The Future Of Purchasing: A Process Becomes A Department
David N. Burt, Ph.D.
David N. Burt, Ph.D., NAPM Professor of Supply Management, University of San Diego, San Diego, CA 92110, 619/260-4868
79th Annual International Conference Proceedings - 1994 - Atlanta, GA
I predict a very bright future for purchasing, as the process progresses
to procurement and on to strategic supply management. The term "purchasing"
will change in meaning from a process to a department. As has been recognized
at numerous world class organizations, procurement and supply management
demand a cross-functional approach to the four key processes of: requirements
determination, sourcing, cost management, and supplier relations management.
As Mike Doyle and I point out in our 1993 book, "The American Keiretsu":
- Supply management will be recognized as a strategic weapon.
- The organization's supply strategy will be integrated into the organization's
strategic business plan.
- Continuous improvement will be the norm within the entire value chain.
- Organizations will embrace a global view, both from a supply and a marketing
point of view.
- Cost and price analysis will progress to strategic cost management, a process
of squeezing cost out of the value chain.
- The development and management of the organization's supply strategy will be
centralized, while supply activities will be decentralized.
- As a direct result, the number of people assigned to the purchasing department
will decrease, while their professional qualifications and compensation will
- Supply management personnel will be both commercially and technically
- The organization's supply base will occur by design, not happenstance.
- Supply managers will be assigned the responsibility of managing the firm's
five to ten key supply relationships or alliances.
- Supply management will play a key role in protecting the organization's core
- At the same time, supply management will provide a window to technology
available from its supply base.
- Supply management will monitor the supply environment for both threats and
- Supply management will manage the organization's supply chains to ensure that
the value chain to which the organization belongs is successful in an
increasingly competitive marketplace.
- Supply management will report to the chief of the strategic business unit.
- The function and its personnel will be seen as coequal to marketing and
engineering. Pay will be equal to similarly qualified personnel in marketing
- Market driven supply strategies will be developed for each strategic commodity
or commodity class.
- All in all, I predict a challenging and rewarding future for those
involved in strategic supply management!
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