research on purchased material

Spending on Experiences Versus Possessions Advances More Immediate Happiness

AUSTIN, Texas — Certain purchases are better than others at sparking people’s in-the-moment happiness, according to new research from the McCombs School of Business at The University of Texas at Austin.

Lead author Amit Kumar, assistant professor of marketing, and his research team found that consumers are happier when they spend on experiential purchases versus material ones. The paper, “Spending on Doing Promotes More Moment-to-Moment Happiness than Spending on Having,” is published in the May 2020 issue of the Journal of Experimental Social Psychology .

“One issue that hasn’t really been examined much is what happens in the here and now — are we happier spending our money on an experience or on a material item?” Kumar said. “The basic finding from a lot of experiments is that people derive more happiness from their experiences than from their possessions.”

Kumar and his co-authors, Matthew Killingsworth from the University of Pennsylvania, and Thomas Gilovich from Cornell University, recruited 2,635 adults who were randomly assigned to a material or experiential group. The participants were sent random texts during the day to monitor their emotions and their purchasing behavior. Material purchasers bought things such as jewelry, clothing or furniture, while experiential shoppers attended sporting events, dined at restaurants, or engaged in other experiences. The results: Happiness was higher for participants who consumed experiential purchases versus material ones in every category, regardless of the cost of the item.

“It would be unfair to compare a shirt to a trip, but when we account for price, we still see this result where experiences are associated with more happiness,” Kumar said.

To address possible differences in types of consumers, the researchers conducted a second study in which they asked more than 5,000 participants to first rate their happiness and then report whether they had used, enjoyed, or consumed either a material or experiential purchase within the past hour. If they responded “yes,” participants were asked a series of questions and details about their purchase.

“We still observed the same effect,” Kumar said. “When the very same person was consuming an experience, that was associated with more happiness.”

The researchers concluded that people are happier with experiential purchases over material ones irrespective of when you measure happiness: before, during or after consumption. Experiences also provoke more satisfaction even though people typically spend more time using their material possessions. The researchers said a possible explanation is the endurance of experiences in people’s memories, while the perceived value of material goods weakens over time.

“If you want to be happier, it might be wise to shift some of your consumption away from material goods and a bit more toward experiences,” Kumar said. “That would likely lead to greater well-being.”

For more details about this research, read the McCombs Big Ideas  feature story .

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Living happily in a material world: Material purchases can bring happiness

A recent study shows material purchases provide more frequent happiness.

With holiday shopping season in full swing, everyone's looking for the perfect gift. For those who like to shop, there's good news: Material things can bring happiness. In a recent study from the journal Social Psychological and Personality Science , researchers have shown that material purchases, from sweaters to skateboards, provide more frequent happiness over time, whereas experiential purchases, like a trip to the zoo, provide more intense happiness on individual occasions.

The majority of previous studies examining material and experiential purchases and happiness focused on what people anticipated about shopping or remembered about items and experiences. The University of British Columbia's Aaron Weidman and Elizabeth Dunn wanted to know how people felt in the moment, say the first weeks with a new sweater or tablet computer. To answer this question, they assessed the real-time, momentary happiness people got from material and experiential purchases, up to five times per day for two weeks. Material purchases consisted of items such as reindeer leggings, portable speakers, or coffee makers, and examples of experiential purchases were a weekend ski trip, tickets to a hockey game, or spa gift cards.

By having people record their thoughts in the weeks following their purchases, as well as one month after their purchases, the researchers showed that material and experiential purchases bring happiness in two distinct flavors. Material purchases bring repeated doses of happiness over time in the weeks after they are bought, whereas experiential purchases offer a more intense but fleeting dose of happiness. Additionally, when people looked back on their purchases 6 weeks after Christmas, they felt more satisfaction about experiential purchases.

"The decision of whether to buy a material thing or a life experience may therefore boil down to what kind of happiness one desires," says Mr. Weidman, "Consider a holiday shopper deciding between tickets to a concert or a new couch in the living room. The concert will provide an intense thrill for one spectacular night, but then it will end, and will no longer provide momentary happiness, aside from being a happy memory. In contrast, the new couch will never provide a thrilling moment to match the concert, but will keep the owner snug and comfortable each day throughout the winter months."

As you go forth in your holiday shopping this season, either for yourself or others, think about what form of happiness you want, before making a purchase.

• Consumer Behavior
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• Borderline Personality Disorder
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Materials provided by Society for Personality and Social Psychology . Note: Content may be edited for style and length.

Journal Reference :

• A. C. Weidman, E. W. Dunn. The Unsung Benefits of Material Things: Material Purchases Provide More Frequent Momentary Happiness Than Experiential Purchases . Social Psychological and Personality Science , 2015; DOI: 10.1177/1948550615619761

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Customer Purchase Intentions and Choice in Food Retail Environments: A Scoping Review

Iana a. castro.

1 Marketing Department, Fowler College of Business, San Diego State University, San Diego, CA 92182, USA

Anuja Majmundar

2 Department of Preventive Medicine, Keck School of Medicine, University of Southern California, Los Angeles, CA 90033, USA; [email protected]

Christine B. Williams

3 Department of Pediatrics, University of California San Diego, San Diego, CA 92093, USA; moc.liamg@2smailliwbc

Barbara Baquero

4 Department of Community and Behavioral Health, College of Public Health, University of Iowa, Iowa City, IA 52242, USA; ude.awoiu@oreuqab-arabrab

Food purchasing and consumption behaviors have implications for nutrition and obesity. Food retail environments, in particular, shape customer food choices and energy intake. The marketing literature offers insights about how public health practitioners can work within food retail environments to encourage healthy food choices. We reviewed experimental studies in the marketing literature to examine factors influencing customer purchase intentions and choice for food products in retail stores. Database searches were conducted in February 2016 for original, empirical articles published in English from 2000–2015 in marketing journals. Each research article included at least one experimental design study conducted in a real or simulated retail environment with purchase intentions or choice of food products as an outcome variable. Backward and forward reference searches were conducted for articles meeting inclusion criteria. Narrative synthesis methods were used to thematically group and summarize the findings of forty-one articles that met inclusion criteria into three categories: shelf display and product factors, pricing and price promotion factors, and in-store and customer decision-making factors. This research contributes to the literature by providing specific and actionable approaches that can increase/decrease customer purchase intentions and choice for food products in retail environments. Translating marketing strategies into public health applications can provide recommendations for future intervention research and policy related to customer food purchasing behavior.

1. Introduction

In the United States, an estimated 35% of adults and 17% of children are obese [ 1 ]. The influence of the food environment is significant for obesity rates. Recent work suggests that foods and beverages purchased in food retail stores contribute a significant portion (63%) of individual’s total daily energy intake and, among children, are the most important source of empty calories, added sugar, and solid fats [ 2 , 3 , 4 ]. Considering the impact of purchases made in food retail environments on diet intake and quality, and their implications for obesity and chronic disease, public health policymakers, practitioners, researchers, and community organizations are actively searching for effective strategies to promote healthier customer choices and purchases when shopping.

Food shopping behavior continues to evolve, and food retail environments are increasingly more complex, requiring a more in-depth understanding of customer behavior [ 5 ]. Food shopping occurs an average of 1.6 times per week and the responsibility for food shopping and preparation is shared among multiple members of a household [ 5 ]. Food retail environments, comprised of supermarkets, corner and convenience stores, supercenters, and ethnic and natural food stores, among others, may exert significant influence on food purchasing decisions and present opportunities for encouraging healthier food choices, given the majority of purchase decisions are made in the stores [ 6 ].

Existing evidence on healthy food retail strategies indicates an important gap in knowledge on how best to promote healthy food choices and purchases in food retail environments [ 7 ]. Progress is being made with evidence-based interventions focused on increasing access, promotion, and consumption of healthy foods [ 7 ], with most of the work thus far studying structural and social environmental changes. However, other in-store factors and customer-specific (i.e., intrapersonal) factors often examined in marketing research also influence customers’ in-store behavior. The aim of this scoping review is to provide a better understanding of customers’ in-store behavior, and factors that have an effect on purchase intentions and choice of food products, by reviewing articles published in the marketing literature. In effect, translating marketing strategies into public health applications may provide recommendations for interventions and policy related to customer food purchasing behavior [ 8 ].

2. Materials and Methods

The primary references in this scoping review were peer-reviewed articles published in marketing journals studying purchase intentions and/or choice in food retail environments. The American Marketing Association defines marketing as “the activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large” [ 9 ]. Understanding consumer behavior is an integral part of marketing, with researchers studying individuals, as well as groups and organizations, and the processes they use to select, secure, use, and dispose of products, services, and experiences to satisfy needs [ 10 ]. As such, the marketing literature can provide important insights into the factors that can influence customer purchase intentions and choice within food retail environments. Purchase intentions, in this study, are defined as intended behavior (e.g., likelihood to buy), while choice refers to the selection of a product. We maintain a specific focus on purchase intentions or choice to interpret learnings about purchase behaviors in a food context. Studies based on either purchase intentions or choice of food products only or both food and non-food products were included. We excluded studies examining these outcomes for non-food products only. The review focused on research using experimental design, either through field or laboratory studies (e.g., simulated store environments, scenario-based or simulated shopping tasks), for an in-situ customer understanding. Experimental design allows researchers to manipulate individual factors while controlling others in order to study and measure the effect of each factor on the outcome of interest [ 11 ]. This scoping review focused on studies using experimental design to capture differential effects of factors influencing purchase intentions and choice for future intervention research.

2.1. Search Strategy

The authors employed a three-step search strategy from February to July 2016, utilizing methods developed by Cooper (1998) [ 12 ]. For the first step, articles were identified for inclusion through comprehensive database literature searches on Web of Science Core Collection and ABI/INFORM. Web of Science Core Collection has the deepest citation coverage across the Sciences, Social Sciences, and Art and Humanities. ABI/INFORM indexes business publications. For each article included in the scoping review, a backward search of references was conducted, with each article listed in the references of the included article assessed for inclusion (step 2). Finally, a forward search was conducted for articles citing the included article (step 3) to identify any other relevant articles.

For the database searches, an enhanced concept-to-operation correspondence was captured via multiple operationalism recommended for literature reviews [ 12 ]. We used a combination of search terms, one from each of two categories: (1) purchase intentions/choice and (2) store. A list of search terms for purchase intentions/choice and store was compiled (11 terms related to purchase intentions/choice, seven terms related to store). Each database search contained one term from each group for a total of 77 distinct searches per database ( Figure 1 ). We queried each database with each unique combination of the search term pairs, using the operator ‘AND’ (e.g., retail + choice, in-store + choice, retail + purchase). Any search terms in article titles, abstracts or keywords were retrieved.

Databases, search terms, and search combinations leading to included articles.

2.2. Inclusion Criteria

Search results were limited to articles (1) written in English, (2) published between 2000–2015, (3) original research conducted in any part of the world, and (4) published in peer-reviewed journals in marketing [ 13 , 14 ]. Results from each combination of search terms were downloaded, saved, and organized in unique reference libraries (Endnote version X7.5.1, Thomson Scientific, Philadelphia, PA, USA). Articles underwent three rounds of screenings to assess inclusion criteria conducted by two study authors. For each round in the screening process, decisions were based on the inclusion and exclusion criteria detailed in Table 1 . Three rounds of screening were necessary to efficiently and accurately determine what articles met inclusion criteria given the number of articles emerging from the searches and the number of studies within each article.

Inclusion and exclusion criteria for each round of screening.

2.3. Data Extraction and Synthesis

Articles published in marketing journals frequently contain multiple studies in one article. Data extracted from relevant studies that met inclusion criteria included manipulated variables and conditions, type of experiment, outcome variables, and key findings. In order to summarize and disseminate the research findings, narrative synthesis was used to thematically group and report findings in the manuscript and a table was created that captured detailed information from each article and serves as a reference for future research ( Table 2 ).

Summary of studies.

This scoping review focused on studies that employed experimental research designs, in which individual factors are manipulated in order to study and measure the effect of each manipulation on the outcome of interest [ 11 ]. Twenty-nine articles met the final detailed inclusion criteria of: at least one study in the article (1) was conducted in a real or simulated retail setting, (2) used experimental design, (3) included purchase intentions or choice as the outcome variable and (4) had food as the product(s) tested. Backward and forward searches of included articles resulted in an additional 12 qualified articles for a total of 41 articles ( Figure 2 ).

Article Inclusion Flow Chart.

Each article included an average of three studies (range: 1–5); the majority of articles had one or two studies that met inclusion criteria. Please refer to Table 2 for a summary of included articles, including the manipulated variables and conditions, type of experiment, outcome variables, and a brief summary of key findings. Type of experiment was categorized as either laboratory or field. Laboratory experiment procedures varied and included asking participants to complete a shopping task, to imagine a scenario and behave as they would in that situation, or to consider products in a simulated store or arranged on a shelf, among others. Field experiments were conducted in real-world retail environments, including grocery stores and small food stores. Outcome variables included purchase intentions, hypothetical choice (i.e., participants indicated what they would select), and choice (i.e., participants made a selection and received the product). The narrative synthesis of results presented below thematically groups and summarizes findings based on three types of factors: shelf display and product factors, pricing and price promotion factors, and in-store and customer decision-making factors. The focus of the synthesis is on discussing factors that were shown to have an effect on purchase intentions or choice.

3.1. Shelf Display and Product Factors

3.1.1. shelf display.

Customer choice and purchase intentions can be influenced by product location on the shelf, the appearance of the products on the shelf, the brands available, and product attributes. Shelf display and product factors can capture customers’ attention and serve as sources of information for customers when making purchase decisions [ 15 , 16 , 17 , 18 , 19 ]. At the shelf display level, location can impact the visual attention a product receives, and attention is correlated with choice [ 16 , 17 , 18 ]. Products located in the horizontal center of the product category receive more attention and are more likely to be chosen [ 17 ]. At the product level, product packaging is associated with purchase intentions [ 19 ], and when a customer repeatedly allocates attention to a product, he/she is more likely to select the product in a subsequent choice [ 18 ].

Customer choices are also associated with the inferences customers draw when looking at shelf displays. Product display factors, such as shelf-based scarcity (i.e., few products left on the shelf) can create positive inferences regarding the popularity and quality of the products on display, leading to higher purchase intentions for those products [ 20 , 21 , 22 ]. In contrast, shelf display conditions can negatively affect purchase intentions and choice for familiar brand food products if display quantity and disorganization suggest others have touched the products [ 21 ].

3.1.2. Branding

Brand familiarity and availability can also impact purchase intentions and choice. Brand familiarity is important as customers are more likely to choose familiar over unfamiliar brands [ 21 ]. Customers’ willingness to buy new private label brands is dependent on the product categories and can be shaped by the financial, functional and social risks associated with the product category [ 23 ]. In the case of private label brand products, mimicking the packaging of the national brand (versus not) can lead to inferences that the private label products are of higher quality and of similar origin as the national brand, resulting in higher purchase intentions [ 24 ]. At the product level, priming customers with a specific brand that is related to a current need can increase choice for the brand (e.g., priming a drink brand when the customer is thirsty) [ 25 ]. Brands with multiple products in a product line benefit from a strong brand reputation [ 26 ], and brands that successfully focus on specific social causes find an optimal balance between the brand, cause, and customer social identity [ 27 ]. Finally, product attributes such as product shape, size, and color can impact customer purchase intentions and choice. Even attributes that are considered to be unnecessary, such as the color of a soft drink, can steer choices when customers are faced with a set of options and cannot decide on one based on important attributes alone [ 28 ].

3.1.3. Nutrition Labeling

Providing health information on product packaging can positively or negatively influence purchase intentions and choice based on customer knowledge [ 29 , 30 ]. High customer motivation to process nutrition information and high customer knowledge led to lower purchase intentions for less healthy products (i.e., high trans-fat). However, purchase intentions for less healthy products are highest for customers high in customer motivation to process nutrition information and low in customer knowledge, suggesting that without knowledge, customers are unable to properly interpret the information [ 29 ]. However, providing objective information about the products can help inform customers. For products for which customers have pre-conceived biased impressions (e.g., an unhealthy product is perceived as healthy or a healthy product is perceived as unhealthy), providing objective information can increase or decrease choice of the products. In other words, providing objective information that a product that is perceived as healthy is actually unhealthy, can reduce choice of the product, while providing information that a product perceived to be unhealthy is actually healthy can increase choice of the product. When the information confirms the bias, differences in choice do not emerge [ 31 ].

Front-of-package labeling systems can also provide customers with information that can influence decision-making. Customers use front-of-package labeling systems, including reductive labels (i.e., providing calories and three nutrients to limit) and evaluative labels (e.g., an icon indicating the product is healthy or the product’s level of healthfulness) differently. Evaluative labels are more beneficial when customers are comparing products, while reductive labels are more effective when evaluating a single product [ 32 ]. Finally, front-of-package labeling can play a role in children’s choices. A study focused on children found that that the presence of an on-package claim (e.g., “Cereal that’s good for you”) in the choice set led to unhealthy choices. This shift appeared to occur particularly when the claim appeared on healthier products [ 33 ].

3.1.4. Food Sampling

Food samples can impact the healthfulness of products purchased [ 34 , 35 ]. Offering customers a healthy food sample, or one that is framed as healthy, can lead to more purchases of fruits and vegetables and healthier choices during the shopping trip. Conversely, customers who were offered unhealthy food samples made more unhealthy choices [ 35 ]. Distractions while sampling, such as having a shopping list memorized, also lead to higher choice of the sampled products [ 34 ].

3.2. Pricing and Price Promotion Factors

Price and promotion information, and how it is presented, can influence purchase intentions and choice. Unit price information can lead customers to choose products with lower unit prices [ 36 ], since it makes prices more salient, increasing customers’ price sensitivity [ 37 ]. However, multiple unit price promotions (e.g., 8 for $8) increase purchase quantities for higher (e.g., Gatorade) vs. lower (e.g., ketchup) consumption products, with higher numbers leading to more purchases than lower numbers (e.g., 8 for $8 vs. 2 for $2) [ 38 ]. In terms of wording for price promotions, repeating initial word sounds across two or more words that are close together can steer product choice by facilitating message processing (e.g., 2 Twix $2) [ 39 ]. In terms of framing for price promotions, providing customers with comparative price information (e.g., sale price and regular price) can influence purchase intentions and choice. Comparative price information should be presented in absolute values when discount size is small and in percentage terms when discount size is large to increase purchase intentions [ 40 ]. However, customers do face computational errors when processing percentages [ 41 ]. Finally, customers who used a surprise in-store coupon for a planned purchase made more unplanned purchases of treat items, items that were cognitively related to the one primed by the coupon, and items shelved near the one primed by the surprise coupon. They also spent more than those who did not get the coupon and more than the discount from the coupon [ 42 ].

Price promotions can negatively influence sales of products after the sale period has ended. Promotions that offer large percentage off (versus cents off) discounts negatively influence customers’ purchase intentions for the brand after the sale [ 43 ]. Additionally, when customers are aware of the fact that they missed a sale, they are more likely to buy the product for a less attractive discount than use unexpected and free money (such as a cash gift from a friend) to pay full price, since they feel it is not a good deal to pay full price regardless of how much unexpected and free money was received [ 44 ].

Customers’ responses to price promotions are based on individual differences, including their decision-making styles (i.e., analytical or intuitive) and regulatory focus (i.e., prevention or promotion). Analytical decision-makers focus on both utilitarian and hedonic benefits, and intuitive decision-makers focus on hedonic benefits, influencing likelihood to buy [ 45 ]. Additionally, promotion framing that aligns with customers’ regulatory focus may lead customers to purchase more products that are not being promoted, affecting the overall basket [ 46 ]. Ultimately, the ability of price promotions to get a customer to switch from one brand to another depends on the customer’s consideration set, the price-quality tiers of the brands, the make-up of the choice set, and individual differences [ 47 ].

3.3. In-Store and Customer Decision-Making Factors

Both intrapersonal factors and in-store environment factors can impact the customer’s experience while in the store and shape customer purchase intentions and choice [ 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 ]. Customers’ implicit beliefs about the relationship between taste and healthfulness, bringing reusable bags to the store, making multiple choices in a row, receiving real-time feedback on spending while on a budget, and paying with a credit/debit card are all linked to less healthy choices [ 48 , 49 , 50 , 51 , 52 ]. One of the articles found that unhealthy foods are perceived to be tastier, are rated as more enjoyable during consumption, and were preferred in a choice task when an enjoyment goal (vs. no goal) was activated; therefore, customers will buy less healthy products when focused on enjoyment [ 48 ]. Bringing reusable bags to the store increased purchase intentions and choice for unhealthy products due to licensing, with customers rewarding themselves for doing something good (e.g., I did something good for the environment by bringing reusable bags, so I deserve a treat) [ 49 ]. Being forced to bring your own reusable bags (e.g., store requirement), having dependents at home, or focusing on the price of the products attenuates this result [ 49 ].

The processes that customers engage in while shopping may also increase unhealthy choices. When customers make multiple choices in a row when grocery shopping (vs. following purchase instructions, such as a shopping list with specific product and brand information), their self-control weakens, leading to unhealthy subsequent choices [ 50 ]. For customers who are on a budget, getting real-time spending feedback (i.e., customers see the price of their overall basket every time an item is added) reduces the mental stress of keeping track of spending and leads to less healthy product purchases while increasing spending without going over budget. However, shoppers without a budget spend less as a result of real-time spending feedback [ 51 ]. Finally, paying with a credit or debit card (vs. cash) leads to more unhealthy product purchases because paying with cash is more ‘painful’ [ 52 ].

Store environment factors also steer behaviors. When customers feel confined (e.g., smaller aisles) they make more varied choices [ 54 ], and a simple (vs. complex or no) scent in the environment increases the number of items selected from product categories that do not contain required purchases rather than from required categories [ 55 ].

4. Discussion

The findings of this review build on existing intervention research in the field of public health [ 7 , 56 , 57 , 58 , 59 , 60 , 61 ] by drawing from the marketing literature and focusing exclusively on studies that employed experimental design, were conducted in retail environments, and focused on customer purchase intentions and choice for food products as outcome variables. The review offers specific and actionable approaches that can be used to increase/decrease customer purchase intentions and choice for food products in retail environments. Prior research in public health has implemented interventions focused on increasing access, promotion, and consumption of healthy foods [ 7 , 56 , 57 ]. Our results contribute to existing research by providing specific marketing techniques related to shelf display and product factors, pricing and price promotions factors, and in-store and customer-specific factors that have been shown to influence purchase intentions and choice (see Table 2 ) and can be implemented in future intervention research focused on improving food decision-making in the environments where decision-making is taking place.

Some intervention strategies can begin before the customer enters the store and others can be implemented to facilitate healthier choices while shopping. Intervention strategies can focus on educating customers on how to prepare for the shopping experience. The United States Department of Agriculture (USDA) Supplemental Nutrition Assistance Program Education (SNAP-Ed) teaches program participants about nutrition and how to stretch their food dollars. Existing recommendations include planning ahead to know what is needed, making a shopping list, and knowing how much is available to spend [ 62 ]. Our findings suggest that in addition to asking customers to make a shopping list, customers can be encouraged to create a shopping list that includes specific details about products to be purchased to reduce the number of in-store choices [ 50 ]. Further, in addition to having a budget, customers can be asked to set a savings goal for the shopping trip and bring cash to pay for the purchase, all of which can reduce unhealthy purchases [ 49 , 51 , 52 ]. A health implication of a cash payment strategy is to encourage ‘audit’ behavior rooted in monitoring an upper limit on spending that invariably involves constant re-evaluation of the shopping basket to exclude indulgent/impulsive purchases, which often tend to be less healthy.

Store-based interventions have focused on point of purchase information, price promotion strategies, and healthy food accessibility and availability [ 7 , 56 , 57 , 58 , 59 , 60 , 61 ]. Point-of-purchase activities and materials (e.g., food demonstrations; taste tests; printed materials, such as recipe cards) are commonly used strategies in supermarkets and in supermarket interventions [ 7 ]. Retailers use food demonstrations and taste tests to introduce customers to new products, encourage sampling, and increase sales of sampled products. A number of findings from this review can contribute to future efforts using point-of-purchase strategies to increase healthy choices. For example, providing healthy food samples to customers as they enter the store and, importantly, allowing customers to enjoy the sampling experience while being distracted [ 34 , 35 ], can increase healthy choices and improve the healthfulness of the overall shopping basket [ 35 ]. The timing of offering the healthy sample and incorporation of distractions are new learnings from an intervention standpoint. These insights have direct relevance for interventions that promote healthy eating by means of simple food preparation and sampling in-store. Additionally, sampling may also help decrease the number of choices made based on the unhealthy-equals-tasty belief by providing samples of healthy products that are tasty [ 48 ]. One way of situating these learnings in retail environments is by providing healthy samples in the produce section, which in most cases is located near the front of the store and providing recipes that incorporate sampled products in the prepared foods section of the store.

Past intervention research has implemented pricing strategies (e.g., incentives, rebates, discounts and coupons) [ 7 , 60 , 61 ]; however, our findings suggest that the framing, timing and format of such strategies must be considered to understand the impact of the price promotion on customers’ buying decisions [ 36 , 37 , 38 , 39 , 40 ]. For example, surprise in-store coupons for planned purchases result in overspending and unplanned purchases [ 42 ]. Additionally, surprise coupons also increase purchases of products that are cognitively related to or located in close proximity to the discounted product. Therefore, a surprise coupon for a healthier item could lead to healthier purchases. When considering discounts, how a discount is presented can influence purchase intentions and choice and should be based on the size of the discount; however, it is important to consider that customers tend to struggle with calculating discounts based on percentages (e.g., translating a 15% off sale to actual dollar discount for an item). Past research establishes that sensitivity for healthy products is higher for price increases than decreases, and the opposite holds true for unhealthy foods [ 63 ]. Pricing strategies discussed in this review can be instrumental in decreasing demand sensitivity and thereby promoting unhealthy to healthy food choice switches among customers.

Research has addressed ways of nudging consumers toward healthier choices through product placement, increasing the salience of food accessibility and availability [ 58 ]. The findings suggest that product and shelf display strategies in the store can focus on attracting attention, given that increased attention to a product is correlated with choice. Attention can be increased by means of horizontal center product placement and product placement can be used to increase visibility for healthier options within the product category [ 17 ]. This has important implications for interventions aimed at boosting demand for local brands, unfamiliar brands, new products, and healthy products or produce (non-branded). Such strategies could benefit both retailers and customers by familiarizing customers with products, given that familiar brands and products are more likely to be selected than unfamiliar ones. Product placement can also be used to expose customers to products they did not realize the store carried. This can be an important strategy for small- and medium-sized food stores that are carrying new products due to the USDA’s new stocking requirements for stores that accept SNAP [ 64 ]. New products should be prominently displayed and strategically placed so that customers are made aware of the accessibility and availability of new products. The findings of the review can also serve to inform technical assistance programs that are funded by federal and private grants and are being created and implemented to promote healthy food access in underserved communities by working with food retail stores [ 65 ].

Insights on the effectiveness of nutrition labeling on packaging also raise important policy implications. In May 2016, after 20 years of the same nutrition label, the Food and Drug Administration (FDA) released a new nutrition label design [ 66 ]. The new FDA policy will require testing in research and practice to understand if and how the new labels affect customer choice and purchase intentions. Moreover, these changes need to be tested among diverse populations with different education levels, socio-economic status, cultural norms, and geographic locations. Situating findings from this review in the emerging policy context, there is a need for educating customers, especially those not as motivated or those that are motivated but lack knowledge, to search for and interpret nutritional information provided in the newly introduced nutrition labels [ 29 , 30 ]. Additionally, front-of-package labels can help inform consumers [ 59 ]. The findings of this review suggest that labels that provide both specific information about how the product performs on key nutritional values (e.g., calories and fat) and those that simply let customers know that a product is deemed ‘healthy’ can enable decision-making [ 32 ]. Additional research in this area is pertinent to respond to FDA’s recent request for information on ways to redefine the term ‘healthy’ as a nutrient content claim that is consistent with dietary recommendations, facilitates quick and healthy food choices, and regulates food products marketed as ‘healthy’ [ 67 ]. Given that biased impressions of products often lead to suboptimal food choices, providing objective, easily understandable information can improve healthy decision-making [ 31 ].

A key strength of the current review is the inter-disciplinary approach to understanding food purchases and health. By reviewing articles in the marketing discipline, our goal is to motivate evidence-based marketing practices to be translated into public health applications. This project was also a collaboration between public health and marketing researchers. Public health researchers provided critical inputs during the research conceptualization and manuscript development process to contextualize marketing insights in a public health framework. Marketing researchers, in turn, lent their domain expertise during data extraction and synthesis and during manuscript preparation. The current review maximizes the opportunity for the inter-disciplinary exchange of ideas and knowledge to achieve better health outcomes for communities.

The search for articles was limited to peer-reviewed journals in English, which may introduce a publication bias if published articles do not represent marketing scholarship investigating choice and purchase intentions. Additionally, the search for articles was conducted in 2016, so the review does not include articles that may meet inclusion criteria published after the search dates. In order to synthesize findings to understand consumer behavior, we limited the review to include laboratory and field experiments with purchase intentions or choice of food products as the outcome variables. In doing so, a number of articles with relevant outcome variables and settings were excluded because they were based on secondary panel data, sales/scanner data, survey/interview data, qualitative data, and/or did not include food products. While findings from these studies may further expand understanding of customer choice and purchase intentions, the emphasis on laboratory and field experiments as a first step allowed us to focus on understanding how controlled manipulations directly affect these outcome variables. Additionally, we are unable to relate the findings to socio-economic disparities. Future public health interventions can assess the implications of these findings given different socio-economic contexts. Despite these limitations, the strengths of this review include drawing a bridge between marketing insights and actionable strategies for healthy food-related interventions and identifying future avenues of research for obesity and nutrition interventions.

5. Conclusions

While findings reveal how different factors affect customer buying behavior, future studies must explore how these translate into long-term and sustainable consumer behavior change, including changes to actual consumption and repeat purchases over time. Understanding how sampling, nutrition labeling, shelf and product displays, and pricing and promotions impact behavior in the food retail environment may help policy makers understand and prioritize strategies to promote customer choice of healthy items. A series of longitudinal, randomized controlled trials to examine the interaction of these variables in food retail environments over time would allow researchers to tease out the most important factors, and make evidence-based policy recommendations based on the most influential and cost-effective factors. Future studies must examine varied theoretical approaches as well as culture, geographic location, socioeconomic status, and other demographics and how they may influence customer choice in a variety of large and small food retail settings. Finally, the marketing literature provides theories that may be useful in further understanding customer behavior in food retail environments. Future research can review and incorporate consumer behavior theories into intervention development.

Acknowledgments

The research presented in this paper is that of the authors and does not reflect the views of the Robert Wood Johnson Foundation, Healthy Eating Research Program. The Robert Wood Johnson Foundation, Healthy Eating Research Program did not have any role in study design, data collection, analyses, interpretation of results, writing, or the decision to submit the manuscript for publication. All authors were involved in the design of the study, in reviewing articles, and in the writing of the manuscript.

Author Contributions

Conceptualization, I.A.C., A.M., C.B.W. and B.B.; Methodology, I.A.C., A.M., C.B.W. and B.B.; Software, not applicable; Validation, I.A.C., A.M., C.B.W. and B.B.; Formal Analysis, I.A.C., A.M., C.B.W. and B.B.; Investigation, I.A.C., A.M., C.B.W. and B.B.; Resources, I.A.C., A.M., C.B.W. and B.B.; Data Curation, I.A.C., A.M., C.B.W. and B.B.; Writing-Original Draft Preparation, I.A.C. and A.M.; Writing-Review & Editing, I.A.C., A.M., C.B.W. and B.B.; Visualization, not applicable; Supervision, I.A.C.; Project Administration, I.A.C.; Funding Acquisition, I.A.C.

The Robert Wood Johnson Foundation, Healthy Eating Research Program provided financial support for this work.

Conflicts of Interest

The authors declare no conflict of interest. The founding sponsors had no role in the design of the study; in the collection, analyses, or interpretation of data; in the writing of the manuscript, and in the decision to publish the results.

Purchasing of Materials

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on February 28, 2023

Fact Checked

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Table of Contents

What is meant by the purchasing of materials.

Purchasing of materials refers to the procurement of materials for a price. It is usually handled by a specific department (e.g., purchase manager in the procurement department), particularly in large companies.

A purchasing department can function effectively if:

• It is organized on a centralized basis
• Full co-operation between purchasing department and other departments is assured
• A close relationship exists between the purchasing department and the accounts department
• The purchase manager is technically qualified and sufficiently experienced
• A proper procedure is clearly set out and strictly adhered to

Purchasing is a critically important and specialized activity in manufacturing companies. Materials account for a considerable portion of production costs .

As such, the purchase manager in such a business is responsible for spending more of its money than anyone else.

Any errors on the part of the purchase manager, therefore, may be extremely expensive. Furthermore, purchasing sub-standard materials will undermine product quality, cause wastage, and lead to costly machine breakdowns.

Hence, it is fundamentally important to ensure that the function of purchasing materials is performed effectively, efficiently, and economically.

According to Alford and Beatty, "purchasing is the procuring of materials, supplies, machines, tools, and services required for the equipment, maintenance, and operation of a manufacturing plant."

As noted above, the purchasing function is typically performed by a separate purchasing department set up under an expert buyer (or purchase manager). To carry out their duties effectively, the purchase manager must know:

• What to purchase
• When to purchase
• Where to purchase
• How much to purchase
• At what price to purchase

What to Purchase

Normally, some of the spare parts and components that a manufacturing concern requires are manufactured in the company itself rather than being purchased externally.

The various items of stores that the purchasing department should procure are:

• All the items of materials, stores, spares, and components that the manufacturing concern cannot make
• Other items that the manufacturing concern can make but does not want to make

Decision-making in respect of the items falling under the second category is an important function of the purchasing department.

The decision about whether to buy or produce a particular item depends on factors such as:

• Annual requirements for the item
• Purchase frequency for the item
• Availability of spare manufacturing capacity to produce the item
• The price advantage arising out of the comparative cost of making and buying
• Product secrecy

The decision to give preference to buying is of the utmost importance. Such decisions are made by the purchasing department under the guidance of the planning department and cost department.

When to Purchase

Materials are generally purchased as and when requisitions are received from the stores department.

If certain items are only available during a particular season, purchases are made during the season.

For items restricted by government regulations, the question of when to purchase will be determined with reference to the date of the license, quota, or permit, as the case may be.

Where to Purchase

The purchasing department generally maintains a list of approved suppliers for various items of materials.

Whenever materials are required, purchases are made from these suppliers after receiving their quotes.

If there are long-term requirements to purchase materials on a regular basis in bulk, the materials are purchased from specific suppliers only.

In the case of controlled materials, purchases are also only made from specific suppliers.

How Much to Purchase

The quantity of materials to be purchased is another important criterion for decision-making.

The purchase department is guided in this respect by the purchase requisition received from the stores department.

However, in organizations that use the budgetary control technique , the purchase budget that is prepared and approved in advance shows the timings and quantity of purchases.

Thus, in such cases, the approved budget is the guiding factor.

Some manufacturing concerns adopt the control technique of economic order quantity (EOQ) , which indicates the quantity and frequency of purchases. EOQ ensures that the costs involved in purchasing materials and carrying inventory are minimized.

At What Price to Purchase

The price to be paid is a key factor that influences the cost of materials . In case tenders or quotations have been invited and received, it is the responsibility of the purchasing department to select the price at which the materials should be purchased.

Normally, in this case, the tender or quotation that offers the lowest price is selected.

However, the terms of delivery, credit period allowed , rate of discount , and the reliability and capacity of the supplier to execute orders should also be considered.

If materials are supplied through a controlling authority, the purchase manager has no option but to procure the supply at the price fixed by the authority.

Types of Purchasing

Purchasing of materials can be undertaken on a centralized or decentralized basis. In either case, it is important to keep in view the nature, size, and requirements of the business.

Centralized Purchasing

Under centralized purchasing, the authority to purchase materials for all the departments in an organization is placed on one individual or one department (e.g., the purchasing department headed by a purchase manager).

Advantages of Centralized Purchasing

The main advantages of centralized purchasing are as follows:

• A uniform and firm policy can be pursued with regard to the conditions of purchasing (e.g., terms of payment).
• Purchasing of materials is the sole responsibility of the purchasing department, meaning that other departments can concentrate on production.
• Since the materials are purchased in larger quantities, it is possible to benefit from better rates from suppliers.
• Different items of material can be standardized.
• The buying staff, by concentrating on purchasing alone, develop specialized knowledge and skills, leading to expertise and, in turn, economical buying.
• Centralized purchasing facilitates the maintenance of one complete set of records for purchase transactions , enabling management to exercise better control over purchases.
• Centralized purchasing helps to coordinate purchasing activities and, by placing authority for purchasing on one person, avoids duplication and overlap.
• Centralized purchasing helps to control inventories and avoid excessive investment in materials.

Disadvantages of Centralized Purchasing

Centralized purchasing also has several well-defined limitations, including:

• The procedure used to purchase materials is not flexible, which may lead to delays in obtaining supplies.
• Setting up a separate purchasing department leads to high administration costs.

Decentralized Purchasing

Under decentralized purchasing (also known as localized purchasing ), the authority to purchase materials is placed in the hands of more than one individual or department.

Under this system, each departmental head makes purchases for their own department.

Advantages of Decentralized Purchasing

Decentralized purchasing is beneficial for the following reasons:

• It enables flexibility in the purchase routine, thereby helping to avoid procurement delays.
• Under decentralized purchasing, no specialized buying team is appointed, which reduces administration costs.
• Decentralized purchasing is more efficient than centralized purchasing because each departmental head can assess their department's requirements and problems most effectively.

Disadvantages of Decentralized Purchasing

Decentralized purchasing also suffers from the following disadvantages:

• Decentralized purchasing is not economical because materials are purchased in smaller lots (as such, volume discounts or favorable purchase terms cannot be obtained).
• Lacks a uniform policy for the purchasing of materials.
• Different prices may be paid for the same materials by different departments.
• Expert buying staff cannot be engaged for each department of the organization.
• There is no coordination among departments, which can lead to duplication and overlap.
• The heads of various operating departments, in being responsible for purchasing materials, cannot concentrate fully on their routine duties.

Purchasing Procedure or Purchasing Cycle

1. initiation of purchase.

This starts with the receipt of a purchase requisition by the purchasing department. The purchase requisition is prepared by the storekeeper based on:

• Requisitions received from the departments of the enterprise
• Replenishment policy being pursued
• Special requisitions for specific equipment and materials
• Personal judgment and experience (if permitted)

The requisitions are usually approved by staff who are authorized to grant approval. The storekeeper ensures that they are acting according to standard policies. They prepare the purchase requisitions in triplicate.

The first one (i.e., the original) is sent to the purchasing department, the next one is sent to the cost department, and the last one is retained by the stores department.

More copies may be prepared depending on the requirements of the enterprise.

The purchase requisition forms the basis of the order to be placed with suppliers. Therefore, this should be prepared with careful attention.

This helps to purchase the right quantity of materials at the right quality, the right place, from the right source, and at the right time.

This helps the enterprise to procure materials at a competitive price. It also helps to ensure the smooth and uninterrupted operations of the enterprise.

Format/Specimen of Purchase Requisition

2. Inviting Quotations

After the receipt of the purchase requisition, the purchase department would proceed further and invite quotations, etc. from suppliers.

The usual practice is to send an inquiry proforma to the supplier. The specimen of the Enquiry Proforma is given below :

3. Receipt of Supplier's Quotation

The supplier, after receiving the inquiry letter, provides a quote and states the terms and conditions of the supply of materials to the purchasing department.

The supplier also provides quality, quantity, time of delivery, price, discount , and other necessary information.

This submission is important from the point of view of both the purchaser and the supplier. It is an offer in legal terms. This, therefore, requires careful handling and proper preservation.

4. Preparation of Comparative Statement

The comparative statement (or a comparative schedule of quotations) is prepared after the quotes are received from the supplier.

It is prepared with a view to comparing the prices, terms, and conditions, and it helps in selecting the supplier whose terms are most favorable to the organization.

The comparative statement is an important document that should be carefully kept on record for future reference and guidance.

The prepared statement is submitted to the head of the purchasing department for approval.

The purpose of preparing a comparative statement is to realize the money's worth. A proforma of a comparative statement is given below.

5. Preparation and Placement of Purchase Order

The last action involved in purchasing materials is to prepare and place a purchase order. A purchase order is a legal document that implies the acceptance of the supplier's offer.

The purchase order should, therefore, be prepared with great care and in complete detail.

This helps the supplier to ensure that they will supply materials of the right quality, the right quantity, and at the right time.

Purchase orders are orders to the supplier to supply the required materials as per their quotations and the instructions contained therein.

A proforma of the purchase order is given as follows:

Generally, the purchase order is prepared in triplicate. The original copy is dispatched to the supplier, the duplicate is sent to the account section, and the triplicate is retained for future reference.

However, if more copies are required, these should also be prepared. For example, if five copies are to be prepared, the fourth one could be sent to storekeeping and the fifth one could be sent to the requisitioning department.

Purchasing of Materials FAQs

What is meant by purchasing of materials.

Purchasing of materials refers to the act or process of obtaining goods, services, etc. (Especially the procurement of materials for an organization)

What are the ways for the purchasing department to function effectively?

A purchasing department functions effectively if: - it is organized on a centralized basis - full co-operation between purchasing department and other departments is assured - a close relationship exists between the purchasing department and the accounts department - the purchase manager is technically qualified and sufficiently experienced - a proper procedure is clearly set out and strictly adhered to

What are the roles of a purchase manager?

Purchasing is a critically important and specialized activity in manufacturing companies. Materials account for a considerable portion of production costs. As such, the purchase manager in such a business is responsible for spending more of its money than anyone else. To carry out their duties effectively, the purchase manager must know: - what to purchase - when to purchase - where to purchase - how much to purchase - at what price to purchase

What are the types of purchasing?

Purchasing of materials can be undertaken on a centralized or decentralized basis.

What is the difference between centralized and decentralized purchasing?

Decentralized purchasing means an organization has many locations and each location procures its own materials. Centralized purchasing means the procurement of goods is done at a central procurement center for all locations of the organization.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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Purchasing of Materials |Cost Accounting

After reading this article you will learn about: 1. Introduction on Purchasing of Materials 2. Centralised and Decentralised Purchase 3 . Purchase Routine 4. Purchase Requisition 5. Specification of Materials or Bill of Material 6. Time of Purchase 7. Purchase Quantity 8. Purchase Order 9. Purchase Procedures and Others.

Introduction on Purchasing of Materials :

In a manufacturing concern there is a separate purchase department under the control of purchasing officer. The main functions of purchase department are to purchase required quantity of materials in time so that the store can feed the production departments with the continuous supply of materials, to purchase better quality of materials at reasonable price.

The purchase officer has to play an important role since much money can be saved or lost by him. He requires a good technical knowledge of the industry and a large measure of administrative ability. He should also be aware of the policy of the management and the financial resources of the concern.

He should also be aware of the market conditions and must have the knowledge of the sources of supply, reliable suppliers, price and purchasing formalities.

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He must keep himself abreast of the government policies regarding import and export restrictions and various duties and taxes on commodities. He must have a working knowledge of laws relating to contracts and sale of goods, so that he can negotiate and enter into contract on behalf of his employer.

Centralised and Decentralised Purchase :

Centralised Purchase:

Centralised buying means purchase of materials by one specialised department. The purchase department is manned by personnel having specialised knowledge in respect of all aspects of materials. The purchase department has the authority to make purchases for the whole organisation.

Under this system the requirements of the whole organisation are ascertained through the preparation of Purchase Budget and the purchase department makes the purchases following the accepted principles and distributes the materials to the respective production departments according to their requirements.

In most of the cases the purchase department purchases material on the basis of Requisition Slip issued by the Store. The suppliers deliver the materials to the Materials Receiving Section. Where centralised purchase is followed, no individual department is allowed to purchase its own materials.

Decentralised Purchase :

Decentralisation of purchases means each department is allowed to purchase materials according to its own needs. So, the authority to make purchases lies with the individual departments.

Advantages:

(a) Benefits of local purchase:

If the production unit is situated far away from the main unit, it is beneficial to allow the unit to make local purchases. Benefits of basic low price, seasonal prices can be enjoyed which will cut out cost.

(b) Reduction in Transportation Cost:

On account of local supply of materials, transport cost will be reduced substantially.

(c) Quick settlement of issues:

Disputes arising out of rejections, shortages, returns can be settled easily and quickly.

Advantages of Centralized Purchase:

The following advantages can be derived from the Centralised buying:

(a) Advantages of bulk purchase:

Since materials are purchased in bulk, materials can be bought at a much cheaper rate because of higher rate of trade discount, better credit facilities and increased bargaining power, quantity, discount.

(b) Maintenance of quality:

Since all the purchases are made by the Purchase Department manned with persons having specialised knowledge in the quality of goods, quality of materials can be maintained which will ultimately lead to production of better quality of finished goods. Better quality of goods surely enhances the goodwill of the business which, in turn, results in increased turnover leading to a greater profit.

(c) Reduction in transport cost:

Under this system materials are purchased in bulk as a result of which transportation cost is reduced substantially. This has a positive impact on the total cost or per unit cost of material. This will enable the organisation to be more competitive.

(d) Advantage of specialization:

As the Buying Department is manned with expert purchasing personnel, right purchases from the right type of suppliers is possible. This guarantees both quality and price.

(e) Duplication can be avoided:

As one person is held responsible for all the purchases, duplication of purchasing work can be avoided.

(f) Planned purchase:

Due to planned purchase holding of excess stores can be dispensed with, better space management becomes possible and unnecessary blocking of working capital can easily be avoided.

Limitations :

The following are the limitations of Centralised Buying:

(a) Expensive

The administrative cost of the purchasing department is likely to be very expensive as a result of which the total cost is sure to increase and the very purpose of costing to reduce cost is defeated.

(b) Acts as a hindrance to smooth functioning:

In case the materials which are required by one production department are not available, it has to wait till purchases are made by the purchasing-department. This delay will lead to stoppage of production which will again lead to increased cost.

Purchase Routine :

Generally the following routine is followed for the purchase of materials:

(i) Request for purchase. The request is made by the Store Officer.

(ii) Inviting tenders and quotations for the supply of requisite quantity of materials.

(iii) Placing of order with suppliers after considering the tenders and quotations submitted by different suppliers.

(iv) Receiving of materials after proper inspection.

(v) Verifying and passing suppliers bill for payment.

Purchase Requisition :

The decision for purchase of materials is taken by the purchase department after receiving requisition for such purchase from any authorised department. Requests for purchases are made by the authorised department to the purchase department on a prescribed form known as Purchase Requisition.

A Purchase Requisition supplies three basic information which help the purchase officer to carry on the function of purchasing efficiently.

The information are:

(i) What materials are to be purchased (purchase of right quality).

(ii) When they are to be purchased (right time).

(iii) How much is to be purchased (right quantity).

Purchase requisition is received by the Purchase Officer from:

(i) The store-keeper for all standard materials;

(ii) The production control department for non-standard materials required for production.

(iii) The plant and maintenance engineer for special maintenance and capital expenditure.

(iv) Head of the departments for special items, like office sundries.

The Purchase Requisition is prepared in triplicate—two copies are sent to the purchase department where one copy is retained as an evidence of authorisation and the other copy is returned to the inventor after quoting therein the details of the order placed which indicates the action taken by the purchase department. The third copy is retained by the Store for office record and for future reference.

Specification of Materials or Bill of Material :

Purchase Requisition contains the particulars and specification of the materials to be purchased. Specification of materials is known as Bill of Material. It is initiated in the Production Control department or in the department of plant and maintenance engineer. BUI of Material is a complete schedule of materials or parts required by a particular job or work order prepared by the drawing office.

Bill of Material is prepared for all production orders and a copy thereof is sent to the store-keeper.

Advantages of Bill of Materials :

The following advantages can be obtained by various departments from Bill of Materials:

(i) On receipt of Bill of Materials the purchase department can place order with the selected supplier. So, Bill of Materials serves the purpose of Purchase Requisition.

(ii) A Bill of Materials authorizes the Store to issue materials.

(iii) The foreman is not required to prepare detailed materials requisitions because the Bill of Materials contains the details of materials to be used by a job or work order. So it saves time and facilitates easy drawal of materials.

Time of Purchase :

The Purchase Requisition indicates the date by which the materials are required for use. The Store-keeper places requisition to the purchase officer as soon as the materials reach the re-ordering level. The purchase officer on receipt of the Purchase Requisition places order to the supplier mentioning the date of delivery.

The date of delivery is fixed keeping in view the rate of consumption of the material and the minimum level fixed for it.

Purchase is also made when the market condition is favourable in spite of the fact that there is no immediate requirement of material for production. In an inflationary economy, materials are purchased in bulk with the expectation that the price will rise further.

In case of raw materials like jute, cotton, sugarcane, bulk purchases are made in the season to take advantage of quantity, quality and price. Sometimes long-term contracts are entered into with the suppliers for the purchase of materials for a specified period at a specified rate to safeguard against the possible rise in price in future.

But, in doing so, the purchase officer should take into account the following factors:

(i) Storage facilities to preserve quantity;

(ii) Financial resources of the concern; and

(iii) Cost of transport, cost of capital and cost of storage etc.

Purchase Quantity :

Before placing an order with the supplier the purchase officer is to ensure that only the right quantity of stores is purchased.

The following factors are to be kept in view in deciding the quantity to be purchased:

(i) The stock level of materials is to be maintained in such a way that production department’s requirement can be satisfied;

(ii) Production is not hampered for want of raw materials;

(iii) There should be no over-stocking to block working capital unnecessarily nor under-stocking of materials; and

(iv) Availability of funds.

Purchase Order:

Definition :

Purchase order is an agreement between the buyer and supplier of materials. It is a request made by the purchaser to the supplier to supply a specific quantity and quality of goods in accordance with the terms and conditions laid down in the agreement. It also signifies the commitment on the part of the buyer to take delivery of the goods and make payment as per the terms and conditions stated in the purchase order.

After carefully fixing up the quantity to be purchased, the purchasing department must place orders with the chosen suppliers. Those suppliers are to be chosen who can provide the necessary goods at competitive prices and at the right time. Quotations are invited from the suppliers.

Quotations received from different suppliers are compared and then the acceptable supplier is selected. After completing the above formalities the purchase order is issued to the supplier for the supply of requisite quantity of goods at specified time.

The purchase order i is issued in prescribed form and prepared in quadruplet (4 copies) and are sent to the following departments for reference and co-ordination:

(i) The first copy is sent to the supplier.

(ii) One copy is sent to the department originating the purchase requisition.

(iii) One copy is sent to the stores or goods inward department.

(iv) One copy is retained in the purchase department as a permanent record.

(v) A copy is sent to the Accounts department.

Purchase Procedures :

The Purchase Department has to follow certain procedures for efficient buying. The purchase procedures involve the following steps:

(1) Purchase requisition :

Receiving the purchase requisition, which may be received from the stores, production control department, Departmental Managers. The volume of materials to be bought should be determined judiciously.

(2) Search for supplier:

The Purchase Department has to search for prospective suppliers. Care should be taken in choosing the correct supplier. Once the suppliers are identified they should be asked to submit quotation or tender. The tenders are to be opened and supplier should be selected after considering the terms and conditions stated in the tenders.

(3) Placing order for purchase:

Once the supplier is selected the purchase order should be given to the selected supplier. Copy of purchase order should be sent to the originating department, Accounts Department and one copy to Costing Department.

(4) Receipt of Materials:

Materials received should be entered in the Goods Received Note and are to be sent to Inspection Department for inspection. After receiving inspection report, the materials are sent to the stores for despatch to the production departments.

For better understanding a chart in this respect is given below:

Purchasing Procedures :

Receipt of Goods:

The following chart depicts the Reception and Inspection procedures of materials:

A goods receiving department is usually set up at the entrance to the factory. All carriers of goods are supposed to report to this department. After receiving delivery note or an advice of despatch from the supplier, the receiving department should make arrangements for unloading the goods.

The receiving office should receive the goods after comparing the quantity, quality and other details incorporated in the Purchase Order which he should already possess. On receipt of goods they should be checked either by weighing or by counting or by inspecting.

If there is any damage or shortage, the fact should be noted on the carrier’s copy or challan. After being satisfied in all respects the receiver of the goods should sign the carrier’s copy of challan.Particulars of goods should then be entered in a Goods Received Note (given below). Goods Received Note is an important document and is necessary so that the supplier’s invoice can be verified and passed for payment.

Goods Received Note is prepared with additional copies to be distributed as follows:

(i) To the purchase department to update purchase record;

(ii) To the department originating the purchase requisition;

(iii) To the accounting and stock control department;

(iv) To the store-keeper; and

(v) Retained in the receiving department for record and future reference.

Goods Received Note (GRN) :

It is a testimony to the goods received which are in accordance with the purchase order. Where this is not so the supplier is informed by a formal communication. If some adjustments are to be made on account of damaged or defective goods it is customary to send a debit note to the supplier for the value of the damaged or rejected items plus cost of carriage for returning them.

Checking of Purchase Invoices:

Along with the goods the supplier sends an invoice which contains the details of the materials supplied and the price to be paid for it.

On receipt of materials the purchase clerk checks the accuracy of the particulars with reference to the following documents:

(i) Purchase Order.

(ii) Goods Received Note.

(iii) Inspection Report.

(iv) Debit Note, if any.

If the invoices are found correct they are signed by the responsible authority of the purchase department with a rubber stamp and passed to the accounts department for payment. The invoices are now checked by the authorised person of accounts department to ensure that the calculations are correct.

The invoice is entered in the Purchase Day Book from which the supplier’s account is credited. Periodically the total of the Purchase Journal is debited to Purchase Account in the General Ledger.

Related Articles:

• Procedure for Purchasing and Receiving of Materials | Cost Accounting
• Documents Required for Purchasing Stores Routine | Cost Accounting
• Material Control: Intro, Need, Essentials, Advantages and Materials Management
• How to Calculate Cost of Materials? [With Methods] | Cost Accounting

What Is Material Procurement?

Many businesses need raw materials to produce its products or help provide its services.  Sourcing these materials  from suppliers helps maintain steady production. However, there are many factors to consider when working in material procurement.

The supply chain evolves and changes as a business grows and more materials are required. There are various ways of procuring materials, and the most suitable method would depend on the type of product or service being offered.

Businesses need to find a reputable and reliable supplier that can provide them with the necessary materials on time and at a reasonable cost.

In this article, we will discuss the material procurement process and some tips on managing suppliers and contracts.

What is Material Procurement?

Procurement is the method of acquiring or obtaining goods, services, or works from an external source. Material procurement is the process of researching, selecting, ordering, and paying for the raw materials required for constructing a building or structure.

Procurement of any kind involves identifying and selecting vendors or suppliers, negotiating prices and terms, and awarding contracts.  The direct procurement process is critical to supply chain management and can significantly impact an organization’s bottom line. Companies must carefully consider all of these factors involved to make the best decisions for their business.

The terms purchasing and procurement may be used interchangeably, but there is a distinction between the two. Purchasing is buying goods or services, while procurement is a broader term that includes purchasing but also includes sourcing, negotiation, and contract management.

Factors to Consider in Material Procurement

There are many factors to consider when procuring materials, including cost, quality, availability, and delivery time. Organizations must balance these factors to get the best value for their money. 

Cost is often the primary consideration when procuring materials. Organizations want the best price possible for the goods and services they need. It is important to compare prices from different suppliers, negotiate for the best price, and observe strategic sourcing.

Quality is another important consideration when procuring materials. Quality is crucial because it affects the performance of the materials or products being procured. For example, if a construction company procures wood that is lower quality than required for a stable structure, they won’t be able to provide a good product to their customers, even if the lower quality means a cheaper price. 

Organizations want to purchase products that meet their standards and requirements. They may need to sacrifice cost to get the desired quality. This can help businesses gain a competitive advantage over their competitors.

Availability 

The availability of materials is a factor that can affect what you buy and from whom. Organizations want to make sure that the products they need are readily available, often on a consistent basis.

This can be challenging if the organization is trying to procure rare or unique items. They may need to place orders well in advance to get the goods when needed. If certain items are not available, this can affect the entire supply chain.

Delivery Time 

The delivery time of materials is also an important factor to consider. Organizations want to ensure that the products they need are delivered on time. This can be challenging if the suppliers are located in different parts of the country or world. It is important to understand the supply chain well to manage expectations and include expected delivery dates in your vendor contracts.

Importance of Procurement of Materials

Material procurement is an important part of direct procurement as it helps to ensure that businesses can source and purchase the raw goods they need to keep their operations running. Effective material procurement also reduces the chances of disruptions due to shortages within the supply chain.

In many cases, procurement operations are also responsible for ensuring that materials are sourced at the most competitive prices, which can lead to significant cost savings for the company. It can also help with the competitive advantage as some suppliers may offer better terms to those who commit to larger orders.

Organizations can use several different methods for procurement, and the most appropriate will depend on the type and quantity of materials required and the company’s budget and preferences. Some common methods include direct procurement, indirect procurement, and online procurement.

Direct and Indirect Procurement

In any business, either materials must be acquired to produce products, or products that are not raw materials must be acquired to provide a service. Procurement as a whole is broken down into direct procurement and indirect procurement. 

Direct material is a term used for those items that become an integral part of the finished product. In contrast, indirect materials are used in manufacturing but not incorporated into the final product. Indirect materials might include the following:

• Marketing services
• Human resources
• Software licenses 

There are advantages and disadvantages to both indirect and direct procurement. Businesses have more control over the quality, timing, and cost when doing direct material sourcing. They can also be sure that the materials will meet their specific requirements. 

However, direct materials can be more expensive, and there may be a greater risk of disruptions in the supply chain.

Indirect materials are usually less expensive than direct materials and can be easily sourced from various vendors. The flexibility of indirect procurement can help avoid disruptions if one supplier cannot meet the demand. 

Moreover, an effective indirect procurement process can make a company more efficient. This is because indirect procurement managers can streamline the process of procuring goods and services, leading to reduced waste and improved turnaround times. 

Steps for Procuring Materials

There are broadly five steps involved in the direct procurement of materials. They are as follows:

• Requisitioning:  This is the first stage and involves preparing and submitting requisitions for the required material. The requisition should include quantity, quality, delivery date, and more details.
• Planning and scheduling:  In this stage, the procurement department plans and schedules the direct procurement process. This includes identifying potential suppliers, fixing delivery dates, and many more.
• Negotiation and placement of order:  In this stage, negotiations are held with the suppliers regarding price, quality, terms of delivery, etc. After the negotiations are complete, an order is placed with the supplier.
• Receipt and inspection of material:  In this stage, the procured material is received from the supplier and inspected for quality and quantity.
• Payment to the supplier:  After inspecting and accepting the material, payment is made to the supplier based on the  contract terms .

The above steps are broadly followed in most organizations. However, some organizations may have more specific procedures in place to procure materials, while still loosely following these basic steps.

Managing Time and Material Contracts

With the different material contracts that a company may have, it is important to understand how to stay on top of them. Many factors are considered and included in these types of contracts and, if not paid attention to throughout the entire procurement process, could result in costly mistakes. To manage time and material contracts, there are a few key things to keep in mind:

• It is important to have a clear and concise scope of work.

A concise scope of work is important to avoid ambiguity in what is expected from the contractor. This can be accomplished by having a detailed project description that outlines all deliverables, timelines, and milestones.

• Make sure you have a clear understanding of the billing structure. 

With time and material contracts, you are typically billed for the hours worked plus the cost of materials. It is important to clearly understand how the contractor plans to bill you so that there are no surprises.

• Make sure that there is a plan in place for how materials will be procured.

This is important to avoid any delays in the project due to material shortages. It is also important to ensure you get the best price for the materials used. This includes understanding lead times, minimum order quantities, and payment terms.

• Establish clear communication channels between the company and supplier.

This is important to ensure that everyone is on the same page and that there are no misunderstandings. It will also save some time if issues arise since the concerns can be communicated quickly and efficiently.

By keeping these things in mind, companies can avoid many pitfalls associated with time and material contracts. By having a clear scope of work, a direct procurement plan, and good communication, companies can set themselves up for success.

Final Thoughts

The material procurement process is important in any organization that relies on direct procurement. The goal is to ensure that the correct materials are obtained at the best possible price and on time. There are several different ways to procure materials, each with its advantages and disadvantages.

There is no one-size-fits-all solution when it comes to direct procurement. It’s important to understand the options available and choose the one that best fits the organization’s needs. 

With that said, here are a few final thoughts on the procurement process:

• Ensure a thorough understanding of the organization’s needs before starting the direct procurement process.
• Be sure to compare prices and delivery times from multiple suppliers before deciding.
• Pay close attention to detail, and don’t hesitate to ask questions. The goal is to get the best possible deal on the materials needed.

Following these tips will help ensure that the purchasing process goes smoothly and that the organization gets the best possible deal on the materials needed, which can help your business succeed and, in the end, improve customer satisfaction.

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DOE Invests $75M in Critical Materials Supply Chain Research Facility Construction

The Department of Energy’s Office of Fossil Energy and Carbon Management has invested $75 million through the Bipartisan Infrastructure Law in a new project to build a new research facility dedicated to advancing the U.S. critical minerals supply chain.

The National Energy Technology Laboratory will lead the Minerals to Materials Supply Chain Facility , or METALLIC, project to enable research, development, demonstration and deployment of critical minerals and materials through rapid validation optimization and commercialization of production and utilization tools, DOE said Tuesday.

“To help ensure a secure domestic supply, DOE is investing in projects to help accelerate the production of essential critical minerals and materials from a diverse set of sources, working with other agencies and the private sector as part of a government-wide strategy,” said Brad Crabtree , assistant secretary of fossil energy and carbon management.

The METALLIC project will involve the participation of Ames National Laboratory, Argonne National Laboratory, Idaho National Laboratory, Lawrence Berkeley National Laboratory, Lawrence Livermore National Laboratory, National Renewable Energy Laboratory, Oak Ridge National Laboratory and Pacific Northwest National Laboratory.

Once completed, the Critical Minerals Supply Chain Research Facility will provide support to the Critical Materials Collaborative, the Critical Materials Innovation Hub and other existing government efforts to advance the U.S. supply chain for critical materials.

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• Purchasing and Transporting Equipment and Research Materials

Harvard University requires that faculty, staff, researchers, students, or other individuals who plan for or purchase products, equipment, supplies, and services with university funds, do so according to university policy. Details about the procurement of goods and services can be found here: https://policies.fad.harvard.edu/procurement . Please reach out to your department finance contact if you have any questions.

Transporting certain research materials and equipment may require import/export permits or other documentation from federal agencies such as US Border Protection and Customs, FDA, USDA/APHIS, Fish and Wildlife, CDC, and customs of the country you are exporting to or importing from. Visit EH&S website to get guidance on shipping and transporting research material , and for documents to assist you in managing the various shipments .  

Shipping or hand-carrying research supplies, equipment, biological materials whether hazardous or not, or other items internationally may require export permit. Consult FAS Export Control Administrator for guidance when carrying or shipping research materials and equipment abroad. Also investigate and understand importing regulations of the country where you are sending your materials and get all required documents to clear your shipment from the international customs.   

If shipping chemicals, please review the Toxic Substances Control Act EH&S webpage on (TSCA)  

Researchers seeking guidance on controlled substance use in the field should contact: 

Shanna deBlieck , Assistant Director of Science Operations, FAS Science Operations:  [email protected]

Taylor Chang , Research Operations Manager, FAS Science Operations:  [email protected]

For the IACUC office :  IACUC Administration, [email protected]

Transportation of radioactive materials is regulated by the Massachusetts Radiation Control Program, U.S. Department of Transportation (DOT), the License of the destination facility as well as other local regulations.  Please review the EH&S webpage on the radiation and safety committee , and consult the EH&S office to ensure the transportation of radioactive materials meets the regulatory requirements. 

Whenever possible purchase research materials locally or from suppliers that can ship directly to the sites.

Shipping capital equipment to the site requires extra steps. Equipment shipped oversee are recorded in the department’s capital asset register as “offsite equipment” and the department must complete an offsite form (or equipment to be based off campus for more than 30 days) for all offsite equipment. Offsite Equipment Notification form can be found on this site: https://oc.finance.harvard.edu/offsite-equipment-notification-form  

If you are shipping a piece of valuable capital equipment to the site, check out the mobile/movable property &equipment program available to departments to insure the equipment against associated risks while in transit.   

Review Harvard policy if your research involves Unmanned Aircraft Systems / Drones , and email  [email protected] to learn about their insurance.

If you plan on importing research materials into the United States, visit the following sites to learn regulations and the required permits:  

• Harvard Office of import/export control ( https://research.fas.harvard.edu/export-controls )  
• US Border Protection and Customs ( https://www.cbp.gov )
• U.S Food and Drug Administration (FDA) https://www.fda.gov/industry/import-program-food-and-drug-administration-fda  
• U.S. Department of Agriculture Animal and Plant Health (USDA/APHIS) ( https://www.aphis.usda.gov/aphis/resources/sa_epermits/eauth-epermits )
• The U.S. Fish & Wildlife ( https://fwsepermits.servicenowservices.com/fws )
• Centers for Disease Control and Prevention (CDC) https://www.cdc.gov/cpr/ipp/applications/index.htm  

Details about shipping and transportation of research hazardous materials or biological samples as well as shipping documents and external references can be found here: https://www.ehs.harvard.edu/programs/shipping-transporting-research-materials  

Shipping Temperature-Sensitive Research Materials

Shipping temperature-sensitive materials can be complex and present risks. The major risk in the transportation of temperature-sensitive products is temperature deviation from required thermal ranges, and the cost for temperature deviation can result in the loss of the research materials. This risk can be mitigated by using the right shipping company, ensuring all shipping documents and permits are secured beforehand, adequate packaging is used, and a tracking system is in place.

Currently, FedEx International, UPS, and US mail services are Harvard preferred shipping companies. Other non-preferred companies specialized in transporting temperature-sensitive materials such as World Courier, DHL Express, BOLLORE Logistics, etc... can be used but please note that using a non-preferred vendor will require advanced planning because you may need to set up a separate account with the vendor.

Some helpful tips when selecting a shipping company for the transportation of temperature-sensitive materials:

• Review past performance on similar contracts.
• Ensure the company can provide services as a qualified vendor for the transport of the subject materials.
• Ensure the company can provide transport services by all applicable regulatory standards.
• Ability to replenish ice during transit
• Ability to provide services with strictly defined schedules for both pick-ups and deliveries.

eShip Global (coming up soon) 

The university is piloting a universal one-stop solution for shipping most ground and express packages domestically, internationally, and freight to ensures compliance with safety and export regulations mandates. The system will minimize the University’s risk associated with moving hazardous or other regulated materials. Stay tuned.

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UB awarded $1.25 million grant to create clean energy research hub

The center will support upstate New York’s transition to an economy focused on clean energy, semiconductor research and artificial intelligence. 

The project, supported by Sens. Chuck Schumer and Kirsten Gillibrand, will tap UB’s expertise in materials science, advanced manufacturing, AI and more

By Cory Nealon

Release Date: April 1, 2024

Krishna Rajan

BUFFALO, N.Y. – Developing critical infrastructure for the emerging hydrogen fuel economy. Building energy-efficient microelectronics. Reducing the steel industry’s carbon footprint. Manufacturing the next generation of sustainable solar panels.

All are ambitious projects that University at Buffalo researchers and partner organizations will advance thanks to a new $1.25 million grant from the National Institute of Standards and Technology (NIST).

UB will use the award, which was championed by U.S. Senate Majority Leader Chuck Schumer and U.S. Sen. Kirsten Gillibrand, to establish a research center that taps into the university’s expertise in materials science, advanced manufacturing, artificial intelligence and other fields.

The center will leverage partnerships with IBM, Linde, National Fuel and other firms – all in an effort to discover new materials that support upstate New York’s transition to an economy focused on clean energy, semiconductor research and manufacturing, artificial intelligence and other industries.

“On behalf of UB, I would like to thank Senator Schumer for his support for federally funded academic research, including this $1.25 million congressionally directed spending request. With Senator Schumer’s support, this new Center for Accelerated Innovation through Materials will establish a materials innovation hub that will help UB lead the state and nation’s transition to a clean energy economy.”

The Center for Accelerated Innovation through Materials (AIM) will be led by Krishna Rajan, ScD, Erich Bloch Chair of the UB Department of Materials Design and Innovation.

“With this funding, UB will establish a materials science research hub that connects industry, educational, workforce and community partners to state-of-the-art equipment and faculty expertise that accelerates the transition of cutting-edge technology into goods and services that benefit the American people,” says Rajan, who is a SUNY Distinguished Professor and SUNY Empire Innovation Professor.

UB will use the grant to purchase equipment – microscopes, spectrometers and more – to study in real-time the behavior of materials when exposed to gases and other environmental conditions. It will also fund the studies of graduate students, and support workforce training programs.

Initially, the center will target several areas of research, including developing infrastructure for hydrogen-based fuels, which are a green energy alternative that has the potential to supplant fossil fuels that power plants, vehicles, buildings and other systems rely upon.

Researchers will work with industry to explore new materials for pipelines to safely and effectively transport hydrogen fuel, which degrades when exposed to stainless steel and other materials commonly used in natural gas pipelines.

Another area of research will be microelectronics. The growing demand for computing power, including supercomputing facilities that support AI systems, is taxing the nation’s energy grid. AIM researchers will explore new materials for chips and other electronic components that more efficiently use electricity.

AIM also will work with the iron and steel industries, which account for 7% of the world’s greenhouse gas emissions, according to the Department of Energy. These industries could reduce their emissions by using hydrogen fuel instead of fossil fuels when converting iron ore to iron. AIM will work on new materials and processes for this transition.

The center will also study use AI and high-performance computing – specifically the fields of computational chemistry and materials informatics – to sleuth for eco-friendly materials to be used in solar cells.

A unique aspect of AIM, Rajan says, is that it integrates its experimental infrastructure with materials informatics, AI and high-performance computing to accelerate innovation in discovery and design of materials to establish a clean energy economy.

Media Contact Information

Cory Nealon Director of Media Relations Engineering, Computer Science Tel: 716-645-4614 [email protected]

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Materials and Supplies

Material and supplies is a broad category of costs that contains all non-capital items like computers and electronic equipment as well as laboratory materials and research related supplies. The scope of work will drive what gets budgeted in this cost category. The expenses must benefit the project, as well as be specifically identifiable with the aims of the project.

Budgeted costs must be Reasonable, Allowable, and Allocable (RAA).

• Reasonable : basis of cost should be provided in the Budget Justification. The cost should be based on existing costs for same or similar sponsored projects as it correlates to the needs of the project or should be based on actual quotes.  Note the basis of your cost estimate in your Budget Justification.
• Allowable : the sponsor must allow the budgeting of the cost.  Federal cost principles for example restrict the charging of so-called administrative/office supply costing (see below).
• Allocable : cost and use must be solely assignable to the sponsored project.

Administrative/Office Supplies (federal)

Office Supplies :  this type of expense may be appropriate as a direct charge to a grant/contract only when it clearly benefits/supports programmatic objectives. Examples would include research notebooks and computer paper used during the technical course of a project. Items such as pencils, paper clips, memo pads and post-its are normally considered an indirect cost and therefore not allowable as a direct charge. Reasonable judgment should be exercised when charging office supplies directly to a grant/contract because they are likely to be highly scrutinized during sponsor proposal review or during an audit.

Postage :  the direct charging of postage to an award for purposes such as the shipment of materials, mailing of research surveys to human subjects and submitting deliverables is appropriate if reasonable care is taken to assure that such costs are for the sole purpose of the grant/contract and can be specifically identified and justified as such. Routine correspondence is considered to be an indirect cost and not an allowable direct charge.

Policies and Resources Affecting Administrative/Office Supplies (Federal)

• Administrative Costs Policy
• Guidelines for Charges to Sponsored Projects Funded by Federal Agencies
• OMB Uniform Guidance  – UMass Summary

Animal Care Costs

Animal purchases are considered technical supplies. Budget the cost to purchase laboratory animals separately from the cost of animal care.  Consult with  Animal Care Services  for current rates.

Computers and Electronic Equipment (Federal)

Although the Uniform Guidance indicates that computing devices need not be solely dedicated to the performance of the federal award, there is still the concept of allocability that must be addressed.  We need to confirm the allocability of the item in terms of cost vs. the benefit to the project.  The cost of the computer to the project must accrue to the budget proportionally to the expected use.  We do need to confirm that if we are budgeting the full cost of the computer that it is not in turn being used for other projects as well.

Incidental use for non-project related emails, etc. is acceptable, but if the project is charged the total cost of the computer, it is assumed that the project benefits proportionally and it is not being used on other projects.  If proportional usage is expected, then the amount budgeted must be based on some reasonable expectation of allocable use.

In summary, and other points to consider about costs for use of computers and electronic equipment:

• They must be necessary for and provide benefit to the project : the computer must be essential for project activities.
• They must be allowable : the computer is specifically identifiable to the grant as an "unlike circumstance.”  While the Uniform Guidance indicates that the computer does not need to be solely dedicated to the project – it can be split funded and shared with other projects – a robust justification must be provided in the budget narrative demonstrating “unlike circumstance” and thus the justification will provide very specific and robust details on how the technical and scientific nature of the project drives the need to budget computing and electronic devices.  To provide evidence of unlike circumstances, the Principal Investigator must document in the proposal that the use of the computer is beyond the normal and customary use and application of computers in the day‐to‐day operations of the laboratory
• The items must be directly allocable : the principal use of the computer must be directly allocable to the purpose, goals, and activities of the funded projects; they can be split funded with other projects but the justification should provide a rationale for charging a proportional cost to the grant.
• They must be reasonable : there must be an informed, prudent decision making regarding the basis of the cost, utility, and value to the project.
• Although incidental email use is acceptable, they must be non‐personal in nature.
• The need for the items has been included in the original proposal and completely justified as to the reason it is being included, the purpose and benefit to the project have been fully described.
• The PI is required to evaluate and ensure that the project does not have reasonable access to other devices or equipment that can achieve the same purpose. Devices may not be purchased for reasons of convenience or preference.  Include this evaluation in the budget justification.

Policies and Resources Affecting Electronic Devices and Computers (Federal)

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