PURCHASING AND SUPPLY ORGANIZATION DEPARTMENT I contacted a consultant for Mansell Ltd. and a great deal of information was gathered and analyzed. The following advice would be given for ways of improving their purchasing and supply organization. Currently, Mansell Ltd. Operates from six sites and has a central purchasing and stock control department in the North of England. Upon an analysis of the company, it has been found that orders for production materials have been placed with over 6000 different companies during the last four years.
There are many benefits to be gained from buying from a smaller number of suppliers. The purchasing and supply department would be better organized and thus more efficient if less supply companies were used. Purchasing supplies from fewer companies would result in better pricing of supplies. For example, if the company purchased the same items from several different companies, it is probably getting charged more.
Purchasing the same item from only one company will result in savings for the number of items bought because many companies give a discount for large quantities of items purchased.
When using the same companies for purchasing, a rapport between the two is possible. When a supplier knows that his/her products will be needed by a certain company, he/she will be more likely to have those products more readily available. For example, if the seller knows that the buyer needs a thousand items each week, the seller will make sure that those items are in stock and will save them for the purchaser instead of selling them to another company.
The more sellers, the more confusion there will be. Even with computer technology, having so many sellers presents a logistical problem. A purchasing and supply organization should follow certain business fundamentals. Low cost, quality, and timeless are fundamental to...