Abstract
Nowadays, firms face a complex and changing business environment. Under the pressure to increase competitiveness, many firms have realised that purchasing decisions affect more than the material flow along the value chain. The increasing emphasis on reduced cost and improved quality, on faster product development through cross-functional teams, and on closer buyersupplier relationship, are changing their perception of purchasing.
Key Terms in this Chapter
Purchasing Integration: A strategic view of purchasing that demands the extension of its involvement from suppliers to the firm’s market.
Buying Activities: Things that buyers do when involved in the purchase decision process: search for information, use of analysis techniques, proactive focusing, and procedural control.
Purchasing Competence: The latent capability to coordinate, organise, and develop the organisational purchasing effectively in a way that produces value to the firm.
Purchasing Importance: Perceived importance reflected on top management support, and equality with other major functions within the firm.
Total Cost (for Purchase Decisions): Purchase price plus additional cost incurred in procurement of an item (e.g., order processing, transportation, warehousing and quality inspection).
Purchasing Process: A logical succession of buying phases. The buygrid of Robinson, Faris, and Wind considered eight buy-phases from the recognition of the need to the performance feedback and evaluation of the buying decision.
Cross-Functional Sourcing Teams: Personnel from different functions brought together to achieve a purchasing or material’s related assignment.