KOREASCHOLAR

In their efforts to compete and grow, companies try to reduce prime costs incurred by their purchasing groups, costs that may be more than 60% of sales. The recent financial crisis and the global economic depression have made it difficult to increase sales, so competitive purchasing is essential. Purchasing-efficiency benefits can be compared with sales-increase benefits: a 5% reduction of purchasing costs has the same effect as a 25% increase in sales. Some companies are using B2B purchasing substitution companies to reduce prime costs of raw materials, subsidiary materials, MRO (maintenance, repair, operation), and consumable materials. In this research, I examine whether purchasing substitution increases purchasing satisfaction and recommend ways to enhance the competitiveness of purchasing substitution. Corporate purchasing substitution strengthens integral purchases, simplifies systems, strengthens the supply network, and enhances customer service regarding quality, deadlines, logistics, and focus. This research is an effort to show how purchasing substitution systems can work best and to discover factors that contribute to corporate satisfaction. Most important is to use highly experienced purchasing experts who can reduce unnecessary costs through integral purchases. First, knowledgable and experienced purchasers can improve bid ordering rates. They can improve corporate satisfaction by recommending products suitable for price negotiation and sharing professional knowledge about items. Second, knowledgeable agents can improve sales rates by securing strong supply networks and minimizing distribution margins. Price competitiveness is most important in purchasing well-organized substitution services to allow expansion of new sales and better long-lasting account relations.

• Doo Ho Lee(Changwon National University)