Effective Purchasing Skills
Effective Purchasing is a lot more than just finding the lowest price in the market. It is really about computing the total cost of ownership of a product or service from a supplier so that a rational choice can be made between competing suppliers.
Does supplier A or supplier B have the right goods or services, at the right price, at the right quality, in the right quantity, at the right place, at the right time for both the short and the long term?
From the point of view of the total cost of ownership, the low-price supplier may not actually provide the best value for you. Yes, the price might be low, but the volume demanded by the supplier might be much more than you can use in the immediate future. It could also be that you don’t have the warehouse space that the higher volume requires and you will have to spend more to rent or build additional warehouse facilities.
- Understanding the Purchasing Function
- Understanding how savings in purchasing increases profits
- Understanding Purchasing in a Lean Management Environment
- Purchasing in a Just-in-Time Environment
- Creating the Purchasing Price Abstract: Calculating who really gives the best price
- Understanding Quality Indicators for local products and imported products
- Looking Beyond the Price Abstract
- Calculating Re-Order Points
- Understanding how Lead Time affects Safety Stock Levels
- Calculating Economic Order Quantity to optimize frequency of ordering
- How poor purchasing polices can easily add inventory in the warehouse
- How dead stock is added to inventory
- Calculating the total cost of ownership
- Understanding Supplier Metrics: Developing your supplier quality program