Ray Collis

Myth #11: Purchasing Pushes Paper

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Sellers have traditionally had a degree of antipathy towards purchasing departments. So too have buyers. That is because its bureaucratic ways were seen as a hindrance to thesale. However, the role and the value of the purchasing function have been radically transformed. Purchasing can now be a powerful ally to both buyer and seller alike.

Purchasing — The New Ally

Purchasing, once an administrative function on the periphery of the organization, now has an important strategic role. This is hardly a surprise given that purchases account for between 20% to 60% of turnover and the performance, flexibility and innovation of all the members of an organization’s supply chain can have a huge bearing on its success.

Previously, purchasing was a bureaucratic department that completed transactions and managed the associated paperwork. Now it is considered to be an integrated function, which aims to not only make the right purchase decisions, but also choose the best suppliers and help them become even better.

The Revolution Of The Purchasing Function

How the role of purchasing has changed is summarized in the table below.

  • Administrative Role
  • A Stand-Alone Department
  • Vendor Management
  • Bureaucratic Procedures
  • Lowest Cost Bid
  • Finding The Cheapest Source
  • Relationships: Adversarial & Reactive
  • Controls Buying Decisions
  • Strategic Role
  • An Organization-Wide Philosophy
  • Process For Decision Making
  • Best Results
  • Total Cost of Ownership – Value, Flexibility & Innovation
  • Relationships: Collaborative & Proactive
  • Coaches The Buying Decisions

Rather than seeking to centralize or control all buying decisions, the new role of purchasing is to spread good buying behavior throughout the organization. Its mission is to deliver a more sophisticated, structured and scientific approach to how purchasing decisions are made.

The new role of purchasing is to be the manager’s ally and friend. It increasingly acts as a buffer to shield managers from the unwelcome attention and undue influence of vendors. Purchasing has also assumed the role of ‘buying police’ — protecting the organization from opportunistic vendors and bad deals.

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