u.k. industrial buyer behaviour - the demise of the
TRANSCRIPT
U.K. INDUSTRIAL BUYER BEHAVIOUR - THE DEMISE OF THE BUYGRID FRAMEWORK
HARRIS, PhilManchester Metropolitan University ENGLAND
HURD, SueShell (UK) ENGLAND
9th IMP CONFERENCE23rd - 25th September 1993
BATH UK
U.K
. In
dust
rial
Buy
er B
ehav
iour
-
the
Dem
ise o
f the
Buy
grid
Fra
mew
ork
Phil
Har
ris
the
Man
ches
ter
Met
ropo
litan
Uni
vers
ity
Sue
Hur
d
Shel
l OiK
J
Add
ress
for
cor
resp
onde
nce:
Phi
l H
arri
s, t
he M
anch
este
r M
etro
polit
an U
nive
rsity
,F
acul
ty o
f Man
agem
ent a
nd B
usin
ess.
Ayt
oun
Build
ing.
Ayt
oun
Stre
et.
Man
ches
ter
Ml
3GH
.Te
l: 06
1 24
7.17
27:
Fax:
061
247
6301
AB
STR
AC
T
The
stud
y o
f "
Indu
stri
al b
uyin
g be
havi
our
" is
a c
ompl
ex s
ubje
ct w
hich
has
led
to a
nu
mbe
r of f
ram
ewor
ks b
eing
dev
elop
ed to
exp
lain
the
indu
stri
al p
roce
ss.
In o
rder
to
eval
uate
the
se f
ram
ewor
ks a
nd id
entif
y cu
rren
t tre
nds
in i
ndus
tria
l pur
chas
ing,
in
terv
iew
s w
ere
held
with
key
per
sonn
el in
thr
ee l
arge
buy
ing
orga
nisa
tions
- B
ICC
. B
TR
and
Nat
iona
l Pow
er.
Resu
lts f
rom
the
ana
lysi
s in
dica
te t
hat t
he B
uygr
id F
ram
ewor
k th
ough
use
ful i
n id
entif
ying
the
buy
ing
stag
es f
or p
artic
ular
pur
chas
es d
id n
ot p
rovi
de a
str
uctu
re f
or
iden
tifyi
ng t
he k
ey d
ecis
ion
mak
ers
and
thei
r ro
les.
The
Int
erac
tion
App
roac
h, h
owev
er
does
and
take
s in
to a
ccou
nt c
ritic
al f
acto
rs w
hich
hig
hlig
ht t
he i
mpo
rtan
ce o
f buy
er
selle
r re
latio
nshi
ps w
hich
inc
lude
ind
ivid
uals
fro
m d
iffer
ent
func
tions
and
diff
eren
t le
wis
int
erac
ting
thro
ugh
the
buyi
ng p
roce
ss.
The
rese
arch
als
o co
mm
ents
on
the
follo
win
g de
velo
pmen
ts :
The
rest
ruct
urin
g of a
gro
up c
an c
ause
a m
ajor
shi
ft in
pur
chas
ing
proc
esse
s.
Ther
e is
a p
lace
for
bot
h ce
ntra
lised
and
dec
entr
alis
ed p
urch
asin
g fu
nctio
ns w
ithin
a
grou
p, b
ut i
nher
ent c
onfli
ct m
ust
be c
aref
ully
man
aged
.
Con
vent
iona
l "
buyi
ng B
ehav
iour
" f
ram
ewor
ks a
re d
iffic
ult t
o ap
ply
in p
ract
ise
due
toth
e bl
urri
ng o
f pur
chas
ing
role
s.M
ost p
rogr
essi
ve c
ompa
nies
app
ear
to b
e in
crea
sing
ly in
volv
ed in
sup
plie
rpa
rtne
rshi
ps.
Goo
d in
tern
al r
elat
ions
hips
bet
wee
n te
chni
cal a
nd p
urch
asin
g sp
ecia
lists
are
ess
entia
lfo
r ef
fect
ive
purc
hasi
ng i
n an
eng
inee
ring
env
iron
men
t.
Intr
oduc
tion
The
Buy
grid
Fra
mew
ork
One
of
the
mos
t w
ell
know
n m
odel
s fo
r un
ders
tand
ing
the
buyi
ng p
roce
ss i
s th
at
outli
ned
by R
obin
son,
Par
is a
nd W
ind
(196
7),
com
mon
ly k
now
n as
the
buy
clas
s or
bu
ygrid
fr
amew
ork.
Th
is
mod
el
is ba
sed
on
the
conc
ept
that
th
ere
are
diff
eren
t de
cisi
on p
roce
sses
ado
pted
und
er d
iffer
ent
buyi
ng s
ituat
ions
, it
can
be s
umm
aris
ed a
s fo
llow
s:-
a)
New
task
- in
whi
ch th
e or
gani
satio
n co
nsid
erin
g a
purc
hase
is f
or th
e fir
st ti
me
seek
ing
to m
eet a
cer
tain
cla
ss o
f nee
d.
b)
Mod
ified
reb
uy -
wha
t was
onc
e a
new
task
is r
epea
ted
and
the
purc
hase
pr
oces
s is
sta
ndar
dise
d w
ithou
t bec
omin
g ro
utin
e or
stra
ight
reb
uy is
jolte
d fr
om it
s ro
utin
e by
som
e un
usua
l circ
umst
ance
.
c)
Stra
ight
reb
uy -
in w
hich
the
com
pany
is m
eetin
g a
need
whi
ch r
ecur
s so
oft
en
that
the
proc
ess
of p
urch
ase
has
beco
me
subs
tant
ially
rou
tine.
The
nam
es o
f th
e bu
ying
situ
atio
ns a
re a
s or
igin
ally
ide
ntifi
ed b
y R
obin
son,
Par
is a
nd
Win
d (1
967)
, w
ith f
urth
er r
efin
emen
t of
the
def
initi
ons
by W
ebst
er a
nd W
ind
(197
2)
and
Fish
er (
1976
). R
obin
son,
Par
is a
nd W
ind'
s (1
967)
orig
inal
res
earc
h pr
opos
ed a
set
of
eig
ht p
roce
ss s
tage
s w
hich
stre
tch
from
the
stag
es o
f ea
rly r
ecog
nitio
n of
a p
robl
em
whi
ch c
an b
e so
lved
thr
ough
som
e ki
nd o
f pu
rcha
se;
to t
he e
valu
atio
n an
d th
en
sele
ctio
n of
sup
plie
rs.
The
se e
ight
buy
phas
es t
oget
her
with
the
thr
ee b
uy cl
asse
s ha
ve
been
use
d to
for
m th
e B
UY
GR
ID M
ATR
IX.
This
det
aile
d bu
ying
mod
el t
he b
uygr
id m
atrix
has
bee
n us
ed e
xten
sive
ly b
y ac
adem
ics
and
sale
s pr
actit
ione
rs to
plo
t the
ste
ps ta
ken
by a
com
pany
for
eac
h ty
pe o
f pu
rcha
se.
In t
he p
ast
twen
ty y
ears
the
buy
grid
mat
rix h
as b
ecom
e as
muc
h an
acc
epte
d ic
on o
f or
gani
satio
nal
buyi
ng b
ehav
iour
thi
nkin
g as
MaC
arth
y's
4p's
and
the
Prod
uct
Life
C
ycle
(PL
C)
conc
epts
hav
e be
com
e th
e m
ost
freq
uent
ly q
uote
d te
nets
of
cons
umer
m
arke
ting
teac
hing
.
The
Pur
pose
of t
he S
tudy
and
Met
hodo
logy
But
, how
doe
s th
e bu
ygrid
mat
rix s
tand
-up
to t
he t
est o
f tim
e? I
s it
as v
alid
tod
ay a
s it
was
ove
r tw
enty
fiv
e ye
ars
ago
whe
n th
e fu
ndam
enta
l re
sear
ch w
as c
arri
ed o
ut?
Doe
s it
still
hav
e su
ch a
maj
or r
ole
to p
lay
in o
ur u
nder
stan
ding
of
orga
nisa
tiona
l bu
ying
be
havi
our?
Or
is th
e m
odel
pas
t it's
sel
l buy
dat
e?
This
pa
per
seek
s to
exp
lore
th
ese
ques
tions
an
d lo
ok
at
the
buyg
rid
mat
rix
in
com
pari
son
with
cur
rent
U.K
. in
dust
rial
buyi
ng b
ehav
iour
pra
ctic
e ba
sed
on r
esea
rch
carr
ied
out
on a
stu
dy o
f th
ree
maj
or U
.K.
orga
nisa
tions
. B
ICC
, B
TR a
nd N
atio
nal
Pow
er.
The
iss
ues
aris
ing
out
of th
is c
ompa
rativ
e st
udy
are
then
dev
elop
ed a
nd f
utur
e ar
eas
for
rese
arch
are
hig
hlig
hted
and
crit
icis
ms
of t
he o
ver
gene
ralis
ed
and
non
circ
umsp
ect u
se o
f th
e bu
ygrid
mat
rix m
ade.
Hie
wri
ters
set
out
to
l<»>k
at
the
valid
ity o
f cu
rren
t co
qxir
ate
buyi
ng b
ehav
iour
in
larg
e U
K or
gani
satio
ns a
nd t
o es
tabl
ish
the
curr
ent
usef
ulne
ss o
f th
e bu
ygri
d m
atri
x.
A fu
ll lit
erat
ure
sear
ch w
as c
arri
ed o
ut a
nd w
ith t
he s
uppo
rt o
f Sh
ell
Oils
a p
rofi
le o
f co
re i
ndus
tria
l bu
ying
com
pani
es w
as b
uilt-
up w
ho p
urch
ased
lub
rica
nts.
Usi
ng S
hell
Oil'
s su
ppor
t, m
ajor
U.K
. us
ers
of l
ubri
cant
s w
ere
targ
ette
d an
d in
terv
iew
s ar
rang
ed w
ith a
sel
ectio
n of
maj
or u
sers
key
man
agem
ent
and
purc
hasi
ng s
taff
. T
hese
f
maj
or u
sers
rep
rese
nted
ove
r 50
% o
f Sh
ell
Oil
indu
stri
al
lubr
ican
t pu
rcha
sers
and
in
clud
ed,
BIC
C.
BT
R,
Nat
iona
l Po
wer
, N
ucle
ar
Ele
ctri
c an
d T
urne
r an
d N
ewel
l am
ongs
t ot
hers
. T
he i
nter
view
s w
ere
carr
ied
out
acro
ss a
foc
used
sel
ectio
n of
sta
ff i
n ea
ch m
ajor
org
anis
atio
n fr
om F
ebru
ary
to J
une
1992
. Fr
om t
hese
int
ervi
ews
thre
e co
mpa
nies
, B
ICC
, B
TR
and
Nat
iona
l Po
wer
wer
e se
lect
ed f
rom
the
res
earc
h to
giv
e in
sigh
t in
to t
heir
org
anis
atio
ns b
uyin
g pr
oces
s an
d re
cent
dev
elop
men
ts.
The
pri
me
limita
tions
of
the
rese
arch
are
its
size
, as
it o
nly
repr
esen
ts o
ne s
ecto
r w
ithin
th
e in
dust
rial
mar
ket
- lu
bric
ants
. A
lthou
gh i
t ca
n be
arg
ued
that
thi
s is
a p
artic
ular
ly
repr
esen
tativ
e in
dust
ry s
how
ing
a cr
oss
sect
ion
of U
.K.
buyi
ng b
ehav
iour
. O
nly
a lim
ited
num
ber
of i
ndiv
idua
ls w
ere
inte
rvie
wed
with
in e
ach
orga
nisa
tion
leav
ing
othe
r po
ssib
le i
nflu
ence
s hi
dden
. A
nd f
inal
ly t
ime
was
lim
ited,
aga
inst
the
se r
eser
vatio
ns i
t m
ust
be s
aid
that
by
havi
ng t
he s
uppo
rt o
f Sh
ell
it he
lped
us
to g
ain
acce
ss a
nd t
ime
from
lea
ding
fig
ures
in
the
indu
stri
al b
uyin
g pr
oces
s w
hich
wou
ld n
ot n
orm
ally
be
avai
labl
e to
res
earc
hers
.
CA
SE S
TU
DIE
S N
AT
ION
AL
PO
WE
R
Com
pany
Bac
kgro
und
Nat
iona
l Po
wer
is
one
of t
he m
ajor
U.K
. re
cent
ly p
riva
tised
ele
ctri
city
-gen
erat
ing
com
pani
es.
The
com
pany
ope
rate
s 31
in
divi
dual
pow
er s
tatio
ns a
cros
s E
ngla
nd A
nd
Wal
es w
ith e
ach
vary
ing
in s
ize
and
tech
nolo
gy.
Nat
iona
l Po
wer
is
an i
nter
estin
g ca
se i
n th
at p
riva
tisat
ion
has
brou
ght
maj
or c
hang
e to
th
e pu
rcha
sing
fun
ctio
n.
Prio
r to
pri
vatis
atio
n, t
hey
empl
oyed
240
ful
l tim
e w
orke
rs i
n th
eir
cent
ral
purc
hasi
ng d
epar
tmen
t. T
his
grou
p w
as g
iven
all
of t
he a
utho
rity
for
ap
prov
ing
size
able
pur
chas
es w
ith t
he i
ndiv
idua
l po
wer
sta
tions
onl
y ab
le t
o au
thor
ise
purc
hase
s of
up
to £
2000
. T
he r
egio
nal
offi
ces
wer
e re
spon
sibl
e fo
r m
ajor
pur
chas
es
and
wer
e or
gani
sed
into
six
sep
arat
e de
part
men
ts,
each
han
dlin
g a
sepa
rate
asp
ect
of
purc
hasi
ng s
uch
as v
ende
r ev
alua
tion,
pol
icy
cont
ract
s, p
rocu
rem
ent
IT,
and
call
off
cont
ract
s.
At
this
tim
e th
ere
wer
e at
lea
st 3
00 c
omm
on i
tem
s w
hich
wer
e pu
rcha
sed
thro
ugh
the
cent
ral
purc
hasi
ng d
epar
tmen
t.
Sinc
e Pr
ivat
isat
ion,
Nat
iona
l Po
wer
hav
e m
ade
sign
ific
ant
chan
ges
to t
he p
urch
asin
g fu
nctio
n of
the
com
pany
. T
he f
irst
ste
p ta
ken
was
to
mak
e ea
ch p
ower
sta
tion
an
indi
vidu
al p
rofi
t ce
ntre
for
the
ir o
wn
spen
ding
. T
he P
ower
Sta
tion
Man
ager
has
bee
n gi
ven
full
auth
oris
ing
pow
er a
nd r
espo
nsib
ility
for
that
sta
tions
bud
get.
The
num
ber
of
prod
ucts
pu
rcha
sed
cent
rally
ha
s fa
llen
from
30
0 to
12
0 an
d ha
s co
ntin
ued
to
decl
ine.
The
rat
iona
lisat
ion
of p
ower
sta
tions
tog
ethe
r w
ith t
he m
ove
to m
ake
them
in
divi
dual
pro
fit
cent
res
has
had
a fu
ndam
enta
l im
pact
on
purc
hasi
ng.
The
thr
eat
of
clos
ure
if th
e st
atio
n do
es n
ot p
erfo
rm w
ell
has
crea
ted
an a
tmos
pher
e of
int
ense
riva
lry
betw
een
them
. T
o da
te t
here
are
onl
y 20
sta
tions
rem
aini
ng a
nd t
here
are
pr
edic
tions
that
fur
ther
shu
t-do
wns
may
be
imm
inen
t.
Pur
chas
ing
Stru
ctur
e
The
ce
ntra
l pu
rcha
sing
de
part
men
t w
as
at
one
time
quite
re
spec
ted
with
in
the
orga
nisa
tion.
Nat
iona
l Po
wer
's pu
rcha
sing
gro
up t
reat
ed s
uppl
iers
as
part
ners
and
did
no
t vi
ew
them
as
riv
als.
T
heir
bud
gets
wer
e la
rge
and
wer
e no
t ve
ry
care
fully
m
onito
red
by h
ead
offi
ce.
Dur
ing
pros
pero
us t
imes
Nat
iona
l Po
wer
did
not
mak
e a
lot
of d
eman
ds f
rom
the
ir s
uppl
iers
and
the
y w
ere
ofte
n ta
ken
adva
ntag
e of
bei
ng c
harg
ed
infl
ated
pri
ces
for
man
y go
ods.
Cen
tral
cha
nges
as
prev
ious
ly m
entio
ned
have
led
to
the
purc
hasi
ng f
unct
ion
bein
g re
duce
d fr
om 2
00 t
o 42
peo
ple.
T
he g
roup
hav
e be
en t
hrea
tene
d by
the
reor
gani
satio
n an
d ar
e no
w
havi
ng
to
just
ify
thei
r ex
iste
nce
and
have
be
en
aske
d by
se
nior
m
anag
emen
t to
re
defi
ne t
heir
rol
es
with
in
the
orga
nisa
tion.
T
hey
have
re
cent
ly
prop
osed
th
at
they
ta
ke
on
the
role
of
pr
ocur
emen
t m
onito
ring
, ho
wev
er
the
acce
ptan
ce o
f th
is b
y se
nior
man
agem
ent
was
not
kno
wn
at t
he t
ime
thes
e in
terv
iew
s to
ok p
lace
.
The
cen
tral
pur
chas
ing
man
ager
s ba
sed
at H
arro
gate
are
stil
l re
spon
sibl
e fo
r se
tting
up
purc
hasi
ng a
gree
men
ts f
or i
tem
s co
mm
on a
cros
s th
e gr
oup.
T
hey
nego
tiate
pri
ces
with
a s
uppl
ier
leav
ing
pow
er s
tatio
ns to
ord
er a
gain
st th
ese
agre
emen
ts.
Buy
ing
from
the
agr
eed
supp
liers
is
not
man
dato
ry a
nd i
f a
pow
er s
tatio
n m
anag
er
wis
hes
to u
se t
he c
ontr
acte
d pr
ice
to n
egot
iate
with
ano
ther
sup
plie
r, h
e is
fre
e to
do
so.
Thi
s ha
s in
its
elf
crea
ted
prob
lem
s fo
r th
e ce
ntra
l pu
rcha
sing
gro
up a
s th
ey h
ave
no
mon
itori
ng s
yste
m t
o ev
alua
te t
he e
xten
t of
the
pur
chas
es b
eing
com
plet
ed a
gain
st a
n ag
reed
con
trac
t. E
ven
if th
ey d
id h
ave
such
a s
yste
m,
they
do
not
have
the
pow
er t
o fo
rce
stat
ion
man
gers
to
purc
hase
fro
m t
he c
entr
ally
agr
eed
vend
ors.
A
s a
resu
lt,
ther
e is
an
inhe
rent
int
erna
l co
nflic
t in
th
e op
erat
ion
of c
entr
al
and
dece
ntra
lised
pu
rcha
sing
fun
ctio
ns.
Eac
h po
wer
sta
tion
now
has
the
follo
win
g st
ruct
ure:
Buy
ing
Pro
cess
(a)
Cen
tral
Pur
chas
ing
The
cen
tral
pu
rcha
sing
gro
up g
ener
ally
sen
d ou
t te
nder
s lis
ting
thei
r re
quir
emen
ts t
o a
shor
t lis
t of
sup
plie
rs.
All
spec
ific
atio
ns f
or t
he p
rodu
cts
are
prov
ided
by
tech
nica
l pe
rson
nel
(mai
nly
the
engi
neer
s fr
om t
he p
ower
sta
tions
).
Pote
ntia
l su
pplie
rs r
espo
nd w
ith t
he c
osts
for
sup
plyi
ng t
he t
otal
vol
ume
nece
ssar
y to
ru
n al
l po
wer
sta
tions
. T
his
is p
roce
eded
by
nego
tiatio
ns w
ith t
he c
hose
n su
pplie
rs a
nd
agre
emen
ts a
re m
ade
for
a ye
ars
supp
ly t
o N
atio
nal
Pow
er.
Pric
es a
re t
hen
circ
ulat
ed
to a
ll po
wer
sta
tions
for
thei
r re
fere
nce.
It
is t
hen
assu
med
tha
t eac
h po
wer
sta
tion
will
co
ntac
t th
e ve
ndor
and
ord
er d
irec
tly f
rom
the
m a
t th
e pr
ice
agre
ed i
n th
e te
nder
. T
he
redu
ctio
n in
pur
chas
ing
pers
onne
l is
ref
lect
ed i
n th
e de
clin
ing
num
ber
of p
rodu
cts
purc
hase
d th
roug
h ce
ntra
l ag
reem
ents
. T
he r
espo
nsib
ility
of
mai
ntai
ning
eac
h of
the
se
agre
emen
ts i
s cu
rren
tly b
eing
tran
sfer
red
to i
ndiv
idua
l po
wer
sta
tions
.
Whi
le t
he p
ower
sta
tions
see
hen
efits
in
purc
hasi
ng p
ower
, th
e st
atio
n m
anag
er w
ill
cont
inue
to
man
age
thes
e ce
ntra
l pu
rcha
sing
agr
eem
ents
, w
ith n
o ne
ed f
or a
cen
tral
pu
rcha
sing
fun
ctio
n.
By
usin
g th
is m
etho
d it
will
be
poss
ible
to
phas
e ou
t th
e ce
ntra
l pu
rcha
sing
fun
ctio
n in
th
e sh
ort
to
med
ium
te
rm.
Thi
s w
ill
in
turn
re
solv
e th
e ce
ntra
lised
/dec
entr
alis
ed
purc
hasi
ng c
onfl
icts
th
at c
urre
ntly
exi
st.
The
tr
ansf
er o
f po
wer
will
the
n be
com
plet
e w
ith t
he P
ower
Sta
tion
Man
ager
hol
ding
all
pow
er f
or
purc
hasi
ng d
ecis
ions
.
(b)
Cen
tral
Dec
isio
n M
akin
g Pr
oces
s
For
thos
e pr
oduc
ts w
hich
are
pur
chas
ed c
entr
ally
, th
e pu
rcha
sing
man
ager
in
head
of
fice
is
still
the
fin
al d
ecis
ion
mak
er.
The
y re
new
con
trac
ts a
nd d
istr
ibut
e te
nder
s to
in
divi
dual
pow
er s
tatio
ns.
Alth
ough
they
ine
vita
bly
mak
e th
e de
cisi
on a
s to
who
will
be
awar
ded
the
busi
ness
, th
ey w
ill g
ener
ally
elic
it th
e op
inio
ns o
f th
e st
atio
n m
anag
ers
firs
t. T
his
is s
een
as a
cri
tical
ste
p du
e to
the
hig
h ri
sk o
f re
ject
ion
of c
ontr
acts
if
a m
anag
er d
islik
es a
par
ticul
ar s
uppl
ier
or th
eir
prod
ucts
.
Unf
ortu
nate
ly,
the
cent
ral
buye
r do
es n
ot h
ave
a sy
stem
in
plac
e th
at a
llow
s th
em t
o m
onito
r th
e fu
lfilm
ent
of c
entr
al c
ontr
acts
. In
oth
er w
ords
, th
ey h
ave
no w
ay o
f kn
owin
g w
hich
pow
er s
tatio
ns a
re h
onou
ring
the
agr
eem
ent
and
who
are
rec
ruiti
ng
thei
r ow
n su
pplie
rs.
Thi
s al
so
mea
ns
they
ha
ve
no
mea
ns
of
mea
suri
ng
cent
ral
purc
hasi
ng e
ffec
tiven
ess
as v
iew
ed b
y th
e st
atio
n m
anag
ers.
The
cen
tral
buy
er w
ill
gene
rally
hav
e to
wai
t un
til a
sup
plie
r hi
ghlig
hts
that
the
agr
eed
volu
mes
are
low
er
than
ag
reed
, du
e to
a
cert
ain
pow
er
stat
ion
not
sour
cing
th
roug
h th
e ce
ntra
l ag
reem
ent.
Thi
s pr
oble
m h
as o
nly
exis
ted
sinc
e th
e th
reat
of
clos
ure
has
incr
ease
d an
d ha
s le
d to
red
uced
loy
alty
fro
m p
ower
sta
tions
to
cent
rally
neg
otia
ted
agre
emen
ts w
ith
vend
ors.
In
fac
t, th
e ce
ntra
lly n
egot
iate
d ag
reem
ent
may
act
ually
fac
ilita
te a
sta
tion
man
ager
fin
ding
a c
heap
er s
uppl
ier.
The
con
trac
ted
pric
e m
ay b
e us
ed a
s a
nego
tiatin
g le
ver
to b
e be
aten
by
alte
rnat
ive
supp
liers
.
(c)
Dec
entr
alis
ed D
ecis
ion
Mak
ing
Proc
ess
The
pow
er s
tatio
n m
anag
er i
s th
e fin
al d
ecis
ion
mak
er w
ithin
a p
ower
sta
tion
site
. T
hey
mus
t ap
prov
e an
y tr
ansa
ctio
n pr
ior
to i
t be
ing
deliv
ered
. T
he s
tatio
n m
anag
er i
s un
der
a gr
eat
deal
of
pres
sure
fro
m h
ead
offi
ce t
o re
duce
the
ir c
osts
and
to
incr
ease
pr
ofita
bilit
y.
Eve
n th
ough
the
pur
chas
ing
oper
ator
with
in e
ach
stat
ion
deal
s di
rect
ly w
ith v
endo
rs t
o ne
goti
ate
a fin
al p
rice
, th
e st
atio
n m
anag
er w
ill h
ave
the
final
say
in
the
deci
sion
. C
entr
ally
agr
eed
cont
ract
s w
ith s
uppl
iers
are
not
man
dato
ry o
n th
e po
wer
sta
tions
, th
ey a
re o
nly
reco
mm
ende
d to
the
m b
y ce
ntra
l pu
rcha
sing
who
se f
unct
ion
is to
use
the
le
vera
ge o
f la
rge
volu
mes
to
driv
e th
e pr
ice
dow
n fo
r th
e gr
oup.
Sta
tion
man
ager
s ha
ve s
tart
ed t
o us
e th
e pr
ice
nego
tiate
d by
the
cen
tral
pur
chas
ing
agen
t as
a s
tart
ing
poin
t fo
r th
eir
nego
tiatio
ns w
ith a
ltern
ate
supp
liers
. T
he s
tatio
n m
anag
er h
as n
o re
spec
t fo
r th
e re
latio
nshi
p w
hich
the
cen
tral
pur
chas
ing
man
ager
may
be
deve
lopi
ng w
ith
supp
liers
. T
hey
are
inva
riab
ly n
ot i
nter
este
d in
the
lon
g-te
rm e
xist
ence
of
supp
liers
as
they
are
mor
e in
tere
sted
in
thei
r ow
n im
med
iate
sur
viva
l an
d ar
e be
ing
prim
arily
dri
ven
by th
eir o
wn
botto
m l
ine.
Sour
cing
and
Sup
plie
r Se
ctio
n
The
cen
tral
buy
ers
tend
to
sour
ce f
rom
sta
ble
and
repu
tabl
e su
pplie
rs w
ho a
re c
apab
le
of s
uppl
ying
hig
h qu
ality
pro
duct
s.
The
y ar
e ve
ry r
isk
adve
rse
and
will
usu
ally
sel
ect
a m
ajor
com
pany
as
a pr
efer
red
vend
or.
Prio
r to
the
rat
iona
lisat
ion
of t
he p
urch
asin
g de
part
men
t, N
atio
nal
Pow
er t
ende
d to
buy
fro
m s
ingl
e so
urce
s. T
his
is s
till
the
feel
ing
of c
entr
al p
urch
asin
g bu
t no
t ne
cess
arily
of
the
pow
er s
tatio
n m
anag
er.
From
our
di
scus
sion
s it
beca
me
evid
ent
that
th
ere
was
no
sing
le p
atte
rn
of s
ourc
ing
polic
y am
ongs
t th
e po
wer
sta
tions
. T
he p
ower
sta
tions
do
not
feel
the
nee
d to
dev
elop
re
latio
nshi
ps w
ith t
heir
sup
plie
rs a
nd a
re m
ainl
y co
ncer
ned
abou
t co
st?
and
tech
nica
l sp
ecif
icat
ions
. T
heir
cri
teri
a fo
r us
ing
one
or m
ore
supp
liers
var
ies
sign
ific
antly
fro
m
one
stat
ion
to a
noth
er u
sual
ly d
epen
ding
upo
n th
e m
anag
ing
engi
neer
.
Thi
s w
ould
ind
icat
e th
at t
he d
iffe
ring
per
form
ance
mea
sure
s be
ing
appl
ied
to c
entr
al
and
dece
ntra
lised
buy
ers
are
caus
ing
a co
nflic
t in
the
sel
ectio
n of
sup
plie
rs.
As
pow
er
stat
ions
are
set
up
as p
rofi
t ce
ntre
s th
ere
is t
he d
ange
r th
at
the
cent
ral
func
tion
beco
mes
inc
reas
ingl
y re
dund
ant,
part
icul
arly
if t
he p
ower
sta
tions
fee
l no
ben
efits
fro
m
purc
hasi
ng s
cale
.
(a)
Cen
tral
ised
Sup
plie
r Sel
ectio
n
Nat
iona
l Po
wer
hav
e a
form
al a
ppro
ach
to b
ring
ing
in n
ew s
uppl
iers
. T
hey
have
pr
oduc
ed a
lea
flet
tog
ethe
r w
ith a
n ap
plic
atio
n fo
rm t
o in
trod
uce
new
sup
plie
rs t
o th
e co
mpa
ny.
With
in t
his
docu
men
t th
ey m
ake
it cl
ear
that
the
y ha
ve s
trin
gent
qua
lity
requ
irem
ents
and
tha
t it
is n
eces
sary
to
have
BS
5750
. T
he l
eafl
et i
nstr
ucts
new
su
pplie
rs
to
subm
it th
eir
appl
icat
ions
to
th
e ne
ares
t po
wer
st
atio
n,
not
cent
ral
purc
hasi
ng.
Thi
s su
gges
ts
that
de
cent
ralis
atio
n is
im
min
ent
with
re
gard
s to
th
e pu
rcha
sing
func
tion.
In t
he p
ast,
Nat
iona
l Po
wer
hav
e be
en v
ery
risk
adv
erse
and
hav
e se
t st
anda
rds
abov
e ne
cess
ary
spec
ific
atio
ns w
hen
listin
g th
eir
requ
irem
ents
for
sup
plie
rs.
One
of
the
purc
hasi
ng m
anag
ers
inte
rvie
wed
sta
ted
that
thi
s co
ntin
ues
to b
e th
e ca
se,
and
that
th
eir
mai
n cr
iteri
a fo
r su
pplie
r se
lect
ion
is q
ualit
y.
The
y te
nd t
o go
with
rep
utab
le
com
pani
es w
ho a
re lo
w r
isk
and
can
deliv
er c
onsi
sten
tly h
igh
qual
ity p
rodu
cts.
(b)
Dec
entr
alis
ed S
uppl
ier S
ectio
n
The
cri
teri
a fo
r se
lect
ion
may
var
y fr
om t
hat o
f th
e ce
ntra
l pu
rcha
sing
man
ager
. It
was
re
veal
ed t
hat
ther
e ar
e tw
o m
ain
supp
lier
crite
ria
whi
ch a
re m
ost
impo
rtan
t to
the
St
atio
n M
anag
ers.
(1)
Mee
ting
the
tech
nica
l sp
ecif
icat
ions
(2)
The
rig
ht p
rice
The
y ar
e no
t cu
rren
tly i
nter
este
d in
val
ue-a
dded
ser
vice
and
do
not
seem
int
eres
ted
in
build
ing
part
ners
hips
with
sup
plie
rs.
The
ir p
rim
ary
conc
ern
is t
heir
sho
rt-t
ern
futu
re
and
avoi
ding
the
unde
rlyi
ng th
reat
of c
losu
re.
Thi
s ha
s pl
aced
a h
eavy
sho
rt t
erm
pri
ce s
ensi
tivity
on
the
purc
hasi
ng f
unct
ion.
The
st
atio
n m
anag
ers
have
litt
le i
nter
est
in w
hat
bene
fits
the
ir c
olle
ague
s ar
e re
ceiv
ing
from
ot
her
supp
liers
and
will
rar
ely
mee
t to
dis
cuss
pur
chas
ing
issu
es.
Thi
s be
havi
our
is
bein
g dr
iven
by
com
petit
ive
rival
ry b
etw
een
the
stat
ions
whi
ch m
ay r
educ
e in
th
e m
ediu
m
term
as
th
e fu
ture
be
com
es
mor
e st
able
. A
lthou
gh
rece
nt
Gov
ernm
ent
elec
tric
ity g
ener
ator
fue
l pr
ocur
emen
t po
licy
pron
ounc
emen
ts o
n su
ppor
t fo
r ga
s, c
oal
and
nucl
ear
tired
pow
er s
tatio
ns l
eave
s on
e to
sus
pect
thi
s flu
id s
ituat
ion
coul
d re
mai
n fo
r so
met
ime.
It
is
inim
itabl
e th
at
man
y ex
istin
g su
pplie
rs
will
fi
nd
thei
r ol
d re
latio
nshi
ps i
nsuf
fici
ent
to p
rote
ct t
heir
pos
ition
s an
d a
degr
ee o
f pr
ice
com
petit
ion
may
be
unav
oida
ble.
Fut
ure
Trcm
ls
It is
evi
dent
tha
t an
y re
latio
nshi
ps d
evel
oped
by
cent
ral
purc
hasi
ng w
ill b
e sh
ort
lived
un
less
the
pow
er s
tatio
ns s
tart
to
com
mit
to u
sing
the
agre
emen
ts n
egot
iate
d by
cen
tral
bu
yers
. T
he c
entr
al p
urch
asin
g de
part
men
t ha
s lo
st t
he p
ower
the
y on
ce h
ad w
ithin
th
e gr
oup.
T
here
doe
s no
t se
em t
o be
any
res
pect
for
thei
r po
sitio
n or
the
ir c
apab
ilitie
s in
the
org
anis
atio
n.
The
fut
ure
of t
he c
entr
al p
urch
asin
g fu
nctio
n at
Nat
iona
l Po
wer
is
a vu
lner
able
one
. Pl
ans
are
now
in
ha
nd
to
dist
ribu
te
the
resp
onsi
bilit
y of
al
l ce
ntra
l pu
rcha
sing
ag
reem
ents
to
the
pow
er s
tatio
ns.
Unf
ortu
nate
ly,
the
time
dedi
cate
d to
the
se c
ontr
acts
in
the
pas
t w
ill n
ot b
e po
ssib
le i
n th
e fu
ture
. T
he p
urch
asin
g op
erat
or w
ithin
eac
h po
wer
sta
tion
is i
nvar
iabl
y ov
erw
orke
d an
d th
us u
nabl
e to
spe
nd l
arge
am
ount
s of
tim
e se
ekin
g al
tern
ativ
e su
pplie
rs a
nd c
halle
ngin
g th
e cu
rren
t one
s.
Man
y su
pplie
rs t
hat
have
don
e bu
sine
ss w
ith N
atio
nal
Pow
er o
n a
regu
lar
basi
s in
the
pa
st,
have
had
a v
ery
com
fort
able
rel
atio
nshi
p to
geth
er w
ith v
ery
prof
itabl
e m
argi
ns.
Now
tha
t th
e fo
cus
has
switc
hed
to r
educ
ing
cost
s an
d br
ingi
ng i
n pr
ofit
cent
res
they
fi
nd th
ese
rela
tions
hips
less
mea
ning
ful.
Loc
al b
uyer
s ar
e so
urci
ng e
lsew
here
and
the
re h
as b
een
a dr
amat
ic c
hang
e in
the
key
su
cces
s fa
ctor
s ne
cess
ary
for
supp
liers
to
mai
ntai
n th
e bu
sine
ss.
Supp
liers
mus
t be
pr
epar
ed t
o m
ove
away
fro
m t
he w
arm
and
cos
y re
latio
nshi
p th
at t
hey
once
had
with
th
e ce
ntra
l bo
dy a
nd m
ove
tow
ards
dev
elop
ing
broa
der
rela
tions
hips
with
eac
h of
the
po
wer
sta
tions
. T
hey
mus
t al
so b
ecom
e m
ore
pric
e co
mpe
titiv
e an
d le
ss w
orri
ed t
hat
thei
r cen
tral
ly a
gree
d co
ntra
cts
are
not
bein
g fu
lfille
d.
The
re i
s lit
tle p
oint
in
a su
pplie
r th
reat
enin
g to
rai
se t
heir
pri
ces
beca
use
they
are
not
ach
ievi
ng t
arge
t vo
lum
es a
gree
d ce
ntra
lly.
Cen
tral
pur
chas
ing
may
soo
n be
a t
hing
of
the
past
and
it
is t
ime
that
the
se
supp
liers
took
som
e ac
tion
to p
re-e
mpt
thi
s.
BT
R I
ND
UST
RIE
S L
IMIT
ED
Com
pany
Bac
kgro
und
BTR
Ind
ustr
ies
is on
e of
the
Wor
ld's
lead
ing
indu
stria
l m
anuf
actu
ring
grou
ps.
The
co
mpa
ny i
s ba
sed
in t
he U
K b
ut h
ave
1,00
0 co
mpa
nies
in
40 c
ount
ries
aro
und
the
wor
ld.
The
y ha
ve b
ecom
e es
tabl
ishe
d m
ainl
y th
roug
h ac
quis
ition
s w
ith t
he m
ost
rece
nt b
eing
Haw
ker
Sidl
ey in
199
2.
The
gro
up h
ave
a ve
ry b
road
pro
duct
and
cus
tom
er b
ase
with
div
erse
pro
duct
s an
d th
eref
ore
a w
ide
requ
irem
ent
for
supp
lies.
T
heir
pro
duct
ra
nge
incl
udes
ele
ctric
m
otor
s, t
rans
form
ers,
spo
rts
foot
wea
r, ce
ram
ic ti
les,
and
bra
kes
and
sign
als
for
train
s.
As
a ho
ldin
g co
mpa
ny.
BTR
hav
e m
ade
each
gro
up i
nto
its o
wn
prof
it ce
ntre
with
th
eir
own
supp
lier
sele
ctio
n an
d pa
ymen
t. Th
ey a
re p
laci
ng a
n in
crea
sing
em
phas
is o
n co
ntro
l of
expe
nditu
re.
Pur
chas
ing
Stru
ctur
e
The
re i
s a
cent
ral
purc
hasi
ng d
epar
tmen
t fo
r th
e U
K g
roup
s w
hich
neg
otia
te c
ontr
acts
fo
r co
mm
on p
rodu
cts.
O
ther
pro
duct
s ar
e pu
rcha
sed
indi
vidu
ally
by
each
gro
up b
ut
are
reco
rded
in a
cen
tral
dat
abas
e al
low
ing
anal
ysis
of
any
poss
ible
cos
t sav
ings
.
Alth
ough
cen
tral
pur
chas
ing
agre
emen
ts a
re m
ade
for
the
grou
p, i
t is
not
man
dato
ry
for
indi
vidu
al g
roup
s to
ord
er f
rom
thi
s lis
t of
supp
liers
. In
the
maj
ority
of
case
s, t
hese
ce
ntra
l co
ntra
cts
are
hono
ured
, and
it i
s on
ly b
ecau
se o
f ex
tenu
atin
g ci
rcum
stan
ces
that
a
divi
sion
wou
ld l
ook
else
whe
re f
or th
e pr
oduc
t.
In e
ach
of th
e B
TR
bus
ines
ses,
the
re i
s a
buye
r w
ho h
andl
es p
urch
asin
g fo
r th
at g
roup
w
ithin
the
cen
tral
pur
chas
ing
depa
rtm
ent
ther
e ar
e pu
rcha
sing
man
ager
s as
sign
ed t
o bu
y pr
oduc
ts i
n on
e pa
rtic
ular
are
a. T
hese
are
as
follo
ws:
Eng
inee
ring
E
nerg
y M
ater
ials
T
extil
es
Gro
up M
ater
ials
The
se c
entr
al b
uyer
s vi
ew t
he b
uyer
s w
ithin
the
ope
ratin
g gr
oups
as
thei
r cu
stom
ers.
W
ithin
BT
R,
purc
hasi
ng is
wel
l re
spec
ted,
and
is
view
ed a
s a
criti
cal
elem
ent
in B
TR
's pr
ofita
bilit
y.
The
mai
n re
ason
is
that
60%
of
turn
over
goe
s to
war
ds t
he p
urch
ase
of
new
equ
ipm
ent,
mat
eria
ls a
nd e
ngin
eeri
ng.
The
eff
ect
of p
urch
asin
g on
pro
fits
can
be
sign
ific
ant
and
is t
here
fore
mon
itore
d ve
ry
care
fully
. B
TR
hav
e a
com
pute
r sy
stem
whi
ch k
eeps
trac
k of
all
purc
hase
s be
ing
mad
e fo
r th
e gr
oup
and
the
tota
l co
st t
o th
e co
mpa
ny.
Thi
s no
t on
ly a
llow
s he
ad o
ffic
e to
se
e w
here
the
bud
get
is b
eing
spe
nt,
but
prov
ides
inf
orm
atio
n ne
cess
ary
to e
valu
ate
alte
rnat
ive
purc
hasi
ng s
trat
egie
s.
Cen
tral
buy
ers
will
ana
lyze
the
rep
orts
and
det
erm
ine
whi
ch p
rodu
cts
are
com
mon
ac
ross
gro
ups
but
not
curr
ently
pur
chas
ed c
entr
ally
. T
hey
will
the
n se
t up
a t
eam
of
buye
rs f
rom
tho
se g
roup
s to
beg
in l
ooki
ng a
t su
pplie
rs o
f th
at p
rodu
ct.
Alth
ough
the
pu
rcha
sing
cri
teri
a m
ay v
ary
from
one
com
pany
to
.mot
her,
it m
ay b
e po
ssib
le t
o fi
nd a
su
pplie
r w
ho m
ost
clos
ely
fits
the
nee
ds o
f th
e gr
oup.
E
ach
buye
rs c
ontr
ibut
ion
is
valu
ed,
and
it is
rec
ogni
sed
that
thei
r op
inio
n is
im
port
ant
to c
entr
al p
urch
asin
g.
The
cen
tral
buy
er i
s us
ually
ver
y kn
owle
dgea
ble
acro
ss a
var
iety
of
fiel
ds a
nd m
ay b
e ab
le t
o re
com
men
d co
st s
avin
g m
etho
ds t
o th
e op
erat
ing
com
pani
es.
His
vie
w i
s ge
nera
lly r
espe
cted
am
ong
the
smal
ler
com
pani
es.
Whe
n in
terv
iew
ed,
one
of t
he
cent
ral
mat
eria
ls m
anag
ers
stat
ed t
hat
he f
elt
that
his
job
was
to
save
tim
e fo
r th
e bu
yers
in
the
oper
atin
g co
mpa
nies
. H
e fe
lt th
at i
f he
can
ded
icat
e hi
s tim
e to
sor
ting
out
all o
f th
e co
mm
on p
rodu
cts
and
nego
tiatin
g th
e be
st o
ffer
it
wou
ld l
eave
the
buy
er
time
to s
pend
on
the
purc
hase
of
impo
rtan
t sp
ecia
lity
prod
ucts
. T
his
also
fits
in
nice
ly
\\iih
HI
R's
sir;ii
cg\
to i
edu
ce t
he t
otal
num
ber
of
supp
liers
tha
t th
ey c
urre
ntly
dea
l \v
nh
But
inx
/'/m
c'.s
\
(a)
Cen
tral
Pur
chas
ing
For
com
mod
ity p
rodu
cts
or
thos
e th
at a
re p
urch
ased
cen
tral
ly,
the
appr
opria
te c
entr
al
buye
r fir
st
obta
ins
prod
uct
requ
irem
ents
fr
om
the
oper
atin
g co
mpa
nies
. T
he
mai
n pa
rtic
ipan
ts f
rom
the
ope
ratin
g co
mpa
nies
are
as
follo
ws:
"Boffin
" E
ngin
eer
Mai
nten
ance
Eng
inee
r Le
ad B
uyer
(fr
om o
pera
!ing
com
pani
es)
Fin
ance
The
mor
e fa
mili
ar
the
cent
ral
purc
hasi
ng m
anag
er is
with
the
pro
duct
the
few
er p
eopl
e ac
tual
ly g
et i
nvol
ved.
If i
t is
a h
ighl
y sp
ecia
lised
pro
duct
, th
en t
he e
ngin
eers
wou
ld
have
the
ma
jority
of
the
say
rega
rdin
g its
spe
cific
atio
n.
The
sec
ond
stag
e o
f th
e bu
ying
pro
cess
is
the
sear
ch f
or
the
supp
lier.
T
he m
ajor
ity o
f su
pplie
rs
are
seen
by
th
e ce
ntra
l bu
yer
on
regu
lar
occa
sion
s.
Oth
ers
may
be
re
com
men
ded
by t
he t
echn
ical
gro
up t
hrou
gh t
heir
own
cont
acts
.
With
in
BT
R,
tech
nica
l pe
rson
nel
are
ofte
n th
e ke
y de
cisi
on
mak
ers
in
sele
ctin
g ve
ndor
s.
Alth
ough a
fin
al d
ecis
ion
may
be
mad
e in
a t
eam
env
ironm
ent,
the
mai
n in
fluen
cers
will
be
the
engi
neer
s.
The
mor
e te
chni
cal
or
spec
ialis
ed t
he p
rodu
ct,
the
grea
ter
thei
r in
fluen
ce t
hey
will
hav
e on
the
final
dec
isio
n.
Onc
e a
shor
t lis
t of
supp
liers
is
draw
n up
the
y ar
e in
vite
d to
ten
der
for
supp
lyin
g to
B
TR
. T
he s
elec
tion
proc
ess
is c
ompl
eted
as
a te
am w
ith t
he o
pini
ons
of
oper
atin
g co
mpa
nies
cou
ntin
g in
the
fin
al d
ecis
ion.
D
ue t
o th
e va
ryin
g ne
eds
of
each
gro
up,
disc
ussi
ons
will
tak
e pl
ace
amon
g th
e m
embe
rs t
o ag
ree
on t
he m
ost
suita
ble
supp
lier.
If
the
re a
re m
ajor
dis
agre
emen
ts,
the
cent
ral
purc
hasi
ng m
anag
er h
as t
he p
ower
to
mak
e th
e fin
al d
ecis
ion.
H
e w
ill b
ase
his
deci
sion
on
the
bene
fits
and
cost
s of
each
su
pp
lier
prop
osal
.
At
the
final
sta
ge,
the
cent
ral
purc
hasi
ng m
anag
er w
ill t
hen
nego
tiate
with
the
cho
sen
supp
lier/
supp
liers
fo
r th
e be
st c
ontr
act.
How
ever
, it
shou
ld b
e no
ted
that
eac
h gr
oup
is
not
boun
d to
use
cen
tral
ly s
elec
ted
supp
liers
. A
s a
resu
lt it
is i
n th
e ce
ntra
l bu
yers
in
tere
st t
o ca
nvas
and
lo
bby
the
opin
ions
of
grou
p bu
yers
. T
he c
entr
al
purc
hasi
ng
depa
rtm
ent's
aim
is
to d
eal
with
as
man
y of
the
shar
ed r
equi
rem
ents
acr
oss
all
grou
ps
as p
ossi
ble.
Thi
s pa
rt o
f th
e gr
oup'
s ex
pens
es i
s ap
prox
imat
ely
30%
of
the
tota
l sp
end.
T
he m
ajo
rity
of
the
spen
d (7
0%)
is o
n m
ore
spec
ialis
ed p
rodu
cts
like b
atte
ry b
oxes
and
ch
emic
als,
req
uirin
g a
grea
t de
al o
f at
tent
ion
from
the
gro
up b
uyer
s. T
he t
rend
is
to
alle
viat
e tim
e sp
ent
on s
hare
d pu
rcha
ses
by g
roup
buy
ers
to a
llow
the
m t
o co
ncen
trat
e on
monito
ring t
he s
pend
in
the
larg
er s
ecto
r.
(b)
Cen
tral
Con
trac
t R
evie
w
As
men
tione
d in
the
Nat
iona
l P
ower
cas
e st
udy,
cen
tral
con
trac
ts c
an b
e pr
oble
mat
ic i
f in
divi
dual
gro
ups
do n
ot o
rder
aga
inst
the
m.
As
with
mos
t la
rge
com
pani
es,
thes
e co
ntra
cts
are
set
up a
s a
serv
ice
to t
he s
mal
ler
grou
p's
buye
rs.
The
y sh
ould
allo
w t
he
oper
atin
g co
mpa
nies
to
save
tim
e in
sel
ectin
g su
pplie
rs a
nd
nego
tiatin
g pr
ices
, fo
r th
ese
prod
ucts
. T
he c
ontr
acts
are
not
man
dato
ry,
but
it is
the
ben
efits
of
savi
ng t
ime
and
mon
ey t
hat
shou
ld e
ncou
rage
the
buy
ers
from
ope
ratin
g co
mpa
nies
to
purc
hase
fr
om
the
se c
ontr
acts
.
BT
R h
as s
et u
p a
mon
itorin
g sy
stem
whi
ch l
ets
them
mea
sure
the
suc
cess
of
thes
e co
ntra
cts.
A
ll pu
rcha
ses
from
al
l co
mpa
nies
ar
e st
ored
on
a
cent
ral
com
pu
ter
data
base
. T
his
sys
tem
pro
vide
s th
e in
form
atio
n ne
cess
ary
to m
easu
re t
he f
ulfi
lments
of
cent
rally
agr
eed
cont
ract
s. F
or e
xam
ple,
a y
early
con
trac
t w
ith a
sup
plie
r m
ay b
e ba
sed
on a
nnua
l co
nsum
ptio
n of
2.5M
litr
es o
f pr
oduc
t. If
the
cen
tral
buy
er c
an m
on
itor
the
quar
terly
usa
ge a
gain
st t
his
tota
l th
ey c
an d
eter
min
e ho
w m
uch
of
the
prod
uct
is b
eing
or
dere
d ag
ains
t th
e co
ntra
ct,
and
alte
rnat
ivel
y,
how
muc
h is
bei
ng s
uppl
ied
by o
ther
ve
ndor
s.
The
re m
ay b
e ot
her
reas
ons
for
the
amou
nt p
urch
ased
to
be u
nder
tar
get,
for
exam
ple
a sl
ow d
own
in m
anuf
actu
ring.
If t
he f
igur
e is
due
to
gro
ups
usin
g ot
her
supp
liers
, th
e ce
ntra
l bu
yer w
ill u
sual
ly in
vest
igat
e to
see
k ou
t th
e re
ason
. It
may
be
that
the
sup
plie
r ha
s no
t pr
ovid
ed t
he l
evel
of
serv
ice
that
the
com
pany
is
look
ing
for
or
that
the
y ha
ve
had
prob
lem
s w
ith o
ne o
f th
e pr
oduc
ts.
If t
oo m
any
oper
atin
g co
mpa
nies
cho
ose
to
purc
hase
out
side
the
cen
tral
con
trac
ts i
t jeo
pard
ises
the
op
po
rtu
nity
to
get
anot
her
low
pr
ice
for
the
prod
uct
whe
n th
e ag
reem
ent c
omes
up
for
rene
wal
.
(c)
Pla
nt a
nd E
quip
men
t
The
de
cisi
on
to
mak
e a
larg
e ca
pita
l in
vest
men
t fo
r th
e pu
rcha
se
of
plan
t an
d eq
uipm
ent
is a
mor
e co
mpl
ex p
roce
ss t
han
that
car
ried
out
for
com
mod
ity p
urch
ases
. T
he p
roce
ss i
s m
ore
invo
lved
and
usu
ally
req
uire
s a
grea
ter
num
ber
of
indi
vidu
als
to
part
icip
ate.
T
his
is m
ainl
y du
e to
the
rel
ativ
e ca
pita
l in
vest
men
t us
ually
req
uire
d to
m
ake
such
a p
urch
ase
and
the
repe
rcus
sion
s it
may
hav
e on
mai
nten
ance
, p
rod
uct
ion
an
d th
e w
ork
for
ce.
The
first
ste
p to
a c
apita
l pu
rcha
se i
s th
e re
cogn
ition
of
a pr
oble
m.
Thi
s is
usu
ally
br
ough
t to
atte
ntio
n by
an
engi
neer
who
may
be
conc
erne
d w
ith i
mpro
ving e
ffici
ency
, o
r pe
rhap
s co
st-c
uttin
g. O
nce
this
pro
blem
is
ackn
owle
dged
by
the
com
pany
, a
team
is
form
ed a
nd u
sual
ly c
onsi
sts
of
mem
bers
from
the
follo
win
g le
vels
:D
irect
or
Fin
anci
al P
erso
nP
urch
asin
g M
anag
erE
ngin
eer
(Boffin
- t
heor
etic
al b
ased
)M
aint
enan
ce
Eng
inee
r
All
capi
tal
inve
stm
ent
purc
hase
s m
ust
mee
t B
TR
's s
trin
gent
pay
back
crite
ria b
efor
e th
ey a
re a
ccep
ted
as a
via
ble
prop
ositi
ons.
The
tea
m w
ill t
hen
deci
de t
he s
peci
ficat
ions
of
the
purc
hase
and
the
est
imat
ed c
osts
inv
olve
d in
ord
er t
o pr
epar
e th
emse
lves
fo
r th
eir
pres
enta
tion
to t
he b
oard
. A
ll la
rge
capi
tal
inve
stm
ents
, ne
ed t
o ga
in f
ull
boar
d ap
prov
al f
or
the
purc
hase
to
go a
head
.
Onc
e ap
prov
al t
akes
pla
ce,
the
lear
n pr
ocee
ds w
ilh s
uppl
ier
sele
ctio
n.
Gen
eral
ly i
t w
ould
be
the
engi
neer
and
mai
nten
ance
eng
inee
r w
ho w
ould
be
mos
t in
volv
ed a
t th
is
stag
e IT
ie o
ther
mem
bers
wou
ld b
e m
ore
activ
e in
lat
er s
tage
s of
the
buy
ing
proc
ess.
Sa
les
repr
esen
tativ
es
from
ea
ch
supp
lier
wou
ld
then
be
ca
lled
into
m
eet
thes
e in
divi
dual
s an
d to
pre
sent
in
form
atio
n on
the
pro
duct
and
ser
vice
s th
at t
hey
coul
d pr
ovid
e T
he p
urch
asin
g m
anag
er i
s un
likel
y to
eff
ect
the
choi
ce o
f su
pplie
r bu
t pl
ays
a vi
tal
role
in
the
nego
tiatio
n an
d im
plem
enta
tion
of th
e ca
pita
l pu
rcha
se.
Whi
le t
he d
ecis
ion
proc
ess
is on
goin
g, t
here
is
an i
mpl
emen
tatio
n te
am f
orm
ed.
Thi
s te
am i
s no
rmal
ly l
arge
r th
an t
he p
urch
ase
deci
sion
tea
m.
The
pur
chas
ing
man
ager
ge
nera
lly m
anag
es t
his
com
mitt
ee,
setti
ng s
ched
ules
and
mak
ing
sure
eve
ry d
etai
l is
take
n in
to c
onsi
dera
tion.
The
com
plex
ity o
f th
is p
urch
ase
was
em
phas
ised
thr
ough
out
the
inte
rvie
w.
It w
as a
lso
evid
ent
that
the
pur
chas
e of
cap
ital
equi
pmen
t ta
kes
a si
gnif
ican
t am
ount
of
time
and
invo
lves
a
larg
e nu
mbe
r of
peo
ple
thro
ugho
ut
the
orga
nisa
tion
Sour
cing
and
Sup
plie
r Se
lect
ion
BT
R's
stra
tegy
is
to r
atio
nalis
e th
eir
supp
liers
and
red
uce
the
num
bers
acr
oss
all
grou
ps.
Wes
tingh
ouse
Bra
kes
for
exam
ple,
had
12
00 s
uppl
iers
con
nect
ed w
ith t
heir
pr
oduc
tion
in 1
990.
B
y Ju
ly 1
992
thei
r to
tal
drop
ped
to 8
00 w
ith a
fur
ther
dro
p to
40
0 in
199
3 an
d 25
0 by
199
4.
BT
R t
end
to m
ultip
le s
ourc
e pr
oduc
ts w
hich
are
spe
cial
ised
or
tech
nica
lly c
ompl
icat
ed.
For
exam
ple
if a
prod
uct
is o
nly
in s
uppl
y fr
om t
wo
com
pani
es,
BT
R w
ill s
et u
p ag
reem
ents
fro
m b
oth
of t
hese
firm
s.
The
rea
sons
as
expl
aine
d by
the
m
ater
ials
m
anag
ers
wer
e th
at i
t off
ers
secu
rity
in
case
one
of
the
supp
liers
go
out
of b
usin
ess.
It
also
w
orks
in
re
vers
e,
prev
entin
g on
e fir
m
from
go
ing
unde
r th
us
prom
otin
g co
mpe
tiven
ess.
If
the
pro
duct
is
not
spec
ialis
ed o
r co
mpl
ex
in
natu
re,
BT
R
will
ge
nera
lly s
ingl
e so
urce
. T
hey
will
com
plet
e an
ana
lysi
s of
the
ir n
eeds
and
id
eally
ch
oose
just
one
sup
plie
r to
pro
vide
all
of th
e or
ders
.
(a)
Cen
tral
ised
Sup
plie
r Sel
ectio
n
With
in
the
cent
ral
purc
hasi
ng
func
tion,
th
e pu
rcha
sing
man
ager
s ex
pect
th
at
any
vend
or i
nter
este
d in
doi
ng b
usin
ess
with
BT
R w
ill a
rran
ge a
n ap
poin
tmen
t w
ith t
hem
. T
hey
are
not
aver
se t
o se
eing
rep
rese
ntat
ives
fro
m c
ompa
nies
who
are
not
cur
rent
ly
supp
lyin
g B
TR
. T
he o
ne c
rite
ria
whi
ch c
entr
al b
uyer
s ha
ve r
egar
ding
new
ven
dors
is
that
if
they
are
int
eres
ted
in p
rovi
ding
a p
rodu
ct t
o al
l gr
oups
the
y m
ust
have
the
ca
pabi
litie
s in
hou
se t
o do
so.
B
TR
do
not
wis
h to
com
mit
to a
sup
plie
r w
ho i
s on
ly
plan
ning
to e
xpan
d th
eir
com
pany
onc
e th
ey a
re g
uara
ntee
d to
con
trac
t.
The
re a
re t
wo
mai
n st
ages
whi
ch t
ake
plac
e in
ven
dor
sele
ctio
n.
Firs
tly,
the
cent
ral
buye
r w
ill d
ecid
e w
hat
prod
ucts
are
com
mon
am
ongs
t th
e sm
alle
r gr
oups
. T
hen
a co
mm
ittee
con
sist
ing
of b
uyer
s an
d us
ually
tec
hnic
al s
peci
alis
ts (
engi
neer
s)
will
be
fo
rmed
. It
is t
his
com
mitt
ee t
hat
will
ass
ess
viab
le s
uppl
iers
. In
som
e ca
ses
it m
ay n
ot
be n
eces
sary
to
esta
blis
h a
com
mitt
ee.
In t
his
inst
ance
, th
e ce
ntra
l pu
rcha
sing
man
ager
w
ould
sel
ect
the
mos
t su
itabl
e ve
ndor
bas
ed o
n th
e te
chni
cal
spec
ific
atio
ns s
ubm
itted
by t
he e
ngin
eers
.
In
som
e in
stan
ces
supp
liers
ha
ve
been
in
heri
ted
thro
ugh
acqu
isiti
ons.
C
ompa
nies
jo
inin
g th
e B
TR
gro
up a
re u
sual
ly a
llow
ed t
o ke
ep t
heir
exi
stin
g su
pplie
rs i
n th
e sh
ort
term
. E
vent
ually
the
y ar
e ch
ange
d ov
er t
o su
pplie
rs w
ith c
entr
al
BT
R a
gree
men
ts.
Dur
ing
inte
rvie
ws
it be
cam
e ev
iden
t th
at f
or a
sup
plie
r to
do
busi
ness
with
BT
R,
they
m
ust
be a
ble
to p
rovi
de a
hig
h de
gree
of
serv
ice
and
qual
ity,
an i
mpo
rtan
t pa
rt o
f th
is
is th
at t
hey
will
be
expe
cted
to h
ave
the
faci
litie
s to
sup
ply
and
serv
ice
the
entir
e gr
oup
if th
ey a
re i
nter
este
d in
a c
entr
al a
gree
men
t.
(b)
Ven
dor
Rev
iew
With
in B
TR
the
re i
s a
vend
or r
atin
g sy
stem
whi
ch
mea
sure
s su
pplie
rs a
gain
st t
he
follo
win
g cr
iteri
a: Del
iver
yQ
ualit
yPr
ice
Agr
eem
ents
Sale
s L
iais
onT
echn
ical
Ass
ista
nce/
Prob
lem
Sol
ving
Eac
h ve
ndor
is
scor
ed o
n ea
ch c
rite
ria
with
the
res
ults
bei
ng u
sed
to r
evie
w t
heir
pe
rfor
man
ce a
nd t
o m
ake
chan
ges
to c
ontr
acts
whe
n th
ey c
ome
up f
or r
enew
al
If a
ve
ndor
has
per
form
ed e
xcep
tiona
lly w
ell
com
pare
d to
the
ir c
ompe
titor
s th
ey m
ay b
e re
war
ded
with
a l
arge
r po
rtio
n of
bus
ines
s in
any
new
con
trac
t. T
his
show
s a
fairl
y so
phis
ticat
ed s
elec
tion
proc
edur
e, c
once
rned
with
per
form
ance
rat
her
than
jus
t be
ing
able
to p
rovi
de t
he l
owes
t pr
ice.
BIC
C C
AB
LE
S
Com
pany
Bac
kgro
und
BIC
C C
able
s is
one
of
the
wor
ld's
maj
or c
able
man
ufac
ture
rs a
nd f
orm
s pa
rt o
f th
e w
orld
wid
e en
gine
erin
g co
ncer
n, t
he B
ICC
Gro
up.
BIC
C C
able
s, m
arke
ts,
desi
gns,
m
anuf
actu
res
and
inst
alls
cab
les
and
cabl
esys
tem
s fo
r th
e tr
ansm
issi
on o
f in
form
atio
n an
d en
ergy
in
a w
ide
vari
ety
of m
arke
ts.
The
se i
nclu
de t
rans
port
, co
nstr
uctio
n, d
ata
and
tele
com
mun
icat
ions
, ele
ctro
nics
, de
fenc
e, a
eros
pace
and
ele
ctri
city
sup
ply.
Pur
chas
ing
Stru
ctur
e
Purc
hasi
ng
with
in
BIC
C
is
stru
ctur
ed
into
tw
o le
vels
. C
omm
on
prod
ucts
ar
e pu
rcha
sed
cent
rally
and
spe
cifi
c pr
oduc
ts a
re p
urch
ased
by
indi
vidu
al u
nits
.
Thi
s st
ruct
ure
was
in
trod
uced
ap
prox
imat
ely
thre
e an
d a
half
ye
ars
ago
whe
n in
divi
dual
gro
ups
wer
e gi
ven
grea
ter
auto
nom
y an
d m
ade
resp
onsi
ble
for
thei
r ow
n pr
ofits
. A
s w
ith
BT
R
and
Nat
iona
l Po
wer
the
cen
tral
pu
rcha
sing
gro
up s
end
out
tend
ers
to a
sho
rt l
ist
of s
uppl
iers
to
bid
for
an i
ndiv
idua
l co
ntra
ct.
Con
trac
ts a
re t
hen
nego
tiate
d w
ith s
elec
ted
com
pani
es a
nd m
ade
avai
labl
e to
all
site
s. T
hrou
ghou
t th
is
proc
ess
ther
e is
a
sign
ific
ant
infl
uenc
e fr
om t
echn
ical
pe
rson
nel.
The
y w
ill
usua
lly
prov
ide
spec
ific
atio
ns f
or t
he c
entr
ally
pur
chas
ed
prod
ucts
and
w
ill o
ften
fo
rwar
d na
mes
of
supp
liers
who
they
fee
l co
uld
com
pete
for
the
cont
ract
.
C'e
ntia
l pu
rcha
sing
will
als
o co
nsul
t bu
yers
with
in e
ach
site
bef
ore
mak
ing
any
final
de
cisi
ons.
It
is im
port
ant
to g
ain
thei
r ap
prov
al t
o av
oid
an)
poss
ibili
ty o
f re
ject
ion
once
the
con
trac
t ha
s be
en a
gree
d.
Buy
ing
Pru
t ess
BIC
C h
ave
deve
lope
d fo
rmal
pro
cedu
res
for
the
purc
hase
of
plan
t an
d eq
uipm
ent
and
are
curr
ently
dev
elop
ing
wri
tten
proc
edur
es f
or o
ther
typ
es o
f pu
rcha
ses.
T
hey
feel
th
at i
t is
im
port
ant
to s
tand
ardi
se p
roce
dure
s ac
ross
all
grou
ps.
The
y al
so a
ppre
ciat
e th
at t
here
will
be
indi
vidu
al p
urch
asin
g st
yles
with
in e
ach
grou
p bu
t be
lieve
tha
t it
will
be
mor
e pr
ofes
sion
al t
o su
pplie
rs if
pro
cedu
res
are
cons
iste
nt.
Hav
ing
a ce
ntra
l pu
rcha
sing
dep
artm
ent
as w
ell
as d
ecen
tral
ised
buy
ers
has
ofte
n cr
eate
d a
degr
ee o
f co
nflic
t. T
he d
ecen
tral
ised
buy
ers
like
to r
etai
n co
ntro
l an
d do
not
ap
prec
iate
in
terf
eren
ce
from
ce
ntra
l pu
rcha
sing
. If
this
co
nflic
t is
no
t ca
refu
lly
man
aged
, th
e be
nefi
ts
gain
ed
from
ce
ntra
l co
ntra
cts
will
be
lo
st
as
a re
sult
of
dece
ntra
lised
buy
ers
seek
ing
alte
rnat
ive
supp
liers
.
For
larg
e ca
pita
l pu
rcha
ses
like
mac
hine
ry t
he p
roce
dure
s ar
e id
entic
al t
o th
at o
f B
TR
In
dust
ries
. A
n en
gine
er r
ecog
nise
s a
need
for
the
pur
chas
e an
d a
mul
ti-di
scip
linar
y te
am p
rese
nt t
o a
boar
d fo
r ap
prov
al.
Supp
lier
sele
ctio
n is
co-o
rdin
ated
pri
mar
ily b
y en
gine
ers
or t
echn
ical
per
sonn
el,
purc
hasi
ng t
ends
to
beco
me
mor
e in
volv
ed o
nce
a su
pplie
r ha
s be
en a
gree
d up
on.
The
ir m
ain
role
s ar
e to
neg
otia
te p
rice
s an
d co
ntra
ct
cond
ition
s
(a)
Cen
tral
Pur
chas
ing
Dec
isio
n M
akin
g
The
mai
n de
cisi
on m
aker
for
cen
tral
ly p
urch
ased
pro
duct
s is
the
cent
ral
purc
hasi
ng
man
ager
. H
e ha
s th
e po
wer
to
enlis
t ne
w s
uppl
iers
if
he i
s un
happ
y w
ith c
urre
nt
serv
ice.
H
e do
es n
ot n
eed
the
grou
p bu
yer's
aut
hori
ty t
o m
ake
this
cha
nge.
H
owev
er,
to a
void
pot
entia
l co
nflic
t, th
e pu
rcha
sing
man
ager
will
nor
mal
ly c
onsu
lt w
ith o
ne o
r m
ore
grou
p bu
yers
to
disc
uss
any
chan
ges.
Eng
inee
rs,
or t
hose
in
a te
chni
cal
role
are
fre
quen
tly t
he k
ey i
nflu
ence
s an
d of
ten
the
end
deci
sion
mak
ers.
T
hey
are
high
ly i
nflu
entia
l an
d if
they
do
not
like
a pa
rtic
ular
su
pplie
r fo
r w
hate
ver
reas
on t
hey
can
prev
ent
that
sup
plie
r fr
om d
oing
bus
ines
s w
ith
BIC
C.
The
rel
atio
nshi
p be
twee
n te
chni
cal
and
purc
hasi
ng s
peci
alis
ts h
as d
evel
oped
ov
er t
he l
ast
few
yea
rs.
Prev
ious
ly t
here
was
a
lack
of
cons
ulta
tion
betw
een
the
engi
neer
ing
grou
p an
d pu
rcha
sing
. T
he v
iew
at
BIC
C i
s th
at t
his
rela
tions
hip
is c
ruci
al
to s
ucce
ss a
nd s
houl
d be
as
clos
e an
d in
tegr
ated
as
a go
od m
arri
age.
The
com
pany
be
lieve
s th
at c
lose
col
labo
ratio
n be
twee
n th
e tw
o pr
ofes
sion
s m
axim
ises
the
com
pany
's pu
rcha
sing
per
form
ance
.
Purc
hasi
ng a
lso
belie
ve t
hat
they
can
ben
efit
from
inv
olve
men
t in
the
ear
lier
stag
es o
f th
e de
cisi
on-m
akin
g pr
oces
s.
Thi
s co
uld
give
the
m t
he o
ppor
tuni
ty t
o ga
in t
echn
ical
kn
owle
dge
as w
ell
as in
crea
se th
eir
awar
enes
s of
the
prod
uct.
BIC
C
cent
ral
purc
hasi
ng f
eel
that
it
is
impo
rtan
t fo
r th
e bu
yers
an
d pu
rcha
sing
m
anag
ers
to b
e te
chni
cally
com
pete
nt s
o th
at t
hey
can
com
mun
icat
e ef
fect
ivel
y w
ith
engi
neer
s an
d op
erat
ors.
(b)
Dec
entr
alis
ed P
urch
asin
g D
ecis
ion
Proc
ess
All
com
pani
es w
ere
mad
e in
to i
ndiv
idua
l pr
ofit
cent
res
a sh
ort
time
ago
and
are
now
re
spon
sibl
e fo
r th
eir
own
purc
hasi
ng .
As
a re
sult
they
hav
e th
e po
wer
to
deal
with
an
y su
pplie
rs t
hat
they
cho
ose.
Pr
oduc
ts w
hich
are
inc
lude
d in
cen
tral
ly n
egot
iate
d co
ntra
cts
will
be
orde
red
from
the
cor
resp
ondi
ng s
uppl
iers
.
Eac
h gr
oup
will
hav
e a
diff
eren
t se
t of
inf
luen
ces.
W
ithin
som
e gr
oups
, th
e po
wer
of
the
tech
nica
l m
anag
ers
dom
inat
es t
hat
of t
he b
uyer
. T
hese
inc
onsi
sten
cies
are
bei
ng
look
ed a
t by
hea
d of
fice
to
see
whe
ther
the
re a
re a
dvan
tage
s of
one
situ
atio
n ov
er
anot
her,
Sour
cing
and
Sup
plie
r Se
lect
ion
Inte
rvie
wee
s in
dica
ted
that
BIC
C p
refe
r to
use
mul
tiple
sou
rcin
g an
d ge
nera
lly h
ave
cent
ral
purc
hasi
ng a
gree
men
ts w
ith t
wo
or,
if ne
cess
ary,
thr
ee s
uppl
iers
for
the
sam
e pr
oduc
t. A
ccor
ding
to
the
com
pany
, m
ultip
le s
ourc
ing
prev
ents
com
plac
ency
am
ongs
t su
pplie
rs.
The
re i
s a
feel
ing
that
if
two
com
pani
es a
re s
uppl
ying
the
sam
e pr
oduc
t, th
eir
pric
es w
ill b
e hi
ghly
com
petit
ive
and
they
will
bot
h pr
ovid
e B
ICC
with
ade
quat
e le
vels
of
serv
ice.
(a)
Supp
lier
Sele
ctio
n
To
sele
ct a
sup
plie
r fo
r a
prod
uct
whi
ch i
s be
ing
purc
hase
d ce
ntra
lly f
or t
he f
irst
tim
e,
a se
lect
ion
com
mitt
ee i
s fo
rmed
. T
his
com
mitt
ee c
onsi
sts
of 3
buy
ers
and
the
cent
ral
purc
hasi
ng m
anag
er w
ho w
ork
toge
ther
as
a te
am i
n th
e se
lect
ion
proc
ess.
The
buy
ers
will
gen
eral
ly c
onsu
lt w
ith t
heir
eng
inee
rs t
o ga
in i
nfor
mat
ion
rega
rdin
g th
e le
adin
g su
pplie
rs i
n th
e m
arke
t an
d to
be
brie
fed
on t
he t
echn
ical
spe
cifi
catio
ns o
f th
e pr
oduc
t. T
he e
ngin
eers
ten
d to
gai
n aw
aren
ess
of s
uppl
iers
as
a re
sult
of t
heir
reg
ular
co
ntac
t w
ith s
ales
rep
rese
ntat
ives
. T
his
rein
forc
es t
he i
mpo
rtan
ce o
f te
chni
cal
sale
s co
ntac
ts in
thi
s se
lling
env
iron
men
t.
The
mai
n cr
iteri
a fo
r su
pplie
r se
lect
ion
is re
puta
tion.
B
ICC
are
not
ris
k-ta
kers
and
pr
efer
to
deal
with
oth
er m
ajor
com
pani
es w
ho o
ffer
the
sec
urity
of
thei
r ex
peri
ence
an
d qu
ality
pro
duct
s.
Del
iver
y is
als
o fe
lt to
be
impo
rtan
t du
e to
BIC
C's
use
of J
ust
in
Tim
e op
erat
ions
. T
he c
ompa
ny d
epen
ds u
pon
thei
r su
pplie
rs
to
prod
uce
qual
ity
prod
ucts
whi
ch d
o no
t re
quir
e in
-hou
se q
ualit
y co
ntro
l ch
ecks
pri
or t
o pr
oces
sing
. T
he
cent
ral
purc
hasi
ng m
anag
er f
elt
that
pri
ce w
as a
n im
port
ant
issu
e bu
t w
ould
nev
er b
e th
e co
mpa
ny's
sole
cri
teri
a fo
r sup
plie
r sel
ectio
n.
For
cent
rally
pur
chas
ed r
ebuy
s. t
he p
urch
asin
g m
anag
er w
ill m
eet
with
a v
arie
ty o
f su
pplie
rs b
efor
e pr
oduc
ing
his
shor
t lis
t fo
r te
nder
or
rene
win
g an
exi
stin
g ag
reem
ent.
BIC
C d
o no
t ob
ject
to
seei
ng r
epre
sent
ativ
es f
rom
com
pani
es t
hey
are
not
doin
g bu
sine
ss w
ith.
The
y fe
el i
t ne
cess
ary
to k
eep
up-t
o-da
te w
ith t
he i
ndus
try
and
to b
e aw
are
of w
hat
othe
r su
pplie
rs c
an o
ffer
. H
owev
er,
as d
iscu
ssed
ear
lier
the
com
pany
w
ill g
ener
ally
sta
y w
ith t
he m
ajor
com
pani
es f
or th
eir
supp
lies.
BIC
C a
re f
airl
y so
phis
ticat
ed i
n th
eir
appr
oach
to
supp
liers
. T
hey
do n
ot v
iew
the
m a
s ri
vals
but
bel
ieve
in
deve
lopi
ng a
par
tner
ship
tha
t be
nefi
ts b
oth
supp
lier
and
cust
omer
. B
efor
e th
e in
trod
uctio
n of
thi
s ph
iloso
phy
buye
rs l
ooke
d fo
rwar
d to
har
d ne
gotia
tions
with
all
supp
liers
, hm
ve\e
r no
w t
hey
will
eve
n im
plem
ent
"rev
erse
mar
ketin
g"
and
appr
oach
su
pplie
rs
to d
e\el
op
prod
ucts
spe
cial
ly
for
the
com
pany
. T
his
"rev
erse
m
arke
ting"
has
inc
reas
ed o
ver
the
last
few
yea
rs a
nd B
ICC
now
bel
ieve
the
y ha
ve
bene
fite
d si
gnif
ican
tly f
rom
the
ir c
lose
rel
atio
nshi
p w
ith k
ey s
uppl
iers
.
All
supp
lier
cont
ract
s ar
e re
view
ed r
egul
arly
to
optim
ise
thei
r pe
rfor
man
ce.
Ope
n co
mm
unic
atio
n is
a po
licy
that
BIC
C h
ave
with
thei
r su
pplie
rs.
Upd
atin
g th
e Bu
y gr
id F
ram
ewor
k or
is it
bey
ond
repa
ir
Info
rmat
ion
gain
ed f
rom
thi
s re
sear
ch h
as p
rovi
ded
insi
ght
into
a n
umbe
r of
dif
fere
nt
purc
hasi
ng s
ituat
ions
and
ha
s hi
ghlig
hted
a n
umbe
r of
key
poi
nts
that
buy
ing
and
selli
ng o
rgan
isat
ions
sho
uld
be m
ore
awar
e of
. T
he f
ollo
win
g is
a s
umm
ary
of t
he k
ey
obse
rvat
ions
:.
Cor
pora
te R
estr
uctu
ring
: th
e re
stru
ctur
ing
of a
gro
up c
an c
ause
a m
ajor
shi
ft i
n pu
rcha
sing
pro
cess
es.
Purc
hasi
ng S
truc
ture
: th
ere
is a
pla
ce f
or b
oth
cent
ralis
ed a
nd d
ecen
tral
ised
pu
rcha
sing
fun
ctio
ns w
ithin
a g
roup
, but
the
inh
eren
t con
flic
t m
ust
be c
aref
ully
m
anag
ed.
Mod
els
and
Fram
ewor
ks:
conv
entio
nal
"buy
ing
beha
viou
r" f
ram
ewor
ks a
re
diff
icul
t to
app
ly i
n pr
actic
e du
e to
the
blur
ring
of
purc
hasi
ng r
oles
.
Supp
liers
Par
tner
ship
s: m
ost p
rogr
essi
ve c
ompa
nies
app
ear
to b
e in
crea
sing
ly
invo
lved
in
supp
lier
part
ners
hips
.
Tec
hnic
al a
nd P
urch
asin
g R
elat
ions
hips
: go
od i
nter
nal
rela
tions
hips
bet
wee
n te
chni
cal
and
purc
hasi
ng s
peci
alis
ts a
re e
ssen
tial
for e
ffec
tive
purc
hasi
ng in
an
engi
neer
ing
envi
ronm
ent.
Cor
pora
te R
estr
uctu
ring
: th
e re
stru
ctur
ing
of a
gro
up c
an c
ause
a m
ajor
shi
ft i
n pu
rcha
sing
pro
cess
es
As
the
com
petit
ive
envi
ronm
ent
chan
ges
mos
t co
mpa
nies
ada
pt b
y re
stru
ctur
ing
whi
ch
can
ofte
n be
co
ntin
uous
or
cy
clic
al
in
natu
re.
Com
pani
es
may
al
so
expe
rien
ce
rest
ruct
urin
g th
roug
h ac
quis
ition
, pr
ivat
isat
ion,
ra
tiona
lisat
ion
or
even
th
roug
h ta
keov
er a
nd j
oint
ven
ture
. D
epar
tmen
ts w
ithin
the
org
anis
atio
n m
ay
lose
or
gain
re
spon
sibi
litie
s de
pend
ing
upon
the
deg
ree
of c
hang
e.
Thi
s w
ill o
ften
res
ult
in c
hang
es
bein
g m
ade
rega
rdin
g co
mpa
ny p
erso
nnel
and
con
sequ
ently
buy
ing
beha
viou
r.
As
was
out
lined
in
the
thre
e ca
se s
tudi
es,
priv
atis
atio
n ca
n ca
use
a ch
ange
in
the
valu
e an
d cu
lture
of
a co
mpa
ny.
In o
rder
to
surv
ive
chan
ge,
com
pani
es m
ust
adap
t to
new
m
etho
ds a
nd b
elie
fs.
The
se n
ew m
etho
ds c
an h
ave
a di
rect
eff
ect
on t
he c
ompa
ny's
purc
hasi
ng p
olic
ies,
rew
ard
syst
ems
and
fina
lly t
heir
pur
chas
ing
crite
ria.
It is
im
port
ant
for
selli
ng c
ompa
nies
to
be a
war
e of
the
im
plic
atio
ns r
estr
uctu
ring
can
ha
ve o
n th
e pu
rcha
sing
fu
nctio
n w
ithin
th
ese
com
pani
es.
If
supj
j^je
rs
wer
e no
t
mon
itori
ng
the
impa
ct
of g
over
nmen
t po
licy
and
the
cons
eque
nt
chan
ges
in
the
stru
ctur
e of
Nat
iona
l Po
wer
, th
ey w
ould
not
be
in d
irec
t co
ntac
t w
ith t
he i
ndiv
idua
l po
wer
sta
tions
and
wou
ld l
ose
valu
able
sal
es.
Whe
n jo
b re
spon
sibi
litie
s ch
ange
so
may
the
mai
n co
ntac
ts o
f th
e sa
les
orga
nisa
tion,
it
is c
ritic
al f
or s
ellin
g or
gani
satio
ns t
o be
cau
tious
abo
ut b
ecom
ing
over
dep
ende
nt u
pon
rela
tions
hips
with
in t
he b
uyin
g or
gani
satio
n.
A p
urch
asin
g ag
reem
ent
once
bas
ed o
n th
e pe
rson
al r
elat
ions
hip
betw
een
a bu
yer
and
selle
r m
ay b
e m
ade
redu
ndan
t th
roug
h ch
ange
s in
per
sonn
el a
nd o
r re
stru
ctur
ing.
Buy
ing
crite
ria
may
als
o be
aff
ecte
d by
a c
ompa
ny r
estr
uctu
ring
. T
he e
mph
asis
may
ch
ange
fro
m p
urch
asin
g pr
oduc
ts w
hich
may
be
of m
ediu
m q
ualit
y an
d in
expe
nsiv
e to
on
e th
at r
egar
ds q
ualit
y as
the
mos
t im
port
ant
buyi
ng c
rite
ria.
Tre
nds
in m
anuf
actu
ring
pl
ants
ad
optin
g Ja
pane
se o
pera
tion
met
hods
can
af
fect
the
bu
ying
cri
teri
a of
the
pu
rcha
sing
dep
artm
ent.
If th
e se
ller
is n
ot a
war
e of
the
se c
hang
es,
he m
ay f
ind
his
deliv
ery
lead
tim
es a
re
now
in
adeq
uate
to
mee
t th
e de
man
ds o
f th
e ne
w
buyi
ng
orga
nisa
tion
stru
ctur
e.
Res
truc
turi
ng c
an a
lso
have
a d
irec
t ef
fect
upo
n th
e w
ay t
he c
ompa
ny s
truc
ture
s th
eir
purc
hasi
ng f
unct
ion.
A
cqui
sitio
ns m
ay l
ead
to a
com
pany
buy
ing
cent
rally
in
orde
r to
be
nefi
t fr
om d
isco
unts
ava
ilabl
e fo
r vo
lum
e pu
rcha
ses
whi
le a
noth
er c
ompa
ny m
ay
deci
de t
o do
the
opp
osite
and
dec
entr
alis
e th
eir
buyi
ng f
unct
ion
in o
rder
for
it
to b
e cl
oser
to
the
man
ufac
turi
ng s
ite.
From
the
ven
dor's
per
spec
tive,
the
se t
wo
type
s of
pu
rcha
sing
fun
ctio
ns w
ill r
equi
re s
igni
fica
ntly
dif
fere
nt s
ellin
g st
rate
gies
. T
hey
may
ea
ch i
nvol
ve d
iffe
rent
peo
ple
from
the
buy
ing
orga
nisa
tion
buyi
ng p
roce
sses
and
may
ha
ve d
iffe
rent
buy
ing
crite
ria.
Pur
chas
ing
Stru
ctur
e: t
here
is
a pl
ace
for
both
cen
tral
ized
and
dec
entr
aliz
ed
purc
hasi
ng f
unct
ions
wit
hin
a gr
oup,
but
the
inh
eren
t co
nflic
t m
ust
be c
aref
ully
m
anag
ed.
The
str
uctu
re o
f th
e pu
rcha
sing
func
tion
is d
epen
dent
upo
n a
num
ber o
f fa
ctor
s.
com
pany
str
uctu
renu
mbe
r of
prod
ucts
pur
chas
edte
chni
cal
natu
re o
f th
e pr
oduc
tspr
oduc
t dem
and
impo
rtanc
e of
pur
chas
ing
func
tion
If th
ere
is on
ly o
ne p
rofit
cen
tre
with
in a
com
pany
, the
re w
ill g
ener
ally
be
a ce
ntra
lised
bu
ying
fun
ctio
n. T
his
allo
ws
the
orga
nisa
tion
to h
ave
tota
l co
ntro
l ov
er t
he p
urch
asin
g bu
dget
with
the
pos
sibi
lity
of d
isco
unts
if
they
are
buy
ing
sign
ifica
nt v
olum
es o
f pr
oduc
t. It
also
pro
vide
s in
divi
dual
s w
ith t
he o
ppor
tuni
ty t
o sp
ecia
lise
in p
urch
asin
g an
d al
low
the
m t
o de
velo
p ex
pert
ise
in
nego
tiatin
g w
ith
supp
liers
, kn
owle
dge
of
mar
kets
and
exp
erie
nce
in c
erta
in b
uyin
g si
tuat
ions
.
Com
pani
es w
ho h
ave
give
n th
eir
site
s th
e re
spon
sibi
lity
of b
ecom
ing
indi
vidu
al p
rofi
t ce
ntre
s m
ay f
eel
that
it i
s ap
prop
riat
e fo
r th
em t
o al
so ta
ke o
n th
eir
own
buyi
ng.
The
re
may
be
bene
fits
for
the
purc
hasi
ng f
unct
ion
to b
e cl
ose
to th
e op
erat
ors
espe
cial
ly if
the
prod
ucts
spe
cific
to
that
site
are
tec
hnic
al
in na
ture
. Th
is f
orm
of
dece
ntra
lised
pu
rcha
sing
aljn
ws
each
pro
fit c
entr
e to
dev
elop
buy
ing
crite
ria w
hich
is
in l
ine
with
thei
r ne
eds
and
wor
king
em
non
men
i. B
ujer
s ca
n go
str
aigh
t to
the
sup
plie
r if
ther
e is
a pr
oble
m i
nste
ad o
f go
ing
thro
ugh
a ce
ntra
l bu
>ing
dep
artm
ent.
In :
ome
case
s, b
oth
cent
ralis
ed a
nd d
ecen
tral
ised
buy
ing
func
tions
may
exi
st w
ithin
the
sa
me
com
pany
. T
he
orga
nisa
tion
will
of
ten
begi
n w
ith
a ce
ntra
lised
pu
rcha
sing
de
part
men
t an
d th
roug
h th
e ch
ange
s in
pro
fit
resp
onsi
bilit
ies
will
dev
elop
dec
entr
alis
ed
purc
hasi
ng f
unct
ions
as
wel
l. T
here
are
adv
anta
ges
of h
avin
g bo
th t
ypes
of
purc
hasi
ng
func
tions
with
in a
n or
gani
satio
n, b
ut a
t th
e sa
me
time
ther
e ca
n be
inh
eren
t di
ffic
ultie
s.
If t
he c
ompa
ny i
n its
ent
iret
y re
quir
es l
arge
vol
umes
of
prod
ucts
com
mon
acr
oss
the
grou
ps,
this
of
fers
th
e ce
ntra
l pu
rcha
sing
m
anag
er
sign
ific
ant
leve
rage
in
hi
s ne
gotia
tions
with
the
sup
plie
r. T
heir
bar
gain
ing
pow
er m
ay a
llow
sig
nifi
cant
sav
ings
to
be
mad
e fo
r th
e en
tire
grou
p w
hich
may
not
hav
e be
en p
ossi
ble
if th
e ne
gotia
tions
ha
d ta
ken
plac
e on
an
indi
vidu
al s
ite b
asis
. A
lthou
gh t
he d
ecen
tral
ised
buy
er l
oose
s so
me
of h
is i
ndep
ende
nce,
it c
an b
e w
orth
whi
le f
or th
em t
o ga
in f
rom
the
sav
ings
suc
h an
agr
eem
ent c
an b
ring
.
Thi
s m
etho
d of
pur
chas
ing
will
onl
y be
of
bene
fit
to t
he i
ndiv
idua
l si
te i
f th
e bu
ying
cr
iteri
a us
ed b
y ce
ntra
l pu
rcha
sing
mat
ches
thei
r ow
n.
If fo
r exa
mpl
e th
eir
mai
n bu
ying
cr
iteri
a fo
r th
e pr
oduc
t is
in
the
follo
win
g or
der;
mee
ts te
chni
cal
spec
ific
atio
nsde
liver
s on
tim
epr
ice
and
the
cent
ral
purc
hasi
ng a
gree
men
t gu
aran
tees
a l
ow p
rice
but
it
is w
ith a
sup
plie
r un
able
to
mee
t de
liver
y re
quir
emen
ts, t
he c
ontr
act
will
not
be
used
by
the
site
buy
er.
If t
he c
entr
al b
uyer
doe
s no
t co
nsul
t bu
yers
in
each
gro
up w
ith r
egar
ds t
o th
eir
buyi
ng
crite
ria,
hi
s ef
fort
s w
ill
be
was
ted
and
cont
ract
s ne
gotia
ted
cent
rally
w
ill n
ot
be
hono
ured
. T
his
may
lea
d to
few
er d
ecen
tral
ised
buy
ers
usin
g th
e su
pplie
rs s
elec
ted
by
the
cent
ral
buyi
ng f
unct
ion.
Ano
ther
for
m o
f co
nflic
t m
ay e
xist
if
the
cent
ral
buye
r in
terf
eres
with
the
site
s.
The
re
is a
fin
e lin
e be
twee
n th
e ce
ntra
l bu
yer
prov
idin
g ad
vice
tha
t m
ay b
e us
eful
to
the
site
s an
d in
terf
erin
g w
ith t
heir
res
pons
ibili
ties.
T
he c
entr
al b
uyer
nee
ds t
o be
sen
sitiv
e to
th
is s
ituat
ion
and
wor
k to
mai
ntai
n th
e tr
ust a
nd r
espe
ct o
f eac
h gr
oup
of b
uyer
s.
To
high
light
any
inh
eren
t co
nflic
ts,
it is
esse
ntia
l fo
r th
e ce
ntra
l pu
rcha
sing
man
ager
to
deve
lop
som
e ki
nd o
f m
onito
ring
sys
tem
whi
ch c
an i
ndic
ate
how
wel
l ce
ntra
lly a
gree
d co
ntra
cts
are
bein
g ho
nour
ed.
Thi
s w
ill
also
al
low
m
easu
rem
ent
of
purc
hasi
ng
effe
ctiv
enes
s, a
lthou
gh t
his
is a
vita
l to
ol i
t can
onl
y be
use
d w
here
cen
tral
buy
ers
have
ex
celle
nt w
orki
ng r
elat
ions
hips
with
dec
entr
alis
ed b
uyer
s an
d ot
hers
inv
olve
d in
the
bu
ying
pro
cess
.
Mod
els
and
Fram
ewor
ks
conv
entio
nal
"buy
ing
beha
viou
r"
fram
ewor
ks
are
diff
icul
t to
app
ly in
pra
ctic
e du
e to
the
blur
ring
of p
urch
asin
g ro
les.
The
mai
n fr
amew
orks
app
lied
to b
uyin
g si
tuat
ions
is
the
Buy
grid
or
som
etim
es c
alle
d th
e B
uycl
ass
fram
ewor
k w
hich
lo
oks
mai
nly
at t
he s
tage
s of
the
buy
ing
proc
ess,
and
th
e In
tera
ctio
n A
ppro
ach
whi
ch l
ooks
hol
istic
ally
at
the
buyi
ng p
roce
ss a
s a
seri
es o
f
inte
ract
ions
. T
hese
fra
mew
orks
will
no
w
be d
iscu
ssed
in
ter
ms
of t
heir
eas
e of
ap
plic
atio
n.
Buy
clas
s F
ram
ewor
k
Idea
lly,
the
appl
icat
ion
of t
he B
uygr
id F
ram
ewor
k sh
ould
mak
e it
poss
ible
for
ven
dors
to
rec
ogni
se w
hat
step
s th
e bu
ying
org
anis
atio
n m
ust
take
in
orde
r to
com
plet
e a
spec
ific
typ
e of
pur
chas
e.
By
appl
ying
the
Buy
grid
Fra
mew
ork
to t
he c
ase
stud
ies
rese
arch
ed,
it is
po
ssib
le
to
mak
e ge
nera
lisat
ions
re
gard
ing
the
invo
lvem
ent
of
diff
eren
t fu
nctio
ns w
ithin
the
org
anis
atio
n. T
he f
ollo
win
g fu
nctio
ns e
mer
ge:
Boa
rd a
nd G
ener
al M
anag
emen
t T
echn
ical
Per
sonn
el (
Eng
inee
r)
Purc
hasi
ng M
anag
er o
r B
uyer
Fi
nanc
ial
Pers
onne
l
(a)
The
Boa
rd a
nd G
ener
al M
anag
emen
t
Thi
s le
vel
of m
anag
emen
t is
onl
y in
volv
ed w
hen
ther
e is
a ne
w p
urch
ase
situ
atio
n th
at
has
a si
gnif
ican
t ef
fect
upo
n th
e co
mpa
ny's
long
-ter
m p
erfo
rman
ce.
A n
ew p
urch
ase
may
hav
e be
en
initi
ated
at
this
lev
el o
r m
ay b
e pr
esen
ted
to t
he b
oard
for
rev
iew
and
ap
prov
al.
A p
robl
em i
s us
ually
rec
ogni
sed
and
high
light
ed b
y te
chni
cal
pers
onne
l w
ithin
the
or
gani
satio
n.
The
y m
ust
then
def
end
any
capi
tal
inve
stm
ent
to t
he b
oard
mem
bers
. T
hey
may
pre
pare
the
cas
e w
ith t
he h
elp
of t
he p
urch
asin
g m
anag
er a
nd a
fel
low
te
chni
cal
colle
ague
.
(b)
Tec
hnic
al P
erso
nnel
(i)
New
Buy
It se
ems
that
the
tec
hnic
al p
erso
nnel
hav
e th
e gr
eate
st i
nflu
ence
on
new
pur
chas
es.
From
al
l th
ree
com
pani
es i
t w
as e
vide
nt
that
the
y ar
e hi
ghly
in
flue
nced
by
sal
es
repr
esen
tativ
es v
isits
and
the
lite
ratu
re t
hat
they
lea
ve b
ehin
d. B
oth
desi
gn e
ngin
eers
an
d pl
ant
equi
pmen
t en
gine
ers
have
a
clea
r id
ea o
f w
hat
is r
equi
red
to
incr
ease
pr
oduc
tion
or i
mpr
ove
perf
orm
ance
but
the
y m
ay n
ot h
ave
the
nece
ssar
y sk
ill
or
expe
rien
ce r
equi
red
to f
ollo
w t
hrou
gh t
o in
depe
nden
tly m
ake
a pu
rcha
sing
dec
isio
n.
The
cas
e st
udie
s in
dica
te t
hat
the
tech
nica
l pe
rson
nel
have
sig
nifi
cant
inf
luen
ce n
ot
only
in
the
earl
y st
ages
of
the
buyi
ng p
roce
ss b
ut a
lso
in t
he f
inal
sta
ges
of a
pur
chas
e.
The
y w
ill t
ry t
o en
sure
tha
t th
e pr
efer
red
supp
lier
has
prov
ided
the
m w
ith t
he g
reat
est
amou
nt o
f as
sist
ance
and
giv
es t
hem
the
max
imum
rea
ssur
ance
tha
t th
eir
prod
uct
is su
itabl
e fo
r th
e ta
sk b
efor
e th
ey a
re c
hose
n. T
his
can
lead
to
conf
lict
betw
een
tech
nica
l pe
rson
nel
and
purc
hasi
ng i
f th
e pr
ice
bein
g of
fere
d by
the
fav
oure
d su
pplie
r is
not
the
lo
wes
t.
(ill
Cha
nge
in \
erul
i
A c
hang
e m
sup
plie
rs w
ill g
ener
al!)
be
appr
oved
by
tech
nica
l pe
rson
nel
and
may
eit
her
be i
nitia
led
b) t
he p
urch
asin
g m
anag
er o
r an
eng
inee
r.
Thi
s pr
oces
s w
ill u
sual
l) b
e in
form
al a
nd m
ay n
ot a
lway
s re
sult
in
the
cons
ulta
tion
of
tech
nica
l pe
rson
nel
The
Hu
i cr
New
Pur
chas
e
From
the
res
earc
h ca
rrie
d ou
t, bu
yers
wer
e no
t us
ually
inv
olve
d in
the
ear
ly s
tage
s of
th
e ne
w
purc
hase
de
cisi
on.
Eng
inee
rs
felt
that
it
was
im
port
ant
for
tech
nica
l re
quir
emen
ts t
o be
cla
rifi
ed b
efor
e an
y co
mm
erci
al c
onsi
dera
tions
cou
ld b
e m
ade.
Thi
s co
rrel
ates
w
ith
the
find
ings
of
B
rand
(1
972)
w
ho
foun
d th
at
buye
rs
bega
n to
pa
rtic
ipat
e in
a n
ew b
uy d
urin
g th
e "a
cqui
sitio
n or
pro
posa
l st
age1
'
The
buy
er t
ends
to
beco
me
part
of
the
team
whe
n it
is n
eces
sary
to
defe
nd a
nd g
ain
appr
oval
of
a pu
rcha
se.
The
buy
er c
an i
nflu
ence
the
out
com
e of
the
dec
isio
n fo
r th
e se
lect
ion
of a
sup
plie
r esp
ecia
lly w
hen
ther
e is
mor
e th
an o
ne w
hich
has
bee
n ap
prov
ed
by t
he
tech
nica
l te
am.
He/
she
will
ba
se t
heir
rev
iew
on
com
mer
cial
fa
ctor
s lik
e de
liver
y, p
rice
and
re
puta
tion
whe
reas
the
tec
hnic
al g
roup
may
lo
ok
for
tech
nica
l sp
ecif
icat
ions
as
thei
r m
ain
crite
ria.
Thi
s w
ill a
llow
the
buy
er t
o ch
alle
nge
the
tech
nica
l de
cisi
on m
akin
g un
it w
ith r
egar
ds t
o th
eir
choi
ce i
f he
is
mor
e ex
pens
ive
than
ano
ther
su
pplie
r.
It is
evi
dent
fro
m t
he r
esea
rch
with
, B
1CC
Cab
les,
tha
t it
is c
ritic
al t
hat
purc
hasi
ng
have
a g
ood
rela
tions
hip
with
the
com
pany
's te
chni
cal
deci
sion
mak
ers,
it
is th
eref
ore
impo
rtan
t fo
r bu
yers
to
deve
lop
som
e de
gree
of
tech
nica
l co
mpe
tenc
e, t
o en
able
the
m
to b
ecom
e in
volv
ed i
n ea
rly
stag
es o
f th
e bu
ying
pro
cess
and
to
gain
the
res
pect
of
tech
nica
l co
lleag
ues.
(ii)
Mod
ifie
d R
ebuy
Whe
n sw
itchi
ng v
endo
rs t
ook
plac
e, t
he b
uyer
oft
en b
ecam
e th
e in
itiat
or a
nd t
he c
o
ordi
nato
r of
the
cha
nge.
The
y ge
nera
lly h
ave
the
resp
onsi
bilit
y of
mak
ing
the
final
de
cisi
on
in t
he s
elec
tion
of t
he s
uppl
ier
but
will
ask
fo
r in
put
from
one
or
mor
e m
embe
rs o
f th
e te
chni
cal
grou
p.
(iii)
Rep
eat
Purc
hase
Dec
isio
n
Alth
ough
the
buy
er h
as t
he g
reat
est
infl
uenc
e in
dec
idin
g w
hich
com
pani
es b
ecom
e pr
efer
red
supp
liers
, re
peat
or
ders
ar
e ge
nera
lly
proc
esse
d by
cl
erks
w
ithin
th
e pu
rcha
sing
dep
artm
ent.
(d)
Fin
anci
al R
ole
The
fin
anci
al p
erso
nnel
with
in e
ach
com
pany
bec
ome
invo
lved
in
the
new
pur
chas
e ph
ase
of b
uyin
g. T
hey
usua
lly p
rovi
de f
inan
cial
app
rova
l ne
cess
ary
for
the
buyi
ng
proc
ess
to c
ontin
ue a
nd d
o no
t te
nd t
o be
com
e in
volv
ed i
n th
e de
cisi
on f
or s
uppl
ier
sele
ctio
n.
In c
oncl
usio
n th
ese
obse
rvat
ions
can
be
used
as
a ba
sis
to a
naly
ze w
hich
mem
bers
of
a cu
stom
er's
buyi
ng c
entr
e m
ay e
xert
inf
luen
ce a
t whi
ch s
tage
.
Dec
isio
n M
akin
g U
nit
The
ide
ntif
icat
ion
of t
he d
ecis
ion-
mak
ing
unit
is ve
ry c
ompl
icat
ed a
nd i
s no
t al
way
s de
fine
d by
the
hie
rarc
hica
l le
vels
in
an o
rgan
isat
ion.
It
is th
eref
ore
esse
ntia
l fo
r su
pplie
rs t
o un
ders
tand
the
int
er-p
erso
nal
com
mun
icat
ion
whi
ch g
oes
on w
ithin
the
or
gani
satio
n.
Thi
s kn
owle
dge
may
re
veal
ho
w
the
grou
p in
tera
cts
and
whi
ch
indi
vidu
als
have
the
grea
test
inf
luen
ce o
r po
wer
in m
akin
g th
e fi
nal
deci
sion
.
The
orie
s in
thi
s ar
ea t
end
to b
e to
o ge
nera
l an
d no
n-sp
ecif
ic.
Non
e of
the
var
iabl
es a
re
spec
ifie
d in
a f
orm
tha
t m
akes
the
m s
usce
ptib
le t
o an
d ro
le m
odel
dep
ende
nt u
pon
"rat
iona
l" d
ecis
ion
mak
ing
with
no
cons
ider
atio
n fo
r th
e so
cial
and
em
otio
nal
fact
ors
in
buyi
ng
deci
sion
s.
Fact
ors
like
repu
tatio
n, p
rest
ige
of s
uppl
ier,
fri
ends
hip
with
the
su
pplie
r an
d pe
rson
ality
of
the
supp
lier's
sal
es r
epre
sent
ativ
e sh
ould
be
give
n gr
eate
r w
eigh
ting.
Inte
ract
ion
Aftp
roac
h
The
In
tera
ctio
n A
ppro
ach
(Hak
anss
on,
1982
) ac
know
ledg
es
indi
vidu
al
pers
onal
ity
fact
ors
as i
mpo
rtan
t in
flue
nces
in
indu
stri
al p
urch
asin
g de
cisi
ons.
T
his
mod
el t
akes
in
to
acco
unt
the
envi
ronm
ent
surr
ound
ing
the
rela
tion
ship
an
d re
info
rces
its
im
port
ance
w
ithin
th
e se
lling
st
rate
gy.
The
in
tera
ctio
n ap
proa
ch
reco
gnis
es
the
com
plex
ity
of r
elat
ions
hips
in
sell
ing
to t
he i
ndus
tria
l m
arke
t an
d vi
ews
it as
fou
r le
vels
.
the
inte
ract
ion
proc
ess
all
indi
vidu
als
invo
lved
econ
omic
and
mar
ket
envi
ronm
ent
atm
osph
ere
char
acte
risi
ng th
e re
lati
onsh
ip
A f
urth
er c
ompl
icat
ion
in
iden
tifyi
ng t
he
key
deci
sion
mak
ers
is t
he
fact
that
the
de
cisi
on m
akin
g un
it m
ay c
hang
e de
pend
ing
upon
the
buy
ing
stag
es o
f th
e pu
rcha
se..
The
int
erac
tion
bet
wee
n m
embe
rs o
f th
e de
cisi
on m
akin
g un
it m
ust
also
be
cons
ider
ed.
The
int
erac
tion
app
roac
h re
cogn
ises
tha
t pe
rson
al c
onta
cts
betw
een
the
two
com
pani
es
are
a fr
eque
ntly
us
ed
mec
hani
sm
for
initi
atin
g de
velo
ping
an
d m
aint
aini
ng
such
re
lati
onsh
ips.
One
of
the
mos
t cr
itica
l el
emen
ts o
f th
e se
lling
pro
cess
is
the
role
of
pers
onal
co
ntac
t in
th
e su
ppli
er-b
uyer
in
terf
ace.
B
ecau
se
of
the
diff
icul
ties
in
id
enti
fyin
g th
e ro
les
wit
hin
the
deci
sion
mak
ing
unit,
and
the
blu
rrin
g of
fun
ctio
ns
with
in t
he B
uygr
id F
ram
ewor
k th
e in
tera
ctio
n m
odel
off
ers
a m
ore
real
isti
c ap
proa
ch
to c
ompa
nies
or
rese
arch
ers
tryi
ng to
und
erst
and
the
orga
nisa
tion
al b
uyin
g pr
oces
s.
The
im
port
ance
of
sp
read
ing
the
tech
nica
l an
d fi
nanc
ial
risk
of
de
velo
ping
ne
w
prod
ucts
and
^at>
cess
with
sup
plie
rs i
s be
ing
reco
gnis
ed b
y m
any
com
pani
es t
hrou
gh
their
incr
ease
d us
e o
f pu
rtne
i.shi
ps o
n in
nova
tive p
roje
cts.
A
noth
er
imp
ort
an
t re
ason
fo
r cl
ose
r re
latio
nsh
ips
with
sup
plie
rs i
s th
e re
du
ctio
n i
n th
e am
ount
of
unce
rtain
ty a
nd
impro
vem
ents
in
the
org
an
isa
tion
s abili
ty
to c
on
tro
l pa
rt o
f its
envi
ronm
ent.
Sta
ble
rela
tionsh
ips
betw
een
vendor
and
purc
hase
r ca
n ac
t as
barr
iers
to
en
try
for
com
petin
g
supplie
rs a
s w
ell
as p
rovi
de
a l
ock
-in s
itua
tion
for
exi
stin
g s
uppl
iers
.
CO
NC
LU
SIO
N
Ou
r in
itial
rese
arch
we
belie
ve s
how
s th
at t
he b
uyi
ng p
roce
ss i
n in
dust
rial
mark
ets
in
the
U.K
. is
com
ple
x an
d th
at a
lin
ear
mod
el a
ppro
ach
like
the
buyg
rid m
atr
ix i
s da
ted
and
has
seve
re l
imita
tion
s.
Priva
tisatio
n,
dece
ntr
alis
atio
n,
rest
ruct
uring a
nd
incr
ease
d co
opera
tion a
mon
gst
org
an
isa
tion
s to
ach
ieve
co
mp
etit
ive
edg
e ar
e u
nd
erm
inin
g w
hat
has
been
a
usef
ul
mod
el
but
is
now
lo
oki
ng
less
th
an
adeq
uate
to
e
xpla
in
the
com
ple
xitie
s of
an
inte
ract
ive
mar
ket.
Alth
ou
gh
this
stu
dy
is l
imite
d b
y tim
e,
size
and
mar
ket
conce
ntr
atio
n,
we
nev
erth
eles
s fe
el
that
it do
es r
efle
ct w
hat
is h
appe
ning
and
that
is t
ha
t th
e B
uyg
rid
Fra
mew
ork
as
an
effect
ive b
uyi
ng
behavi
our
mod
el
has
been
re
plac
ed
by a
n in
tera
ctio
n
model
whic
h
more
ad
eq
ua
tely
refle
cts
the
holis
tic n
eeds
of
modem
bus
ines
s.
Ack
no
wle
dg
emen
ts
We
would
lik
e t
o p
lace
on r
eco
rd
our
ap
pre
cia
tion
to
She
ll O
il fo
r th
eir s
up
po
rt a
nd
spec
ial
thanks
to
Mik
e H
arr
is.
Ray
Bam
ford
, M
alc
olm
Lyo
ns.
P
eter
Sau
nder
s, a
nd a
ll th
e in
div
idu
als
fr
om
B
TR
In
du
strie
s.
Na
tion
al
Po
we
r an
d B
ICC
w
ho
pro
vided
an
op
po
rtu
nity
for
us t
o a
sses
s cu
rrent
ind
ust
ria
l pu
rcha
sing
.
Ref
eren
ces
Bra
nd.
G.T
. (1
97
2).
T
he
ind
ust
ria
l buyi
ng
deci
sion
. London:
Ass
oci
ate
d
Bus
ines
s
Pro
gra
mm
es
Fis
her,
L.
(19
76
).
Indust
rial
ma
rke
ting
, an
an
alyt
ical
ap
proa
ch
to
pla
nnin
g
and
exe
cutio
n.
(2nd e
d).
US
A:
Anch
or
Pre
ss
Hak
anss
on.
H.
(I982).
(ed).
A
n
inte
ract
ion
appr
oach
. IM
P
Gro
up,
in in
tern
atio
na
l M
ark
etin
g a
nd P
urc
hasi
ng o
f In
du
stria
l Goo
ds.
Ch
ich
est
er,
Wile
y. p
p. 1
0-27
.
Robin
son,
O.J
., P
aris
, C
.W.,
and
W
ind,
Y.A
. (1
96
7).
In
du
stria
l buyi
ng a
nd cr
eativ
e
ma
rke
ting
. N
ew
York
: A
llyn
& B
acon
Webst
er.
Jr
.,
F.E
. an
d W
ind.
Y.A
. (1
97
2).
A
ge
nera
l m
odel
fo
r u
nd
ers
tan
din
g
org
an
isa
tion
al
bu
yer
be
ha
vio
ur.
Jo
urn
al o
f Ma
rke
ting
. 36
. 12
-19.