Commercial Purchasing

The third sector I will speak about is mining (primary - extraction of natural resources). Purchasing here is important because the equipment purchased will mostly be large plant type machinery, and expensive. Also the seller will have the leverage, as there is not a large market for highly specific mining tools, however the mines are not able to operate without their tools and will have to pay for what they need. This means that the purchasing department will have to be very good at their procurement strategies. They will also need to be good at playing the few suppliers of machinery off against each other. The main problem faced by purchasing in this sector is that by delaying the purchase of machinery in order to get the best deal, the mine could be losing money hand over fist due to the fact that rival mines may already have better equipment and be outstripping the others in terms of their output. The purchasers at a mine would have to be very well versed in when to stop trying for a better deal, and taking what they have managed to acheive. If they were continually holding out for a better deal then they would swiftly put their mine out of business. …