Business Perspectives

Purchasing departments focus on more than price

Last summer, I conducted interviews with purchasing entities across a diverse range of U.S. industry throughout the Northwest.

The primary concerns of purchasing departments in second half 2011 relate to product availability and product integrity often expressed as weakened or non-existent supplier reliability.

When speaking with a seasoned and successful purchasing official regarding exclusive and national supplier contracts at a successful Montana company, he thoughtfully shared his purchasing philosophy and strategies.

"When we cautiously enter into a new supplier relationship of significance, we are prepared to go three years. It takes at least three years for the new supplier to come to know us — the way we operate, our insecurities and warts.

"We evaluate, over time, the supplier's response to our urgencies, and day to day how often do we see our rep, what new values are being brought to our business relationship? Finally, how straightforward, direct and timely is the supplier when they are in error? It happens."

When completing my purchasing interview with a senior purchasing director at a high performance manufacturer, his direct reports — three purchasing managers — asked whether they also might speak with me.

The four of us spoke for two hours. My appreciation for what lies at the heart and motivations of committed, caring, responsible purchasing managers increased.

Top-performing purchasing managers focus their vigilance on corporate profitability objectives. They serve as internal protectors to ensure that all P&L spending efficiencies of operations, marketing and administration are being manifested — day after day. They are vigilant "hall monitors" of business profitability.

In the fourth grade at P.S. 253 in Brooklyn, N.Y., if you got out of line, you got reported by the sixth-grade hall monitor.

It isn't low purchase price alone that gets the purchasing manager's attention. It's the purchase solution's impact and value on business performance. Purchasing managers support a higher priced solution — if that solution is proven the most valuable to business operations.

They also want to be involved in all price and delivery negotiations of a superior performing solution or even when a commodity solution is requested. Purchasing managers don't like being ignored. They can easily live with the well-earned negative comments by others on their diligence and vigilance, regardless of the management level.

Interestingly, when times are tough for their business, their work is easier as employees throughout the business are careful and watchful on what and how much they spend.

When times are good — when the business is growing — it is then when there is a noticeable slack in purchasing discipline that must be identified and corrected vigilantly by the hall monitor.

If your selling efforts to department and purchasing personnel are rewarded by an order, make them the "hero" — not you.

Stay humble. You've successfully proven the superior performance of your fairly priced solution and the purchase value integrity of you and your company.

Conversely, if all the purchasing agent screams is, "Price, lower price, lowest price" and remains deaf and blind to the total cost of ownership of your solutions — i.e. consistent quality performance, lowered cost of operation, availability and reliability in building the client's business profit — then just walk away.