Here in the office, we've all been passing around the seasons of Mad Men, thinking especially about how much business (and the treatment of women in business, ahem!) has changed significantly over the decades. At Jason's suggestion, I did some research to provide you all with some light (and hopefully interesting) holiday season reading about the origins and evolution of procurement and purchasing into the vital industry we know it as today. In the first part of this series, I'll cover pre-Industrial Revolution to WWII. Helping me along on my research is the book Purchasing and Supply Chain Management by Robert M. Monczka, Robert B. Handfield, and Larry Giunipero.
One of the earliest records of purchasing history goes back to a book published by Charles Babbage in 1832, looking at the economy of materials and manufacturing. Babbage recommended that there be a "materials man" within the sector, or someone who "selects, purchases, and delivers all articles required. Taking it forward a few decades, the notion of "purchasing" was solidified during the Industrial Revolution, when the booming railroad industry was able to take goods from the developed East and Midwest and deliver them to the South and the quickly expanding West. This is the era where the Chief Purchasing Officer was born in spirit if not in title, as "the purchasing function was such a major contributor to the performance of the organization that the chief purchasing manager had top managerial status."
Alarmingly, some problems from 1887 still abound today. One railroad comptroller from the era wrote a book entitled The Handling of Railroad Supplies -- Their Purchase and Deposition, which stresses the need for technical expertise within the purchasing team and comments on "the lack of attention given to the selection of personnel to fill the position of purchasing agent." All this is important because "The late 1880's signaled the beginning of organizing purchasing as a separate corporate function requiring specialized expertise."
Thus through the turn of the century, the role gradually kept evolving by incorporating material specifications and the development of an official purchasing process. But then: enter the World Wars. Here, during WWI scarcity, purchasing became vitally important in getting wartime goods where they needed to go. Maintaining stock clearly won out over a focus on cost reduction during this period. Despite the obvious importance, "the years during WWI featured no publication of any major purchasing books." One respected professional during the time, in fact, noted, "there was considerable doubt about the existence of any general recognition of purchasing as being important to a company."
WWII brought newfound recognition, however. Due to the wartime boom and necessity of "obtaining required (and scarce) materials," purchasing was finally recognized as a major, vital part of companies. In fact, in 1933, only nine universities had purchasing programs. By 1945, 49 did. Interestingly, "a study conducted during this period revealed that 76% of all purchase requisitions contained no specifications or stipulation of brand," which "suggested that other departments ... recognized the role of the purchasing agent in determining sources of supply."
Join us in the next post in this series, where we'll follow the role of purchasing and procurement through the actual Mad Men years to today.