Mobilization gives purchasing a chance to demonstrate its worth
By Jim Morgan -- Purchasing, 11/18/1999
The question that was posed as the 1930s came to an uncertain end was never really answered. By 1945, everything was changed! World War II was not a magnified repeat of the first war.World War I killed off the Austro-Hungarian, Ottoman, and Russian Empires and created a string of new independent countries. It also left Germany crushed and bitter and the bolsheviks in charge of a communist-led totalitarian state that replaced the old Russian Empire.
World War II, on the other hand, was a war that truly brought closure. By the end of that war, America's role in the world was so utterly changed that there was no returning to the economy of the '30s.
Actually, it is very difficult to compare the role of American business in World War II with that in the earlier war. In the earlier war the U.S. concentrated on moving troops and supplies to a single continent; this time everything was global and the problems for industry were especially acute. Mobilization for defense and then war, quickly and quietly wiped out unemployment lines. But suddenly the need for workers to produce war supplies was butting heads with the needs of the armed services for trained troops.
Of prime importance was the need to retool an industrial sector that had literally laid dormant for a decade. Because so little had been added to plant and equipment during the '30s, companies were pressed hard to add to all manner of new capacity.
Another cause of acute problems was the matter of getting goods and supplies delivered to the troops spread out around the world. The transportation system, like the nation's manufacturing capability, had been allowed to atrophy.
Purchasing's role in the mobilization, when compared with that in the earlier war, became clear more quickly and ran more deeply, within corporations. This time around, there were more top managers willing to listen to purchasing's ideas and test their theories. "Scientific purchasing" was the name given by Purchasing Magazine's editor, Stuart Heinritz, to purchasing's new involvement in the newly enlarged supply picture.
For the first time many suppliers felt confident to go beyond the traditional "price bounds" laid down over the years in their relationships with suppliers. Buyers, searching for competent productive capacity, began placing more emphasis on negotiation. Rather than spending their time haggling over prices, they began to regard negotiation as a strategic as well as a tactical tool. Besides prices, they were pushing suppliers for added value.
Buyers also began testing their wings in various areas of inventory control. Many began relating inventory control to purchasing flow control, organization, price/cost analysis, flow charting, and the ramifications of supply contracts.
As the war progressed the new role of purchasing blossomed. Buyers, who once were "chained" to their desks were making plant visits to suppliers and potential suppliers. They were extending the scope of many of their ideas developed in the 1920s on measuring supplier performance. Many, of necessity, were getting deeply involved in solving logistics problems and measuring the service performance of key carriers. Despite an almost suffocating regulatory system in place on most transportation modes, buyers were starting to push carriers for service concessions--especially on in-bound deliveries.
By the end of the war in late summer 1945, American industry had more than met the test. Most notably, purchasing had pushed its significance to new levels in corporate America. In purchasing, in companies across the nation in August 1945 there was pause. Buyers were wondering: Would purchasing hold on to its well-earned gains in respect? Would there, indeed, be a future for corporate America itself?
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