When it comes to buying nonstrategic goods and services with low supply risk, wide availability, and low, often negotiable, prices, tactical buying is the way to go. These items also work well for auctions and Internet buying from a public exchange.
Tactical Buying – The purchasing process focused on transactions and nonstrategic material buying. Closely aligned with the ‘ordering’ portion of executing the purchasing transaction process. Its characteristics include stable, limited fluctuations; defined standard specifications noncritical to production; no delivery issues; and high reliability concerning quality-standard material with very little concern for rejects.
The following are some of the important traits of tactical buying:
1. Involves common products with standard specifications and reliable quality
Tactical buying refers to the purchase of common products that have standard specifications and reliable quality. These products are often highly standardized, with industry-determined specifications, and are rarely customized by suppliers. In this area, suppliers compete based on volume and price differentiation.
2. Availability of many competing suppliers
When it comes to tactical buying, it’s important to be aware of the various suppliers that are available to you. Typically, goods and services that fall under this category can be found within specific industry groups, both domestically and internationally, and are offered by many different suppliers. These suppliers often rely on mass marketing, internet catalogs, and buying exchanges to promote their products and services.
As a buyer, you have the option to set up recurring purchase agreements or make one-time purchases from one or more suppliers. There is typically no long-term loyalty between the buyer and seller, as purchases are often sporadic and infrequent.
3. Buyer’s ability to negotiate better prices, quality, and delivery costs
Tactical buying refers to the practice of leveraging the buyer’s bargaining power to lower prices, enhance quality, and decrease delivery costs. This strategy is particularly effective when multiple competitors offer similar or comparable goods and services.
4. Focuses on transaction management
Tactical buying is primarily concerned with managing transactions. Unlike strategic buying, which emphasizes building close relationships with suppliers, tactical buying simplifies the process of sourcing suppliers. There is little to no integration between suppliers and the product design process. Instead, buyers focus on planning, purchasing, and expediting. There is typically no need for extensive supplier performance measurement.
5. Works best with stable schedules and usage rates
To make the most of tactical buying, it’s important to have a stable schedule and usage rate. Even though tactical buying is typically done periodically, buyers can save money and streamline delivery by using inventory planning systems that predict future demand. By creating a buy plan, buyers can negotiate better prices and guarantee that the product or service they need will be available when they need it.