Purchasing activity is an integral and incessant activity of every business. Many flourishing organizations regard it as a key function and thus have a dedicated purchase department to take care of the purchase activities. The prime objective is to clearly justify its separate existence. Further, since purchasing is a part of the total management activities, it should ensure that its objectives are in sync with the organizational objectives. Identifying objectives assists the imaginative personnel in enhancing their efforts to attain these objectives economically and efficiently. These objectives are established by the purchasing department head in consultation with the top level of management or as per the policies set by the management.
Objectives of Purchasing
Following are the objectives of purchasing:
- To maintain continuity in supply
- To maintain quality standards
- To avoid duplication, wastage and obsolescence
- To sustain organization’s competitive position
- To maintain good image of the organization
- To develop alternate sources of supply
To maintain continuity in supply – The purchasing function needs to ascertain that the materials, supplies and equipment are available in continuity, to avoid any disruption in production and maintain a production schedule. This also requires investments to be made in reserve inventories. The efficiency though can only be achieved if these factors are properly balanced that is dependent on experience, assessment of planned activities and activities forming part of purchasing authority.
To maintain quality standards – The purchasing function should ascertain that the purchased materials should be of desired quality such that the goods can be purchased as per specifications and quality standards are maintained.
To avoid duplication, wastage and obsolescence – The purchasing department head should possess accurate knowledge of items in hand and material requirements for a set period of time, to take informed decisions on both long range as well as short range plans. This is very important to avoid any duplication, wastage and obsolescence of the items purchased.
To sustain organization’s competitive position – The purchasing authority is responsible for evaluating his specifications on purchasing the right material. This will help ensure that the quality standards maintained are neither higher nor lower when compared to those of arch rivals as well as to maintain the goodwill of the organization in the industry.
To maintain good image of the organization – The purchasing agent should build a good image of the organization before the vendors for smooth functioning of the purchasing operation as well as to explore new areas and materials, apart from reducing their costs and enhancing product quality.
To develop alternate sources of supply – The purchasing department should identify alternate sources of supply to increase the bargaining power of the buyer and cut down on the purchase expenditure. This also eases down the pressure when a particular supplier fails to deliver the required items; the same can be sourced from the selected alternate suppliers.
