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Back to Sourcing Fundamentals: Re-Organizing the Purchasing Function

By Julie Brignac (1254 words)
Posted in Purchasing & Supply Chain on June 25, 2013

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Successful sourcing of goods and services is a continuous improvement process that can provide a competitive advantage for any organization.  It ensures shorter cycle times through the use of master supply agreements, increases the supplier base to reduce supply risk, and improves costs due to market price competition.  Although a consistent sourcing system sounds like it should be fundamental to any business, over the past several years disorganization of the purchasing function has prevented these results from occurring. 


Disorganization is based on three common misconceptions:

1:  Anyone Can Buy Anything

2:  You Can Operate Without a Guiding Strategy

3:  Ongoing Training is Unnecessary


What caused these misconceptions to occur?


One interesting fact that I have observed over the last year while consulting in the areas of strategic sourcing, procurement and supply chain management is that many organizations are seemingly starting from scratch or they are missing crucial elements of a properly organized sourcing team when it comes to the fundamentals of a successful purchasing group.  While the organization may have people buying goods and services, they often are not organized as a purchasing group, and hence, they do not all operate consistently or with formalized purchasing processes. 


Another example is that an organization may be lacking a strategy, even though the purchasing function has been in existence in that company for many years. 


Or, another phenomenon is that the strategic sourcing group is formally organized and managing their primary categories, but again, foundational elements such as the consistent issuance and use of master supply agreements or a structured approach to supplier relationship management is non-existent. 


Time and time again, this trend of disorganization is caused by three common misconceptions.


3 Common Misconceptions for Your Organization to Avoid


Misconception #1:  Anyone Can Buy Anything


Every company needs to buy stuff.  As the global economy slumped into one of the worst recessions in recent history, many companies downsized and the value for a formalized sourcing function deteriorated because many leaders think that anyone can buy anything.  The purchasing function can be one of the most devalued functions in a company, because, as human beings, some people believe that anyone has the ability to “shop”. 


I’ve seen this scenario play out especially in midsize companies where the value for managing categories may be less than in the larger organizations where millions, even perhaps billions, of dollars are spent on key supply chain elements.  Therefore, as we emerge (hopefully) out of this dreadful recession, there is a pressing need to more formally organize the sourcing function because cost pressures continue to mount, even as business begins to escalate.


Misconception #2:  You Can Operate Without a Guiding Strategy


The number of major sourcing organizations who are operating without any type of strategy or guidance is astounding to me.  Developing a strategy is core to setting goals and objectives, setting the stage for major sourcing initiatives, and ensuring that all the stakeholders are aligned with regards to how sourcing should operate and what they should achieve. 


Developing a strategy – and living by it – is as fundamental as it gets.  Perhaps the value for a strategy declined during the recession as personnel decreased and other company initiatives took precedence, such as growing revenue, decreasing costs, or simply just managing to survive and stay in business. 


Whatever the reason, if your organization is operating without a guiding strategy that is documented and shared within and across the organization, then there is little to no chance that there is consistency in sourcing efforts, and the chances are that the sourcing group is busy fighting fires and being reactive, versus proactively understanding the vision and driving towards common goals.


Misconception #3:  Ongoing Training is Unnecessary


Ongoing training of sourcing personnel seems to have reached an all-time low since I started consulting 5 years ago.  I can personally vouch for this decline, because I can compare the amount of training that took place in my corporate days versus the amount of training I have delivered as a consultant.  Maybe some think that is an unfair comparison, but I don’t think many would argue that the emphasis on procurement training has declined, especially since many organizations shifted purchasing to individuals that may or may not have any formal purchasing training or background due to company layoffs, restructuring or other internal survival tactics. 


So now that the economy is coming back and organizations are re-staffing their purchasing groups, shouldn’t training on sourcing best practices be at the forefront of their priorities?


As businesses continue to bounce back and grow, it becomes more and more important to operate at a world-class sourcing level with a structured approach to supplier management and consistent use of master supply agreements.  In order to put this in place, we must first get back to sourcing fundamentals. 


Key Actions to Get Back to Sourcing Fundamentals:


  1. Stop Rogue Purchasing Processes

  2. Develop a Strategy

  3. Train, Train, Train to Drive Consistency in Your Sourcing Effort


While there are many other best practices to consider, if these three fundamental elements are addressed, organizations will greatly benefit from more formally trained and experienced sourcing professionals to manage their supply chain.


How does your purchasing organization function?  Have you experienced any of these misconceptions?  How have they impacted your effectiveness?



Written by Julie Brignac, Principal, Vantage Partners, and a member of the firm’s sourcing and supply chain management practice.  She has worked as a transformational leader in globally matrixed organizations, with over 20 years of strategic and operational experience in supply chain management, international outsourcing, sales and operational planning, procurement transformations and business process improvement initiatives. She is the inventor of The RoSS Model®, an end-to-end project benefit financial validation process that helps organizations predict, report, and reconcile project benefits to financial statements, specifically in the supply chain arena. Julie is an Associate Adjunct Professor for the Undergraduate School of Supply Chain Management at the University of Maryland, as well as an Adjunct Professor of Online Learning for the Whitman Business School for Syracuse University. She holds an undergraduate degree from the University of Virginia, where she was a Bailey Tiffany Scholar, and a graduate degree in Business Administration and International Business from the University of Maryland University College. She is a certified Six Sigma Master Black Belt, Lean Expert and a Certified Purchasing Manager by the Institute of Supply Management.



Do you have a question for Julie?  Post it in our Purchasing & Supply Chain Community, she will be happy to help: Ask an Expert


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Comments (4)

HeatherStone posted on: June 27, 2013

Hi Julie,
Sure anyone can buy anything from anywhere, but the thing is that there are usually a few best options for your company. Thanks for these great suggestions, and thanks to Lisa for sharing them with the BizSugar community.

Michelle posted on: June 27, 2013

Sourcing goods and services pretty much offers a good alternative if you want to save time and money. But I'm guilty as charged on the second misconception. You really need to be well-organized to achieve your goals when sourcing anything.

Thank you for sharing!

MACs Women's Group

Martin Lindeskog posted on: June 30, 2013

I worked as a purchaser for about 10 years, so Julie Brignac's post is music for my ears. I will show this post to my fellow board members (SILF Western region, a supply chain management organization).

Julie Brignac posted on: August 7, 2013

All, thank you for your comments - I appreciate them and thank you for reading the article!

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