Strategic Management: Formulation and Implementation

Purchasing And Materials Management

Purchasing, the operation of storage and warehouse facilities, and the control of inventory are interrelated functions. However, the purchasing function is the first step in the materials management process. Moreover, purchasing is a key area in the management of company and must be treated as such.

This section discuses only some of the purchasing aspects.

Purchasing

Purchasing is a key factor in the profitability of a company. It should be perceived as a potential source of important savings and managed to ensure that it will achieve these savings. A small reduction in purchase costs can often have a greater effect than do large reductions in labor costs.

However, a lack of understanding of the true importance of purchasing is common. Moreover, poor purchasing commonly results from improper organization, poor operating procedures, and a lack of integration into business plans.