Purchasing Management

In: Business and Management

Submitted By Kanam1226C
Words 1106
Pages 5
Purchasing management is the critical business function to every organization as no organization can exist without suppliers’ support. Traditionally, purchasing was viewed as a clerical activity that only did some documental work required by other departments. There was usually no communication between purchasing and other departments within the organization. Also, suppliers were usually selected based on price and availability only. However, purchasing management has undergone a great change since 1960s. Organizations began to realize that purchasing can become a profit-making activity rather than just a profit-taking activity.

A study performed by Carr and Pearson (2002) shows that purchasing management has a positive impact on the organization’s financial performance, no matter the firm is small or large in scale. It always plays a major role in the organization’s efforts to improve the quality of products and, in turn, market share. An effective purchasing management can improve the overall productivity, profitability, and return on investment of an organization. Therefore, in modern organizations, purchasing is viewed as a vital element in gaining competitive advantage. Coordination with other departments, such as marketing, production and financial, was augmented. Purchasing professionals nowadays are required to work across functional boundaries, for example, working with the production department to plan the schedule for goods acquired and delivered. More importantly, its performance measures are no longer based on its own as an independent unit but upon the performance of the organization as a whole.

Recently, many organizations place customer satisfaction as a key objective. A good customer service can help the organizations to build customer loyalty and to be differentiated from its competitors. Suppliers become a decisive element of the supply…...

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