The Objectives of Purchasing (Cost Accounting)
Progressive organizations recognize purchasing as a significant function and establish a separate purchase department to look after this function. Objectives of purchasing must be clearly laid down by the organization for the reason of the functioning of the purchase department. It must be seen that aim of purchasing should match with the overall objectives of the organization.
The objectives of purchasing can be outlined in this manner:
• Maintaining stability of supply: The purchasing utility must ensure the continuous accessibility of material, supplies and equipments to uphold production schedule or to keep away from disruption in production. The purchasing function also needs investments in reserve inventories. The efficiency of purchasing function lies in appropriate balancing of these issues which require experience, decision of future activities and trends and a variety of other activities on the fraction of purchasing influence.
• Maintenance standards quality: The purchasing purpose must ensure that the material purchased must be of needed quality in order to produce the goods in accordance with the specifications and to maintain quality standards.
• Avoidance of repetition, waste and obsolescence: The purchasing authority must have the correct knowledge of the items in hand and the obligations of materials for a exacting period in order to have proper decision considering long range and short range plans. This is essential to avoid duplication, waste and obsolescence regarding various items purchased.
• Maintenance of company's spirited position: The purchasing authority must always examine his specifications for the purchase of right material. This is essential to make sure that his company's quality standards are neither advanced nor lower than those of close competitors and to uphold his company's position in the industry.
• Maintenance of company's good image: The purchasing agent must produce an excellent image in the mind of suppliers. This will aid him in purchasing operation and to find out new ideas and materials besides infuriating its cost or improving products.
• Developing alternative sources of supply: optional sources of supply should be exposed for raising the bargaining power of the buyer and reducing the cost of purchases. Purchases can be prepared from optional sources if a specific supplier fails to deliver the requisite items.