| The traditional role of purchasing is to purchase | | | | as bid management and evaluation, order |
| materials conforming to specifications such as physical | | | | management and payment processes such as |
| dimensions and the lowest bids. Most organizations still | | | | handling of invoices. The automation reduces errors in |
| view purchasing as a tactical one with a short sighted | | | | the purchase to pay cycle and increases process |
| approach. The tactical role of purchasing is underlined | | | | efficiency. |
| by the fact that most firms don't have purchasing | | | | With increased competition and globalization, strategic |
| function in the corporate boardroom. | | | | purchasing involves sourcing supplies at the global level |
| Purchasing as a tactical function is confined to clerical | | | | to reduce costs, better quality products. The global |
| processes such as bid invitation, order management | | | | sourcing enables a firm to forge long term relationships |
| and payment. But purchasing is a complex function | | | | with vendors who have the synergy and to share |
| that manages suppliers for operation, new product | | | | best practices and solutions. By having the supplier |
| launches and market planning. The strategic role | | | | closely work with the firm, more products are launched |
| envisages supplier involvement for increasing the | | | | quickly in the market and fewer inventories of finished |
| efficiency of the business itself. This transition from | | | | products unsold are stored in warehouses. |
| tactical to strategic to engage suppliers is a long term | | | | Strategic purchasing enables firms to enter the |
| process and therefore considerable change | | | | ecommerce arena to source supplies online. According |
| management processes. | | | | to Porter's five forces theory, suppliers are seen as a |
| The objective of strategic purchasing is to manage | | | | force in the success of a product or firm and they are |
| suppliers to reduce cost of materials and engage them | | | | classified as either weak or strong. A chain is as |
| in downstream processes and also to reduce the cost | | | | strong as its weakest link. Strategic purchasing |
| of purchasing. The implementation of IT in purchasing | | | | integrates suppliers into the network and collaborates |
| enables automation of many of the processes such | | | | to develop them. |