Requisition is one of the most significant aspects of an organization as an organization can’t fulfill the whole raw material need internally. Order of required raw material seems to be the most reliable option in such situations. Sometimes, companies get a better deal by purchasing.
Earlier, it was easy to handle orders just by purchasing. Nowadays, it is difficult with the changing conditions and increases in competition.
Some of the other factors which influence the decision of purchasing department are:
- Affirmation of sellers’ accreditation
- An examination of the quality of material
- Assessment of various costs related to the raw material
Purchasing department creates a network of sellers and shares the information with other departments.
The purchasing department is responsible for ordering raw materials and equipment from a reliable source at the appropriate time.
Significance
The significance of requisition is out to test with the selection of raw material to make it into finished goods. The quality of the raw material is crucial for the organization to have finished goods.
The decision of the selection of the item should be aligned with the fulfillment of these criteria:
- If the company is looking for a solution in the external market, the cost of acquiring should be less than in-house manufacturing.
- Sometimes, the company does not have the resources to manufacture the raw material. This leads to the need for an external market.
- Sometimes, storage of goods is not possible for the organizations. Buying seems to be a better option than storing it.
Duties of the organization:
The organization plays the most significant role to achieve the set goals.
Ordering of raw material needs a lot of attention as the finished product is dependent on the quality.
Organizations create a process to have a check on the production.
Managing the different departments of the organization:
Organizations on a large scale want to manage their resources as efficiently as possible.
It is necessary to have the whole process in a synchronized way.
When an organization wants to start a new establishment like a factory, they want to open a factory near the old establishment.
An organization looking forward to acquiring a warehouse wants the warehouse to be near their showroom as it reduces the transportation cost and helps fulfill the demand quickly.
Availability of supplies:
Availability of supplies is another aspect in determining the purchase of raw material.
The organization needs to identify their requirement, as for the organization dependent upon technology, they need to have skillful labor.
Whereas the organizations depend upon more labor-driven, work needs to have unskillful personnel.
The organization needs to have the cost element in its mind as per the requirement. The cost of resources mainly changes with the change in availability and nature of the task.
Expenditure:
Expenditure is yet another aspect while deciding the purchases.
A business looking forward to manufacturing the product wants to have some equipment that provides value to the organization.
An organization can have two types of expenditure while selecting the pieces of equipment. Either it could be the price of the equipment acquired or as an expense in the form of rent.
Companies looking forward to the long-term Operations and are not willing to commit hefty amounts to acquire the place can take the lease route.
Assistance:
Businesses need some assistance for the proper functioning of the organization.
Each industry requires a Different set of facilities.
For example, A manufacturing unit wants services like premises, water.
Extension:
Preparing for the long-term goal helps to future-proof the business.
While manufacturing the finished goods, organizations should also think about the expansion factor.
Organizations should evaluate the room for expansion as prior planning for the growth helps to save a lot of money and
resources in the future.
For example, if someone is investing in premises, it is a viable option to purchase that machine with the future aspects.
Purchasing premises with a single-story establishment will be great for future-proofing.
Welfare:
Those organizations working with an element of risk for employees should prepare the safety measures.
To safeguard the employees’ interest, organizations should take care of the safety of employees working with the machines.
They should follow all the precautionary measures like updated machines and tools. Organizations should prepare funds for future uncertainties.
