Product Feature as a Determinant of the Industrial Buying Method
Purpose: The purpose is to present how a product feature, as determinant, affects selection of the appropriate buying method. The correct buying method choice provides companies with many advantages in terms of cost savings achieved within the organisation. Design/methodology/approach: The main method used is case study. The measurement of the result is based on target achievement set by a company. In addition the article reveals a new mathematical analysis of learning curve using integral calculation. Findings: Two determinants are presented - vulnerability to engineering changes and high labour intensity. Analyses show that choosing adequate buying method to a certain purchasing situation influences cost performance. There is also deliberation of new mathematical analysis of learning curve as supportive tool for industrial buyer. Research limitations/implications: The main limitation of this research is impossibility to test effectiveness of using different buying methods scenarios under the same conditions. Practical implications: For practitioners, buying method should be carefully chosen in relation to certain purchasing situation, e.g. product feature should be considered as one of the determinants. The article also provides supportive tool for price negotiations using learning curve phenomenon. Originality/value: The article presents how two determinants, frequent engineering changes and high labour intensity, affecting optimal industrial buying method selection in order to achieve better cost performance. In addition the article revealed new mathematical analysis of learning curve as supportive tool for professional buyers to be used during direct negotiations with suppliers.(original abstract)
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