PURCHASE AND INVENTORY CONTROL

1. PURCHASE AND INVENTORY CONTROL

2. PRINCIPLES OF PURCHASE Quantity Source Price Terms

3. PRINCIPLES OF PURCHASE FIVE ‘R’ Right Quantity Right Quality Right Price Right Source Right Time

4. RIGHT BEST Carrying cost is more than the additional Margin

5. PURCHASE SHOULD FOLLOW SALE & NOT VICE VERSA NOTE THE MONTHLY DEMAND OF SKU’s 2 IMPORTANT FACTORS – LEAD TIME & SAFETY STOCK WEEKLY SALE 1ST WEEK – 40% 2ND WEEK – 30% 3RD WEEK – 10% 4TH WEEK – 20%

6. SOURCES OF PURCHASE BIGGER STORES PURCHASE DIRECTLY FROM COMPANIES WHAT IS CORRECT? CUT THE COAT ACCORDING TO YOUR CLOTH KOOPRA / SABUDANA – SALEM/COCHIN ALPONSO MANGOES – KOKAN GROWERS GRAPES – NASIK VEGETABLES – NASIK, PUNE. SUJI/BESAN/MAIDA – FLOUR MILL MEDICINES – PHARMACEUTICAL COMPANY AS YOU GROW BIG FOLLOW – BACKWARD INTEGRATION

7. RIGHT TIME PLANNING ACCORDING TO THE DEMAND SUGAR OTHER FMCG RAVA / SUJI KOOPRA COCONUT MAIDA BEFORE SCHOOL RAKHEE GANAPATI ITEMS MONSOON ITEMS DIVALI ITEMS VALENTINE DAY CRISTMAS ITEMS SUMMER SPECIAL RAMZAN ITEMS SANKRANTI ITEMS HOLI ITEMS

8. PURCHASE REVIEW & CONTROL 1) NO STOCKOUT OR NO OVER STOCKING 2) PURCHASE & RETAIL PRICES ARE COMPETITIVE 3) SALE IS NOT MORE THAN PURCHASE 4) STOCK LEVEL AS PER STOCK HODING POLICY & STOCK TURN RATE 5) QUALITY OF GOODS MAINTAINED 6) TRADE CREDITOR PAYABLE ACCORDING TO NORMS 7) OLD & DAMAGED GOODS ARE RETURNED 8) PURCHASE FOR SEASONAL DEMAND 9) SCHEMES AVAILED OR NOT AVAILED FOR BEST ADVANTAGE OF THE STORE

9. SUPPLIER LIST NAME / ADDRESS / TEL.:/ MOB: / EMAIL ID COMPANIES / BRANDS / SKUs TERMS OF PAYMENTS, EXTRA CREDIT DAYS SHOP CLOSED ON / TIMING EXTRA SCHEMES IF ANY NAME OF THE OWNER NAME OF TSI NAME OF ASM NAME OF ASDM

10. COMPANY SCHEME NEW PRODUCTS AND CONSIGNMENT ARRANGEMENT GOODS WELL PURCHASED MEANS HALF SOLD BUY WHAT YOU SELL BUY THAT MUCH YOU CAN SELL 2% Saving in Purchase is equal to 16% increase in Sale

11. PURCHASE OF AGRICULTURAL COMMODITIES Every State has Agriculture Produce Market Act – Market Yard Dalals or Brokers Minimum Quantity Credit Facilities Quality Assessment Foreign Material Moisture Damaged Grains Insects Adulteration Offence under Prevention of Food Adulteration Act Harvest Season Purchase Cold Storage

12. Suppliers can be Classified into Fresh produce Dry Grocery(unbranded) FMCG products

13. One has to study the market practices with reference to these categories Fruits & Vegetable may be purchased from Farmers FMCG products may be purchased from the Distributors/ Wholesalers There may be Backward Integration or Outsourcing Mutton, Chicken, Beef etc from Abttoir Fish from Landing Jetty Large Retailers may have Backward Integration

14. Markup Structure Discrimination Advertisement / Display Charges Credit Period Return / Exchange –(Replacement) Schemes Taxation

15. INVENTORY CONTROL WHAT IS STOCK ? WHAT IS INVENTORY ? INVENTORY HAS INHERENT TENDENCY TO GROW COST OF INVENTORY OR CARRYING COST PAYMENT OF INTEREST INSURANCE GODOWN / WAREHOUSING CHARGES HIGH STOCK HOLDING ISBAD STOCK-OUT ISWORSE

16. INVENTORY CONTROL LEAD TIME ORDERING COST SAFETY STOCK JUST IN TIME (JIT)

17. TECHIQUES OF INVENTORY CONTROL MINIMUM MAXMUM RE-ORDER LEVEL FIXED FREQUENCY ORDERING SYSTEM FIXED QUANTITY ORDERING SYSTEM FIXED FREQUENCY & FIXED ORDERING SYSTEM ABC ANALYSIS RULE OF 10 NO ENTRY TECHNIQUE ECONOMIC ORDER QUANTITY (EOQ)

18. ECONOMIC ORDER QUANTITY (EOQ) 2 A O 2 x 1200 x 10 x 100 100 EOQ = = 160000 = 400 = I 15

19. TRADE CREDITORS PAYABLE ATLEAST 60 % STOCK HOLDING PREFERABLY 80 % STOCK HOLDING IDEALY 100 % STOCK HOLDING

20. SUPPLY CHAIN MANAGEMENT WHOLESALER GODOWN DALAL Bill / DO TRANSPORTER BOX TELEPHONE / PO Bill / DO / PO CHEQUE RETAILER PURCHASE GODOWN ACCOUNTS

21. SUPPLY CHAIN MANAGEMENT COMPANY DISTRIBUTOR DISTRIBUTOR’S REPRESENTATIVE GODOWN OF DISTRIBUTOR COMPANY’S REPRESENTATIVE ACCOUNTS DEPT GODOWN PO CHEQUE PO RETAILER PURCHASE GODOWN ACCOUNTS