University Business Report: Principles of Purchases Research

This report delves into the principles of purchasing, emphasizing the significance of the six core principles: right quality, right time, right quantity, right price, right source, and right place. It examines how these principles are applied and measured within a business context, using examples to illustrate performance evaluation. The report further explores the potential negative impacts of certain purchasing strategies, such as continuous discount offers, on long-term revenue generation and profitability. Through this analysis, the report offers insights into effective purchasing management and its implications for overall business success, supported by relevant academic references.

Running Head: PRINCIPLES OF PURCHASES 1
PRINCIPLES OF PURCHASES
(A Research on Management)
Name of the Student:
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Name of the University:
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Word Count: 500
Reference Style: APA

PRINCIPLES OF PURCHASES 2
Table of Contents
1. Importance of old adage.....................................................................................................3
2. Performance measures........................................................................................................3
3. Negative effects of measures in long-term.........................................................................4
References..................................................................................................................................5

PRINCIPLES OF PURCHASES 3
1. Importance of old adage
In order to study the importance of the old adage, there is a significant requirement of
mentioning the six major principles of purchasing. According to Jha (2017), they are the right
quality, right time, right quantity, the right price, right source and the right place. The adage
can be segregated into two core parts. The first part is regarding “what you don’t measure”
and the second part is “you can’t manage”. In accordance with the first part, “if the
organisations do not measure the purchasing principles, then there is an issue”. On the other
hand, as per the second part, “that issue is associated with customer management or overall
business management”.
2. Performance measures
In order to discuss the performance measures of purchasing, exemplary scenarios can
be made for all the six principles mentioned earlier. For instance, in case of the right quality,
the firms need to be focused on the grade of raw material. Best quality includes the best
degree raw materials as the effective quality. In addition, medium quality with an average
grade of raw material is also the effective quality. As an example, it can be mentioned that an
ice-cream manufacturing company will include the quality of raw materials, such as, avocado
and honey, as per its price-tags. In case of the right time, the organisations wait for the
moment while stock reflects the minimum level. If the level of reordering materials from the
supplier is fixed, then it ensures the right time (De Beule, Van den Poel & Van de Weghe,
2015). For instance, an ice-creamery reorders fruits while the stock reaches to the minimum
number of fresh fruits.
In turn of the right quantity, firms concentrate on balancing the minimal accumulated
cost and the shortage of materials. Otherwise, excess purchasing can result in unnecessary
blockage of capital and overstocking. As a whole, inventory management cost can be higher.
For instance, an ice-creamery use the right quantity of dry fruits in products for omitting the
possibility of overstocking. In case of the right price, there is a necessity of considering a
variety of factors. As opined by Andriolo, Battini, Persona & Sgarbossa (2015), such factors
include delivery time, the curve of demand and supply, ultimate life of the material,
governmental restrictions, competitional extent, discount offers and after-sales services. For
instance, an ice-creamery may use discount offers for the right price as it reflects the
competency level.

PRINCIPLES OF PURCHASES 4
In order to select the right source, organisations focus on choosing the suppliers, who
fit in several areas. Few instances of the areas include the right quality, right quality and the
right time of delivering materials (Jha, 2017). For instance, an ice-creamery ties up with local
farmers for the supply of fresh fruits. In case of right place, firms concentrate on selecting the
place, which ensures products’ availability. For instance, the ice-creamery uses vans for
delivering products to the doorstep of local people.
3. Negative effects of measures in long-term
The measures may carry negative role in case of long-term purchasing performance.
With the help of one of the six measures, the aspect can be portrayed. For instance, as the
right price, if the ice-creamery continues the strategy of discount offers, then it can harm the
annual revenue generation and profitability (De Beule, Van den Poel & Van de Weghe,
2015).

PRINCIPLES OF PURCHASES 5
References
Andriolo, A., Battini, D., Persona, A., & Sgarbossa, F. (2015). A new bi-objective approach
for including ergonomic principles into EOQ model. International Journal of
Production Research, 54(9), 2610-2627. doi: 10.1080/00207543.2015.1113324
De Beule, M., Van den Poel, D., & Van de Weghe, N. (2015). Assessing the principles of
spatial competition between stores within a retail network. Applied Geography, 62,
125-135. doi: 10.1016/j.apgeog.2015.04.015
Jha, A. (2017). Value-Based Purchasing: Time for Reboot or Time to Move
On? JAMA, 317(11), 1107. doi: 10.1001/jama.2017.1170