purchasing

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Buy

To take ownership of some asset in exchange for some monetary remuneration. Buying may take any of several forms. In a cash purchase, the buyer gives cash or a cash equivalent immediately in exchange for the asset. In a credit sale, the buyer takes ownership immediately in exchange for future payment, often with interest. An example of buying is a simple transaction involving widgets. If the buyer is willing to pay $2 per widget and the seller wishes to sell 100 widgets, then the seller gives to the buyer 100 widgets and, in their place, receives $200. See also: Sale.

purchasing

the business function which is involved in procuring raw materials, components, finished goods and capital equipment, ordering and acquiring supplies of these items at competitive prices. Purchasing is charged with the task of maintaining adequate STOCKS of raw materials, components or finished goods, and placing orders to top up stocks as necessary. This involves seeking out and evaluating suppliers in terms of the quality of their offerings, reliability, delivery times and after-sales service, as well as prices. For standard commodities, industrial buyers will generally buy largely on price, seeking quotations or tenders from suppliers. The buyer can choose to place large orders with just one or two suppliers to secure BULK-BUYING price discounts or he or she may choose to spread orders among several suppliers to diversify supplies and avoid the risk of disruption to production if a single supplier defaults. Finally, industrial buyers need to keep up to date with materials and product prices and new materials becoming available in order to provide intelligence to production and marketing colleagues. See BUYING PROCESS, BUYING CENTRE, MATERIALS MANAGEMENT, JUST IN TIME (JIT) SYSTEM, APPROVED SUPPLIER, NATIONAL ACCOUNT, DECENTRALIZED PURCHASING, SOURCING. See also FOUR O'S OF PURCHASING.
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