PurchTips - Edition # 143


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Top 10 Purchasing Changes In 10 Years

By Charles Dominick, SPSM, SPSM2, SPSM3

How Are Purchasing & Sourcing Different Today?

The new year's arrival made me ponder how purchasing in 2008 differs from purchasing in 1998. Here are the top 10 purchasing changes in those 10 years.

10. Technology Proliferated. Today, eProcurement and eSourcing are two of the most useful practices in purchasing. Ten years ago, those terms were unheard of.

9. Center-Led Procurement Arrived. In 1998, even top purchasing departments processed purchase orders. Today, purchasing departments aim to centralize the supplier selection process, not transactions, which are delegated to end users or outsourced.

8. Purchasing Grabbed More Spend. When purchasing departments deliver results, management seeks more spend that Purchasing can positively impact. Once sourced by other departments, categories like fleet management, benefits, and travel services are now sourced by Purchasing.

7. Social Responsibility Became A Top Priority. Whether for philanthropy or to avoid media scandals, management counts on Purchasing more than ever to buy from diverse suppliers, make environmentally-conscious decisions, and do business ethically.

6. Measurement Was Mandated. With the potential of smart purchasing widely known, senior management more strictly holds their purchasing departments accountable for results. The use of purchasing metrics and dashboards is now commonplace.

5. Strategic Sourcing Went DIY. In the '90's, strategic sourcing was done mostly by consulting firms hired to help companies reduce spend. Today, many companies have their own refined and documented in-house strategic sourcing processes.

4. Supplier Roles Expanded. In 1998, there was talk about "partnering" with suppliers. Today, there's action. Top purchasing departments actively develop their suppliers and look to the supply base for ideas, better performance, and innovation.

3. Global Sourcing Went Mainstream. Ten years ago, only the progressive companies were searching abroad for suppliers. Now, in some countries, it is difficult to find products manufactured domestically.

2. The CPO Position Got Adopted. This past year alone, I've encountered an unprecedented number of folks with the title "Chief Procurement Officer."

1. The Supply Chain Was Recognized. In the last decade, companies more closely analyzed the way material flows into, through, and out of the organization. This "supply chain" focus has those who once just placed orders now responsible for inventory, warehousing, outbound logistics, and distribution.

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