Improving the supply

The development of supply chain management changes the relationships between companies providing goods to one another. This has affected the role of the purchasing function. Purchasing has traditionally been an order-by-order process based on obtaining the best combination of price, quality and delivery (availability). Estimates are requested, best options are negotiated, orders are placed and delivery is monitored.

This approach has been eroded over the years and the time-consuming task of obtaining estimates is not now usual in routine material supply. The development of supplier relationships has introduced longer-term arrangements involving contracts, call-offs and schedules. This has changed the role of the purchasing function. Instead of individual orders, supply is negotiated less frequently. This has meant a different style of purchasing activity because low level routine negotiation is being replaced by high level contracts. The number of suppliers is also reduced.

Purchasing people are no longer order processors.

These changes have a major effect on the type of expertise required in purchasing. The traditional type of 'buying' is being superseded by a combination of high-level contract management and supply scheduling as part of the material control activity. This means that materials management will absorb the purchasing operations as part of control and scheduling. Why is this now practical and possible? The answer lies in the current supply environment:

• total quality - supply...