You are auditing a local pharmaceutical company. One of the newly appointed purchasing staff is an old school friend of yours. During lunch one day he tells you that the companys purchasing department is looking at their list of preferred suppliers and wonders why his line manager was adamant that purchase orders should be sent only to preferred suppliers. Adding that he personally knows a supplier that can provide raw materials at a much better price than the preferred suppliers, your friend believes that he can save the company thousands in the long run.

REQUIRED

What action should the local pharmaceutical company take? Provide evidence to support your decision and explain how supplier selection should be managed.