Question

1. a) What is the most important element in Purchasing Management? (5%)

2. b) Within such element, what is the most important factor to contribute to its success and why? (5%)

3. c) What are the three main objectives of purchase management in a company? (6%) Among the three objectives, which one do you think is the most important, and why? (4%)

Answer 1

a)

Expertise is the most important element in Purchasing Management. Expertise means the capacity of an organization to evaluate different suppliers, negotiating contracts, ensuring the quality of purchases, etc. The expertise in preparing purchase contracts and the ability to incorporate computer and software systems are also coming under the ambit of this element.

b)

Within the element of expertise, people or human resource are the most important factor to contribute to the success of Purchasing Management. It means that no organizations can ensure expertise in purchasing management without the support of its employees in the purchasing team. Having the right people in the purchasing management team is very crucial for all organizations because they can utilize their expertise to evaluate different suppliers, negotiating contracts, ensuring the quality of purchases, preparing purchase contracts, incorporate computer and software systems into purchasing management, etc.

c)

The following are the major objectives of purchase management in a company.

• Creation of a long term relationship with different suppliers.
• Ensuring the reduction of cost of purchase by availing the best prices, discounts, offers, etc.
• Expansion of the supplier base by identifying new sources of purchase.
• Continuous evaluation of the purchase mechanism etc.

Among these objectives, continuous evaluation of the purchase mechanism is the most important objective of the purchase management in a company. Continuous evaluation of the purchase mechanism is helping a company to recognize the strengths and weaknesses of the existing mechanism for purchases. It also can lead to other objectives of purchase management such as the creation of a long term relationship with different suppliers, reduction of cost of purchase, expansion of the supplier base, etc.

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