My company has just hired a strategic sourcing consulting
firm to “take a look at” our Purchasing Department. Everybody
is in a panic thinking that some people will be fired or the whole
Purchasing department will be outsourced. Have you ever been through anything
like this? What can we expect? – Brad in PA
Brad, I have
been through this type of strategic sourcing exercise several times and nobody was fired as a result,
although some should have been, but that's another story. I've
seen Purchasing consultants study whether the Purchasing department should be outsourced
and they even recommended that it should be, but it never happened. What to expect? Dozens of spreadsheets, hundreds of hours of
extra work, hundreds of thousands of dollars (or more depending on
your company size) in reported cost savings (much less in actuality) and
close to zero anything in the way of employee compensation or appreciation. I don’t mean to dishearten you; I only want to prepare you for the
reality of what's to come. The sad thing is that your company
could save the hefty cost of the Purchasing consultanting firm as well as achieve all
the desired cost savings results if it would just listen to the advice
of the purchasing experts like you that it already employs. A consultant once told me this definition: A consultant is someone
who looks at your watch and tells you what time it is. I added
to that: And then asks you to make a spreadsheet of time zones across
the world. Good luck. You’ll need it!
I'm a
vendor rep (and have been for 30 years) and I call on buyers all
the time. My question is: should I bring a PowerPoint presentation? I never know if people these days expect/demand all this new-fangled
technology. – Stan
That is a great question, Stan. I’m
glad you wrote in with it. PowerPoint can be used very impressively
in sales presentations. It makes the presenter stand out as
a professional in my mind. The short answer is yes, definitely. Here are the caveats. A) Always bring your own laptop / cable / power
supply / speakers / knowledge of how to run all of the above. The
only thing you should expect from your host is the screen, board or
wall on which to project the material. I can’t tell you how
much time salespeople have wasted in meetings over the years because
they did not have what they needed or they had no idea how to use
any of it. We would help and then track down IT people. It’s a mess. I’m sure as a salesperson, you would rather spend
your time talking about your product or service than fumbling with
your laptop. B) Only include relevant slides. Many salespeople
re-use presentations with other company’s proprietary info (big faux
pas) or they skip over information trying to save time saying it’s
not important. I always wonder what I'm missing and why. Leave out the deadweight ahead of time.
From a purchasing agent’s
point of view, what is the proper amount of times that a good salesperson
should follow up on leads and in what time frame? How do I straddle
the line between, “working for the business” and “becoming a pain
in the butt?” – Tricia in NY
As you can imagine, Tricia, this
is highly subjective, based on the buyer’s personality. Believe
me, every buyer makes the distinction you mentioned above. I
asked some of my contacts and the general consensus is one follow
up per 3-6 months! I know this is about ten times less than
your boss tells you. One more tip: if a buyer says that
he or she will get back to you after hearing from his or her boss / the
head of another department / the president of the company, you'll have
to be patient. If you don’t hear back, the buyer is either rudely
ignoring you or is genuinely waiting for an answer from someone else. Calling or e-mailing constantly won’t help no matter what and will
definitely move you into the “pain in the butt” category.
I just got a job as a Buying Assistant. I was supposed
to start training with my boss right away, but there was a mix up
with the scheduling, and now my boss has to leave on a business trip
for the next two weeks. He gave me a Purchasing industry trade magazine
(that runs your column) and told me to “read and learn” while he is
gone. I don’t want to make it look like I wasted the time,
but I have no idea where to start or what to do. Can you set
me on the right path? – Call me Clueless in CA
Welcome to the
wonderful world of purchasing, Clueless. It just gets better
from here! I think you will do fine since you have a boss smart
enough to introduce you to a publication that runs my column! To learn about the industry, start with these websites. They
are comprehensive and will provide you a good knowledge base (including procurement definitions, supply chain management issues, and procurement solutions) about
standards and current trends in the Purchasing field as well as provide courses: www.ism.ws and
www.supplyknowledge.com
I work in the Purchasing
Department of a large company. I am often called upon to lead
vendor selection teams. It’s always the same pattern. About halfway through the process, I lose control of the strategic sourcing project as
competing factions within the company start to fight to get their
priorities to be everyone’s priorities. What can I do? – Anonymous
in Corporate America
Anonymous, you do ask the tough questions, don’t you? Years ago, one thing I learned about strategic sourcing projects was never to let the scope change from the original goal. As you go along, everyone (and I do mean everyone) has a “better idea” to “improve” the project. Resist this. If the sourcing project was structured appropriately from the beginning, this will only hinder it. A good way to handle this is to strongly urge that you finish the project under the original scope and include all these “great ideas” during the next round of sourcing that commodity. The old priority shuffle is also a challenge. The best way to handle this is to have a higher-up (such as a CPO, CEO or Senior VP) with veto power who makes the decision so you will not be a casualty of the war. This is often possible if presented correctly to said higher-up. Failing that, you want to acknowledge all contributors needs, de-emphasize your own so it doesn’t look like you have a personal stake in the outcome, and highlight / fight for only those priorities which are good for the company as a whole. This line may work, “Well, Billy-Bob, I know you’ve indicated Vendor X would be good for your department, but Vendor Y seems to be leading among the rest of the participants. Why don’t we send your concerns to Vendor Y and get a clarifying response from them?”
I constantly read in magazines that a typical
purchase order cost 75-150 dollars. How can this be true? Skeptical
Skip
Skip,
I hear what you are saying. I have doubted those numbers too. How can a hospital determine an aspirin costs 200 dollars? It’s
all thanks to the magic of Cost Accounting. That must be quite
an interesting field. Old Merlin himself wouldn't know where
to start! The underlying issue is that all the overhead (building
maintenance, salary, equipment) is built into the numbers. Let’s
say you bought a fancy laser printer for 1,000 dollars and you only
printed one page in an entire month. Excluding building maintenance,
salary, etc, and just focusing on the retail price, the cost per page
would be 1,000 dollars. If you printed 10 pages in that month,
the cost per page drops to 100 dollars per page. Now add back
in your salary, electricity, etc. The cost per page goes back
up. That’s the magic of Cost Accounting.
My coworkers
and I in our small company have a bet going on this. Who do
you think is responsible for resolving invoice problems, the Purchasing
Department or the Accounting Department? Betty
Oh, Betty! This is like writing to Santa Claus and asking who is responsible
for delivering jellybeans, him or the Easter Bunny. Sure, Santa
could technically deliver jellybeans, but should he? Just for
fun, you might want to find an “Ask An Accountant” type column and
send the same question in to that advice columnist.
