Management's expectations From Purchasing

As Purchasing 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.

Cost Savings - 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.

Brand/Differentiation Support
- 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 differentiation strategy.

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 that survival.

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.



Be 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.


 Articles on Materials Management.....

Management's expectations From Purchasing
Crisis in Purchasing & emergency Planning

Negotiation Questions from suppliers that can Surprise you
The Supplier Code of Conduct
Entering into a Time and Materials Contract
Supplier's bid Comparison Formula
Supplier Diversity Program
Determinants of a Modern Purchasing Department
Negotiating With Suppliers Over their Policies
Procurement Project Management Plan
The Purchasing Risk Analysis
Inventory Audit Checklist
Hazards Of Purchasing profession
Tactical vs Strategic Purchasing
Demystifying Group Purchasing Organizations
Suppliers' Secrets For Negotiating With Purchasing
Cost Savings Reporting: Dot Your I's!
Code of Ethics in Purchasing
Six Sigma to Success