Strategic Procurement

... [T]he best strategic sourcing decision may be to not make a purchase at all (Russel, 2009).

Information about Strategic Procurement

Strategic procurement incorporates actions aimed at reducing the supplier base, negotiations, communication and maintaining long-term relationships with suppliers (Ryals and Rogers, 2006; Swinder and Seshadri, 2001). It is particularly relevant in light of globalisation (on the sales side it increases pressures on the company's own prices and on the purchase side it opens up new potential), the development of cost-saving communications and widely available IT, improved logistics and procedures, dynamic competition, high consumer demands, increasing environmental awareness and requirements for transparency. All these developments make operative procurement tasks obsolete and calls for a more strategic approach aligned with the wider organisational strategy. Some common mistakes that companies can make in relation to their procurement strategies include purchasing without defined tasks, failing to find the balance between central and local purchasing, failing to achieve efficiency despite suitable purchasing tools, or sole concentration on design and development (Kerkhoff, 2005).

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