The procurement function in the construction industry has resisted change for many decades. But in recent years, new trends have proven a force to be reckoned with, as many organizations begin adopting and embracing new strategies in a bid to stay competitive. We explore current methods that are in practice and also the new wave that sees many procurement departments rushing to implement.
Purchasing by Requirements
Purchasing by requirements is done by collating specification details and quantity of the desired item. Uncommon items that do not require keep stock or advance orders can be purchased this way. The buying organization benefits through the use of competitive bidding from suppliers, where the price is king. This method of procurement allows the organization to reduce their wastage and to increase their efficiency.
Speculative purchasing is also known as ‘buying long’ or ‘forward buying’. This means that an organization will buy more quantity than needed of an item as it expects a rise in the price. The positive outcome is the organization can avoid stock-outs or having to pay more for a sudden increase in cost.