Traditionally, an efficient buyer was simply a good negotiator.
Purchasing and Supply with Nyasha Chizu
Strategic procurement before the 90s was manned by personnel who had mastered procurement processes and negotiation.
There has however been significant advancement of the purchasing function over the years.
Executive support has been pouring to strengthen procurement policies and procedures, elevating the procurement function from clerical and tactical to strategic level and thereby demanding the appointment of qualified and competent procurement managers.
The procurement profession has therefore changed dramatically over the past 10 – 20 years and continues to change constantly.
Uncertainty in business, slow revenue growth and lower profit margins that are caused by economic factors such as higher interest rates and commodity driven inflation has demanded more cost control by both the finance and purchasing functions.
Accountants have always dominated procurement staff due to the broader limitation of most buyers to understand the business case, align their activities to contribute to corporate competitiveness and the failure to report their contribution towards achieving the organisational goals.
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The major strength of procurement staff has been their understanding of their core activity that many other activities of business do not understand. The ability to source rather than to buy/purchase has seen executives elevating the function in the organisational echelons.
Professional procurement staff has capacity to develop contracts and manage them. It has been established that most projects that failures are a result of the missing link of contract management since emphasis is placed on the project management.
Organisations have realised that well oiled procurement units have significant impact on profits given the fact that procurement activity is responsible for spending half if not more, of every dollar in revenue acquiring goods and services for the company.
This is achieved through facilitation of timely availability of goods and services and ensuring organisational provisions are of an appropriate quality.
Procurement also supports innovation that can be drawn out of the supply base through good relationship management. The change in the role of the procurement function is driven partly by senior executives who discover the potential of the procurement department.
This therefore requires the practitioners to rise up and be able to demonstrate their capabilities. Procurement capability is more than just changing purchase requisitions to purchase orders, buyers need the capacity to contain and reduce costs and contributing to the competitive advantage.
A procurement professional needs procurement technical skills that are acquired from studying relevant procurement qualifications.
In addition to the basic procurement skills that includes risk management in procurement, they need to make use appropriate technology that assist them to assess or conduct sophisticated analysis, collaborating with suppliers, looking globally for sources of supplies and using best practice to manage contracts and projects.
Accountants agree that procurement contributes directly by managing supply availability, distribution costs and escalating commodity prices.
The weakness of most procurement personnel is in the understanding of business model changes where procurement must play a leading role to support the organisational objectives.
These initiatives include the evaluation of outsourcing make or buy decisions, improving cash flows, complying with new regulatory requirements, managing sales and general administrative management.
If your buyer cannot negotiate, manage suppliers to improving the availability of resources and manage contracts, ensure that they acquire the necessary procurement qualifications that equip them with the foundation skills of the profession.
If the basics are covered, then thrive to train your buyer to add value through acquiring advanced training that strengthens conceptual skills.
Nyasha Chizu is a Fellow of the Chartered Institute of Purchasing and Supply writing in his personal capacity. [email protected]
