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Evaluating Food Commodity Procurement Strategies

Author

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  • Jones, Kraig M.
  • Whipple, Judith M.
  • Raper, Kellie Curry
  • Mollenkopf, Diane A.

Abstract

We use a case study approach to determine the primary factors affecting food manufacturers' commodity procurement decisions, as well as to examine the strategic nature of commodity procurement departments. The research fills a gap in both the commodity and procurement literature. A large literature exists on commodity marketing; however, very little exists on the topic of commodity procurement. Existing procurement literature tends to focus on non-commodity products rather than commodity products. The results suggest a model for the strategic role of commodity procurement departments within food manufacturers. The initial procurement strategy must be supply maintenance, which once accomplished, allows the commodity procurement department to progress to a profit-focused strategy, which is generally cost-based. Finally, the role of the commodity procurement department can expand by offering additional services to customers, such as designing promotional programs.

Suggested Citation

  • Jones, Kraig M. & Whipple, Judith M. & Raper, Kellie Curry & Mollenkopf, Diane A., 2004. "Evaluating Food Commodity Procurement Strategies," Staff Paper Series 11810, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    • Handle: RePEc:ags:midasp:11810
    DOI: 10.22004/ag.econ.11810
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    File URL: https://ageconsearch.umn.edu/record/11810/files/sp04-26.pdf
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    References listed on IDEAS

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    1. Marvin L. Hayenga, 1979. "Risk Management in Imperfect Markets: Commodity Procurement Strategy in the Food Manufacturing Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(2), pages 351-357.
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    Keywords

    Marketing;

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