Procurement: Indent to PO to GRN

Cement, steel, sand, aggregate, bricks, tiles, pipes, wires. Material is often the largest share of a building's cost. It is also where money leaks most quietly: short supply, wrong grade, double billing, or stock that walks off site at night.

Good procurement is a chain of six records.

The six steps

1. Indent. The site engineer asks for material: what, how much, by when, for which activity. The schedule and the BOQ quantities tell him how much.
2. Quotes and comparison. Purchase gets quotes, ideally from at least three suppliers, and compares rate, brand, delivery time and credit terms.
3. Purchase order (PO). An approved order with item, grade, quantity, rate, delivery date and payment terms.
4. Goods received note (GRN). When the truck arrives, the site checks quantity and quality and records what was accepted. Torn cement bags, wrong steel diameter or wet sand are rejected or noted here.
5. Bill check. Accounts match three documents: PO, GRN and supplier invoice. This is the three-way match.
6. Payment. Only for what was accepted, at the PO rate.

A worked example

• Indent: 200 bags of OPC 53 cement for the first-floor slab.
• PO: ₹375 per bag, 200 bags = ₹75,000. (Illustrative rate.)
• Delivery: the challan says 200 bags. At unloading, the store keeper counts 196 good bags and 4 torn.
• GRN: 196 accepted.
• Bill check: the invoice says 200 bags. The GRN says 196. Pay for 196.
• Payment: 196 x ₹375 = ₹73,500.

If accounts pay on the challan, the site pays ₹1,500 for cement it never used. Small on one truck. But a mid-size building may receive a few hundred deliveries. The same leak, repeated, becomes lakhs.

Stock and consumption

After the GRN, material sits in stock until it is issued to work. A simple stock register shows receipts, issues and balance for each material. Compare it with theoretical consumption from the BOQ:

• 1 m³ of brickwork in CM 1:6 needs about 1.31 bags of cement (from the rate analysis in module 4).
• If the site laid 40 m³ of brickwork this week, it should have used about 52 bags for mortar.
• If stock fell by 70 bags with no other cement work, 18 bags need explaining.

Tools

• Small sites: paper registers, a notebook with the store keeper, photos of challans on WhatsApp, Excel.
• Mid-size builders: site apps that record indents, GRNs and stock on the phone; Tally (TallyPrime) or similar for accounts.
• Large companies: an ERP such as SAP, or real-estate ERPs commonly seen in India such as Farvision, with purchase, stores and accounts linked.

The tool matters less than the habit: no payment without a GRN, and no GRN without a count.

What comes next

The last lesson in this module covers the daily records that hold a site together: DPRs, attendance and measurement, on WhatsApp or in an app.