Question

According to "How is Procurement Strategically Important to an Organization" one expert suggests the following, "a penny saved is a penny earned" and any cost avoidance goes directly to an organization's bottom line. What's your thought's on this statement and why is this statement relative to Supply Strategy?

Answer 1

Either you earn a new penny or reduce cost , by both ways you increase your profits . Procurement plays major role in reducing costs.

Planning procurement is a big managerial task. Not bringing all inventories one at a time that would increase storage cost and also now bringing less inventory this would result in less revenue as there wouldn't be inventory to produce the product.

So having right amount of inventory and when to procure is a big decision . Just in time is one technique which specialises in procurement.