Home | Business
In a traditional organization, the role of purchasing is to simply purchase and the means was to negotiate and to have a confrontational attitude with the vendors. This led to the concept of ‘buying power’ of organizations into the management literature. For instance, large organizations squeezed every cent from their suppliers by using their buying clout. Purchasing solutions are based on vendor, geographic and technology specific. Whatever be the solutions, the goals are reduced cost, higher quality and reliability. Purchasing is a complex process with so many variables that the organization may not have control on many of them. For instance, currency fluctuation is an important variable that affects the buying decision. The degree of centralization in an organization plays a major role in purchasing solutions. A purchasing organization may have single or multi vendor for a product item. Vendor specific solution is based on whether to have multi vendor arrangement to reduce the risk of dependence on one vendor or to forge a long term relationship with a single vendor. Geographic specificity is determined to reduce the risk of dealing with different cultures, systems or to reduce the costs. For instance, Wal-Mart sources a significant portion of its requirements from Low Cost Regions (LCR). Technology specificity starts with the need to automate systems and to have greater over the business process. The automation solution increases the efficiency and tracks the vendor performance. ERP solutions integrate purchasing solutions seamlessly with other business processes such as inventory management, logistics and shipping. Web based solutions provide auctioning to get the materials at the lowest bid from many vendors. Finally, the increasing globalization trends and competition force the businesses to outsource purchasing and to concentrate on the core activities. Each solution has its own merits and de-merits depending upon the context such as product category, policy intervention. In essence, purchasing has evolved from being a back end service provider to a strategic partnership role.
Article Source: http://www.content.onlypunjab.com
Purchasing Software provides detailed information on E-Procurement Software, Purchasing Consultants, Purchasing Management Software, Purchasing Outsourcing and more. Purchasing Software is affiliated with Free Budgeting Software.
Please Rate this Article
5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
