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7 Key Questions for CEOs on Purchasing

Purchasing and supply management is vital to every business and ultimately controls the profitability of the organisation.

 

Whereas most people look to the organisations manpower for savings, many businesses have large amounts of money “tied up” in contracts for external supply.

 

It is vital that those contracts contribute to:

 

  • Cutting costs

  • Improving efficiency

  • Creating value

  • Improving effectiveness

 

There are 7 key questions to which the CEO of the organisation should have the answers:

 

  1. Do you know how much money you are spending externally?

  2. Do you know how much money you spend on each category of expenditure?

  3. Do you know how much money you spend on each supplier?

  4. Can you find how much you spend on procurement and payment processes as well as the basic item.  In other words, do you know the procurement costs?

  5. Do you know the whole project life cycle of large items such as buildings and equipment?

  6. Do you personally know your key suppliers, as they have such a big impact on your business?  Do you share your strategy with them?

  7. Do you have skilled people developing and managing your purchasing?  It is essential that they deliver in accordance with your strategy.

 

These answers to these key questions can be very powerful in establishing whether your purchasing is effective.  It is relatively easy to purchase goods or services out of habit, without due care to efficiency and effectiveness.

 

{Provelio can provide the service that you need to find the answers to your questions.  Contact Paul Wilson at paul.wilson@provelio.com}

 

 

 

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