Performance evaluation of purchasing function Different ratios and indexes are following Material Cost Indexes 1. Material cost index = material cost for a product production cost of the product 2. Material cost/sales index = material cost of each product sales value 3. Material variance index = value of material actually used value of standard material quantity Vendor Rating Index 1. Vendor rating index ( Quality) = no of lots rejected no of lots received 2. Vendor rating index ( Delivery) = delivery on schedule total no of deliveries 3. Vendor rating index ( Price ) = lowest price bid price bid by vendor 4. Overall Vendor rating = vendor rating ( quality ) x f + vendor rating (delivery)xf+vendor rating ( price ) xf where f is a constant factor Material planning Index : 1.Price variance index = standard price- actual price standard price 2. Lead Time Index = Average lead time this year Average lead time last year Efficiency Indexes 1. Manpower strength = Total staff in purchase total company staff Negotiation effieciency = actual price paid by the organisation market price

Inventory and stores Weeks inventory on hand = material in stock Weekly consumption Inventory turnover ratio ( finished good ) = annual sales average inventory Inventory turnover ( Raw material )= annual consumption average inventory Production loss due stock out = production loss due to unavailability total scheduled production line Stores index Handling cost index = total handling cost total value of material received and issued Handling loss index = total value of losses due to handling total value of material recd and issued Storage loss index = value of inventory loss due to pilferage ,obsolescence average value of inventory Obsolescence index = value of non - moving items in inventory total inventory value Space Utilisation index = aArea used for storage total storage area Codification index = no of items codified total number of items Freight = lowest rate bid for freight rate paid Vehicle capacity utilisation = total load shipped capacity x no of trips uation of purchasing function Different ratios and indexes are following Material Cost Indexes 1. Material cost index = material cost for a product production cost of the product

2. Material cost/sales index = material cost of each product sales value 3. Material variance index = value of material actually used value of standard material quantity Vendor Rating Index 1. Vendor rating index ( Quality) = no of lots rejected no of lots received 2. Vendor rating index ( Delivery) = delivery on schedule total no of deliveries 3. Vendor rating index ( Price ) = lowest price bid price bid by vendor 4. Overall Vendor rating = vendor rating ( quality ) x f + vendor rating (delivery)xf+vendor rating ( price ) xf where f is a constant factor Material planning Index : 1.Price variance index = standard price- actual price standard price 2. Lead Time Index = Average lead time this year Average lead time last year Efficiency Indexes 1. Manpower strength = Total staff in purchase total company staff Negotiation effieciency = actual price paid by the organisation market price Inventory and stores Weeks inventory on hand = material in stock Weekly consumption Inventory turnover ratio ( finished good ) = annual sales average inventory Inventory turnover ( Raw material )= annual consumption average inventory

Production loss due stock out = production loss due to unavailability total scheduled production line Stores index Handling cost index = total handling cost total value of material received and issued Handling loss index = total value of losses due to handling total value of material recd and issued Storage loss index = value of inventory loss due to pilferage ,obsolescence average value of inventory Obsolescence index = value of non - moving items in inventory total inventory value Space Utilisation index = Area used for storage total storage area Codification index = no of items codified total number of items Freight = lowest rate bid for freight rate paid Vehicle capacity utilisation = total load shipped capacity x no of trips more on purchasing functions - purchasingdesk.com