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Challenges Voiced by Procurement Professionals James Doyle, founder of JAMSO, began last month requesting procurement professionals what they faced at their companies as the biggest lack of understanding by leadership. Here is a sampling of the responses: Gerald (Jerry) Rasmussen: Many internal management and non-management people think there is a giant warehouse out there with every part for every application just sitting there and all we need to do is pick up the phone and order the part. And this is in an environment with fairly complex finished products. Robert Eddington: The expectation of others that the job is very quick and simplistic. In some cases I have to agree with them, but that can't be counted on in every case and all the time. They generally have no idea into all the background work or the problem solving that goes into the process. Reading the comments above it seems we all have the same problems. I don't think other will ever grasp the amount we do, usually because we make it happen so regularly that they just expect it that way all the time. Christine Langford, CPSM: There is a stereotype that Procurement are penny pincher whose favorite line is "sharpen your pencil." There's so much more value we drive other than purchase price. Understanding the costs in the marketplace and knowing your suppliers costs is so much more effective than just telling someone to generally cost reduce. I've found the most effective way to "sell" procurements capabilities is to have cross-functional needs and wants meeting before a negotiation. After, have a recap and let them team know what you've achieved. You can even assign costs to these items to show how much value Procurement achieves. Mark McKitrick: Communicating to the client what their true needs are versus what they think they want, and arriving at a solution that can be culture changing. Tyron Pirrie: Getting your colleagues to understand what procurement is and the benefit of the department to a company. Learn more. |
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Milwaukee Procurement Professionals Turn to Kanbans The Milwaukee Business News reported a key measure of Milwaukee-area manufacturing activity once again indicated contraction in June. The seasonally adjusted Purchasing Managers Index was below 50 for now the third month in a row, according to the Marquette-ISM Report on Manufacturing. The PMI was at 46.55 in June, down from 47.70 in May. Any number more than 50 indicates growth, while less than 50 signals contraction. Since January 2014, the index has been positive 13 of the 18 months. In the June survey, respondents said:
Employment, customers' inventories and imports grew in June, while new orders, production, supplier deliveries, inventories, prices, backlog of orders and exports declined or slowed. Regarding these indices, respondents said:
Seasonally adjusted blue collar employment grew from 47.8 in May to 58.8 in June, and seasonally adjusted white collar employment grew from 52.2 in May to 62.8 in June. In the six-month outlook on business conditions, respondents indicated a downward shift in positive expectations compared with May. Approximately 43.8 percent of respondents expect positive conditions over the next six months, 37.5 percent expect conditions to remain the same and 18.8 percent of respondents expect conditions to worsen within the next six months. Lean more. |
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Addressing the Fragmented Purchase Order Process Ian Smith, General Manager at Invu shared with Digital Supply Chain, that a new survey of finance personnel from public and private sector SMBs reveals that, even when purchase order processing systems are in place, often the rigor they are designed to enforce is not followed through. believes this means businesses could be missing out on all sorts of efficiency savings as well as everyday spending intelligence. The survey of financial controllers in small and mid-sized businesses, turned up some surprise findings, one being how many organizations had formal purchasing departments and structures in place. This was true for 80 percent of mid-sized companies (those with 50-250 staff). Although the trigger for having a formal purchasing department was often to handle goods for resale, where such departments existed they were also being used for internal purchasing by 93 percent of survey participants. However, it is the gulf between where these organizations could be and where most of them are in reality that has proved most significant. The majority of businesses taking part in the survey applied rigor to purchase order processing (POP) only partially - controls which were undermined by more haphazard processes at other points in the purchase order management cycle. Typically this has resulted in unnecessary additional layers of manual administration and a lack of visibility across spending. It has also created bottlenecks in Finance departments, where all of the information has been centralized. This has left budget-holders and functional decision-makers overly dependent on Finance teams and disempowered from making informed decisions about new purchasing. Small private companies were the least likely to have a formal purchasing function for internally-consumed goods and services - by extension probably because they are not bound by the same external requirements. Where a hybrid approach was allowed for purchase requisitions, 43 percent of organizations recognized immediate inadequacies in their PO practices and almost two-thirds (64 percent) indicated 'urgent' plans to address purchase order management inefficiencies in the future. Even where businesses do have formal systems in place for purchase order processing, too often the loop isn't closed - in that purchase requisitioning is inconsistent, even chaotic, and receipts of goods and services are not being tallied with POs until the invoice comes in, by which time the money has been spent. |
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