Difference Between Purchasing And Traditional Purchasing

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Purchasing is referred to as the activity that is responsible for obtaining parts, materials, supplies and services to create a product or to provide a service (Joyce, 2006). Van Weele (2000 cited in Day, 2002) defines purchasing as the activities done to obtain all types of goods, services, knowledge and capabilities from external sources which are essential for running, managing and maintaining the organisation’s primary and support activities at the most preferred conditions. Leenders et al. (2002, cited by Quesada et al., 2010) defined purchasing as a “clerical function” essentially. Purchasing was “generally regarded” as essentially being a “service to production”, where the managers paid little to no attention towards the issues faced…show more content…
Traditional purchasing was more of the exchange of resources were more contractual than relational, states Dubois and Gadde, (2000, cited in Svahn and Westerlund, 2009).Traditional purchasing strategy, which is highly related from the then initial thinking and assumption of purchasing, was where only adversarial buyer-supplier relationships were mostly created and only short term orders were placed with the supplier, whoever offered the lowest price, states Nellore et al., (2001, cited in Bevilacqua and Petroni,…show more content…
1.1: The traditional purchasing cycle. The traditional purchasing strategies faced issues, from the buying organizations side, such as the cost of the preparation of invoices and documents in order to obtain payment, and with regard to the seller, the time taken to receive payment and the cost of delaying a purchase order or honoring an invoice leading to issues where the vendors refused to take part in the process and those who were willing to, charged high prices in order to cover up any of those aforementioned cost (Parikh and Joshi, 2005) In the modern context, purchasing strategies follow the concepts of both relational purchasing and performance. Modern purchasing strategies such as green channel suppliers, which is about creating close buyer-supplier relationships which enables the organization to obtain special discounts towards its purchases, obtain highly sought-after items, exchange of “mutually beneficial” information on new products, raw materials and trends (Monczka et al., 1998; Purdy and Safayeni, 2000, cited in Parikh and Joshi, 2005), the rise of E-procurement, where buyers can look for suppliers on e-procurement web sites, thus enabling the buying organizations to purchase at “volume discounts” and obtain “special offers” (searchcio.techtarget.com, 2016). Other forms of modern purchasing strategies include reverse auction, where the primary objective is to compete at the lowest purchase price (Purchasingauctions.com, 2016), Tendering where the organization

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