Page 2: The purchasing and supply role
Every business, from an NHS hospital to the biggest brands in the world such as Coca-Cola or McDonalds, needs supplies. Purchasing may involve the day-to-day necessities like photocopier paper, soap and towels for wash rooms or service support for IT equipment. However, the purchasing role also covers high-tech or large scale equipment for major projects such as the building of an aircraft carrier or the Olympic stadium, as well as the skills required to operate it.
Purchasing and supply roles therefore require high levels of skill. CIPS is the professional body which aims to promote the highest standards of excellence in purchasing and supply management across all industries. It provides these through its professional qualifications programme, focused training and education and by rigorous assessment procedures.
Adding value to the business
Those involved in purchasing and supply are in a position to consider every stage of a business’ processes, from raw materials to waste management. This ‘helicopter view’ can help a procurement manager to spot ways of making efficiencies or opportunities to improve the quality of products or services bought. They can see not just internal impacts, but also what is happening in the external environment and the marketplace. This can help to generate new ideas to add value to the business, identify how it can increase competitive advantage or improve sustainability.
An example of how vital the role is occurred when BP needed to manage the supply chain of emergency goods following the Deepwater Horizon oil spill in the Gulf of Mexico in 2010. The supply chain team had to source everything from mealworms to feed wounded birds, to booms to prevent the oil spreading further, to dispersant materials to remove the oil. The challenges included finding sufficiently large quantities available quickly as well as trying to keep budgets under control.
Procurement managers are also involved in researching suppliers in new markets and developing new and innovative procurement methods to improve effectiveness. They also agree and manage service level agreements (SLAs). An SLA is a contract that specifies standards, timings and payments for the supply along with penalties for missing targets. It sets out the responsibilities and expectations for both the business (the buyer) and its suppliers. A key element of the SLA is ensuring that the price quoted by suppliers will not be subject to change, thus affecting the purchasing budget.
Longer term purchaser and supplier relationships can provide stability and add value to both parties. The purchaser may be able to get the best possible terms and prices or a supplier may ‘go the extra mile’ for the business in an urgent situation. This type of collaboration builds trust between buyer and supplier, which might enable a just-in-time relationship, where both parties hold minimum stock and so reduce costs.