 Charles Babbage’s book “On the economy of

machinery and manufacturers”, published in 1832,

referred to the importance of the purchasing
function.
 Babbage wrote that a central officer responsible for
operating mines was “a materials man who selects,
purchases, receives, and delivers all articles
required.”
 An 1870 article said that judicious purchasing
could save big bucks.
 Savings potential and profit-leverage effect of
purchasing became popular.

 The railroads, which were probably the largest

organizations in the United States at that time ,
recognized the crucial impact of purchasing.

 The late 1800s signaled the beginning of

organizing purchasing as a separate corporate
function requiring specialized expertise.
 This era also witnessed the development of
basic purchasing procedures and ideas.

 Proper specifications, supplier relations,

organization of purchasing, started becoming
popular.

 Purchasing gained importance during World War

I because of its role in obtaining vital war
materials.
 World War II introduced a new period in
purchasing history.
 The emphasis on obtaining required (and
scarce) materials during the war influenced a
growth in purchasing interest.
 The membership of the National Association of
Purchasing Agents increased from 3,400 in
1934 to 5,500 in 1940 to 9,400 in the autumn
of 1945.
 The heightened awareness of purchasing
that existed during World War II did not
carry over to the postwar years.
 It was hard to visualize a company
becoming more successful than its
competitors because of its superior
procurement.
 The postwar period saw the development of
the value analysis technique, pioneered by
General Electric in 1947
 The mid-1960s witnessed a dramatic growth of the
materials management concept.
 The combined related functions such as
purchasing, inventory control, receiving, and stores
under the authority of one individual.
 The overall objective of materials management was
to solve materials problems from a total system
viewpoint rather than the viewpoint of individual
functions or activities
 The various functions that might fall under
the materials umbrella included material
planning and control, inventory planning and
control, materials and procurement research,
purchasing, incoming traffic, receiving,
incoming quality control, stores, materials
movement, and scrap and surplus disposal.
 Never in industrial history has competition
become so intense so quickly.
 The spread and rate of technology change
during this period was unprecedented, with
product life cycles becoming shorter.
 This intensely competitive period witnessed
the growth of supply chain management.
 Now, more than ever, firms began to take a
more coordinated view of managing the flow
of goods, services, funds, and information
from suppliers to end customers.
 Managers began to view supply chain
management as a way to satisfy intense cost
and other improvement pressures.