All you ever needed to know about Purchasing !

Pur­chas­ing as a Function


Pur­chas­ing within a busi­ness can be seen as a spe­cial­ized task per­formed by indi­vid­u­als with a par­tic­u­lar role. The pur­chas­ing func­tion within a busi­ness is intended to acquire sup­plies, nec­es­sary wid­gets, ser­vices or other busi­ness related items. The more effi­cient this process becomes the eas­ier it is for a com­pany to obtain the parts, includ­ing ser­vices and labor, nec­es­sary to carry out their oper­a­tions. You might be able to get away with­out pick­les but you can’t make a ham­burger with­out the bread and meat.


Some­one with the title of pur­chaser, pro­cure­ment offi­cer, buyer or even a pur­chas­ing depart­ment would be respon­si­ble for car­ry­ing out pur­chas­ing within a com­pany. Depend­ing on the size of the com­pany it might even be the owner. The main chal­lenge that orga­ni­za­tions face is under­stand­ing and prop­erly inte­grat­ing pur­chas­ing with the sup­ply chain man­age­ment or logis­tics func­tions of the busi­ness. Suc­cess­fully inte­grat­ing and mea­sur­ing pur­chas­ing within a com­pany will allow for more insight into com­pany spend­ing. You’ll be able to have a bet­ter under­stand­ing how many pick­les you need, or bet­ter yet, how much bread and meat you should have stocked up.






Pur­chas­ing as a whole can be boiled down to answer two main questions.


Ques­tion 1) What do we need to obtain ?


Depend­ing on how effec­tively you can prop­erly answer this ques­tion you can move onto answer ques­tion 2. Many com­pa­nies have major prob­lems in Ques­tion 1. Do you really need the pickle? What kind of bread should you be buy­ing? What about meat?


Ques­tion 2) How and who should we go to obtain what we need?


This ques­tion is a lot more dynamic because it has a lot more mov­ing parts. If you choose to buy a pickle do you go direct to a farm and make the pick­les? Do you buy from a store? Direct to man­u­fac­turer? How will the pick­les get to you?



A major con­cern with the sup­ply chain is actu­ally com­mu­ni­ca­tion between each of the links on the chain. Get­ting infor­ma­tion from one link to the other with­out a prop­erly inte­grated sys­tem usu­ally requires a cost of time or money. Pos­si­bly both.


The impos­si­ble tri­an­gle sug­gests you can only exist at one point within the tri­an­gle. You can have fast and cheap but it won’t be good. Fast and good but it won’t be cheap. Good and cheap but it won’t be fast. Or a com­bi­na­tion of medi­oc­rity between all three.



What is your solu­tion to a prob­lem like this?






The trick to solv­ing the tri­an­gle is not to actu­ally solve the tri­an­gle. The trick is actu­ally to find a new tri­an­gle or cre­ate a new shape or way of doing things entirely. (Star Trek fans this is called the Kobayashi Maru)


How does this apply to purchasing?


Typ­i­cally some­one in a com­pany will real­ize that they need to order some­thing. Or even expense some­thing. They’ll make a request to order or go through a req­ui­si­tion process. If an order is approved, the pur­chaser will nor­mally have a sup­plier in mind and will need to obtain a quote. This takes time. Then there might be a period of nego­ti­a­tion. This takes time. The order then needs to be placed and even­tu­ally received. This takes time and com­mu­ni­ca­tion. Finally a pay­ment needs to be made. This takes com­mu­ni­ca­tion and pos­si­bly time.


Delays in this process will eat at effi­ciency and cre­ate bot­tle­necks. It might even cost you very real dol­lars. You can’t have upper man­age­ment just sit­ting around wait­ing for requests and you shouldn’t really skip steps or it’ll cre­ate mon­ster prob­lems later. The solu­tion will be to find a solu­tion that suits your organization’s requirements.


You wouldn’t get a Fer­rari to drag a trailer. If you need to move that trailer you can’t really ignore it either. It’s really just comes down to find­ing out your options.







Pur­chas­ing as a busi­ness func­tion can be a com­pet­i­tive advan­tage for your orga­ni­za­tion. In fact every busi­ness will have expenses, pur­chases or orders they need to make so in the grand scheme of things if your com­pany doesn’t have proper con­trol of it’s pur­chas­ing it is most likely hurt­ing your orga­ni­za­tion.