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Purchasing Organization Structure

Introduction

A company’s purchasing function is critical to the long-term success of a business. Shrewd negotiations with vendors let purchasing departments economically source quality items that are integral to the manufacturing process and essential to providing customers with desirable finished products. Contrarily, a purchasing arm’s operational inefficiencies can lead to high material costs, product inconsistencies and customer dissatisfaction.

Small Business

Unlike large corporations, small business tend to have small purchasing desks run by a single individual, who cultivates personal relationship with vendors and can quickly act when issues arise. On the downside, as businesses grow, single purchasing professionals can easily become overwhelmed with the responsibilities of maintaining relationships and tracking deliveries. Therefore, small businesses should grow their purchasing desks in lockstep with their overall growth.

Centralized Purchasing

Larger companies often create centralized purchasing structures, where a purchasing executive leads a team of individuals, housed in a central location. With this hub approach, a company with seven plants across the US would buy materials for all plants. This give purchasers the advantage of buying in bulk, for lower overall costs. Centralized purchasing also gives professionals tighter control over the purchasing process.