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Questions you absolutely must consider include: Buy Considerations when outsourcing to reduce cost The decision to outsource a part or assembly is often based on Purchasing and supply management essay of internal resources, refocus of core competencies, or cost reduction.
The focus of this article is on outsourcing with the objective of lower cost. If you are attempting to outsource a part or assembly that is produced in-house based on lower cost, you must perform a thorough analysis.
In many cases, cost can only be reduced if the supplier is going to use a more efficient process or significantly less expensive labor. You must be careful in comparing costs.
Unless you are going to eliminate some fixed costs, the only real cost reduction is the variable cost. If the supplier cannot produce the part for a price lower than your variable cost, you are not saving your company money.
If you are in the process of outsourcing a part or assembly in an effort to reduce cost, you should be searching for a supplier that can produce the part using a more efficient method than you or a much lower labor rate are currently using.
Even after they add in their overhead and profit, it is possible that the supplier can produce the part for less cost than you can in house. Total revenue received from sales of the product is N12, If we bought the entire N10, worth of the product on January 1st, at the end of the year we would have made a N2, gross profit on an investment of N10, But do we have to buy the entire N10, worth of the product at one time?
What if we bought N5, worth of the product on January 1st. Then, just before running out of stock, we bought an additional N5, worth of the product with part of the revenues received from selling the first shipment. Could we make the same gross profit on an even smaller investment?
What if we were to buy N2, dollars worth of material. Sell most of it. Buy another N2, dollars worth of the product. Sell most of that shipment and then repeat the process two more times before the end of the year.
The annual gross profit of N2, is now generated with an investment of about N2, Which investment option is better? Selling N10, worth of a product and making N2, gross profit with an investment of N10, N5, or N2,? The best option is N2, Investing N2, rather than N10, frees up N7, that can be used for other purposes… such as stocking other products that have the potential of generating additional profits.
Capital goods include factories, machinery, tools, equipment, and various buildings which are used to produce other products for consumption. Capital goods also refer to any material used or consumed to manufacture other goods and services.
Capital goods are important to businesses, because they use capital goods to help their business make functional goods for the buying public or to provide consumers with a valuable service. The significant exception to this is depreciation allowance, which like intermediate goods, is treated as a business expense.
Buy The major factors that must be taken into consideration when you are deciding to lease or buy a piece of capital equipment. What are the major factors that must be taken into consideration when you are deciding to lease or buy a piece of capital equipment? A minimal down payment consisting of a first and last payment is usually required in advance, and the monthly payments remain the same for the duration of the lease.
Plus, electronic documents can be generated the same day as the approval so you can watch a machine demo, apply for credit, have documents signed and receive a purchase order all in the same day.
The use of a piece of machinery to make a product is what makes a company income. Leasing provides an easy, affordable method of using equipment that allows a monthly payment without obtaining a bank loan or worrying about budget justification.
Leasing also keeps your other lines of credit open and total system financing, including delivery and installation, can be spread over the lease term. When acquiring new equipment, leasing provides advantages such as: Longer terms and lower payments — Lease terms can be flexible up to 84 months.
Periodic equipment updates — Reduce obsolescence risks with life cycle management. Manageable upfront costs — Little or no down payment. Purchase options — At lease end, purchase at agreed upon price or return the equipment.Affordable Papers is an online writing service which has helped students from the UK, US, and Europe for more than 10 years.
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Strategic management is fundamentally concerned with how firms achieve and sustain competitive advantages (Teece, Pisano, and Shuen, ).
Visiting us is the best way to get firsthand information about a Sullivan education. Not only will you learn more about what it means to be a Sullivan student, but you’ll also learn about our quality academics and how we embody experience-based learning. Published: Mon, 5 Dec In the strong global competition, high labor costs, shorter product life cycles, and environmental regulations to keep customer satisfied and to have more sustainable business performance companies should try to have the right product or service at the right place at the right time, and this cannot be done without an understanding of Supply Chain Management in its.
Sep 19, · The primary audience of this report is corporate supply chain, procurement, and purchasing professionals, but it is also relevant for strategy, risk management, operations, and other corporate functions dealing with climate change and the supply chain.
The Benefits That Effective Purchasing And Supply Management Essay [Type the document subtitle] | [Type the author name] Neo Reconia Sys -