After spending months on planning, a full week on packing, and a day on traveling, you might have finally reached your luxury resort vacation. You unpack your bags and dig through them to find out your swimsuit for having a sea bath. But you find nothing and realize that you forgot your swimsuit at home. In such a situation, you need to spend additional money on buying a new swimsuit. In such cases, procurement service providers can come to your aid.
This is called on-spot purchase.
Spot purchasing is considered a 180 from strategic sourcing. Strategic sourcing engages long-term procurement services, but spot purchasing takes place when there is an urgent requirement, and purchases must be made on an urgent basis. These purchases are always unplanned and made of small orders. Spot purchases are made immediately after making the purchase.
Spot purchases do not happen only on vacations. They occur all the time in the trade and business world. It has been found that almost 40% of a business’s indirect spend activities come from spot-on purchases. Listed below are some of its remarkable features:
- They take place for emergency purposes
- They are meant for inexpensive purchase
- The transaction is always easy
- They are considered as a unique purchase
- They come from an unmanaged spend category
Types of Sourcing – Strategic, Tactical, & Spot
In most cases, strategic sourcing consumes the most portion of purchases. These purchases can be planned. While strategic sourcing takes place, availability and prices play a vital role. Also, its impact on the overall organization must be considered carefully.
While strategic sourcing is mainly focused on the principles of communication and partnership, tactical sourcing is different in its approach. It is used to get items required for running the business. Many organizations use this approach for making their purchase decision.
The approach of tactical sourcing depends on price and availability of delivery dates as the purchases are made only based on needs. Each transaction is considered a different and unique occurrence, and they usually follow a short-term approach.
It is usually an unplanned purchase that is not conducted by the procurement service providers, it is conducted by the end-users. It enables the buyers to find out what they need quickly. Also, it allows the suppliers to win deals with a quick turnaround. It may lead the business to a potential new partnership. Spot sourcing is an under-managed spend as an outcome of its ad hoc and user-oriented nature.
In most cases, it is required when there is an urgent requirement for a particular good or service; for example, you can consider you can think about an incident when you need lots of prints, but you have only a single piece of paper. In such cases, you need to buy papers immediately. This type of purchase is economical.
A Final Takeaway
When you have a clear idea about strategic, tactical, and spot purchases, then dealing with these purchases will become easier for you. Spot purchase is different from strategic and tactical purchase approaches.