Meaning and Definitions of Purchasing
Purchasing is an every-day function of almost everyone and occupies much of the time both of business houses and ultimate consumers.
There are three basic types of purchasers :
(i) Industrial buyers who buy raw materials, stores and equipment for manufacturers :
(ii) Merchant buyers who buy goods for resale and include wholesalers, retailers, speculators etc. and
(iii) Ultimate buyers, i.e., consumers who purchase goods for consumption.
We are here concerned only with the first purchasing, i.e., Purchasing of raw materials, equipment, stores etc. for the use in the manufacturing process.
Purchasing to a manufacturing concern is of extreme importance because it has its bearing on every vital factor concerning the manufacture, i.e., quantity, quality, cost effi-
ciency, economy, prompt delivery, volume of production etc It is the scientific purchasing that can save much money, time and efforts of the management. In manufacturing organisation, “purchasing is the procuring of materials, supplies, machines, tools and services required for the equipment, maintenance and operation of the business”. Purchasing must be of the right quality in proper quantity for delivery at the correct time and at the most favourable price from outside the organisation.
In the words of Walter, Industrial purchasing is “the procurement by purchase of the proper materials, machinery, equipment and supplies of stores used in the manufacture of a product adopted to marketing in the proper quantity and quality at the proper time and at the lowest price consistent with the quality desired.”
In simple words, the task of purchasing is related to going to open market, finding the desired materials at the lowest possible price, and selecting the supplier who offers it at that price having the quality of the materials in mind. It is indeed, a specialist activity calling for the commercial rather
than the technical training and outlook.