Supply chain management skills purchasing professionals need
By Bill Michels -- Purchasing, 11/13/2008 2:00:00 AM
Remember the time when someone in the company who wanted to buy something would have to "go through purchasing?" It was as though the department was a passive filter—or worse, an obstacle course. It's no wonder that purchasing professionals complained they got no respect.
In the last five years, however, the purchasing profession has taken a giant leap forward. Smart companies have recognized the value of bringing purchasing knowledge into design and manufacturing decisions and other business strategies. They are realizing how they can increase the value of their products, find a competitive edge, optimize transactional efficiency and maximize shareholder value through careful supply management. As sourcing goes global, even simple purchases can entail a complex assessment of supply chain, and therefore, company risk.
All this has translated into a higher respect for—and more demands on—chief procurement officers and the people who work for them. The question is, are they ready to meet them?
It's great that purchasers have been brought into cross-functional teams to help plan a product from design, through testing, global sourcing, production and marketing. To really play a valuable role on such an important team, purchasers must have much deeper knowledge than simply how to watch prices, check a vendor's credentials and negotiate a contract. If they are going to really contribute to a team, they'd better know how to function on one. If they are expected to contribute to design, they'd better have a sense of what makes a good one. If they are expected to manage a supply chain through several tiers back to raw inputs, they'd better have sophisticated investigative and analytical skills. If they are expected to source from around the globe they'd better have an appreciation for a world of different cultures, currencies, laws and time zones.
While many buyers wanted the fundamental change of moving purchasing from a tactical, transactional activity to a revenue-generating strategic imperative, others feel like victims of the change. For whatever reason—lack of resources, lack of support, or lack of will—they have not developed the required skill set to meet the challenges ahead. There are many challenges. Here are the skills they will need to overcome them and reach their full potential:
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Cost-analysis skills, so they'll know the cost behind the price rather than concentrating on buying based on price only.
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An understanding of how to analyze, set up or manage longer supply chains, so they won't be forced to stay with domestic suppliers.
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Management savvy to prevent individual departments from running rampant in indirect spending items—particularly legal and marketing services.
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Modeling knowledge to predict what suppliers will bring the biggest risk, and the skill to set up a risk management plan with alternatives in case of supply disruptions.
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Ability to assess the internal risks of designs or processes that limit supply options.
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Ability to actively manage supplier relationships with a plan for each category or supplier and the skills to execute the plan.
Smart companies are expecting significant value from their supply chains and the people who manage them, and these skill gaps can be disastrous. CEOs have grown to expect the results smart supply management delivers, so they are not likely to back off those expectations. Now that you have what you wish for, are you prepared to keep delivering it?
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