What are the objectives of purchasing management?

The materials management is necessary for any company. Having a well-equipped headquarters with the right office equipment and supplies is essential for the operation of the sales department. Having an inventory with quality raw materials is related to optimal and efficient production; and the acquisition of products and services at reduced costs has a positive impact on the finances of the companies.

Therefore, having a purchasing department that meets its objectives is essential for the supply chain and the development of any economic activity, whether within the retail , e-commerce or services sector. But what are the purchasing goals? What should this department take care of?

Definition of the purchasing department

The purchasing department is the area or sector of the company or organization that is responsible for managing supplies. Its main objective is to identify the essential resources and materials to maintain the production chain and operations associated with the company, such as surveillance, transport and delivery of orders, sales, among others. A good purchasing manager should take care of:

  • The acquisition of physical goods.
  • The correct handling of information.
  • Risk analysis in the absence of resources.
  • The implementation of effective purchasing systems.
  • Maintenance and purchase of equipment and machines.
  • The systematization and automation of the purchasing process.
  • Payment for essential services, such as electricity or the Internet.
  • The replenishment of inventory, raw materials and office supplies.
  • The purchase or rental of real estate, such as offices, premises and warehouses.

So what goals does the purchasing department have?

To fulfill its duties, the purchasing department needs to cover certain main objectives. This is of utmost importance because the healthy operation of the company necessarily depends on good material management. Let’s look at the most common purchasing goals:

# 1 Reduce costs and identify savings opportunities

It’s not just about buying, it’s about how to do it. Analyzing the different options offered by the market and their benefits is essential for the purchasing department. We are not talking – necessarily – of acquiring products at the lowest price – because quality also matters – but of negotiating deals with attractive advantages for the company.

This objective is closely related to the identification of savings opportunities because the department must be able to analyze the market and anticipate offers, take advantage of the incentives and extra benefits offered by one supplier compared to another, reduce shipping costs, prolong the payment or get credit and organize the inventory to buy only what is necessary, that is, without spending more than necessary.

# 2 Diversify orders to avoid setbacks

Choosing a single supplier for large batches of merchandise is a risky gamble. For this reason, purchasing departments must include the diversification of suppliers within their objectives . What does this mean? That, in order to anticipate any setback or delay, they have to choose two or more companies and distribute the orders among them.

In this way, if one of the wholesalers suffers an unforeseen event, the production chain will not be paralyzed and there is a margin of time to make an emergency purchase before it directly affects the development of the economic activity of the company.

# 3 Quality and quantity at the perfect time

As we said, purchasing objectives are not limited to buying for the simple fact of doing so. It is essential that they choose products, services and materials of the right quality so that this is reflected in the final product; order the number of units necessary to cover operations; consider a margin of error; and calculate an average price that does not exceed financial projections and that does not put other departments of the company at risk.

In addition, purchases must be made at the right time . If an order is placed too late, the company’s production chain will be delayed. If it is done too early, the company could have liquidity problems to meet other financial commitments, such as payment of wages and salaries.

# 4 Implement automation systems

Working with specialized computer programs is key for workers to meet purchasing objectives. This will help them maintain an open channel of communication with sales, production, and senior management. In addition, with these types of tools you can efficiently and quickly monitor inventory and anticipate future orders.

Therefore, computerized purchasing systems have become a fundamental part of any company and the purchasing department is the user that benefits the most from them. Ultimately, this class of software reduces human error, simplifies reporting, improves order processing, makes it easier to create an efficient purchasing method, and allows you to track every task in your department.

# 5 Innovate to make the company grow

Innovation doesn’t just belong to production, sales or research employees. The purchasing department can also support and contribute to help the business expand . To do this, purchasing workers must stay in close collaboration with the other departments of the company, since they know the prices of the materials and can propose ideas that allow refining the manufacturing or reducing the costs of production and sale.

Their participation could even allow the launch of low-cost or low- end products to reach a greater number of buyers. For example, Apple, Xiaomi and Samsung – just to name a few – have three product lines. Low-end phones and tablets are typically made from cheaper materials or have different finishes than high-end ones. The creation of this new line of products may not have been possible without the purchasing department.