Strategic procurement and financial performance of Iranian manufacturing companies

Abstract

Procurement has turned into the strategy for cutting cost and improving quality in order to increase the efficiency of the procurement function and reduce production costs. The objective of this study is to scrutinize the interrelation between the level of strategic procurement and financial performance of manufacturing companies in Iran. A cross-sectional explanatory study was designed to identify Iranian manufacturing company's procurement management practices and performance outcome. Findings of this study noted a positive relationship between the strategic procurement and financial performance of the companies. For developing strategic procurement, firms should therefore improve the skills in their purchasing professionals, tally the strategic procurement with overall business strategy with long-term plans, select the potential and key suppliers, and create a good relationship with them. These factors could affect a firm's financial performance and increase profit.