The notion of purchasing

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Background

The notion of purchasing and indeed the importance of efficient purchasing strategies, especially between organisations, is something that has not until the latter half of the twentieth century been widely recognised or regarded (Lysons & Gillingham, 2003).

According to Spence (2006), purchasing effectively works as a ‘gatekeeper' - determining which goods enter the firm and the quality of these goods acquired is inextricably linked to the quality of the output.

Bailey et al. (2008: 4) and Lysons and Farrington (2006:6) both define purchasing as:

“...the right quality of material, at the right time, in the right quantity, from the right source, at the right price”

However both authors as well as Van Weele (2004) acknowledge this traditional definition to be largely simplistic, and does little to take into account the many existing concepts and objectives of purchasing. Subsequently Van Weele (2004) proposes a more detailed definition as:

a. “The management of the company's external resources in such a way that the supply of all goods, services, capabilities and knowledge which are necessary for running, maintaining and managing the company's primary and support activities is secured at the most favourable conditions”.

Therefore as businesses operate more in rapidly changing competitive environments, effective purchasing and supply management are becoming increasingly recognised as key business drivers, where firms can ill afford to ignore the potentials it may bring (Van Weele, 2004; Collignon et al, 2007; Zheng et al, 2007; Pressey et al 2009). As the pace of business changes, Bailey et al (2005) proposes that organisations should improve internal practices such as the purchasing function quickly, and should rarely allow it to lag behind others.

Consequently then, González-Benito (2007) notions that this competitive potential of the purchasing role should be recognised as suppliers represent key elements in developing and engaging in buyer-supplier relationships. Bailey et al. (2005) further suggest that the benefits of engaging in such transactions arise from the idea of sharing and exchanging together. Buvik and Grønhaug (2000) conclude that effective organisation of such relationships is an important determinant of a firm's competiveness in changing conditions.

Spence (2006) additionally argues that such arrangements in terms of the type of relationship and the power balance between the actors could affect the terms of engagement, negotiations and alterations throughout the course of the agreement, thus, managing an organisation's supplier base and implementing purchasing strategies is fast becoming an essential issue (Dubois & Pedersen, 2002).

Purpose Of Study

Aim Of The Study

The aim of the dissertation is to evaluate established literature and theory that deals with the aspects mentioned previously in section 1.1. Subsequently, it aims to link and compare these findings to the purchasing practices of a small number of selected existent organisations and identify how, and, if these theoretical concepts are put into practice.

Such aspects include the types of relationships that can occur between buyers and suppliers and what purchasing strategies are likely to be favourable in such transactions. Further to this, an important issue is the matter of how power can influence these decisions and how this reflects upon these relations emphasising the strategic importance of relationships between actors.

Necessity And Importance Of Study

Bailey et al (2008), González-Benito (2007) and Dubois and Pedersen (2002) argue and conclude that purchasing represents a substantial force within a firm, having great impact upon total costs and thereby on prospective profits – clearly a matter that should not be ignored and avoided.

In addition to this, some authors (Constantino and Pellegrino, 2009; Ramsay and Wagner, 2009; Svahn and Westerlund, 2009), argue that as an issue, purchasing has received too little attention in the past, both professionally and academically. Buvik (2001:439) further disputes that “scant use of references to basic theoretical frameworks and empirical research findings” exist in the comparisons of purchasing and marketing literature, potentially weakening the academic status and validity of present literature.

Because of these reasons, of the lack of attention and the potential strength of the purchasing function, this study has grounds to be undertaken. There is sufficient standing to try to bring together the ideas of theory and apply it first-hand. The study should be able to add to the existing research through making and seeing the possible links between theory and practice.

Dissertation Objectives

To achieve the main purpose and aim of this study and to provide attainable targets and results, the following key objectives that could help realise this have been formulated:

  • To critically evaluate the effectiveness and interactions of established and traditional purchasing theories. (in specific relation to...)

  • Conduct primary research into what purchasing processes actually exist within these selected organisations.

  • Analyse which elements and ideas of purchasing theory are actually evident within these organisations' actual purchasing operations.

  • Suggest recommendations on how implementing ideas and issues contained within these theories could be used within the organisations.

Study Structure??

study structure

Based on which sources – journal articles etc..
Outline of methodology
Constraints – time, resources, availability of information, firms willingness to share, reliability of data (qualitative)

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