| "> | | | | Geographic specificity is determined to reduce the |
| In a traditional organization, the role of purchasing is | | | | risk of dealing with different cultures, systems or to |
| to simply purchase and the means was to negotiate | | | | reduce the costs. For instance, Wal-Mart sources a |
| and to have a confrontational attitude with the | | | | significant portion of its requirements from Low Cost |
| vendors. This led to the concept of 'buying power' of | | | | Regions (LCR). |
| organizations into the management literature. For | | | | Technology specificity starts with the need to |
| instance, large organizations squeezed every cent | | | | automate systems and to have greater over the |
| from their suppliers by using their buying clout. | | | | business process. The automation solution increases |
| Purchasing solutions are based on vendor, geographic | | | | the efficiency and tracks the vendor performance. |
| and technology specific. Whatever be the solutions, | | | | ERP solutions integrate purchasing solutions |
| the goals are reduced cost, higher quality and | | | | seamlessly with other business processes such as |
| reliability. Purchasing is a complex process with so | | | | inventory management, logistics and shipping. Web |
| many variables that the organization may not have | | | | based solutions provide auctioning to get the |
| control on many of them. For instance, currency | | | | materials at the lowest bid from many vendors. |
| fluctuation is an important variable that affects the | | | | Finally, the increasing globalization trends and |
| buying decision. The degree of centralization in an | | | | competition force the businesses to outsource |
| organization plays a major role in purchasing solutions. | | | | purchasing and to concentrate on the core activities. |
| A purchasing organization may have single or multi | | | | Each solution has its own merits and de-merits |
| vendor for a product item. Vendor specific solution is | | | | depending upon the context such as product |
| based on whether to have multi vendor arrangement | | | | category, policy intervention. In essence, purchasing |
| to reduce the risk of dependence on one vendor or | | | | has evolved from being a back end service provider |
| to forge a long term relationship with a single vendor. | | | | to a strategic partnership role. |