Purchasing and Financing 2024
Purchasing- and Financial Management For 2nd year CATS learners. Aligned to the outcomes of the German accredited certification: “Industrie Kaufmann/frau”.
Purchasing- and Financial Management
For 2nd year CATS learners.
Aligned to the outcomes of the German accredited certification: “Industrie Kaufmann/frau”.
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Quality<br />
Regarding quality, you must realise that it is not always the best quality that is needed as<br />
illustrated in the case below.<br />
When you manufacture toy cars <strong>and</strong> have to purchase little tires you would not buy tires<br />
made from the same material as Formula 1 tires or tires made out of rubber that is<br />
normally used for planes. Tires of normal rubber that lasts for two years would be good<br />
enough because the quality of the toy cars does not justify the use of expensive rubber.<br />
The proper quality means the quality that is required for the need <strong>and</strong> that is not always<br />
the best quality. It does not make sense to use screws that will last for 20 years when the<br />
other parts will only last for 3 years.<br />
Price<br />
Regarding price, you must realise that the quoted price doesn’t give the full information<br />
as there are different ways of payment <strong>and</strong> different price components that have an<br />
impact in the total amount that has to be paid at the end.<br />
Ask the following questions when you obtain a quotation for goods:<br />
o Do I have to pay before, on, or after delivery?<br />
o Are insurance costs included in the price?<br />
o Is delivery included in the price?<br />
o Does the quoted price include VAT?<br />
o Do I qualify for any cash or bulk discounts?<br />
EXAMPLE:<br />
You manufacture s<strong>and</strong>als for tourists visiting the Kruger Park. It is now mid October <strong>and</strong><br />
the main season will start at the beginning of December. The s<strong>and</strong>als are produced from<br />
leather in different sizes.<br />
The requirements for the leather are:<br />
1. The quality has to be good, according to SABS St<strong>and</strong>ard B<br />
2. They need 500 kg for the start <strong>and</strong> the option to re-order 100 kg from time to time.<br />
3. The total consumption is estimated at 1 000 kg.<br />
4. The first order must be delivered on 1 November <strong>and</strong> the rest at short notice.<br />
5. The total price must be competitive <strong>and</strong> he is prepared to pay cash.<br />
Option A<br />
Alpha Leather has the reputation of producing high quality (A). They always deliver 250kg<br />
bags in two days (guaranteed). There is no possibility to order less. The delivery costs are<br />
R50 <strong>and</strong> the price per kg is R5. There is a 5 % cash discount available.<br />
5
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