Giles Wright, Jr.
Giles Wright, Jr., Vice President, ADR North America, LLC, Ann Arbor, MI 48106-0366, 734-930-5070, http://www.adrna.com, firstname.lastname@example.org
William L. Michels. C.P.M.
William L. Michels. C.P.M., Chief Executive Officer, ADR North America, LLC, Ann Arbor, MI 48106-0366, 734-930-5070, http://www.adrna.com, email@example.com
Introduction. Today's Chief Executive is no longer content to grow the top line to improve profitability alone. Demand for higher returns for shareholders are driving the modern CEO to grow top line sales and reduce bottom line costs.
Commodity Managers become Business Mangers. In business today, there is little value for a purchasing department that is merely managing transactions with a low return on investment. The new requirement is for commodity managers as business people with strategic vision, plans and results. It is not uncommon for a business to demand continuous cost reductions of 5% or more from the purchasing department. Commodity managers are being asked to manage cross-functional expenditure in companies where organizational difficulty is high and expenditure is extremely strategic and complex. How can a company be transformed to provide results year after year? The Results Oriented Purchasing strategic map below should be implemented.
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Baseline Assessment. The first step that must be sorted out is a statement of where the company is in terms of its purchasing evolution. Business issues, processes and practices should be assessed. Asking the following questions can help determine your company's baseline:
External consultants have these baseline checkpoints and it is often cheaper to commission the study than develop these criteria and practices, but it can be done in house.
Gap to Best Practice. When a company develops the criteria of best practice, it is easy to overview a template and identify areas of strengths and weaknesses.
Vision. Once the weaknesses are known, a vision of where purchasing should be, can be developed. The vision should be short, to the point and clearly the end objective.
Reorganize for Success. A critical evaluation of purchasing must be made in line with the new vision. Normally, reorganization to get focus and direction is necessary. In many cases, the staff can meet the challenges of the vision, but in some cases, they cannot.
Introduce New Processes. The baseline highlights the poor processes and business needs for effective purchasing. A careful cross-functional approach to overhauling business practice is required.
Enhance Buyer Tool Kits. The baseline approach will highlight the needs to be developed. In many cases, project management, cost management, presentation, writing, financial, strategic planning skills require enhancement.
Create Metrics. Real, auditable metrics for buyer/supplier performance must be developed
Conclusion. A complete review of purchasing and close of gaps to best practice in today's environment of e-commerce, consolidation, integration, and other changes to the supply base will lead to Results-Oriented Purchasing.