Purchasing is not a cost function. It is a value function.” — Peter Kraljic

At a time when costs are rising and pressure on financial performance continues to increase, many companies operate in a constant firefighting mode. Materials or medical supplies are missing, a supplier fails to meet delivery deadlines, service support is postponed to “tomorrow,” and the contract—once reviewed more closely—turns out to offer little real protection for the organization.

In such conditions, procurement can no longer be treated as a purely supporting function. Today, it is one of the key areas directly influencing financial results, operational stability, and the pace of organizational growth—regardless of whether we are talking about a medical facility, a service company, or a manufacturing business.

Strategic purchasing is a response to a reality in which reactive decisions are becoming increasingly costly—in terms of time, money, and organizational stress.

1. WHAT DOES STRATEGIC PURCHASING MEAN IN PRACTICE?

Without a procurement strategy, it is difficult to achieve real savings and predictability. Sales and customer service are, of course, critical functions — but when procurement fails to operate effectively, the consequences are felt across the entire organization: from operations and finance to customer relationships.

Strategic purchasing is a process, not a one-off decision made under time pressure. It means moving away from reacting to problems and toward conscious, structured planning. It includes, among others:

– analysis of actual business needs (not just “what we have always purchased”),
– knowledge of the market and available alternatives,
– risk management,
– negotiations that go beyond price alone,
– long-term cooperation with suppliers.

Procurement stops being perceived as a department that “only spends money” and instead becomes a true business partner.

In practice, this means shifting the mindset from “where is it cheapest?” to “which decision will not create problems in three, six, or twelve months?”

2. PRICE VS. TOTAL COST – why they are not the same?

One of the most common mistakes in both service and medical organizations is focusing solely on the purchase price. Price is visible immediately; hidden costs appear later.

The Total Cost of Ownership (TCO) includes, among others:
– service and maintenance,
– risk of downtime,
– time and involvement of internal teams,
– costs of complaints, changes, and renegotiations,
– the impact of purchasing decisions on other areas of the organization.

Practical example: A service company selected the lowest-priced property management provider without fully analyzing the scope of the contract and SLA conditions. After several months, it became clear that key services (such as surface polymerization) were not included in the agreement and required additional fees, while long service response times generated further operational issues and costs.
At the purchasing stage, the offer seemed inexpensive; from a TCO perspective, however, the decision proved costly.

3. PROCUREMENT BENCHMARKING – fewer assumptions, more facts.

Strategic purchasing begins with market knowledge. One offer provides no real comparison. Two often create only the illusion of choice. Three offers represent the minimum needed to identify where real value lies—although this is not always possible in every category.

Benchmarking is not solely about reducing prices. Its primary purpose is to:
– understand market standards,
– identify risks hidden in the fine print,
– realistically assess the quality and scope of services,
– prepare for substantive, data-driven negotiations.

As a result, purchasing decisions become less intuitive and less “based on gut feeling,” and more grounded in facts and data.

4. NEGOTIATIONS – not just “how much can we cut from the price?”

In organizations that think long term, negotiations do not end with price.
Far greater value lies in discussions covering:
– response times and SLA levels,
– responsibility for delays and errors,
– contractual flexibility,
– financial and legal safeguards,
– stability of cooperation over time.

A well-negotiated contract is not needed when everything runs smoothly. It becomes critical when things stop working as planned and challenges arise—whether cost-related, operational, or both.

5. RISK MANAGEMENT – fewer surprises, greater control.

Every purchasing decision carries risk—operational, financial, or reputational. Strategic purchasing means identifying these risks and managing them consciously, rather than reacting only once problems occur.

In practice, this includes:
– planning alternative scenarios,
– verifying suppliers,
– incorporating contractual safeguards,
– reducing dependency on a single partner.

Organizations that take this approach operate less often in emergency mode and benefit from greater cost predictability.

Strategic purchasing is not about buying cheaper,  it is about less firefighting and more informed decision-making.

It means purchasing more wisely, calmly, from verified suppliers, and with an understanding of long-term consequences.

These are the decisions that allow organizations regardless of industry to move away from constant reaction and toward building stable, resilient operations. Without chaos, without urgent phone calls, and without costly surprises.