Focus on TCO: get the best product at the best value
The old-school procurement approach, which focuses solely on getting the most competitive price possible, is on its way out. New market requirements such as just-in-time delivery and total quality management, as well as competition from outsourcing, commoditisation and globalisation, urge companies to adopt a more strategic approach to purchasing. This approach includes taking into account:
- the entire lifecycle of the purchased goods;
- tthe corporate strategy;
- the quality of service;
- the viability of supplier/supplier relationships;
- customer/market needs;
- and much more.
The power of collaboration
This overall approach requires extensive collaboration: purchasing teams have to move from their islands and work across divisions and geographies. Moreover, it is critical that they work together with suppliers – directly or through procurement platforms – as well to identify opportunities.