Over the past couple of years something that has become known as “reshoring” has been getting an increasing amount of attention. In these uncertain economic times with rising costs overseas including fuel and transportation costs, more US companies are considering or planning to bring jobs back into the US. This process has many advantages such as reducing inventories, reducing lead times, improving quality, speeding up all processes, but until recently the increased cost was not worth it in the long run. That is what prompted manufucaturing, service, call centers, and IT jobs to move to overseas. But as the winds change and the total cost for these functions and goods becomes the same or even less by moving the jobs back into the US, many experts believe that this year will see a migration of these jobs from China, Vietnam, and the Phillipines returning to the United States.
Founded in Chicago in 1924, Grant Thornton LLP (Grant Thornton) is the U.S. member firm of Grant Thornton International Ltd, one of the world’s leading organizations of independent audit, tax and advisory firms. According to a recent study they predict a full one third of US business will move jobs back into the US this year. The results of this survey are shown in this infographic they created. of U.S. businesses will move goods and services work back to the U.S. over the next 12 months. See more at: http://www.grantthornton.com/issues/library/survey-reports/manufacturing/2013/11-reshoring-infographic.aspx#sthash.dWIMjCWI.dpuf
The larger your business the more specialized the need is for job duties within the company including the purchasing and procurement department. As growth occurs a purchasing department becomes divided into two separate teams: a strategic team and a tactical team. This division is not the case for each organization neither it is appropriate for all. The strategic team will lay out the strategy to be used in the purchasing department. They would handle more of the long-term planning, evaluation, analysis, and adjustments. The tactical handles the implementation of the strategy. They cover the what to do and how to do it.
What can happen is that if the same set of people that are responsible to plan, evaluate, and analyze are also responsible for the actual buying, chances are high that all these tasks will not have the level of success your company desires and may even fail. That is why it is important to understand the different applications of strategic and tactical procurement and divide responsibilities when you can, even if you don’t have clearly defined and separate divisions within your procurement team.
If you have 2 or more people in your purchasing department you can divide responsibilities. However, this division does not necessarily place one team or person beneath the other. They are two sides of the same coin and must work together to achieve the company goals.
We’ve mentioned how strategic procurement can be viewed as long term while tactical as short term. Don’t forget that both have an importance of its own. One blunder that the organizations must avoid at all cost is to place all the top talent into the strategic team and the relatively low performers into the tactical procurement team. It may seem natural to put your stronger players into the strategic team, but a balanced approach will yield far better results.
If you put the high performers on the strategic team you will often find the need to bring them in when some difficult situation arises pertaining to tactical issues. Pulling personnel from the strategic team will make the strategic team fall behind and it creates a need and dependence from the tactical side. The talent should be evenly placed in order to maximize performance of each. Another possibility the management may consider is to rotate the top performing purchasing manager in each team for six months each. This will keep the employees from being dissatisfied and stalled in their job and get the significant tactical and strategic jobs done handled by your top performers. It can also be an advantage of having worked in both teams to enhance where you work as you have a better understanding of what is going on with the other team.
Obviously there is much more that can be said about strategic vs tactical procurement so hopefully this has stirred some discussion within your business as you work to improve and strengthen your team.
Strategic procurement in an organization must aim to deliver improved business performance. The focus must be on making bottom-line savings. Managing and sourcing the supply base in an efficient manner is the key to success in that direction. Strategic procurement is a process that works with the aim to continually re-evaluate and improve the activities pertaining to purchases made in an organization. As far as organizations involved in production are concerned, it is considered to be a component of the SCM (supply chain management). But whether your business is involved in production, services, or any other industry it is prudent that you also apply the techniques of strategic sourcing. The purchasing department must make an assessment of the company’s present spending as well as the supply market. The total cost analyses have to be done and suitable suppliers must be identified. A sound, strategic procurement strategy must be devised and negotiations must be made by the purchasing manager.
Making sustainable improvement is important since procurement is not a one-time activity. It goes on indefinitely in an organization as long as the company is functioning.
Procurement must provide source of value. The approach must include support for full-scale transformation of procurement and targeted improvement as well. Strategic procurement helps realize tangible benefits in that favour the organization.
Strategic procurement must result in value creation. It is an important tool in conceptualizing novel business models that seek improvement in efficiency.
The success of implementing strategic procurement depends on three pillars:
So what does strategic procurement look like in your organization? How will you get there? It has to start somewhere so why not take the imitative today?
There are two things we have all heard much about in recent years: the terrible global economy and the cloud. Joblessness, weak international trade, and weak currencies have had businesses on edge and putting a lot of pressure on purchasing managers to save money! Within this environment technology has continued to advance and you see references to the cloud everywhere with many business applications. According to a study by International Data Corporation (IDC) and commissioned by Microsoft, cloud computing will contribute new jobs in a big way, 14 million by 2015 to be specific. You can view Microsoft’s whitepaper about the research here: “Cloud Computing to Create 14 Million New Jobs by 2015.” Here’s an infographic that outlines the key numbers from the research.
The Institute for Supply Management, or ISM, was founded in 1915 with a mission “to enhance the value and performance of procurement and supply chain management practitioners and their organizations worldwide.” One of the ways they help to execute this mission is by offering the Certified Professional in Supply Management® (CPSM®) and Certified Professional in Supplier Diversity® (CPSD™) qualifications. View the certification programs here.
The Certified Professional in Supply Management® (CPSM®) designation signifies that you possess the knowledge, skills and abilities required to meet an established level of competency in the field of supply management in areas such as finance, supplier relationship management, organizational global strategy and risk compliance.
The Certified Professional in Supplier Diversity® (CPSD™) is a professional designation for supply management professionals whose responsibilities include supplier diversity.
The American Purchasing Society is a professional association for those in the purchasing industry and was one of the earliest organizations to offer certification. If you are interested in becoming a Certified Purchasing Professional (CPP), a Certified Professional Purchasing Manager (CPPM), a Certified Green Purchasing Professional (CGPP) and/or a Certified Professional Purchasing Consultant (CPPC) check them out today.
Recertification every 5 years is done by earning an additional 15 points and completing all relevant online courses applicable at the time of your recertification. Once you reach age 50 and have been previously certified you achieve a lifetime certification.
Read more about the American Purchasing Society.
ROI, or Return on Investment, is a factor in every business, whether it be for-profit or even non-profit. The bottom line is that owners, investors, and anyone with a stake in the business wants to make sure they are getting their money’s worth. A contributor to a non-profit wants the same – is their donation being maximized and put to good use. So that brings us to our current topic, procurement certification. Allowing and encouraging your purchasing team to achieve procurement certifications will help improve your ROI, both in what the business gets from the employee and how the increased knowledge makes the department and functions more efficient.
A business may implement several strategies and tactics with the end goal being to minimize spending and maximize savings thereby getting an improved ROI. How effectively those strategies are put into place is directly related to the skill level and training of the people following the guidelines. Having the very best missions statement and goals in the world won’t help if it is not backed by good people.
The return on investment will be improved when the individual team members in the procurement department are experienced and have a clear idea of what they are doing. Procurement certification can help provide a greater understanding of their job and responsibilities, expand their thinking, and provide additional critical thinking skills that will allow them to contribute more to the team and to the business. Surveys comparing purchasing and procurement staff results that have certification to those without clearly show that those with certification provided a higher Return on Investment. But you don’t need surveys to tell you that better training produces better results.
Procurement certification also gives you more creditability which in turn helps produce better results. When making proposals to company executives or presenting ideas for improved efficiencies, you automatically start from a better position having procurement certifications behind your name. This credibility lends itself t helping you achieve more. When you do that, the overall ROI for you as an employee and for the purchasing department within the company will all be improved.
If your business does not offer funding for procurement certifications you may want to make the case as to why this type of investment in you will provide an excellent return. We touched on this idea in the opening that you can provide an improved ROI to the business yourself. Employees, no matter what the business, are always the greatest asset. In many instances payroll is also the biggest expense so if the business can improve their ROI by offering to pay for certification that may be very appealing. But if they don’t, you will want to consider doing this yourself on your own time to become more valuable to the business. By showing initiative and producing improved ROI as a result of your certification you put yourself in a better position to be awarded and recognized. Being at the right place at the right time is more than pure luck, it is preparedness and you can be better prepared by getting certified.