COST OF PURCHASE
FoodWorld is following cost of purchase method which helps to avail perishable products from the farmers at lower cost.
A grading centre is in the planning stage which will sort out the right goods at the farm level itself and hence reduce unnecessary tonnage costs. Grading can also enable FoodWorld to pay the right price in staples, FoodWorld has been depending on the millers it buys rice centrally but gets it processed at several millers and also buys from reverse …show more content…
The entire process clearly depicts the factors which are identified and addressed thus enabling the retail organization to have an efficient supply chain. The entire process needs to be audited to meet timelines may by reengineered to achieve cost efficiencies and reduce cycle time in an organization. The supply chain brings expertise in fresh foods where there is no place for branded supply. The company believes in selling fresh food from suppliers to be higher among other competitors. The chain is entering into direct arrangements with large farmers and farmers co-operatives. This is through annual or seasonal contracts which guarantee an off take in return for a fixed price, to promote reliability in supply am price; wholesale markets can ﬂuctuates day to day, depending on number of tracks which land up in the …show more content…
In addition to the factors directly associated with pricing decisions, the buying team has to deal with and adjust to the impact of inflation, recession and other national and local economic variables. Not only can these factors affect pricing in a direct sense, but also indirectly through their effect on the consumer’s disposable income and the general demand for merchandise in the market.
The retailer has an overall pricing policy aimed at the market, which has been communicated to the buying team. The main objective of the buyer and merchandiser is to maintain a consistency of market appeal in quality, assortment, and pricing across various related departments or demand centres, as well as over a period of time.
Not infrequently the policy is called for several price zones in any given category of the assortment, such as ‘good’, ‘better’, and ‘best’ price zones. Within each of these price zones are ranges of price lines from the lowest price in that zone to the highest price. The strategy of EDLP (everyday low price) effectively offers a uniformly low ‘price zone’ for a particular category or entire merchandise assortment. The implication of this is that consumers benefit in the long run from a reduction in the purchase price of goods gained through more efficient buying and distribution