Relational competence and strategic procurement management

Abstract

This article explains what a strategic procurement management approach to effective business strategy is. This proactive approach is contrasted with current reactive and simplistic approaches to purchasing and supply management. A proactive approach to business management requires firms to recognise that their boundaries need to constantly change in response to consumer preferences; and, that the most effective operational tool for deciding on the “effective boundaries” of the firm will be based on analysing types of relational competences. This approach links competences, relationships and asset specificity in order to procure a supply and value chain which reduces the costs of transactions and improves profitability.