Transformation Of Procurement Practices For Non Production And Indirect Functions

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Transformation of procurement practices for Non-production & Indirect Functions
This paper will focus on the concepts of transformation in procurement practices for non- production & indirect functions while comparing & contrasting the impacts of the same in varied fields (Retail / Aerospace & Defense). The economic scenario since the late eighties forced companies to reduce costs to improve bottom-line profits. Although indirect procurement costs were considered as “fixed / insignificant” and much more inflexible than cost of direct good & working capital expenditures, they were one of the few areas in an organization that provided ample opportunities to reduce costs and improve bottom-line profits. The basic concept behind the works being compared here is that organizations all the while had underestimated the influence on the bottom line profits that the control on indirect spending functions can bring about. Both projects discussed here address the techniques, which resulted them in overlooking a golden opportunity to optimize indirect spending using technological tools such as purchasing cards to cut costs & strategic sourcing. The “Northrop Grumman Corporation” the well-known defense contractor implemented Corporate Purchasing Card to simplify payment, ordering, information processing and record keeping for the company 's low-dollar, nonproduction purchases in late eighties which later evolved as an integrated feature with the evolution of ERP systems & saturated

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