Right from the evolution of procurement, till the 1950s and ’60s, procurement was perceived as a cost-cutting function. The view, in fact, the underlying visibility of procurement changed from the early 1970s, when the oil crisis of that decade brought in widespread economic and Industrial challenges. Businesses found it back-breaking to obtain raw materials, satisfy customer requirements, and minimize the escalating inflation of goods and services.
This situation resulted in the businesses and organizations enforcing procurement as a distinguished team aiming to secure goods and services by tactical approaches. This work will outline the rise of tactical buying towards a significant outburst of how to sustain and secure materials in a short period. Also, it will describe the opportunities, approaches, the variety of tools, and its growth in the industry.
Sayings so, to expound tactical buying, let’s divide this article into sub-topics and derive the partnership of tactical Buying in the industry.
Let’s touch base some key points before we deep-dive
Total Jobs Created: 2, 00,000 as per NASSCOM in the year 2019.
Key Players: Infosys, IBM, TCS, CTS, GENPACT, GEP, Accenture etc.
Tactical Buying: More than 45 % of the total jobs created
Salary:As per Experience / Industry.
Trends & Technology: Biggest Impact in future.
Over a while, the above numbers are exceeding the industry benchmark, but at the same time, it’s scary to watch our market becoming more technology-driven, which may bring down the percentage of tactical hires.
The most interesting part is that around 65 % of the employee force doesn’t understand that the underlying principle of tactical buying is supply chain distribution. Sad, but who is to be blamed?
Difference between Strategic Sourcing and Tactical Buying
Do Strategic and tactical buying complement one another? The answer is yes! To be a successful strategic Sourcing leader, how one understands and analyzes the tactical buying record and history is important. The primary difference between strategic and tactical buying is: tactical buying is a short-term victory but Strategic Sourcing is long term decision-making for the organization. Tactical buy in other words simply satisfies the requirements by requesting a quote, placing an order, and expediting deliveries to ensure the presence of materials for production. There is no streamlined approach to render services and products. In short, buying just implies supplying to the organization. When a business needs a product, it raises an Indent and the procurement department procures those goods /Services.
Tactical Buying – Role In & Roll Out
The Role-in of tactical buying is very simple, but Roll out requires an imperative strategic approach by companies to eliminate cost, workforce, and to sustain in the Industry. The intermediate performance of tactical buying creates an impact on the organization in terms of cost and ethics of buying. Since there was no streamlined process when it all started, every company’s primary focus was to record a benefit to the organization. This was purely to track down the expenses since there was no ERP system in the industry back then.
Later, when most of the mid-sized manufacturing organizations adapted the technique of tactical buying, the inflow of materials was intact with the production scheduled, but organizations faced a severe impact due to uncontrollable cost, inappropriate supplier sections, etc.
When the Manufacturing organizations were adapting to the new way of buying, technology in the industry observed difficulties, process flows, and incompetency of buying professionals in terms of record-keeping and analysis. Then to capture the market, various technology companies came with an Enterprises Resource Planning system, shortly termed ERP by Gartner in the1990’s. This software mainly focused on enterprise-wide such as Inventory, Invoicing, sales, production, purchase, etc. The initial flow of the software-enabled most of the Tier 1 manufacturing organizations to understand a steady and streamlined way of enabling requirements for the organizations. This is was a tremendous mark in the Industry.
Different Technology experts came up with different software to overcome the market difficulties and ease the process for Multinational production companies.
Companies look out
When the technology Industry was busy in capturing the trend, companies started analyzing the pitfalls in the tactical buying nomenclature. Companies wanted an institutional procurement process that continuously improves and re-evaluates the purchasing activities and that’s where the “Strategic “term evolved. Most of the blue-chip companies wanted to enable a strategic partnership with the supplier base. So the aim of tactical buying is to support the day-to-day transactions such as issuing purchasing orders, following delivery with suppliers, whereas strategic sourcing focuses on strategic planning, supplier development, contract negotiation, supply chain infrastructure, and outsourcing models.
How Far – Tactical
What exactly are the companies doing to waive off the traditional buying system, in order to reduce the workforce, and increase better transparency in the system? As per the data, most of the employees are engaged in transactional work and hence companies have decided to automate the repetitive tasks and some of the transactional tasks using automation software.
As per statistics, Technology has taken over the commercial way of doing business through automation, by which industry witnessed higher production rates and increased productivity, increased quality, and decreased human intervention. In our context, the industrial terminology is Robotic Process Automation. In simpler words, these are computer Bots.
Below is the list of Top Ten RPA Softwares
1. Automation Anywhere
3. Open Connect
5. Blue Prism
6. UI Path
8. Kryon System
The best thing about this software is these are “No code, low Code “and closely work with process owners for determining the automation ideas.
The go-to strategy is “Be migrant”. Most of the significant and well-established companies have already been taken over by RPA software’s and there was a constructive burn down of workforce of about 20 % in the market, which means that 30 % of the transactional activity is automated. This is a warning, but, if you want to be sustainable in the industry, then along with the process knowledge, seek anyone RPA Tool to be very relevant. Moving to a strategic part of buying /procurement will not be very easy in today’s market, but keeping the options open is the best bet. Being Techno-Commercial is always a better choice in any unprecedented situation.
Just a thought, there’s also another type of sourcing & buying and i.e. bought out items where many companies buy the FG’s that are outsourced or manufactored by 3rd party or vendors. These are mainly low profitable and labor intensive products which are volume based and not value based ones. Companies do not invest their own infrastructure & facilities for such low key products instead go for bought out.