John O' Gorman

The Purchasing Department Re-invents Itself

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The Revolution in the Purchasing Department

Previously purchasing was a bureaucratic department that completed transactions and managed the associated paperwork. Now it is considered to be an integrated function, which aims to ensure professional buying skills and practices are applied to all corporate buying decisions organization-wide.

How the role of purchasing has changed is summarized in the table below.

The Revolution of The Purchasing Function
Traditional Purchasing New Age Purchasing
Administrative Role, A Stand-alone Department Strategic Role, A Organization-wide Philosophy
Vendor Management
Procedures To Follow
Value Management, Better Decisions – Business Case
Lowest Cost Bid
Finding the cheapest source
Total Cost of Ownership, Value, flexibility & innovation
Relationships: Adversarial and Reactive
(e.g. that batch is rejected)
Relationships: Collaborative and Proactive
(e.g. how can we improve quality)
Controls Buying Decisions Coaches, Guides Buying Decisions

Purchasing – The Manager’s Friend
From seeking to control all buying decisions, purchasing is seeking to be the manager’s ally and friend.  It increasingly acts as a buffer to shield managers from the unwelcome attention and undue influence of vendors. It also assumes the role of ‘buying police’ – protecting the organization from opportunistic vendors and bad deals.  Its mission is to deliver a more sophisticated, structured and scientific approach to how purchased decisions are made.

Seller Implications:

1.              Sellers must recognize the role of purchasing in the buying process and abide by its rules.

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