Several considerations go into financing and leveraging strategies for purchasing. These include considering your cash flow because you have to pay for what you order,interest rates, setting payment terms,understanding commodity markets, currency markets for international purchases,tax laws etc.
An understanding of market conditions is of strategic importance for the purchaser. For example depending on the product life cycle of the product in the buyer's organization the buyer must adjust her strategy. In the growth stage scalability with suppliers is important whereas exit and scale down in the decline stage is more important in the decline stage. The right time for focusing on lower cos and lean initiatives is when the buyer's organization's product is at the maturity stage.This was a rather cool way of putting it - I thought!
Another interesting discussion, though very brief, was the Risk/value matrix. This matrix seems to be a development of the Kraljic Model . Here is a diagram
of the modified model. Seems to make sense if you think about it. Download risk_value_matrix.doc
Recent Comments