Effective purchasing strategy: Implementation

Common wisdom says that when a company reaches the number of 700-900 employees, it's a perfect time to start working on Purchasing management.

When I started working as a global procurement manager in January, the company where I worked had only 300 employees.

When I announced my new job to my colleagues and former colleagues, most of them congratulated me, their replies were quickly followed by, “Wow, it's really very early for a Purchasing organization start.”

In reality, it is not too early. In a perfect world, you can start as soon as you reach 100 employees.

Why? Because by the time you get to 700 people, it's too late. The procedures have already broken down. People are starting to feel the evil that's already established, and questions are popping up on the radar.

When cleaning up purchases is a job in itself

This makes it easier toprofitability analysis, but it is a path that requires a lot of time to reap the benefits.

At this time, you will need a person whose job is to clean up anything that is not properly operational.

I was that guy who came to clean up the historical mess. The CFO wants savings commitments.

Thinking about buying comes thinking about developing a sourcing strategy.

The aim was to work towards becoming a trusted advisor and to develop a more nuanced approach to spending.

What really happens is that we get stuck in operations that aim to try to fix the problems.

The company is not seeing the strategic value it was hoping to get.

In reality, it probably requires two years of tactics, operational work to get to this point.

How can you buy strategically if you don't know what you're spending?

Off radar

In the early stages of society, the focus is on income and the development of new business.

Why hire a new employee to focus on something, shopping, that's not even detected by the CFO's radar yet?

Instead, most businesses focus on what's on their radar: The need to pay bills.

Despite the best of intentions, you most likely end up in a complex situation.

There will be a snowball effect in a company with 800 employees where supplier data is scattered for lack of very little control.

You may have compliance issues, and you'll have a lot of cleaning up to do before going public, if that's in your plans.

By the time your business reaches 100 or 200 employees, you will need to have a qualified Buyer to manage purchases. Not necessarily as a full-time job. Sometimes it's enough to have a consultant.

I cleaned up 600 suppliers over the last year.

Data cleaning was done in two days.

So that's it's manageable.
I also cleaned 12,000 suppliers without any processes in place.

We called in an external firm that spent six months in order to finalize the task.

Adaptable globally

This is a necessity that you will one day have. Scalability is not a big concern, if done with business growth.

The processes for analyze suppliers are more or less the same for a company with 100 employees as for a company with 100,000 employees.

Be proactive rather than reactive. Hire someone to help set up all the interconnected systems, processes, and policies, and make sure policies are reflected in the processes. Then, no one will have to “modify” the system put in place because it will work.

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