chapter  6
The Purchasing Function
Pages 21

The function of the Purchasing Department is to obtain for the firm or company everything it needs to carry on its activities, except labour which is obtained by the Personnel Department. The items to be purchased are of four main types. These are:

1 Capital assets These are purchases of plant, machinery, motor vehicles, office equipment, tools and appliances of every kind. They last a long time – longer than a year – and are distinguished from items that last less than a year, which are called 'consumables'. Capital assets are often extremely expensive – a single crane may cost as much as £500 000 for example – and the purchasing officer has much to do to ensure that such items are properly approved before ordering, after a period of careful evaluation by staff who know all about the asset concerned. Often special members of staff are appointed to supervise the purchase of assets in particular fields (e.g. office equipment), and no requisition will be considered that does not bear the signature of the appropriate official. 2 Consumable items These are items used in the course of business, such as letterheads, envelopes, paper clips, etc., for office use; and lubricants, cleaning materials, greases, etc., for factory activities. Much of the ordering of this type of good is routine – it is simply a case of ordering when stocks are running low – but all such items are valuable and easily pilfered so their use should be monitored. Staff should know that management views misappropriation of such items as a serious offence. 3 Goods for re-sale Firms in wholesale and retail trade buy goods to sell again at a profit, after perhaps performing such useful services as breaking bulk, distribution, display, etc. So widespread is this sort of business activity that the word 'purchases' has come to mean 'items bought for re-sale at a profit', even though the Purchasing Department may buy many other items. So the purchase of a machine or of typing paper for office use is not 'purchases' in the usual meaning of that word, which is reserved for goods that are to be re-sold.