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2007
Conference Paper
Title
Lead buying. Setting up an international commodity based purchasing network
Abstract
In many industries, globalisation of markets and increasing cost pressure has forced companies to organise themselves on a global basis. In order to grow and develop new markets or to tap wage potentials, companies have raised plants in international locations or bought themselves into competitors from these regions (Trent and Monczka, 2003). Traditionally focused on the Triade markets, the automotive sector as also other industries is increasingly investigating opportunities in emerging markets (Wildemann, 2000). Due to local content obligations, companies are often forced to purchase a specified percentage of the end product value in particular countries. These developments impact strategy and organization of purchasing and logistics departments (Trent, 2004; Corswant and Fredriksson, 2002).
To address this challenge from an organizational point of view, many companies have established lead buying organizations for their purchasing departments. This relatively young form of organizational structure has achieved significant success in the industry. The purpose of this paper is to show a path for consequent further development of the lead buying concept towards an integrated international purchasing organization. The paper will briefly describe the cornerstones of developing an international purchasing network. Based on this it will illustrate potential pitfalls in setting up a lead buying organization as well as identifying key success factors (definition of roles and responsibilities, suitable purchasing tools, controlling instruments, human resource and IT prerequisites, etc.) for further development towards enhanced international collaboration.
To address this challenge from an organizational point of view, many companies have established lead buying organizations for their purchasing departments. This relatively young form of organizational structure has achieved significant success in the industry. The purpose of this paper is to show a path for consequent further development of the lead buying concept towards an integrated international purchasing organization. The paper will briefly describe the cornerstones of developing an international purchasing network. Based on this it will illustrate potential pitfalls in setting up a lead buying organization as well as identifying key success factors (definition of roles and responsibilities, suitable purchasing tools, controlling instruments, human resource and IT prerequisites, etc.) for further development towards enhanced international collaboration.