What Is Purchasing?

What Is Purchasing?
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Introduction
Direct and Indirect Purchasing
Developing a Purchasing Focus
The Major Facets of Purchasing

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Purchasing in the context of business is about negotiating with current and potential suppliers to provide the business with raw materials (direct purchasing) for use in the production cycle or general materials/services (indirect) required for the everyday operation of the business.

The role of purchasing can be described as the opposite of sales in the sense that sales is about selling your products in the marketplace, whilst purchasing is all about buying raw materials as cheap as possible and adding value via the production process to sell the final product at a profit.

DIRECT AND INDIRECT PURCHASING

Direct purchasing can be defined as:

The purchase of materials required to be used directly in the production cycle.

Indirect purchasing can be defined as the purchase of materials and services to be used indirectly in the production cycle:

Specialist training for employees.
Recruitment agencies, temporary staff.
Consultancy services, to bring about business improvements.

DEVELOPING A PURCHASING FOCUS

In the context of this section of the web-site we shall look at different approaches towards purchasing.

We begin with observing the major tasks of a purchasing function, those of going from a traditional to a strategic focus. The next step is to look at the work of Michael Porter, make or buy decision making, through to developing a sourcing strategy.

THE MAJOR FACETS OF PURCHASING

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