Procurement plays an essential role in acquiring goods and services from preferred suppliers with a cost-effective process. The procedures vary as the procurement cycle’s primary consideration includes delivery time frames, product quality, and profit margins. However, cost, quality and on-time delivery are the more dominant attributes of procurement performance evaluation. This article discusses the major procurement considerations in this industry. It could greatly benefit the kitchenware industry to make the correct business decision via these avenues by carrying out strategic Sourcing, analyzing sales trends, having the right price benchmarking, and ensuring the quality checks are being carried out.
The key components in any strategic sourcing are to strengthen the spending analysis, supplier management, supplier evaluation and detailed market research. It refers to identifying the spend profile and supplier base to ensure the business requirements align with the suppliers. It aims to achieve the lowest total cost of ownership and minimal of supply chain risk. Hence, it embodies the business relationship with its sourcing partners as a loop that developed periodically instead of a one-way process. A higher level of cost savings is the most apparent benefit from strategic sourcing. Identifying the suppliers that provide the highest value at the proper pricing enables higher cost savings.
In order to enhance effectiveness and competitiveness, it is imperative to select and maintain competent suppliers. Many factors affect the selection of suppliers, including cost/price of goods and services, quality assessment, reliable delivery times, financial position, logistic and technological capability, trust and commitment, etc. Sustaining the relationship with suppliers also imply that the suppliers feel valued and motivated to optimize their performance to meet the business objectives.
Price Benchmarking and Quality Management
Price benchmarking is defined as a fundamental activity in any procurement process. It is a form to compare the cost for goods and services with other suppliers on a like for like basis. Either it is a one-off price comparison or ongoing exercises regularly, it allows the purchasing team to make purchasing decisions in reasons and wisely. It is to ensure the company is getting a reasonable price on the goods and services. Also, it is real-time feedback about the market prices and trends. Developing and implementing these processes help to add value and have an optimal return of investment.