What’s Strategic Buying?

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Strategic purchasing aims to maximize benefits and manage costs by promoting efficient use of materials throughout a company. It involves spend analysis, keeping up with current and projected needs, building relationships with suppliers, and automating the planning process. It is an ongoing process that involves interaction between purchasing professionals, suppliers, and management.

Strategic purchasing is a methodology used in many companies to realize the maximum benefit to the company, while effectively managing the costs associated with the acquisition of raw materials and operating components. Unlike tactical purchasing, which tends to view the purchasing process as somewhat distanced from other functions within the company structure, strategic purchasing attempts to promote the most efficient use of all materials throughout the company. The objective of this type of purchasing is to increase the company’s profits through the most judicious use of purchasing approaches and strategies.

One of the ways strategic buying is done is through analyzing how money is being spent on purchases currently. The idea is to determine if there is a way to improve the purchasing process by adjusting the guidelines associated with the request for materials or by placing orders with suppliers. Often, this type of spend analysis will reveal a small way or two to make the process more efficient and possibly save the company time and money.

Keeping up with current and projected needs is also part of strategic purchasing. For example, attention to the purchase of new software or computer equipment occurs long before it is necessary. This allows the purchasing department to evaluate a number of options in advance and opt for the solution that is in the best interest of the business without having to make quick last-minute decisions. This approach is especially important if keeping up with the latest technology is crucial to the smooth running of the business.

Strategic purchasing also involves building a relationship between buyers and suppliers. By working together, it may be possible to optimize the lead time needed to process an order with the supplier, thereby reducing the need to maintain a larger inventory. Depending on how much business the company does with the supplier, it may also be possible to find ways to expedite delivery.

Using strategic planning also means automating the planning process as much as possible. Tasks that are routine can often be configured to complete through software or other automated means. This allows purchasing agents to focus on other aspects of the purchasing process and thus increase the chances of using available resources more efficiently.

Ultimately, this method is based on redefining purchasing habits, processes and behaviors so that society enjoys the maximum benefit. From this point of view, strategic purchasing is not an event, but an ongoing process involving the interaction of purchasing professionals with suppliers and the management arm of the company.

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