Page 43 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes Introduction

In the previous unit, we studied about the concept of codification and standardization in materials
management. This unit will help you learn about the purchase department, its functions,
purchasing management, the different purchase policy and procedures and the purchase of high
capital equipments.
Purchasing is the function of procuring materials, tools for stores, (or supplies) and services
required for the manufacture of a product, maintenance of the machines and uninterrupted
running of manufacturing plant in a manner that guarantees marketing of the company’s products
in the quantities desired at the time agreed upon and at the competitive price, consistent with
quality desired.

4.1 Meaning of Purchase Management

In the words of Alford and Berry “Purchasing is the procuring of materials, supplying machine
tools and services required for the equipment maintenance and operation of manufacturing
plant”. Purchasing in a sense is the task of buying goods of right quality, in the right quantities,
at the right time, at the right sources, and at the right price.

Traditionally, purchasing was regarded as one of the activities of the production management.
However, much progressive management have already realized that in view of changing
business conditions, growing competition continual escalation in the cost of inputs, purchasing
must be given status equal to that of other major functions (i.e., production, sales and finance).
The purchase department is headed by the purchase manager/officer. In some firms, the head of
the purchase department is also called commercial manager or purchase chief.
Purchasing management encompasses a group of applications that controls purchasing of raw
materials needed to build products and that manages inventory stocks. It also involves creating
purchase orders/contracts, supplier tracking, goods receipt and payment, and regulatory
compliance analysis and reporting.
Purchasing management directs the flow of goods and services in a company and handles all
data relating to contact with suppliers. To be effective, it requires knowledge of the supply
chain, business and tax laws, invoice and inventory procedures, and transportation and logistics
issues. Although a strong knowledge of the products and services to be purchased is essential,
professionals in this field must also be able to plan, execute, and oversee purchasing strategies
that help their company be more profitable.
Sourcing reliable suppliers is a crucial part of purchasing management. Managers, agents, and
buyers usually learn about new products and services from Internet searches, trade shows, and
conferences. They meet with potential suppliers in their plants whenever possible. Skills in
foreign languages may be helpful for sourcing suppliers in other countries. Individuals who
work in this area must always assess potential suppliers in terms of the supplier's ability to
deliver quality merchandise at a suitable price and on time.

Purchasing management professionals must be good negotiators, understand technical product
information, have good mathematical ability, understand spreadsheet software, understand
marketing methodology, and be outstanding decision makers. To get ahead in this field requires
good leadership skills, and higher positions often require a master's degree in a business related
subject. Entry level positions, such as junior buyers, assistant buyers, and purchasing clerks,
often require a college degree and some product knowledge.

38 LOVELY PROFESSIONAL UNIVERSITY