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What is a procurement strategy?

A procurement strategy is a planned approach of cost-effectively purchasing supplies. It should take into consideration various factors, such as the budget, funding, timeline for procurement, projected risks and opportunities.

To evolve an effective procurement strategy, it’s necessary to assess what is required. This may include assessing the business or project objectives, available and existing resources and supplies. The company should also decide whether to create the materials required or outsource, considering cost and sustainability as the key determining factor.

In brief, a general procurement strategy follows five steps:

Step 1: supplier identification

Step 2: supplier segmentation

Step 3: relationship analysis

Step 4: relationship management

Step 5: evaluation

In construction, procurement refers to the process of purchasing goods or services for the purpose of design and construction. The procurement for the design and construction of a building could take different paths. Any route chosen should follow a strategy that tailors or suits the long-term objectives of the client’s business plan and purpose.

Consideration should be given to the following factors:

  • Speed
  • Quality
  • Specific project constraints
  • Cost
  • Risk
  • Financing
  • Asset ownership

Your task

What do you consider to be the major difference between procurement strategy in the construction industry and general procurement strategy?

Share your thoughts in the comments area and provide examples to illustrate your answer.

Further reading

If you want to learn more about procurement strategies, you may want to read this research paper from the COBRA 2010 conference:

Muriro, A. and Wood, G.D. (2010) A Comparative Analysis of Procurement Methods Used on Competitively Tendered Office Projects in the UK, Manchester: University of Salford.

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This article is from the free online course:

Contract Management and Procurement: An Introduction

Coventry University