National procurement and cost reduction in manufacturing firms:

Abstract

The study covered the literature about international procurement and cost reduction n manufacturing firms, and reflected the forms used in international procurement, the tools used, why organizations engage in international procurement, how costs can be reduced and relationship between international procurement and cost reduction. International procurement refers to a commercial transaction between a buyer and a seller located in different countries, this highlights that procuring internationally is becoming more of a strategic motive that should be hired by organizations with a global view of staying in business. The study investigates forms used in international procurement and these include purchasing, tenancy agreements, hire purchase, counter trade, franchising among others. Furthermore it also investigates the tools used which also include sourcing, auctioning, ordering, market place among others. The study highlighted several factors that force organizations to engage in international procurement, these include need to acquire low priced goods, need to access worldwide technology, need to acquire high quality of goods and services and the need to enjoy better services. Furthermore the study also highlighted ways of reducing costs in organizations like supplier relationship, cost reduction, cost managements, target costing and value engineering and capacity utilization.