WHY PURCHASING MANAGEMENT TODAY MORE COMPLICATED COMPARED TO THE PAST?

Text     : Muhammad Syahmi Bin Mohd Zaludin
Images : Google Images

In the name of ALLAH, The Most Gracious and The Most Merciful,


Assalamualaikum. For the third post, we would like to discuss about the purchasing challenges.

Do you know anything related to the challenges in purchasing?

There are five purchasing challenges as shown below :

1. Increase in Transportation Cost
2. Increase in Material Cost
3. Economy and Political Environment Change
4. Globalization
5. Environmental Issues

First of all, the increasement in the transportation cost.

Transportation modes!

Transportation can be defined as the facilitation of raw materials and component parts from supplier through the firm's manufacturing process to the ultimate customers.

Transportation is often the most costly and time-consuming component of purchasing management. Thus, we need to handle the transportation cost in order to meet the manufacturing and customer delivery schedulling requirements. 

The cost is constantly increasing due to the increasement of the diesel and gasoline price, highway toll fees, road taxes and other contributing factor such as the distance, the size of the products and the mode of transportation choosen to deliver the finished goods to customer.

There are 5 transportation modes such as motor, rail, air, water and pipeline. Air transportation mode is higher in cost compared to the other 4 modes.

Air transportation

 

Rail transportation

 

Pipelines

Water transportation

 

Road transportation

Second, the increasement in material cost.

Increasement in price of oil

The natural resources in the earth mostly are non-renewable. We are actually running out of of these natural resources such as timber, coal, ore and oil. Thus, the cost to consume this raw material are slightly higher nowadays compared to past.

It might be even higher in the next 5 years as the natural resources are getting lower while the demand are high in number.

Third, the economy and political environment change.

Custom clearance

As the purchasing manager, we'll need to get involved in the import and export activities. The activities are related to the laws and customs of the country you are. There might be differences in the law and regulations on certain items. 

Laws and regulation at each country are different

The documentation and certificates needed by the country also might be differ from each other as each country has their own laws and regulation.

Fourth, the globalization. 

Globalization can bring good and disaster

The globalization can be define as the growth to the worldwide scale or going international in market and sources. Most of the time the company who aspired to expand their business and establish sub-company outside the origin country are referred to go global. 

The best company will win the battle!

To go global, those company need to make research from the trusted source in order to enable them to make the best strategy while expanding their business there.

Fifth, the environmental issues.  

Go green!

Nowadays, the company are focusing on the environmental issues sensitivity and awareness.



 Thus, the purchasing management need to come out with their strategy to become an eco-friendly products and services supplier as the customer are more eco-friendly-oriented.

In a nutshell, the purchasing management are important to the organization in order to maintain their existence in the field of business. 

THE IMPORTANCE OF PURCHASING MANAGEMENT

Text     : Muhammad Syahmi Bin Mohd Zaludin
Images : Google Images

In the name of ALLAH, The Most Gracious and The Most Merciful,

Manage the purchasing wisely!

Assalamualaikum. For the second post, we would like to discuss about the importance of purchasing management.

Purchasing management is considered by many organization as an important and essential component for any business. Those companies recognize the cost savings that can be obtained from an effective purchasing decisions that will lead their companies to rise more and become prominent in the field of business nowadays.

The main importance of a purchasing management is the cost control. 

Control the cost efficiently!

The purchasing manager will eventually analyze which suppliers are supplying the best quality of raw materials and assembly parts at the reasonable prices. Starting from this point of advantages, they will review the background of the supplier in form of their on-time shipments, reputation and warranties.
 
Switching suppliers is costly and finding the best suppliers is a must to all company who would like to meet the customer requirement and at the same time grab the opportunities to become the leader in the industries. 

Second, the purchasing management need to secure their supply chain.

 

Supply chain!

The company who act as the buyer from another supplying firm need to ensure  that all of the necessary raw materials and assembly parts  appears on time with expected quality and quantities according to the order. 

Delay of shipment will bring disaster

In case there are any delay of shipment, the effect will eventually affect the whole supply chain. It will create loses to be bear by the company and gives bad experiences to the customer whom we are dealing with.

Third, the purchasing management is playing the role in ensuring the customer satisfaction.

In most companies, the purchasing managers have two typical obligation in their minds which are the quality of the product and also the on-time deliveries.

Customer satisfaction is the key towards success!

 

Good quality product gives great satisfaction!

Poor quality of products or services will give bad reputation to the company. It leads towards rejection of any further demand from customers. They may change their supplier if we happen to deliver the goods not according to their requirement. Thus, the purchasing manager and purchasing team need to play a critical role in shaping the customer's experience with the company they are dealing with.

Put this smile on your customer faces!

Don't annoy your own customer!

In a nutshells, purchasing management are playing essential roles in an organization. In order for them to generate more profitable gains, they need to start it with a great team of purchasing management. Through purchasing, we are able to create anything and delivered them to the customer according to the right price, right quality, right quantity, right place and right time.

Assalamualaikum :)

In the name of ALLAH, The Most Gracious and The Most Merciful.

Bismillahirrahmanirrahim, this will be the 1st of many post for our assignment of Purchasing and Supply Chain Management, LOG 2063. 

We will provide a lot of information related to purchasing and logistics through out the year. Please add any recommendation in the comment box. Thank you :)