CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
The people understanding of purchasing has in most times been restricted to purchasing of tangible products. Taking purchasing to only applying to distributive trade and those activities that are involved in the purchasing and distribution of manufactured goods. However, broader strategic and conceptual philosophy recognizes and sees purchasing to also applying to services firms like laundry and drying, hospitals, banking, insurance, education, legal services, entertainment, transportation etc.
Due to changes and more sphistication in the life of individuals, there has been a greater change in the demand and needs of man. The urge for acquisition of tangible products has not been dominating in the satisfaction of human wants or needs. There has a greater de3mand for services which helps to sustain the life of man, the need for legal services, need for entertainment, need for medical care, transportation service etc.
This has also given rise to the establishment of many firms to take care pf these needs. Also there has been a great been for companies to introduce not just purchasing functions in their activities but also there is need for a strategic purchasing operations to their activities so as to be able to satisfy the needs of the consumers and that of the company profit. For the greater satisfaction of human needs and maximum profit for service industries, there is need for these companies to understand that their survival is based o effective and efficient satisfaction of their consumers. Their needs and wants, attitudes and life style must be well understood so as to bring about a better operation in their work.
Service companies should also understand their “Services account for close to on behalf of the consumer expenditure” and that also even firms themselves spend most of their working capital on services for sustenance repair and maintenance of legal, insurance, banking, credit service etc. this therefore means that service companies would recognize the essence of purchasing to be able to satisfy there services need of both firms and individuals. There is need at this stage to explain what purchasing in services industries. Purchasing has been defined as meaning “The set of activities that facilitate exchange transactions involving economic goods and services”.
The services must therefore conform with their requisition. It must also be worth the value they paid for it. In the course of the transaction, the customer gets the best deal that is supposed. The opportunity of their firms to make profit will depend on the customers services and patronage the get. In as much as there is emphasis on profit for companies survival, this cannot be done outside the customer backing patronage. The essence of purchasing here therefore come in purchasing emphasis should therefore not be neglected. Service industries must therefore recognize the idea.
But due to the nature of services the only thing that should be understood is that although purchasing is everything where the application to services industry will take a different farm only that the aim still remains the same, the customer satisfaction profit motive and proper co – ordination of the purchasing related activities.
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