Purchasing as a Strategic Resource

Purchasing as a Strategic Resource  

One of the fundamental contributing factors to an organisations competitive advantage and to overall customer satisfaction in the purchasing and supply function which in the corporate environment of today is vital to an organisations longevity. For an organisations to function and have a smooth operation it is essential that their requirements are met in a seamless flow which is directly dependant on the supply of these requirements being supplied at the right time and in the right quantities to ensure optimum utilisation of the organisations resources (Hugo, Weiss-Badenhorst & Biljon, 2006; pp.9-13). Organisations are increasingly looking at purchasing as a strategic approach in attaining and maximising their competitive advantage (Kanhaiya, 2007; pp.2).

For shareholder value to be increased the organisation needs to either individually or collectively increase revenues and decrease costs, it is for this reason that purchasing is looked to at an executive level (Johnson & Flynn, 2015; pp.2-3).

The purchasing function in my current organisation is integral in not only ensuring that there is continuous operation flow by providing the required raw materials and services to both production and general operations but also in ensuring that the deliverables are achieved at the right cost and quality. In the current economic environment where the customer demands the best quality at the best price, the purchasing function is what enables my organisation to stay ahead of our competitors. The purchasing department that falls under the scope of the supply chain director has successfully maintained and is continuing to ensure that our raw materials procured are at a good quality and is negotiated at the best cost, further to this the purchasing department is also tasked with the responsibility of managing all third party costs which includes contracts and contractors that forms part of the operations.

According to Van Weele (2005; pp.138), organisations are increasingly looking at their suppliers in an opportunistic manner in order to gain a competitive advantage and it is the purchasing functions that is tasked with developing and maintaining supplier strategies that on par with the organisation strategic objectives.

To relate examples from my current organisation; our purchasing department has developed good strategies with our suppliers of raw materials, of which ranges from consignment stock arrangements to extended payment terms and specifically ensuring that our suppliers understand the nature and operational constraints in our industry and transversely we understand our suppliers constraints thereby creating a mutually beneficial partnership. Further to raw material suppliers the purchasing function also manages all third party service providers whereby service level agreements are in place and is monitored and measured regularly.