Question

(B2B Marketing)

Purchases that affect performance? (Give examples)

Answer 1

The price charged for an item by the buying department isn't usually a fair indicator of buying efficiency.

An item's price can fluctuate due to market conditions, its availability and other pressures on demand. The buying department might therefore not be in a position to monitor the quality. Reviewing the inventory turnover ratios is a common method for determining buying effectiveness. The ratio measures the number of times the inventory is used, or turned, on average, during the period.

Administrative costs form the basis for calculating the performance of purchases. This calculation of success is not related to the amount of purchased products the department has procured. The metric is related to how well the buying department does in the tasks it is supposed to conduct against the department's current budget.