4 key facts a buyer can learn from their supplier

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While procurement staff interact with suppliers as part of their standard activities on most days its often somewhat of an overlooked oppourtunity. While we get caught up in the transactional nature of our function it’s often missed that procurement staff have a lot to learn from their suppliers.

Buyers should not merely look at their suppliers from a transactional standpoint but look to what strategic information can be obtained during undertaking their routine tasks. The information can provide a tremendous advantage if captured and utilized in the right way.

Why is this? Well without a doubt, suppliers will generally know more about the product and market than their buying counterparts. While this might hurt your sense of pride it’s generally true, and my young padwan you have much to learn!

So what are the key 5 facts that buyers should focus on learning from their supply base?

1/ How requirement (design) influences price – suppliers usually have fabulous knowledge of the cost build-up of a product, how much for the raw materials, how much labor gets applied, how much it takes to assemble the product. This can be key if you’re looking for cost down opportunities.

2/ The most Optimum / Economic order quantities – Sure you know your requirement but do you know what would happen to your price if you optimized your order quantities? Your supplier does, so ask them!

3/ Lead time assessment – so you want to reduce lead time – who do you ask? That’s right the supplier, usually, they’ll understand how a lead time is constructed and why it is that horrendous figure you don’t like. Want to reduce it? – work with the supplier to understand what can be tweaked to bring about that lead time reduction you crave.

4/ The level of product risk – it’s often overlooked but a failure to evaluate (and mitigate) risk can bring about a supply chain’s downfall. Want to know those key risks and issues that are likely to impact you? That’s right, you guessed it – ask the supplier for their input.

As you can see valuable information is held within the supply chain. It can offer your company real competitive advantage if utilized in the right way. The first part is to identify how the supplier can help you, the second part is to ask.

You think there’s other valuable information held by the supplier? We’d love to hear what you think – feel free to add them in the comments section below.

5 reasons why your head of procurement probably has a worse job than you

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We all have times where we think our job sucks. Whether that’s just because the day brings a series of problems that are difficult to resolve or perhaps there’s conflict with other team members within the business. We all know that there are times when work can be challenging and we think our job is the worst.

But if you think you have it bad, spare a thought for your department head who probably has it a lot lot worse.”

Of course, one of the main challenges is that in a leadership role your answerable for performance, procurement (and supply chain in general) is one of those functions that can be influenced by various external factors outside of the department and at times it can feel a little like sticking your thumb in a hole to stop the water pouring out – sooner or later you’ll find more and before you know it you’ve run out of fingers!.

So what problems are Procurement leaders likely to face that makes their job worse than yours? Let’s take a look at the top 5.

1/ Compliance – Ensuring compliance with agreed business governance rules and enabling processes (like contracts) can be a nightmare. As procurement people, we know what makes sense and what works but unfortunately, some may see this as hindering their day job and an “I know best” scenario kicks in that actually causes the business harm. Ensuring compliance (especially in large companies) can keep even the best procurement executive awake at night.

2/ Unrealistic demands for savings – we’ve all been there – the business has problems – who’s going to get it out of the hole it’s dug itself – of course, those procurement folks. Setting unrealistic savings expectations not only does the business harm it can prevent procurement from working on the activities that matter.

3/ Cost Creep – One of the symptoms of a business that does not have its supply chain under control is cost creep. It might be gradual and across many commodities but bit by bit cost creep can happen and once it does it can rapidly become a major issue that often requires robust strategy changes. There can be a multitude of reasons for why this happens (at the supplier level) and how the business accepts it but of course, it’s the role of the procurement exec to resolve it.

4/ Business systems – Ahhh Technology, it can be a super duper enabler or a cast iron weight around your ankles. I’ve come across countless supply chain execs who blame much of their woes on legacy IT systems (or even worse new ones that weren’t scoped properly). Many supply chain departments have to find workarounds to plug the gaps and the resultant system becomes a control on how much change can be applied.

5/ The team – Yes, that’s right you’re the problem!! One of the key enablers to procurements ability to deliver its objectives is its workforce. Finding the right people to fit the appropriate roles can be a real headache especially if you’re hamstrung through poor funding for salaries or weak promotion prospects. Also what about skills, can you train? Molding a set of individuals into an immaculately functioning supply chain team takes hard graft for often little reward.

Ultimately, the role of Procurement executive can often feel as though it’s a thankless task with problem after problem thrown at you to hinder progress. However, if you get it right it can be a richly rewarding career for a right-minded (and problem-solving) individual

Got some thoughts on what the worst procurement job is? We’d love to hear your feedback below.

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