Have you ever wondered what strategic purchasing is? Discover the ins and outs of this process of procurement. In this blog, we’ll focus on the intricacies of strategic purchasing and how it relates to your organisation.
Strategic purchasing is purchasing driven by provider performance and the needs of the buying organisation. Ultimately, it’s a process that develops supply relationships between buyers and suppliers.
Strategic purchasing came from the desire for flexible procurement in the West. Companies a few decades ago were focused on materials/services and purchasing supplies at the lowest price. Purchasing acted in a supporting role in the acquisition of goods and services.
Due to this, there was little involvement with suppliers. However, factors such as oil crises and other events shocked companies into a realisation. More importance needed to be placed on supply.
Underestimating the importance of supply inputs to company processes and activities could be detrimental to its success. Because of this, organisations grew more reactive, becoming more involved with suppliers and internal functions like price and delivery costs.
That leads us to today, where strategic purchasing is an inbuilt process of any successful company. Nowadays, organisations have well-developed, strategically proactive purchasing departments. They contribute heavily to their organisations and, subsequently, their performance.
Back in 1988, Russel Sysons produced a model which showcases the levels of integration for purchasing.
Most would agree that strategic purchasing starts with long-term relationships with your suppliers. Cooperating with the right suppliers ensures the prompt procurement of supplies and products ahead of the competition. Strategic purchasing also allows for an open, communicative environment between the supplier and purchaser. This closer relationship with suppliers will also provide advanced knowledge on product developments. On top of this, a strong relationship with suppliers allows you to meet the certification or licencing requirements for products.
Well, the main benefit of strategic purchasing is the competitive advantage it offers. You find yourself more prepared for consumers’ demands. It allows you to have the exact products you need to ensure sales. Fully integrated purchasing departments can direct their companies with suppliers in innovation and product creation. Strategic purchasing can provide a sizeable advantage that competitors will find hard to overcome. Ultimately, strategic purchasing can allow for:
Well, we’ve reached our conclusion to this blog on strategic purchasing. Now you have a great idea of what to expect and how to implement this element of procurement strategy. As this blog covered a lot of information, we’ve included a recap.
We know that the procurement and tendering process can seem like a minefield. That’s why we’ve created four services and one software that help you achieve your procurement goals. With 20 years of experience, we’re well equipped to deal with all of your procurement needs.
We provide project-based tender support and management in addition to offering any required procurement support on an ad-hoc basis. Our Procure Consult service includes mentoring, coaching and general advice. Ultimately, we have the capability and experience to support any operational or strategic procurement requirement.
Our Procure Health Check service is for companies that have some knowledge of procurement but need that bit of assistance. The service includes on-site interviews with stakeholders to understand current procurement processes, skills and understanding. Also included is a review of procurement systems, infrastructure and opportunities for development.
Our Procure Analyse service provides a high-level, vendor-led analysis of an organisation’s spending activity. This helps us to understand current purchasing behaviour and areas where procurement activity can be focused to deliver greater value. This service helps generate a structured, forward plan for procurement activity and improving purchasing operations.
Procure Outsourcing focuses on providing procurement solutions on an outsourced basis. This would mean that the procurement services can be tailored to your needs. This could mean:
Are you trying to find a supplier for your project? Post your tendering opportunity onto any of our 11 sector-specific portals for FREE with Procure Post!
Housed by our sister company, Hudson Discover, our portals host thousands of tendering opportunities for organisations of all sizes. We’ll help you identify your requirements and find the most suitable suppliers for your business.
For more information or for a free consultation, please get in touch.
Check out our other blogs for further Procurement Insights:
Top 10 Tips to Improve Your Supply Chain Management Improving your supply chain management is…Read More