Are you currently able to reevaluate your spends in terms of strategic and transactional purchases?
Today’s post is by Steve Schwerin, Account Manager at SafeSourcing.
Purchasing is often divided strategic and transactional. I like these distinctions, because they help me hone in on the places where value is added in our field as things change. There are certainly other ways to categorize spend. One way of looking at strategic purchasing as distinct from transactional is that it deals with the non-commoditized. Another is how it affects your core business. This is not to say that it doesn’t deal in commodities. Strategic purchasing is just something that needs to be dealt with a little more deftly, and as such, adds value to your firm in often intrinsic ways.
Not too long ago, I was watching a fascinating video clip on the “appliance boom.” I had long heard of electronics booms, various industrial booms, the housing boom, the plastics boom and even the computer boom. Forgotten in this mix was the appliance boom, yet there was a very real appliance boom back in the early 20th century as electricity became more of a household reality. In the beginning of this phase, appliances were not something the average person often bought. Households might have one washer and drier for years and a toaster was not a disposable item. Appliances back then were actually screwed into light sockets since houses were not wired for appliances; they didn’t have electrical outlets. In situations like this, knowing who you bought your appliance from and what brand it was were very important details. Today, many appliances have become commoditized. We buy the cheapest one with the most features. Toasters and irons have become ubiquitous fixtures in our households. Our situation today would have been hard to believe back then.
What Changed? Time? Technology? The sheer number of appliances on the market? Regardless, lots of things that are more important to our well-being than a toaster were once strategic purchases, but have become transactional. Details in business are always morphing, so continuing to purchase things in the same old way can be very costly. Certain products that were once transactional purchases might even become strategic purchases as they become more critical to your central line of business or develop new features that are hard to place a value on. The way you go about purchasing whether it be strategic or transactional may not only determine if you reach your savings targets, but how successful certain business endeavors are period. Keeping an eye on which category each of your purchases currently falls into may be the beginning of keeping on top of savings opportunities as they come and go.
For more information on how we can help you with your procurement needs or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative at 888-261-9070. We have an entire customer services team waiting to assist you today.
