PRODUCTION &

PURCHASE PROCESS

-ROHAN V. MOHITE

MEANINGPRODUCTION The processes and methods employed to

transform tangible inputs (raw materials, semifinished goods, or subassemblies) and intangible inputs (ideas, information, knowledge) into goods or services.

PURCHASE

Purchase is to obtain ownership of a security or other  asset in exchange for money or value also called buy.

Now we are going to understand their procedure as to how it is carried on in companies/factories further…..

THE PROCESS

OUTPUT FROM PRODUCTION

INPUT TO PRODUCTION

WORK ORDER

BILL OF MATERIAL

PURCHASE

GOODS RECEIPT

PURCHASE ORDER

PURCHASE INDENT

PURCHASE• PURCHASE INDENT It is a document used in purchase process

where seller sends buyer a quotation regarding the goods to be purchased as the buyer’s open enquiry with the product’s details such as it’s price, quantity, etc.

The details to be filled in the Purchase Indent include as follows-

Date, name of the indentor, type, budget, year, details of item with specifications, signatures of respective persons.

PURCHASE ORDER After a Purchase Indent is accepted by a buyer, the

buyer issues a Purchase Order which is a legal offer by the buyer to the seller as for Purchase. The seller has also to acceptsuch document without which the order stands cancelled.

The Purchase Order includes the following details to be filled in it-

Date, address of both co.s, validity, items with the requirement and their details as to how much is required, terms and conditions by buyer, mode of payment …

GOODS RECEIPT The seller receives the Purchase Order it becomes a

Sales Order for the seller. As a purchase Order is received by the seller, the seller if

accepts the order, then Goods Receipt is created to end the Order process.

The details filled in the note include as follows- Supplier’s name; Supplier’s A/c no.; date; details of items as

quantity ordered, description…

PURCHASE As the process-Purchase Indent, Order, Goods Receipt,

the final step is to purchase the goods i.e. to acquire the ownership of items/goods, after the mode of payment and delivery terms.

This Purchase Document includes or is a compilation

of the previous process i.e. it has all the information from buyer to seller, their details; the goods description with its details, rule followed (MODVATABLE, NON-MODVATABLE,..), DUE DATE OF Document, some additional information like batch no,etc., Excise duty is calculated & shown in this document, the main document shows the DECLARATION & TERMS AND CONDITIONS,..

BILL OF MATERIAL A BILL OF MATERIAL(BOM) is a list of the raw

materials, sub-assemblies, intermediate assemblies, sub-components, components, parts and the quantities of each needed to manufacture an end product.

It is prepared by the PLANNING Department. A BOM is a list as above, as in it, the materials are

recorded which are required to produce a finished product, which contains what is required and how much is required for a finished product to be produced.

For eg.- To produce a pen- how much plastic granules, refills,.. Is required and in what quantity. It is recorded in a BILL OF MATERIAL.

WORK ORDER A WORK ORDER is a order prepared by Planning

department for Production Department in order to produce Finished Product.

A Work Order is a document which is prepared to order to produce a specified quantity and as per the Bill Of Material.

A WORK ORDER is thus a document, which contains a product’s details with it’s quantity, rate, Bill Of Material,

amount calculation…

INPUT TO PRODUCTION This is a process where the factors of Production are

sent in the factory for producing the finished product.A document is created as a fact that materials are been changed and concentrated for output.

OUTPUT FROM PRODUCTION This is a process where the Finished Products are

been produced and thus there is a output of materials/inputs. A document is creaed as a fact that Finished goods are produced & thus ready for sales or delivery.

THANK YOU.