Companies increasingly depend upon resources from outside the firm. Successful companies view purchasing as a strategic function that buys these external resources and manages the associated supplier relationships with a pro-active and long-term perspective. In that sense, purchasing has evolved from a clerical function to an increasingly strategic function in many companies. Hence, strategic purchasing supports overall corporate strategy in its market and value proposition. For example, innovating companies, such as Apple or BMW, need a purchasing function that works closely with its supply base and focuses on ramp-up capacity rather than prices. However, companies that compete through low prices, such as Walmart, or through minimum costs of ownership, such as HP, need a purchasing function capable of minimizing prices of both initial and spare parts. Thus, where purchasing is considered strategic, it is more likely to be involved in the firm’s strategic dialogue and contribute to achieving its long-term goals. As such, purchasing is a key capability that acquires resources from outside the firm and is therefore a potential source of sustained competitive advantage.
Nonetheless, recent data from the International Purchasing Survey (IPS, http://www.ipsurvey.org/ ) of more than 600 purchasing professionals from North America and Europe, demonstrate that 47% still perceive that purchasing is not included in the strategic planning process of the firm and its performance is not measured in terms of its contributions to the firm’s strategic objectives. Moreover, 56% of these professionals find that purchasing is not focused on long-term issues that involve risk and uncertainty. In other words, despite increasing awareness of the potential benefits of strategic purchasing, tactical realities are still far from optimal. It seems that implementation of the idea is vital, though not well charted. Optimal implementation of strategic purchasing leverages the liaison role of purchasing when connecting external suppliers with internal clients, and ensures the development of purchasing’s learning capabilities so that results do not erode over time.
In that regard, through a collaborative research project between EADA (Desirée Knoppen) and MIT-Zaragoza Logistics Center (Maria Jesús Sáenz), we are currently expanding a framework of guidelines that help managers avoiding key pitfalls on the path from converting strategic intentions into practical realities.