What is effective Purchasing?
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.
Another reality you have to contend with is the end of life of the part you are buying. Consumer demand these days changes so quickly that it is not wise to keep large quantities of products. A mobile phone you just bought could be obsolete by the time you get to the mall exit. Hence, most businesses try to keep their inventories as low as possible while still being able to meet customer demand. So, a quantity discount may not be that advantageous after all. You run the run of having a large quantity of obsolete and unsaleable stocks.
This changes the definition of the best supplier from the cheapest to the one who is able to supply the right quantity, at the right quality, at the price that is still profitable for you.
The above suggest that purchasing staff need to be trained beyond just canvassing and instead develop supplier relationships that will provide you with a stable supply base for the long term. They need to learn concepts like the impact of short lead times, understanding economic order quantities and developing long term relationships with reliable suppliers.
RMP Consultancy regularly conducts seminars on effective purchasing skills as well as Strategic Purchasing where these concepts, tools and techniques can be learned. Send your staff for training. Give us a call.
Upcoming Purchasing Seminars
4 Nov 2019, Monday, Effective Purchasing Skills,
11 Nov 2019, Monday, Strategic Purchasing Management and Negotiation Skills Training (Two Days),
19 Dec 2019, Thursday, Effective Purchasing Skills,
23 Dec 2019, Monday, Effective Negotiations Skills Seminar,
14 Jan 2020, Tuesday, Strategic Purchasing Management and Negotiation Skills Training (Two Days),
Register for one of the Seminars Above
Register for the Seminar
Please Contact Claire or Marco
Landlines: Tel (632) 8697-0767, Tel (632) 8579-0233
Mobile (Globe) 0917-882-5578, Mobile (Smart) 0918-937-3455
Or you can write an email to us and send it to:
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