Global Purchasing Essay Example | Topics and Well Written Essays - 1000 words

Global Purchasing - Essay ExamplePurchasing is central to any organizations activity. They choose to purchase raw materials, components and machinery in order to produce or manufacture products. It is stated by Williams (1975, 1985) that an organizations primary purpose is to reduce negotiations most transactions and to reduce the scrutiny of the same later on. This means that good bargaining and settlement of beneficial terms and conditions ensure that problems do not develop later during delivery or the manufacturing process. It is clear that the profits that will be made on the sale of the product will be largely placed through the effective purchase itself.It is the responsibility of the purchasing department to make what is known as an effective purchase. A purchase is effective when the best terms is obtained subject to best delivery schedule and in conformity to the quality parameters that have been explained and accepted by both the provider and the purchaser. Apart from this, the terms and conditions mustiness also be suitable and not detrimental to the purchaser.There are three types of purchase. One is purchase of Routine Products that are of low financial survey not complex and their nature, quality, consistency and value can be determined easily. They are readily available and purchase departments do not spend also much time on their procurement as otherwise the procurement can become more costly than the product itself. Here the relationship with the supplier is nominal.The other type is purchase of Bottleneck Products that are products with a low financial risk and a high complexity. Professional purchasers spend time and cash in their determination and in simplifying the relationship with the supplier in order to reduce their complexity. The supplier has the power in this relationship (Five Force Analysis ostiary M.E) and the purchaser is