Purchasing and supplies Essay Example for Free

Purchasing and supplies EssayPurchasing can be traced as farther back as 2800 BC in cuneiform clay tablets get orders. Curiously only during the past two countries has purchasing been addressed in heap books and text books. In 1832 Charles Babbage addressed purchasing in his book On the Economy, Machinery and Manufacturing The first book devoted specifically to purchasing, The Handling of Railway Supplies The Purchase and disposal published in 1887 was authored by Marshall M. Kirkman. The first college textbook on purchasing was authorized by Howard T. Lewis of Harvard University in 1933.Although interest of purchasing and supply lead has been a phenomenon in the 20th, it was recognized as independent and importing function well before 1900. Growth of interest and attention to purchasing was rather spotted in the early 1900s but by 1915, several books on acquire had appe atomic number 18d and several articles had been published in trade press primarily in the engineering journals.Yet prior to World War I (1914-1918) approximately firms regarded the purchase function primarily as a clerical activity. However during the solid ground war, the ability to obtain raw materials supplies ad services needed to keep the factories and mines operating were the 3key determinates of organizational success. Attention was given to the organization policies and procedures for purchase functions, and so it emerged as a recognized management activity. Historically since management interest has focused on research and development, marketing, finance and operations, purchasing has frequently been subordinated to these functions. Mangers are however becoming aware impact on the bottom line that does any other functions. It is with such insights the purchasing has evolved and evolves through the following four stages. peaceable stage- Purchasing function has no strategic direction and primarily reacts to the requests of other functions,This stage is characterized bya) H igh proportion and individual communications due to purchasing low visibilityb) Supplier selections based on price and availability.Independent stage- Purchasing functions adopts the latest purchasing techniques and processes, but its strategic direction is independent of the firms agonistical strategic.In this stagea) transaction is based primary on cost reduction and efficiency measures. b) Coordination links are established between purchasing and adept discipline.c) Top management recognizes the importance of professional development. d)Top management recognizes the opportunities in purchasing for contribution to profitabilitySupportive- Purchasing function support the firms competitory strategy by adoption purchasing techniques and products which strengthens the firms competitive positionIn this stagea) Purchase is implyd in gross sales proposal teams.b) Suppliers are considered a resource with emphases on experience motivation and attitude.c) Market product and suppliers are continuously monitored and analyzed. iv)Integrative stage- Purchasing strategy is in full integrated into the firms competitive strategy and constitutes part of an integrated effort among peers to formulate and implement a strategic plan. In this stagea) Cross-functional educational activity of purchasing professionals executive is made availableb) Permanent lines of communication are established among other functional areas.c) Professional development focuses on strategic elements of the competitive strategyd) Purchasing performance is measures in terms of contributions to the firms success1.3 The Role of the Purchasing DepartmentThe purchasing department is expected by the management to fulfill the following five rightsRight TimeRight Price These rights are also referred to as the principles of purchasing. In order to undertake these rights the purchasing department delineates the following as in roles To support company operations with an uninterrupted flow of materials and services.ii)To buy competitively- Keep abreast of the forces of demand and supply that shape prices and material availability on the market understanding suppliers cost structure and ability to help reduce it further price negotiation to help get ahead a fair price.To buy wisely- Continual search for better vales that yield the best combination of quality service and price reconciling users needs with suppliers capabilities by use of cross functional teams To keep inventory investment and inventory losses at a practical minimum. To develop good relationship with suppliers fellowship and good Continuing relationship with active suppliers- good relationship with potential suppliers is invaluable.To achieve maximum integration with other departments of the firmUnderstanding major needs of user departments and impart such support as standardization of programmes, future price forecasting, make or buy analysis and providing a repository of information and data from suppliers.To ove rlay the purchasing and supply management function proactively and in a professional cost effective manner- Continual analysis of activities to eliminate those that only marginally play to the effectiveness of the organization and establishing policies and procedures that achieve departments objectives in the most cost effective manner1.4 The Contribution of Purchasing Department to the Overall Firms Performance As a function, purchasing is common to all types of business operations. The purchasing department however is an organizational unit of a firm whose duties may include responsibility for part or all of the purchasing function and additional activities as well. As a matter of fact, the purchasing function is usually performed most effectively and efficiently by a centralized unit made of buying specialist who a time may work in mating with a more comprehensive cross-functional team of specialists. Prior to the 1950, the purchasing department was a clerically oriented order placing unit.In the ensuing years however, managerial violence has focused onspecialization of individual buying activities, professionalism and contribution to the firms profit. This emphasis by the management on the purchasing department has been borne bug out to of the realization of the profit potential of purchasing as a function. Every dock saved in purchasing is equivalent to a new shilling in profit. The profit margin of a firm is usually given as.