Effective Purchasing Performance

Introduction

In an organization, the department needs to outline the essential elements just to perform effectively according to their functions. Usually the managers are the person who ensures the performance of their departments. Every area in an organization comprises with unique characteristics to support the overall performance of the organization.

Purchasing

One of the important processes in an organization is the purchasing department. In this area, the manager and the staff should work together to organize all of the necessary information and materials. Every organization are proposed to have their unique way in managing the purchasing department to ensure that all the allocated budget are not wasted and utilized according to its purpose.

Because of the influence of globalization, the businesses are forced to move in targeting the higher value in transaction and administration. In this case, the businesses formulated an effective purchasing management. The effective purchasing management does not only centers in its core function but also strategically focus in adding competitive advantage for the organization. Through applying the best practices, the operations in the purchasing department can be competitively managed. Managers and staffs who handle the purchasing function recognize the importance of their role can support the ongoing operation of the department and experience its significant contribution in the business performance (SSM, 2009).

Effective Purchasing Management Strategies

The purchasing management can be effective through the use of the system that provides the quality materials and other necessities for the business in a timely and cost-effective manner. At first, it is important to hire the people that can function according to their roles and responsibilities. Efficient and cost effective purchasing operations’ depends entirely on the well-trained people. These people are expected to facilitate the communication and shows accountability in their duties. On the other hand, the budget that is used in purchasing functions is required, but should be not excessive. Through the balance management in the purchasing department, there is an assurance that practices involved meets the criteria without sacrificing the quality and timeliness. It is an advantage for the organization to use the advanced technologies in purchasing that promises convenience because it allows the efficient processes as a strategic response in time, costs, recording, and others.

The operations included in the warehousing is also part of the purchasing management and can be effective if there is an assurance that all the purchases and deliveries are administered in a level that can satisfy the time and inventory area. All the activities involved in the warehousing operations are recorded and accounted in order to control the purchasing processes. The process in contracting is also important in purchasing for it is the manner of monitoring and evaluating the services received from the external entities. The processes in contracting analyses the goods and services that play significant role in meeting the quality. Usually the contracting practices involve the negotiation processes such as including the bidders and evaluate the contract according to the best attribute of goods and services at justifiable costs (RESC, 2009).

Advantages and Disadvantages

In a simple form of explanation, the purchasing is about buying the right goods, at the right time, at the right price, with the right quantity, and of the right quality. This is the fundamental requirement of the purchasing department, but because of the great numbers of competing sellers or bidders, the management cannot measure the best among the masses of vendors and suppliers. In adopting the effective purchasing strategies, the organization can easily manage this area and adds value in their competitive advantage.

It is an advantage in the organization if the purchasing management is proactive and adds value to the organization, improves communication with the suppliers and other potential suppliers, and has a better understanding in the marketplace. On the other side, there are no real disadvantages if the people and the process are aligned according to the objectives of the department, as well as to the organization. However, time and budget invested in the process might be the critical elements that should be monitored because it has tendencies to deliver the drawbacks instead of benefits (Barclays, 2005).

Conclusion

The effective purchasing management lies in the present situation of the organization and the influence from the past management. Through recognizing the weaknesses and threats in the purchasing management, the people can have the idea on the things or areas that should be emphasize in order to meet the new set objectives. The continuous practice of the purchasing management can polish the said areas and be an effective department in the organization.

References:

Barclays, (2005) Effective Purchasing, Chartered Management Institute [Online] Available at: http://www.barclays.com/latitudeclub/pdf/pdf_146_effective_purchasing.pdf [Accessed 29 July 2010].

RESC, (2009) Purchasing and Contract Management, RESC Reviews Protocols [Online] Available at: http://www.window.state.tx.us/tspr/resc/9purchasing.pdf [Accessed 29 July 2010].

SSM, (2009) Effective Purchasing Management, Spotts, Stevens and McCoy, Inc. (SSM) [Online] Available at: http://www.ssmgroup.org/upload/Effective%20Purchasing%20Management.pdf [Accessed 29 July 2010].