Every business will have many suppliers for raw materials, water, electricity, paper, IT hardware, software and support, office furniture, office cleaning, distribution & delivery (if not in house), company vehicles and even coffee. This list could go on and on.
Purchasing management and cost reduction strategies should be geared towards generating substantial revenue from pre-existing elements without making additional revenue. This process identifies profitable procedures already in place and optimizes procedures to maximize profitability. Purchasing management & cost reduction enables businesses to identify their current needs, forecast future revenues, and understand the factors that help or prevent their cash-flow from being in a dangerous position. A successful purchasing management & cost reduction strategy includes the entire organization and all levels of management.