Evolution of Purchasing in Supply Chain - Research Paper Example

This technique gave many business organizations the motive to venture into diverse money-oriented activities that aim at simplifying arbitrage, reducing agency cost, improving the price-to-value relationship, leveraging the money spent in an organization and implementing contracts that homogenize terms and condition across the company or organization. As a result of strategic sourcing, customers could get their products at the right time, at right quantity, at the right quality, at the right price, in the right place from the right supplier.

Although strategic sourcing provided almost everything that an organization requires for quick and higher profit gain, other values were not obtained, and supplier relationship management (SRM) become the succeeding evolution in purchasing. This concept involved the supplier and the customer establishing an interpersonal relationship with middle persons. The companies would then use the relationship or any organization involved to maximize their benefit from that interaction. It requires careful collaboration with the primary suppliers to realize and uncover new benefits while reducing all the risk involved in the operation.

With all these concept being embraced in business strategies, the current activities is being supplied with integrated innovation and business intelligence capabilities that aim at addressing the changing continues customer demands. In conclusion, purchasing in the supply chain has evolved even more to a greater level.