In common parlance, “purchasing” is used to denote procurement of materials, machines and tools on payment. But today purchasing as a function has acquired a new dimension, and, as such, it may be defined as “the function of procurement, with a view to reduce the investment, variety and value of materials so as to facilitate the standardization and competitive marketability of the product.”
Purchasing is a process which includes all the functions involved from the time the need is felt till the receipt and approval of the materials purchased. Scientific purchasing has become a basic and integral part of materials management.
Definition of Scientific Purchasing
Purchasing has been defined by Dr. D.Walters as:
“the procurement of purchase of the proper materials, machinery, equipment and supplies or 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.”
Modern industrial purchasing, usually called as scientific purchasing, is based on the facts. It is an activity of specialists in the field. It calls upon commercial training on the part of those who are engaged in the purchasing activity.
Scientific purchasing, thus, is an executive activity which calls upon the co-operation of all the related functions in the organization such as planning, production, distribution, financing, and management functions. Gantt is of the opinion that ‘two-thirds of all possible gains through the most efficient management of production could be realized by having all the materials ready when you want it, where you want it and in the condition you want it.” “
Purchasing”, says Alford and Beaty, “is the procuring of material, supplies, machines, tools and services required for the equipment, maintenance and operation of a manufacturing plant.”
Objectives of Scientific Purchasing
From the above definitions we may arrive at the following objectives of scientific purchasing :
1. Procurement of goods and services ray purchasing.
2. Ensuring the required quantity and quality at a minimum possible price.
3. Procurement of the materials in accordance with the production plan, product to be produced and the purpose for which the purchasing is intended.
4. Ensuring the arrival of goods at a time when it is required considering the production schedule. Delay for lack of materials results into labor loss and wastage of machine hours.
5. Avoidance of blocking of capital in inventories not required. Bulk purchasing, as far as possible, should generally be avoided.
6. Finding the substitute with a view to improve the quality, reduce the cost of product and conserve the scarce raw materials.
Importance of Scientific Purchasing
Importance of scientific purchasing may be enumerated as listed below :
1. In order to ensure a good turnover and maintain the past sale record it is necessary that purchasing may be made in such a manner which helps the organization to face the competition in the market. Competitors are always interested in excelling. They can surpass if they do better in reducing the cost and offer quality goods at a cheaper rate than what is being offered by your organization. The scientific purchasing aims at giving a jolt to their planning and leave them behind by resorting to scientific purchasing.
2. Highest return on the investment can be ensured provided the purchasing is properly and scientifically managed.
3. Purchasing department can easily function in an advisory capacity to the management because it is placed in a better situation than any other department in the organization. The purchasing department is in close contact with the market and it knows the recent trends. This enables the department to offer suggestions which may carry conviction and weight for the organization.
4. The purchasing department is also of invaluable help to the whole organization in molding the manufacturing and marketing policies as per the demand of the market with which the department is in constant touch.