Direct material cost budget (budget for the procurement of basic materials and inventories)

Having data on the volume of production, you can begin to develop a budget for direct material costs.

The budget of direct material costs and material values ​​in its content includes three components:

• ? budget (estimate) of basic materials (need);
• ? material inventory budget at the beginning and end of the budget period;
• ? material procurement budget.

They are interconnected: the estimate of the requirements for basic materials serves as the basis for the procurement plan for materials, stocks of materials are an integral part of the procurement plan, all together are used to justify the production program.

To draw up an annual budget for direct material production costs, the following information is needed:

• 1) the volume of production in units (pieces, meters, kilograms, sets, etc.);
• 2) the amount of materials required for the manufacture of a unit of production (consumption rate);
• 3) the unit cost of each type of material.

With the help of this information, the normative direct material costs for the production of a unit of output are determined, which, in turn, establish the budgetary level of direct material costs and are the basis for developing the budget for the procurement of direct (basic) materials.

According to the conditional example, the required amount of basic materials for the production of furniture was calculated (Table 7).

When drawing up a budget (estimate) of direct material costs, they proceed from the invariability of the rates of consumption of materials and prices for them. If these parameters change during the budget period, the estimates are recalculated.

Sometimes managers need to know the specific volume of materials, taking into account possible losses. Inclusion in the budget of the expected losses of raw materials and materials allows you to control the level of real losses, and, if it exceeds the budget, promptly take measures to prevent overspending.

Table 7 Estimated direct costs of materials in 200X

* The cost of the material includes the purchase price and transport and procurement costs (TRC) 10% to the purchase price.

The Material Usage Budget serves as the basis for budgeting for the procurement of materials. To budget for the procurement of materials, it is necessary to provide for the formation of carry-over stocks of materials at the end of the budget period, and when budgeting, make an adjustment for the level of initial stocks (that is, stocks at the end of the current period).

Production stocks for the purposes of planning material requirements are divided into current, preparatory and insurance (reserve).

The current stock is necessary to provide production with materials for the period between two successive deliveries (the timing and frequency of deliveries are negotiated in the contract with the suppliers of raw materials and materials). It is determined for equal deliveries as the product of the average daily material consumption by the time interval between two successive deliveries:

Preparatory stock is created at the time of unloading materials, quantitative and qualitative acceptance, preparation for use. Its value is determined by the conditions of production, types of materials, organization of storage facilities.

Taking into account stocks of materials at the beginning and end of the planned (budget) period, there is a balance dependence between the volume of purchases of materials and its required (consumption) quantity:

Hence the amount of materials that must be procured in the budget period:

In a conventional example, the direct material cost budget is shown in Table 8.

A number of factors must be taken into account when preparing a procurement budget, such as price increases, discounts, commercial loan terms, possible substitutes for materials, exchange rates, etc.

Sometimes budgets for the use and procurement of materials can be drawn up in the form of a single document. But if several types of materials are used in production (a large range of materials), the budget loses its analyticity, the effectiveness of the budget control function decreases.

The sequence of budgeting direct material costs:

• 1. Determine the most important types of raw materials and materials required for the production of products.
• 2. Calculate the consumption rates of raw materials and materials per unit of products to be manufactured, or for the entire volume of sales in accordance with the share of direct material costs.
• 3. The projected changes in the structure of direct material costs (due to changes in the rates of consumption of materials, prices for any types of raw materials and materials) must be adjusted in the corresponding month of the budget period.
• 4. Other direct costs of materials are determined using the rate in rubles per unit of production and the planned volume of sales in each month of the budget period.

In the conventional example, to simplify calculations, other direct material costs are not included.

Table 8 Budget of direct costs of materials for 200X year

Note:

• * data taken from the estimate for materials, taking into account 1% inflation per month (table 7).
• ** account for 50% of the material requirements for the next month.
• *** is equal to the ending stock in the previous month.

The procurement budget contains information on financial and economic indicators that characterize the efficiency of the Procurement business process. Depending on the complexity of the organization of this business process, the structure of the procurement budget is also selected.

It can be one budget, or it can be a whole set of budgets. If the company deals with almost all purchases in one department, then there may be one procurement budget. If several departments are involved in the "Procurement" business process, then you can divide it into several budgets, which will speed up the preparation and approval of the procurement budget, since the components of this budget could be prepared and agreed in parallel.

This logic can also be used. Regardless of the organizational distribution of the Procurement business process between departments, it is possible to allocate a budget for the procurement of raw materials (for a manufacturing company) and a budget for procurement of goods (for a trading company and a manufacturing company that sells commercial products).

An example of a possible structure for a procurement budget is presented in picture 1... This focus on purchasing is easy to explain. As a rule, in most companies in the procurement area there is a large margin for improving efficiency by optimizing procurement costs. By adjusting the work on the "Supply" business process, it is possible to more clearly control the main two parameters, namely the volumes of purchases and prices, and this can be done in all areas of procurement (from raw materials and materials to purchases to ensure the work of the office).

Fig. 1. Example of a procurement / supply budget structure

In addition to optimizing procurement costs, naturally large reserves can be in strengthening control over the procurement business process. Everyone knows that in this area it is easiest for the company's employees to organize themselves "additional motivation" and thereby sharply reduce the company's financial results. Therefore, strengthening procurement control will significantly reduce such cases.

The budget for the procurement of raw materials and materials contains part of the information on financial and economic indicators characterizing the "Supply" business process, namely, that part of it that relates to the procurement of raw materials and materials for the production of products. The budget for the procurement of raw materials and supplies allows you to control, as a rule, the most significant part of the costs at a manufacturing enterprise. This budget allows you to manage both the volume of purchases and the price factor.

The budget for the procurement of raw materials and materials may contain the following groups of indicators characterizing the efficiency of the "Supply" business process in terms of procurement of raw materials and materials:

volume of purchases;

average price;

the total cost of purchasing raw materials and supplies;

the share of prepayment contracts in the total volume of purchases;

turnover of raw materials and supplies;

accounts receivable turnover;

accounts payable turnover;

stocks of raw materials and supplies;

execution of the procurement budget in physical terms;

execution of the procurement budget by amount (price factor);

the number of hours of downtime (breakdowns of the production schedules) due to the lack of raw materials and materials;

number of premature / late deliveries;

payments of funds.

The budget for the procurement of raw materials and supplies should always require very close attention. Very often in the cost of production, the cost of raw materials and materials occupy the bulk (up to 80%). Naturally, reducing the cost of raw materials and materials by at least 1% can make a significant contribution to increasing the company's profits. Conversely, an increase in this cost item by 1% significantly reduces the company's financial results.

In a situation where there are a large number of suppliers with different delivery conditions, it can be very easy for procurement staff to justify the price at which they purchased raw materials and supplies. Thus, a situation arises when the supply department is very tempted to obtain additional external motivation for its work from suppliers.

In addition, the lack of management accounting at enterprises often contributes to the fact that, as they say, "catching the hand" in such a situation is very difficult. Unfortunately, there is no absolutely correct recipe that could help in such a situation. One should try to use all known methods.

Perhaps, even if you use them all at once, it will still not be possible to get a 100% guarantee of overpricing, but, nevertheless, to some extent the situation can be corrected. First of all, you need to start keeping records of prices for raw materials and materials. If the number of purchased items is very large, then you need to use a well-known principle and first of all focus on those items that have the largest share in the total volume of purchases. In this case, you will need to follow this rule.

When considering the procurement plan, which must include purchase prices, any price increase must necessarily raise suspicions in the financial department. The supply department should give a fairly detailed explanation of why they have pledged price increases. After the budgets are approved, it is necessary to track them when submitting applications for procurement financing. For some reason, prices may suddenly rise even at this stage.

Note: For more information on using the procurement / supply budget in company management, see Part I "Budgeting as a management tool" workshop Alexander Karpov.

Procurement / supply budgeting regulations

As you know, through a clear control of procurement budgets, you can manage quite effectively a significant part of the company's costs. It is clear that you need to control two main parameters of the procurement budget. These are volumes and prices. To control volumes, you need to use a system of standards and restrictions. If the company does not have such a system of standards and restrictions, it will be difficult to control the procurement budget, which means that the company may incur completely unnecessary costs, but it will not be able to influence this situation.

And besides, you still need to understand that the costs are overstated and determine how they can be reduced. Controlling prices is even more challenging. There is no longer such a general recipe as in the case of volume control, so companies try various options in practice and settle on the option that best suits their conditions. Some companies do not stop at just one option, but use several and are constantly looking for more and more new ways so that the company does not get used to the methods that are currently used.

It is necessary to pay attention to one important point when forming the procurement budgeting regulations and linking it with the responsibility system. In all companies, of course, responsibility for performing procurement functions can be divided in different ways. In small companies, all purchases can be carried out by one department or even one person.

In medium and large companies, the procurement department is most often engaged in the procurement of raw materials and materials (or goods, if we are talking about a trading company). With regard to the procurement of materials for auxiliary production, this can be handled by the services of the chief engineer. The procurement of materials for the maintenance of transport can be handled in the transport department. By purchasing office equipment, information department, etc. Thus, several departments can participate in the procurement. Accordingly, when forming procurement budgets and budgets of the Central Federal District, this fact must be taken into account and the budgeting regulations must be built taking into account this moment, since everyone who is engaged in procurement has a significant impact on the financial and economic condition of the company.

Most often, the functions of purchasing raw materials and materials are assigned to the department of material and technical supply, therefore, as a rule, the budget for purchasing raw materials and materials is drawn up in this department. But in practice, different situations can occur. For example, at an enterprise operating in the veterinary equipment market, the situation with regard to the procurement of raw materials and materials was as follows.

Since the products were so, so to speak, intellectually intensive, the purchase of raw materials also required high qualifications. Therefore, the choice of raw materials and suppliers was carried out by the heads of laboratories, and OMTS in this part actually performed technical functions to ensure the supply of raw materials from those suppliers who were chosen by the managers.

If we talk about non-compliance with budgeting regulations and, in particular, delays, procurement budgets are often delayed longer than other budgets. This is due to the fact that they are in the last place in the sales-production-supply chain.

When determining the responsibility for drawing up a budget for the procurement of raw materials and materials, the question necessarily arises of how these functions should be distributed between the procurement department and PEO. Here the question arises as to whether there should be an economist in the supply department or he should be in the PEO. Obviously, extremes will clearly be ineffective.

When the budget for the procurement of raw materials and materials is drawn up without the participation of the procurement department, this, firstly, contradicts the principle of decentralized planning, and secondly, after all, it is procurement managers who do the real work with suppliers, so they know these markets better than PEO specialists.

When the budget for the procurement of raw materials and materials is drawn up without the participation of PEO, this, firstly, will increase the likelihood of its inconsistency with the production budget. Communication between specialists from one department is much more streamlined than between specialists from different departments, and since if the production budget is formed in the PEO, then the PEO specialist who prepares the budget for the procurement of raw materials and materials will be able to clarify some points with his colleague at any time for work.

Another important point that must be taken into account when forming the budgeting regulations for the procurement of raw materials and materials is the accuracy of the prepared production budget. It is clear that the procurement schedules for raw materials and materials are built on the basis of production schedules, that is, you need to know what kind of raw materials and materials, in what volumes and in what time frame the production management will need to fulfill the production budget.

Unfortunately, it often happens that the production management does not take real part in the budgeting process. The production director can formally sign production plans, but at the same time he does not even think to follow them. Production planning will work as before according to the situation. But such situational management can lead to serious problems for the company. These problems are mainly related to the fact that either the necessary raw materials will not be in the warehouse, or, on the contrary, the warehouse will be filled up with raw materials, in which there is currently no need for such volumes.

An example of a budgeting procedure for the procurement of raw materials and supplies

An example of the main functions that can be performed within the framework of budgeting for the procurement of raw materials and materials in the planning phase (see. Rice. 2):

planning the balance of raw materials and materials at the beginning of the planning period;

planning the balance of raw materials and materials at the end of the planning period;

planning the volume of purchases of raw materials and supplies;

budgeting for the procurement of raw materials and supplies;

coordination and adjustment of the procurement budget for raw materials and supplies;

preliminary approval of the procurement budget for raw materials and supplies.

Fig. 2. An example of a budgeting procedure for the procurement of raw materials and supplies (at the planning phase)

An example of the main functions that can be performed within the framework of budgeting for the procurement of raw materials and materials in the accounting, control and analysis phase (see. Rice. 3):

preparation of factual information on the procurement of raw materials and supplies;

preparation of the actual budget for the procurement of raw materials and supplies;

analysis of budget execution for the procurement of raw materials and supplies;

coordination and approval of the results of the analysis of the budget for the procurement of raw materials and materials.

Fig. 3. An example of production budgeting regulations (at the phase of accounting, control and analysis)

Note: more details about the procurement / supply budgeting regulations can be found in Part II "Regulation of the budgeting system" workshop "Budgetary Enterprise Management" conducted by the author of this article - Alexander Karpov.

Purchase / supply budget model

As noted above, the procurement budget can actually consist of several budgets (see. Rice. 1). There are two reasons for this division. First, different departments can be responsible for the allocated purchases (although one department can also do this), and there can be many of them, which will lead to a complication of the procurement budget preparation procedure.

If he is not prepared in time, then, as a rule, you will not find the culprit. Or for this it will be necessary to prescribe a rather complex procurement budgeting regulation (see Book 2 "Regulation of the budgeting system"). Secondly, such a division will allow building a more accurate financial budgeting model, which will help to get better budgets, which means that it will be possible to increase the degree of control over the company's financial and economic condition.

It should be noted that in some companies procurement budgets are differentiated not only in different functional areas, but also broken down into current and investment ones. The point is that the company can draw up a separate budget for the purchase of fixed assets, on the basis of which the budget for fixed assets is formed. The latter can be used to calculate depreciation and property tax.

When developing a procurement model, it is again necessary to take into account the complexity of the Procurement business process itself. Indeed, one of the main goals of developing a model is to obtain a mechanism for managing a budgeting object through a system of financial and economic indicators based on the corresponding budgets. Thus, when creating a procurement budgeting model, it is desirable to have a description of the Procurement business process.

It is clear that for a manufacturing company, the cost of purchasing raw materials and supplies may constitute the most significant part of the total procurement budget (excluding purchases of fixed assets, within the framework of investment projects). Therefore, it is necessary to approach very seriously the development of a budget model for the procurement of raw materials and supplies. Naturally, in this case, it is desirable to apply the standards for the remains of raw materials and materials. Such logistic standards, along with production standards for the consumption of raw materials and materials per unit of production, will significantly increase the efficiency of managing the business process of purchasing raw materials and materials.

Logistic standards for residuals can be determined for each group of purchased items. This may be due to the dynamics of price increases, a system of discounts depending on the volume of purchases, the stability of suppliers, delivery times and other factors affecting the business process of purchasing raw materials and supplies. The very values ​​of the standards for the remainder of raw materials and materials at the end of the period can be determined, for example, as a percentage of production requirements in the next period.

So, when drawing up a budget for the procurement of raw materials and materials, the volumes are determined according to the standards, and for planning the purchase prices, you will have to use some less formal mechanism. Of course, a fairly simple model can be used for this. For example, purchase prices can be budgeted based on the analysis results obtained after processing statistical information. In this case, indeed, the model of the budget for the procurement of raw materials and supplies will be fully formalized.

When developing a financial model, and then when drawing up budgets, you need to remember that, after all, budgeting is a management system, and not just a mechanism for calculating budgets. Therefore, when planning financial and economic indicators and purchase prices, in particular, it is necessary to include the target factor. That is, prices may depend not only on external factors, but also on internal ones, in particular, on the efficiency of the procurement department. In some companies, by the way, planned purchase prices are used in the motivation scheme of the supply department, motivating it to reduce the planned price level while maintaining the quality of purchased raw materials and supplies and meeting the delivery schedule (see Book 4 "Financial structure of the company").

Example of a budget model for purchasing / supplying raw materials and supplies

In this example of a budget model for the procurement of raw materials and materials, data on planned production volumes, rates of consumption of raw materials and materials (in physical terms), rates of balances of raw materials and materials, as well as planned purchase prices are used as input information (see. Tab. 1). Another input parameter is the incoming balances of raw materials and materials, that is, stocks at the beginning of the planning period.

With the planning of all incoming balances of the balance, as already noted, there can also be serious problems. In this case, the balances of raw materials and materials at the beginning of the planning period are planned on the basis of the last year's budget, actual information on its implementation, as well as forecasts based on more accurate information about the influence of factors that were taken into account when drawing up a budget for the procurement of raw materials and materials.

Table 1. Example Example of a consolidated budget for procurement of materials

Budget item
Production volume (units)
	product 1	45 472	3 525	3 661	3 782	3 925	3 408	3 177	2 858	2 799	4 082	4 402	4 733	5 120
	product 2	49 084	3 737	3 881	4 002	4 145	3 628	3 397	3 078	3 039	4 502	4 827	5 208	5 640
	product 3	42 160	3 293	3 441	3 562	3 705	3 188	2 957	2 638	2 559	3 662	3 987	4 368	4 800
	product 4	38 538	3 071	3 221	3 342	3 485	2 968	2 737	2 418	2 319	3 242	3 562	3 893	4 280
	product 5	5 158	0	0	0	0	0	74	738	709	622	752	983	1 280
The volume of materials for production (units)
	Material 1		48 372	50 374	52 068	54 070	46 832	43 746	36 547	35 680	51 041	55 334	60 190	65 844
	Material 2		48 806	50 814	52 508	54 510	47 272	44 260	37 607	36 750	52 357	56 776	61 930	67 932
	Material 3		46 576	48 614	50 308	52 310	45 072	41 986	34 963	33 952	48 017	52 310	57 166	62 820
	Material 4		47 010	49 054	50 748	52 750	45 512	42 500	36 023	35 022	49 333	53 752	58 906	64 908
	Material 5		2 725	2 841	2 938	3 052	2 638	2 491	2 311	2 248	3 068	3 358	3 719	4 147
Desired stock of materials at the end of the period (units)
	Material 1	13 169	10 075	10 414	10 814	9 366	8 749	7 309	7 136	10 208	11 067	12 038	13 169	13 169
	Material 2	13 586	10 163	10 502	10 902	9 454	8 852	7 521	7 350	10 471	11 355	12 386	13 586	13 586
	Material 3	12 564	9 723	10 062	10 462	9 014	8 397	6 993	6 790	9 603	10 462	11 433	12 564	12 564
	Material 4	12 982	9 811	10 150	10 550	9 102	8 500	7 205	7 004	9 867	10 750	11 781	12 982	12 982
	Material 5	829	568	588	610	528	498	462	450	614	672	744	829	829
Desired stock of materials at the end of the period (thousand rubles)			1 698	1 790	1 897	1 673	1 595	1 380	1 371	1 980	2 196	2 448	2 745	2 800
Stock of materials at the beginning of the period (units)
	Material 1	8 484	8 484	10 075	10 414	10 814	9 366	8 749	7 309	7 136	10 208	11 067	12 038	13 169
	Material 2	8 484	8 484	10 163	10 502	10 902	9 454	8 852	7 521	7 350	10 471	11 355	12 386	13 586
	Material 3	8 484	8 484	9 723	10 062	10 462	9 014	8 397	6 993	6 790	9 603	10 462	11 433	12 564
	Material 4	8 484	8 484	9 811	10 150	10 550	9 102	8 500	7 205	7 004	9 867	10 750	11 781	12 982
	Material 5	485	485	568	588	610	528	498	462	450	614	672	744	829
Stock of materials at the beginning of the period (thousand rubles)		1 419	1 419	1 698	1 790	1 897	1 673	1 595	1 380	1 371	1 980	2 196	2 448	2 745
The volume of purchases of materials (units)
	Material 1		49 963	50 713	52 468	52 622	46 215	42 306	36 374	38 752	51 899	56 305	61 321	65 844
	Material 2		50 485	51 153	52 908	53 062	46 670	42 929	37 436	39 871	53 240	57 806	63 130	67 932
	Material 3		47 815	48 953	50 708	50 862	44 455	40 581	34 761	36 765	48 875	53 281	58 297	62 820
	Material 4		48 337	49 393	51 148	51 302	44 910	41 205	35 823	37 884	50 216	54 782	60 106	64 908
	Material 5		2 809	2 860	2 960	2 969	2 609	2 455	2 298	2 412	3 126	3 430	3 804	4 147
The amount of costs for the purchase of materials (thousand rubles)		115 027	8 393	8 716	9 202	9 414	8 422	7 889	7 002	7 575	10 274	11 407	12 733	13 998
material stocks standard		20%

Note: not always procurement of materials or goods can be carried out in any volume. In some cases, purchases can only be made in large quantities, and discretion in purchases can be very significant for the company. For example, it may be of great importance for a company to purchase 2 or 3 containers, because the financial and economic condition of the company may significantly depend on this. In this case, you have to choose some kind of compromise solution, taking into account, on the one hand, the need for a resource, and on the other hand, limited financial resources. An example of such a procurement budget model can be found in the article "Discrete procurement budget model".

So, based on the data on the planned production volumes, the demand for materials is calculated using the technological matrix, which determines the standards for the use of materials for the production of products.

Next, the stocks of materials at the end of the period are calculated. For this, stock standards are applied. In this case, it is a certain percentage of the material requirements for production in the next period. The percentages can be different for each material.

Then, using a simple balance ratio, data is obtained on the planned quantities of purchases of materials. To do this, add stocks of materials at the end of the period to the amount of materials required for production, and subtract stocks of materials at the beginning of the period.

In addition to volumetric indicators, it is necessary to calculate cost indicators. This must be done in order to plan the payment of funds for the BDDS, as well as to obtain data on the cost of stocks of materials for the consolidation of BBL. To do this, you need to use information about the purchase prices for materials.

V table 1 in fact, the summary budget for the procurement of materials is presented. This model takes into account that a company can purchase the same materials from different suppliers and on different terms. Moreover, the terms mean not only the cost, but also the payment schedule. The model also includes the ability to take into account price dynamics for each supplier. In this example, the company is considered to be purchasing materials from three vendor groups.

Besides the fact that they have different prices, each group of suppliers needs to pay on a different schedule. The first group of suppliers needs to make a 50% advance payment, and pay the remaining 50% at the time of delivery of materials. The second group of suppliers must pay 100% at the time of receipt of materials. The third group of suppliers must pay 60% at the time of delivery, and 40% - next month.

Thus, a budget is drawn up for each supplier group, the format of which is very similar to the format of the consolidated procurement budget (see. Tab. 1). At the same time, the procurement structure for each group of suppliers is selected on the basis of which of the problems for the company is most urgent. For example, if it is liquidity, then the procurement structure is shifted towards those suppliers who provide a deferred payment, but at the same time ask for a higher price.

If, on the contrary, there is a problem with profitability (and with liquidity everything is in order), then materials are purchased more from those suppliers where the price is lower, but you need to pay earlier.

To calculate payments for each group of suppliers, a schedule is drawn up, similar to the schedule of receipts, which is formed when planning sales receipts (see Sales Budget).

Those. payments for current purchases are planned using collection ratios. To do this, the amount of costs for the purchase of materials for each month is divided in a certain proportion (in accordance with the collection rates), and the amounts received are recorded at the intersection of the corresponding procurement period (lines) and the payment period (columns).

The last article in the chart summarizes the payout data. This information is then fed to the BDDS. In the very first line of the graph, the values ​​of accounts payable are calculated. This is done according to a completely understandable formula: creditor at the end of the period = creditor at the beginning + purchases - payment. Accounts payable are reported to the BBL.

Note: For more information on the financial model of the procurement / supply budget, see Part III "Financial budgeting model" workshop "Budgetary Enterprise Management" conducted by the author of this article -

Procurement budgeting often used in wholesale trading companies that purchase goods to their warehouse. Usually Purchase Budget appears after approval Sales plan and definitions Standard stock.

The Annual Procurement Budget is usually approved in December for the entire next year. The monthly purchasing budget is adjusted monthly at the beginning of the current month for the amount of deviations between actual sales and planned sales in the previous month. The actual Purchase Budget may be less than the planned one if the actual sales were less than the planned level and vice versa, more than the planned one, when the actual sales exceeded the plan, as a result of which the warehouse with the goods became less than the standard value.

An example of adjusting the Purchase Budget taking into account the fact of sales, the situation at the beginning of May.

Analyzing the situation at the beginning of May, we still do not know how much the fact of sales in May will deviate from the plan. But we already understand that due to the excess of April sales over the plan, it is necessary to increase purchases in May by 12 units (from 60 to 72). Using the ABC-XYZ analysis, you can easily distribute the procurement budget into groups:

It would seem that everything is simple and fast, we do “order” = “budget”. However, firstly, in practice, with a wide assortment, situations inevitably arise when, for example, one of the items of the A_Y group (Item_5) is in short supply and requires an order. The warehouse forecast for items of the A_Y group (Item_4 + Item_5) exceeds the standard at the beginning of June by 10 units (69 + 15 - 15 - 15 = 54)> (16 + 28 = 44) and does not require an order, but a specific warehouse for one specific item Product_5 is in dire need of replenishment. Below is an example where, according to the calculation, we need to order 112 units, and the budget is allocated for only 72 units.

The situation when the "calculated" order according to the formulas differs from the planned procurement budget arises very often. And you need to make a choice: either an order for the budget or an order for the calculation. In such a situation, wholesale trading companies usually focus on the "Budget", that is, they adjust the calculated order (reduce 112 to 72), while retail stores and chains are more often guided by "calculation", that is, the real current need (they leave order 112, receiving an excess of the warehouse over the plan). This difference in approaches is caused by the fact that "retail" and "chains", as a rule, work with wholesale suppliers on terms of credit and fast delivery, having time to make a full turnover of the inventory during the loan. They are not interested in where the supplier will take the goods from, what stock of the warehouse is forced to keep to meet the needs of the networks, how long it takes for production and delivery. And in the absence of goods from a wholesale supplier, trading "networks" compensate for their risks with fines. The wholesaler, as a rule, has a tougher financial dependence, it is more difficult for him to "get" money for an unplanned purchase. In addition, it is often physically impossible for a wholesaler to deviate sharply from the annual purchase volume agreed with the manufacturer. He cannot drastically reduce the order, as he will lose bonuses. He may not always increase the order, since the amount of the loan is limited or the raw materials may not be available physically. Networks are faced with similar problems and the correction of the "calculated" order for the "budget" only in the case of working with the manufacturer-factory directly and are forced to choose the agreed volume of goods at a certain time. Also, the correction of estimated purchases in the networks is possible in case of low interest on the part of the supplier, when he works with them within the framework of an insufficient credit limit (the networks would buy more, but the supplier does not allow them).

So, the need for purchases (calculated order according to the formulas) is equal to 112 units of goods, and the budget is only 72 units, and we decided to reduce the estimated order “under the budget”, that is, to make it equal to the budget. How can this be done with minimal damage to yourself? I propose to proceed according to the following algorithm:

1. We replenish the stock to the level of monthly sales, first of all, in group A. The product of group “A” has more chances to be sold and its absence will have a stronger effect on the final sales. Inside A - first of all along X, then Y and Z.

Then we replenish the stock to the level of monthly sales in B, and then in C. "New items" without sales statistics in a budget deficit should be considered only after ordering at least a monthly demand for a product with fixed sales statistics.

1. Having achieved the "monthly" stock for all groups, proceed to bringing the "stock" to the standard. This should be done in steps, iterations. At the same time, group "A" at each iteration add more than group "B", and group "B" more than "C". For example, in proportions 3: 2: 1

The step-by-step drawing up of a settlement order for the budget looks like this:

The opposite situation may also arise, when the "budget" is greater than the calculated order. Oddly enough, the recommendations for bringing it to the budget are similar. It would be a mistake to use "extra" money to expand the assortment and increase the stock of new products (if this is not caused by the liquidation of OP positions). You will not be able to maintain a wide assortment all the time, and, having spent now the resource on new items, you will then face a deficit in the matrix for group A.

Priorities when ordering similar goods from different suppliers:

First of all, buy back the goods of their own brands (a guarantee of future independence).

Secondly, maintain strategic cooperation. That is, to adhere to the planned volumes of purchases with those suppliers, work with which was especially profitable (high mark-up, long credit, etc.) over the past several periods.

In the third place, place an order with suppliers whose product has shown high sales dynamics.

Profit is usually more important than sales dynamics, since a supplier with good dynamics will sooner or later expand its presence among your competitors. And then it turns out that you, increasing his share to the detriment of your own profit or the share of your own goods, worked more for him than for yourself. Yes, your managers can sell his goods now “easier”, but in the end you will receive less money by spending the same amount of the allocated budget. Of course, you cannot completely cut a recognizable product with a lower margin, but it is quite possible not to be zealous in its purchases and at the same time transfer customers to a similar product from suppliers with more favorable conditions for you.

When there is a budget deficit, the purchasing manager usually reconciles priorities with the sales and marketing department. At the very least, it informs them about the choice of suppliers and goods made.

High School of Economics

State educational institution

Higher professional education

Kazan State University

Examination on the discipline "Cost Management"

On the topic: The essence of the procurement budget

Kazan 2010

Procurement budget

Regulation of the volume of purchases

Reduced transportation costs

Reduced storage costs

Cost estimate analysis

Bibliography

Procurement budget

The procurement budget of the manufacturing company depends on the planned production volume. Based on the planned volume, production plans to purchase the required amount of materials at a certain cost. The procurement budget is a plan for the procurement of products from the assortment in the context of product types or by main suppliers. Shows how much and what kind of products should be purchased by the company from external (import) and internal suppliers. The procurement budget is drawn up by the procurement department based on the sales budget, since the volume of purchases directly depends on the volume of sales. The volume of purchases of raw materials and supplies depends on the expected volume of their use, as well as on the estimated level of stocks.

The formula for calculating the volume of purchases is as follows:

Volume of purchases = volume of use + stock at the end of the period - stock at the beginning of the period

The procurement budget, as a rule, is drawn up taking into account the timing and procedure for paying off accounts payable for materials.

The planned requirements for the procurement of materials and their use can be prepared both in one document and in separate independent budgets. Many people prefer a single document. This budget determines the timing of the purchase and the amount of raw materials, materials and semi-finished products that must be purchased in order to fulfill production plans. Material usage is determined by the production budget and the proposed changes to the inventory level. By multiplying the number of items of materials by their estimated purchase prices, the budget for the purchase of materials is obtained.

Cost and time plan for a certain period, which are necessary to meet the material needs of the enterprise, provided by the budget, in the context of materials

To assess the effectiveness and feasibility of the selected areas of activity for the coming period, the operating and financial budgets of the enterprise are formed. An important condition for the smooth operation of an enterprise is high-quality planning and full provision of the need for material resources.

The procurement budget is formed as a plan of the material and technical supply service and determines the need for the purchase of raw materials, materials, components in kind and in value terms in the planning period:

the procurement plan in kind is intended to determine the required volume and range of material resources;

The source of information for building a procurement budget is the following data:

1) the need for basic material resources, obtained during the formation of the production plan,

2) the level of balances of material resources at the beginning of the planning period,

3) the level of standards of stocks of material resources,

4) consolidated applications for non-standardized materials for the implementation of production and economic activities, proposals from suppliers,

5) prices for all types of material resources.

The need for materials for the implementation of the production program is calculated based on the estimated production volume and reasonable rates of expenditure of material resources: As a rule, to analyze planned indicators and monitor performance, the procurement budget can be grouped by financial responsibility centers, cost items, types of materials, suppliers and structural divisions. The calculated total volume of purchases of a specific material for the period is distributed among suppliers in accordance with the priority of contracts and delivery quotations. In case of limited supply in resources from the most priority supplier, the analysis of the possibility of the following contracts takes place. The procurement budget in value terms is calculated for each contract by multiplying the quantity of material by its price. If the contract with the supplier has a specific behavior of the price that differs from the established rate of increase in the price of the material, then the contract prices are used. It is possible to apply the base prices of materials taking into account the dynamic change - the inflationary (average) index. Procurement and inventory budgeting begins with collecting the necessary data. These include:

1) Sales volumes (units)

2) Purchase prices for the period

3) VAT rates

4) Norms of stocks of goods and materials (%)

5) Plan of consumption of materials (units)

6) Percentage of payment for delivery of the current period in the same period

7) Delivery cost for the period

8) Payment for deliveries of the previous period (%)

9) Amounts due in the current period (%)

Regulation of the volume of purchases

The creation of large stocks leads in some cases to significant savings, since when purchasing in large quantities, suppliers, as a rule, make discounts in prices. Although the stocks of material resources created in this case are often stored for a long time, storage costs can be lower. Than winning on price discounts. The savings are maintained as long as the amount of the discount exceeds the cost of storing material resources. Storing excess inventory is often completely unnecessary. After all, warehousing only entails costs, without increasing the value of the stored products. Unnecessary warehousing always means wasted funds, in other words, waste.

One of the main reasons for the formation of excess stocks is the overestimation of the size of the purchased lots, which is not justified by the need. Another reason is uncertainty, ignorance of how much this or that resource will be required and when exactly.

Management of the volume of purchases, of course, requires additional efforts and costs, but it is worth it if the goal of the activity is to achieve high performance and further development of the enterprise.

Reduced transportation costs

This problem is in many ways akin to the problem of saving on purchases.

One way to achieve small stocks and backlogs is to move material flow through the shop only when there is a production need for it.

The task of the manager is to choose the option that is rational in a specific economic situation. This problem is one of the main ones in the theory of inventory management. The way to reduce inventories at the enterprise lies through their rational use, elimination of excess surpluses, improvement of rationing, including through the establishment of clear contractual terms of supply, the optimal choice of the supplier, and the efficient operation of transport.

Reduced storage costs

The organization of storage facilities plays a very significant role in increasing the efficiency of the use of circulating assets. The primary task of inventory management is to figure out the total cost of maintaining inventory.

Storage costs can be divided into two main groups.

Capital investment costs:

Are in direct proportion to the total value of the total inventory of inventories available at the enterprise. Part of the stock is placed in warehouses, the other part goes through the production process or is located in the sales area or in the finished product warehouse.

Warehousing costs:

Includes items such as the maintenance of the warehouse, the remuneration of warehouse personnel, the acquisition and operation of inventory, transportation, loss of goods, insurance.

If stocks are kept in a separate room, the cost of the room is not too difficult to calculate. Warehouse costs do not exhibit the same obvious dependence on inventory volume as do capital expenditures. However, they can also be reduced by reducing the volume of reserves.

Calculation of labor costs for warehouse personnel is also not a problem. It is much more difficult to estimate how much labor costs are reduced when inventory is reduced. If a reduction in inventory allows you to abandon a separate warehouse, then you can also reduce the number of warehouse personnel.

A special item is the cost of inventory, which includes, in particular, warehouse racks with shelves, pallets and mechanisms for cargo handling, including forklifts, lifts and carts. If inventory reduction makes it possible to concentrate inventory in one or more nearby locations, significant savings in transportation costs are achieved.

The amount of insurance premiums is assigned based on the value of the property to be insured. As the total value of inventory declines, so does the cost of insurance.

purchase budget cost estimate

Cost estimate analysis

Expenditures	2007		2008		Change in costs
	thousand roubles	beats the weight %	thousand roubles.	beats the weight %	thousand roubles.	rates of growth %
Material costs	187815	0,010	32644	0,0016	-155171	0,174
Labor costs	861985,6	0,047	1331538	0,0653	469552,2	1,545
Deductions for social needs	286917	0,016	404116,6	0,0198	117199,6	1,408
Other costs	468000	0,026	560734,8	0,0275	92734,81	1,198
Losses from marriage	18269	0,001	20353	0,0010	2084	1,114
General running costs	161324	0,009	217582	0,0107	56258	1,349
Depreciation	37563	0,002	44091,8	0,0022	6528,8	1,174
Equipment maintenance costs	21381	0,001	24675	0,0012	3294	1,154
Raw materials and supplies	16127283	0,888	17745506	0,8707	1618223	1,100
Total costs:	18170538	100%	20381241	100%	2210703	10,216

Coordination and systemic interconnection of procurement with production, sales, warehousing and transportation, as well as with suppliers

formation of a strategy for the acquisition of mater resources and forecasting the need for them

receiving and evaluating offers from potential suppliers

selection of suppliers

determining the need for material resources and calculating the number of ordered materials and products

negotiating the price of ordered resources and concluding supply contracts

control over the delivery time of materials

incoming quality control of materials and their placement in the warehouse

bringing the mother of resources to other subdivisions

10. Features of the use of procurement logistics.

Purchasing logistics

During

After solving the problem search and selection of a supplier

Transit warehouse

11. The mechanism of functioning of procurement logistics.

Purchasing logistics- This is the management of material flows in the process of providing the enterprise with material resources.

The main questions that should be answered in the process of providing the enterprise with objects of labor: what to buy, how much to buy, from whom to buy, on what terms to buy.

During determining the need for material resources the following make-or-buy problem can be solved.

With an increase in the volume of consumption of any product, the profitability of its production on our own increases. Further development of the relationship between suppliers and consumers towards mutual cost reduction and increased production efficiency leads to a transition to deeper cooperation, called outsourcing - the problem of separating part of the procurement functions and transferring them to specialized firms is solved. For example, such functions as storage, transportation, incoming control, loading and unloading operations, etc.

The task of determining the organization's need for material resources is to determine their most optimal value.

The choice of methods for calculating the need for material resources depends on many factors: the volume and regularity of consumption, the regulatory framework, prices for materials, their scarcity, etc. In practice, methods of grouping materials according to ABC and XYZ are widely known.

After solving the problem search and selection of a supplier... When looking for suppliers, you must:

♦ make a list of potential suppliers;

♦ determine the criteria for the selection of suppliers and their significance;

♦ make a preliminary analysis of suppliers according to the criteria in order to narrow their circle to four or five;

♦ prepare and send inquiries to suppliers on missing information;

♦ carry out a commercial assessment of suppliers;

♦ hold (if necessary) preliminary negotiations or meetings with the most preferred suppliers;

♦ select suppliers and conclude contracts with them for the supply of products.

The purchases of goods, carried out in whole or in part at the expense of the republican and local budgets, are state purchases and are carried out using:

♦ tender (open, closed) with an approximate purchase price of 8000 or more base values;

♦ procedures for requesting price proposals with an approximate purchase price from 1000 to 8000 base values;

♦ procedures for drawing up a competitive list with an approximate purchase price of 50 to 1000 base units.

It should be borne in mind that the terms of delivery can be transit or warehouse. Transit supplies imply the purchase of material resources directly from manufacturers, and warehouse- from intermediary trade organizations from their bases and warehouses.

Relationships for the procurement of material resources are formalized by a supply agreement between suppliers and buyers.

· Prices for products of suppliers, their level and stability;

· Product quality, its compliance with consumer requirements;

· Completeness of the product range;

· System of payments for products (prepayment, subsequent payment, sale by installments);

· Reputation of suppliers;

· Financial position of supplier enterprises;

· Delivery time, responsiveness to customer requests;

· The level of pre- and after-sales service;

· Remoteness of the supplier from the consumer.

The rating is calculated using methods of individual or collective peer review... To eliminate subjectivity in the assessment of suppliers, the method of collective assessment should be preferred. Its effectiveness increases if you correctly form a team of experts, objectively assessing the competence of each participant and its impact on the final result.

Total value rating is established by summing the products of the significance of the criterion for its assessment for a given supplier. By calculating the rating for different suppliers and comparing the values ​​obtained, the best partner is determined.

Analysis of the work of organizations showed that many of them do not risk establishing relationships with one supplier, preferring to purchase from competing manufacturers. This applies primarily to basic materials that are required in large quantities. It is believed that for the sake of economic security, it is inappropriate to take from one manufacturer more than 50% of the total purchase of a certain material. In this regard, it is advisable to distribute material flows among two or three suppliers in proportion to their rating indicators.

13. Basic principles of relationships with suppliers.

Logistic integration with suppliers is achieved through joint planning, as well as through a set of economic, technological and technical measures. Integration should be based on an orientation toward good partnerships, an orientation toward a willingness to take a reciprocal step, even when it does not bring any profit.

In logistics, relationships with suppliers should be based on the following principles:

♦ Treat suppliers in the same way as with the firm's customers.

♦ Remember to actually demonstrate common interests.

♦ Familiarize the supplier with his tasks and keep abreast of his business operations.

♦ Be willing to help in case of problems with the supplier.

♦ Comply with the assumed obligations.

♦ Consider the interests of the supplier in business practice.

14.Essence, tasks and functions of production logistics.

Production logistics is the management of production procedures within an enterprise, which ensures the optimization of production costs in accordance with a given target function, usually based on the marketing strategy of the enterprise.

Logistic systems considered by production logistics are called intra-production (micro-logistic systems). These include: an industrial enterprise; wholesale enterprise with warehouse facilities; junction cargo station; seaport, etc.

The purpose of production logistics is to optimize material flows within enterprises that create material goods or provide such material services as storage, packing, hanging, stacking, etc. A characteristic feature of the objects studied by production logistics is their territorial compactness.

The participants in the logistics process within the framework of production logistics are linked by intra-production relations (in contrast to the participants in the logistics process at the macro level, connected by commodity-money relations).

Traditional concept organization of production involves:

Never shut down the main equipment and at all costs maintain a high utilization rate;

Make products in as large batches as possible

Logistic kaya concept organization of production includes:

· Refusal from surplus stocks;

· Reduction of the time for performing basic and transport and storage operations;

· Refusal to manufacture products for which there is no order from buyers;

· Elimination of equipment downtime;

· Obligatory elimination of marriage;

· Elimination of irrational intra-plant transportation;

· Availability of an optimal stock of production resources.

Production under market conditions can survive only if it is able to quickly change the assortment and quantity of products. howling products. Today logistics offers to adapt to changes in demand due to the stock of production capacity.

Production capacity arises from the qualitative and quantitative flexibility of production systems. Quality flexibility is ensured by the availability of versatile service personnel and flexible manufacturing. Quantitative flexibility can be provided by a reserve of equipment and a reserve of labor.

15. Variants of material flow management in intra-production logistics systems.

Logistics systems considered by production logistics are called in-house logistics systems... These include: an industrial enterprise; a wholesale enterprise with warehouse facilities; junction cargo station; nodal seaport, etc.

At the macro level, intra-production logistics systems act as elements of macrological systems. They set the rhythm of the work of these systems, they are the sources of material flows. The ability of macrologistic systems to adapt to environmental changes is largely determined by the ability of the intra-production logistics systems included in them to quickly change the qualitative and quantitative composition of the output material flow, i.e., the assortment and quantity of products.

At the micro level, intra-production logistics systems are a number of subsystems that are in relationships and connections with each other, forming a certain integrity, unity. These subsystems - purchasing, warehouses, stocks, production services, transport, information, sales and personnel - ensure the entry of material flow into the system, passage within it, and exit from the system. In accordance with the concept of logistics, the construction of intra-production logistics systems should ensure the possibility of constant coordination and mutual adjustment of plans and actions of supply, production and sales links within the enterprise.

Management of end-to-end material flow within the framework of intra-production logistics systems can be carried out in two fundamentally different ways, which are called push and pull systems.

Pushing system organization of material flow - a system of organization of production, in which the initiator of the movement of material resources from one structural unit to another is the transmitting unit. type systems RP, namely MRP I and MRP II. Formalization of decision-making processes in the system MRP 1 produced using various methods of operations research. It is possible to calculate the need for raw materials, form a production schedule, issue output forms to a printer or display. MRP II includes MRP I functions for determining material requirements and process control functions.

The pulling system is the organization of the movement of the through material flow, in which the initiator of the movement is the production link (workshop, department, site, etc.), which buys material resources. At the same time, the central control system does not interfere with the exchange of material resources between departments, and the control signal (order) for the shipment of materials to the next stage of the production and technological cycle comes from the department - the recipient of the resources. The role of the central control system is to set tasks for the final link of the production process chain, i.e., flow control is carried out in a decentralized manner.

16. "Pushing system", its essence, conditions of use, advantages and disadvantages.

Pushing system organization of material flow - a system of organization of production, in which the initiator of the movement of material resources from one structural unit to another is the transmitting unit.

In a pushing system, objects of labor entering the production site are not ordered directly by this site from the previous technological link. The material flow is “pushed out” to the recipient by a command arriving at the transmitting link from the central enterprise management system.

The greatest application in modern production is found in pushing systems of the type RP(from the English Resource Planning - "planning needs / resources"), namely MRP I and MRP II (from the English Materials / Manufacturing Resource Planning - "planning the need for materials, production resources").

Formalization of decision-making processes in the system MRP 1 produced using various methods of operations research. It is possible to calculate the need for raw materials, form a production schedule, issue output forms to a printer or display. The use of the MRP I system allows to reduce inventory levels, accelerate their turnover, and reduce the number of cases of violation of delivery times. System MRP II is considered as the second generation of the MRP I system. Generations of systems differ not in the level of technology development, but in the flexibility of management and the breadth of functions. MRP II includes MRP I functions for determining material requirements and process control functions.

Functions MRP systems:

♦ ensure the current regulation and control of inventories;

♦ in real time to coordinate and promptly adjust the plans and actions of various services of the enterprise - supply, production, sales.

In the push system, in its most radical version, to each subsequent element of the technological chain, the material flow is pushed out strictly according to the commands coming from the control center. The push-out system is typical for traditional industries in the CIS.

Disadvantages:

♦ impossibility of quick response to changes in the market situation;

♦ the need to create excess insurance stocks;

♦ impossibility of full optimization of plans due to the lack of the ability to take into account all the circumstances;

♦ the need for a constant increase in the complexity of information processing systems and personnel qualifications with an increase in the number of factors taken into account in planning;

♦ the need to create large planning divisions and the introduction of continuous expensive automation to ensure an acceptable speed of response to disturbing actions of internal and external circumstances.

17. "Pulling systems" of management of intra-production material flow, their essence, advantages and disadvantages.

Pulling system is the organization of the movement of the through material flow, in which the initiator of the movement is the production link (workshop, department, site, etc.), which buys material resources. At the same time, the central control system does not interfere with the exchange of material resources between departments, and the control signal (order) for the shipment of materials to the next stage of the production and technological cycle comes from the department - the recipient of the resources. The role of the central control system is to set tasks for the final link of the production process chain, i.e., flow control is carried out in a decentralized manner.

Pulling (“pulling”) flow control models are used not only in production, but also in distribution logistics.

In the practice of logistic concepts of the "pulling" type, the concept of "right on time" ... The principle of creating micrologistic systems of the just in time type is such an organization of the material flow, in which all materials, components and semi-finished products arrive at the right place, in the required quantity, of the required quality, by exactly the appointed time. Nothing should be produced or purchased until the need arises.

The initial "impetus" for the emergence of material flow is the order for products from the side of the buyer. The market, as it were, "pulls" products out of the enterprise, and inside it, each subsequent technological link "pulls" from the previous link the materials and components necessary for production.

The main terms of the aggregate effect from the application of a logistic approach to material flow management:

♦ effective transition to small-scale and individual production, its orientation to the market;

♦ establishing partnerships with suppliers;

♦ reduction of equipment downtime;

♦ improving the quality of products;

♦ reduction of the production cycle;

♦ minimization of costs.

18.Essence, tasks and functions of distribution logistics.

Distribution logistics is a set of functions related to the process of bringing finished products from manufacturer to consumer in accordance with the interests and requirements of the latter. It must provide:

♦ end-to-end material management, ie, link the distribution process with the production and procurement processes;

♦ marketing approach to material flow management;

♦ the interconnection of all functions within the distribution itself.

Item study - the material flow at the stage of movement from the supplier to the consumer, as well as the rationalization of the process of physical promotion of the product to the consumer.

Distribution logistics covers the entire range of tasks for managing material flow at the "supplier - consumer" section, starting from the moment the implementation task is set and ending with the moment the delivered product leaves the supplier's sphere of attention. At the same time, the main specific weight is made up of the tasks of material flow management, which are solved in the process of promoting already finished products to the consumer.

In the process of solving the problems of distribution logistics, it is necessary to find answers to the following basic questions:

♦ through which channel to bring the product to the consumer;

♦ how to pack products;

♦ which route to send;

♦ whether warehousing will be required in the process of delivery of the finished product to the consumer;

♦ what level of service to provide, as well as a number of other issues.

At the enterprise level, i.e. at the micro level, logistics sets and solves the following tasks:

♦ planning the implementation process;

♦ organizing the receipt and processing of the order;

♦ selection of the type of packaging, making a decision on packaging, as well as organizing other operations immediately preceding shipment;

♦ organization of shipment of products;

♦ organization of delivery and control over transportation;

♦ organization of post-implementation services.

At the macro level to tasks distribution logistics include:

♦ selection of a material flow distribution scheme;

♦ determination of the optimal number and locations of distribution centers (warehouses) in the serviced area.

19. Logistic distribution channels, their types and main characteristics.

Distribution channel- this is the path along which goods move from producer to consumer, a set of organizations or individuals who assume ownership of a specific product or service on the way from producer to consumer.

The distribution channel participants include manufacturers, various intermediaries and consumers of products. They form a logistic chain, which is a linearly ordered set of links in the logistic process that carry out logistic operations to bring the external material flow from one link to another.

Participant functions:

♦ collection of information necessary for planning and facilitating the sale of goods;

♦ preparation and dissemination of information about the product;

♦ establishing and maintaining relationships with potential buyers;

♦ manufacturing of goods taking into account the requirements of buyers (concerns such activities as production, sorting, assembly and packaging);

♦ Negotiating prices and other conditions for the subsequent implementation of the act of transfer of ownership or possession;

♦ transportation and storage of goods;

♦ search and use of funds to cover the costs of the operation of the kapal.

The manufacturer may not use the services of intermediaries, but in this case their functions are transferred to him. The main managerial decision of the manufacturer in the field of commodity circulation is the choice of such a number of participants in the distribution, in which the distribution of functions allows minimizing distribution costs without disrupting the timely and high-quality offer to the target market of the required assortment of goods.

Distribution channels can characterize by the number of their constituent levels, length (extent) and width.

Channel of goods movement, containing zero level, refers to the direct type of channels, and containing more intermediate levels - to indirect channels. The zero-level channel assumes direct contact between the manufacturer and the consumer, without the participation of intermediaries.

Sibling channel includes one intermediary. In consumer markets, this intermediary is usually a retailer, and in industrial markets, it is a sales agent, a wholesale intermediary. Two-level channel includes two intermediaries. In consumer markets, they are usually wholesalers and retailers, in the industrial goods market, they are distributors and dealers. Three-level channel includes, respectively, three intermediaries, most often two wholesalers and one retail.

Length kapala - the number of intermediate links performing work on the movement of goods from the manufacturer to the consumer.

Width- the number of intermediaries at each level involved in product distribution. One wholesale buyer - a narrow distribution channel, various wholesale buyers - a wide distribution channel.

20. Types of intermediaries in distribution logistics.

Mediator it is a natural or legal person who facilitates the establishment of business ties between producers of products on the one hand and consumers on the other. The task of intermediaries is to transform the range of products produced by manufacturers into a range of products that consumers need.

In real-life distribution channels, it is possible to use three main methods of product promotion:

♦ direct- the manufacturer of the product enters into direct relations with its consumers and does not use the services of independent intermediaries;

♦ indirect- for the sale of its goods, the organization resorts to the services of various kinds of independent intermediaries;

♦ combined- organizations with mixed capital, including funds of both the manufacturer and another independent company, are used as an intermediary link.

Intermediaries classify by a combination of two characteristics: a) on whose behalf the intermediary works; b) at whose expense the intermediary carries out its operations. Based on the poi. there are two types of intermediaries:

♦ dependent- assist the manufacturer (seller) in the distribution of products, but at the same time do not receive ownership rights to these products;

♦ independent- participate in the distribution of the manufacturer's products as the owners of these products.

TO first group includes organizations dependent on the manufacturer, as well as individuals who assist the manufacturer (owner) of the goods in the distribution (sale), but do not directly participate in the sale and purchase transactions with their capital and do not bear any commercial risks. This group of intermediaries includes agents(traveling salesman, broker, commission agent, consignee) is a physical. or legal. a person performing transactions or carrying out business orders of another person at his expense and on his behalf, representing the interests of the buyer or seller on a relatively permanent basis and does not assume ownership of the goods. The agent searches for potential buyers and sellers, organizes negotiations between them, prepares draft contracts, helps in registration of the transfer of ownership of goods, advertises the goods, motivates buyers to purchase goods.

NS second group intermediaries are independent organizations that participate in the process of distributing the manufacturer's products on their own behalf and at their own expense, thereby acquiring ownership of the products sold. There are two subgroups in this group.

Firstly, these are intermediaries who act in relation to the manufacturer (seller) as buyers who purchase his products on the basis of a sales contract (trading houses, wholesale and retail organizations).

Secondly, intermediaries who receive from the manufacturer (goods owner) under a separate agreement the right to sell his products (goods) in a certain territory for an agreed period of time. For its implementation, the parties include independent contracts, according to which intermediaries (distributors, dealers) act as buyers of products (goods).