10 Steps to Better Purchasing Management
- Determine how & where spending has occurred by vendor or vendor type to gain a better understanding where savings opportunities exist. Use the information to aggregate spend across the organization, leveraging volume for improved pricing & increased efficiencies.
- Know your vendors & optimize supplier relationships. Develop vendor expectations & selection criteria based on historical vendor performance metrics. Develop a vendor scorecard with key metrics such as lowest cost paid, on-time deliveries & lead time required, and monitor the scorecard regularly.
- Establish a preferred vendor list based on historical performance and on-time deliveries.
- Gain spend management & budget control. Research historical total cost of ownership, not just costs.
- Establish control & compliance with policies. Stop unauthorized purchases through systematic controls.
- Improve risk management. Mitigate risk by on-order and overdue shipment monitoring.
- Streamline purchasing processes by establishing systematic processes for requisitions, requests for quotes, purchase orders, and receiving.
- Lower inventory investment by conducting trend analysis to better predict future buying and production needs & overstock analysis to reduce existing, non-performing inventory.
- Measure purchasing performance. Consistently review statistics and use decision support tools to constantly improve purchasing and procurement activities.
- Leverage technology. Quality purchasing, inventory & business management software will manage the details for these activities, enabling you to use the information to increase efficiency and grow your business.
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