Enterprise sourcing combines demand for goods and services to secure wholesale products, minimizing operating costs and increasing net profit. Small companies can use this approach to minimize office supply costs, while large companies create a purchasing department to negotiate bulk discounts. Corporate procurement is an ongoing process that tracks usage and seeks greater discounts.
Enterprise sourcing is a purchasing approach that involves combining demand for various goods and services used throughout an organization and using that collective demand to secure those wholesale products. The result of this type of effort is that the overall cost of operation to the business is minimized, allowing the business to make a greater amount of net profit from the manufacturing effort. Typically, corporate procurement will require the creation of some type of central purchasing process that involves coordination with personnel in each department or location of the company. This type of supply network helps identify the level of demand for different goods and services in each part of the business, work with suppliers to meet that demand, and negotiate volume pricing that saves the business money.
Businesses of any size can benefit from using the foundations of enterprise sourcing. A small company that operates a single location can use this approach to minimize office supply costs by identifying the total monthly usage of all employees for items such as copy paper, pens, printer ribbons, and pads of paper. An office manager or other authorized employee will then negotiate with a local supplier based on that monthly volume usage to secure a discount off the standard price for those items, sometimes entering into a contractual agreement to lock in those lower rates. This allows small businesses to obtain office supplies that are consumed regularly at a lower cost, which in turn means that more of the income generated by the company is retained as net income.
Large companies with multiple locations will often create a purchasing department as part of the headquarters structure. This department works with each location to evaluate usage on different goods and services, combines the totals for all locations, then tries to negotiate bulk discount deals with various vendors. When this approach works efficiently, the operating expenses associated with each location within the corporate structure are minimized, allowing the business to retain more of its revenue stream as profit.
As with many business and strategic endeavors, corporate procurement is an ongoing business. Purchasing agents are constantly looking for greater discounts on goods and services commonly used in a business. Tracking usage is also important, as a change in the volume of purchases associated with a given item can open the door to negotiating greater savings. As a means of improving a company’s ability to receive the maximum utility from its purchases, corporate procurement is an approach that is practical and will often produce results in a very short period of time.
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