Today, purchasing is an important partner in product development and plays a key role in optimizing a company’s results. It has found its important strategic role within the company. The following article outlines the five biggest challenges that purchasing must overcome.

A clear strategy with professional purchasing planning

The most important goal of purchasing planning is to ensure a secure view of the future. While not all risks can be planned for, some can be, for example, if price increases are expected from suppliers due to higher wage agreements, or if quasi-monopolies form that make the procurement of raw materials and intermediate products more expensive. However, foreseeable currency fluctuations, corporate strategy, and the future product portfolio must also be taken into account.
However, some developments are unpredictable for purchasing. That is why professional purchasing always plans for at least three scenarios: best case, worst case, and realistic. After all, it is crucial for management to know whether changes in the sales strategy will entail risks to earnings and which products will see changes in margins.
A positive side effect of in-house purchasing planning is that it also improves planning reliability for suppliers and enables long-term partnerships.

A clear view of the facts

Purchasers need the right tools to work strategically and reduce costs in the long term. But to do this, they need a foundation: transparent data – right down to the document level. All too often, data is stored in different systems, from paper invoices and Excel files to SAP and other ERP systems. In order to change the cost situation and identify potential savings, the data used for strategic decisions must come from a single system. The keyword here is consolidated data. Only then can potential savings become visible, for example through volume bundling, raw material consolidation, and focusing on strategic suppliers. In addition, purchasing is then in a position to identify the causes of cost drivers: maverick buying, bottlenecks or surpluses in the use of framework agreements, incorrectly posted invoices, conversions from sample to series parts, implausible cost changes, or incomprehensible pricing.

Current events require a quick response

Political crises, rapidly rising raw material prices, collapsing exchange rates, suppliers going bankrupt – for purchasing, this means reacting quickly! Optimal data and information management is the key factor for success here, because manual processes can mean a critical loss of time. That’s why all relevant information must be available in real time. And that means from all locations, in all currencies used (including foreign currencies), and from the various ERP systems.

Big Data Management

In complex, international corporate hierarchies, procurement often still takes place locally, without the central purchasing department being informed about all activities. This results in thousands of purchasing transactions every day in international corporations, with correspondingly large savings potential. It is therefore important to harmonize data, for example, part numbers, supplier numbers, and product group structures. Only when purchasing is able to capitalize on this data can significant competitive advantages be achieved.

The new role of the purchaser

Purchasers have new tasks: they are no longer cold-blooded negotiation professionals who push suppliers to the brink of profitability and process orders when there are no negotiations pending. Tomorrow’s purchasers are networkers and have a place in product development. They have a seat at the table during meetings on new products and innovations so they can contribute their knowledge of supplier products.

Of course, strong negotiating skills are still essential. In their new role, however, they also need to be able to recognize innovations and have comprehensive language skills so they can operate internationally. The use of tools for optimal presentations is simply part of the new role of the purchaser. Dashboards integrated into the purchasing control system are particularly helpful here, as they analyze data quickly and easily and present the results in a graphical format that is suitable for management.