Bread & Butter in Purchasing
Classic Purchasing Skills Can Still Write Remarkable Success Stories
Classic Purchasing Skills Can Still Write Remarkable Success Stories
In many of our projects, we predominantly deal with the very modern challenges of our customers with regard to systematic management in changing technological, ecological and social environments.
But time and again, classic purchasing topics also find their way into our project scopes – into our so-called bread & butter or day-to-day business. As we see , it is precisely these topics from the basic purchasing toolbox that often add considerable value for our customers‘ purchasing teams and help the projects achieve remarkable results. I would like to report on two examples at this point.
For a client in the media environment, we implemented an challenging project to establish a central strategic purchasing function. Jointly, the role and tasks of Strategic Purchasing as well as its interfaces to the specialist departments were determined and transferred into the implementation. As always, the objective was to increase cost control, ensure audit-proof processes and, last but not least, at least maintain the flexibility and speed of the procurement processes – but ideally also to increase process efficiency.
The recent past of our customer was and is currently characterized by a strong expansion path. At the same time, procurement functions were formed in various departments that responded independently to the needs of internal and external customers.
As advantageous as this independence may have been in terms of reaction speed and flexibility, it ultimately had a negative impact on cost control, process transparency and compliance requirements.
The establishment of a central Strategic Purchasing department aroused concerns among many stakeholders of a bureaucratic entity that would unnecessarily complicate, slow down and paralyze processes.
However, as we were able to show in the project, the opposite is the case. The independent action of the specialist departments did indeed take place quickly and flexibly – but by no means in a way that could have been described as „best practice“ purchasing.
Strategic Procurement found its role in continuing to delegate procurement tasks, but at the same time providing professionalized structures, processes, methodology and tools.
Where procurers had previously had to regularly conduct time-consuming inquiries for even smaller requirements, Strategic Purchasing successively provided pre-negotiated catalog partners or service partners with standardized fee agreements. From these portfolios, which can be viewed in digital form, procurers can now compare suppliers transparently according to product range or competencies and cost level and then select them freely and quickly to meet their requirements.
For larger requirements that make tendering essential, a procurement platform has been deployed. In contrast to the current practice of approaching bidders individually using classic office applications, the platform simplifies communication with bidders on the one hand. It also makes them more professional and, above all, leads to audit-proof awarding of contracts.
In addition, Strategic Purchasing is involved in the implementation of procurement projects above certain value limits, contributing methodology and that extra mile of purchasing spirit.
As a result, Strategic Purchasing is now responsible for all of our customer’s expenditures. However, this does not mean that it carries out all procurement itself.
It delegates numerous tasks to the specialist departments, but also provides process-related guidelines, documentation, templates and tools to support and simplify the processes. In this way, not only can the speed and flexibility of the processes be supported, but Strategic Purchasing also helps to significantly reduce the current effort of procurement activities.
In the same breath, however, a part of the cost responsibility is delegated to the procuring unit and the purchasing performance is tracked and reported via previously jointly defined key figures.
On the one hand, this practice helps to keep cost awareness in the specialist departments permanently high and, on the other hand, to make the comprehensive value contribution of strategic purchasing to the company’s success transparent.
We supported another customer from the metal processing industry, a classic German medium-sized company, in the course of the generation change in purchasing in the design of a targeted MGM concept.
Until the joint project, the focus of Strategic Purchasing was on order processing, handling of situational requests and security of supply.
With the change of division management and a rejuvenation of the team in strategic purchasing, we were commissioned to develop a concept for MGM with one of the strategic buyers along his daily work, to transfer it into practice and finally to roll it out in the entire team.
During the course of the project, which lasted around 12 weeks, we succeeded in first teaching in-depth purchasing methodology „on the fly“ to a pilot, and in initiating and supporting concrete and systematized optimization measures. In parallel, appropriate reporting structures were developed for different perspectives and flight levels.
Our project started very operationally with the identification and categorization of relevant material groups. Until now, the customer’s focus in assigning materials to material groups was more on production or sales-oriented criteria.
In order to make the material groups manageable for purchasing purposes, manual re-categorizations based on (supplier) market-oriented criteria were necessary.
On this new basis, it was possible to systematically derive individual optimization strategies and measures based on the characteristics of the respective materials and to initiate them during the project.
Further now, it was possible to develop a set of standardized evaluations and overviews that present the status, current measures and effects in the material groups.
As a result, the setup of data, methodology and reporting developed in a first step as a pilot was successfully transferred to the entire team.
Strategic buyers now have a setup of structures and methodology at their disposal that has been developed and proven in practice with external support and which provides orientation in the area of material group management in practically every situation.
In addition, divisional management is now in a position to set targets for each material group on the basis of a standardized set of evaluations, and to identify and control cost trends and the status of cost optimization measures.
As Adconia GmbH, we advise our customers with the experience of more than 250 projects from more than 17 years – in questions around purchasing, supply chain and the digitalization of processes. Our goal is always to increase the profit contribution of purchasing through cost reduction, process automation or the qualification of our customers‘ purchasing teams.
With a correspondingly broad wealth of experience, precise knowledge of everyday purchasing and a high level of professionalism, our consultants carry out training measures at eye level. We do this – depending on the requirements – both as a sparring partner for specialists and managers with many years of experience and as a trainer for seasoned purchasing professionals and young professionals.