Purchasing function essay
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The purchasing function is described by Lysons and Gillingham (2003) as a function with resource to procure supplies. It is usually argued that the purchasing function is not strategically important to enable organisations to gain competitive advantage. Carr and Pearson (2002) described nonstrategic purchasing as a function that is clerical in nature, reactive to other functions and focusing on short-term issues. Ramsay and Croom (2008) on the other hand saw purchasing as a strategic function that contributes to the overall organisational competitive advantage. But Reck and Long in Carr and Pearson (2002) argues that purchasing function of a firm can operate between strategic and nonstrategic levels within an organisation. There is now a question as to whether purchasing should still be considering the nonstrategic role of the purchasing function. This paper will be looking the role of purchasing that make makes it strategic and how purchasing function is strategically important in gaining competitive advantage for the organisation with the aid of model and tools/techniques for purchasing.
Purchasing is usually defined as obtaining the right quality material, at the right time, in the right quantity, from the right source, at the right place (Lysons and Gillingham 2003; Baily et al. 1998). Van Weele (2005) also defined purchasing as the management of the company’s external supply of goods, services, capabilities necessary for running, maintaining and managing the company’s primary and support activities is secured at the most favourable conditions. Although, there is no agreed definition of purchasing from literature, these definitions indicate that there is need for supply requiring to determination of specifications, supply continuity by choosing a suitable supplier, efficient buying (worth the value), and relationship to ensure supply at the right time to manage inventory and monitor efficiency of suppliers thereby defining the purchasing function.