The purchasing area planning process begins with the information from the annual sales, production and economic forecasts in general.
The Sales Forecast will provide a total measure of the material requirements, products and services that must be purchased by the purchasing department.
The Production Forecast will give information about the location where materials, products and services in general will be required.
The Economic Forecast will provide information on general trends in prices, wages and other external costs.
• Once having a general forecast of each one, monthly and semi-annual estimates will be made comparing with inventory and warehouses.
• Once the goals and objectives of the purchasing department have been analyzed, followed by the action and resource forecasts to achieve them, Budgets are developed and made, which are divided into the following:
Budgets for the purchase (production) of Materials.
This process begins with an estimate of production with forecasts and sales plans:
• The production schedule establishes the number of units to complete and the quantity plan to be purchased is developed.
• The purchasing department multiplies the quantities purchased by the anticipated purchase price to arrive at the total budget subdivided in the production period.
• Quantities are adjusted for planned changes in inventories.
MRO budget
In order to supply maintenance, repair and operation, this purchasing plan is based on using the proportions of material purchased previously, cost of merchandise, adjusted for anticipated changes in inventory and general price increase levels.
Capital budget
This budget plan is supported by company strategies related to production lines, market segments and new businesses. Production needs, obsolescence of current equipment or new technologies, expansion plans, etc. are taken into account.
Administrative budget for purchases
The planning of this budget is based on wages and salaries; space costs, including electricity, light, air conditioning; costs all office furniture and equipment, etc.
