Logistics and Supply Chain Management, 6th Edition

The transition from purchasing to strategic sourcing

For decades the role of the purchasing function in the business was to ‘buy things’. The aim was very simple: to achieve the best deal – which usually meant to get the lowest price. The emphasis was on negotiation skills and leveraging any difference in relative power between the buyer and the seller. Often the buyer would seek to play one supplier against another if alternative providers of the product or service were available. More recently this search for a better price has led many companies to adopt a strategy of ‘low-cost country sourcing’ leading to a massive shift to offshore purchasing and outsourced manufacturing.

Whilst the attractions of paying less for purchased goods and services ...