Developing a Product Procurement Strategy for Commodities

Strategic procurement involves taking a strategic approach to proactively and long-term selecting suppliers within your respective categories. Strategic procurement can be described as a reflection of the integration of procurement or purchasing strategy with the overall corporate strategy.

An example of strategic procurement is the procurement strategy for commodities (general goods that are not custom-ordered). The product strategy for commodities is simply a procurement strategy for purchasing quality goods and services at the lowest price. Note that in this case, we are not only referring to raw materials like copper, ore, cotton, or grain. Instead, we are referring to categories or groups of goods or services, which, of course, also include raw materials.

Due to high competition in today’s global market, it often requires the procurement/SCM (Supply Chain Management)-team to develop focused concepts and methods and adapt them to the organization’s procurement behavior. A procurement strategy for commodities is based on CSSP (Category Sourcing Strategy Plans) that ensure the use of systematic processes to develop procurement strategies to achieve the organization’s SCM goals and support the company’s objectives.