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The Conflicted Role of Purchasing in New Product Development Costing

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The Conflicted Role of Purchasing in New Product Development Costing

Purchasing plays an important role in new product development (NPD) costing by managing the cost of materials and components that go into the new product. However, the role of purchasing can become conflicted when trying to balance the need to control costs with the need to support the goals of NPD. On one hand, purchasing needs to negotiate the best prices and terms for materials and components to keep costs low. On the other hand, purchasing needs to work closely with the NPD team to ensure that the materials and components meet the necessary specifications and quality standards, even if it means paying a higher price. This can lead to tension and conflicts between the purchasing and NPD teams. To mitigate this, it is important for the two teams to have clear communication and to establish a shared understanding of the goals and priorities of the NPD project.

Lisa Ellram and Wendy Tate talk about their research entitled:   “The Conflicted Role of Purchasing in New Product Development Costing.”

Purchasing Training

Purchasing and Negotiation Quotes

  • “When I am there at our global product development centers, I am meeting with the design team and reviewing design work being done there and meeting with engineers responsible for work being done specific to that region, meeting with purchasing team.” ~Mary Barra
  • “In every country except – industrial country except the United States, the government uses its massive purchasing power to negotiate drug prices. That’s one of the reasons prices are so much higher in the United States than in other countries.” ~Noam Chomsky
  • “A stronger dollar increases U.S. dollar purchasing power.” ~Steve Mnuchin
  • “Everything is negotiable. Whether or not the negotiation is easy is another thing.” ~Carrie Fisher
    “The most dangerous negotiation is the one you don’t know you’re in.” ~Christopher Voss
  • “The price of every thing rises and falls from time to time and place to place; and with every such change the purchasing power of money changes so far as that thing goes.” ~Alfred Marshall
  • “My first job at General Motors was as a quality inspector on the assembly line. I was checking fits between hoods and fenders. I had a little scale and clipboard. At one point, I was probably examining 60 jobs an hour during an eight-hour shift. A job like that teaches you to value all the people who do a job like that.” ~Mary Barra