in cutting cost when we opt for conventional way of asking tender /quotation.BUYING MATERIAL FROM TAX EXEMPTED AREA .-In several countries the federal/ Stategovts provide tax heavens for manufactures for certain period say 10- 15 years Hence buyingfrom these area s helps in cutting cost .In common parlance it is called TAX HOLIDAYS . Lookout for such places prior to placing orders.ALTERNATE MATERIAL-Select high cost items and replace it by some low cost material . eg ;steel by plastic/aluminium .TRY MERGE IN TRANSIT- The concept of in-transit product merging—where, for example,two things are shipped from different locations and then married in transit so that they reach the
customer as a single shipment—can be seen as a technique for reducing inventory if the need forthe customer to simultaneously receive multiple SKUs is a given. To some extent, merge-in-transit represents an extension of postponement beyond the distribution center walls.VENDOR MANAGED INVENTORY (VMI). With the appropriate incentives, allowingsuppliers to assume the responsibility for replenishment of your inventory, because of theirvisibility into both their own inventory and production schedule and your demand data, canalmostalwaysreduceyourinventory.VENDOR STOCKING PROGRAM (VSP). Used primarily for maintenance inventories butapplicableto all, VSPs require a supplier to commit to an extremely high service level for delivery ofspecific SKUs within a fixed time at a predefined markup. VSPs can reduce or eliminateinventories for slow-moving products. There are numerous ways to take better control ofinventory and decrease its associated costs. The key to managing inventory successfully is tocontinuously measure your performance and look for new ways to improve it. Reducesurplus/obsolete inventory. Surplus or obsolete inventory can be reduced without risk tocustomer service. Purchasing should be active members of the committee to review and disposeof surplus. Improve supplier quality. Poor supplier quality will result in added costs in manyareas including additional inventory as well as the cost of rejections, rework, warranty,inspectionandexcessiveexpediting.Improve customer service. Purchasing should ask each day: How can we get the product to thecustomer on time? How can we reduce transport time? How can we improve communicationswith our customer? Establish objectives for the supply chain targeted on serving the customerbetter.As one of purchasing practitioner, this post has incorporated all corners stone concept that can beapplied to actual business setting. My compliment to the author!We as a Cross Jubail Company Limited are truly moving forward as expected. I am really proudthat we are now registered in Saudi Electric company and we will try our best to produce our
reliability with the SEC. This post has incorporated all corners stone concept that can be appliedto actual business.