Dr. Tom DePaoli
The dreary days of purchasing professionals as super clerks are dead. The exhilarating quest for supply management is underway at breakneck speed! Purchasing is rapidly transforming itself into the supply management concept. New skill sets are required to make the supply management explorer fast, flexible, and furious in their pace. Supply management has the most strategic importance of any strategy for corporate competitive survival in the 21st century.
The Old Style Purchaser Needed Bureaucratic Skills
In the old bureaucratic purchasing transaction jungle skills such as meticulousness, attention to detail, and “hard” contract interpretation were demanded. Purchasers were viewed as skilled “administrativecrats” who somehow got internal customers past the rules of the road of the complicated buying process. Materials did in fact arrive, but since cycle time varied, and material flow train wrecks occurred, the purchaser had to have a high level of expediting or “rescue” skills. Specification mistakes that required additional bureaucratic procedures to correct were frequent. Relationships with vendors were adversarial at best. Purchasers had to be tough. The “buyers-win the vendors-must-lose” negotiating style prevailed. The vendor base was allowed to swell in order to reinforce the “just-in-case” philosophy. Deselecting was quick and ruthless for the vendor who failed to meet expectations. Price alone was the king. Purchasers with price cutting skills on the price tag only were honored. Project bid and quote preparation proficiency were essential. These bid packages were often complicated and layered with legal language. Commercial code knowledge was deemed needed. The high transaction costs and bureaucratic procedures forced purchasers to be expediters or super clerks. Purchasers had to be very “productive” bureaucrats. Paper shuffling skills were expected. Transactions were many, complicated, and costly. The traditional arms length relationships with suppliers ruled. Much of purchasing focused on non-value adding tasks that had little or no impact on the bottom line. The understanding of tangled purchasing procedures and methods insured job security but did little for the bottom line. Vendor selection was usually by bid and vendors would change with each bid. The revolving door of vendor selection never rested.
Supply Management Demands Relationship Skills
Supply management is mostly about building relationships and trust. This demands the ability to understand, lead, and inspire people from various backgrounds and experiences. Supply managers must have the skills to lead cross functional teams. Cooperative long term relationships with suppliers are essential. Supplier consolidation is the starting point for enhanced relationships with suppliers. Supply managers need skills that define a methodical process for supplier selection. These skills include knowledge of the industry, market analysis, financial evaluation skills, and a keen knowledge of the business needs of their own company. Negotiation talent must be on the win-win cooperative basis.
Listening skills are critical. Supply managers must completely understand the needs not only of their own internal customers but what really counts for their real customers, i.e. those who pay for the products that their company produces. Supply managers must have sharp marketing knowledge of their final customers needs. They need to know what are the specifications or characteristics of their products that are really valued by their customers. Supply managers must do in-depth value analysis. Paying customers do not really care what MRO, office supply or miscellaneous suppliers that are used by a firm. They almost exclusively care about the product that they are purchasing. Supply managers should insure that the quality and services provided are top notch and that their world class suppliers are allowed to deliver this goal.
Supply Managers as Explorers and Agents of Change
The ability to empower end-users to do their own routine purchases is key. Since this is often a radical change for many organizations, supply managers must become agents of change. Skills in using the best practices for transaction reduction, streamline efforts, and reducing the work of other departments are essential. Trend producing skills in best practices such as EDI and purchase cards are necessary. Supply managers above all must understand their particular business and what is important for its success. They can no longer be sequestered in the dark bureaucratic dungeon of purchasing. Strategic skills and developing strategies for particular materials is requisite. Computer skills should be centered around the gathering and analysis of information not particular software. Electronic communication skills with worldwide connectivity are important. Cycle time reduction and time based management skills are constantly in use. Supply managers are the corporate innovators and they perpetually use the skills of their suppliers to “leapfrog” the business ahead. This is where the role of explorer sets forth.
Above all supply managers must possess an arsenal of communication skills. This includes presentation, written skills, and one-on-one personal skills to coach individuals to accept and change for the better. The table below summarizes the new skills required for supply management.
Bureaucrat Skills Explorer Skills
|Negotiating Win-Lose adversarial||Negotiating Win-Win Cooperative|
|Administrative skills||Relationship skills. High Integrity.|
|Attention to Detail||Communication Skills|
|Adversarial Supplier Relationships||Strategic Business Knowledge|
|Attention to detail skills||Listening & Trust Building skills|
|Expediting & Rescue ability||Leading Cross Functional Teams|
|Bid & Quote Package Precision||Consolidation & Supplier Selection|
|In-depth Transaction Knowledge||Best Practices Knowledge|
|Arms Length Vendor Policy||Tapping Supplier Innovations|
|Price Tag Cutting Ability||Total Cost of Ownership Reduction|
For more information on implementing skill training for supply management contact the author.