Purchase department has a key role so for as the procurement of proper materials, machinery, equipment and supplies of stores used in manufacture of a product is concerned. The head of the department is utile known as Purchase Manager or Chief Buyer.
The importance of purchase department may be summarised as under:
(1) Purchasing is a primary function and it directly influences the total cost of the products.
(2) The amount of profit earned in a factory depends upon the efficiency of purchasing department.
(3) It checks unnecessary and excessive investment of capitals on purchase of materials.
(4) It introduces new lines of products through discovery of new substitute materials.
(5) It prepares plans and policies relating to scheduling of production and marketing.
(6) It serves as an information centre as regards price, source of supply, specification and mode of delivery.
(7) It ensures continuous availability of requisite quality materials to avoid disruption in production.