Approximately 70% of a manufacturing companies’ revenue is spent with third party suppliers. The importance of the strategic management of that spend, across the entire purchasing lifecycle, cannot be overstated in terms of its impact on an organizations financial success. But despite that imperative, do we, as purchasing leaders and professionals, have a seat at the big table? The CPO answer is often a resounding “yes”. In fact, Deloitte’s 2016 CPO Survey, published just a couple of … [Read more...]
Antitrust Violations: “Inside the Shark’s Mouth”
This week I had the privilege of participating on a panel sponsored by Finance Executives International on the topic of the antitrust violations that have occurred in the automotive supply chain. For those of you who are not familiar with the issue let me bring you up to date. In February 2010, the FBI raided the offices of three wiring harness manufacturers in the Detroit area carting away papers and computers. Soon, it became known that they were investigating price fixing and other … [Read more...]
How to Deploy Resources? Strategically or Tactically
As we close in on the end of January, most resolutions have already fallen by the wayside – freeing us up with more time. Now is the accepted time to make your regular annual good resolutions. Next week you can begin paving hell with them as usual. – Mark Twain The beginning of the year is a good opportunity to examine the alignment of your purchasing organization and objectives. High performing purchasing organizations combine breakthrough strategies with a clearly defined, aligned … [Read more...]
Five Things to do in the New Job
Congratulations you have worked hard and gotten that new purchasing position that you were chasing. Whether the position is a lateral move, a promotion or a move to a new company here are some tips to help you start getting results: Build understanding the internal landscape Identify the key people in the company who you will be interfacing with on an ongoing basis. Go meet with them to understand how their roles interface with yours, their priorities, their plans for achieving and … [Read more...]
The Power of Small Steps
In a training class I was delivering last week one of the buyers expressed frustration about the time and effort that was going to be required to implement a change across her supply base. She understood the current state, knew where she wanted to go and had a realistic view of the time and effort that the change would require. I think that many of us share her frustration when implementing change. Sometimes when we think about the current state and think about the future state, frustration … [Read more...]
Finding Untapped Savings Opportunities
Now that we are at the end of the year, most companies have their 2016 business plans completed. In many business plans, purchasing will have savings task(s) to achieve throughout the year; purchasing teams are continuously trying to find ways to accomplish these task(s). A commodity-by-commodity review of company spend can often times turn up untapped, easily implementable savings. To start, take the time to write down the questions you should be asking about each commodity in your spend … [Read more...]
Why Good Buyers Make Good Leaders
I have always thought that good buyers transition into good managers and finally good leaders. What characteristics do good buyers have that make them good leaders? Here are a few: They ask good questions. “Judge a man by his questions rather than is answers” is a quote attributed to Voltaire. A good buyer is always seeking to increase their knowledge and understanding of what they buy, why they buy it, who they buy it from and other parties’ interests by asking good questions. As a … [Read more...]
Purchasing Cost Models: How Buyers Can Use Cost Models Effectively
This blog is the third of a three-part blog series designed as follows: How cost models help companies succeed. The types of cost models buyers of manufactured products use. How buyers can use cost models effectively. Earlier this year, we surveyed over 30 sales and marketing professionals and CEOs at automotive suppliers to understand which types of cost models their customers were using and how they are using them. Their insights, added to our experience, provide interesting … [Read more...]
Purchasing Cost Models: Types of Cost Models Used by Buyers of Manufactured Products
This blog is the second of a three-part blog series designed as follows: How cost models help companies succeed. The types of cost models buyers of manufactured products use. How buyers can use cost models effectively. We see four types of cost models being used by buyers today: Open book cost modeling Knowledge-based modeling Hyper-optimized cost modeling Attribute-based cost modeling Open Book Cost Modeling Open book cost modeling utilizes information provided by the … [Read more...]
How Purchasing Cost Models Help Companies Succeed
Cost models provide buyers with valuable benchmarks to validate supplier pricing. Used effectively, they help drive optimal design, reduce the time required to bring products to market and help companies succeed. This blog is the first of a three-part blog series which will discuss: How cost models help companies succeed. What types of cost models do buyers of manufactured products use. How buyers can use cost models effectively. When it comes to understanding supplier cost … [Read more...]