![]() If poor quality materials are used for production, the finished goods may show some defects/shortcomings, and at that stage, it would be too late to rectify the shortcomings. As the quality of end products depends upon the quality of input materials, the purchasing department needs to be vigilant in respect of the quality of the materials procured, to be used as input. ![]() This aspect gains additional significance in a market, in which cut-throat competition is rampant. They are also likely to lose their loyal customers, who are very particular about the quality of the brand they are using it. They don't like any compromise in this regard, as any shortcoming (faulty or defective products) in their product would destroy their image in the market, and their market share may decline. Manufacturers are, therefore, very cautious about maintaining the quality of their products. The quality of the end product produced by any unit is of paramount importance. As a result, the efficiency of the management is enhanced, and the bottom-line of the company is improved. An efficacious and effective purchasing function leads to the procurement of materials of superior quality at competitive rates. It has a strong bearing on production cost, level of production, timely delivery, and product quality. The importance of purchasing function is the same for all organizations, irrespective of the fact whether it is a manufacturing unit, trading company, Government, or a charitable body. The significance of purchasing may be gauged from the following: Efficient Administration What is the importance of purchasing department? Policy ComplianceĪpart from the various functions that are discussed above, the purchasing department is also responsible for compliance with the company policies and procedures, a formal procedure is adopted for making a requisition to the purchasing department which further follows certain norms while placing the order. In the case of small business enterprises, the purchasing department is usually related to the accounting department to ensure the availability of sufficient funds for the execution of the purchase order. It ensures that the material order is received from the respective vendors on time and any delay arising can be tracked. ![]() Handling the paperwork related to the receipt, delivery and other peripheral activities related to the purchases is also one of the functions of the purchasing department. Apart from the prime vendor, who supplies all the relevant quantities, one alternate vendor should also be kept aside to meet the emergent situations or periodically to cross-checking the prices. So, in the case of small businesses, the purchasing department is required to do some extra exercise of finding a suitable vendor so as to meet the requirement of the business. However, the same may not be possible where the volume of the business is small. Higher quantities are preferred to get the maximum discount. Whenever the price touches the bottom mark, the order is placed to get the maximum advantage. Evaluating PriceĪnother routine function of the purchasing department is continuous evaluation of the price. Purchasing also involves that suitable quantity is procured from the suitable vendors only. Where the volume of the business is relatively less, only the required quantity of the stock is kept so as to avoid the blocking of the capital and saving the ordering and the carrying cost of the product. In the case of a retail outlet, it is ways ensured that relevant stock is there available on the shelves or in go down so as to avoid any situation of stock-out or losing the customers. In the case of manufacturing, establishment material includes basic raw materials like steel, iron, plastic, and aluminum and also includes machinery, tools, equipment, etc. The basic role of purchasing department is to make available the materials to carry out the production process. To obtain a better grasp of the purchasing department's role, consider some of the functions it does. Many individuals, including some employees, are unaware of what the purchasing department performs, why it exists, or what it accomplishes. The services provided by these divisions are used by many manufacturing, retail, military, and other industrial companies. The purchasing or procurement departments of most large companies, as well as some government organizations, play a critical role in their everyday operations.
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