In an agile world like the one we live in, in which the dynamics and paradigms of supply chains change rapidly, digital transformation in any sector, including the purchasing sector, is unavoidable.
But for this transformation to be successful and expand the competitiveness and profitable potential of a business, we need to ask ourselves: how to promote this structural change in a sector that normally has traditional methods and needs to invest in updating and qualifying its employees?
Elaborating a good purchase planning that ensures greater predictability of demands, greater agility and better negotiation conditions – especially when opting for an annual contract with suppliers, which keeps the value of the parts quotations unchanged during the contracted period.
Benefits of purchasing planning
Planning in the purchasing sector is fundamental for the financial and cash flow health of an organization. It ensures that production will never stop due to lack of parts and that, when necessary, there will always be parts in stock. In addition, it avoids scrapping of parts, waste, unnecessary expenses – such as air freight in the case of last-minute purchases – and no lack of cash for any fundamental purchase.
Proper planning is capable of offering the procurement sector greater visibility of purchases, which can provide many benefits. Some of them are:
- Avoiding extra expenses, which blows the department’s budget;
- Greater efficiency: it avoids rework, forgetting materials to be purchased and prevents the same material from being quoted by more than one employee;
- Allowing the consolidation of orders, which makes negotiating the prices and deadlines for payment and shipment easier, and generates savings;
- Avoiding delays in the arrival of materials;
- Evaluating the need for technical knowledge to support the acquisition process. Especially when the internal technical capacity of the purchasing department is not available or is insufficient;
- Monitoring the purchasing process to analyze actual performance regarding planned activities and thus promoting adjustments – continuously and agilely;
- Allowing the purchasing department to meet additional needs with more quality and speed that were not foreseen in the initial planning;
- Increasing the transparency and predictability of the purchasing process.
The role of supplier choice in procurement planning
Procurement planning will only be effective if it includes the supplier qualification stage, which can avoid several inconveniences related to contracts closed with inadequate companies.
And problems with suppliers happen more often than you might think. A virtual community dedicated to purchasing professionals, Sales Hacker, has evaluated the relationship with its suppliers. Among the results obtained, we highlight two very worrying data:
- 84% of professional buyers reported that they always or often do not receive feedback from suppliers regarding their inquiries to purchase various materials;
- In relation to after-sales, 76% admit that the lack of return always or frequently occurs when they ask for information from the seller about any aspect of the purchased product – and many times already paid.
Many times, the discovery of a bad service, whether in quality, price, punctuality, ethics or transparency, only happens after being hired. That’s why it’s so important to research the supplier’s reputation before closing the contract, use advanced negotiation techniques and create performance indicators to analyze the services offered.
An even more practical option is to count on the services of companies specialized in the acquisition of materials, which can offer many advantages to the organization.
Annual purchase contract: is it worth it?
The option of an annual purchase contract with a specific supplier helps to plan most of next year’s purchases and close their values, ensuring that everything is within budget. Also, this modality optimizes the purchaser’s routine, since the same quotations made when the contract was closed don’t need to be repeated when the part becomes necessary. Having an annual contract is our golden tip to strategically plan your department’s purchases, from short, medium and even long term.
Soluparts is a spare parts specialist that offers an annual contract. In order to close said contract, it’s necessary to make a survey of the acquisitions made in the previous period, as well as meetings with all sectors of the company to understand the individual demand of each one of them in the next year.
With this list of indirect materials, sent by the client, Soluparts’ team quotes each one of the items, consolidating them in a single document – which is used for contract elaboration. This way, during the current year, when there is demand for any of the listed parts, there is no need to send a new quotation request – just send the purchase order, which greatly benefits the process of purchasing parts as it becomes more agile.
In Soluparts’ Annual Contract, the price of parts remains unchanged for one year. Thus, the buyer becomes a contract manager, and gains time to handle other strategic tasks.
If you still have any questions about how it works and what are the benefits of the Annual Contract, we have prepared an infographic to help you, click here to download.
To understand how to start drafting an annual contract for your company, talk to our spare parts specialists.
In the last few years, we have been following significant changes in the global economy that bring a lot of barriers and opportunities for organizations (digital transformation, concern with more sustainable practices, among others).
For the purchasing area, there are also other challenges: reducing expenses, making right decisions, optimizing the department’s processes and contributing to the company’s success.
An excellent way to increase the department’s efficiency and solve its main problems is to count on the right partners. We list below some reasons to partner with a company specialized in international indirect material procurement, helping to deal with these complex challenges faced in the current context. Keep up and get good results!
1. Premium service
Getting the right guidance, at the right time, is fundamental for decision-making in a company’s daily routine.
A supplier chosen hastily can bring a series of problems: a delay in a delivery of a lot of materials, for example, can generate the paralysis of a part of the operations for a certain period, which brings great losses to the company.
To guarantee the purchase of reliable suppliers, here at Soluparts, we have developed an internal supplier ranking that evaluates essential questions such as delivery time, prices, agility in response, among other factors.
Soluparts has great market experience and access to over 15,000 manufacturers. With a clear and transparent communication, our entire team of specialists strives to provide buyers with an experience of comfort and security by doing everything to meet their expectations.
We have a constant concern with the customer’s well-being. By facilitating the acquisition process, we give, through our premium service, the possibility of finding the indirect material they need, no matter the country, manufacturer, if the part is obsolete or not, which improves their work routine.
2. Better payment terms
Negotiating prices with suppliers is something that demands dedication and energy from the purchasing department. It takes time to contact the manufacturer, explain the demand, wait for the budget to be sent, question the values, try to get to an ideal price and define the forms and deadlines for delivery and payment (the latter is often one of the most complicated moments, since the supplier wants to get paid for the material as soon as possible while for the company it is better to pay with a longer deadline).
With a company specialized in the purchase of spare parts, it’s not necessary to have negotiations with each supplier, which reduces the time spent for the execution of these activities. Also, with Soluparts, it’s possible to pay with deferred payment.
Soluparts is a partner of its clients, we understand that we are all playing in the same team, so the client’s success is our success.
3. Purchase contracts suitable for your needs
Optimizing the purchasing team’s time by reducing the amount of quotations to be worked by the professional of the department can be done through purchasing contracts.
This modality allows the quotations to remain valid for a certain period. In this case, the specialized company receives the list of products to be bought and makes the quotations. The client receives the quotations of the several pieces for approval. When there is demand for one of the materials included in the contract, the client requests the purchase of these materials at the prices already established (within the validity period of this contract).
At Soluparts, you have the option of getting an Annual Purchase Contract, which offers to our customers crucial convenience, by reducing bureaucracy and generating savings for the company.
4. Culturally diverse team to assist in negotiations
With globalization and the development of the media, the cultural dimension has become an important ally for the purchasing area of companies.
Whether dealing with other branches of the organization or partners from other states and countries, knowing more about the other party (heir customs and values, for example) ensures greater alignment, which reduces the possibility of noise in communication.
In this context, being able to count on a team located in different countries, who is capable of communicating in several languages and is experienced in making acquisitions in multiple cultural contexts, becomes a differential.
At Soluparts, our employees, of various nationalities, have international experience, essential for purchasing management with suppliers from all over the world.
5. Access to relevant content for professional day-to-day life
In today’s world, information and data are the new oil. In the purchasing sector it is no different: having the access to information about market trends (such as the regionalization of supply chains, predicted by specialists, in the post-Pandemic world of Covid-19), is something extremely relevant when strategies are being defined and there is the interest to remain competitive and updated.
Soluparts empowers indirect material buyers by providing quality content on challenges related to international purchasing, supply chain related innovations and new technologies and also provides information and tips for you to improve your personal skills, that are essential for your professional growth.
Tip: access our blog to keep up to date with news that will make your routine more productive and effective!
Soluparts: security, trust and comfort in your indirect material procurement process
Maintaining productivity and optimizing time, in a period marked by intense and rapid changes, is a challenge to be faced by the various areas of a company.
To ensure more security in your decisions and make purchasing indirect materials more efficient, count on Soluparts, our team is specialized in providing support, solutions, commercial conditions and better prices for our partners, ensuring that all your demands are met.
We have offices in several countries (Brazil, Germany, Portugal, Hong Kong and United States) and we count on experienced negotiation professionals.
For more information, visit our website and take the opportunity to request a quote with our team.
Soluparts is an international trading company specialized in purchasing and delivering all types of industrial materials (MRO – Maintenance, Repair, Operations). Our dynamic team and modern systems enables us to offer a fast and reliable service to all our clients. See below what makes us unique.
1- We are agile
Our branches in the US, Germany, Brazil, Portugal and Hong Kong allow us to optimize and leverage materials purchasing and sales logistics, providing our customers with the best supply chain service in the industry: fast, reliable and modern.
2- We connect you to the 5 continents
Soluparts helps you reduce the number of international suppliers, since we have branches in the most competitive markets in the world. Your quotation will reach the most relevant manufacturers on the five continents, and you as our customer will only need the paperwork and time spent on one quotation. Our relationships and connections allow us to find any brand and product you need.
3- Manufacturer warranty
We offer the same warranty as the manufacturer. Should any mishap occur, our customer contacts us directly and we will solve the problem.
4- Experience and trust
Companies in various industries work and trust Soluparts. They know we always achieve expressive results. We have competitive and reliable suppliers in every segment and by decreasing your numbers of registered suppliers you also decrease risks of dealing with many different manufacturers..
We also rigorously check all incoming and outgoing products from our warehouses, ensuring that items shipped to the customer meet their requirements, reducing unnecessary expenses on returns.
5- We are facilitators
We help our customers purchase spare parts and effectively reduce prices, delivery time and bureaucracy. Our customer gathers all their demands in a single quotation request and we will take care of all contact with the various manufacturers, as well as in selecting the best prices and conditions in the market. This reduces ours client’s time in searching and comparing quotes with multiple suppliers. We also do cargo consolidation reducing costs and delivery time, ensuring the best terms.
6- Premium customer service
We have a multicultural and international team, prepared to help you in the best way and in several languages. Each of our consultants knows the needs of each client closely. They are experienced professionals with unlimited access to over 15,000 brands, with the daily mission of offering you the best prices and best market conditions.
Our logistics and purchasing departments are highly efficient, maintaining direct contact with our customers’ logistics departments to ensure all export documents and procedures are following their requirements.
How can we assist you? Do you face any other issues that we do not address in this text? We have experience in solving foreign trade issues and will be able to help you with what you need. Never again will a part be missing from your factory!
On September 20, 2019, the International Chamber of Commerce, ICC, published the latest Incoterms update.
The International Chamber of Commerce has been publishing Incoterms rules for over 80 years, reviewing them every 10 years to keep up with new market technologies and innovations, to better represent new business practices, facilitating and making negotiations more accessible.
Incoterms, known worldwide and translated into 30 languages, define the responsibilities of the exporter and importer at each stage of the import / export process, transferring the ownership of the material.
They provide importers, exporters, attorneys, carriers, insurers and students from the international arena with rules and guidelines that reflect the latest developments in the business environment, aligning different levels of insurance coverage, including transportation arrangements, such as modal, safety-related requirements, transportation obligations and costs, among other points.
According to ICC Secretary General John W.H. Denton:
The Incoterms 2020 rules make business work for everyone, facilitating trillions of dollars in global trade annually. Because they help importers and exporters around the world understand their responsibilities and avoid costly misunderstandings, the rules form the language of international sales transactions and help build trust in our valuable global trading system.
The updated Incoterms 2020 list contains the rules for 11 Incoterms. They have already been published and will be effective on January 1, 2020. Therefore, their use is suggested from that date. If importers / exporters wish to consider the Incoterms 2010, this should be added to the documents (eg EXW Incoterm 2010)
Here is the updated list:
1- EXW – Ex Works – At the source, at the given location. It represents the minimum obligation for the exporter.
2- FCA – Free Carrier – Free at the carrier at the specified place of delivery. It is now accepted for sea transportation provided it is in container. In addition, BL will now be released on board and terminal shipping will be accepted.
3- FAS – Free Alongside Ship – Free by the ship at the specified port of embarkation. Incoterm used for loose cargo, ie it is not required to be in a container.
4- FOB – Free On Board – Free On Board at the given port of embarkation. It can also be used in cabotage.
5- CPT – Carriage Paid To – Transportation Paid To Destination
6- CIP – Carriage And Insurance Paid To – Paid transportation and insurance to specified destination. It is now possible to negotiate insurance. In the incoterms of 2010, insurance was 10% of the value of the merchandise, now it can be any value, 20%, 45%, 60,%, and so on.
7- CFR – Cost And Freight – Cost and freight at the designated port of destination. Commonly referred to as FOB + Freight and can only be used for sea and cabotage shipments.
8- CIF – Cost Insurance And Freight – Cost, insurance and freight at the designated port of destination. Like insurance, freight cost can now be negotiated, not exempting the exporter from providing it, which remains mandatory. .
9- DAP – Delivered At Place – Delivered to the given destination location. Exporter fulfills the obligation to deliver the unloaded goods to the place of destination.
10- DPU – Delivered At Place Unloaded – Delivered to the specified destination landing location. It forces the exporter to unload cargo at the importer’s destination.
11- DDP – Delivered Duty Paid – Delivered duty paid at the specified destination. Unloading can be negotiated, which does not guarantee that it will be accepted, but the goods must be cleared for importation at the designated place.
Hiring a supplier involves several steps. The first one is a survey, in which all the options of suppliers are evaluated, followed by the elaboration and signing of a contract.
In the contract, all conditions for the provision of service or purchase are established: prices and payment terms, deadlines and delivery terms and other details, everything is agreed in the contract between company and supplier.
However, in addition to the contract, it is essential to follow up on the suppliers’ performance at all stages in which they are involved. This monitoring is not always carried out, mainly because the managers do not know the right way to or what they should accompany. The quality of products in deliveries, delays and problems and even a pro-activity of the supplier are points that can be measured and evaluated, for example.
Check out a few criteria that you need to track to monitor any suppliers’ performance, and how best to evaluate each one:
It is of the utmost importance to establish and maintain quality standards aligned between your company and each of the suppliers. To do so, monitoring the quality of the services provided is essential. After all, if this monitoring does not happen, the supplier can’t know ig the quality standards are aligned, if the company is satisfied and if there is a possibility of disruption of business relations.
One very important quality criterion to keep track of is a quantity of items that are rejected per delivery. This index says about the supplier’s concern to ensure that deliveries are made according to the customer’s request.
For this criterion, companies usually measures in PPM, parts per million, scaling how many PPM were delivered damaged or were rejected. The company should set an acceptable standard of quality problems for each type of delivery, and use this standard to evaluate the performance of each supplier.
In addition to monitoring, it is important to make those standards clear when contracting suppliers. Thus, the supplier who disrespects company quality standards should be penalized and even excluded from the list of service providers, depending on the extent of the situation.
Another set of criteria that should be presented are those related to the performance of deliveries. When you close a contract, it contains the dates on which the products are to be delivered or the services provided, and this date is to be followed strictly.
In the meantime, companies typically engage in a “standard deviation” of delivery dates, about 1 day before and 1 day after the date previously set. This deviation exists to foresee incidents in the delivery, and a margin of error is also established for undelivered goods – about 10% of the total order.
Of course, the ideal scenario would be delivery on the agreed date, in the correct quantity and without damage or rejected parts. In the case of services, the ideal would be that they were provided within the contracted term, without a need for contracting services that were not foreseen.
However, accidents and all sort of events can occur, and therefore, establishing an acceptable deviation is a better way to monitor the performance of your suppliers. So, keep strict control over respect for dates and results, while safeguarding an acceptable range of errors, and assign scores to each supplier on those issues.
On a scale of 0 to 10, for example, a supplier only scores a 10 if their deliveries perfectly match the three requirements: term, conditions and appropriate quantity.
Other evaluation criteria
It is also possible to assess supplier performance through its position on some negotiating fronts. Evaluate whether the vendor is open to reducing costs based on your bids and making payment terms more flexible. This shows the supplier’s desire to maintain a long-lasting relationship with your company.
Another possible option is to evaluate the transparency of the supplier, in the sense of providing previous customer contact information, with which you can seek references, as well as data such as company involvement in labor lawsuits and other charges, for example. That says of the suitability of the company, and your organization only has to gain by doing a full checking job of the suppliers to which it unites.
Analysis of supplier performance
After evaluating suppliers’ performance, assigning notes and making the necessary observations, it is important to analyze these data. For suppliers who provide the same type of service, it is interesting to draw a comparison between the notes and observations, and thus decide on the permanence of both or give preference to one of them.
For all suppliers, it is important to assess the feasibility of keeping them within the company. If a supplier does not perform in line with company standards, it is worthwhile to schedule a meeting and review the terms of that partnership, and even consider canceling the contract.
Providing constant feedback is the best way to pass these evaluations on to suppliers, enabling them to make improvements to their internal processes and keep an eye on the relationship with your company. Thus, it is possible to avoid extreme situations of dissatisfaction between the parties.
These evaluations are also a great way to analyze the workings of the processes involved in managing your company’s supplies, and to find loopholes and problematic points. In this way, the company gains not only by maintaining the best contracted suppliers, but also by constantly testing and optimizing management processes and methods.
How do you monitor supplier performance in your business? In addition to keeping files with this cataloged data, it is also possible to use automated systems and even joint worksheets to group the data and analyze the performance of each supplier.
We hope you have learned a little more about the importance and different ways of measuring the performance of the suppliers you hire. Share this article and help more colleagues improve their relationship with suppliers!
Dealing with suppliers involves numerous steps: surveys, checks, budgets and a lot of alignment meetings. The process of choosing the right supplier for your demand involves meetings, reviews, discussions and definitions, all to make sure that both sides gain in that relationship.
The first step is the actual choice of supplier. After identifying what your company needs when receiving the purchase order, it’s time to assess the possibilities. Usually, you will work with more than one viable option of supplier, and choosing the best one can be quite challenging.
The biggest mistake one can make is to choose a supplier without analyzing thoroughly all the qualities and faults of each option. Luckily, there are some key points that can help you make your decision more easily.
We set aside 5 of them, the most important factors to check before closing a deal with a supplier! Ready? Read below:
Price and conditions
Perhaps the price and terms of payment are the factors that weigh the most when choosing a supplier. Here, you must go back to your financial planning, and check if what was offered fits your budget and your needs.
Suppliers must offer a fair price for the service, but it is your role to negotiate so that the final price of your product is not compromised. Remember: a low price does not always mean low quality as well as a high price does not necessarily indicate a high level of quality. Find out what makes up this price by analyzing the quotations, and see if it makes sense.
Be beware of prices far above or far below what the market generally provides. High prices may be just a way of trading, as a margin to reduce the price to a level acceptable to the supplier. Low prices can hide abusive fees and contractual obligations.
And remember to see the expiration date of the quotation, because the price you see today may not be the same 3 weeks from now, and if you need to make the purchase next month, this quotation will be useless – and all your effort will be wasted.
To maintain a good relationship with suppliers, the company must set deadlines that can be met fully. Don’t forget to align your schedule with theirs, and always question whether the supplier offers a very long or very short delivery time.
You have every right to request proof of compliance with deadlines, as well as reports and statements from other customers, to have more faith in the work of the supplier.
Try to find out if the supplier has a history of unforeseen events that expand the deadlines, like accidents or shipping problems. Speaking of which, don’t forget to check the delivery options each supplier offers. Besides making a huge difference in the final price, different kinds of transport demand different deadlines, and you must be prepared for that.
Partner up only with companies that work with visions and values similar to yours and that can, in some way, enrich your production. To ensure that you are not being carried away by empty words and clichés, go beyond the institutional website and look for other customers from the supplier before closing the deal.
Find out what the partnership experience was like. Be sure to confirm whether the dialogue was easy, and if the company channels were available to resolve questions and problems.
The focus here is in the supplier’s ability to provide the service you require!
Quality is non-negotiable, and this also applies to the services provided by a supplier.
By service, we mean on-time deliveries, technical support when necessary and the support of the structure as a whole. Just imagine, if a supplier delays a delivery, then your product won’t be ready in time, your sales will be hampered, and your business may suffer reprisals from the customers.
So make sure your supplier is reliable. Check the legal and economic status of the company before closing a partnership. Request documents that demonstrate whether the supplier is indebted, facing labor proceedings or other criminal charges, and whether taxes are being paid on time. Any problem in these areas can impact your company’s image!
Speaking of image, the way the public sees your suppliers is decisive information! Like we said in the values topic, it’s important to partner up with good companies, that can enrich not only your business, but also your image.
It’s true that not every partnership will be a total win, but one cannot and must not be a total lost. To prevent that, dig in deep and find out where your possible suppliers stand on the public opinion!
You can do some research on their social media profiles, analyzing how they deal with criticism and complaints there, and also if there are any efforts towards keeping a good public image. Also, there are some websites devoted to publicizing criticism from unsatisfied customers and this is a great opportunity to check the supplier’s conduct on each situation.
Of course, there are other points you can check to make a deeper analysis on each supplier. We hope this article gives you some direction, but don’t stop here!
A nice tip is to try to choose a supplier for your company just like you do for your own personal purchases. How do you choose a store to buy from? Do you go online and look for reviews from previous customers? Do you only buy from stores that have been in business for a while?
Better yet, how do you choose someone to do a repair in your home? Everything you check before hiring this person should be checked before signing with a supplier. The care you have with your house should be extended to your company!
So, do you analyze any other criteria when choosing suppliers? Does your company have a special way to decide who to hire? Share with us! Leave your insights at the comments below!
For many years, the purchasing department was considered just another department within the companies, responsible for carrying out the purchasing activities in isolation, without any connection with the other activities carried out by the company.
However, times have changed, and today this department is already recognized as a fundamental part of organizations, actively participating in the selection of the best suppliers, choice of the lowest prices and working together with other departments involved in the production process of the company.
In an increasingly competitive world, companies need to act strategically, optimizing to the maximum the processes that directly interfere with productivity and business profitability. Each action is placed under a microscope, to evaluate the viability of it and the return it can bring.
Efficient management of the purchasing department can mean improvements in a number of areas, such as competitive advantage, profit and even corporate image. In today’s article we will list some reasons that make the procurement sector so strategic and important to the success of companies.
Check it out:
Supply of basic needs
The purchasing department is responsible for keeping the business running. It is through it that office supplies come in, providers of cleaning and maintenance of the space, snacks and meals, machinery and equipment, security apparatus, all items for inventory and much more.
Without these purchases the operation simply stops, that is, the company can not work unless these conditions are in full operation. Therefore, the first big importance of the purchasing department is this: make the company work. Without it nothing will exist, no business will be closed, there will be no profit, jobs or production demand.
Cost reduction and time optimization
When it comes to reducing expenses, rather than layoffs and outsourcing, the answer may be in the purchasing department. Effective management can ensure equally positive results at a lower price, and in times of global crisis, saving is a key word.
Today, technology needs to be present in the structure of the purchasing department. Modern machinery and state-of-the-art software ensure cost savings, by eliminating document storage costs, paper loss and damage, and by reducing human failure rates.
Thus, the company that invests in computerizing the operation of the purchasing department is ahead of its competitors, offering more structure and organization so that the work can be carried out in the best way possible. Still, in addition to the improvements in organization and cost reduction already mentioned, the time of the purchasing department can be highly optimized by technology.
Within any company, the desire is to perform as much as possible in the shortest time frame. So do not underestimate the saying “time is money”! The more time is devoted to performing simple activities, the less time left for more complex activities, which really need more attention. All the operation is impaired and the money invested is wasted.
A bureaucratic purchasing department is more efficient, works harder in less time, and generates more results costing the company less.
Maximization of profits
The company’s profit is virtually in the hands of the purchasing department. The strategies adopted and purchasing process are critical to the company’s financial success, and a small step in the wrong direction can symbolize irreparable damage.
A truly effective purchase involves building relationships with the best suppliers, ensuring better purchasing conditions, investing in the department’s employees negotiation skills, and promoting periodic meetings to evaluate the purchasing strategy within the company’s goals.
In addition, we can not ignore the search for lowest prices, which directly impact the final price of the product, thus, the competitive advantages of the company. Therefore, an evaluation of the supplier and the negotiation strategy must be in line with the company’s objectives, so that it is possible to design profit margins and establish achievable goals.
The purchasing sector can even improve the institutional image of the company by ensuring partnerships with reputed suppliers and avoiding association with organizations involved in controversies. The purchasing process also runs through the evaluation of the suppliers, in view of their image among the public and the suitability of each organization.
With this, the relationship between the company and the clients is strengthened, creating a relationship of trust based on the mission and the values that the company defends. As a consequence, new customers can be attracted by this image, representing new business horizons for the company.
There are many variables that interfere with the final cost of production. However, the purchasing sector is linked directly to one of them, the inventory control. Stockpiling is a department that often generates a lot of burden to businesses, with high costs of maintenance, disorganized purchases, and exorbitant personnel expenses.
The purchasing sector acts in conjunction with the company’s inventory needs, acting in a preventive manner in the vast majority of cases. This means that the purchasing department should, in partnership with the stock managers, ensure that purchases are made before the demands arise, based on some usage forecasts, as well as expiration dates and pre-scheduled maintenance.
As a result, purchases on an emergency basis are fairly reduced, allowing space for better price negotiations, reducing inventory costs and, by consequence, the total cost of production. It’s a win-win ratio for departments and for the company as a whole!
In addition to these points, the purchasing department acts jointly with several other sectors, placing itself as a fundamental piece throughout the company’s production chain. Therefore, it is necessary to see beyond the purchase orders, and invest so that the functions can be exercised fully.
How is the purchasing department seen in your company? Do you know of other points that are relevant to an organization’s success? Tell us, in the comments below!
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