Purchase and supply strategies must be based on the evaluation of requirements and market conditions.
They will depend on the cost levels of the buyers and the sourcing risks involved. It is also necessary to consider issues such as the number and type of suppliers to be used, the type of relationship to establish with them and the contracts to be signed; as well as the management of each Strategic partner and each contract.
Companies in any sector of the economy constantly experience the action of new competitors, a reality that is requiring entrepreneurs, both suppliers and merchants, to apply logistical strategies different from traditional ones to continue in force, continue to grow and increase their market share.
This depends on the vision of the future that senior management has, on the resources, strategies and the expectation of profitability that a company has as a result of its operation. Whoever buys well sells well, says an old adage, so one way to improve the organization's profitability is through negotiations with the counterparty. The buyer tries to achieve better conditions (price, quality and guarantee on the goods purchased) and the seller tries to make a sale with good margins for his company. Finally, the balance of the transaction is the result of the teamwork assumed by the purchasing, marketing and sales areas.
According to studies by the IAC, Colombian trends in logistics strategies for the purchasing and supply area are aimed at establishing, maintaining and developing long-term relationships with suppliers that offer quality inputs, according to defined service and design criteria. In this context, the predominant trend is to reduce the number of suppliers, in order to delegate to them (just in time) tasks such as quality control, storage, transportation, design and procurement of new supplies. Although it is not a critical factor, price is still a relevant aspect in the selection of suppliers.
Benefits of an adequate strategy
Generally, the benefits of an adequate sourcing strategy are reduction of the supplier base, long-term agreements, open communication, frequency of responses and philosophy of continuous improvement. In this way the organization ensures that the purchased product meets the specified requirements. The type and scope of control applied to the supplier and the product must depend on the impact of the item purchased in its subsequent implementation on the final product / service. The International Trade Center establish a simple and complete purchasing and supply model, which includes the entire Supply Chain (see figure). This begins with a clear understanding of the corporate culture of the purchasing company, defined in the mission, vision and values;that guarantee an adequate management of the supply strategy, in accordance with the strategic objectives of the company; and with the formulation of a supply plan, with the specifications and input requirements; to then continue with the analysis of the market of suppliers, national and foreign.
Corporate culture
Requirement and supply plan
Analyze Supply Market
Strategic Procurement Plan
Evaluate / Approve Suppliers
Obtain and Select Offers
Negotiation
Contract Management and Relationships
Contract Preparation
International Logistics
Management Feedback Inventory Management
Measurement and Performance Evaluation
Procurement strategies must be based on the evaluation of requirements and on market conditions. They will depend on the cost levels of the buyers and the sourcing risks involved. It is also necessary to consider issues such as the number and type of suppliers to be used, the type of relationship to establish with them and the contracts to be signed; as well as the management of each strategic partner and each contract. The model includes guidelines for the evaluation and approval of suppliers and for obtaining and selecting offers, depending on the purchase to be made.
Purchase capacity
In the competitive environment, and faced with the need to obtain profits and meet financial goals, the styles, power and capacity of negotiators appear, as a result of their training, experience, principles and convictions or also of the demands of their own organization. and the middle; that originate the conditions agreed or sometimes imposed by the power of the strongest.
Smart negotiation
A good approach to smart negotiation is contained in the Harvard Method, in which the negotiator must recognize that:
A) Negotiation is done with people with whom you have an interdependent relationship.
B) Negotiation is a process in which you try to influence the opponent.
C) We want the opponent to make a specific decision that suits us.
D) We must analyze the situations that help the other party to make the decision favorable to our interests, as well as those that hinder it.
E) We must keep in mind the mutual gain and the long term.
The Harvard method, developed by T. Fisher, is also known as principle, interest, or merit trading, as opposed to position trading.
The Harvard Method consists of seven stages: The determination of the best alternative, both its own and that of the counterpart; the phase of exploration of the interests of the parties; the generation of settlement options, subsequently presented at the negotiating table that imply benefits for both parties; the criteria of legitimacy, arguments or justifications; the commitments that come after the options are studied, evaluated and accepted for contributing to mutual benefit; becoming part of the agreement, in such a way that it is viable and is fulfilled; a good communications strategy, which provides effectiveness to the negotiation process; and lastly, the relationship, which is constantly at risk throughout the negotiation process.
The mixed objective of the entire process will be to successfully face its seven phases, without neglecting the maintenance of good relations with the other negotiating parties, with a long-term vision.
Supplier relationship management
It is, basically, the preparation of contracts that define the main obligations of the parties and determine the context in which the business relationship will be carried out, the terms related to the type of contractual relationship desired, the legal aspects, non-compliance. contractual and dispute resolution.
Once the contract is signed, it is important to ensure its effective compliance and to properly manage the relationship with the suppliers; understanding the management issues of the same as the toles and responsibility of the parties that subscribe them.
Logistics management of physical distribution and inventories
The logistics management of International Physical Distribution of the products, from the place of origin of the purchase to its final destination, includes import operations, internal distribution, schedules and routes, selection of land, sea or air transporters, the choice of handling and packaging equipment, and the implementation of improvements and cost reduction in logistics processes. Good inventory management is key to increasing organizational efficiency, optimizing inventory levels and evaluating opportunities to reduce inventory variation and ownership costs, achieve high levels of service to internal and external customers, minimize storage error rates and obtain international traceability and quality standards. By last,the evaluation of purchases and supplies requires identifying the measurements, according to the needs of each company
Purchasing Staff Profile
The importance of the buyer as general of utilities, the image that the consumer forms by the prices, quality and variety in the assortment; the increase or decrease in inventory management expenses; the changing market and permanent dealings with suppliers are some of the reasons why an organization should hire purchasing personnel.
This human resource must have personality, education and leadership characteristics in accordance with its responsibilities. The following sentence from Peter Drucker is worth quoting. "Executives who do not strive to make sound personnel decisions will be playing not only with company performance, but with respect for the company."
Being clear on how to maintain and optimize the negotiation capacity to achieve the vision of each company, it is feasible to develop appropriate internal processes to satisfy the parties, and generate a good image before clients and shareholders; in order to achieve financial success from the perspective of a system and an optimal purchasing and supply strategy.
In this context, the predominant trend is to reduce the number of suppliers, in order to delegate to them (just in time) tasks such as quality control, storage, transportation, design and procurement of new supplies. Although it is not a critical factor, price is still a relevant aspect in the selection of suppliers.
