Strategic Purchasing Meaning -

Tactical vs. Strategic Purchasing Definition. Strategic purchasing is the process of "planning, implementing, evaluating, and controlling strategic and operating purchasing decisions for directing all activities of the purchasing function toward opportunities consistent with the firm's capabilities to achieve its long-term goals" Carr and. Measurement plans are important elements of a strategic purchasing plan. Measurements should be designed to provide an indication, on an ongoing basis, of the progress being made toward the achievement of tactics and strategies in support of objectives and goals. The strategic purchaser is responsible for the creation of contracts, the use of scheduling agreements, and for the purchasing data in the business partner master records. She also compiles vendor lists. In addition, the strategic purchaser can use various SAP BW evaluations to help her with the strategic decision-making process. 6. Green Purchasing. This is one of the more common purchasing strategies for governments and local governments. This strategy champions the need for recycling and purchasing products that have a negative impact on the environment. What Do Procurement & Purchasing Strategies Accomplish? Strategic purchasing requires a proactive long-term approach to supplier relationship management. The formation of closer, cooperative links with key suppliers requires increased boundary-spanning activities which link buyer and supplier at different levels within each organization.

Once the purchasing function was recognized as a strategic function, it was encouraged to develop an active role in the firm’s decision making in order to enhance its strategic role. Several practices have been observed and proposed to do so in different articles. The foundation of Strategic Source is Spend Visibility – the detailed and reliable view of what an organization spends – but with many large organizations, spend data is imperfect and actual strategic sourcing activity is often limited to a few categories of spend only.

Strategic sourcing was first established by General Motors in the 1980’s and is now a common business purchasing tool. The rise of China and its manufacturing capabilities has opened up numerous strategic purchasing opportunities. Strategic sourcing is often used for high valued services, ad hoc purchases and core large values purchases. Measuring purchasing performance is important, as the purchasing department plays an increasingly important role in the supply chain during an economic downturn. A reduction in the cost of raw material and services can allow companies to competitively market the price of their finished goods in. The company management has to decide on the strategic supply chain policies with regards to suppliers. Reducing the purchasing spend for a company can directly relate to an increase in profit and strategically there are a number of decisions that can be made to obtain that result.

Purchasing managers' success in these roles resulted in new assignments outside to the traditional purchasing function – logistics, materials management, distribution, and warehousing. More and more purchasing managers were becoming Supply Chain Managers handling additional functions of their organization's operation.

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