The issue of procurement is increasingly becoming part of the trend of seeking competitive advantage for enterprises. Its strategic importance is emphasized from the point of view of achieving the main goals of the enterprise, and the rationalization of purchasing is currently treated as one of the fundamental factors for increasing competitiveness. To understand the contemporary role of the procurement sphere in an enterprise, one should consider the potential modern sources of creating corporate profit. Figure 1 indicates the classic ways of improving economic performance in a company. There are two basic methods in this regard: revenue growth and cost reduction. Revenue growth can be associated with raising prices while maintaining or increasing sales volume, or increasing sales at constant prices. An enterprise will record a higher profit in such a situation if costs do not change or grow at a slower rate than the company’s revenue. Such a growth path for a company is becoming increasingly difficult to achieve today. Low inflation combined with an increasing rate of productivity means that prices cannot be raised without the threat of losing customers. Customers have a large selection of cheap and high-quality products. Hence, the main area of concentration today is cost reduction. The classic way in this regard is reducing employment. In practice, it encounters significant barriers and is not a source of long-term savings. Another approach is cost reduction through reengineering. Companies such as Hewlett-Packard, Toyota, Ford, Motorola, and many others applied such an approach several years ago, identifying and eliminating inefficient areas of activities that do not add value, and reducing the time required to carry out the studied processes. For leading companies, reducing the cost of purchasing materials and services remains a current challenge. However, a strategic approach to procurement is necessary in this regard, thanks to which the effects are much more extensive.
The article comes from the magazine “Logistyka” 3/2007.