Far too often the purchasing function fails to develop strategies and plans that align with or support organizational strategies or the plans of other business functions. There are a number of reasons why purchasing may fail to integrate their plans with company plans. First, purchasing personnel have not historically participated in senior-level corporate planning meetings, because they were often viewed as providing a tactical support function. Second, executive management has often been slow to recognize the benefits that a world-class purchasing function can provide. As these two conditions are rapidly changing, purchasing is being integrated within the strategic planning process in multiple industries. A purchasing department actively involved within the corporate planning process can provide supply market intelligence that contributes to strategic planning. Effective supply market intelligence involves the following:
- Monitoring supply markets and trends (e.g., material price increases, shortages, changes in suppliers) and interpreting the impact of these trends on company strategies.
- Identifying the critical materials and services required to support company strategies in key performance areas, particularly during new-product development.
- Developing supply options and contingency plans that support company plans
- Supporting the organization’s need for a diverse and globally competitive supply base.
Source: Purchasing and Supply Chain Management. (Monczka, Handfield, Giunipero, Patterson)