The supply manager’s task in CPSM 1B5 is to creatively develop financing or leveraging strategies for purchases. A supply leader does not simply rely on the financing department to generate income or come up with money to pay for the purchases. A procurement or supply chain leader should help the organization without causing any harm or damage to the business interest of the seller.
CPSM 1B5 lays out sixteen (16) methods on developing financing and leveraging strategies for purchases. This article will only discuss top 5 methods that are commonly used for leveraging strategies for purchases.
A supply manager should keep in mind the cash flow of buying organization before placing any large orders. As a Certified Professional in Supply Chain (CPSM), you can find solutions such as, deciding to split up the order, extending the payment terms with the supplier, or refer the problem to your financial department.
Market condition involves the phase of the product life cycle for which the supply manager is buying. Thus, a supply manager should properly control the amount of raw materials as well as calibrate the supplies to reduce the risk of low sales.
You don’t have to worry about passing the CPSM exam if you are already familiar with the payment terms. Supply managers can solve the company’s cash flow challenges through the proper implementation of payment terms.
Items with high interest rates possess a huge impact to supply managers since unsold items that are left in the inventory become expensive. Moreover, financially weaker suppliers become more vulnerable as the interest rates rise.
Certain assets in the company have certain depreciation values such as the value of equipments and plant. The role of supply managers is to plan for replacements or leases ahead of time as depreciation and obsolescence sets in for plant and equipment.
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