The influence of purchasing strategies on performance

Abstract

The potential of the purchasing function to increase shareholder value is not well publicized and hence not widely recognized. This fact becomes self‐evident when the effect of purchasing strategies on performance is well understood. With an increasing number of organizations embracing long‐term oriented collaborative relationships, studies looking at performance implications of contemporary purchasing practices are particularly timely. Attempts to provide empirical evidence linking four purchasing strategies to two dimensions of procurement performance: effectiveness and efficiency. Results indicate that purchasing managers can enhance the effectiveness and efficiency of their purchasing efforts via cooperative negotiation with a small base of suppliers and by establishing collaborative long‐term oriented relationships with them, revealing the impressive ability of the purchasing function to enhance shareholder‐value.