STUDENTS' CORNER -51
In our last session, we looked into Demand Forecasting as a part of Logistics. Now, let us move on to the next part of Logistics: Purchasing.
Purchasing is a process. Before we go into the process of purchasing, let us see how many types of purchases are there. There are four types of purchases as major kinds and they are a) Personal Purchasing b) Mercantile Purchasing c) Industrial Purchasing and d) Institution or government purchasing.
When you go to the mall and purchase a product, soap, for your own use, it is personal purchasing. Though you may not be aware of your own importance to the manufacturer of the brand of the soap, you are really important. Without your purchase, the product will not be of any use to the manufacturer. The money he has put in the production of the soap he must get back and he gets back when you purchase the soap and many people like you buy the product, the manufacturer makes profit. The manufacturer ultimately depends on you for his money. If all the customers, for example, decide not to buy the soap, his business will have to stop. Like this, for all the products you see stacked on the shelves of the mall, there are and there must be customers; otherwise, the mall will not store those products. So, ultimately, it is the people who make personal purchases that decide the economy and the financial strength of the manufacturers; it means these personal purchases influence the very financial position of the country itself. The national economy depends on the personal purchasing of the people. All kinds of advertisements, visual and paper media , only aim at increasing and sustaining the personal purchases of the people.
There are many factors that influence the personal purchasing and we will go into them later after looking at the other kinds of purchasing.
A person buys some product, say clothes or dresses, only to sell them to others . He is not making any purchase for personal use. Supposing he buys 50 shirts and keeps one for himself and sells the rest of the lot; even then, he has not made any personal purchase since the bulk-selling is his business. This kind of purchasing is what we call mercantile purchasing. He is doing business by selling shirts to others and therefore he has to buy them first. Actually, he is a middleman between the consumer and a business man. In fact, he purchases a product for re-sale. That is, he becomes a part of a channel of distribution of goods from the manufacturer to the consumer.
Nowadays, this mercantile purchasing has enormously popularized what is called e-commerce, online purchasing and selling. What do you think of Amazon.com? Is it not the biggest online seller? Again, some more facts are there in connection with mercantile purchasing and we will go into them in detail in the right place.