Marketing Management, Millenium Edition - epiheirimatikotita.gr

116 CHAPTER 6 ANALYZING BUSINESS MARKETS AND BUYER BEHAVIOR➤➤➤➤➤divisions and buying them centrally to gain more purchasing clout. Individualdivisions can buy from other sources if they can get a better deal, but centralizedpurchasing usually produces substantial savings. For the business marketer, thismeans dealing with fewer and higher-level buyers, and using a national accountsales group to deal with large corporate buyers.Decentralized purchasing of small-ticket items. More companies are decentralizingselected purchasing operations by empowering employees to purchase small-ticketitems such as special binders and coffee makers. This has come about through theavailability of corporate purchasing cards issued by credit-card firms. Companiesdistribute the cards to supervisors, clerks, and secretaries; the cards incorporatecodes that set credit limits and restrict usage. National Semiconductor’s purchasingchief says these cards have cut processing costs from $30 an order to a few cents.“Now buyers and suppliers can spend less time on paperwork, so purchasingdepartments have more time for building partnerships.” 16Internet purchasing. By 2003, business-to-business buying on the Internet is projectedto reach $1 trillion per year (compared with a projected $108 billion for consumerbuying). 17 The move to Internet purchasing has dramatic and far-reachingimplications. Companies are not only posting their own Web pages to sell tobusiness buyers, they are establishing Intranets for internal communication andextranets to link with regular suppliers and distributors. So far, most businesses areusing extranets to buy MRO supplies. However, a growing number, such as GeneralElectric, are preparing to buy nearly all supplies on-line to shave transaction andpersonnel costs, reduce time between order and delivery, and consolidatepurchasing. In fact, GE Information Services is a leader in helping GE internalbusiness units and outside companies use the Internet to buy from and sell to otherbusinesses; its Trading Process Network lets companies buy raw materials,components, and just about anything else with a few clicks of the mouse. Internetpurchasing can help forge closer relations between partners and buyers, and itlevels the playing field between large and small suppliers. At the same time, it canpotentially erode supplier-buyer loyalty and open the door to possible securitydisasters. 18Long-term contracts. Business buyers are increasingly initiating or accepting long-termcontracts with reliable suppliers. For example, General Motors wants to buy fromfewer suppliers who are willing to locate close to its plants and produce high-qualitycomponents. In addition, business marketers are setting up electronic datainterchange (EDI) systems so their customers such as hospitals and bookstores canenter and transmit purchase orders electronically.Purchasing-performance evaluation and buyers’ professional development. Many companieshave set up incentive systems to reward purchasing managers for good buyingperformance, in much the same way that sales personnel receive bonuses for goodselling performance. These systems are leading purchasing managers to increasetheir pressure on sellers for the best terms.Lean production. Many manufacturers have moved toward lean production, whichenables them to produce a more high-quality product at lower cost, in less time,using less labor. Lean production incorporates just-in-time (JIT) production, stricterquality control, frequent and reliable supply delivery, suppliers locating closer tocustomers, computerized purchasing, stable production schedules made available tosuppliers, and single sourcing with early supplier involvement. JIT II, the next levelof customer-supplier partnerships, focuses on reducing the costs and time involvedin day-to-day purchasing transactions by locating one or more supplier employees at