The success of a manufacturing process is often dependent upon the quality of the chemicals that are used. Purchasing departments face the challenge of buying raw materials that meet required specifications and are priced within the stipulated budget. In many instances, it is not possible to satisfy both these requirements. Consequently, a choice has to be made between one and the other.
The volume of chemicals required by an organization often fluctuates. During certain periods, consumption may follow a steady pattern. At times like this, it is a relatively simple task to ensure that adequate supplies are at hand.
The purchasing department in a manufacturing organization that requires a steady supply of various chemicals, fulfills its role by playing a delicate balancing act.
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A manufacturing company that spends large amounts on the purchase of chemicals can gain a significant cost advantage if it is able to bring down the amount that it pays for its purchases. Many organizations however, assume that optimizing the procurement function is limited to getting the lowest possible prices from their suppliers.
Topics: Pricing in Chemical Industry