Purchasing and supply management is increasingly viewed as one of the important management activities through which organisations can realize their strategic objectives. As competition, broadening product range, altering customer demands and economic pressure continue to intensify, executives everywhere have opened their eyes to the strategic benefits that can be achieved through intelligent use of purchasing and supply management. As such, purchasing and supply management has evolved from a mere clerical function (mainly handling purchase orders) to a value-contributing integral function.
Business leaders have long known that effective purchasing and supply management can directly improve the bottom line and thus its tactical potential as a cost killer is no secret. After all, spending on purchased goods and services can account for 70 percent of a company’s costs. However, what we notice now is the realisation of the potential for purchasing and supply management to affect both top and bottom line, for example, through its role in promoting innovation, protecting brand reputation, and optimisation of end-to costs in value co-creation process.