Top 7 New trends influence purchasing in the world

Top 7 New trends influence purchasing in world 
Top 7 new trends in purchasing that will influence an organisation’s purchasing function in South Africa. To persist competitive in today’s rapidly changing marketplace, it is essential for the purchasing department of an organisation to keep up with the latest changes and trends in purchasing. These trends have been, and no doubt will continue to influence purchasing departments. 

1 Preferential procurement

Preferential procurement falls typically under the heading of supplier development in the organisation’s supplier selection policy. This means that the organisation must make a strategic policy decision concerning preferential procurement. The latter says that the organisation makes a real effort to buy from organisations owned by previously disadvantaged groups in South Africa. Though preferential procurement should be part of an organisation’s social responsibility, it is still essential that in the selection of preferred procurement suppliers, sound business principles should apply. The main purchasing objectives of
the right product, at the right price, at the right time and place, and of the right quality should still be applicable in the selection of these suppliers. A possible approach is to break large orders into different sections, giving a small section of the law to preferential suppliers as part of a process of development. As the suppliers develop their businesses, and if they can meet the requirements, more significant orders can be placed, thus contributing to the supplier’s development.

2 Reducing the number of suppliers

Organisations are reducing the number of suppliers from whom they purchase, which promotes good long-term relations between the purchasing an organisation and this chosen supplier. With fewer suppliers, those from whom an organisation does obtain receive larger orders regarding both volume and rand value, which may lead to quantity discounts. The commitment made by the purchasing organisation to the few chosen suppliers, and the fact that larger orders are placed with these suppliers, also make it likely
that they will be willing to improve product quality and to look for ways to reduce the price of their products.

3 Long-term supplier contracts

Organisations are moving away from short-term supplier contracts requiring frequent competitive bidding towards deals ranging from five to fifteen years. This approach not only frees up time usually spent by purchasing staff selecting and negotiating with suppliers but also avoids the costs usually associated with supplier selection and negotiations. Improved relations with suppliers are an added advantage of these long-term contracts, as suppliers will reciprocate the purchasing organisations’ long-term commitment to them with enhanced service, quality and prices.

4 Outsourcing

More and more organisations are choosing to focus on their core business by outsourcing noncore activities. This, in turn, leads to a reduction in costs and an increase in flexibility. It does, however,
Add to the responsibility placed on the purchasing department, as it is responsible for the procurement of these outsourced services and products from external suppliers.

5. New skills required by purchasing personnel

One needs only to look at the most recent advertisements for purchasing personnel to realise that the days when organisations appointed just about anybody to work in the purchasing department
are fast disappearing. Organisations operating in highly technical fields such as engineering are increasingly requiring that their purchasing personnel hold qualifications in engineering that will
enable them to perform their purchasing functions more effectively.

6. Electronic purchasing

When one looks at the purchasing cycle, it becomes evident that there is a lot of information that needs to be transferred from one person to another and from one organisation to another
when making a purchase. In a paper-based system, this creates a lot of room for mistakes, and it can be a slow and costly process, as information needs to be transferred from one document to
another. However, through the application of business-to-business (B2B) communication techniques such as electronic data interchange (EDI) and electronic marketplaces, organisations are
able to purchase products and services electronically. In doing so, they can speed up the purchasing process as well as avoid costly mistakes linked to the writing and rewriting of information
onto different documents. When EDI was first used, only suppliers and purchasing organisations related to the same computer system could exchange information. But with the appearance of the Internet, the exchange of information between organisations has become much more widespread and accessible to organisations that were previously not involved in an EDI set up. Through the different B2B applications, suppliers can share information about, for example, the availability and price of their products, while purchasing organisations can use these applications to place orders, follow up on orders and make payments to suppliers.

7.  International purchasing

It should be evident that with regard to the global market, there is a far larger supplier base that is involved when purchasing from local suppliers. Not only does it open up a much larger supply base, but buying from international suppliers may also mean lower prices, better quality and a wider variety of products and services.

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