The Strategic Role of Purchasing


   The strategic role of purchasing is to perform sourcing-related activities in a way that supports the overall objectives of the organization. Purchasing can make many contributions to the strategic success of the organization through its key role as one of the organization's boundary-spanning functions.

   1. Access to external markets. Through external contacts with the supply market, purchasing can gain important information about new technologies, potential new materials or services, new sources of supply, and changes in market conditions. By communicating this competitive intelligence, purchasing can help reshape the organization's strategy to take advantage of market opportunities.

   2. Supplier development and relationship management. Purchasing can help support the organization's strategic success by identifying and developing new and existing suppliers. Getting suppliers involved early in the development of new products and services or modifications to existing offerings can reduce development times. The idea of time compression getting to market quickly with new ideas -can be very important to the success of those ideas and perhaps to the organization's position as a market leader or innovator. Among the primary purchasing activities that influence the ability of the firm to achieve its objectives are supplier selection, evaluation and ongoing management (sourcing), total quality management, and purchasing planning and research.

   3. Relationship to other functions. Virtually every department within an organization relies on the purchasing function for some type of information or support. Purchasing's role ranges from a support role to a strategic function. To the extent that purchasing provides value to other functional areas, it will be included in important decisions and become involved early in decisions that affect purchasing. Being well informed allows the purchasing function to better anticipate and support the needs of other functional areas. This support in turn leads to greater recognition and participation.

   Purchasing often has the same functional reporting relationship as logistics, which is helpful for coordinating material's management. Purchasing and logistics need to work closely in coordinating inbound logistics and associated material rows.