Needs-Based Purchasing: What Is It & How Does It Work?

If you’re a manager who's been thrown into purchasing on top of all your other responsibilities, you’re not alone. You might be purchasing dozens or hundreds of SKUs. It’s easy to just order the same thing from the vendor you always use, but there’s no guarantee it’s the best on the market. How can you make sure you’re getting the best value for your money?

There’s a single framework that can help: needs-based purchasing.

Needs-based purchasing is the process of defining your needs before sourcing a product from vendors. In other words, what are the constraints for the purchase? Taking a needs-based approach opens up the possibilities to more products that can get the job done and can unlock major savings for your organization. 

To take a needs-based approach, you’ll need to consider: 

  • Product Specifications: What are your product requirements? Can you be lenient with requirements or are they strict?
  • Budget: How much are you willing to spend?
  • Lead Time: When do you need the product delivered? Do you need something tomorrow or can you schedule a delivery in advance? Scheduling in advance will almost always open up more options and better pricing.
  • Vendor Performance: What’s the vendor’s reputation? Do they deliver on product quality? Do they ship on time?
  • Values: Do you have ethical or sustainability requirements for your supply chain?

You might be tempted to simply “SKU-swap” (i.e., look for the same SKU across vendors to guarantee the best price), but that doesn't fully account for the options on the market. For example, in buying a 16”x16”x16” corrugated box, a 12”x12”x12” or 18”x18”x18” might do the job just as well. SKU-swapping won’t account for these slight changes in specifications,

The only issue with a needs-based approach is that it takes a lot of time to set up, with no guarantee that it’ll be worth it (especially if it’s for an inexpensive one-off purchase). 

Response makes it easy to take a needs-based approach. We give you the controls to search for products from your top vendors based on product specifications, budget, lead time, and more.

We’re always working to improve the quality of our content. If there’s anything you think we’re missing or needs changing on this page, let us know.

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