Tag: strategic procurement

IR6

Achieving Successful Strategic Procurement in the Chemical Industry

Strategic procurement is a plan that is crafted with the sole objective of achieving goals that may be quite far off in the distance, such as five or ten years into the future.  A strategic procurement strategy not only helps come up with short-term solutions but rather involves coming up with strategies that will serve the long-term purpose. In any organization, strategic procurement plans are created by top-level management and the same applies to firms in the chemical industry. A strategic procurement plan also influences the tactical procurement plans that are developed and implemented.  It is a comprehensive plan that takes into account the targeted objectives and needs of the procurement department of the firm. Strategic procurement is one of the most significant tools that helps in maximizing the valuerequest proposal contribution of any company. It serves as a guide for any organization and should be updated regularly at the interval of a year to ensure its alignment with the overall business strategy.

In this blog, the procurement experts at SpendEdge explain some of the strategies for developing a successful strategic procurement plan for the chemical industry.  (more…)

IR23

Why Companies Need to Shift from Passive to Strategic Purchasing Right Now

Purchasing is a strategic process for any company, as it involves intense planning and execution of strategies. Intense competitive pressures have forced companies to re-examine their approach to managing their purchasing strategies. Initially, most companies followed traditional purchasing methods also known as passive sourcing.  However, passive sourcing had its own set of problems such as no targeted resources, low cost-benefit and cost-effectiveness indicators, and poor justice in access to services. This is one of the prime reasons for strategic purchasing to gain the limelight. Strategic purchasing improves the value to price relationship by simultaneously reducing cost and improving service quality. It studies the supplier relations across the entire organization and creates partnerships with suppliers.  But that’s not all, here are some of the main reasons why cRequest Demo_SEompanies who are still sticking on to the age-old passive sourcing strategies must consider strategic purchasing:

Cost of ownership

Passive sourcing is known to be price driven. Strategic purchasing, on the other hand, focuses mainly on the total cost of ownership. This involves determining which costs are most relevant in the acquisition and use of a particular good or service. The elements involved include order placement, transportation, inspection, and the costs of use and disposal.

Build supplier relationship

Today, building good supplier relationships is integral to an efficient sourcing process for a company. Unlike passive sourcing, strategic purchasing begins by identifying spending areas that need improvement, followed by collecting information on the supplier capabilities in the marketplace and then to select suppliers based on the total cost of ownership philosophy. Companies can use supplier relationship management to maintain the improvements and build high levels of trust. By maintaining a good rapport, suppliers and customers can work together to measure defect rates and identify the root causes of these defect. This also helps in maintaining good supplier stability.

Cost management

Both buyers and suppliers are benefited from strategic purchasing. Buyers are benefited as they gain the ability to negotiate lower unit prices for high-volume purchases, which reduces the price of the cost of goods sold and maintaining the ability to set competitive prices for their products. Suppliers are benefited as they will be able to sell a significant portion of their output. This makes planning easier and provides management with long-term cash flow visibility. 

Risk management

Strategic purchasing can help in risk management. Close supplier relationships can help companies identify and resolve potential problems easily and rapidly. Also, managing supply risk is an integral part of sourcing. An in-depth understanding of supply chain risks allows companies to draw contingency plans to mitigate them. Supply chain risk assessment helps protect profitability and the company’s image against supply disruption.


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