What is the Importance of Purchasing and Supply Management in Companies?

Carrying out purchases in a company are related to the management of supplies. As contracts for goods must be made and negotiated and services that support production and its success; through the most suitable techniques, tactics and types of negotiation strategies.

Both steps are important for progress of the business, since, the idea is to be supplied with sufficient resources, which offer the best quality and the lowest cost; thus increasing the profit of the company and reducing the existing inventory.

Currently, companies intervene with higher frequency in globalized markets, and each time the competition is stronger, both nationally and internationally; therefore, a competitive advantage is very important.

What do we refer to as purchasing management in a company?

It refers to both strategic and operational tasks carried out by the company, that is, a series of steps that guide this whole process towards the goal set, by obtaining services or goods; thus guaranteeing the quality, the time and of course the best cost of the same.

How is purchasing management carried out in a company?

When you are going to make a purchase, the first thing is make a list of what is needed, then the document is made to request said purchase, detailing the quantity of each product or service to be contracted.

cycle of purchasing management in a company

Then go to review, to carry out the purchase order, then the finance department must approve the budget, subsequently several budget requests are sent to the suppliers to choose the most appropriate one and a contract is signed with them.

Afterwards, you are sent the purchase order, which you must accept For greater legality, then the supplier sends the order to the buyer and he must review it, giving the go-ahead; later it is finalized, with the payment of the invoice.

What do we refer to as a company’s supply chain and what is its objective?

It refers to the monitoring that is carried out, from the moment the supplier dispatches the merchandise to the buyer, either to a wholesaler, a retailer or a consumer; in other words, to all that information process, which is related to materials, finances, among others.

All these aspects must be coordinated and integrated in the company, the main objective being reduce existing inventory; hence the importance and advantage of the purchasing department division, which is in charge of always keeping what is needed available.

There are several options for software to manage this processSome of these have an interface based solely on the web, to be accessed from any browser; others focus, on application provider services or ASP, to be accessed through a network.

The importance of purchasing and supply management in companies

As mentioned at the beginning, both steps are importantIn the case of purchasing management, because the company can choose the best budget from the beginning in each decision made, making the most of all resources; In addition, costs are reduced.

graphic representation of the process that exists in the management of purchases and supplies

Also to obtain a better communication and relationship with suppliers, which is essential for the contracts to be satisfactorily concluded; equally economic risks are avoided, as well as the time that the process itself may take.

The supply chain is key to the operational task of the company; therefore, we cannot ignore the importance of a good organizational structure for the success of the company, because it will guarantee a good response from customers.

This happens, because it encompasses all the movement that begins with the raw material, until it reaches the final distribution; success will depend on planning, of the dynamism in the physical execution and control or evaluation of the chain.

Both processes are necessary and vitally important for any company that wants to achieve success; hence the importance of knowing the probabilities in business for decision making, according to needs and making the necessary corrections if necessary.

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