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There is much discussion and heralding of various company practices that are being used today to add value to the corporate bottomline. Each company seems to have its own model. Each breakthrough innovation that leads to a corporate turnaround, or market dominance, is deemed to be "pushing the envelope." Yet, is there a trend in the methodologies being implemented? Current best-in-class methodologies that are transforming purchasing into a value-added corporate entity appear to follow a pattern, one that crosses industries and company demographics. This pattern of value-added methodologies may be the planning model businesses can use to seize control of purchasing’s shifting role as we enter the next millennium. If a trend exists it seems to be centered around three major methods of reengineering: (1) workforce utilization; (2) the use of suppliers’ core competencies; and (3) business efficiencies and measurements.
Your Suppliers’ Roles
Nearly a decade ago, reducing the supplier base was embraced and has become a common methodology for leveraging volume and pricing. However, the use of fewer suppliers has evolved into much more than simply discarding the Rolodex in favor of a few business cards and volume discounts. Today, purchasing is adding value by pruning the supplier base down to those whose core competencies are best-in-class. Those suppliers who have the ability to complement purchasing’s supply chain needs are accorded a coveted position. In turn, purchasing must work with these suppliers to build long-term relationships. The two organizations must share a common vision, personal relationships must be developed at all levels, and both parties should see benefits to the relationship. When forming a strategic supplier relationship, be patient. Trust can take time to develop.
Business Efficiencies and Measurements
Best-in-class organizations measure their business and wring out cost to improve business efficiencies. Those that have been doing it successfully have coupled various dependable methodologies with new breakthroughs in technology. Therefore, the key here is the use of new technology as a tool to take advantage of proven core competencies and bring them to a new realm. Continuous process improvement must factor in the advances of technology to stay best-in-class. However, internal systems must first be tied together through enterprise resource planning (ERP) — purchasing, accounting, and other departments must have access to one another’s data before an automated system can be used to transmit payment to suppliers.
Robert J. DeFusco
Robert DeFusco is a director of corporate materials for EMC Corporation in Hopkinton, Massachusetts. He has 20 years of purchasing background, including experience in worldwide sourcing, negotiation, reengineering of procurement processes, and quality management.
Mr. DeFusco has addressed numerous professional forums, including the National Electronic Distribution Association, the Institute of International Research, and the National Association of Purchasing Management at the International Purchasing Conference. His reengineering efforts have been featured in Electronic Purchasing, Electronic Business, and Electronic Business Buyer. He also co-authored a case study for EDI Forum entitled "Re-engineering Procurement at Bull Electronics."
Michael D. Clark
Michael Clark is president of Purchasing and Materials Consulting, Inc., in Yarmouth, Maine. He
has 20 years of business and education experience in both the public and private sectors, including extensive materials management experience with two Fortune 500 organizations. He also has project-management background in the electronics industry. In addition, Mr. Clark has secondary teaching and post-secondary administration experience.
CMP Media, Inc., "Channel Strategies PC Assembly Wave — A Reengineering of the PC Supply Chain May Cut Dell’s Price Advantage," Issue: 651, Section: October 6, 1997
CMP Net, "News Section: Top 25 Executives," Issue: 764, November 17, 1997
"Conditions that Create Influence for Purchasing in Corporate Strategic Planning," Center for Advanced Purchasing Studies, 1997
Fortune, February 20, 1995, "Purchasing’s New Muscle"
Fortune, December 8, 1997, "Toyota Defies Gravity"
Logistics Management, August, 1997, "Why Sun Listens to the ‘Voice of Suppliers’"
"The Outsourcing Institute Forum," February 4, 1996
Purchasing, February 13, 1997, "AUTOMOTIVE/OEM, Purchasing at Harley Links Supply With Design"
Purchasing, July 17, 1997, "Purchasing Evolves Into Supply Management"
Purchasing, September 19, 1996, "Why Sun Microsystems Wins 1996 Medal of Excellence"
Purchasing, September 19, 1996, "MEDAL OF EXCELLENCE, Sun Shines by Taking Out Time"
Purchasing, May 1, 1997, "Is Integrated Supply the Way of the Future?"
Purchasing, May 22, 1997, "Integrated Supply Chains: How to Make Them Work"
Purchasing Today®, August 1997
FOR FURTHER READING
Burt, David N. and Doyle, Michael, The American Keirtsu, Business One Irvin, 1993
Burt, David N. and Pinkerton, Richard L., A Purchasing Manager’s Guide to Strategic Proactive Procurement, American Management Association, 1996
"CEOs Speak Out: How They View Purchasing," Purchasing Today®, January 1998
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