From the early days of your business, making good procurement decision is always major issue.Good Procurement is critical in the days of your business coming into existence. You need to procure assets (these are the things that you use to generate revenue for your business) that will save you for a durable period of time. It is important to make good decisions, even if you are new in the business world.Costswhile most entrepreneurs go for the cheapest items, it is important to look at the basic level focus on the the cost of items that were submitted or to be submitted by the supplier. A good decision maker will look beyond the cheapest item and look beyond the costs. You need to look at the associated costs of the item to be procured such as receipts, acquisition, transport costs, storage, usage, maintenance, and disposal of the product or service. This is known as the Total Cost Of Ownership Analysis.
Examples of the components of total cost of ownership that a procurement decision maker will need to consider involve energy usage, productivity impacts, and salvage value. All the above components vary from supplier to supplier and can result in the lowest priced product or service not being the lowest cost product or service. A good decision maker identify and quantify all the components involved before purchasing.Supplier Performance
A procurement decision maker faces the challenge with regard to the performance of suppliers. The categories of products and services at this level are specialized and therefore shielding unreliable suppliers is very difficult and selecting the right supplier the first time is critical.Good decision making collects many factors ranging from financial analysis of suppliers to supplier performance metric collect by your organization to those of other organizations, proof of adequate performance and long term viability is very important.
Good procurement decision making involves actively, the efforts by the suppliers on archiving joint cost reductions. There is a strong relationship and communication protocol between making good procurement decisions and the strategic suppliers Using meetings to brainstorm on the betterment of ways of doing business together and actually implement the best of those ideas for more measurable improvements.
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