Strategic and tactical procurement are sometimes presented as alternative procurement management approaches. Both have the same goal: to acquire the goods and services that the organisation needs in the most cost-effective and reliable way possible. However, the two schools take different approaches to achieving this.
What Is Tactical Procurement?
Tactical procurement is very much an ‘in the moment’, hands-on management approach, giving organisations the ability to adapt quickly to changing market conditions, fluctuating prices, and supply landscapes. Decisions are made to align with short-term objectives and to achieve immediate cost savings and efficiencies. An element of tactical management is necessary in any procurement approach to avoid unforeseen price hikes, stock shortages, and delays.
Importance Of Strategic Procurement
Strategic procurement, on the other hand, takes the long view by prioritising longer-term supplier relationships, cost stability, enhanced quality control, and risk mitigation as the best ways of strengthening the organisation’s agility and robustness in face of change.
Rather than focusing on immediate or ‘tactical’ needs, strategic procurement addresses long-term, overarching business objectives. This can inject greater accuracy into the budgeting and forecasting process, improving visibility over the organisation’s procurement activities and expenses. It also gives a more data-driven approach to total cost of ownership management, considering the full life-cycle cost of services and products, rather than just the one-off price, which can aid better long-term procurement decisions.
It’s important to note however that overemphasising strategic procurement can lead to higher initial costs. This is because of the investment required in technology, training, and consulting frameworks. It may also reduce flexibility, making it harder to respond quickly to fast-moving market changes, new opportunities, or changes in legislation. Additionally, relying too much on technology and data analysis can increase risks, such as inaccurate data and cyber security threats.
So, is a tactical approach better than the strategic viewpoint?
Not necessarily. One of the big drawbacks of a purely tactical approach to procurement is that it can easily lead to missed opportunities for long-term savings and value creation. Focused purely on short-term gains, efficiencies, and cost control, tactical procurement can lose sight of the big picture and fail to establish the relationships and processes needed for genuine long-term savings.
Tactical Vs Strategic Procurement: An Either/Or Choice?
Ultimately, it’s not a matter of choosing one approach over the other, as all organisations will engage in both and the choice depends on the nature of the expenditure and the dynamics of the market. On the shop floor, both tactical and strategic approaches are necessary to optimise your procurement processes in line with your organisational objectives and needs.
Considering industry dynamics, the competitive landscape, and business goals will help shape a 360° approach to collaboration and long-time supplier relationships, while tactical procurement processes will help you prioritise price and availability to maximise short-term deliverables. Rather than opposing schools of thought, tactical and strategic procurement are more like two sides of the same coin. It’s all about the type of sourcing and approach you need to control your costs to reach your short-term goals, while also investing in improving your procurement model long-term.
Find Out More
Get in touch today with the expert procurement consultants at Quantum 360 to find out how we can help you integrate both tactical and strategic procurement approaches into your strategy, for maximum reliability, scalability, and cost benefits.
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