Now, more than ever, many Purchasing Managers are starting to feel the pinch or have been feeling it since the summer. Sales are slow and anxiety is heavy as fewer resources become available and expectations heighten. Companies keep saying “gimme, gimme” with regards to cost reduction/avoidance and increased supplier value. The silver lining is that it is possible to achieve these demands without spending a whole lot of money or any for that matter. However, one can argue and say that time is money…oh well. The improvements may not be seen immediately, but will prove to be beneficial in the long run.
With an unstable economy and rising prices, it is difficult for many Purchasing Managers to deliver savings continuously. Their situation is complicated, but can be explained in simple terms – some individuals are forced to produce more with less, and this also goes for many who find themselves far from the world of Purchasing Departments.
The underlying problem sometimes lies in the reactive mindset. With a volatile economy, it is necessary to transition to a proactive approach. Back in July, I posted a blog titled “Quenching Your Company's Thirst” in which I briefly touched upon the topic of limited resources. We are all familiar with the phrase, “If life hands you lemons, make lemonade.” But what if you have only one lemon or no lemons at all? This is the dilemma that many Purchasing Managers are facing currently.
The perception that Purchasing Departments are costs centers and not profit centers creates the impression that no investment is needed. Better technology and outsourcing procurement services are rarely invested in them. Therefore, Purchasing Managers cannot wait for lemons to be handed to them. They need to go out and pick the fruit themselves.
Several hurdles need to be jumped first in order to become proactive and start picking. The first obstacle is headcount shrinkage. Many Purchasing Managers are swamped more than ever with tasks; and morale may also decrease as layoffs continue. The endless list of responsibilities for Purchasing Managers is also a burden as corporate strategies gear towards more centralized sourcing rather than plant purchasing. The importance of establishing standardized processes is also stressed as standardization allows for better communication across all departments.
Several more challenges exist when we take into account globalization. In my next installment, I will venture into the global economy’s impact on Procurement. Stay tuned…and Happy Halloween.