The process of purchasing and supplying has to be followed by adequate planning, organizing, as well as proper direction. Purchasing also needs to be followed by the ability to properly control the activities that are responsible for the leasing, the purchase, and the hiring.
The act of purchasing has been in existence since the time that man has been existing, from the period of the dark age to the stone age, the system of purchase used in the modern day could be traced back to the time of trade by barter system. The idea of purchase in any organization is used to: harness the resources of an organization, serve the purpose of any business, to enhance the quality of the society.
There are problems usually associated with purchase and supply, but these problems are dependent on the type of purchase that is being made at a given time. Every type of purchase is usually different for every economic situation, it is important for us to know that there is a difference between organizational purchase and domestic purchase. Domestic purchase should never be categorized with organizational purchase as they should be treated differently.
Industrial buyers are those who purchase goods and services for productive and significant purposes, an example of this is buying for the sake of production.
Institutional buyers purchase goods and services for the purpose of institutional establishments such as schools, hospitals and governmental establishment.
Intermediate buyers are those who purchase goods for the sake of reselling. Those regarded as distributors could be classified into this category.
Raw materials that have not gone through any process, this raw materials also serve as the basis for the production of other products or materials.
Supplementary materials are materials that are not absorbed in a physical way at the end of every production process, examples of supplementary materials include water and industrial gases.
Products that are semi-manufactured are products that have gone under production, but will require further production at a later stage.
Components are good that will further go through physical changes at the end of the production process.
Finished products are products that are purchased to be sold, there is nothing to be done to a finished product except being sold.
There are goods made for investment purpose. Goods made for the purpose of investment are not consumed at the instance they are made. Machines used for production, and computers could also be regarded as part of investment goods.
