In this article, you will learn the definition of purchasing in its simplest form, the objectives and different types of purchasing.<\/p>\n
Please share this article on your social media handle. Together we share knowledge.<\/em><\/pre>\nPURCHASING<\/h2>\n
What Do You Understand By Purchasing?<\/h3>\n
Purchasing is one of the basic functions common to all organisation. It refers to the process of acquiring goods, services, and equipment from another organization in a legal and ethical manner.<\/p>\n
It can also be defined as the process of buying right materials, in the right quantity, at the right price, made available at the right time and using the right supplier to meet the operational need of an organization.<\/p>\n
It has been described in so many ways by different authors and scholars. Some of those definitions are mentioned as follows:<\/p>\n
According to LYSONS,<\/strong> “Purchasing is that function responsible for obtaining by purchase, lease or other legal means, equipment, materials, supplies and services required by an undertaking for use in production”.<\/p>\n
According to BAILEY and FARMER,<\/strong> “Purchasing is the procurement of right quality of material, at the right time in the right quantity, from the right source at the right price”.<\/p>\n
From the above definitions, some key variables or elements are noted:<\/p>\n
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- RIGHT QUALITY: To purchase the right quality of materials.<\/li>\n
- RIGHT QUANTITY: To purchase the materials in right quantity.<\/li>\n
- RIGHT TIME: To make the materials available at the right time.<\/li>\n
- RIGHT PRICE: To purchase the material at the right price.<\/li>\n
- RIGHT SOURCE: To purchase the materials from the right source.<\/li>\n<\/ul>\n
\u00a0Objectives of Purchasing?<\/h3>\n
The main objectives of purchasing are:<\/p>\n
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- To maintain an uninterrupted flow of materials to support the operation of the organization.<\/li>\n
- To procure materials economically at a cost consistent with the quality and service required.<\/li>\n
- To develop and maintain a good buyer-seller relationship.<\/li>\n
- To provide the necessary expertise, advice and information to the organization regarding the best quality of material available in the market, suppliers\u2019 capability and performance, etc.<\/li>\n
- To maintain organization reputation and credibility in the market by fair dealing and prompt payments.<\/li>\n<\/ol>\n
Types of Purchasing<\/h3>\n
The two main types of purchases are for buying and for resale. The buying function is generally for industrial use and resale falls under the wholesalers, retailers, distributors, and agencies. However, the following are the different types of purchases:<\/p>\n