It might seem less important in comparison with sales, marketing, production or R&D, but the Purchasing Department has the same decisive impact as the rest in any company’s operations and profits. The professionals in Purchasing have a complex role, not always without tensions resulting from inside and outside the organisation in which they work.
Most firms have a purchasing department. A department that provides its own organisation with a service based on procuring the materials necessary for production or day-to-day operations; assessing and negotiating prices to maximise revenue and assure supplies without sacrificing the quality required or the deadlines stipulated; finding and selecting new suppliers and materials as a result of targets for improvement or new needs; monitoring and assessment of suppliers; compliance with quality policies and commercial agreements already negotiated and signed.
A difficult balance
People with responsibilities in Purchasing have the job of finding the ideal balance to meet generally divergent needs arising within their own organisation. On the one hand, technical, operational and functional needs. On the other, economic needs. The aim is to buy the best product, material or service at the lowest price. And it is this short, simple “rule” that makes managing purchasing a tremendously complex task: technical requirements rule, but economic strictures often rule even more.
And as if this were not enough, Purchasing must take into account the who and how of the firm that makes an offer. This means the robustness and reliability of the supplier also determine the success of the Purchasing role. In fact, the confidence inspired by a supplier is often a deciding factor in choosing their offer. Even more than the strictly financial side of the offer.
Cheap can be costly
Experience lends credence to the idea that what seems cheap in fact proves more costly. Purchasing professionals are well aware of this, so above financial terms they generally recognise, value and defend a supplier’s commitment, seriousness, professionalism, ability to solve problems, financial robustness and support or assistance, among other factors that are not always easy to put a price on.
Without detracting from the importance of the initial technical and financial terms, those in the Purchasing Department pay increasing attention to these parallel aspects of purchasing. This is why the professional level in this department is getting higher, more specialised and of more strategic importance to firms. The purchaser, especially in industry, is increasingly important.