Where is Your Money Going

Managing consumables, as well as other major capital expenditures, requires a sound purchasing strategy based on several factors, including strategic sourcing, internal rationalization, and understanding the marketplace.

Strategic sourcing

Philip Carter, D.B.A., a professor in Arizona State University's Supply Chain Management Department, provides a definition of the strategic sourcing process. "It starts with what you need, what do you need to support the plant, and then it's a question of saying is this the right thing," he says. After a printer answers the preceding questions, the internal work begins. "Then you start looking at possible suppliers. You might look very wide if you're a big company or look locally." Printers might consider who they purchased from in the past, the ones with which they may have the most negotiating power. "Then you have to decide how to approach them," Carter continues. "Is it going to be putting out a request for quotes, looking at bids? Are you going to sit down and negotiate with two or three companies? Do you need to try to expand the value proposition in some other way—getting more services, getting better service, and so on?"