Over the past few years, I’ve observed that companies are recognizing the need for more advanced procurement activities. That’s great, obviously. But what’s interesting is the difference in how various companies assign these responsibilities to their employees.
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Some companies require their procurement employees to raise their competency levels to handle these new activities. Other companies have subdivisions of their procurement departments dedicated to activities like market assessments, supplier financial analysis, training selection, and even the cutting of purchase orders. In these subdivisions, the employees do nothing but these specialized tasks while the procurement agents are not required to have the skills to perform those tasks.
Which arrangement does your company use? What do you see as the benefits of doing it that way? Whose job is safer: the specialist or the generalist? Why?
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Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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Comments
As a purchasing consultant I have seen both approaches you mention. I think the answer to your question really comes down to two things 1) what is the skill set currently available in your department and 2) what are the longterm goals for how the department will be organized.
In my opinion, it is always better to cultivate a higher level of skill, but this is not always realistic in the short term and those POs and contracts must continue to be processed. Dividing up the work among specialists can be a great short term strategy to ensure the work gets done. Crosstraining should then be undertaken in the long term to ensure that all members of the department can complete all the functions. This strategy can also help minimize the inevitable silos that occur when specializing the department.
Charles this is a great question and I think more companies are starting to ask themselves just this.
I agree with J Robinowitz and as a consultant have seen both approaches as well.
I have worked for large and small companies here and in Europe and have experienced the benefits/drawbacks of both.
The benefit of dividing your Purchasing Team into Strategic/Tactical is that it frees up the specialist to see the bigger picture and focus on benefiting the company long-term vs. trying to dig through the pile of requisitions, material moves and other daily paperwork that requires a lot of time, energy and concentration as well.
One thing that I was amazed to learn is that not everyone has a strategic mindset and not everyone wants to learn those skills. Some are very adamant about only wanting to place purchase orders, expedite them, etc. Others are adamant about not wanting to touch that kind of work and to only negotiate, etc.
Personally I can handle the tactical aspect as long as I am working on strategy at the same time. I was amazed though at how many buyers want to do only one or the other type of buying. In larger companies this is a benefit but in smaller ones if their buyers are solely tactical it will hurt them in the long run if they do not have someone willing to take on the different mindset, training and new skill set.
Preferences of the indenter also needs to be weighed.Requisitioners prefers to have one buyer deal with all his cases whether tactical or strategic
There are 2 project which differ from each other under my management-
1.Tasks as Procurement Analyst,Procurement Agent and Procurement Coordinator tasks (tactical procurement)
-Procuement Analysts do their regular reporting and come up with various suggestions on market, prices,Suppliers, leakages in the business.
-While Procurement Agent takes care of RFQ, negotiations and PO issuance. They need to have good product and price knowledge
-Procurement Coordinator takes care of PO Ammendments, Supplier followups,Invoice enquiries,Updating Catalogs, creating requests, Inventory maintanence,new supplier on boarding and other MDM activities.This they do per instructions given to them in the most efficient manner
Advantage:PA’s can focus on cost driven tactical negotiations and have clear KRA on savings
PC’s can help support PA’s, maybe 1PA having 2 PC’s for supporting their various purchases
2.In my second project,the team is split as Req to PO team and MDM team.Analysis is best left to the management to take care of and bring out suggestions to the client.
I am trying to evolve best practices among both these projects however am limited as I cannot change completely change the way business is done as it is client driven. Its better to leave this to the way business in done in different industries however bring best practices forward to make the business more efficient.I have seen benefits in both the way of doing business
I would also agree that this is a great question. What I have done within my own department is turn it upside-down in a good way. The company had hired category managers and that’s all they were doing. Between them, no one knew what the other was doing and when holidays came, this category was in limbo. After a couple of weeks, I was able to shuffle and hire, which in our world is really rare. I’ve changed them to become Project Team Leads for my Senior Category Analysts, giving them an opportunity to grow and become “market-able”, plus learning new challenges and getting more visibility to the stakeholders instead of being “Paper pushers”. We are also now more customer-service oriented and working with them on understanding their projects, milestones, delays and projects costs. They were nervous in the beginning because I removed their security blanket,but after 18 months, they are very happy and wouldn’t want to go back to where they were. Then, I hired a couple of co-ops to handle; renewals, invoice processing and tracking, hardware/software requests, contracts administration and I have to say they are all striving. It is true that it depends who you work for. We are a service company, no manufacturing, no logistics/transportation. Everyone one of them is a back up of someone else. No one is in their silo. It took 18 months… to get them to where they are today and I am very proud of each one of them. Again, it all depends what you can do, if you have carte blanche to make your department work the way you want without forgetting that we are more than just procurement, we add value as we become more visible to all projects and steady state.
It is great to hear your success story, Dominique. Thanks for sharing!