Evolution of Purchasing

IDIS 424 Spring 2004

1

1830-1900

• Charles Babbage’s book mentions a “materials man” • Use of Selling Agents • Railroads created a “Supplying Depart.” – Need for technical expertise – Centralization – Contributions to Profitabiity 2

1900-1939

• Development of purchasing procedures and forms • Development of material specifications • Articles on purchasing appeared in trade journals • National Association of Purchasing Agents established in 1934 3

1940-1946

• Acquisition of needed and scarce materials • Purchasing courses offered at universities 4

1947-1965

• Marketing overshadowed purchasing • Purchasing regarded as a negative function by most firms • GE created a Purchasing Analysis Department in 1960 to analyze material prices 5

1966-1970

• Concept of Material Management developed (total systems approach) • Techniques of multiple sourcing and competitive bidding introduced 6

1971-1999

• New technologies and increased global competition created the need for new approaches to purchasing • A “world view” of purchasing developed • Use of Purchasing Professionals • Purchasing Managers became part of top management teams • Development of cross-functional purchasing teams 7

2000 and Beyond

• Emphasis on supplier development and supplier improvement • Focus on cooperative rather than on adversarial approaches with suppliers • Greater integration with other functions of the firm • Greater emphasis on the big picture (Strategic Purchasing) 8