What is Tactical Purchasing?
Tactical purchasing is a procurement strategy that is based on transactional or short-term activity. It focuses on short-term cost reduction and the efficient management of purchasing activities. Taking this definition, it often involves making purchasing decisions based on immediate needs rather than long-term strategic goals. In tactical purchasing, buyers typically negotiate with suppliers to obtain the best possible price, delivery time, and terms of sale.
Frequently seen in small and large manufacturing businesses, it makes use of a more reactive routine. When buying supplies and materials is a way to increase production levels and reduce costs.
However, a possible problem with this style of purchasing is that in many cases is that it is reactive. This may mean that orders may have been received and fulfilled quickly, but costs may have also increased because of this activity.
Tactical purchasing is simply executing routine administrative tasks (requesting quotes, placing orders, expediting, etc.) on a reactive basis, outside of the context of an enterprise-wide focus, and without pursuing continuous improvement or contribution to specific senior management goals.
Below are several scenarios where tactical purchasing can be reactive and problematic:
- Reactive purchasing during supply chain disruptions: During a supply chain disruption, buyers may resort to reactive tactical purchasing to quickly source materials and products from alternative suppliers. However, this approach can lead to quality issues, delivery delays, and higher costs due to the lack of long-term supplier relationships.
- Price-focused purchasing without considering quality: Buyers may prioritize cost savings over quality when implementing tactical purchasing strategies. This approach can lead to low-quality products, production delays, and customer dissatisfaction, ultimately hurting the company’s reputation.
- Over-reliance on spot purchases: Buyers may over-rely on spot purchases rather than long-term contracts, leading to frequent price fluctuations and a lack of stability in the supply chain. This approach can also result in quality issues, delays, and higher costs due to the lack of leverage in negotiations with suppliers.
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