Page 49 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes 4.4 Purchase Parameters – Eight Rs of Purchasing

Scientific Purchasing is not a mere procurement of needed materials at the lowest price but
procuring them in a way that minimizes the overall cost of the product. To ensure this, scientific
purchasing is governed by eight well known parameters called Basic elements of scientific
purchasing or also called Principles of purchasing or “simply’ 8Rs buying”-Right Quality, Right
Quantity, Right Price, Right Time, Right Source, Right Place of Delivery, Right Procedure and
Right Contract.

1. Right Quality: Quality of a product is measured in terms of its design, chemical
composition, heart treatment, surface treatment, manufacturing process, mechanical and
electrical properties, workmanship, etc. Two distinct but closely inter related aspects of
quality are quality of design or quality of conformance.

Quality of design for purchased items refers to the quality specified by the company’s
design department in the form of specifications while quality of conformance refers to the
extent to which the goods and services purchased compiles with the specification laid
down.
To determine the quality of conformance of purchased items, sampling plans are used.
Different methods of providing quality specifications are – brand or trade name, commercial
standard, performance standard, blue print, samples, etc.

Figure 4.1: 8Rs of Purchasing

1. Right Quality Rejections
8. Right contracts Right Material value
and Specifications
Legal aspects analysis standardization

7. Right Procedure

6. Right Transportation 2. Right Quantity EOQ
cost Analysis of Right attitude inventory Models
transportation & 8R’s of Purchase

Logistics Parameters

3. Right Price Negotiation
5. Right Source 4. Right Time learning curve

Vendor rating Re-order point

Purchase Research Lead time

Source: R. Punitha (2008). "Materials Management". Excel Books Pvt. Ltd.
2. Right Quantity: Right quantity is yet another important parameter in buying. Quantity
decision is influenced by “Relationship methods” and “Buying methods”. Replenishment
method such as reorder level, “two-bin system”, “review system-optional replenishment”,
and “review system compulsory replenishment” help to provide broad guide lines.

Example: Order quantity under first three replenishment system is fixed and is generally
the economic order quantity, yet the same might have been modified in the light of constraints.
However, the reorder quantity under the fourth system (i.e. review period-compulsory

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