ROLE OF PURCHASING IN COST REDUCTION AND CONTRIBUTION TO PROFITABILITY – AN APPRAISAL OF A MANUFACTURING COMPANY

ROLE OF PURCHASING IN COST REDUCTION AND CONTRIBUTION TO PROFITABILITY – AN APPRAISAL OF A MANUFACTURING COMPANY

Abstract:
This abstract provides an overview of the role of purchasing in cost reduction and its contribution to profitability within a manufacturing company. The study aims to assess the significance of effective purchasing strategies in achieving cost savings and enhancing the overall financial performance of the organization.

In the competitive business landscape, manufacturing companies face various challenges, including rising costs of raw materials, intense market competition, and fluctuating economic conditions. Consequently, optimizing the purchasing function becomes crucial to mitigate these challenges and improve profitability.

This study employs a qualitative research approach, utilizing a case study method to appraise the purchasing function’s impact on cost reduction and profitability within a selected manufacturing company. Primary data is gathered through interviews with key personnel responsible for procurement and financial management. Secondary data sources, such as company reports and industry publications, are also analyzed to complement the findings.

The research findings highlight the multifaceted role of purchasing in cost reduction. Effective purchasing practices, such as strategic sourcing, supplier evaluation, negotiation, and supply chain management, can lead to cost savings through volume discounts, improved supplier relationships, and efficient inventory management. By reducing direct and indirect costs, purchasing can positively impact the company’s bottom line and enhance profitability.

Furthermore, the study demonstrates that purchasing contributes to profitability beyond cost reduction. Collaborative supplier partnerships, innovation-driven procurement strategies, and value engineering initiatives can enhance product quality, reduce lead times, and foster competitive advantages. These factors ultimately contribute to customer satisfaction, increased market share, and improved financial performance.

The research concludes that purchasing plays a vital role in cost reduction and profitability enhancement within a manufacturing company. The findings emphasize the need for strategic alignment between purchasing and overall corporate objectives, as well as the importance of adopting best practices in procurement and supply chain management. The study recommends that manufacturing companies invest in skilled purchasing professionals, leverage technology-enabled procurement tools, and foster strong supplier relationships to maximize the benefits of effective purchasing practices.

Overall, this appraisal emphasizes the significance of purchasing in driving cost reduction and profitability, providing valuable insights for manufacturing companies seeking to optimize their procurement function and enhance financial performance.

ROLE OF PURCHASING IN COST REDUCTION AND CONTRIBUTION TO PROFITABILITY – AN APPRAISAL OF A MANUFACTURING COMPANY, GET MORE PRODUCTION AND OPERATION MANAGEMENT PROJECT TOPICS AND MATERIALS

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