Businesses operate in circumstances which are caused as a result of macro- and micro-economic factors. Macro-economic factors are due to myriad forces such as political stability and unforeseen natural calamities upon which businesses have little or no control. For instance, businesses have little control over oil price hikes caused as a result of war in certain parts of the world.
In most of the organizations, purchasing reports to operations. Hence most of the management consultants who have operations expertise consulted on problems related to purchasing. Purchasing consultancy evolved from the need for IT in purchasing function and the transition from tactical to strategic function. As IT was integrated into the business functions, firms needed to know the level of automation and the different systems available in the market.
Globalization and competition forced the purchasing from a transition role to a strategic role: from cutting costs to managing suppliers, from confrontational behaviour to collaborative. This necessitated strategies to engage the suppliers, evaluate them based on the new criteria, and help firms formulate strategies to go global.
Manufacturing firms spend more than half of their operating costs on materials and parts. Hence most of the consultants focus on manufacturing industries. For instance, the automobile industry with many tiers of suppliers for parts and modular supplies presented great scope for cost reduction and supplier involvement in new product development. They provide consultancy in contract management, ecommerce strategies.
The cost of consulting prohibits small and medium enterprises to hire consultants. There are online services to post the problem so that consultants are pulled to the firms, thereby eliminating search costs.
