The first part of this article addressed issues related to the complexity that the supply chain will experience in the coming years and how the Purchasing/Supply sector of organizations enters this context, contributing to the adaptation of companies with the mentioned complexity and still obtaining expressive results from the opportunities that will appear. due to changes in the current scenario.
Optimization of relationships with suppliers, greater intensity in the use of technology and better management of the supplier base are initiatives that should be part of the agenda of Purchasing/Supply executives in the coming years, but the greatest contribution will be in the qualification of personnel in this sector to conduct the company in the face of future adversities.
In the opening segment of this article, we discussed that the buyer of the future should be a finance expert, insider consultant, and intelligence agent. In this concluding segment of the article, we will discuss the skills of a relationship agent, risk manager, environmental protector, legal specialist and integration agent.
Buyer as relationship agent
The organization of the Purchasing department around categories is becoming common in Brazilian companies. These categories are established based on the expenses (spend) of a set of items, common specifications, company strategy or simply families of products and services. The managers of these categories direct their activities to guide buyers in the work of obtaining products and services that are part of their respective categories.
Despite the added value provided by the work of category managers, the Purchasing area of the future requires that this manager have more time devoted to relationship issues and not just to aspects of structuring the category. For example, act in such a way that internal customers are connected and communicate with suppliers, explain operational requirements to suppliers, everyone understands these requirements and these are measured through measures previously agreed between both parties.
Figure 1 – Buyer as relationship agent
Source: Adapted from Handfield, R., 2014
Management activities must consider the need to connect people allocated in different organizations, taking as a reference the understanding of the interests of each party that can create opportunities that did not exist before the approach of the parties. Thus, the manager must look at internal and external relationships and bring the two worlds together. Look at the supplier market and identify how these suppliers can bring more value to your internal public and, consequently, to your company.
There is much more to be obtained in the relationship than just the price of the products and services offered by the suppliers. Reduction of the total cost of ownership, shorter time in the service cycle, greater flexibility, contribution to the development of the brand of the product or service sold by the customer, are some examples of value generated by the supplier that can be obtained by the category manager in his mission relationship agent.
Buyer as risk manager
Risk management in the supply environment has as one of its main tasks the identification of potential risk associated with the execution of the relationship between the company and its suppliers in order to anticipate possible interruptions in the supply of goods and services. Another task of equal importance is the redefinition of the supply chain in order to make it more robust and able to recover quickly from global shocks.
In addition to interruptions caused by suppliers, the manager must also be concerned with events such as natural disasters, epidemics, geopolitical conflicts, social movements, fire, use of slave labor, financial instability, and others that may interrupt the flow of goods and supply chain services.
Let's see two examples of risks that occur when there are contracts and subcontracts in the global chain and it is not known who is who in the chain. The first occurred in 2013 when the Aldi supermarket in the United Kingdom removed Findus meat lasagna from its stock because it contained between 30% and 100% horse meat. Comigel was the producer and supplier of the lasagna for Findus and blamed it on his French-based meat supplier Spanghero, but the meat had come from Romania. In the end, who takes the blame for selling horse meat from the consumer's point of view?
The second was with Walmart, when it decided in 2013 to sell a specific pair of shorts for women and hired a supplier in India to produce the shorts. The supplier was out of production capacity, but didn't want to lose the deal with Walmart. Thus, the supplier decided to subcontract production to another company in Bangladesh that operated a facility considered unsafe, resulting in the death of 112 people due to a fire that broke out in these facilities.
In addition to being unsafe, the building did not have an emergency staircase and the windows were made of cast iron, making the place a real trap for its employees. The unsafe condition of the building was public knowledge, but the prime minister at the time considered that the tragedy was not the result of negligence by the factory owners, but an act of sabotage. The fact is that Walmart was found guilty by public opinion generating several claims for damages and ended up donating $ 1,6 million dollars for the creation of a safety training academy in Bangladesh.
Figure 2 – Buyer as risk manager
Source: Adapted from Handfield, R., 2014
Risk analyzes should normally be carried out through simulations of scenarios using the technique of looking for answers to different situations that may occur (What-if). These analyzes must be carried out jointly with the supplier market intelligence personnel, involving category managers.
The construction of the risk assessment structure and measurement system involves the development of a mechanism for collecting information and building the communication and analysis skills to absorb perceptions from different points in the supply chain and generate forecasts of possible sources of risk. supply interruptions, incidents or problems that could impact the relationship.
Buyer as protector of the environment
The buyer's positioning as a sustainability agent involves meeting the following points: a) definition of a code of conduct to be followed by the supplier with regard to production within sustainable parameters indicated by the buyer company; b) establishment of audit procedures; and c) identification of a set of incentives that motivate the supplier towards sustainability.
Figure 3 – Buyer as a protector of the environment
Source: Adapted from Handfield, R., 2014
The issue of sustainability and social responsibility is a market demand that is already understood by most components of the supplier base of the purchasing companies. However, there is a need to reinforce compliance with this requirement. Thus, the Purchasing/Supply sector needs to determine the rules for complying with a consistent code of conduct, establish a system of measures and metrics to be charged and apply all of this throughout the supply chain.
Buyer as legal expert
The idea here is not to make the buyer a lawyer in contracts, but to draw attention to the need for the purchasing professional to know the legal requirements necessary to make a contract that meets the needs of the buyer and supplier.
The buyer with knowledge of the contract can contribute to the speed of the analysis that is carried out by the legal department, since upon receiving a draft from the supplier, he is able to identify where the risks are and work with the legal department to quickly write clauses that circumvent these risks.
Figure 4 – Buyer as legal expert
Source: Adapted from Handfield, R., 2014
The buyer can work with legal to develop pre-approved clauses that address the idea of preventing problems rather than others that seek to repair damages. It is common for the purchasing company to establish clauses that allow suing the supplier if something goes wrong, but the supplier is hardly able to sue the buyer for his responsibility for what went wrong.
We must spend our time in negotiating contracts that address change issues, such as changes in scope, objectives, transparency in responsibilities, frequencies of reports to be produced by both sides, definition of metrics and indicators that will be used to control the operation . This should be a priority to include in contracts because it is more productive in supporting the success of the relationship because they aim at preventing problems instead of clauses aimed at repairing damages.
When it comes to global contracts, the Purchasing department can play a significant role in the legal field through knowledge of the different supplier cultures, rules and regulations and specific terms of the countries where the business is taking place.
Thus, the buyer of the future must have the ability to understand the flow of goods and services in the supply chain and also understand the economic issues associated with contractual terms.
Buyer as integration agent
As an integration agent, the buyer can act as if he were, for example, a soccer coach. Every Brazilian knows that the objective of a good soccer coach is adhesion, union or cohesion among the team members. Similarly, the role of the buyer as an integration agent comprises constant interaction with suppliers in order to bring closer, development and improvements to both sides, as well as meeting mutual interests. Buyer and supplier commitment is critical in this process, as are all players on a football team.
The traditional expression of relationship management with suppliers conveys the idea that the purchasing company has a hierarchical position over the supplier and that actions to improve the relationship will be commanded by the buyer. On the other hand, the idea of integration and articulation that should guide the buyer of the future and implies equal commitment between the parties, without impositions and inviting the supplier to be part of the effort employed by the buying company.
Figure 5 – Buyer as integration agent
Source: Adapted from Handfield, R., 2014
Thus, the buyer as an integrator or articulator must encourage the continuous development of the supplier, through better technical training, technological updating and operational efficiency in its performance dimensions.
One of the performance dimensions is focused on innovation. In this regard, efforts should be made to get the supplier involved in the creation of goods and services that provide competitive advantages for the purchasing company and leverage the business of the company responsible for the innovation.
The issue of innovation generates a broad discussion that deserves a specific article on the subject. The starting point of the debate can be, for example, the supplier's degree of involvement in the innovation process. The supplier can provide its collaboration through consultations and opinions on the design of the new product being developed by the purchasing company, it can develop the new product jointly with its customer or even fully develop the new product to meet the performance specifications of its customer.
Ultimately, the Purchasing sector must have personnel capable of interacting with suppliers in pursuit of continuous development, critical thinking about the implemented processes, strategic cost management and quality improvement. Purchasing needs to have people with project management skills without, however, negatively impacting the relationship.
Conclusion
Throughout this article, we suggest that the buyer of the future should be a financial specialist, internal consultant, intelligence agent, relationship agent, risk manager, environmental protector, legal specialist and integration agent so that the Purchasing/ Supplies can help your organization cope with the increasing complexity of the supply chain.
At this point, the reader must be asking that for the Purchasing/Supply professional to have all the suggested skills, he will be a superhero and this is the idea of figure 6, where our hero combines the eight skills discussed in this text. In this case, our character is the “Future Buy Man” who also appeared in the other figures of the article with his “FB” badge.
Figure 6 – Buyer as a superhero
Source: Adapted from Handfield, R., 2014
In fact, it is not mandatory that a single professional already has all the skills. We are talking about this need in 2025. Thus, the reader has ten years to prepare and act as a “Future Buy Man”. Remember that the demand for our qualification is increasing more and more. What is expected at the moment is that the Purchasing/Supply sector as a whole performs the content of the mentioned skills as quickly as possible, even if this has to be divided among the professionals of the sector so that each one assumes responsibility for one subset of the total discussed here.
Bibliographic reference
HandfieldR, 2014. Strategic Procurement & Supplier Alignment:
The Future Faces of Procurement, Presentation Materials and Notes.
KPMG, 2013 FutureBuy: The Future of Procurement, Research Report.
To reference the article in your publication, use:
HANDFIELD, R.; BRAGA, A. The buyer of the future – Part 2. Tecnologística Magazine, São Paulo, Year XX, n. 234, p. 100-104, May. 2015.
Rob Handfield, PhD
Bank of America Professor of Supply Chain Management
College of Management
N.C. State University
M: (843) 469 2313
Ataide R. Braga, PhD
Professor and Researcher
Institute of Logistics and Supply Chain
Tel .: (21) 3445-3000
Ataide Braga
https://ilos.com.brAtaíde Braga is a Leader in Purchasing and Supply Practices at ILOS. He has been certified by the International Society of Logistics as a Professional Logistician. He is the author of several articles published in magazines and conferences in Brazil and abroad. His research area is focused on the relationship between customers and industrial suppliers. His professional experience includes responsibility for the acquisition of equipment and spare parts in the international market for maintenance of critical reliability systems.
