Efficiency in Purchasing: A Study on WBHO Construction Firm

1. EXECUTIVE SUMMARY

WBHO is a leading firm in the industry of construction and civil engineering. The efficiency of purchasing plays a major role in this status. The purchasing department pays constant attention to its supplier relationships and negotiations and they approach tasks with enthusiasm and tact. Their objective is to maintain a high quality and a competitive price.

The method of obtaining company specific information is to interview a senior executive within the purchasing department of WBHO.

The current state of the purchasing department of WBHO is such that it encourages the growth and efficiency of the purchasing department which in turn allows for the realization of its objectives.

The key issues that the purchasing department

This could lead to possible discounts for buying fuel in bulk from companies that are not government owned that import and export fuel. By doing so, WBHO will have a sufficient amount of fuel on hand and will be less affected by the price escalation. WBHO can ensure that their trucks go through road worthy and quality checks on an annually basis to decrease the chance of unforeseen malfunctions and break down of their trucks. In addition, a systematic maintenance plan should be implemented to prevent potential failures before they can take

Not only does this affect the cost of transporting materials, but has a knock on effect affecting supplier negotiations. Due to very little opportunity to reduce costs of fuel, most cost saving is pursued in getting the best price from suppliers. In pursuing this objective, negotiations can become heated and unfriendly. This puts strain on the relationship with the supplier. This strain can result in negotiations ceasing forcing WHBO to go to an alternate supplier who has a worse price.

Causes:

Cost increases are most often out of the control of the affected firm. These increases are often caused by external factors relating economies and currency exchange changes. This is particularly true concerning fuel. Supplier relationships and negotiations that sour are often caused due to the rush and stress of acquiring materials; this results in rush decisions and brash attitudes that negatively affect the relationship. Pressure from senior management can also put undue rush on negotiations resulting in a less than favourable outcome.