Typically, they help other departments - identify their needs, manage the requisition process and source competitive prices, and generally act as controllers to ensure adherence to budgets.
To ensure quality and to prevent unethical practices, purchasing is usually separate from receiving and accounts payable.
6 ways the purchasing department can improve business/Top objectives of most business’s purchasing departments:
1. Lower costs:
This is by far the primary function of the purchasing department. A well-run department should allow you to achieve immediate savings by choosing a mix of suppliers who can provide the best prices and terms. In this process, relationships with suppliers who cannot provide the right level of quality at the prices quoted are terminated.
The purchasing department can also provide savings by taking advantage of warranties and discounts often forgotten by non-specialists.
Purchasing can also help you save by providing better transparency in how your company spends. This will, in turn, allow you to negotiate better contracts and free up your cash flow.
2. Reduce risk and ensure the security of supply:
Supply chain management involves sharing and managing risks with suppliers. This can be done by moving the risks to the suppliers who are best able to manage it. Or it can be done through diversification of supply.
The purchasing department has to identify what goods and services are crucial to the company and take the appropriate steps to secure their supply chains accordingly. Often, this comes down to an economic decision, where higher risks can result in lower prices, or vice-versa.
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