becomes more complex the following aspects too assume more
importance to management now than ever before. In fact ,
management is looking out for results in the following areas
from its Purchase functions:
Productivity Improvements -
Management will always expect you to do more work with fewer
resources. No matter whether you're in a tactical or strategic
purchasing organization, there are many productivity metrics
that you can choose from to track productivity gains: PO's per
buyer per day, average length of sourcing cycle, man-hours per
dollar saved, etc.
- Management wants
Purchasing to save money. However, successfully achieving and
reporting cost savings requires a careful approach. Be
sure to synchronise your definition of cost savings with
management's definition, track your cost savings, and focus
on total cost reduction, not just price reduction at any
cost (L1 syndrome) A new concept , Total cost of ownership (TCO)
is a powerful approach now. Savings need to be seen on a
long term basis.
- Your organization's mission or vision statement
should give you some clues as to how your organization wants
to be perceived in the marketplace and how it wants to be
differentiated from its competitors, such as offering
higher quality, faster cycle time,
better service, lower cost, or something similar.
Make sure that
your decisions and metrics support your management's brand and
As futile as this sounds, you'd be
surprised how many organizations have a mission of being the
"highest quality provider" in their industry, yet their
purchasing departments measure only cost savings.
Customer Satisfaction - Sometimes,
being in purchasing can make you feel separated from your
organization's customers. But management relies on things that
you're responsible for, like assuring continuity of supply, to
keep its promises to its customers etc.
Realize that you can
personally be responsible for your organization's failure to
meet customer expectations. In the era of tough competition,
organizations shall have have to meet customer expectations
(read delight) to survive and Purchasing has a critical role in
Positive Cash Flow
- In some
organizations, the timing of monetary receipts and payments is
critical. Those organizations cannot afford to have more cash
leaving the company than coming in during certain periods.
aware of that and negotiate appropriate terms with your
suppliers. But don't just pay them late and hope that they don't
notice. Remember , once bitten twice shy is a great saying
,applicable to many organizations.