Do purchasing managers really manage purchasing?

Do purchasing managers really manage purchasing?

To answer that question, we need to start with a standard to measure against--a benchmark of sorts. An obvious standard is the generally accepted functional definition of management: good purchasing management is a process of planning, organizing, directing, motivating, and controlling the work and the workers to achieve organizational goals.

The first function is planning which can be defined as a process of deciding in advance what is to be done, who is to do it, how and when it is to be done, and how well it is to be done.

Purchasing managers' greatest failure in planning is deciding in advance what is to be done. This is because most purchasing departments are in the filling requisitions business. They get a requisition and they fill it. Often, this process is repeated without any thought of such things as economic order quantity, negotiations of an annual contract, a systems contract or any number of other possibilities.

It is as if they expect the organization to go out of business after each requisition is filled. Little thought is given to continuation of the business. In fact, I had the head of purchasing of a large utility company in one of my workshops a few years back, and he told me he had looked at his records and discovered that he had bought 51 forklift trucks--one at a time--last year. When I told this story to two purchasing executives of a steel company, they said, "Oh, yes, that sort of thing happens around here all the time."

Unfortunately, this happens not just in one or two companies, but in the vast majority of companies every day. Does this mean purchasing managers are ignorant, lazy or stupid? No, of course not. In most cases, it means they are doing what the organization (top management) expects of them--filling requisitions. In other words, they are being good organization people.

However, the organization should expect and demand more from its purchasing department. If I find any fault at all with purchasing managers in this area, it is that they have failed to convince or sell top management on the importance of purchasing.

Organizing for Purchasing

The classic definition of organizing is the work of providing in advance those things needed to carry out the plan.

Once a good plan has been constructed, other organizational factors must be considered:

* the right people are available;

* these people know their role in the organization and how these jobs relate to others;

* they know for what part of the plan they are responsible;

* they are properly trained to carry out their part of the plan;

* they have all of the things needed at the right time and right place to carry out the plan.

Purchasing people generally are very capable of the technical side of their jobs. They know how to buy steel, castings or electric motors. However, many are found wanting when it comes to purchasing principles. They do not know such things as how to make a contract, how to start and run a value analysis program, or they are not good negotiators. Hopefully, companies will soon require that all their purchasing people earn a CPM and that this will become the minimum standard for employment.

Directing the Department

A common definition of directing is that it is the use of communications and leadership to guide the performance of one's subordinates toward the achievement of the organization's plans. Many authors and professors also would include motivation as part of directing. I do not because I feel that it is important enough to be a function by itself.

Obviously, there are many departments where leadership and communication are handled in an excellent way and many others where they are not. Consequently, it is much harder to generalize about how well or how poor this is being done.

Motivation

Motivation is the process of channeling a person's inner drives so that he or she wants to accomplish the organization's goals. Motivation is not something that you do to an employee to make them work. Rather, employee motivation is achieved by providing the proper psychological work environment that promotes the individual's motivation--a natural part of their makeup. In other words, we must cultivate an employee's motivations as a farmer cultivates his crops.

A major failure of management in the U.S. is that we talk Theory Y and do Theory X. This is probably true in well over 80% of the companies. If we are to compete in the world markets, this must be changed.

When it comes to defining control, I prefer the definition that Henri Fayol developed. Fayol (who was the French father of scientific management) wrote, "Control consists in verifying whether everything occurs in conformity with the plan adopted, the instructions issued and principles established." In other words, control is the process of checking up on a plan's actual progress.

Again, since we fall down in planning, we cannot expect to have good control, for without a plan to compare results against, control is meaningless.