Forums Marketing Purchasing Cost Analysis

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    Purchasing Cost Analysis


    Purchasing is one of the major functions of the organization. As without purchasing, it would be very difficult to manufacture goods. Procurement analysis is the analysis of what goes on in your purchasing department, are they keeping to the purchasing strategy and are inventories being kept to the optimum levels. It is the actual cost that is spent to purchase the product. Not only this, there are costs related to delivery, storage and handling also. You may also have a supplier which requires advance payment. You might have ordered a large item which requires several people to move and you have to pay for them. So, purchasing cost doesn’t mean the cost to purchase the product but it also includes the cost which will eventually affect the cost of production of the product.

    Order Cycle

    It can be said as a process or a route through which the order line progresses and the cycle actions are completed. Each step has a result. Order cycles contain cycle actions, or processing steps, such as Enter, Pick Release, or Ship Confirm. It can be customized by redesigning the prerequisites of cycle actions and by rearranging it.

    Prerequisites for Order Cycles:

    • Set upcycle actions
    • Set upcycle action results
    • Assign results to cycle actions

    Order Processing

    A road which starts with picking goes with packing and ends with delivering the packed item to the shipping carrier is known as Order Processing.

    It involves different steps:

    a) Picking- It refers to the picking of the articles in a specified quantity to fulfill the order of the consumer. There are 3 types of picking-

    1. Piece Picking- When the orders are picked one piece at a time, it is known as piece picking. This is generally done in repair part distributors or mail order catalog companies.
    2. Case Picking- Case as a whole is picked.
    3. Pallet Picking- In this type of picking, the whole order is picked in one go and shipped to the customer.

    b) Sorting- It refers to keeping products on the basis of the destination; size etc. depending upon the orders.

    c) Packaging- In this step; price, labeling and weighting of the product is done.

    d) Consolidation- In this step, packaged items are filled in a box and are ready to be shipped to the customer.

    This is very much important for any organization as the timely order will lead to goodwill of the firm. If a firm fails to provide the product at a definite time, a rational consumer will switch to a different company and it will definitely affect the brand image of the product. Thus, a company must make sure that it has efficient Order Processing System.

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