For a company to function properly, it must be made up of several departments that are necessary for its proper development. Although sales is still considered to be the most important, the purchasing function should not be neglected. A reduction in purchasing sales is sometimes more advantageous than an increase in sales at constant cost.
Here are 5 reasons why your company should implement a purchasing strategy.
1. The purchasing function plays a strategic role
The purchasing we are talking about here is not “B to C” purchasing, which can be likened to a personal act of consumption. What we are talking about here is “B-to-B” purchasing, i.e. the company buying a product or service. This is a function that should not be overlooked. Ideally made up of a purchasing department, it guarantees good purchasing management. It is a good strategy, because it cuts across the whole company. Firstly, it has a direct impact on the company’s financial health and operating results through cost reduction. What’s more, its scope of activity extends beyond the purchasing department to include all internal departments. Finally, it is the department that evaluates the performance of strategic suppliers and arbitrates competitive tenders.
Finally, there is growing competition between companies to win new customers and meet their requirements. This phenomenon has put the spotlight on the purchasing function and its vital role in strategy. A recent study showed that, on average, almost 68% of a company’s turnover is spent on purchasing. A 1% saving on purchasing is equivalent to a 10% increase in sales.
2. The role of purchasing in the business world
Purchasing plays a key role. In a society where the world economy is growing, where living conditions have improved considerably, and where technology and information technology are being used for communication and sales, purchasing has become more accessible and more in demand.
- Economic growth translates into increased consumption and therefore demand, in terms of both quality and quantity.
- A better standard of living has a direct impact onconsumer demands
- The development of NICTs has also brought many changes, especially in the structuring, management and dissemination of information.
- With the shift from a production economy to a market economy, companies need to put in place new functions such as purchasing to ensure greater productivity and stay ahead of the game.
3. A function that allows you to manage your company’s needs effectively
The purchasing function is responsible for managing and meeting the company’s needs in the short, medium and long term. However, in order to coordinate these different challenges and take coherent action, it is essential to have a purchasing strategy that is in harmony with the company’s general policy.
The place and organisation given to purchasing procedures have a direct impact on their effectiveness. On the one hand, they reflect the importance you attach to purchasing organisations. On the other, they ensure that internal customers in other departments of the company who are concerned by the prescription aspect of the purchasing process have a line to follow.
4. The purchasing function can take many forms
Don’t be fooled by appearances. There are techniques to master if you want to buy well. In fact, the buyer’s job has its own specificities, which are part of the organisation of a purchasing department. In fact, the profession has undergone a number of changes over the years, making it an increasingly important part of a company’s organisation. Originally, purchasing was an administrative function. It consisted of sending orders corresponding to the company’s needs and methods. It then expanded to include negotiation. The purchasing manager negotiates and plays a key role in choosing the company’s strategic and non-strategic suppliers.
Finally, the purchasing function has become increasingly central, to the point of defining purchasing policies. It integrates information about the supplier market, products and prices. In addition, it must be omnipresent with its competitive environment and the stakeholders that make up its business sector. It is clear that this function has undergone a major evolution that proves its importance in a company today.
5. The purchasing function has many responsibilities
The purchasing function has a number of responsibilities. Firstly, itacquires goods and services through external service providers. Secondly, it negotiates with the best suppliers and draws upframework agreements. It is therefore a key player in the company’s economic performance. Finally, a purchasing department ensures that the best articles and products are sought and acquired, so as to guarantee the company’s added value and the quality of its distribution. When the focus is on raw materials, it is responsible for guaranteeing the supply function to ensure the means of production. It therefore generates a competitive advantage and is a bulwark of risk management.
As you can see, implementing a strategy for a company’s purchasing function is of vital importance. It plays a crucial role in the development and smooth running of a company. To ensure the success of your strategy, rely on a professional. Weproc is your best ally.
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Weproc is a SaaS software specialized in digitizing the procurement process of companies. From purchase requests to supplier invoicing, through the validation process, Weproc is designed to simplify the purchase management of SMEs and mid-sized companies by centralizing all purchase-related activities.