- Learning Objectives
- Introduction and History of Purchasing
- Why Is Purchasing Important?
- How Can the Appropriate Relationships with Suppliers Create Value?
- Purchasing and Supply Management and Return on Investment (ROI)
- Purchasing and Information Technology (IT)
- The Purchasing Process
- Strategic and Tactical Roles of Purchasing
- Types of Purchases
- Conclusion and Chapter Wrap-Up
- Key Terms
This chapter is from the book
This chapter is from the book
This chapter is from the book
Types of Purchases
Organizations buy many different goods and services. As previously indicated, the challenge for purchasing is deciding on the supplier that offers the best opportunity for items an organization must purchase externally. Table 1-5 lists and describes many of the items that a purchasing department is responsible for buying. Services are a special category of spend and the involvement of purchasing depends on the organization.
Table 1-5 Different Types of Purchases
|
Type of Purchase |
Description |
Examples |
|
Raw materials |
Items with a lack of processing by the supplier into a newly formed product. Often these raw materials are not of equal quality and are purchased by “grade.” |
Petroleum, coal, lumber, copper, zinc, gold, and silver |
|
Semi-finished products and components |
All items purchased from a supplier required to support an organization’s final that are production. |
Components, subassemblies, assemblies, subsystems, and systems (seat assembly, steering assembly, doors, and posts) |
|
Finished products |
Products for internal use or products that require no major processing before resale to the end customer. |
Furniture, computers, cars, and carts |
|
Maintenance, repair, and operating items (MRO) |
Items that do not go directly into an organization’s product but are required to run the business. |
Spare parts, office and cleaning supplies |
|
Production support items |
Materials required for packaging and shipping. |
Tape, bags, inserts, and shrink-wrap |
|
Services |
Services required to support the facility or the business. |
Customer support, temporary labor, facilities, and legal |
|
Capital equipment |
Assets intended to be used for more than one year. |
Machinery, computer systems, and material-handling equipment |
|
Transportation and third-party purchasing |
A specialized type of service buying to manage inbound and outbound material flows. |
Rail, truck, ocean, 3PL, and multimodal |