Purchasing Strategy Essay

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Purchasing Strategy Report
Purchasing strategies are an important aspect of a business. Suppliers must fit the structure of your company in order for the partnership to be successful. Otherwise, there will be little to no room available for growth between purchaser and supplier—only discord and micromanagement in order to assure business is not disrupted. I think this is why it is so important to employ the services of more than one supplier. “Intense competitive pressures have forced companies to re-examine their approach to managing suppliers and their supply base. An increasing focus on core competencies, and the concomitant increase in outsourcing of components and services, has also placed greater emphasis on supplier management. In addition, much of the traditional in-house development activities have been pushed onto suppliers. Purchasing is thus increasingly regarded as a strategic weapon, centered on its ability to create collaborative relationships for firm advantage” (Handfield, et al, 2005, p.1).
Although they work hand in hand, there is a distinct difference between supply chain strategy and the overall business strategy. The supply chain strategy forms from the particular direction the company decides to move towards. For instance, senior management has to define a strategic direction when considering the products that the company should manufacture and offer to their customers. As product cycles mature or products sales decline, management has to make strategic decisions to develop and introduce new versions of existing products into the marketplace, rationalize the current product offering or whether develop a new range of products and services. Once this there is a clear understanding of the overall business st...

... middle of paper ... chain based on continuous risk assessment with the objective of reducing vulnerability and ensuring continuity. Global sourcing is an approach that requires supply management to view the entire world as a potential source for components, services, and finished goods. Longer-term supplier relationships involve the selection of and continuous involvement with suppliers viewed as critical over an extended period of time (three years and beyond). Early supplier design involvement requires key suppliers to participate at the concept or predesign stage of new-product development. Supplier development is when a company works directly with a supplier to facilitate improvement in a designated functional or activity area. Total cost of ownership is the process of identifying cost considerations beyond unit price, transport, and tooling (Monczka, et al, 2009, pp.218-221).
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