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Best Way - Steps to Implement a Purchasing Department

If you are the owner of a medium to large sized company, it may be time to take advantage of the possible savings offered by a purchasing department. In order to realize these savings, it will be essential to put in place a set of tools which the department will use to track spending, and leverage that spending in order to maximize savings.

    Incorporate a Series of Product Tracking Tools

  1. The development of a set of tracking tools is the first step which you must take in order to put a purchasing operation in place. A prime example of one of these tracking methods is the utilization of a standardized set of commodity codes which can be used to both track current inventory and order new products. A standardized commodity code set can be purchased from a code publication company. It will be extremely important for your purchasing department to adhere to these code descriptions in order to properly track product and develop spend data.
  2. Constitute Commodity Councils

  3. These councils consist of committees of employees who understand the items which your purchasing department will be ordering. Their input can ensure that the quality of goods ordered is sufficient and that they meet the specific needs of your company.
  4. Analyze Past Spend Data

  5. In order to put into place the type of purchasing strategies which will save your company money, you must first understand your past spend. You should develop and put in place a set of metrics to account for spend data. This will allow you to understand your company's spend in order to realize savings. This data will also provide a set of vital intelligence tools, which will be useful when you consider expanding your company's spend to account for new product lines.
  6. Develop a Purchasing Strategy

  7. Now that a tracking mechanism and spend data are in place, your company should develop a comprehensive purchasing strategy that accounts for strategically sourcing vendors who can compete against each other to drive down the price of the bid. It should also include putting in place a bid letting environment, which is accommodating to the needs of most vendors in order to encourage the participation of as many prospective vendors as possible. The efficient use of high-technology purchasing tools will also play a key role in allowing your vendors to effectively participate, while driving down labor costs within your new purchasing department.
  8. Follow-Through and Contract Management

  9. Ensure that a Chief Supply Chain officer is charged with the responsibility of follow up in the procurement process. He should be tasked with managing the vendor's contract to confirm quality of service, ensuring that ordered supplies are received, are of the proper quality and quantity, are delivered on time, and delivered to the correct department. All of the purchasing strategies in the world are useless if the vendor does not perform.

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