We have 15 years of data that shows that buyers who move from price-focused, competitive purchasing to cost/value-focused, collaborative purchasing can achieve savings of 8-18% (see figure).
I wish we had a similar level of data on the career progression experienced by buyers who develop cost knowledge and utilize it in a collaborative way. I think it would be revealing.
It has been my experience that buyers who develop a deeper understanding of cost also increase their knowledge of operations and quality positioning themselves better for promotion opportunities within purchasing as well as for opportunities that arise in other functions where an understanding of costs, manufacturing and quality come into play. Here are some examples that come to mind:
- Buyer moves to operations as a production supervisor, gets promoted to an operations manager and then gets promoted to a purchasing director.
- Buyer moves to accounting to work on capital budgeting. Comes back into purchasing as a purchasing manager.
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Buyers use their cost and manufacturing knowledge to reduce costs. Their approach with suppliers can be competitive, where the knowledge is used as a hammer to drive down pricing, or collaboratively to reduce costs while taking into consideration the interests of both parties.
I believe buyers who demonstrate a collaborative approach with suppliers positions themselves better for promotions within and outside of their purchasing organizations. Why? Suppose there were two buyers who had the same background, had developed the same level of cost knowledge and achieved similar savings results. However, one buyer was a hard, competitive negotiator; the other, a collaborator who achieved similar results while building relationships. Which buyer would be more likely to move within their company to:
- Sales, where building relationships with customers is key?
- Operations management, which requires achieving results while building positive labor relationships?
- Purchasing leadership, where they will need to not only achieve results by working with suppliers but with their buyers and managers in other functions within the company?
Yes, I am biased. I believe that buyers achieve better results when they use a collaborative, cost knowledge approach to purchasing. I believe in it so much that I built a company around it. In addition, if data were available, I believe it would support my belief.