Purchasing still trying to catch up

Shutterstock.com | Ollyy

For many years, I have been committed to counseling companies on how to make their purchasing department ready for the future and thus able to compete. What I have come across is excuses for at least the same amount of time: no time for digitization and innovation, not enough staff for new concepts, and a lack of creativity for ideas. In the meantime, however, the situation has become so critical that many purchasing managers have realized that things cannot go on like this.

As a result of the pandemic and the war in Ukraine, numerous companies and organizations have become aware of their purchasing's vulnerability to crises. Rising raw material prices, jeopardized supply chains, digital environments, and the call for a new strategic direction — all of these factors have been impacting the purchasing department. Everything that has been overlooked over the last few years or even decades is now hitting home. The job now is not to take random, empty measures, but to build up a modern, innovative purchasing department in a structured manner.

Core purchasing capabilities of the future

To catch up with international competition and to secure a sustainable position in purchasing, a number of core capabilities are required. Among the key tasks in purchasing are negotiation skills, communication skills, knowledge of the specifications of the goods to be ordered as well as their classification into commodity groups, sensible supplier management, and know-how in framework agreements. In theory, this seems more than obvious and I'm sure this isn't the first time you've heard it. In practice, I nevertheless experience that precisely this basis is lacking. In this article, I will take a closer look at the subjects of negotiation skills and communication skills.

Negotiating skills: more than just price squeezing

First of all, we are creatures of habit as the saying goes. In purchasing too, daily routines ensure that we lose sight of the key tasks. Negotiations are part of the everyday life of buyers. Nevertheless, many times their preparation suffers and then the outcomes don't turn out as desired.

The top athlete illustrates this case well. Let's take a look at the javelin throwers who have qualified for the Olympics. After having thrown the javelin thousands of times, they know exactly what they have to pay attention to. Nevertheless, they don't just take it easy, but train all the more intensively, especially shortly before a decisive competition.

Similarly, good performance in any negotiation requires regular practice. The excuse that there was no time often leads to unpleasant consequences. To overcome this, I have developed a mind map as a tool in preparing well for negotiations. It is no larger than a regular sheet of paper and contains all the essential aspects that are important in a negotiation. Learn more about the mind map and how it works in my blog article: "Does purchasing need to prepare for negotiations? After all, they are part of everyday life ..."

Communication skills: a must in purchasing

Next, purchasing goes hand in hand with effective communication. Bearing this in mind, it is essential to practice communication skills on a regular basis or they will degenerate. In our modern work environment, we are increasingly forgetting how to talk to people as much of our communication is done through emails, chats, or other written messaging services.

In this context, a situation comes to mind that I once experienced as an interim manager. One of the people there was a young, well-educated buyer who was also very socially competent. I once observed her typing a question about the ERP system into Google and then asked her why she didn't ask one of her colleagues. She replied, "I don't want to disturb them and prefer to look for the solution myself." Of course, you don't have to ask about every little thing, but at that moment I also realized that we have already lost the ability to communicate internally.

Another phenomenon in this connection is e-mail. At this point, I don't even want to talk about how many mails are unnecessary and only serve to protect the writer or to shift the blame onto someone else in case of doubt. Similarly, the famous "mountains of work" could be easily avoided. My recommendation: reach for your phone. This sometimes saves a lot of e-mail correspondence and is also a good opportunity to train your own communication skills.

In my book, Purchasing in Transition, I also discuss other aspects of communication, such as how to address conflicts openly and how to avoid wasting time in communication. 

Do the practice test.

As is so often the case, purchasing executives are primarily responsible for successfully playing catch-up. Instead, they should be leading the way as confident leaders and ask themselves where their purchasing department stands today and where it should be tomorrow. Put your purchasing to the practical test:

• Do your buyers only have Excel spreadsheets on their minds?
• Do they even know the final product and do they care at all about the quality?
• Are you spending too much or too little in purchasing goods and services?
• Do conflicts occur often in your purchasing?
• Do your buyers suffer from a lack of creativity?
• Have your buyers ever heard of strategies?
• Do you lack language, communication, and social skills?
• Do your buyers lack negotiation skills?
• Is sales more important than purchasing in your company?

If you've been nodding your head while reading this, then it's high time to make a change. To find out exactly where your focus lies, contact me to arrange a personal appointment.

In my new book, Purchasing inTransition[Der Einkauf im Wandel], discover the five success factors that will define purchasing in the future.

English translation by Nelly Thomas; MBA