Determining what materials and services to purchase is the first and one of the most crucial steps in the procurement process. Responsibility for this determination varies with the requirement. In many cases, the using department is responsible. For example, Plant Engineering is responsible for developing equipment requirements. Plant Operations develops requirements for operating
supplies such as drill bits, lubricating oils, and related items. Administrative Services initiates requirements for office supplies, equipment, and services.
The responsibility for determining which component materials to specify for newly designed products is a complex issue, complicated by the frequently conflicting interests, orientations, and biases of the many departments that have an interest in the end item or service. For example, Engineering may desire design excellence. Marketing may demand nonstandard and unique features. Operations prefers long production runs utilizing existing equipment, requiring few operators, and using high-quality, easy-to-work materials. Purchasing prefers to buy readily available materials from several dependable sources at reasonable prices.
Historically, Purchasing contributions to the organization’s success have been seen as being in two basic areas:
- ensuring the timely availability of required supplies and services and
- Obtaining them at economic prices.
However, these contributions are greatly expanded when purchasing is included at the beginning of the design process. For instance, as material requirements are developed, purchasing should ensure that only essential needs are incorporated in the requirement. The description of the requirement (usually a specification) should not contain features that unduly limit competition among qualified suppliers. Further, purchasing can help the designer to be sensitive to the relative availability and cost of the alternative materials that may satisfy product requirements. Timely availability of required materials and services usually is enhanced by the availability of two or more qualified sources or carefully structured strategic alliances.