It's in this new market environment that those in purchasing and supply management find themselves catalysts or roadblocks for change. Most are taking the path to positive change.
Word to the Wise: Strategize
Mentors and high-priced consultants have for years encouraged the ambitious to tie their own goals to those of the organization for which they work. To a large extent, e-procurement forces the purchasing manager's hand on this. The tactical mindset, the week-to-week perspective, the endless schmoozing of suppliers becomes an anachronism with e-procurement. "Forward-thinking purchasing organizations are recognizing that there is no reward or value for purchasing noncritical, commonly found, consumable supplies and parts," said Michael Patton, president and CEO of PurchasingFirst.com Inc., Dublin, Ohio. "So they are putting their resources toward strategic purchasing issues, where they can make a more significant impact on the bottom line."
The strategic-minded concur, suggesting that the profession is finally getting to do what it always wanted, according to one longtime purchasing executive. "e-procurement allows people to do what they thought they were going to do when they became purchasers: source merchandise and supplies and provide employees the tools they need to drive their businesses and be successful," says Beverly Mackey, vice president of procurement services for Charles Schwab & Co. Inc. in San Francisco.
As online procurement penetrates purchasing consciousness, the focus shifts from transactions to ensuring that the goods and services are more available to the employees. "You can offer a small selection or full catalogs defined to a particular group -- the buyer gets to be more of a customer expert. What our branch employees require is somewhat different from the needs in technical departments. It allows targeting specific task-related purchases," Mackey says. "My client is better-served because they can have specific tools they need, and the firm maintains the processes necessary to manage value."
Professionals can then start to focus on the customer, the organization's bottom line and value-added functions such as in-depth supplier sourcing, quality assurance and supplier performance reviews. Perhaps most importantly, online procurement frees up purchasers to tune into customer needs. "Our customers give us fabulous ideas on how we can improve services," Mackey says. Her organization's purchasing and supply team is able to hear the ideas and implement them, in part because e-procurement has begun to free them.
According to C.V. Ramachandran, vice president in the operations practice of Booz Allen & Hamilton in New York, e-procurement permits purchasers to control the market proactively instead of the market inflicting its idiosyncrasies on purchasers. Online purchases tend to encompass a full year's worth of supplies or services, or at least several quarters' worth. But customers may have to encourage their own organizations to be a bit more proactive. Ramachandran offers basic principles to ensure e-procurement's success across the board:
- Eliminate waste or create value. These are the only ways to achieve sustainable benefits.
- Match e-procurement solutions to the characteristics of the spend.
- Decide if, how and when you can become a market maker. € Leverage existing e-procurement products. Don¹t spend the time and money to develop something proprietary.
- Don¹t underestimate the internal changes required to realize benefits.
Proactive thinking should also lead companies and purchasing departments to more fully embrace the system and tenets of supply chain management, according to Thomas Stallkamp, CEO of MSX International, Auburn Hills, Michigan, a global outsourcing services company. "True supply chain management deals with strategic planning, production control and scheduling, inventory management, demand forecasting and warranty or customer follow-up," he said in a speech at this year's International Purchasing Conference in New Orleans. "All these functions in your company can, should and will continue as Web communication accelerates the speed of information flow."