Introduction

Purchasing is one of the most significant aspects of an organization. Internally, it is difficult to meet the needs of raw materials. Purchase of essentials seems to be a better option from the market.

Purchase of required raw material or tools seems to be the most reliable option in such situations.

Placement of order was one of the few things organizations focused on.

Nowadays, it is critical and different with the changing conditions and increases in competition. 

Some of the other factors necessary for purchasing department are:

• Verification of sellers’ credentials 
• An inspection of the quality of material
• Evaluation of various costs associated with the raw material like transportation

Purchasing department creates a network of sellers and shares the information with other departments.

The purchasing department is responsible for raw materials, sellers, and equipment from a reliable source at the appropriate time.

The importance of purchasing is out to test with the selection of raw material to make it into finished goods. The quality of the raw material is crucial for the organization to have properly finished goods.

The decision of the selection of the item is made with the fulfillment of these criteria:

• The cost of the purchase should be less than that of manufacturing it(internally).
• Unavailability of the resources to create the purchased product.
• ROI is not that good while making the product in the organization.
• Seasonality affects the storage of the product(Buying it rather than storing it makes a lot more sense).

Management of resources

Organizations want to manage their resources as efficiently as possible.

It is necessary to have the whole process in a synchronized way.

When an organization wants to start a new establishment like a factory, they want to open a factory near the old establishment.

It saves them a lot on costs and resources.

An organization looking forward to acquiring a warehouse wants the warehouse to be near their showroom as it reduces the transportation cost and helps fulfill the demand quickly.

Availability of resources is another aspect in determining the purchase of raw material.

The organization needs to identify their requirement, as for the organization dependent upon technology, they need to have skillful labor.

Whereas the organizations depend upon more labor-driven, work needs to have unskillful personnel.

The organization needs to have the cost element in its mind as per the requirement. The cost of resources mainly changes with the change in availability and nature of the task.

Cost Incurred

Cost is yet another aspect while deciding the purchases

A business looking forward to manufacturing the product wants to have some equipment that provides value to the organization. 

An organization can have two types of costs while selecting the pieces of equipment. Either it could be the price of the equipment acquired or as an expense in the form of rent.

Companies looking forward to the long-term Operations and are not willing to commit hefty amounts to acquire the place can take the lease route.

Shipping Management

Organizations use transportation for easy movement of their products and tools. 

Transportation decisions are dependent on the mode of transportation and the route of transportation. 

If an organization decides to transport its products through the air, it increases its responsiveness and costs. On the other hand, if the organization chooses the land route, their cost decreases as well as the responsiveness of the transportation.

The organization should also evaluate if they have the infrastructure for transportation or they need to hire these services.

Transportation plays a significant role for every business, and when an organization is operating in two different places, it becomes a crucial part of the business.

Efficient transportation options help the organization to bridge the distance between the two establishments of the same organization.

Services Required

Businesses need some services for the proper functioning of the organization.

Each industry requires a Different set of facilities.

 For example, A Showroom unit wants services like electricity and water.

Precautionary Measures

Those organizations working with an element of risk for employees should prepare precautionary measures.

To safeguard the employees’ interest, organizations should take care of the safety of employees working with the machines.

They should follow all the precautionary measures like updated machines and tools. Organizations should prepare funds for employees for future uncertainties.

Future Aspect

Preparing for the long-term goal helps to future-proof the business.

While manufacturing the finished goods, organizations should also think about the expansion factor.

Organizations should evaluate the room for expansion as prior planning for the growth helps to save a lot of money and

resources in the future.

For example, if someone is investing in a Facility, it is a viable option to purchase that machine with the future aspects.

Purchasing a facility with a ground floor makes it easier to expand the floors in the future.

Duties of the Purchase department

The purchasing department is one of the important departments in the organization to achieve the set goals. 

The purchasing manager is responsible for the following activities

• Creation of the network
• Seller selection
• Establishing a communication interface
• Negotiation