Best places to work
Companies that offer the best opportunity for purchasing professionals combine ongoing training, challenging jobs, clear career paths, and, of course, competitive pay.
By Susan Avery; Elena E Murphy; Kevin R Fitzgerald. -- Purchasing, 12/10/1998 2:00:00 AM
Over the past several months the editors of Purchasing Magazine have queried readers, members of Purchasing's Editorial Advisory Board, purchasing recruitment professionals, and various other sources about what makes a company a good place to work for purchasing professionals and what companies meet these criteria most effectively.
Several traits were identified as critically important to creating an environment that enhances a purchasing career:
* Advancement. Ambitious purchasing pros must be able to clearly see that they can advance in the profession, and that career paths in purchasing/supply management offer as many rewards and as much job satisfaction as careers in other disciplines.
* Training. The best companies prepare purchasing professionals for future advancement, whether it be inside or outside the company. Ongoing training--either in-house, at educational institutes, or both--is the best way for purchasing pros to stay on the cutting edge of procurement.
* Job satisfaction. A tough one to call, but we tried to judge how well companies establish environments that enrich the professional lives of purchasing employees. Key to job satisfaction is how purchasing is positioned within a company. Is there a clear connection between company success and purchasing performance? Does top management truly understand and appreciate purchasing's value?
* Compensation. While we tried to take a long-term view, current compensation levels had to at least be competitive with the overall market.
Most important to our determination of best places to work for purchasing professionals is how well a company prepares individuals to meet future challenges in purchasing and supply management.
Develop other expertise
As the purchasing function continues to evolve, recruitment experts say that purchasing pros must be knowledgeable in other disciplines, such as engineering or finance. Dave Singer, who works in the Raleigh, N.C., office of Fortune Personnel Consultants, has recruited purchasing professionals for client companies for 10 years. He has seen the function evolve from processing transactions to managing supply.
"The importance of purchasing and supply chain management has been elevated over the past five years," Singer says. "Companies are recognizing the importance of the function."
Singer notes that corporate America is beginning to view purchasing as a breeding ground for top company managers. He increasingly receives calls from companies that are looking for "someone who can go beyond purchasing and supply chain management. Purchasing people are being groomed for other areas," he says.
Tonia Deal, president of Tonia Deal Consultants, Inc., agrees with Singer that purchasing has arrived at the upper echelons of U.S. business strategy. "Purchasing was once viewed as an ordering department," she says. "Today, purchasing is viewed as a key to the bottom line. Engineering and sales/marketing now expect purchasing to be part of the team. Right now, purchasing is an opportunity to thrive."
Top purchasing prospects are scarce today, according to Deal. Although she does not typically "market candidates," she knows how badly her client companies want to acquire the best purchasing talent. "When I see a good candidate with strong potential, it's almost a guarantee that one of my clients will hire him or her within sixty days," she says.
Here, then, are Purchasing's choices for the best places for purchasing professionals to work.
CHRYSLER CORP.
Auburn Hills, Mich.
Purchasing at Chrysler Corp.--soon to become part of DaimlerChrysler--has become a widely recognized pioneer of the advancement and recognition of superior supply management. Under the leadership of Tom Stallkamp, who became president of the company at the beginning of this year and recently was named president of the merged DaimlerChrysler, purchasing became world-renowned for its innovative approach to supplier relations and cost control. Chrysler's score (supplier cost reduction) program is the benchmark in reducing cost, and Chrysler's supplier development programs stand out even among automakers, who tend to train and develop suppliers much more extensively than other industries.
Like other benchmark companies, Chrysler places a great deal of importance on training supply managers and helping them advance their careers. Every year, corporate management and top management in Chrysler's procurement and supply (P&S) group set training objectives and goals for the entire procurement and supply group. For example, one year all employees were required to take classes on process thinking. Another year courses were offered on leadership training. This level of training is mandatory.
On the next training level, functional groups determine and maintain a training "matrix" that describes the skills that individuals in each department must attain.
The third training level involves individual requirements that each employee establishes with his or her supervisor. This training could include computer skills, writing, speaking, or interpersonal skills. Individual training programs also may include seminars and college degree programs, all of which are eligible for reimbursement.
Career planning for procurement and supply personnel, which has been conducted informally for years, now is being formalized in an annual career planning process for each P&S employee. Promotion from within is done whenever possible; the only non-entry-level positions filled from outside the company are those requiring unique or special talents that aren't available from candidates inside the company.
Chrysler also offers P&S personnel rotational assignments to engineering, manufacturing, and international operations.
High pay, low turnover
Chrysler believes that its compensation for P&S personnel is equal or superior to the best in any industry. But, because P&S is regarded as a strategic function by management, managers and executives are graded at higher levels than in other companies. Compensation for these supply strategists, therefore, tends to be higher than at other companies.
Headhunters have had difficulty recruiting out of Chrysler, according to a procurement spokesperson. Part of the reason is that "salaries and benefits here are higher than in other industries and companies."
Turnover at Chrysler's P&S group has been very low, less than 0.5% annually. In two recent instances, Chrysler reports that people left the company for higher positions, only to return several months later.
The single most attractive aspect of working at Chrysler may be the company's understanding of the concepts of supply chain management and the extended enterprise. Veteran observers of supply management have acknowledged that Chrysler's approach is unique. Few companies recognize and use the strategic advantages that procurement and supply can deliver the way that Chrysler has. Company officials also note that a "significant factor in the pending DaimlerChrsyler merger is the Chrysler procurement and supplier relations model."
HARLEY-DAVIDSON MOTOR CO.
Milwaukee, Wis.
Purchasing professionals at Harley-Davison Motor Co. have experienced a great deal of change over the past few years. According to Garry Berryman, VP purchasing, a force driving these changes is that purchasing now is recognized by top management as a vital strategic weapon.
"Our activities are realized as being strategic in every part of the organization," says Berryman, "especially in the executive suite. Purchasing reports to the president of the company, not a plant manager. This has raised awareness and expectation."
Several years ago, top management at Harley mapped out a strategic plan for growth. One of the keys to the plan was an elevation of purchasing and closer working relationships with key suppliers. Berryman was brought in (from Honda of America) as VP of purchasing, a position that had not existed before. Also, purchasing had been largely decentralized. Now, "we are an enterprise-wide resource," says Berryman. "Working in this group gives a broad perspective of the business. Enterprise-wide approaches have provided the drum beat to march by across the company, which is very powerful."
Purchasing professionals at Harley now know they are not tied to traditional ways of doing things and that creativity is encouraged and rewarded. "HD purchasing has an entrepreneurial spirit," says Berryman. "We all have ample opportunities to contribute and make the organization better."
Cross-functional skills
Purchasing at Harley was reorganized nearly two years ago into two major groups: Operational purchasing, which handles all procurement related to production; and development purchasing, which is devoted to new product design and development. Harley places a premium on purchasing pros who have talents in addition to purchasing, especially engineering or finance. Harley uses cross-functional teams extensively, and the team environment is considered important for success. Movement between functions is viewed as very healthy.
"We expect and encourage cross-functional movement," says Berryman. "We have been fortunate enough [in purchasing] to be able to bring in strength from both manufacturing and engineering. People are our true competitive advantage."
Berryman emphasizes that purchasing itself offers career paths at Harley-Davidson that are as exciting and rewarding as those of any other function. "There are clear and exciting career paths within the supply management function that are fully equivalent to leadership positions in manufacturing or engineering. Career-minded contributors do not have to look elsewhere for growth and opportunity," he says.
Berryman believes that Harley compensates its purchasing professionals quite well. "We compete head-to-head, on a national basis, with all industries for highly competent, technically grounded resources in the disciplines of engineering, finance, purchasing, and operations management," he says. "We will not let compensation get in the way of hiring and retaining the right people."
Equally important to the purchasing atmosphere at Harley Davidson is supplier relationships. Purchasing at Harley has established a supplier advisory council, which meets routinely to discuss joint initiatives and provide purchasing with input from the supplier perspective. This open approach is unusual and it has resulted in very close working relationships between Harley-Davidson and key suppliers.
"Relationships with suppliers are considered in everything we do," says Berryman. "Suppliers are truly an extension of Harley-Davidson."
IBM CORP.
Armonk, N.Y.
Procurement at high-technology giant IBM Corp. focuses on building the right skills in purchasing professionals to enable them to advance to positions that challenge them while simultaneously strengthening the global competitive position of the company. Led by veteran purchasing executive R. Gene Richter, VP and chief procurement officer, procurement at IBM is widely recognized by observers of the purchasing function as being on the cutting edge of total supply chain management.
At IBM, career advancement in procurement requires continuous upgrading of skills. As marketplace demands change, so do the skills required to meet these new demands. IBM procurement prides itself on identifying these new skills and providing appropriate training for supply managers, whom the company refers to as "commodity sourcing managers" and "fulfillment managers."
IBM describes its procurement training program as "well defined and comprehensive." Training courses range from basic "new to procurement" courses to seminars on developing sourcing strategies. Training is designed to give new buyers basic fundamentals and to allow experienced purchasing pros to challenge their peers with new ways of thinking.
All training courses at IBM are designed, developed, and facilitated by both internal education and training professionals, professors from various universities, and hired consultants. Purchasing pros who receive training outside the company are reimbursed through the IBM tuition refund program.
Leadership training
In addition to basic training for new buyers, IBM offers what it calls a "procurement/logistics leadership program" that is designed to develop future procurement leaders. This training consists of a two-year intensive program that provides employees with exposure to multiple organizations, both domestically and internationally.
Four six-month assignments expose leadership trainees to different parts of IBM's overall procurement operation--integrated supply chain, commodity/sourcing councils, distribution procurement, production procurement, customer solutions, and general procurement. Each assignment is designed to challenge trainees, who are placed in highly challenging roles at the end of the program.
Also key to a future in procurement at IBM is the company's major focus on electronic commerce, which IBM calls "e-procurement." Top management is looking to procurement professionals to drive a major shift toward Internet buying and a variety of other procurement activities that can be done on the Net.
All levels are heard
IBM also involves purchasing pros in decision-making processes that affect their jobs. This can include reengineering initiatives, business process management, and development of policies and practices.
To ensure that purchasing pros on the front line understand management decisions or needed changes to the organization, IBM executive management visits from 50 to 75 global company locations each year. In this manner, Gene Richter hears the views and opinions of purchasing employees first-hand.
Compensation
Purchasing management at IBM ensures that compensation stays competitive by participating in a number of surveys that check to see that total compensation packages enable the global procurement organization to attract and retain purchasers with critical skills needed for today's and tomorrow's marketplace.
AMERICAN EXPRESS
New York City
Purchasing professionals at American Express Co. are not stuck in the past. That's for sure. They've been taken out of the business of processing transactions and moved into strategic supply management.
At American Express, purchasing pros do not perform traditional purchasing tasks, says Joseph Yacura, senior VP of worldwide procurement. They are not buyers, they are "analysts" who have autonomy and full power within their areas of responsibility to define the strategy that will be used in their purchasing area.
Purchasing at American Express has the advantage of being built mostly from the ground up by a leader who understands the importance of cross-functional skills. Yacura created the department when he arrived at American Express about five years ago, after working in purchasing for five years at Pacific Bell and ten years at IBM.
Yacura built his group by recruiting purchasing pros with "a high-level skill set." Most--75%--of the 220 people now working in purchasing were hired within the past five years.
Training is key
Training is an area on which Yacura places a great deal of emphasis. Most purchasing professionals in global procurement receive up to 80 hours of training annually.
"Training is a critical ongoing initiative in global procurement," he says. "In addition to existing training--ranging from leadership to quality function deployment--we also allocated $4,000 per employee for additional unique training that employees felt they required to complement their existing skills," he says.
"We just created a director of global procurement training to coordinate training needs and to develop new ways of delivering training," adds Yacura. "Amex is also one of the founding members of the napm Advanced Technology Consortium, which has funded the development of training materials on compact disc."
Salaries compete globally
"Every two years we assess our compensation programs in all major markets throughout the world to verify the competitive nature of our compensation programs," says Yacura. "This is performed at a company-wide level."
High achievers in purchasing at American Express also can receive stock options.
Promote from within
Yacura attempts to promote from within his global procurement organization whenever possible. "We have published online global position descriptions and competency-based models for all positions within global procurement," he says. These are accessible by any employee. Employees receive a minimum of two performance reviews per year to assist them in identifying areas for further development.
Turnover is very low in Yacura's global procurement group. Recent departures typically have moved to other functions within Amex to get a broader base of knowledge about the company.
"We also place individuals on temporary assignments, usually ranging from three to 12 months, with different client groups in the U.S. and around the world," says Yacura.
Purchasing pros at American Express also get involved with customers. They provide help on how customers can use the company's purchasing card, and they are piloting a program through which Yacura's group will assist other companies with their MRO purchases.
BETHLEHEM STEEL
Lehigh Valley, Pa.
Bethlehem Steel has transformed purchasing from a tactical to a strategic function over the past few years. The company has achieved this through a combination of training and involvement on cross-functional teams.
Purchasing at Bethlehem is so proud of its transformation that it has produced a videotape that summarizes the shifting of purchasing to a strategic activity, and touts Bethlehem as a challenging but rewarding place for purchasing professionals to work.
Robert Rudzki, vice president and chief procurement officer, says Bethlehem has placed a lot of emphasis on training in an effort to continuously improve and challenge purchasing pros. Rudzki wants purchasing professionals to take calculated risks, so they need to be continually updating their skills and learning new ones. Employees attend forty hours of training annually, and the company offers a variety of seminars for purchasing, including ones that cover negotiating, Bethlehem's approach to sourcing, and the use of statistical process control.
Cross-functional teams are another tool used to advance purchasing at Bethlehem. Rudzki observes that since 1994 the percentage of purchasing/transportation professionals who had experience only in their own department has decreased from 70% to 31%. Though he does not attribute the change to cross-functional teaming, the trend reflects the perceived value of working for several departments over time.
William Ender, director--services, says sourcing is more effective due to the interaction between a cross-functional entity, the company's risk management council, and other commodity teams. The council oversees hedging and commodities futures buying by providing policy guidance, he says. Separate buying teams use the information when sourcing commodities such as natural gas and base metals. Each team that works with the council specializes in sourcing a specific commodity or related group of commodities.
Rudzki says team buying lends itself to informal mentoring since there are several supervisors who can assist other team members. This enables a person who is becoming acclimated to the corporate culture or sourcing practices to ask questions of someone other than his or her immediate supervisor.
To match employees with different cross-functional teams, Rudzki meets routinely with various business units to discuss projects. Projects often run for 12-18 month intervals, so there is emphasis on a mix of participants with experience and those that need experience in a certain area. The goal is for buyers to source on multiple teams, then eventually to lead one or more teams.
Turnover is minimal at Bethlehem due to training, opportunities, and incentives within the company. Rudzki reports that purchasing professionals typically stay in the department 15-20 years.
Compensation
Ronald Casbon, general manager of corporate MRO/capital services, notes that the company gathers information to gauge its own compensation packages, which include a 401K plan with matching funds from the company and awards for "outstanding individual and team performance." Bethlehem says it has highly competitive compensation packages. The company also conducts annual surveys among purchasing employees and internal customers.
TEXAS INSTRUMENTS
Dallas, Texas
Buying in the semiconductor industry is not for the faint of heart. In fact, this cutthroat arena changes faster than saying "silicon wafer." To remain at the forefront, Texas Instruments (TI) works to make its procurement organization a place to acquire skills and practice them in an ever-evolving industry.
To attract and retain procurement professionals, TI offers performance-based pay. Purchasing executives discuss annually what the company wants to achieve and map out how they will contribute on an individual basis. If incentives are reached, purchasers receive bonuses and options to participate in stock programs.
The company also provides the "flexibility to customize reward plans," says Maggie Fischer, worldwide procurement & logistics group business development manager for TI's Semiconductor Group. That can include non-cash recognition such as departmental rewards for achieving goals. A department can earn a luncheon or an announcement at a key meeting to boost buyers' visibility in the company.
Career advancement
Opportunities for career advancement are readily available to purchasing executives at TI. The company prepares them to work in a number of environments, according to Fischer. The approach worked so well that two procurement executives recently left TI for higher-level positions at other companies.
Fischer notes that to prepare buyers to work in a number of environments, TI uses cross-functional teams. These teams enable the company to source more effectively since each department contributes its own expertise to the final decision. Procurement representatives work with other departments such as engineering and manufacturing to ensure effective sourcing.
Cross-functional teams support another element of TI's strategy, which is to ensure continuous development among its buyers. As Fischer puts it, "Some procurement executives have selected a job in purchasing for their career, while others join for a career-enhancing opportunity and leave after three to four years."
She cites the recent departure of the two procurement directors as examples of how TI prepares purchasing pros for advancement. One director moved on to become a vice president of procurement at an $8 billion company; the other is a VP at an electronics distributor. Both moves resulted in significant increases in purchasing responsibility.
One reason that TI's purchasing executives are sought out by other employers is that they gain more experience due to the relatively flat structure of the company, says Fischer.
Train toward goals
On an annual basis, management and buyers set new goals for buyers. The company then decides what training is necessary to complete the goals based on the person's current skill set.
Training is available internally or externally. TI reimburses people that take outside classes related to their annual goals or long-term career development. Procurement executives also attend seminars available through napm and other professional organizations.
Within the company, buyers take classes that are part of the procurement training curriculum, such as the negotiation process and legal and ethical issues in purchasing. For professional development, buyers study problem solving, leadership development, and project management.
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