Purchasing Managers: Shop Talk 0Share By John Edwards No tags available Purchasing managers juggle a To-Do list o stressul! business-critical tas"s#rom stri"ing the best deals to $rojecting demand to staying abreast o inancial and $olitical changes worldwide% &isten in as our $urchasing managers chat about challenges and shoot the bree'e on strategy% (magine sho$$ing sho$$ing or a living% That)s the basic job descri$tio descri$tion n or $urchasing managers! but a sho$$ing s$ree at the mall isn)t on their To-Do To -Do lists% *nli"e $eo$le who sho$ or un or to relieve boredom! $urchasing managers ind themselves juggling an array o stressul! businesscritical tas"s% +s they strive to stri"e the best deals or their com$anies! $urchasing managers consider $roduct cost! ,uality! availability! reliability! and su$$ort when choosing su$$lies and su$$liers% (n addition to highly reined negotiating s"ills! $urchasing managers need in-de$th "nowledge o s$eciic $roducts or services and mar"et conditions% They dedicate endless hours to studying sales records! evaluating inventory levels! $rojecting demand! researching oreign and domestic su$$liers! and staying abreast o inancial and $olitical changes that could $otentially aect the su$$ly o! and demand or! necessary materials% &isten in as our $urchasing managers tal" sho$! chat about challenges! and shoot the bree'e on strategy%
ON THE ROAD: Scott Vanderlinde
Purchasing anager! Doe$"er (ndustries! +nnaheim! Sas"atchewan! .anada Purchases: .ustom and common com$onents or $roducing semitrailers and grain haulers Challenge: /athering bac"ground on $arts bought rom North +merican su$$liers that originated at overseas manuacturers Insight: verseas sourcing is diminishing in avor o North +merican su$$liers
+s $urchasing manager or Doe$"er (ndustries! a manuacturer located in +nnaheim! Sas"atchewan! .anada! Scott 1anderlinde ac,uires the basic materials the com$any needs to $roduce its semi-trailers and grain haulers% 2( $urchase custom and common com$onents! such as sus$ensions! tires! wheels! lights! and wiring! as well as raw materials! including steel and aluminum! which we use to either ma"e $arts in-house or outsource or abrication!2 1anderlinde says% 3or 1anderlinde! an ideal wor"day is one when everything rolls along as steadily and smoothly as the trailers and haulers his ac,uisitions hel$ create% 4is wor" is usually hectic! however% + ty$ical day might ind him negotiating with a mill or sheet metal! a metal abricator or a s$eciali'ed $art! or a com$onent su$$lier or a s$eciic nut or bolt% 2any com$onents we use are standard in the industry and easy to source!2 1anderlinde says% 2But when we design the $art! we $rovide drawings and s$eciications to a contract manuacturer%2 Because Doe$"er manuactures vehicles in an array o conigurations! 1anderlinde sources thousands o $arts and raw material ty$es to meet the com$any)s diverse $roduction needs% Each $urchase re,uires 1anderlinde to consider a variety o actors% 2( review the total cost! and how critical the $art is to manuacturing!2 he says% 2+lso! when we source overseas! ( have to consider actors other than trans$ortation that add e5$ense%2
Doe$"er sources nearly all its $roducts rom su$$liers located in .anada and the *nited States% 26e source 78 $ercent o our $roducts rom North +merica! distributed between .anada and the *nited States!2 1anderlinde says% 2+nd we buy a small volume o materials rom e5ico%2 Just because a su$$lier is located in North +merica doesn)t mean that its $arts or materials haven)t originated in other $laces% 2any o our su$$liers indirectly bring in $roducts rom overseas!2 he says% This means he has to investigate the su$$lier)s o$erations to discover e5actly who is $roviding the $roducts! and determine the $otential or su$$ly chain vulnerabilities that could cut o the source o a critical $art or material% 2( need to understand where our $roducts come rom and the diiculties our su$$liers ace!2 1anderlinde says% &i"e many $urchasing managers! 1anderlinde is seeing su$$ly chains shorten as rising energy and trans$ortation costs! combined with a wea"er *%S% dollar! ma"e it more e5$ensive to im$ort $roducts% 2The )ade in .hina) trend is diminishing!2 he says% 2any su$$liers are considering locating develo$ment and manuacturing in North +merica instead o .hina%2 9egardless o the distances involved! reight remains an inevitable $art o any $roduct)s cost% To sim$liy $ricing management and gain more control over shi$ments! Doe$"er $reers to $ay its own reight costs whenever $ossible% 2Even though about :8 $ercent o our $roducts arrive via $re$aid reight! there)s still a cost to us!2 1anderlinde says% 2No su$$lier can shi$ or ree%2 To manage $rocurement costs and e5$edite $lanning! 1anderlinde relies on Doe$"er)s enter$rise resource $lanning ;E9P< sotware% The technology! su$$lied by (ndiana$olis-based .onsona! $rovides a rulesbased system that enables 1anderlinde to $lan and e5ecute $rocurement strategies by describing the com$any)s re,uirements%
The sotware streamlines routine tas"s and hel$s 1anderlinde stay on to$ o critical situations% 9eordering! or instance! is now ully automated% 2The system alerts us when we)re down to the last our wee"s o inventory on an item!2 he says% +ll orders can be automatically increased! reduced! rushed! $ushed bac"! or even canceled% 2Purchasing has evolved rom the days when we handled orders manually!2 1anderlinde observes%
MAKN! TE"H #ORK: $on %etsinger Purchasing anager! 6estern Electronics! eridian! (daho Purchases: Electronics com$onents and raw materials or consumer and oice $roducts Challenge: aintaining inventory to su$$ort an array o com$onents re,uired by a constantly evolving $roduction line Insight: 1isibility $rovided by su$$liers) online $urchasing $ortals enables more accurate delivery commitments to customers
3or the $ast := years! eridian! (daho-based 6estern Electronics has handled $rinted circuit board assembly and $ac"aging o$erations or a variety o electronics manuacturers! creating the 2guts2 inside a variety o consumer and oice $roducts% +s 6estern Electronics) $urchasing manager! Jon &etsinger understands the sourcing challenges a contract tech manuacturer aces! including an almost endless array o electronic com$onents re,uired by a constantly evolving $roduction line% The $arts run the gamut o technology! including both cutting- and trailing-edge $roducts% 2( handle everything rom electric motors and large transormers to sheet metal and co$$er wire to ty$ical electronic com$onents! such as ca$acitors! resistors! and integrated circuits!2 &etsinger says% 6estern Electronics sources most o these materials! which are manuactured around the world! through large distributors! including +vnet and +rrow Electronics%
The irm also deals with smaller distributors or s$ecialty $roducts% ost o these $artners are located within a three- to ive-day trans$ortation window% .ustom metal $roducts! however! are usually sourced rom what &etsinger describes as low-cost geogra$hies! such as Thailand and other $arts o Southeast +sia% &i"e 1anderlinde! &etsinger relies on $lanning sotware to hel$ coordinate and monitor 6estern Electronics) $urchasing activities% 4e also de$ends on collaboration with co-wor"ers% 2( wor" with the scheduling team daily to determine the o$eration)s short-term needs!2 &etsinger says% The $urchasing grou$ serves as a su$$ort team or o$erations% 2+s $lanning hori'ons close in! o$erations needs to have the materials on hand! in the right amounts! at the right $oint!2 he adds% The (nternet also hel$s $urchasing managers do their jobs aster and more eectively% &etsinger notes that a growing number o su$$liers are setting u$ $urchasing $ortals on their 6eb sites% 2This technology allows us to log in! view costing inormation! and see the stoc" being held or us!2 he notes% 2That visibility allows us to ma"e more accurate delivery commitments to customers%2 By giving businesses the ability to view critical $artner data in real time! the (nternet e5$ands $urchasing)s geogra$hic sco$e while shortening lead times% (nstant data access also allows $urchasing managers to collaborate with global su$$liers :>?@! without $ic"ing u$ a $hone or sending an email! by directly accessing their $artners) inventory and billing systems% 2(t)s a worldwide economy! and the world is getting smaller!2 &etsinger observes% 2(t will hel$ our business i we can source rom dierent $arts o the world to satisy both our needs and! ultimately! our customers) needs%2
P&MPN! P&R"HASES: Ken #est'eld
Strategic Sourcing anager! The /orman-9u$$ .om$any! ansield! hio Purchases: Parts and materials or industrial $um$s Challenge: .o$ing with rising commodity $rices and trans$ortation costs Insight: onitoring su$$lier $erormance and relationshi$s hel$s identiy savings o$$ortunities
+s a strategic sourcing manager! Aen 6estield "ee$s a steady su$$ly o $arts and other materials lowing into The /orman-9u$$ .om$any! an industrial $um$ manuacturer located in ansield! hio% /orman-9u$$ manuactures $um$s or a variety o mar"ets! including consumer! munici$ality! wastewater! industrial! construction! $etroleum! and agriculture% The com$any o$erates seven manuacturing acilities in three countries one each in .anada! The Netherlands! and (relandC and our in the *nited States% 6estield has wor"ed at /orman-9u$$ or > years% 4e started in the com$any)s engineering de$artment! where he s$ent si5 years as a com$uter-assisted design ;.+D< o$erator and technical su$$ort engineer! among other roles% 4e then moved into sales and! when the o$$ortunity arose! became a cor$orate buyer% 6estield has wor"ed in $urchasing or the $ast ive years% (n his current $osition! 6estield oversees $urchasing or /orman9u$$)s main $lant in ansield% 4is job tas"s him with ac,uiring a variety o $roducts! ranging rom castings to diesel engines! as well as abricated $arts! electrical com$onents! wiring! decals! $aint! and even nuts and bolts% ost o /orman-9u$$)s su$$liers are based in the *nited States% 26e ta"e $ride in the act that we buy domestically!2 he says% 6estield describes his $urchasing de$artment as a 2jobbing sho$%2 26e don)t buy large ,uantities o any one $roduct! but we do $urchase volumes o dierent $roducts!2 he says%
6estield eels that careul statistical analysis is vital to coordinating /orman-9u$$)s wide-ranging sourcing activities% 26e base orecasts on history and sales re$orts!2 he says% The com$any)s sales inormation is stored in an +S->00 com$uter system running +.-P+. E9P sotware $rovided by .olumbus! hiobased TD.(% 2nce the data is loaded! the system creates a master schedule rom which we build $urchasing $lans!2 6estield says% The com$any scores its 0-$lus su$$liers on several "ey criteria! including delivery! ,uality! and $ricing data% 26e issue a ,uarterly scorecard to benchmar" su$$lier $erormance!2 6estield says% 2&ast year! we held a )su$$lier day) to reward the best $erormers%2 The event serves to strengthen bonds and hel$ both $arties better understand and a$$reciate each other)s needs% /orman-9u$$ $resented the su$$liers with awards and u$dated them on com$any news and $lans% &i"e his counter$arts at other com$anies! 6estield is battling rising commodity $rices and trans$ortation costs% 2To minimi'e the im$act o soaring $rices! we)ve built more eiciency into the assembly line and shi$ment consolidation $rocess!2 he says% 6hile 6estield reali'es that he has only limited control over shi$$ing costs! he still wants to shave rates wherever he can% 3or instance! ater learning that one carrier was moving about 0 $ercent o inbound reight on the su$$liers) terms! he called a meeting to address the situation% 2()m now wor"ing with the traic coordinator to com$ile a list o carriers we have contracts with and determine which ones oer the most avorable terms!2 he says% 2+nd we)re wor"ing toward including s$eciic carrier re,uests on the $urchase orders%2 6estield says strategic sourcing#a $rocurement $rocess that continuously im$roves and re-evaluates a com$any)s $urchasing
activities#also hel$s him buy $roducts and materials on the best terms! while saving time and reducing overhead e5$enses% 6estield stays abreast o new technologies to ind ways to im$rove $rocesses and cut costs% 26e now release about $ercent o our $urchase orders electronically!2 he says% 2That re$resents a lot o time#and $ostage# saved%2 4e)s also loo"ing into the 2su$$lier-managed inventory2 conce$t! which re,uires "ey su$$liers to assume res$onsibility or maintaining negotiated inventory levels% 2This is an o$$ortunity to shit some trac"ing and management wor" to the su$$lier!2 he says% But 6estield doesn)t believe that more su$$lier oversight will diminish the $urchasing manager)s role% 2.om$anies will always need someone to decide what to buy and who to buy it rom!2 he says% 2That will never change%2
!OVERNMENT #ORK: Paul North 1ice President o Procurement! 4arris .or$%! 9ochester! New For" Purchases: .ustom-develo$ed com$onents and non-critical $arts or radio communications e,ui$ment Challenge: Servicing government agencies with s$eciic ,uality! source! and security re,uirements Insight: .ustom sotware hel$s identiy $otential vendors and negotiating terms
Purchasing materials or a business with a customer base com$osed almost entirely o government agencies $oses a variety o s$ecial challenges% Paul North! vice $resident o $rocurement or 4arris .or$%)s 9ochester! N%F%-based 93 .ommunications Division! is used to co$ing with the s$ecial $urchasing re,uirements government customers set or the ty$e! ,uality! and geogra$hic origin o sourced $arts%
2ur $rimary $roducts are tactical radio communications e,ui$ment!2 North says% 2ur customers are the *%S% government! including the De$artment o Deense! and various international governments%2 (ntended or highly secure voice and data communications! 4arris .or$%)s s$eciali'ed radios oer reliability or high-security customers% 26e develo$ the majority o $roducts ourselves!2 North says% 26e identiy customers) needs and create $roducts that meet their re,uirements%2 Such s$eciali'ed radio e,ui$ment demands e5$ensive and oten uni,ue com$onents% *nli"e most manuacturers) $urchasing re,uirements! ,uality! source! and security considerations all trum$ $rice or the $arts North $rocures% 26e $ay close attention to security!2 he says% 26or"ing with the State De$artment and other government agencies! we $erorm a technology review o com$onents%2 The review tells the com$any)s buyers which $roducts they may $rocure and how to source them% North sources non-critical $arts conventionally rom vendors worldwide% 2Some com$onents are classiied as $ure commercial devices!2 North says% But many $arts! mostly those using cutting-edge or militarily sensitive technologies! are considered 2controlled2 and must be $rocured rom *%S%-based vendors% E5ce$tions are sometimes made when availability or some other criteria suggests that it may be best to loo" to a oreign vendor or a $articular $art% 2Through licensing! we can obtain a$$roval rom the State De$artment to source those com$onents internationally!2 North says% 2But some devices are not cleared to be manuactured outside the *nited States%2 +utomation technology has signiicantly lited the burden rom North)s $urchasing team% 2(t used to ta"e two days or a buyer to issue re,uests or ,uotations because we had to igure out what $roducts were needed and in what
,uantities! determine the last su$$lier o choice! and do the engineering drawing!2 he says% 2Then we had to $ull the $ac"age together by com$leting! distributing! and collecting the 93Gs! and manually transerring the inormation into a decision matri5%2 Today! a custom sotware environment automates most o the $rocess% 2The sotware tools relieve the buyer)s res$onsibility!2 North says% (n act! the system ta"es the irst ste$ in the $rocurement $rocess by automatically matching re,uired $arts with $otential vendors% 26hen ( arrive in the morning! the action messages are waiting or me!2 he adds% The system also acilitates online negotiations% 2ur su$$liers are given a bid deadline! and they $rovide an electronic ,uote!2 North says% 2The data is then $resented to the buyers or review%2 The system also hel$s 4arris meet e5$ort control mandates by ma"ing sure conidential data isn)t accidentally disclosed to $arties who aren)t cleared to receive such inormation% 2Protection is built into the system to ma"e sure the right $eo$le get the right data!2 North says% 4arris recently im$lemented a sotware-based dashboard that hel$s buyers trac" critical $rocurements with a real-time status summary% 2The system shows how many outstanding 93Gs the buyer hasC how many are on timeC and how many have been e5$edited! held! and cancelled!2 North says% 26e can loo" at the metrics and note where we)re in control and where we need hel$%2 North)s $urchasing team would be hard-$ressed to achieve com$arable eiciency and $roductivity without automation% 2(t has given us more time to wor" strategically and stay ocused on our "ey $artners!2 he says% That visibility is a strategic commodity $urchasing managers can a$$reciate! whether their To-Do lists eature $rocuring raw materials rom domestic su$$liers or high-tech com$onents rom overseas%
