November 25, 2009

The Need to Establish a Purchasing Department in an Organisation

 

1.0 Introduction

Purchasing department exist in most organisations particularly multinational and other large enterprises. Purchasing department works as opposite of sales and marketing department through identifying suitable suppliers and works to reduce cost of bought in items. With this said, one of the key responsibilities of purchasing department is to ensure that there will be no shortages. Such responsibility is carried out by properly coordinating acquisition of goods and services and by encouraging open and competitive bidding on all goods and services. When purchasing equipment, materials and supplies as well as services, there is the necessity to ensure that the right quality, in the right quantity at the right price and from the right source is evident.  

The purchasing department takes a new function today wherein the emphasis is on long-term business strategy and less emphasis on the more mechanical tasks of price comparisons and order placement. This premise is particularly true since the modern purchasing department is more often involved in the process of locating new sources, marketing and research and development (Banning, 1997, p. 1).

 

2.0 Problem Statement

The problem that will be addressed in this study is the necessity of establishing a purchasing department within an organisation. There are managerial, financial and technical implications of establishing a purchasing department hence it must be a requirement and that it will serve as a source of competitive edge to the organisation. However, the process of establishing a purchasing department is not without difficulties. The following research questions will be answered:

1)     What are the benefits of having a purchasing department to an organisation? What are the detriments?

2)     What are the problems and challenges encountered by organisations without a purchasing department?

 

3.0 Study Objectives

The main aim of this study is to explore the extent to which a purchasing department is deemed a necessity to organisations. In lieu with this, the following research objectives will be addressed:

·        Explore the positive and negative results of having purchasing department in organisations

·        Investigate reasons for the need of a purchasing department to an organisation

 

4.0 Methodology

The research strategy that the study will utilize is the descriptive method. A descriptive research intends to present facts concerning the nature and status of a situation, as it exists at the time of the study (Creswell, 1994). It is also concerned with relationships and practices that exist, beliefs and processes that are ongoing, effects that are being felt, or trends that are developing. (Best, 1970) In addition, such approach tries to describe present conditions, events or systems based on the impressions or reactions of the respondents of the research (Creswell, 1994). This research is also cross-sectional because of limited time. This research is a study of a particular phenomenon (or phenomena) at a particular time. (Saunders et al, 2003) Accordingly, cross-sectional studies often employ the survey strategy, and they may be seeking to describe the incidence of a phenomenon or to compare factors in different organizations.

In this study, primary and secondary research will be both incorporated. The reason for this is to be able to provide adequate discussion for the readers that will help them understand more about the issue and the different variables that involve with it. The primary data for the study will be represented by the survey results that will be acquired from the respondents. On the other hand, the literature reviews to be presented in the second chapter of the study will represent the secondary data of the study. The secondary sources of data will come from published articles from books, journals and theses and related studies.

The survey method, also known as the questionnaire method, will be used in gathering the data for this study. Surveys are the most common form of research method for collection of primary data. The descriptive survey of the population is valuable in understanding the audience, and in the definition of the existence and magnitude of the problems, and the survey data are also helpful in determining cause and effect relationships between variables (Commonwealth of Learning, 2000). For this study, two sets of structured questionnaires will be constructed: one for companies with purchasing department and another for companies which do not have purchasing department.

 

5.0 References

Banning, K. B. (1997). Opportunities in Purchasing Career, McGraw-Hill Professional.

Best, J. W. (1970). Research in Education, 2nd Ed. Englewood Cliffs, N.J.: Prentice Hall, Inc.

Commonwealth of Learning. (2000). Manual for Educational Media    Researchers: Knowing your Audience. Vancouver, Canada: Commonwealth Educational Media Centre for Asia (CEMCA).

Creswell, J. W. (1994). Research design. Qualitative and quantitative approaches. Thousand Oaks, California: Sage.

Saunders, M., Lewis, P. and Thornhill, A. (2003). Research Methods for Business Students, 3rd Ed. London: Prentice Hall Financial Times.


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