So today we are going to post our first post about the purchasing challenges.
Have you ever know the challenges in purchasing? if you don't have any idea. we are going to tell you.
We're going to discuss eight (8) purchasing challenges:
1. Increase in Material Cost
2. Increase in Transportation Cost
3. Increase changing economy and political environment
4. Globalization
5. New inventory concept
6. Safety of environmental issue
7. Technology requirement
8. Business Alliance
The first thing is about the raw materials. Why? As you know the resources in our earth cannot be renew. So, it affects the cost of the raw materials.The limited resources affects the cost nowadays than past. Such as oil and coal.
Transportation cost is increasing by the distance, mode use to transfer the finished goods and size of product. As we know expenses of the price of petroleum,highway toll fees, road tax may vary this factors, thus it is why the transportation cost is increase.
The third point of challenges is the changing in economy and political environment. To import and export raw materials you need to complete the documentation from customs (that may be different from the origin country). Furthermore, the others country regulations always different.For example, neighboring nation such as Indonesia has different type of documentation and procedures compare to Malaysia.
Globalization is a new term that refers to 'go international'. This term is now commonly used by firm that expanding their business outside the origin country. But, to apply this concept, the firm who wants to go internationally must make a research/researches. Making a business outside the origin country is more challenging as they face more obstacles.
The emerging of the new inventory concept like Just-In-Time (J.I.T) is the effect that shows us, to be competitive in market, they must reduce the inventory.On the other hand, as to fulfill the customers' need, some of the firms need to apply inventory as they must satisfy the customers' requirement.
Nowadays, environmental issues are very common in the news headlines. This concern makes the purchasing management works hard to apply this concept to make sure they are creating a good relationship with the people and more Eco-friendly. This concept also helps the firm to reach the standard in reserving environment
Last but not least, the technology in a company is needed to be upgrade to improve the efficiency of production activities. So, the purchaser in logistics need to adapt with the technology changes as it will encourage competition among the organization. If the company still used the old technology and the demand of the product from customer is increase. It will affect the production based on quality quantity and etc. while, if we update the requirement of technology, the company will produce in large quantity.
Making a business alliance is needed as the purchaser must have a good relationship with seller/sellers or buyer/buyers. This is because purchaser should decide the best supplier which provide the raw materials or components with high quality at the lowest price. Business alliance is really important to make sure the firm is still in competition and competitive in every aspects in business. Business alliance also will shown from relation between distributor to get the related information about the demand and satisfaction of the product. So, the purchaser need to create the partnership between them.
If you don't agree with us, please don't be reluctant to comment or if you have anymore addition fact to be add please don't be lazy to comment too. Thanks :)
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