CHAPTER-1

INTRODUCTION

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1.1 Purchasing Management

Purchasing management is concerned with the planning and controlling of the acquisition of
suppliers' goods and resources, to fulfill the administrative and strategic objectives of the
organization. In practice, purchasing managers have to deal with both customers internal as well
as external. He/she has to respond creatively to internal customers' need on the one hand and to
maintain a mutually profitable relationship with suppliers on the other. This dual-role perspective
of purchasing management has, in recent years, been increasingly recognized as comprising
complex tasks in the integration of internal/external and upstream/downstream supply chain
management activities. The part of supply chain management that focuses on the management of
inbound goods and services into a firm.

1.1.1 Meaning and Definition:

Purchasing is the first phase of Materials Management. Purchasing means procurement of goods
and services from some external agencies. The object of purchase department is to arrange the
supply of materials, spare parts and services or semi-finished goods, required by the organisation
to produce the desired product, from some agency or source outside the organisation.

1.2 Importance of Purchase Management

1.2.1 For Cost Effective Production
Purchasing is responsible for learning of the internal requirements, locating and selecting
suppliers, obtaining the materials, parts, supplies and services needed to produce a product or
provide a service. A purchase manager is responsible for negotiation of price with suppliers too.
You can get some idea of the importance of purchasing when you consider that in manufacturing
industry more than 60 percent of the cost of finished goods comes from purchased parts and
materials. Furthermore, the percentages for purchased inventories are even higher for retail and
wholesale companies, sometimes exceeding 90 percent. Nonetheless, the importance of
purchasing is more than just the cost of goods purchased; other important factors include the
quality of goods and services and the timing of deliveries of goods or services, both of which can
have a significant impact on operations.

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1.2.2 For Strategic Purpose
Purchasing is a strategic issue. The manufacturers have to procure capital items like plant and
machinery for manufacturing facilities. It requires heavy investment. So, purchasing is an
important function. But in some organisations, especially small scale, purchasing is considered
as a clerical activity. They assign this job to the persons simply who are loyal to the organisation.
But it is a wrong way. In purchasing, the executives must by dynamic, innovative, creative and
must have analytical decision making. The emergence of the supply chain management concept
has enlightened managers about the strategic role played by purchasing. Purchasing helps to
determine a firm's cost structure through negotiations with suppliers. If the executives are
efficient in bargaining then they can save for the organisations and this will help the
organisations to cut costs and helpful in getting competitive advantage in the market. Purchasing
initiatives can lead to reducing inventory and improving the quality of incoming parts and
components through vendor selection and supplier development. Purchasing also supports new
product development by encouraging supplier involvement in product development.

Organization can realize major benefits from their focus on purchasing management as
mentioned below:

1.2.3 From a Top Management Perspective

There are five rights that every management expects from their purchasing executives:
 Right Quantity
 Right Quantity
 Right quality
 Right Time
 Right Supplier
 Right Cost

1.2.4 From Functional Perspective

 Uninterrupted flow of materials and services
 Buying at competitive prices
 Avoiding under-inventory and over-inventory

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  To have good relationship with other departments
In nutshell, purchase management has the following benefits:
 Cost reduction or improvement (required utmost to be competitive in market)
 Improved material delivery (required for smooth flow of production)
 Shorter cycle time, including product development cycle times (helpful in fast
production)
 Quality improvement (required to satisfy or win the hearts of the customers ultimately)

1.3 Purchasing Activities

There are two major forms of purchasing activities that take place in an organization:
 Tactical purchasing
 Strategic sourcing

 Tactical Purchasing
The organisations require some materials for the smooth flow of production. The day to day
management of materials flow is called tactical purchasing. These activities generally ensure that
products and services are delivered to the right internal people at the right time but are often not
carried out using a long term horizon.

 Strategic Sourcing
The purchasing which affects the long-term profitability is called strategic purchasing. Strategic
sourcing is a part of purchasing activities but in a border sense. In the strategic sourcing process
there may includes members from other than purchasing department like from engineering,
quality, design, manufacturing, marketing and accounting department for managing, developing
and integrating with supplier capabilities to achieve competitive advantages like cost reduction,
technology development, quality improvement and cycle time reduction.

1.5 Types of Purchase

There are mainly two types of purchases; the individual purchase and the organizational
purchase.

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Individual Purchase
Individual or personal purchase includes those types of items or products which are purchased
for personal or family consumption.

Factors influencing individual purchase behavior:

In general mainly there are four types of influence factors:
 Cultural Factors
 Social Factors
 Personal Factors
 Psychological Factors

Organizational Purchase
A purchase will be considered to be organizational if it is made in the name of a company or
organization, regardless of size, from a medium sized company up to a multinational or state
company. Organization consists of business, industries, retailers, wholesaler, government and
non- government organizations.
 Business and industries purchase materials for business use or as a raw material to
produce other product.
 Wholesalers/Retailers/traders buy product for resell at profit.
 Government organisations purchase products for use in offices or provide services to
people.
 Non-government organizations purchase products to provide services to their client.

Consumer Purchasing / Decision Industrial Purchasing / Decisionmaking

Making
Less risky More risky
Emotional decision-making Rational / Analytical decision-making
Personal purchasing is sometimes Scientific purchasing as whole
unplanned or on the spot or abrupt buying organization’s profitability affects
influenced by promotional activities

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1.6 Purchasing Cycle
The purchasing cycle begins with a request from within the organization to purchase material,
equipment, supplies, or other items from outside the organization, and the cycle ends when the
purchasing department is notified that a shipment has been received in satisfactory condition, and
managerial accounting is actively involved in each step.

The main steps in the cycle are as under:

 Recognition of need
 Description of need
 Selection of suppliers
 Determination of prices
 Preparation of purchase order
 Placing the order with a selected supplier
 Monitoring and follow up the order
 Receiving the ordered materials
 Checking and approving for payment to supplier

1.7 Characteristics of a Purchasing Manger

The following pre-requisite traits are required for a purchase manager:

Interpersonal skills
The purchase manger must have good communication skills. There are many aspects of
interpersonal communication such as handling suppliers, respect of other opinion and so on. He
or she must be efficient in the same.

Analytical Decision Making

Purchase manager may face many problems in his or her job like placing order, selection of best
supplier, to maintain healthy relationship with supplier, and purchase right materials in right
quantity at right time and so on. So, a good purchase manager must have analytical decision
making.

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Loyal to the Organisation

The purchasing manager is involved in large activities of purchasing materials consistently

involving very large financial deals. So, he has to be loyal to the organisation and he has to prove
his loyalty from time to time.
Computer Literacy
The purchase manager must be well skilled in computer as he requires use of computer in many
activities. If he is computer literate, then he can work efficiently.

Technical skills
Now-a-days, in production a very highly sophisticated technology is used. Purchase manager
must have technical understanding of the business. The purchase manager has enough technical
background to understand the production process, the supplier’s processes and scheduling system
in order to making improvement.

Ability to Make Decision

The purchasing manager has to take quick decisions in line with procurement strategy of
organization vis-à-vis liaison with other departments. He or she has to take decisions with
quality, market, economic, social and political environment and issues taken into account.

Innovative
Innovation is very necessary for survive in the market in present competitive market condition.
So, a purchase manager should take innovative decisions related to purchase techniques,
maintaining quality, inventory stock, inventory control, re-ordering level and order processing.

Bargaining Power
It must be the prime motive of the purchase manager that organization can purchase more and
best materials with less cost. For this a purchase manager should have good bargaining power.

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1.8 Materials Management
Material management is defined as the planning, acquiring, storing, moving and controlling of
materials as per the requirement of the organisation. Materials management is basically related
with the smooth flow of materials. The major activities covered under materials management are
the anticipation of the materials required in the organisation from time-to time. It involves
ordering and obtaining materials from the suppliers, introducing the materials to the organisation
and monitoring the status of materials. It helps to optimize the usage of facilities, personnel and
funds and to provide service to the user in the line with the organizational aims. Materials
management is the coordination and control of the various material activities. The key material
activities are:
 Purchasing Activities
It involves mainly identification of materials needs, market research, maintaining materials
records etc.
 Procurement Activities

It involves material specifications, materials studies, receiving materials etc.

 Inventory Management
It involves planning and controlling of materials handling, storing materials and managing
material supplies etc.
 Supply Management
It involves monitoring in-plant material handling, strategic planning of materials etc.

1.9 Classification of Manufacturing Materials

The manufacturing materials can be classified into following categories:
 Raw Materials
It is the materials that the company is required to transform into finished goods. It is very
important. The shortage of halts can stop the production and can cause high losses. It is different
for different industries. As for example, for textile industry the cotton is main input. For
automobile industry, the spare parts are very important.
 Manufactured Parts
These parts are the output of the organizations. These are the finished materials built by the
company.

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 Work in Process
These are semi-finished products found at various stages in the production process.

 Packaged Materials
These are materials that are packaged together to prevent damage during transportation and
deterioration when they are stored.
 MRO Supplies
These materials are required for maintenance, repairing, and operating supplies used in the
manufacturing process regularly for the smooth manufacturing, i.e. soap, lubricating oil, grease,
plastic and rubber parts, screw driver, nuts etc.
 Loose Materials
These are materials that are partially fabricated and that should be handled individually.

1.10 Objectives of Materials Management Department

The primary objectives of Materials Management department are:
 Low Procurement price
 High inventory turnover
 Low cost of acquisition and possession
 Continuity of supply
 Consistent quality
 Low payroll costs
 Favorable supplier relations
 Maintenance of good records

The secondary objectives of Materials Management are:

 New materials, processes and products

 Economic make or buy decisions
 Standardization
 Product improvement (Khana, 2012)

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Relationship between Materials Management Department and other Departments
Materials Management Department plays a very important role in an organization and it must
have good relationship with other departments. The departments that are mostly involved are:
Production, Engineering design, Quality control, and Finance Department.

Materials Management Department and Production Department

The materials management department must have good relationship with production department.
Materials Management is responsible for the purchase of all materials required by the production
department. If the needed materials are not supplied at right time then the production process can
halt and generate huge losses. So, for the smooth functioning of the production department, the
materials department must be vigilant about the latest requirements.

Materials Management and Engineering Design Department

If both materials management and engineering design department work together then the much
required innovative strategies can be formulated and implemented. Both departments can work
together for standardization of materials. The suggestions of the materials management are very
important for engineering department.

Materials Management and Quality Control Department

The selection and rejection of the materials purchased depends upon the parameters set by the
quality control department. So, if both the departments have cooperation and cordial relationship
then the delay in the purchasing of raw materials can be avoided.

Materials Management and Finance department

Usually, finance department release fund to materials department for the materials purchased. It
is the responsibility of the both departments to clear payments to the suppliers smoothly, without
much delay unnecessarily.

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1.11 Risks to be Considered by Purchase Material Manager
The purchase and materials manager must avoid the following consequences:
 Receiving materials before they are required, causing more inventory cost and chance of
deterioration in quality;
 Not receiving materials at the time of requirement, causing loss of productivity;
 Incorrect materials take off from drawing and design document;
 Subsequent design changes;
 Damage/loss of items;
 Failure on installation;
 Selection of type of contract for specific material procurement;
 Vender evaluation criteria;
 Pilling up of the inventory and controlling of the same;
 Management of surplus materials; and
 Any one of the above or all of the above, or combinations.

1.12 Features of Purchase Management -

 Select default procurement method as – auto or manual.

 Send quotation and purchase order emails to suppliers.
 Add any comments in purchase orders and incoming shipments for notifying
the suppliers.
 Mention cost price and minimal quantity for every product.
 Manage incoming shipments and products from store backend.
 Update received quantity of partial shipments.
 An auto-draft purchase order is created for out of stock products.
 Merge two or more purchase orders.

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1.13 Work Flow of Purchase Management -

First, the admin will select the default procurement method as - make to stock
(manual) or make to order (auto-draft). Then, the admin will add all the suppliers'
information such as name, email, telephone, etc.

Next, in the product edit page, the admin will enter the cost price, select the
procurement method and add supplier's price and minimum quantity. The admin
can add multiple suppliers for a product.

For creating a new purchase order, the admin can select any one of the available
suppliers from the list and add the products mentioning the order quantities. Before
sending the purchase order, the admin can also edit the ordered items. The admin
can also notify the supplier by adding any comments in the purchase order.

An incoming shipment will be created for every new purchase order. When the
admin receives the ordered shipments, it can update the information in the store.
After that, the ordered product stock will auto-update itself in the store.

1.14 Benefits of Purchase Management -

Determining which products to order at what quantity and from which supplier is
really challenging. The purchase management extension enables the admin to
manage the complete procurement function within the store.

The admin can select the supplier for sourcing the products and send the purchase
orders accordingly. The purchase order extension automatically creates a draft
purchase order whenever a product goes out of stock. This feature reduces the
demand-supply gap and prevents overstock situation.

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1.15 INTEGRATION OF MRP AND JIT:

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 CHAPTER-2

COMPANY PROFILE

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2.1 COMPANY PROFILE

Jindal Zippers is a distinguished manufacturer and trader of a wide range

of CFC Zipper, Vislon Zipper, Aluminum Zipper, Metal Zipper, Fancy
Specialized Zipper, Clothing Zipper, Colorful Zipper Slider, etc. Founded in
the year 2000, we are aSole Proprietorship company that is incepted with an
objective of providing high quality range of zippers and its accessories in diverse
specifications within limited time period. Situated at Ludhiana (Punjab,
India), we have constructed a wide and well functional infrastructural unit that
plays an important role in the growth of our firm. Under the headship of our
Mentor “Mr. Prakash Jindal”, we have gained huge clientele across the nation.

Registered in 2000, Jindal Zippers has made a name for itself in the list of top
suppliers of Zippers in India. The supplier company is located in Ludhiana, Punjab
and is one of the leading sellers of listed products.

Jindal Zippers is listed in Trade India's list of verified sellers offering supreme
quality of Colored Zippers ,Garment Zippers ,Nylon Zippers etc. Buy Zippers in
bulk from us for the best quality products and service.

Jindal Zippers is a distinguished manufacturer and trader of a wide range

of CFC Zipper, Vislon Zipper, Aluminum Zipper, Metal Zipper, Fancy
Specialized Zipper, Clothing Zipper, Colorful Zipper Slider, etc.

About us

Year of Establishment - 2000

Legal Status of Firm - Sole Proprietorship (Individual)
Nature of Business - Manufacturer
Number of Employees - 100 to 120 People

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Annual Turnover - Rs. 1 - 2 Crore
IndiaMART Member Since - Oct 2011

2.2 PRODUCT DESCRIPTION

They are leading supplier of Zipper in Delhi. We provide best quality metal zips
to our clients with affordable price. We are supplier of all types of metal zippers.
Features:
 Cost effective
 Durable
 Optimal friction

2.2.1 Durable Metal Zippers

Our organization is vastly engaged in manufacturing and supplying a wide gamut of

Durable Metal Zippers in Ludhiana, Punjab, India. Our offered Durable Metal Zippers
are designed and made out ...

2.2.2 Metal Zippers

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With the rich experience in market, we manufacture and supply a extensive range of
Metal Zippers in Ludhiana, Punjab, India. Our offered range of Metal Zippers are
designed and manufactured

2.2.3 Colored Zippers

We are very reckoned manufacturer and supplier a sufficient assortment of Colored

Zippers in Ludhiana, Punjab, India. The offered Colored Zippers are designed and
manufactured using high quality raw material ...

2.2.4 Garment Zippers

Under the supervision of our experts, we are engaged in manufacturing and supplying of
Garment Zippers in Ludhiana, Punjab, India. We offer a wide range of Garment Zippers,
which are ...

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2.2.5 Nylon Zippers

Under the supervision of our experts, we are engaged in manufacturing and supplying of
Nylon Zippers in Ludhiana, Punjab, India. We offer a wide range of Nylon Zippers,
which are ...

2.2.6 Two Way Zipper

Being one of the reputed organization in the business sector, we are engaged in
manufacturing and supplying of Two Way Zipper in Ludhiana, Punjab, India. We offer a
wide range ...

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Polyester thread

Polyester thread looks, feels and sews like nylon thread. The big
difference is that polyester thread has superior sunlight (UV) and
mildew resistance. This makes it the first choice for sewing things that
are used outdoors.

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Delrin (plastic granuals for injection molding)

One of the many injection molding resins that Stack Plastics specializes in
working with is Delrin®. Delrin® is a homopolymer variation of POM
(polyoxymethylene), and is ideal for injection molding parts that require high
stiffness, low friction, and excellent dimensional stability.

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Zinc

Zinc Zipper Puller

Leading Manufacturer of Zinc School Bag Zipper Puller and Slider Metal
Zipper

Slider Metal Zipper

With the constant endorsement of our diligent experts, we are engrossed in

presenting a highly qualitative Slider Metal Zipper to the industry.

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 CHAPTER-3
REVIEW OF LITERATURE

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REVIEW OF LITERATURE

This section reviews the relevant literature of objectives of purchasing management,

global sourcing and partnership relationships with suppliers within the purchasing
management field.

Wisner(2001), purchasing management is upgraded into the higher level of part of

important business strategies that provide added value for it’s immediately or ended
customers.

Stanley (2001) again, they pointed out that purchasing function has changed significantly
in the last 15 years from pure transactions-oriented order processors to supply managers
with an emphasis on supply chain management strategy for adding value for customers
and meeting the company’s long-term goals.

Cho and Kang(2001),in the last several decades, firms in the USA have faced increased
competition from all around the world and the competitive pressure from markets and
consumers has forced many firms to improve the quality of their products and to lower
the cost of bringing them into the market.

Malon and Benton(2002) argued that not many researchers have attempted a more
rigorous analytical approach to purchasing issues. There are three phases in the
purchasing management that have been discussed in the section of literature review in
this paper, including objectives of purchasing management; global sourcing and
partnership relationships with suppliers.

Carr and Pearson (2002) addressed that since the demand of his customers will
probably change at will, one of the important firm’s objectives of purchasing

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management is to make sure that it can obtain the dependable and flexible supplies from
its suppliers.

Kannan and Tan(2002),the firm’s purchasing management objective is to consistently

obtain the good qualities and delivery performance from its suppliers. For example, a
supermarket will obtain a relatively larger value margin when it provides products for the
customers if the organization can buy the qualified goods at a lower price or at a shorter
delivery time from the suppliers. However, the analysis of the objectives of purchasing by
other researchers is much more developed based on the following perspectives.

Smeltzer, et al.(2003) also argue that in order to complete firm’s strategic goals, selecting the
right suppliers to ensure their dependable and flexible supply is one of purchasing management
objectives also.

Zsidisin ﹠Ellram,(2003).The objectives of this paper are to review the knowledge and develop

the argument of existing research findings about purchasing management especially in service
industry. Two reasons explain why this paper mainly focuses on purchasing management rather
than other issues of supply chain management. Firstly, recent studies have shown that firms
especially in the service industry in western countries such as America will be challenged ever
more intensely in reducing the transaction costs of purchasing.

Allen (2003) clearly emphasises that e-procurement should be conceived as “a multi-

dimensional, complex business change effort”, not a “software installation effort”. The formula
for successful implementation is given as: “building on the foundation of people, then
reengineering the business processes around best practices and finally applying the right
technology”. In terms of people, executive sponsorship and cross-functional implementation
teams are counted as vital.

Chambers and Johnston (2004),from the perspective of a single operation in the chain, supply
chain management can be seen as managing the operations that form its demand side

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management(physical distribution management)and supply side management (purchasing
management).Consequently, purchasing management is accepted as a term for the supply side of
operations that deals with the operation’s interface with its supply within the supply chain
management.

Lazowski(2004)address that with the development of global economy, sourcing around the
whole world may find the cheaper product materials, labour cost, overhead expenses and
exchange rates result in savings delivered directly and immediately to the company’s bottom
line. According to this global sourcing strategy, a critical issue is to focus on the right countries
from which to select the supplier because there is a great variation in the infrastructure, local
laws, customs and attitudes toward business from country to country and it is important to assess
all costs and risks carefully since wide regional variety also exists within many countries.

Turban et Al., (2015) indicates that by automating processes and workflows associated with
purchasing, the firm expects to increase the productivity of its purchasing agents, lower purchase
prices of different types of goods and services, streamline the information flow, business
processes, and workflows involved in purchasing, eliminate maverick buying (i.e., buying from
unauthorized vendors), reduce order fulfillment and processing times, reduce the number of
suppliers the firm is dealing with, streamline invoice reconciliation and dispute resolution,
reduce the administrative processing cost per purchase order, integrate budgetary controls into
the procurement process, minimize human errors in the buying and shipping processes, and
monitoring and regulating buying behaviour.

Anderson et.al.(2017) published seven principle of supply chain management, these principle
were seven time tested and offer value to the organization to adopt the SCM in their
organizations. They describe that each principle can provide three types of benefits these are:
revenue growth, asset utilization and cost reduction.

T. S. Chandrashekar, Y. Narahari, Charles H. Rosa, Devadatta M. Kulkarni, Jeffrey D.

Tew, and Pankaj Dayama (2018), studied Auction-based mechanisms are extremely relevant in
modern day electronic procurement systems since they enable a promising way of automating

25
negotiations with suppliers and achieve the ideal goals of procurement efficiency and cost
minimization. A clarification of the relationship and the definition of these terminologies are
shown in the figure 2.8. eBusiness is more than e-commerce since it focuses on functions, while
e-Commerce is a subset of e-Business focusing on the sales aspects of e-Business.

26
 CHAPTER-4

RESEARCH METHODOLOGY

27
 RESEARCH METHODOLOGY

4.1 RESEARCH DESIGN:

A Research design is the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the Research purpose with economy in procedure. In
fact the Research design is the conceptual structure within which Research is conducted: it
constitutes the blueprint for the collection measurement and analysis of data.
It must be able to define clearly what he wants to measure and must find adequate methods for
measuring it along with a clearly cut definition of population he wants to study. Since the aim is
to obtain complete and accurate information in the said studies, the procedure to be used must be
carefully planned. The research design must make enough provision for protection against bias
and must 28aximize reliability with due concern for the economical completion of the research
study.
Descriptive research is adopted for this study. It includes surveys and fact finding enquires of
different kinds. The major purpose of descriptive research is description of the state of affairs as
it exists at present. The main characteristic of this method is that the researcher has no control
over the variables. He can only report what has happened or what is happening.

4.2 OBJECTIVES
1. To pay reasonably low prices for the best values obtainable, negotiating and executing all
company commitments.
2. To keep inventories as low as is consistent with maintaining production.
3. To secure good vendor performance including prompt deliveries and acceptable quality
4. To locate new materials or products as required.
5. To develop good procedures, together with adequate controls and purchasing policy.

4.3 SAMPLING DESIGN

A sample design is a definite plan for obtaining a sample from the sampling frame, it refers to
the technique or procedure the researcher would adopt in selecting some sampling units from
which Interpretations about the population is drawn.

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4.4 POPULATION AND SAMPLE SIZE
A decision has to be taken concerning a sampling unit before selecting sample. The population
for this study includes the employees from three branches of Jindal Zippers.

4.5 DATA COLLECTION

The task of data collection begins after a research problem has been defined and research design
/ plan chalked out. While deciding about the method of data collection to be used for the study,
the researcher should keep in mind two types of data viz,
 Primary and
 Secondary

4.5.1 PRIMARY DATA

The primary data are those which are collected afresh and for the first time and thus happen to be
original in character. The tool used for collecting primary data is a structured questionnaire.

4.5.2 SECONDARY DATA

The secondary data on the other hand are those which have already been collected by someone
else and which have already been passed through the statistical process. The secondary data has
been collected from the company records, journals. The secondary data collected for this
research was obtained from journals, magazines, company reports and websites

4.6 METHODS OF PURCHASING MATERIAL

Some of the methods of purchasing are discussed as follows:
1. Purchasing by Requirement:
This method refers to those goods which are purchased only when needed and in required
quantity. The goods which are not regularly required are purchased in this way. On the other
hand it refers to the purchase of emergency goods. These goods are not kept in store. Purchasing
department must be in knowledge of the suppliers of such goods so that these are purchased
without loss of time.

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2. Market Purchasing:
Market purchasing refers to buying goods for taking advantages of favourable market situations.
Purchases are not made to meet immediate needs but are acquired as per the future requirements.
This method will be useful if future needs are estimated accurately and purchases are made
whenever favourable market situations arise. The market situation is constantly studied for
forecasting price trends.

3. Speculative Purchasing:
Speculative purchasing refers to purchases at lower prices with a view to sell them at higher
prices in future. The attention in this method is to earn profits out of price rises later on. The
purchases are not made as per the production needs of the plant rather these are far in excess of
such requirements. A cloth mill may purchase cotton in the market when prices are low with the
attention of earning profits out of its sales when prices go up.

5. Contract Purchasing:
In the words of Spriegel it is “the purchasing under contract, usually formal, of needed materials,
delivery of which is frequently spread over a period of time.” Under this method a specific
quantity of materials is contracted to be purchased and delivery is taken in future. Even though
the goods are procured in future but the price and other terms and conditions are fixed at the time
of contract. This method may be useful when price rises in future may be expected and material
requirements for future may be accurately estimated.

4.7 TOOLS AND TECHNIQUES

Material Requirements Planning (MRP)
Material Requirements Planning (MRP) is a computer-based production planning and inventory
control system. MRP is concerned with both production scheduling and inventory control. It is a
material control system that attempts to keep adequate inventory levels to assure that required
materials are available when needed. MRP is applicable in situations of multiple items with
complex bills of materials. MRP is not useful for job shops or for continuous processes that are
tightly linked. The major objectives of an MRP system are to simultaneously:
1. Ensure the availability of materials, components, and products for planned production
and for customer delivery,

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2. Maintain the lowest possible level of inventory,
3. Plan manufacturing activities, delivery schedules, and purchasing activities

JIT: (Just in Time) an inventory strategy companies employ to increase efficiency and decrease
waste by receiving goods only as they are needed in the production process, thereby reducing
inventory costs. This method requires that producers are able to accurately forecast demand.
A good example would be a car manufacturer that operates with very low inventory levels,
relying on their supply chain to deliver the parts they need to build cars. The parts needed to
manufacture the cars do not arrive before nor after they are needed, rather do they arrive just as
they are needed. This inventory supply system represents a shift away from the older "just in
case" strategy where producers carried large inventories in case higher demand had to be met.

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 CHAPTER-5
DATA ANALYSIS AND
INTERPRETATION

32
DATA ANALYSIS AND INTERPRETATION

Jindal Zippers Located in Ludhiana. The company is principally engaged in the

business of manufacturing and sales of CFC Zipper, Vislon Zipper, Aluminum
Zipper, Metal Zipper, Fancy Specialized Zipper, Clothing Zipper, Colorful Zipper
Slider, etc. To improve their Raw material inventory management system so as to
be classifies the items in different aspects. The data used for calculation is collect
from company. Table 1 shown below shows the summery of Available items cost,
used items cost of raw materials from the month Nov-16 to Mar-17.

1. Cost Accounting Problem on Cost Sheet:

The accounts of Basudev Manufactures Ltd. for the year ended 31st
December 1988 show the following:

33
(a) Material Consumed

(b) Prime Cost

(c) Works Cost

(d) Cost of Production

(e) Total Cost and

(f) Sales.

34
Statement of Cost for the year ended 31.12.2018

The following data are available for 2006:

Bill of materials:

35
Part Order quantity Lead time Inventory on
(months) hand
CFC Zipper 350 1 220

Aluminium zipper 400 2 250

Metal zipper 800 2 120

Colourful zipper slider 850 2 105

Clothing zipper 250 1 250

Fancy specialized zipper 600 2 300

Vislon Zipper 1500 2 200

Complete the MRP for hand trolley and show what quantities of orders must be
released and when they must be released in order to satisfy the MPS.

36
MRP Table of Jindal Zippers
Empirical equation for stock on hand calculation
SOH t = R + SOH t-1- Projected requirements

SOLUTION:
Product structure for CFC Zipper is shown below:

Fig1. Product structure of CFC Zipper

From product structure diagram it is indicated that the components/ sub assemblies
are arranged as per precedence relationship. Based on the above inputs such as
BOM, Product structure and MPS the evaluation of stock on hand can be
estimated.

In this case study the evaluation of stock on hand is estimated for only main
product assembly as given below:

Let us consider order quantity for final assembly of product = 350 units Stock on
hand = 220 units Lead time = 1 month Based on the data given in master
production schedule the stock positions are evaluated for every period individually

37
MRP Table for Hand Trolley
Empirical equation for stock on hand calculation
SOH t = R + SOH t-1- Projected requirements

Table 1. MRP Table for Hand trolley

Where
SOH t --- Stock on hand for period (t)
R --- Receipt
SOH t-1 = Stock on hand for previous period.

From the above table it is indicated that stock on hand was maintained for every
period also shortage of materials was overcome by placing a planned order release
well in advance by one month. So that the shortage problem was solved
successfully without any barriers.

38
Sources through which vendors came to know about the company.

Sources No. of respondents Percentage

Audio 10 20
Visuals 5 10
Displays 5 10
Prints 20 40
Others 10 20
Total 50 100

Sources of media
45
40
40
35
30
25
20
20 20
15
10
10 10
5
0
Audio Visuals Displays Prints Others

Sources of Media

Interpretation:

The above bar graph shows that most of the employees come to know about the
company through Print Media i.e. 40% of the employees. And about 20% of the
employees come to know about the company through audios and the remaining
come to know through visuals, displays and others.

39
Table showing the impact of advertisement and Sales Promotional Activities of the
suppliers.

Impact No. of respondents Percentage

Yes 20 40
No 30 60
Total 50 100

Impact

40%
Yes
No
60%

Impact of Advertisement and Sales Promotional Activities

Interpretation:

The above pie chart shows that the advertisement activities does not affect the
purchase activities of Jindal Zippes. 60% of the employees were of the point of
view that sales promotional activities of the suppliers does not affect the purchase
of the company. And 40% of the employees gave a positive response for the same.

40
 Software is used by the company to record the activities

Software No. of respondents Percentage

SAP 35 70
Oracle 15 30
Total 50 100

30%

SAP
Oracle

70%

Software used by the company to record the activities

Interpretation:

It is interpreted that majority of the respondents used SAP software to record the
activities and 30% of the respondents used oracle software to record the activities.

41
 Single vendor or multiple vendors for the purchase of materials

Vendor No. of respondents Percentage

Single 15 30
Multiple 35 70
Total 50 100

30%

Single
70% Multiple

Vendors (Supplier) Analysis

Interpretation:

Almost all good companies try to procure its goods from multiple vendors.
Dealing with multiple vendors gives the company opportunity to get various
discounts and offers. Also according to the above results 70% of the company’s
dealings is with multiple vendors and only 30% of the company’s dealings are with
single vendors.

42
 CHAPTER-6

FINDINGS, SUGGESTION AND

CONCLUSION

43
6.1 FINDINGS

 Zindal zippers apply 4 methods of purchasing

 Purchasing according to the requirements
 Contract purchasing
 Schedule purchasing
 Market purchasing
 Zindal zipper apply 3 types of tools and techniques raw material.
 Just in time
 Bills of material
 Material requirement plan
 It shows MRP tables of CFC zippers
 From product structure diagram it is indicated that the components/ sub
assemblies are arranged as per precedence relationship. Based on the above
inputs such as BOM, Product structure and MPS the evaluation of stock on
hand can be estimated.
 From the above table it is indicated that stock on hand was maintained for
every period also shortage of materials was overcome by placing a planned
order release well in advance by one month. So that the shortage problem
was solved successfully without any barriers.
 The above bar graph shows that most of the employees come to know about
the company through Print Media i.e. 40% of the employees. And about
20% of the employees come to know about the company through audios and
the remaining come to know through visuals, displays and others.
 The above pie chart shows that the advertisement activities does not affect
the purchase activities of Jindal Zippes. 60% of the employees were of the
point of view that sales promotional activities of the suppliers does not affect

44
 the purchase of the company. And 40% of the employees gave a positive
response for the same.
 It is interpreted that majority of the respondents used SAP software to record
the activities and 30% of the respondents used oracle software to record the
activities.
 Almost all good companies try to procure its goods from multiple vendors.
Dealing with multiple vendors gives the company opportunity to get various
discounts and offers. Also according to the above results 70% of the
company’s dealings is with multiple vendors and only 30% of the
company’s dealings are with single vendors.

45
6.2 SUGGESTIONS

 Purchase activities of the company should be reviewed an regularly as possible.

 The company should try to increase its dealings on global level, as it has gained a very
large share in the textile industry.
 Company should indulge into some advertising like advertisement on televisions.
 The company must indulge in more sales promotional activities.
 The company must provide job security to its employees.
 The company must purchase the materials wholly on the basis of purchase requisitions
received by the different departments.
 Strict cost control measures must be taken so as to decrease the cost of unnecessary
overheads.
 The company must keep a track record of all its purchase activities so that comparisons
can be made easily.
 The company must try to deal maximum with multiple vendors for a single material as
multiple vendors are best option over a single vendor.

46
6.3 CONCLUSION
Through comparing and analyzing the existing literatures about the objectives, global sourcing
and partnership relationships with supplier within the topic of purchasing management, results
are summarized as follows. Firstly, as discussed above, traditional purchasing objectives have
been upgraded to the strategic objectives which are much more aligned with the firm’s long-term
goals: besides, with the development of global economy, large companies usually adopted global
sourcing plan to purchase the high-quality products with relatively lower purchasing costs;
finally, in order to decrease the risks when dealing with the suppliers, long-term partnership with
supplier is often developed by the companies, which benefits both buyers and suppliers.

47
REFERENCES

48
 REFERENCES
Carr,A.S., ﹠Pearson,J.N. (2002). The impact of purchasing and supplier involvement on
strstegic purchasing and its impact on firm’s performance. International Journal of
Operations and Production Management, 22(9), pp.1032-1053.
Cho,J., ﹠Kang, J. (2001). Benefits and challenges of global sourcing: Perceptions of US apparel
retail firms. International Marketing Review, Vol.18, Iss.5;pg.542.
Kannan,V.R., ﹠Tan,K.C. (2002). Supplier selection and assessment;Their impact on business
performance. Journal of Supply Chain Management, Vol.38, Iss.4;pg.11.
La Londe, B.J.(1998). Supply chain evolution by the numbers. Supply Chain Management
Review, Vol.02, Iss.1;pp.7-8.
Lazowski, F.(2004). Key Steps That Help Formulate Global Sourcing Strategy. Supplier
Selection ﹠ Management Report, Vol.04, Iss.2; pg.10.
Malon,M.J., ﹠Benton W.C.(2002). Supply chain partnerships:Opportunities for operations
research. European Journal of Operational Research, Vol.101, Iss 3, 16. pg. 419-429.
Olorunniwo, F., ﹠Hartfield, T.(2001). Strategic partnering when the supply base is limited: a
case study. Industrial Management+Data Systems, Vol.101, Iss.1;pg.47.
Samli, A.C., Browning,J.M., ﹠Busbia,C.(1998). The Status of Global Sourcing as a Critical
Tool of Strategic Planning: Opportunistic Versus Strategic Dichotomy. Journal of
Business Reaearch, Vol.43, Iss. 3; pg. 177-187.

49
Websites:
https://www.coursehero.com/file/9982562/MRP-Examples-and-Solutions/
https://www.google.co.in/url?q=http://www.yourarticlelibrary.com/cost-accounting/problems-
cost-accounting/top-14-cost-accounting-problems-with-
solutions/75727&sa=U&ved=2ahUKEwifqsmhkuvjAhWJQ48KHRCoCG0QFjAAegQIBBAB&
usg=AOvVaw0fvYl50IeFBP9obZO8IFbm
www.jindalzipper.com
http://www.yourarticlelibrary.com/purchase-management/methods-of-purchasing-materials-8-
methods/53168

50
 Summer Training Project Report On

“PURCHASING MANAGEMENT
AT
JINDAL ZIPPERS”

Submitted to Panjab University, Chandigarh

In the Partial Fulfilment of the Requirement of the Degree Of
M.COM (Master in Commerce)
(SESSION: 2018-20)

Supervised by: Submitted by:

Ms. Aman Garima Aggarwal
Roll No: 47046
M.Com (2nd sem)

KHALSA COLLEGE FOR WOMEN

CIVIL LINES, LUDHIANA

51
 PREFACE

M.COM is stepping stone to management career. Management is the art of getting things done

through help of others. It is the process of Planning, Organizing, Staffing, Directing, Co-

ordination and Controlling in an efficient manner for effective use of scarce resources. In Past

Business Organization were managed by owner managers having no professional knowledge.

But now days due to severe competition professional management has taken the place of the

traditional management.

Theoretical knowledge without practical knowledge is of little value. Theoretical studies in the

classrooms are not sufficient to understand the functioning of complex organizations. Therefore,

it becomes necessary to undergo any project work.

I took my project with Jindal Zipper Project work is the part of circulation which helps us to co-

relate our theoretical concepts with practical experiences. The Topic that I have taken for project

is “Purchase Management”. During the said period of training, I observed the functioning of the

firm keeping the main emphasis on the subject matter of the assignment i.e. “Purchase

Management”. The main purpose of the report is to give the complete written account on

whatever I have studied about the firm. I have tried my best to present the true picture of the

firm.

Garima Aggarwal

52
 ACKNOWLEDGEMENT

NO Great Endeavour is any field is possible in solitude .It needs inspiration guidance and
help at every step. So we must preface our report by expressing sincere and deep
gratitude to those who made it possible for us to complete any project work.

First of all, we bow our head in gratitude to God for his blessings. It is our Pleasant duty
to place on record our sincere thanks to the worthy and honourable owner and manager
Mr. Parkash Jindal encouraging and liberal facilities during the course of our study.

It gives us immense pleasure our profound sense of gratitude and indebtedness to our
major advisor Mr. Rajan Jindal (Co-Owner) for the valuable guidance, support and
cooperation extended to us during the course of the study.

We are thankful to other lecturer of our department Mrs. Aman for giving their valuable
suggestions.

Sincere thanks to the respondents who extended their cooperation by providing the
information for this study and for showing interest in our research.

We shall be falling in our duty if we don’t thank many others who directly or indirectly
helped us.

I am highly indebted to Jindal Zippers for their guidance and constant supervisions as
well as for providing necessary information.

I would like to express my gratitude towards my parents and member of Jindal Zippers
for their kind co-operation and encouragement.

GARIMA AGGARWAL
53
 EXECUTIVE SUMMARY
This project report on Purchase management of Jindal Zippers deals with manufacturing of
trading of wide range of CFC Zipper, Vislon zipper, Alumnium Zipper etc.. This report basically
throws light on purchase management.

I had analyzed various methods, tools and techniques to know purchasing of raw material of the
company.

Through analysis of schemes adopted by the firm, solutions are recommended so as to take
efficiency decision for making firm more effective and efficient.

Here is the chapter wise description of the various topics covered under the project report.

Chpater1 includes the topic in relation to the introduction of purchasing management and
material management.

Chapter2 includes the Company Profile of the Jindal Zippers. It includes the Introduction of the
company, Product description.

Chapter3 includes the literature review in relation to the purchase management.

Chapter4 includes the research methodology. It includes meaning of research methodology,

method of purchasing and tools and techniques applied by the company.

Chapter5 includes data analysis and interpretation. It contains the data analysis of vendors,
suppliers, collected from the firm and MRP Tables of Jindal Zippes.

Chapter 6 includes findings and recommendations and conclusion. A conclusion is the final
section of a report in which you have to tie together what was presented in the report, summing
up the main point, explaining how the report was proven and successfully closing the discussion.
Through comparing and analyzing the existing literatures about the objectives global sourcing
and partnership relationships with supplier within the purchasing management.

54
 TABLE OF CONTENT

CHAPTER NO. PARTICULARS PAGE NO.

CHAPTER-1 INTRODUCTION 1-13

1.1 Purchasing Management

1.2 Importance Purchase Management
1.3 Purchasing activities
1.4 Types of purchases
1.5 Purchase cycle
1.6 Characteristic of purchasing management
1.7 Material management
1.8 Classification of manufacturing material
1.9 Objectives of material management department
1.10 Features
1.11 Risk to be considered by purchase management
1.12 Workflow
1.13 Benefits
CHAPTER-2 COMPANY PROFILE 14-21

CHAPTER-3 REVIEW OF LITERATURE 22-26

CHAPTER-4 RESEARCH METHODOLOGY 27-31

3.1 RESEARCH DESOGM

3.2 OBJECTIVES

3.3 SAMPLING DESIGN

3.4 POPULATION AND SAMPLE SIZE

3.5 DATA COLLECTION

3.6 METHODS

3.7 TOOLS AND TECHNIQUES

CHAPTER-5 DATA ANALYSIS AND INTERPRETATION 32-42

CAHPTER-5 FINDINGS, SUGGESTION AND CONCLUSION 43-47

REFERENCES 48-50

55