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Purchasing Management - A Driving Force to Maximizing Profitability

Purchasing Managers, purchasing agents our number one supplier."The Owner ---
and buyers are the life support system of "Hey, he's been with me for twenty two
your supply chain. I often use the phrase years. He deserves a promotion. We can
in leadership training; "You're only as send him to a seminar on Time
good as the people you surround yourself Management."Some of you readers may
with." That phrase also applies to one of recognize that conversation however many
the most critical functions in wholesale may not recognize the fallacies that lie
distribution, the Purchasing Manager. So within it. In wholesale distribution, it
what does being the life support systems seems that the primary prerequisite for
to supply chain management mean? It means becoming a Purchasing Manager is being a
purchasing is the center of the universe, buyer for the company and having long
the equator, the fulcrum when it comes to tenure... Promoting our senior buyer to
meeting customer demands. This is a Purchasing Manager simply due to how long
common fact. We all know it. Most of us they have been with the company is a
say it and yet few of us really common mistake. This misconception is
understand it. Even the US Department of often based on the lack of understanding
Labor Bureau of Statistics supports it about the critical nature of the position
with reams of data on purchasing. and how it should contribute to the
However, the more important, often overall success of the
overlooked, misunderstood and organization.Different Skill SetsIt is an
underutilized concept is that Purchasing undisputable fact that different skill
Managers in our industry are really the sets are required to become a successful
"Tendons and Muscles" that enhance Purchasing Manager as compared to being a
profitability within the supply chain successful buyer. Purchasing is a
itself.Most of us "Talk the Talk" and can profession that requires professionals.
quote supply chain gospel. In fact, deep Managing a group of professionals with
down we really do believe that the type of personalities required to
profitability in the industry is driven succeed sandwiched between the needs of
by the supply side of the equation. Yet, the sales force, the needs of the vendor
in reality, we may not really understand partners and the obligation to be cost
the true value, the contributions, the effective, competitive in the market
skill set required for success and how to place and maximize growth and
recognize or leverage talent within our profitability is not an ordinary
own organization for this critical piece challenge. Yet, in my humble opinion, it
of our overall success formula.Supply is probably one of the most important
Chain Management (SCM)Understanding SCM management positions you can hold in a
is basic to understanding the necessary company. Purchasing Management holds the
purchasing culture required to leverage key to meeting company objectives.
our ability to maximize profitable Effective Purchasing Management builds
growth. It begins with understanding your the platform for success.Don't cringe;
markets, your customer base and the Purchasing Managers need to have a sales
future of the industry. It is critical personality before they can really
that we understand SCM and how to create understand the science of selling in the
an effective purchasing culture that wholesale distribution industry. This is
supports company strategic initiatives. a prerequisite to building an effective,
This obviously includes maximizing supportive purchasing organization that
profitable growth while maintaining world develops policy and procedure, creates a
class service and customer cost effective process, negotiates beyond
satisfaction.Keep in mind the fact that the purchase price, develops a staff that
the supply chain will exist whether or understands the necessity of relationship
not we have a competent, Superstar equity with the internal sales force and
Purchasing Manager running the buy side embraces the concept of purchasing
of our profitability equation. (E-mail strategies that are in alignment with
for a copy of the article "Margin company strategy. This sales DNA will
Management--Using the Supplier come in handy for the development of true
Profitability Ratio") There are a number partnerships with vendors and gain the
of academic definitions of SCM published respect of the company's sales
today for reference. However, I believe force.Experience in the industry is
the definition can be stated in these critical and a college education is a
terms:"Supply Chain Management is the foundation to build upon. The building
coordination of partnerships between the blocks should include:- Leadership Skill
manufacturer, importer, distributor and Development
customer that results in maximizing - Mentoring & Coaching Skills
growth, profitability and customer - Sales Effectiveness Understanding
satisfaction."How Do We Create the - Purchasing Certifications (CPM, APP,
Successful Purchasing Culture?The CPP etc)
Purchasing Manager must become the - Organizational Skills
Driving Force. Sometimes the simplicity - Scenario Planning
of the answer lies within the complexity - Strategic Thinking Skills
of the question. Start by asking the - Time Management
following questions:1. How was the - Operational Analytical SkillsSuper
Purchasing Manager selected? Star Characteristics- Highly Self
2. What criteria were used in the Motivated
selection process? - Optimistic
3. What kind of qualifications beyond - Excellent Leadership Skills
seniority was brought to the table? - Skilled at Coaching & Mentoring
4. What kind of training did the - Calculated Risk Taker
Purchasing Manager receive after being - Listens Well --- 80% of the Time
promoted? - Plans Well
5. Does training include leadership - Ability to Think Outside the Box
skill development, coaching, mentoring, Because They Know What Goes on Inside the
negotiations, sales effectiveness and Box
team building?Keep in mind that the - Excellent Communicator
purchasing environment at many companies - Inspires Excellence in Others
is strictly determined by size and - Strong Social and Interpersonal Skills
revenue stream of the organization. In - Commands a Presence
larger organizations there is a - Honesty
distinction between the duties of a - Integrity
Purchasing Manager, a Buyer and a - Embraces Accountability for Self and
Purchasing Agent. And in some cases we Purchasing PersonnelStop and ThinkWhen
just employ order placers with little or the time comes for your company to create
no responsibility for growth and the position of Purchasing Manager or
profitability.Purchasing agents and perhaps you realize it is time to
buyers often focus on routine tasks and redefine what purchasing management is
they may specialize in particular product all about --- Stop and Think; or, as
lines or other groups of related Lieutenant General Russell Honore so
commodities. The Purchasing Manager needs eloquently stated during the Katrina
to focus on the strategic side of the crisis, "Don't Get Stuck on Stupid".
business, tracking market trends, Think about the real value Purchasing
customer preferences, price trends, cost Management should bring to the company.
effectiveness and managing the supply Think about leverage, profit
chain. This includes evaluating and opportunities, merchandising and product
qualifying vendor partners, improved creativity. Think about, cost
negotiations and the support of effectiveness, relationship equities and
merchandising strategies. Critically most importantly, think about the
important to creating a successful individual requirements necessary to
purchasing culture is their ability to maximize success. Purchasing Management
coach, mentor and train their buyers on should focus on maximizing profitable
creating profitability, maximizing growth. We all look at sales first when
customer service and building it comes to growth and profitability.
relationship equity with their own sales Don't overlook the ability and
force.The Purchasing Management responsibility to contribute to the
SuperstarFinding the right person to fill primary reason we are all in the
the critically important role of business. Remember, Purchasing Management
Purchasing Manager can become quite a must become the muscles and the tendons
challenge. Often times there is a that maximize profitable growth. Dr. Rick
tendency to simply rely on tenure, Johnson () is the founder of CEO
product experience and the compassionate, Strategist LLC. an experienced based firm
often misguided feelings of employee specializing in leadership and the
entitlement.The Owner -----"We have grown creation of competitive advantage in
to the point that Purchasing Management wholesale distribution. CEO Strategist
needs to become a strategic initiative. LLC. works in an advisory capacity with
Let's promote Old Joe, he's been with us distributor executives in board
for twenty two years now and has been representation, executive coaching, team
handling the commodity side of our coaching and education and training to
business for the past fifteen years."The make the changes necessary to create or
VP of Sales ---- "But Joe doesn't have maintain competitive advantage. You can
any formal management training and some contact them by calling 352-750-0868, or
of our sales people think he's a real visit for more information. CEO
pain! He's doesn't understand cost Strategist - experts in Strategic
effectiveness and lacks creativity. Leadership in Wholesale Distribution.
Remember the major problem we had with




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