Beyond Buying: Purchasing's Changing Role
Jim Limperis, C.P.M. CFPIM
Jim Limperis, C.P.M. CFPIM, OEM Commodity Manager Motorola Codex, Mansfield, MA. 02048, 508/261-4438.
Richard G. Weissman, C.P.M.
Richard G. Weissman, C.P.M., Corporate Quality Manager, Ferrofluidics Corporation, Nashua, N.H. 03061, 603/883-9800.
79th Annual International Conference Proceedings - 1994 - Atlanta, GA
Buyers must focus beyond buying in order to assure that they continue to grow within the changing role of the purchasing professional. Traditional transaction based procurement must be replaced by strategic sourcing management.
In the past, concentration on being more "efficient" in the speed of the transaction was of utmost importance. However, the efficiency was limited to learning curve improvements by the buyers placing the purchase orders. In the future, concentration will be on being more "effective" in transactional purchasing. To go beyond the limited learning curve advances by the buyer, a more effective system of transacting purchase information to the supplier needs to be implemented. One such system is Electronic Data Information, otherwise known as EDI. Through EDI, the demands are flowed electronically into the supplier's facility so that the supplier has access to the on-line MRP requirements of the customer. Paper handling is reduced significantly as requisitions no longer flow inter-office, requiring signature approval or modifications and in many instances being rejected back to the originator for completion. Filing is virtually eliminated as the need to print hard copies of purchase orders is unnecessary. Mailing of supplier copies of purchase orders is no longer a requirement. The key to doing things smarter, not harder, is the underlying theme when looking beyond buying.
In order to be smarter, the progressive buyer must be skillful in many areas, truly assuming the role of a supply base general manager. The changing role of the purchaser touches upon many areas. Buyers need to increase their professional development in areas such as financial evaluation, quality system assessment, ISO 9000, communications, education and motivation as well as environmental compliance, the North American Free Trade Agreement, worldwide sourcing, cost analysis, customer service and support, to name but a few.
FINANCIAL EVALUATION Since when does financial evaluation fall under the guise of buyers' responsibilities? With the numerous mergers, buyouts, consolidations and bankruptcies changing the profile of our supplier base, it is imperative that the buyer "prepare" for the fallout vs. "repair" the aftermath of product/service interruption. There are many reputable financial service organizations who can assess suppliers' financial statements, appraise the riskiness of their financial stability and alert you when significant management changes or critical financial ratios worsen. Where applicable, the buyer should solicit the support of his/her finance departments' expertise to assess the suppliers' financial health. Regardless of which tool is used, the responsibility for ongoing financial evaluations must be borne by the buyer so that supply-base optimization can be a proactive, not a reactive strategy.
QUALITY SYSTEMS ASSESSMENT
Like financial evaluation, quality system assessment must be a continuous practice to assure that a suppliers' process is under control. A common tool/technique should be utilized to warrant consistency and objectivity. Frequency of assessments should also be standardized so continuous improvement can be measured regularly from the original baseline. Although quality or supplier engineers may take team leader roles in the assessment, it is critical that the buyer become well-versed in the quality system evaluation process to maintain a primary role in the source selection process.
ISO registration requires conformity to documented processes. Although the quality assurance department will probably take the lead role in assuring the integrity and consistency of the documented procedures, the organizations conducting the activities will be responsible for documenting how they conduct business. Buyers will be required to document how purchase orders are placed.
On the surface, this sounds simplistic. However, there are many issues that may arise when a purchase order is place. For example, how does the buyer know from whom to purchase the commodity? How does the buyer know that the supplier has been qualified? What happens when there is an engineering change order (ECO) which changes the specification? How is that new specification communicated to the supplier? Is the change critical or can the effectivity date be set to utilize existing inventory? How are non-ECO related changes (i.e. price, delivery, date, quantity, carrier, destination, etc.) implemented?
Excellent communications, both internal and external, are mandatory for truly successful procurement. No longer can a buyer be content to process paper and make the obligatory phone calls to place orders and check pricing. Today's buyer needs to be an aggressive communicator, using verbal, written and multimedia tools to properly manage a global supply base.
Electronic Data Interchange has helped many departments eliminate the drudgery of transactional purchasing. Eliminating the transactional portion of one's job frees up the buyer to be able to tackle the tough job of communications.
A key purchasing function is facilitation. The buyer is in a strategic position to act as a company communicator in all supply base issues.
Strategic use of communication tools enhances this process. The buyer must be aware of the goals and objectives of their company, fully understand them, and be able to properly communicate the objectives throughout the total supply chain. The buyer must also be knowledgeable of the objectives of the supply base, understanding individual supplier's business objectives. When information from all directions is understood, the buyer must be ready to represent all parties to ensure a successful procurement process. The buyer must be able to interface with all levels of management, both internally and throughout the supply base. There is a need to coordinate efforts and issues, be a clearing house of information, and act as an ombudsman when the situation warrants.
Communication skills that are needed vary by the situation. However, the buyer who operates in a global arena must understand that the era of the eight-hour day has passed. Purchasers must adopt the attitude to be always "on call" to solve a supply problem. Any attitude, less than this total commitment, undermines the importance of the challenges facing the profession. Improved telecommunications, personal computers and other technological aids are the tools of today's buyer as compared to the "green visor" of yesterday's buyer. The tools of the trade, as well as the shady perception of the profession, have changed. The buyer now has to make that same commitment to change.
Never stop learning! Buyers who feel that they "know it all" will quickly be relegated to the "non-recyclable" scrap heap. With the world changing so quickly, today's buyer must be astutely aware of global, economic, and political issues that affect procurement issues.
Formal education is easy to define. At the minimum, purchasers must have a college degree, or be in the process of obtaining one. Technical degrees are becoming very popular, but business degrees are still relevant. Advanced degrees are also being required by many employers.
Formal education also includes professional certification. The Certified Purchasing Manager (C.P.M.), as offered by the National Association of Purchasing Management (NAPM) is the most popular certification in the purchasing profession. However, as the purchasing profession continues to evolve beyond buying, complimentary disciplines, such as the American Production and Inventory Control Society (APICS), offer the Certified in Production and Inventory Management (CPIM) and Certified in Integrated Resource Management (CIRM) certifications. The American Society for Quality Control (ASQC) also offers the Certified Quality Auditor (CQA) designation as well a score of similar certification opportunities. All professional certifications enhance professionalism and show a personal commitment to education and personal growth.
Informal education is harder to define, but is also critical to business operations. Attend seminars, read books, utilize company training, benchmark, attend lectures, network, subscribe to newsletters and magazines, sign on to information networks, join professional associations, visit libraries, read the paper, watch the news. Local purchasing management associations offer excellent resources to take advantage of many of the above sources of informal education. We are surrounded by information. Tap in!
Personal motivation is the key to success. All of the training in the world is useless unless each individual has the internal motivation to succeed. The workplace, and purchasing's role in it, has rapidly changed, and continues to evolve at a blistering pace. A year ago, articles were being written about the strategic importance of purchasing. Now, articles are being written about the elimination of purchasing. Obviously, this cannot be allowed to happen, or it just may!
Unfortunately, the profession is always in a credibility fight. A personal commitment to yourself and the profession is needed to continue the positive focus. In order to continue to win the battles waged, the purchasing professionals self-motivation and pride must transcend to value.
In conclusion, buyers must look beyond buying to assure that they continue to grow or they may find that their companies will find it necessary to grow without them! As organizations continue to flatten, resulting in less opportunities for promotions, the purchasing professional must grow by expanding their own capabilities/skillsets. As purchasing departments continue to become more efficient through EDI, supplier optimization and other tools, there will be less and less demand for the transactional employees. Those buyers who will quickly be labeled as excess resources will be those individuals who maintain a status quo paradigm of what is required to do the job!