Strategic Purchasing:

❖ Approaches to Strategic Purchasing:

• The use of strategic planning also means automating as much of the
planning process as possible. This free purchasing staff to focus on
other aspects of the purchasing process and this increase the changes of
using available resources with more efficiency.

• In the end, these approaches are all about buying habits, processes,
and behaviors so that the company enjoys the most benefit. From
this perspective, strategic purchasing is not an event, but an outgoing
process that involves the interaction of purchasing professionals with
suppliers, and the management arm of the company.
What is Strategic Plan?
 Strategic Plan:
• Purchasing managers should have a strategic plan, and
then use effective buying tactics to carry it out.

• By definition a “Strategy” is a plan to reach long – term goals

that takes one year or longer to complete.

• Strategy gives direction while tactics form the basis for

handling the various battles of the day.
 Strategic Purchasing Planning:
• Strategic Purchasing Planning seeks to identify critical long – range
supply issues, and to foresee sourcing changes.

• This reduces uncertainty by formalizing analytical and creative

thinking in cost reduction.

• Strategic Purchasing Planning is a necessity for purchasing to

become predictive and proactive, rather than reactive with short –
term problem solving.

• Interpreting the strategic implications of global supply assurance for

the company is a purchasing management responsibility.
Transforming Your Purcahsing Department
from Tactical to Strategic
❖ 12 Characteristics of Strategic, in contrast to Tactical:
• Spend Analysis – is a strategic purchasing teams examine
the amount of money they spent in each category of goods and services
and use this analysis to identify opportunities for improvement

• Supplier – Relationship Management – measures the supplier

performance and regularly spend time meeting with suppliers to
implement improvements.

• Technology Implementation – frequently update and add technologies

that measurably reduce costs, decrease cycle time and make the process
more efficient.
Transforming Your Purcahsing Department
from Tactical to Strategic
• Develop Project Plans – use project management practices to map out
both recurring activities and one – time projects.

• Enterprise – Wide Contracts – consolidate spend across all parts of

the firm and enter into contracts with a limited supply base to serve the
needs of the entire firm.

• Involvement Specification Development – are involved at the early

stages of specification development, lending specialized knowledge
in materials availability, cost drivers, standard parts, and reliability
of supply.
Transforming Your Purcahsing Department
from Tactical to Strategic
• Development of Productivity Tools – develop tools so repetitive tasks
can be done more quickly and error free.

• Supplier Development – don’t blindly accept the suppliers and

products that are currently available. They work with suppliers to
develop need capabilities or products that will improve cost or quality.

• Work Responsibility Refinement – constantly identify ways to

automate, delegate or eliminate tactical, non – value added work.
Transforming Your Purcahsing Department
from Tactical to Strategic
• Forecasting – regularly document changes that they forsee in price levels,
availability, and markets to ensure a competitive advantage for their
companies.

• Risk Management – involves in identifying risk in procurement

contracts, analyzing and developing mitigating responses to risks.

• Category Management – is a structured approach to the procurement

of goods and services and applies best practices tools and techniques in
the development and implementation of an integrated category strategy
aligned to the organization needs.