How does a purchasing consultant actually work for medium-sized businesses?
The task of the purchasing consultants is to make profits visible in the supply chains and thus to raise the value of yield. In addition to reducing purchase prices, for example through renegotiations, the purchasing consultant also asks if necessary: What does a product really cost? It is perhaps obvious that a factory machine, for example, costs far more than the mere purchase: Technical inspection, maintenance, repairs, logistics, insurance and other items can be added. But there are also costs along the entire supply chain that can be unnecessarily high. This is due to inefficient processes that are not questioned by anyone, but whose costs can often exceed the partial costs several times.
Create team spirit at the beginning of the project
At the beginning of a project, purchasing managers often worry that their previous work will be questioned. Through workshops and discussions, the purchasing consultants must therefore succeed in getting the purchasing team on board. The consultants look individually and holistically at who stands in comparison to the competition and how the backs of the buyers can be strengthened, for example through new hires, qualifications or learning-by-doing. To ensure that the effects of a project continue to have an impact after the project has been completed, a good purchasing consultancy also ensures that the various departments in the company work better together. This creates a new team spirit in the company. Of course, this also increases the joint success of the project and thus increases the appreciation of the buyers in the company.
Transparency is the key
Experience shows that there is usually too little data transparency in purchasing to be able to identify the potential savings. An essential part of every optimization project is therefore an initial data analysis. Further steps can only be taken efficiently once data transparency has been established. Combining products into product groups according to risk susceptibility or risk type is a proven method of supporting purchasing in its strategic tasks. The customer is provided with real-time reports by the consultants so that he retains control over the project, does not experience any surprises and can understand the potential savings. Good purchasing consultants therefore work on the customer’s premises. This makes it easier for the consultants to integrate themselves into the customer’s team as a team and simplifies coordination.
Focuses of a purchasing optimization project
After analyzing the purchasing data, the consultant checks, for example, whether it makes sense to establish alternative suppliers or to reduce the number of suppliers of certain goods. On the one hand, better prices and conditions can be negotiated and on the other hand, additional suppliers guarantee security of supply. In addition, it is important that not every department orders as they wish, but that the purchasing department does this centrally. Here, the purchasing consultant must strengthen the trust of the various departments in the competencies of purchasing. In addition, the departments must understand that it is not a matter of cutting their budgets, but rather of getting more for the same money. However, the consultants also promote cooperation with the important suppliers and thus develop the basis for product innovations, which essentially arise from the dynamics between purchasing and production. Purchasing can thus achieve sustainable cost savings of 5% to 15%. Another important focus is the optimization of logistics processes, for example by outsourcing warehouses or parts of production to logistics companies. Savings of up to 18% are possible here.
Furthermore, during a procurement optimization project, the desire to fundamentally optimize purchasing structures (purchasing goals/strategies, purchasing processes, purchasing organization, purchasing employees, purchasing methods/tools and purchasing controlling) often becomes apparent. Such a holistic project which optimizes purchasing from the bottom up is usually carried out separately.
Reduce product costs
If required, product costs of manufacturing companies are examined in a cost structure analysis using software. The software represents a system for the exact and holistic breakdown of any manufacturing costs, material savings and missing production steps. This in turn has a positive effect on the wallet of the entrepreneur. It provides clarity about who has which requirements and when and makes order processes, purchasing data and delivery dates transparent. The information obtained in this way gives purchasing a strong position in negotiations with suppliers. Product costs can thus be reduced by up to 40%.
Customer wins through learning-by-doing
The consulting team takes the buyers into the negotiations and trains them in practice. In order to further qualify the employees, well-positioned consulting firms also offer workshops in which practice-relevant techniques for everyday business are taught. Thus the purchase is sustainably further qualified, so that after departure of the consulting team the obtained savings can be maintained and independently reproduced. Purchasers benefit from the many years of experience of the consulting teams, which consist of engineers, production and purchasing specialists. Topics of these workshops are e.g. benchmarking, in order to be able to estimate independently the own strengths and weaknesses, identification of optimization potentials, cost structure analyses for the calculation of prices, manufacturing techniques, logistics, supply chain management etc.
What does a purchasing consultation cost?
You don’t always have to pay high daily rates for the additional know-how and manpower. There are also purchasing consultancies that work 100% on a success basis. As an entrepreneur, you should make sure that the consulting fees are measured by the savings achieved during a project. There are still purchasing consultants who identify and calculate potential for the future even when the project has been completed a long time ago.
Conclusion: Companies often simply lack the manpower and the time to optimize their own purchasing. It can therefore be worthwhile to expand your own purchasing team on a temporary basis. In addition, purchasers learn from the project through learning by doing and discover a new passion for purchasing.