Classification Of Purchasing Goods

In General, purchased materials and services can be grouped into the following categories :

1. Raw material. Raw material are materials which have undergone no transformation or minimal transformation, and they serve as the basic materials for a production process
2. Supplementary materials. These are materials which are not absorbed physically into the end product. They are used or consumed during the production process.
3. Semi-manufactured product. These products have already been processed once or more, and they will be processed further at a later stage.
4. Components. Components are manufactured goods which will not undergo additional physical changes, but will be incorporated in a system with which there are is a functional relatioship by joining it with other component. They are built in an end product
5. Finished or trade product. These encompass all products which are purchased to be sold, after negligible added value, either together with other finished product and/or manufactured products.
6. Investment goods or Capital equipment. These are the products which are not consumed immediately, but whose purchasing value is depreciated over a period of time. in general the book value is stated on the balance sheet annualy.
7. Maintenance, Repair and Operating Materials (MRO items). These product sometimes reffered to as indirect materials or consumbles items, represent material which are neccesary for keeping the organization running in general and for support activities in particular.
8. Services. Sevices are activities which are executed by third parties (supplier, contractors) on contract basis.

(Disadur dari buku Purchasing and supply chain management karangan Arjan J. Van Weele)