Purchase department plays a very important role in an organization because purchasing has its effect on every vital factor concerning the manufacture, quality, cost, efficiency and prompt delivery of goods to customers. Its function is to procure materials, supplies, services, machines and tools at the most favourable terms consistent with maintaining the desired standards of quality. Purchasing is the most important function of materials management as the moment an order is placed for the purchase of materials, a substantial part of the company’s finance is committed which affects cash-flow position of the company.
Thus, if the size of a business concern permits, there should be a separate purchase department and the responsibility for purchasing all types of materials should be entrusted to this department. The head of this department is usually known as the Purchase Manager or the Supply Manager or the Chief Buyer.
Functions of Purchase Department
- To receive the purchase requisition from the department that need the material.
- To select the supplier from whom materials are to be purchased.
- To place the purchase order with the selected supplier.
- To follow-up the purchase orders.
- To check and pass the purchase invoice for payment.
- To maintain a list of the names and address of suppliers for every group of materials generally required.
- To maintain relations with the suppliers.
- To coordinate and supervise the staff of the purchase department.
- To maintain the purchase record.
- To purchase the right quality of materials in right quantity at right price and at right time.
Purchasing Management is one of the marketing management activity, It managing all activities related to purchasing like as procuring raw materials, purchasing materials, managing invoice, managing inventories etc.
Objectives of Purchasing Management
- To purchase the required material at minimum possible price by following the company policies.
- Keep department expenses low.
- Development of good & new vendors.
- Development of good relation with the existing suppliers.
- Training & development of personal employees in department.
- Maintain proper & up to date records of all transactions.
- Participating in development of new material and products.
- Contribute in product improvement.
- Take Economic “MAKE OR BUY” decisions.
- Avoid Stock- out situations.