Most companies consider purchasing to be simplistic and merely a means to an end: The goal is to minimize costs while meeting functional requirements. Therefore, most major manufacturers play competing suppliers against one another, use their clout to squeeze suppliers or find other ways to force further price cuts through purchasing. And because senior managers in purchasing seldom stay in their positions for more than a few years, they rarely build good will among suppliers or create sustainable improvements in the overall purchasing function. As a result, the primary purchasing model in most companies rests on finding the best price for each isolated transaction through any means possible.
This approach misses a significant strategic potential to add value to a company through the purchasing function by driving innovation and superior long-term cost performance. Transforming purchasing into such a strategic function requires a long-term perspective aimed at building “networks of competence” — people who can cross boundaries and analyze the true costs of product and process proposals. It requires integrating purchasing into the beginning of a design or project rather than relegating it to the end of the process chain, where its role is viewed as simply buying the goods and services other departments need. It requires a fundamentally different approach to recruiting and training employees, as well as reorienting the entire company to a holistic... To read the complete article, login or sign-up using the form below.
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