DEPARTMENT ROUTINE
8. Any discussion of the routine duties of the purchasing department is necessarily more or less theoretical and any method of procedure laid down is subject to such modification as will reduce it to a practical working basis for the individual establishment. To present the subject in a practical manner, therefore, this discussion will be confined to the needs of an average manufacturing business. As has been stated elsewhere in these papers, it is much less difficult to modify a system designed to care for all details in a large establishment than to expand the simple systems of a small business.
The duties of the purchasing agent in respect to the actual purchase of goods may be classified as follows:
1. Receiving requisitions, or orders for materials and supplies required for stock or in different departments.
2. Placing and following up orders.
3. Checking receipt of goods.
4. Checking invoices for prices.
5. Filing order copies and requisitions.
9. Requisitions. Under ordinary circumstances the purchasing agent will place no orders until he has first received a requisition from either the stores department or the department that requires the material. The requisition should in every case state the purpose for which the material or supplies is required, as well as by whom wanted.
Each department should be supplied with its own requisition blanks, and, to make them distinctive, a different color should be adopted for each department. Each department should also be identified by a letter which will be printed on the requisition blank in connection with a serial number. Thus the requisition numbers of one department will start with A1, another B1, etc.
A positive rule should be laid down that all requisitions issued by one department are to be signed by one person, usually the foreman. This rule must be rigidly enforced and no requisitions honored without the proper signature.
While requisitions should be drafted in a form to meet individual requirements, Fig. 10 is given as a typical example that will be found suitable in a large majority of offices.
The requisition, as a rule, is made in duplicate. The original goes to the purchasing agent and the duplicate is retained by the foreman. In some of the larger establishments a triplicate form is used, the original and duplicate being sent to the purchasing agent. The duplicate is then returned to the foreman with proper notations to show that the order has been placed.
There are very few cases, however, where this is necessary. It is not a good plan to require the foreman to keep records that can be eliminated, and the average foreman does not care when or where the order is placed; all he wants is the material. He has no interest in going back of the purchasing agent on whom he has made requisition.
When the factory is located at a distance from the office, requisitions should be in triplicate and bear the O. K. of the superintendent or factory manager. The duplicate will then be filed in the factory office pending the receipt of the goods.
Fig. 10. A Typical Form of Requisition Blank
Foremen who make requisitions on the purchasing agent will retain their copies until the material is received.
On receipt of the requisition, the purchasing agent first investigates to find if the material, or some other that will answer the same purpose, is in stock. If not, he looks up his sources of supply and prices, and then he is ready to place the order. When a large investment is involved, it is usually necessary to obtain special quotations, and sometimes samples, before the order can be placed.
10. Low Stock Report. Another form of requisition is the low stock report furnished by the stores clerk. Every article and class of material in stock is given a low limit. When this limit is reached the stores clerk makes a report, Fig. 11, to the purchasing agent. This is recognized as a notice to purchase. The report shows the low limit and quantity in stock. It is important that the low limit be included, for in some cases it will be found advisable to change the limit. Material formerly used in large quantities may now be in so little demand that it will be thought best to reduce the limit. At other times it will be necessary to increase the limit.
Fig. 11. The Stores Clerk's Report of Low Stock
The report is made in duplicate, a copy being retained by the stores clerk until advised that the order has been placed. There is no special need for keeping these reports permanently; all information that they would supply may be had from copies of purchase orders.
11. Purchase Orders. When an order is placed, it is of course necessary to keep one or more copies. The best practice is to make purchase orders in manifold, providing as many copies as may be required. Modern typewriters and carbon paper render it possible to make all necessary copies at one writing.
The number of copies will be governed by the requirements of the business. In a small business where the goods are received by the purchasing agent, one copy is sufficient. When a receiving clerk is employed, a second copy will be needed by him to check the receipt of goods.
The illustration, Fig. 12, shows a set of six blanks, the original and five copies, which will meet the requirements of the average manufacturing business. These copies will be used as follows:
Fig. 12. Typical Form of Manifold Order Blanks
Original. This is to be mailed or delivered to the vendor.
Follow-Up Copy. This copy is retained by the purchasing agent to follow up the order. It is first filed in a tickler, or date file, back of the date when an acknowledgment should be received. If no acknowledgment is received, the vendor is followed up and the order filed ahead.
The order is next filed under the date when the invoice should be received. After the invoice is received, the order copy can be used to follow up the transportation company for delivery.
Receiving Copy. This copy goes to the receiving clerk who files it according to the name of the vendor. When the goods are received, he checks the items against the copy and returns it to the purchasing agent. In some cases he reports the receipt of goods by means of a receiving slip, which will be explained later.
Auditor's Copy. In a highly organized business a copy of every order is given to the comptroller or auditor. The principal use of this copy is to furnish information in respect to obligations incurred, that finances may be provided in advance.
Cost Department Copy. The copy furnished the cost department is to post the cost clerks in prices. In many large factories complete files of all orders placed are kept in the cost office. This is an excellent plan since it provides a complete price record.
Shop Copy. This is intended for the special use of the factory when located at a distance from the office. It is filed in the office of the factory manager, under the name of the vendor, and supplies him with a record of all orders placed for the factory.
12. Checking Receipts. The purchasing agent will be advised of the receipt of goods by the return of the receiving clerk's copy of the order, properly checked. Or, in some cases, it may be advisable to have all goods reported on a special form, Fig. 13.
Fig. 13. A Form of Report of Goods Received
SURPLUS TOOLS GATHERED FROM OVER-EQUIPMENT AT LOCAL SHOPS AND RETURNED TO CENTRAL STORES ON THE SANTA FE SYSTEM
The Reapportionment of Work, Concentrating all Manufacturing Operations at Topeka, Made it Possible to Return to General Stock Many Small Tools, to be Used as Needed Instead of Held in Unnecessary or Excess Local Reserve
Courtesy of the Engineering Magazine
In those factories where a receiving clerk, as well as a stores clerk, is employed, the receiving slip should be made in duplicate. One copy will go to the stores clerk with the goods and will later be sent to the purchasing agent, furnishing a double check on the goods. The purchasing agent will send one copy to the cost clerk, first noting the account to be charged. This gives the cost clerk the necessary information for charging out material when used.
One argument in support of this plan is that, having no record of quantities ordered, the receiving clerk will be compelled to carefully count and list all articles received. But it is also true that he is obliged to make a detailed copy instead of merely checking the items against his copy of the order.
Another point in connection with the work of the receiving clerk that has caused much discussion, is the wisdom of furnishing him with a record of prices. The prevailing opinion among manufacturers seems to be that this should not be done. This need not interfere with the operation of our system, for prices can be left off the receiving clerk's copy by using a short carbon. This will keep all blanks uniform in size.
13. Checking Invoices. It may be laid down as a rule that invoices should first go to the purchasing agent, not for audit, but to be checked for quantities and prices. The purchasing agent will check the invoice, note on it the purpose, or the department for which the goods were purchased, and forward it to the auditor. The transaction is then closed so far as the purchasing agent is concerned.
14. Filing. After the O. K.'d invoice has been forwarded to the auditor, the following papers remaining in the purchasing department are to be filed:
Follow-up copy of the order, filed alphabetically under the name of the vendor.
Receiving clerk's copy of the order, filed with the original requisition.
Requisition from the department requesting the goods, filed numerically according to the departmental serial number; that is, all requisitions from Dept. A will be filed together in numerical sequence.
When a record of goods received has been made on the forms prescribed, the purchasing agent's records will be complete.