BUYING IN TIMES OF CRISIS. PURCHASING MANAGEMENT IN SMES WITH FINANCIAL PROBLEMS. ARRIAGA ASSOCIATES, CONSULTANTS COSTS, PURCHASE AND OPERATE. NOW ALSO IN ZARAGOZA, SPAIN. Reviewed by Momizat on .   BUYING IN TIMES OF CRISIS. THE PURCHASING MANAGEMENT One of the most serious consequences of the crisis is the lack of liquidity. SMEs are experiencing liquid   BUYING IN TIMES OF CRISIS. THE PURCHASING MANAGEMENT One of the most serious consequences of the crisis is the lack of liquidity. SMEs are experiencing liquid Rating: 0
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BUYING IN TIMES OF CRISIS. PURCHASING MANAGEMENT IN SMES WITH FINANCIAL PROBLEMS. ARRIAGA ASSOCIATES, CONSULTANTS COSTS, PURCHASE AND OPERATE. NOW ALSO IN ZARAGOZA, SPAIN.

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BUYING IN TIMES OF CRISIS. THE PURCHASING MANAGEMENT

One of the most serious consequences of the crisis is the lack of liquidity. SMEs are experiencing liquidity problems for many reasons. Among others are the following:

Mainly because financial institutions have reduced working capital financing, especially the financial credit and to a lesser extent. commercial credit.

Companies are faced with reduced benefits. This means, firstly, a reduction in bank lending because it reduces the capacity to repay loans, and other, which means lower profits lower self-financing capacity.

Customers are delayed payments and bad debts arise, insolvencies and bankruptcy proceedings.

The suppliers every day rely less and a maximum credit granted and often require cash payment. The maximum credit crunch forces companies to have to pay long before the period referred to if they want to re-purchase.

Faced with this dilemma the company has to obtain other funding sources that can arise mainly from circulating. Among them is reducing inventory and improving terms of sale and payment.

But there is a question not exploited enough that has to do with the management of purchases. Many companies have serious liquidity problems because they have to address too many payments from suppliers. This occurs because of too much material they have collected too soon. Perhaps this advance in orders as big or that the same be made to get prices cheaper or because they want to ensure there are no problems in production or sales service.

However, if suppliers are achieved by providing flexible to be gradually, as needed, at levels of quality and good enough supply security, payments will also gradually making and the company will have invested so much money stocks of raw material.

If a company has serious liquidity problems should not buy more than you need in every moment even if it costs more expensive or even if there is a risk of stopping production. Always better to have productive inefficiencies that have liquidity problems, as liquidity in these times is a strategic variable.

But in these times you can spend much time in finding better suppliers that do not penalize because they ask more flexible deliveries based on production needs. Sometimes the decision to make large orders for security for costs or hides a lack of internal coordination of the company, forecasting and also a lack of effort to find better suppliers, more reliable and flexible. The emotional ties are sometimes set in barriers to seeking other more flexible suppliers.

Today more than ever, all departments must coordinate and to paddle in the same direction, the direction to maintain the minimum financial investments invested in stocks. If funding fails can fail and stall the same company.

Arriaga Associates is a consulting various business lines among which include the funding and refinancing business and operations consulting, production and purchasing.

Jesús María Ruiz de Arriaga

Lawyer, economist and consultant. Associate Director.

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