Do you know what really
happens in your purchasing department? What are those
positions called? Are they just Buyers buying all day? Maybe
they’re just Purchasers purchasing? Sounds a little like a
children’s rhyme, but truly the buyer or purchaser is an
investor! I ask this because these staffers are investing
the company’s money into saleable goods that will allow the
company to stay competitive and grow? Why are these
important people titled only as Buyers or Purchasing Agents?
Shouldn’t they be Investors? See what you think after
reading this article.
 Scenario
Jill works in purchasing, she comes to work and answers
emails for an hour. She then goes into her ERP to make
buying decisions. Jill will use the ERP to create a line by
line report by “highest usage” items in her SKU group. This
means: When a line item is eligible to be purchased, she
will then have to cut a PO and send it electronically to the
supplier. This set of decisions can take most of her day
because during this time she will also be answering emails
as well as fielding calls from sales, warehouse, and
suppliers. She uses her tried and true excel spreadsheet,
that has been handed down through the years from buyer to
buyer, to cross reference and log purchasing data. She must
also deal with branch transfers and emergency order requests
from sales, on a tight time line. Then she has to decide how
that purchase will forecast. Worse, if she should have-could
have-would have planned for it better; would there have been
a stock out? During her day Jill will also take phone calls
from suppliers that want to know what next season looks
like. The Suppliers may also call to tell her about sales
opportunities, closeouts, or changes in a product mix.
Jill has only been with the company for a few years. The
company has used the current software for 5 years now. The
person who trained Jill to use the software was not fully
aware of all the internal functions that the software
allowed for because they were not effectively trained. Over
her tenure, Jill has become accustomed to using the ERP, as
everyone else in the department does, even if that means her
use is disjointed. The only difference between she and the
other buyers is what she buys and not how she buys it.Story
continues below ↓
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By now, Jill
has had a busy day, after lunch she is calculating the
minutes until she gets to run to her car! She is using the
technology inefficiently while putting out fires in every
department. She is at the beck and call of every supplier
she deals with and has cut multiple PO’s for the same
company all day. Despite the hurdles, there is hope.
Here are a few ways Jill and your company’s Investor, can be
helped:
Software
Investigate what “work-arounds” your purchasing department
is using currently. Next, find out when the last time a
software audit was performed by the software company. If it
has been between 12 to 18 months then this is a good time to
have them come out to evaluate what’s working and what’s not
working for your company. A simple software update could
allow Jill to stop using the excel spreadsheet, which likely
contains errors, and to start using the software that was
designed for mitigating those errors.
Supplier Management
Perhaps Jill is too overwhelmed with the information from
the suppliers that she works with to really make good
investment decisions? Jill should have half or even one full
day to evaluate suppliers and make sure that she is making
good purchasing decisions with them. Are there duplicate
suppliers, special sales, or discounts she should fully
evaluate before cutting a PO? If Jill is doing this on the
fly or making a note, and forgetting to come back to it, she
is not able to use this information thoughtfully.
Time Management
Ever heard the saying, “If everything is on fire nothing is
on fire”. This saying is very true for Jill and her ability
to prioritize emails and to-do lists. These tasks are
paramount to her ability to do her job well. The questions
to ask are: What defines an emergency? Who decides what’s on
fire? When is the appropriate time to extinguish a fire?
Should there be so many? Every Buyer has their own way of
“firefighting,” but the truth is Buyers cannot make good
decisions while being inundated with constant attacks of
high alert after high alert. Help buyers decide where their
time should be spent every day and eliminate so many
external stressors on their time.
Purchase Order Reduction
In this scenario Jill is looking at her data in a passive
way by not determining what needs to be purchased via
supplier only. She is looking at data based on highest
volume. This is a fine way to look at the data, however,
compiling each line into supplier by supplier purchase would
be more efficient. Not only will Jill reduce the number of
purchases made but also the cost to process said purchase
orders will reduce for the supplier. Jill’s supplier will
surely thank her once they can process a single, large
order, all at once rather than in multiple small orders.
Return on Investment
Buyers are tasked with spending the most money of any one
department. Purchasing has a direct effect on net margin and
cash flow. Could your purchasing department benefit by
having someone who is strictly dedicated to running reports
and distributing information? If such a person existed in
her company, Jill would know what product was the best bang
for her company’s buck on every purchase. This would be a
much more efficient way for her to spend her time
purchasing. A specifically allocated report person can make
sure that the Buyers/Investors have all pertinent data at
their fingertips. Imagine if Jill already had GMROI, Turns,
Hits, and other reports that she could reference
immediately!
Do you really know what goes on in your purchasing
department? Investigate ways to streamline daily tasks and
decisions. Help your team decide what is important and what
can wait. Hire a reports person who can decipher what
information is important to the buyers. Now ask yourself;
are your Buyers just buyers, or are they Investors? Even one
of these ideas can go a long way in creating an atmosphere
of accountability and informed decision making in your
purchasing department. If you need help or have any
questions, send me an email and ask!
danah@distributionteam.com
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