Procurement Strategy

Paper Summary:

This paper discusses how procurement strategy has become an important means by which firms can build a sustainable competitive advantage. It looks at how factories are reducing inventories by using just-in-time delivery models and how other manufacturing firms are moving production offshore to reduce costs. Whether the issue at hand is getting the goods to the right place at the right time, or simply getting them their in the most cost-effective manner possible, firms are developing innovative procurement strategies in order to compete more effectively.

Outline:
Advantages to Strong Procurement Strategies
Procurement Best Practices
Implications for the Maritime Shipping Industry

From the Paper:

"Procurement strategy can lend a company a competitive advantage. One of the ways is by reducing costs. The quest for the right mix of cost and quality has led purchasing agents all over the world. Western consumers have an expectation that costs will remain low and quality will not be sacrificed. Governments in developing markets seek to create jobs for their citizens. When these two basic facts come together, it creates opportunities for companies to reduce their costs by procuring supplies or finished goods overseas. By reducing factor costs, a company can either improve its profitability or be in a stronger position to compete on the basis of price. Many firms also reduce costs by reducing inventory. This can be done by shortening delivery cycles, and has been demonstrated to be a an effective procurement strategy across many industries. Ford, for example, set up a supplier park, based on the European model, in order to reduce inventories and enhance flexibility by having their key suppliers in the immediate vicinity of their manufacturing plant."

Sample of Sources Used:

• Procurement Best Practices Epiqtech. Retrieved April 7, 2008 from http://www.epiqtech.com/Purchase-Procurement-Best-Practices.htm
• Kapur, Mansi (2004) Rediff India Abroad Retrieved April 8, 2008 from http://www.rediff.com/money/2004/aug/13adidas.htm
• (2006) Top Ten Strategies for Procurement Success Oracle Newsletter Retrieved April 7, 2008 from http://www.oracle.com/newsletters/updates/february-2006/procurement/top-ten-strategies.html
• Bhaskar, Rohan (2005) Procurement Strategy: Key to Successful e-Procurement iToolbox.com Retrieved April 7, 2008 from http://blogs.ittoolbox.com/supplychain/eprocurement/archives/procurement-strategy-key-to-successful-eprocurement-5125
• Business Editors (2000) World's First Maritime Procurement Web Site Set to Launch. Business Wire. Retrieved April 7, 2008 from http://findarticles.com/p/articles/mi_m0EIN/is_2000_March_7/ai_60003689

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