services, your costs should be reduced. To achieve compliance, you will need the support ... of becoming the customer se
SUCCESSFUL PURCHASING More Than Just Price STEVE MIZES, MBA
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When you tell a colleague or friend that you manage purchasing for your company they often
think of you as “the person who finds the best deals.” In some respects, that statement can, and should be true. However, there is much more involved in developing a successful purchasing strategy for an organization than focusing exclusively on price. A sustainable and effective
program, one that demonstrates value to both employer and employees, must have a plan, a leader, and
above all, match the goals of the company. Throughout my 14 years in the purchasing profession, I have spoken with numerous colleagues and reviewed several different approaches which have had varying
degrees of success. The aim of this column is to help you define your purpose and develop a successful program.
The reason companies centralize purchasing is to improve the profitability of their business. By centralizing labor, limiting suppliers, and consolidating the purchases of products and services, your costs should be reduced. To achieve compliance, you will need the support
from both your management and co-workers. Restrictive guidelines that limit personal choice
encourage employees to find a way to break the rules. Providing a great deal of selection, along with
multiple suppliers, will not allow your business to obtain the best prices. You must find a middle ground that works within your company culture. Do not try to be the person to set company culture, but rather, work within the culture that already exists.
For example, let’s review how this relates to office supplies. The largest discounts are available when you restrict the thousands of items available from a retailer to a handful of products
your employees may select. If your list is too limited, your employees will constantly fight to
find reasons they will need to purchase outside the guidelines. Anticipate this action and offer some
variety. Rather than offering just one style of blue pens, offer two. Empower employees with a limited
selection from each product category. Your colleagues understand the company will not allow unlimited
options, they just want some personal decision making. With this route, your compliance will rise along with your savings.
Another example is the management of wireless service — your mobile voice and data service. If you select a single carrier for the company you will inevitably disappoint someone. And in many cases, the disenchantment exists for a very valid reason. The larger carriers offer great coverage,
but “dead zones” are real and they exist where your employees live and travel. If you elect to reimburse expenses your employees incur on wireless devices for business, I advocate a “bring your own device”
(BYOD) approach. Empower employees to pick both the carrier and the device they want. Work with
management and select the dollar figure that makes sense for both the device and the monthly recurring
charges. By allowing your employees to make these decisions themselves you can avoid the responsibility of becoming the customer service desk for mobile devices. To the contrary, you are acknowledging that there is a company responsibility to help cover the costs that relate to work.
The most important take away, and surprisingly the least utilized, is to remember that
the suppliers you select should work in partnership with you. Thus, during the selection
process, make your expectations clear and hold them accountable. If you don’t define your
expectations your suppliers will certainly fail to meet your objectives. Invest the time prior to signing
any contract to define roles, reporting, and service level commitments. At a minimum, meet with your
key suppliers quarterly and review their performance. Where there are shortfalls, assign tasks, names and completion dates. Hold your suppliers accountable to all agreements.
The glamour of most businesses traditionally goes to the people who produce sales or topline revenue. Your role in purchasing plays an important part in the profitability of the company, it is only less visible. As you achieve savings, write them down and share with management.
If you carefully track expenses and document the value you create you will ultimately ensure greater job security, a higher salary, and inevitably a promotion. Make time to track this, create the visibility and “sell” yourself.
STEVE MIZES is president of EC Purchasing, an organization that harnesses the buying power of more than 200,000 members. With over 14 years of experience in corporate purchasing, Mr. Mizes has been invited to speak before many professional organizations on the subject of purchasing. He has also published a full series of articles that are available by contacting him directly at
[email protected] or visiting stevemizes.com.
