Purchasing Management - The Driving Force
Purchasing is the fulcrum when it comes to meeting customer demands. We all know it, yet few of us really understand it. Purchasing managers are really the tendons and muscles that enhance profitability within the supply chain itself.
Most of us quote supply chain gospel, and deep down we really do believe that profitability in the industry is driven by the supply side of the equation. Yet in reality, we may not really understand the skill set required for success and how to recognize or leverage talent within our own organization for this critical piece of our success formula.
Supply Chain Management (SCM)Understanding SCM is basic to understanding the necessary purchasing culture required to leverage the ability to maximize profitable growth. It begins with understanding your markets, your customer base and the future of the industry. Keep in mind the fact that the supply chain will exist whether or not you have a competent, superstar purchasing manager running the buy side of your profitability equation. There are a number of academic definitions of SCM. My favorite is:
“Supply Chain Management is the coordination of partnerships between the manufacturer, importer, distributor and customer that results in maximizing growth, profitability and customer satisfaction.”
How Do We Create the Successful Purchasing Culture?The purchasing manager must become the driving force. Sometimes the simplicity of the answer lies within the complexity of the question. Start by asking the following questions:
- How was the purchasing manager selected?
- What criteria were used in the selection process?
- What qualifications beyond seniority were brought to the table?
- What training did the purchasing manager receive after being
- Did that training include leadership skill development, coaching, mentoring, negotiations, sales effectiveness and team building?
Keep in mind that the purchasing environment at many companies is strictly determined by size and revenue stream of the organization. In larger organizations there is a distinction between the duties of a purchasing manager, a buyer and a purchasing agent. In some cases we just employ order placers with little or no responsibility for growth and profitability.
Purchasing agents and buyers often focus on routine tasks and they may specialize in specific product lines or groups of related commodities. The purchasing manager needs to focus on the strategic side of the business, tracking market trends, customer preferences, price trends, cost effectiveness and managing the supply chain. This includes evaluating and qualifying vendor partners, negotiations and the support of merchandising strategies. Critically important to creating a successful purchasing culture is the purchasing manager’s ability to coach, mentor and train buyers on creating profitability, maximizing customer service and building relationships with their own sales force.
The Superstar Purchasing ManagerFinding the right person to fill the critically important role of purchasing manager can become quite a challenge. Often the tendency is to simply rely on tenure, product experience and the misguided feelings of employee entitlement.
Owner: “We have grown to the point that purchasing management needs to become a strategic initiative. Let’s promote Old Joe - he’s been with us 22 years.”
VP of Sales: “But Joe doesn’t have any formal management training and some of our salespeople think he’s a real pain! He doesn’t understand cost effectiveness and lacks creativity. Remember the major problem we had with our number one supplier?”
Owner: “Hey, he’s been with me for 22 years. He deserves a promotion. Besides, we can send him to a seminar.”
In wholesale distribution, it seems that the primary prerequisite for becoming a purchasing manager is being a buyer for the company and having long tenure. Promoting a senior buyer to purchasing manager simply due to how long he or she has been with the company is a common mistake, often based on the lack of understanding about the critical nature of the position and how it should contribute to the overall success of the organization.
Different skill sets are required to become a successful purchasing manager as compared to being a successful buyer. Managing a group of professionals with the type of personalities required to succeed gets sandwiched between the needs of the sales force, the needs of the vendor partners and the obligation to be cost effective and competitive in the marketplace. In my opinion, it is probably one of the most important management positions in a company. The purchasing manager holds the key to meeting company objectives. An effective purchasing manager builds the platform for success.
Sales Personality Required!Don’t cringe. Purchasing managers need to have a sales personality before they can really understand the science of selling. This sales DNA will come in handy for the development of true partnerships with vendors and gain the respect of the company’s sales force.
Think about the real value the purchasing manager should bring to the company - leverage, profit opportunities, merchandising and product creativity. Think about cost effectiveness, relationships, and most importantly, think about the individual requirements necessary to maximize success. The purchasing manager should focus on maximizing profitable growth. We all look at sales first when it comes to growth and profitability. Remember, the purchasing manager must become the muscles and the tendons that maximize profitable growth.
Check out Rick’s new CD and workbook Real World Leadership Kit - “Learning to Lead So Others Will Follow” http://www.ceostrategist.com/resources-store/real-world-leadership.html.