Purchase strategy

From CEOpedia | Management online

A purchase strategy refers to a plan or approach that a company or organization uses to acquire the goods and services it needs to operate and grow. It encompasses the various activities and decisions involved in identifying, evaluating, and selecting suppliers, negotiating prices and terms, and managing relationships with suppliers over time.

The main components of a purchase strategy include:

  • Needs assessment: Identifying the specific goods and services that are needed to support the company's operations and goals.
  • Supplier identification and evaluation: Identifying potential suppliers and evaluating their ability to meet the company's needs in terms of quality, price, delivery, and other factors.
  • Negotiations: Negotiating prices, terms, and conditions with suppliers to ensure that the company is getting the best value for its money.
  • Contract management: Managing contracts and relationships with suppliers to ensure that they are meeting the company's expectations and that the company is getting the best value for its money.
  • Continuous improvement: Regularly reviewing and improving the purchase strategy to ensure that the company is getting the best value for its money and that its needs are being met.

A purchase strategy is essential for any organization that wants to operate efficiently, effectively and profitably. It helps the organization to identify the best suppliers, negotiate the best terms, and ensure that it is getting the best value for its money. It also helps to mitigate risk, reduce costs and increase efficiency.

Typology of purchasing strategies

Product sourcing strategies regarding the number of suppliers:

  • one supplier (single sourcing)
  • one supplier which is also a monopolist in relation to the acquired product (sole sourcing)
  • two suppliers (dual sourcing)
  • many suppliers (multiple sourcing).

Purchasing strategies taking into account the subject of purchase, i.e.

  • purchases of individual items (unit sourcing)
  • purchasing product modules (modular sourcing).

Purchasing strategies separated because of the geographical area of penetration, the basic strategies are:

  • local (local sourcing)
  • national (domestic sourcing),
  • global purchasing (global sourcing).

The strategies taking into account the location of delivery, i.e.

  • external suppliers (external sourcing)
  • internal suppliers (internal sourcing).

Strategies taking into account delivery time:

  • delivery to the warehouse, increasing existing stocks (stock sourcing)
  • delivery in accordance with the pull rules and just-in-time - directly to the appropriate production position.

Strategies taking into account the purchasing entity:

  • individual purchases
  • joint shopping

See also:


Purchase strategyrecommended articles
SupplierCriteria for selecting suppliersInternal processes perspectiveStandard priceSupply managementProcurement proceduresLogistic processStrategic cost managementDistribution cost

References