THE IMPORTANCE OF EFFICIENT PURCHASING IN A MANUFACTURING ORGANIZATION.
- BACKGROUND OF THE STUDY
Purchasing is concerned with the “process of defining the organization needs, selecting suppliers, agreeing terms, placing order and receiving goods and services. It is by it’s nature of service” function oriented to providing a complete supply service for users within the organization.
Purchasing according to Oyeoku (1993) is referred to as function of business that enters into contracts with the organization suppliers and the final places orders with them. Where the function of procurement is emerged with that of store, the receive and pay for the goods and service in other to received on behalf of the organization. purchasing can also be define according to oyeoku (1993) as the act of accomplishing through identifying and comparing the suppliers as well as their supplier that are available to organization through the process of negotiation with the sources available to them with sole intention of arriving at an agreed term in order to limit cost and improve the organization profit.
According to Lyson (1984) he defines organizational purchasing as that function that is responsible for obtaining by purchase, equipment, material, lease or other legal means, supplies and service required by an undertaking for production use.
In this definition, the word purchasing has been used in an economic sense of definition the function of creating utilities goods and service that satisfy human wants.
Purchasing does not confined to manufacturing output but also applied to even distributing, and services organization.
The importance of efficient purchasing to manufacturing organization cannot be over- emphasized, ‘that is’ it is to created efficient supply of equipment, fuel raw materials, component, power and other consumable service for use by industries.
Long ago buyers where employed to buy production material without a proper research on market to obtain the right quality at the right price, and with a high increase of profit to organization.
Today purchasers are trash to have organization need in an efficient economical and wiser from for equipments to organization. This approach was only successful when services or goods are not many substitutes, when there was an abundant material and when many managers took resources for granted.
According to Baily (1987) organizational purchasing is the process by which organization define the needs for goods and services, and compare the supplies and suppliers available for them, and arrive at agreed terms of trading and make contracts and place orders, also accept, revise and pay for the goods and service supplied.
The numerous diverse item that are constantly needed and when the quality of material influences the cost of manufacturing the final product, then an organization purchaser function becomes particularly very important and this demand close attention.
Therefore manufacturing organization should realizes the fact that the buyers is the custodians of organization purser and hence economists are derived purchasing provide direct saving on cost and contribute to cash increase flow
According to the institute for supply management purchasing is defined as a major function of required material service and equipment.