Question

Why is it important to review the market for new suppliers, or options, to fulfill a procurement need?

Answer 1

A management or manager should keeps on reviewing new suppliers or options in the market because of few reasons. Some of them are:-

• To keep an eye on the changes in the market

If you are not keep an eye on the new suppliers than you will not able to adopt the new technology as well. That will result in you will keep using the old technology and your competitors will take advantage of yours.

Example : in earlier 90’s in printing industry better machineries were introduces. Printers and publishers who has not adopted the same had face lots of losses because new technology given better quality.

• To see if there is any change in the cost of raw material

If you are keep reviewing the new suppliers, than you will able to check whether there is any change in the cost of the product you required for production. Because that way your existing suppliers will not able to make fool of you.

• Location

Selection of location has huge impact on the company’s cost of production. So, if the new suppler is near to market and relocation of the same will give benefit to the company than they should go for the same. This will reduce the cost of production of the company.