Tactical vs Strategic Purchasing

PurchTips - Edition #108 September 6, 2006

By Charles Dominick, SPSM

Is Your Purchasing Department Strategic or Tactical?

Most purchasing departments aspire to be “strategic.” They seek to minimize their tactical tasks and spend more time on strategic ones. Here are 10 characteristics of strategic, in contrast to tactical, purchasing.

Spend Analysis: Strategic purchasing teams examine the amount of money they spend in each category of goods and services and use this analysis to identify opportunities for improvement.

Supplier Relationship Management: Strategic purchasing teams measure supplier performance and regularly spend time meeting with their most important suppliers to implement improvements.

Technology Implementation: Strategic purchasing teams frequently update and add technologies that measurably reduce costs, decrease cycle time, and make the purchasing process more efficient.

Developing Project Plans: Strategic purchasing teams use project management practices to map out both recurring activities and one-time projects.

Enterprise-wide Contracts: Strategic purchasing teams consolidate spend across all parts of their organizations and enter into contracts with a limited supply base to serve the needs of the entire organization.

Forecasting: Strategic purchasing teams regularly document changes that they foresee in price levels, availability, and markets to ensure a competitive advantage for their organizations.

Involvement in Spec Development: Strategic purchasing teams are involved at the early stages of specification development, lending specialized knowledge in material availability, cost drivers, standard parts, and reliability of supply.

Development of Productivity Tools: Strategic purchasing teams develop tools (e.g., RFP templates) so repetitive tasks can be done more quickly and error-free.

Supplier Development: Strategic purchasing teams don’t blindly accept the suppliers and products that are currently available. They work with suppliers to develop new capabilities or products that will improve cost or quality.

Work Responsibility Refinement: Strategic purchasing teams constantly identify ways to automate, delegate, or eliminate tactical, non-value-added work.

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