Purchasing at 100: Where it's been, where it's headed
By Jim Morgan -- Purchasing, 11/18/1999
While much of the business world greets the millennium by solving Y2K computer problems, the purchasing function and Purchasing Magazine will be marking very palpable milestones of their own next year.Purchasing, the corporate activity, will be marking roughly 100 years of existence. Purchasing Magazine will be celebrating its 85th anniversary as a national business magazine. The story that follows is a review and analysis of the purchasing function over its first 100 years. Much of the research for this narrative is based on materials in the archives of Purchasing Magazine. It's a story that follows and examines how industrial purchasing grew from a seat-of-the-pants activity to one of the most important industrial components of modern corporate management.
Perhaps the best measure of that growth in importance is expressed in dollars. Where in the first decade of the 20th Century, purchasing departments often accounted for barely 20% of corporate expenditures, the last decade of the century finds typical procurement operations with responsibility for 50%-70% of corporate expenditures.
Coincidentally, while corporate spending on goods and services have been rising dramatically over the course of the 20th Century, exactly the opposite has taken place in spending on labor. Where it was common for many manufacturing companies to spend in excess of 40% labor in the years prior to World War I, many manufacturing companies today have direct labor costs that barely reach 6%.
As the tale of purchasing's rise to prominence in corporate America unfolds, it very quickly becomes apparent that the function is a mirror of U.S. business in the 20th Century. As a result, an understanding of how purchasing began and evolved offers many insights into the development and prospering of the U.S. industrial juggernaught, and how it grew and developed into the strongest, most powerful industrial force in the world. Understanding the development of purchasing in the 20th Century also provides some clues about what to expect as the supply/purchasing function enters its second century.
In presenting our examination of purchasing's first 100 years, we have broken the century up into 13 time periods. While they can hardly be thought of as definitive eras, they, nevertheless, are not arbitrary, either. For the most part the time periods reflect the basic stages of business development in America in the 20th Century and purchasing's parallel role in these stages of development.
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