Most organizations cannot satisfy all their materials requirements internally because they do not have the capability to make the items themselves. In some cases, they purchase items from external sources simply because it is cheaper to purchase than to make them internally.

Till recently, the purchasing process simply involved placing an order with the supplier who offered the lowest price. Thus the purchasing function did not receive much attention. Nowadays, increase in competition and market demand and scarcity of resources have forced organizations to reexamine their purchasing activities. In modern organizations, the purchasing department's functions have expanded considerably and include activities such as verifying the credentials of suppliers, inspecting the quality of the materials to be purchased, ensuring the timely delivery of the material, etc.

In addition to purchasing the products needed in the production process, the purchasing department is also responsible for developing and maintaining a network of vendors, and sharing information with other departments about new products, processes, materials and services.

In other words, the purchasing department must ensure that the right equipment, materials, and supplies and services are procured in the right quantity, from the right source, at the right time, and at a competitive price.

We examine the purchasing process, make-or-buy decisions, duties of buyers and ethics in buying. We also discuss the various responsibilities of purchasing managers.

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