Media coverage during the past year has further deteriorated the automotive market. The blame for all those recall campaigns carried out by Daimler, VW and General Motors, among others, is usually put on the purchasing department: The emphasis is always on the price and never on the quality. Or is it?
Purchasing under pressure
What is the status quo in purchasing in industrial corporations nowadays? The typical purchaser shares an open-plan office with his or her colleagues, sitting in front of a computer. Half of his workday is spent entering data into the system, the other half answering e-mails. In between, he has to participate in meetings which can be extremely fraught with conflict. Price dumping is expected by superiors and leaves him hardly any room for maneuver. Another factor is the growing international competition. Let’s face it: Purchasing is under severe pressure. And this pressure is passed on to the suppliers. How do you think the purchaser will enter into the next price negotiation? Perhaps he comes straight from a meeting with the head of the quality department who told him how disappointed he was with his work. Or the Global Manager has only just raised the saving target. And in order to save the kettle from exploding, action needs to be taken – the sooner, the better.
Long-term business objectives
It is commonly agreed that the purchasing department has to comply with the company’s long-term business objectives. Dear salespeople: Why don’t you ask your buyer what his long-term business objectives are? What can you as the supplier do for your partner in the next few years? How can you face the global competition together? Communication is the key – internally, too!
Why is it so important to change the purchasing situation?
The tremendous stress and extreme pressure the buyers are under lead to high fluctuation and ultimately to a lack of specialized workforce. This results in poorer production quality which again raises the business risks. Moreover, a badly trained or unmotivated purchasing crew is no asset to the internal sales. Higher competition leads to everyone blocking each other instead of acting in concert.
My 5 solutions
- A plan for action needs to be put into place
Concrete measures after the situation analysis which have to be implemented immediately – with short-term, mid-term and long-term goals. Keep in mind: Old structures have had time to grow, new ones need to be allowed the same.
- Build bridges instead of digging trenches
Instead of pointing the finger at each other, it is so much more effective to think about strategies that could really push the company forward. Building bridges can be very helpful here – between suppliers, purchasing, and sales.
- Internally strong
Ask, show, talk to each other! Bring your internal departments together, and you will will find that the results can be truly amazing!
- Internationally competent
Intercultural communication is of utmost importance on today’s global market. In order be internationally competent, you need to train your purchasing department accordingly in order for it to be able to speak their partner’s language through social competence.
- Re-thinking on all levels
Continue as you’ve always done, and you’ll head straight into a dead-end street. Instead, promote the willingness for innovation on all levels, the early intertwining of projects in different departments and a close cooperation between the department heads. So many internal target conflicts could be avoided!
What does the future of purchasing look like?
The purchaser of the future will be a manager of his own product groups with a lot of personal responsibility and initiative. He or she will be an expert of intercultural communication and an ambassador of his or her company. He will be working in inter-disciplinary teams with professional leaders instead of old-fashioned hierarchies, and his negotiating skills will be of paramount importance for the success of the entire company. He will be a price-dumper no longer, but a negotiating expert with personality.
The re-think has already started in many industrial companies, also in the automotive industry. I wish the same for you. Ask questions, find solutions and start cooperating!