The Role of Purchase Management in Product Development
The major companies of the world sell millions upon millions of products daily. This is all thanks to product management, or supply chain management. Purchase management is an absolutely essential component of product development and product management.
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Development
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New product development is a multidisciplinary business feature that encompasses all the functions involved in bringing a new product to market. It has five major steps: conception of the product or process idea, initial business or technical assessment, concept development, product/process design and engineering, and product testing/prototype creating. New product development is probably one of the most, if not the most, expensive functions of any business.
Management
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Purchase management is the maintenance of an efficient supply chain (from raw materials to manufacturing to customers). It also involves several functions including: finding suppliers, estimating the cost of materials, contracting with suppliers, purchasing materials, negotiating, handling purchasing problems and maintaining purchase records. There are two major types of purchasing: purchasing for resale (retail and wholesale businesses) and purchasing for consumption (industrial businesses).
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Role
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Effective purchase management is essential to keeping the costs of developing products low and ensuring the development process is fast and productive. Because the process of developing products is so expensive, purchasing must be carefully managed and constantly improved. Several factors are key to effective purchasing management. Among these are: skilled purchasers, cost-effective, quality materials and reliable suppliers.
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