Sample Paper on Managing Purchasing Business Strategy

The Managing Purchasing Department and Purchasing Business Strategy

The business environment is facing a dynamic shift that necessitates businesses with a global reach to diversify ways of remaining competitive, especially in carrying out timely manufacturing as well as managing the shipping operations. This entirely depends on the purchasing department that enables all other departments of the company to operate optimally.

One such global company that depends on its purchasing department is Wal-Mart. Wal-Mart is a global company with retail stores in over 20 countries and subsidiaries around the globe. This makes the company’s purchasing department a key administrative unit within the company’s operations. The purchasing department is involved in sourcing of goods, which are then shipped to other entities.

The company uses a cost strategy in its purchasing department. One of the strategies it uses is cutting out middlemen along its purchasing chain. The company also uses the cost strategy to purchase its goods from suppliers directly from the manufacturers. The company’s strategy in purchasing involves purchasing goods directly from manufacturers other than through the middlemen in order to reduce the purchasing costs involved through middlemen. This purchasing strategy enables the company to achieve the preferred supplier status, an innovative strategy that it uses to establish and maintain a cordial relationship (“A Winning Strategy: Is Walmart Right To ‘Delayer’? (A Guest Author Post by IACCM’s CEO Tim Cummins,” 2010).

Purchasing directly from the manufacturer means a lot for the company since the suppliers can match the company preference, hence constantly maintain quality products. Apart from purchasing directly, the company also outsources some sourcing and purchasing functions, especially when dealing with its private label products. The company uses this purchasing strategy to control parts of its $100 billion dollar purchasing budget. This strategy is used mainly for its global operations. Other than this, the company also uses a cost leadership strategy in its purchasing operations by establishing global sourcing partnerships and vendor partnerships to strategically source for goods from manufacturing entities at the best possible price. This cost leadership strategy used at Wal-Mart enables the company to purchase large volumes of goods from suppliers at the lowest prices (“Incredibly successful supply chain management: how does Walmart do it?,” n.d.).

The company’s purchasing strategy is very important due to its overall corporate strategy it employs in the market. The company employs a cost leadership strategy to outweigh its competitors as well as to help sustain its worldwide operations. Having an efficient purchasing strategy is also important for the company, as this enables it to refill and maintain its inventories with bulk goods from manufacturers directly, and at the lowest possible prices. This efficiency enables the company to maintain its stores, with most of its products in the retail stores being affordable due to the prices of goods sourced directly at lower prices from manufacturers.

The company’s success factor is attributed to its slogan, with the company mainly selling products at the lowest price to save its customers money. The company success is based on numbers and quality products, which has enabled it to be a market leader globally. This is entirely based on its purchasing strategy that enables it to source for goods in bulk and at lowest prices, hence growing its market share numbers and being successful in its global operations.

 

 

References

Cummins, T. (2010, March 9). A Winning Strategy: Is Wal-Mart Right To ‘Delayer’? (A Guest Author Post by IACCM’s CEO Tim Cummins). Retrieved May 8, 2015.

Incredibly successful supply chain management: How does Wal-Mart do it? (n.d.). Retrieved May 8, 2015, from http://www.tradegecko.com/blog/incredibly-successful-supply-chain-management-walmart