Local hero or Champions League? Where does your purchasing department stand?
How is your purchasing department doing in the Corona pandemic? Purchasing has certainly been challenged and put in the spotlight during the crisis. Organizational strengths as well as weaknesses stand out much more. Where exactly does your purchasing department stand in comparison with similar companies? Is it a local hero, or is it already playing in the Champions League? Dr. Stephan Hofstetter explains in this interview how Kloepfel Consulting helps its customers to find out where they stand.
Dr. Hofstetter, location assessment in purchasing – what does that mean?
Our clients appreciate having their purchasing structures and processes evaluated from an independent perspective and in comparison to best practices. Our site assessment offers exactly that. To this end, it covers six fields of action. The basis is the exchange with the client’s purchasing department as well as with upstream and downstream functions, with important internal stakeholders and, of course, with the management. Both positive aspects and critical points are identified.
How to find out where the problem in the purchasing is.
Purchasing’s value proposition falls short of its potential and return-on-investment opportunities remain hidden. This is mainly because purchasing is not developed proactively enough to act convincingly, especially in critical situations such as during the Corona crisis.
In which areas does purchasing need to be developed? What are typical challenges you encounter?
We observe that purchasing in many companies continues to be too operational and not strategic enough. It is often difficult to separate strategic purchasing from operational ordering in terms of personnel. Also, purchasing strategies are sometimes discussed and passed on, but not documented in writing. Purchasing and supplier strategies are written down in rudimentary form, and “treasure maps” – i.e. clear strategies – for commodity groups are lacking.
In many companies, digitization is also a major topic. What development are you observing here in purchasing?
Unfortunately, the digitization of purchasing processes – keyword “eProcurement” – is only slowly taking hold. Efficiency is significantly impaired by media disruptions and manual administration. The budgets for initial lighthouse projects would be manageable. This also affects networking or automated exchange with suppliers. In addition, cross-plant and cross-location structures are still not practiced enough in medium-sized companies, so that potential synergies are not fully exploited. In addition, the systems are often fragmented and the data is not consolidated in a database, so that important figures and quantity structures are laboriously compiled in preparation for tenders and negotiations.
And what about continuing education in purchasing?
Modern methods that remedy this situation naturally require appropriate training. But too little is invested in the further training of long-serving employees, although this would be a sustainable measure. Thus, modern methods and approaches spread too slowly.
When investing in purchasing, customers certainly want to know what the ROI is. What is this about?
To date, performance in many purchasing departments has not been measured by key performance indicators. Nor is there much reporting on what has been achieved. This is not only a lack of transparency, which would provide a basis for improvement – purchasing sells itself short in this way. It is clear, however, that if similar requirements alone are consistently bundled by a responsible lead buyer and a distinctive product group management is implemented, substantial increases in efficiency and savings are usually already apparent.
Last but not least: What does such an analysis cost and how can it currently be implemented?
A site analysis can be implemented in any case with a manageable budget. It depends on the size of the company, the number of business units and operational locations. The discussions currently take place online. At the end, customers receive a detailed assessment report and a summary presentation of the results. Of course, we are also available if there is a need for further support in the development of purchasing.
Dr. Hofstetter, thank you for the interview.
Would you like to find out where your purchasing department stands? Then get in touch now!
Press contact
Kloepfel Consulting GmbH
Gerrit M. Schneider
Public Relations
T: +49 211 / 882 594 17
Mail: rendite@kloepfel-consulting.com