When companies last minute purchasing, good purchasing goes out the door. Instead of getting competitive bids and negotiating prices, rush delivery becomes top priority and prices secondary. 60 minute couriers and Next Day deliveries often become a way of life. When a salesperson brings in new sales, some companies are lucky to make 15 cents on the dollar in pretax profit. On the other hand, every dollar saved in purchasing returns 100 cents to the company in pretax profit.
More money flows through the hands of the purchasing department than any other in the company.
You can improve your bottom line quicker and more dramatically by focusing in on purchasing than you can with any labor efficiency program or method analysis. Good purchasing takes time, and time is what purchasing typically doesn't have due to expediting and all the phone calls and paperwork that go with it. If you adopt an MRP system which schedules and reschedules material requirements to reflect the ever changing manufacturing environment, you will be able to significantly reduce expediting. Combine that with more bidding and negotiation and you can really make an impact on your bottom line. Without a good planning system, though, purchasing will inevitably drift back to expediting and all the costly inefficiencies that go with it.