Academic journal article Journal of Purchasing & Materials Management

Historical Evolution of the Purchasing Function

Academic journal article Journal of Purchasing & Materials Management

Historical Evolution of the Purchasing Function

Article excerpt

Historical Evolution of the Purchasing Function

Interest in purchasing as a separate, important, and profit-contributing function of management has gained substantial momentum within the decade of the 1950s and up to the present. As one reviews the development of, and attention to, this function, he cannot help being impressed by the progress which has been made in the last few years.

Perhaps the recent, rapid advances in knowledge concerning the proper role of purchasing within the modern organization overshadow completely the early work and study devoted to this function. Some authors have indicated that such attention is solely a phenomenon of the last few decades.1 Even so, it is important to understand how the purchasing function has developed to the level and position it occupies today. A knowledge of what has happened in the past often will give one a keen insight into the problems of today and a better picture of what may occur in the future. A true comprehension of where we are today requires an understanding of where we have been and how, and in what areas, progress has been made. This understanding can be gained, at least in part, by a review of the available literature on purchasing to determine the concepts of early authors and to highlight the types of problems, and recommended action, presented in this literature. Such a review will show that the purchasing function was established as an important area of activity, and was being written about, much earlier than is commonly assumed.

This paper presents, chronologically, the early writings on the subject of purchasing. Magazine articles are reviewed through the year 1910, by which year such articles were appearing frequently. Books on purchasing are reviewed through 1928, in which year two books presenting an analytical, managerial approach to purchasing were published. From this review, it will be apparent that the purchasing function has historical roots which are much deeper than is often recognized by scholars and practitioners alike.

LITERATURE PRIOR TO 1900 One of the early classic books in management provides evidence that purchasing was established as a separate industrial function well over 100 years ago. Charles Babbage's book, On the Economy of Machinery and Manufactures (1832), referred to the purchasing function in two places. In discussing the organization of duties for a mining concern, one of the ten officers responsible for operating the mines was "a materials man [who] selects, purchases, receives and delivers all articles required."2 Later he mentioned, "It will have been found necessary to establish an accountant's department...and this department must be in communication with the agents who purchase the raw produce..." And in describing the importance of the division of labor he further noted that "a great reduction in the cost of the article which is brought to market" can be accomplished by utilizing "the precise amount of skill...necessary for the execution of each process...[and] throughout every stage...from that in which the raw material is procured, to that in which the finished produce is conveyed into the hands of the consumer ..."3 Certainly this early author recognized the basic importance of the purchasing function to the overall success of an organization. It also is interesting to note that he recognized a "materials man" who would have control of several functions, in addition to purchasing, which are embraced under the now-popular "materials management concept."

Another of the references made to purchasing before the turn of the century was in an 1870 trade magazine entitled "Purchasing Building Materials," which pointed out that through judicious purchasing a firm may be able to effect substantial savings in total production costs: After a bill of the necessary amount of lumber has been prepared, it will be found an economical practice to communicate with lumber dealers in various parts of the country, for the purpose of determining the price for the kinds of lumber required. …

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