For consistency in the article we refer to “buyers,” but in practice the role we describe
is also called procurement manager, procurement agent, or contracts manager. This article
focuses on the complexities and frictions involved in supplier selection (verifying that suppliers
are indeed qualified, using historical supplier performance in making award decisions,
etc.). Such complexities are present in the supplier selection process for most goods and
services. One possible exception are raw materials traded via commodity exchanges; such
markets are specifically designed to circumvent the complexities and frictions of supplier selection
by instituting highly standardized contract terms, using liquid markets to find prices,
and using clearinghouses to guarantee the terms of trade. As such, commodity exchanges
will not be covered in this article.