Despite a continuing focus upon cutting costs many companies could become far more effective at purchasing. According to Prof. Colin Coulson-Thomas who led the effective purchasing project which examined buying across Europe: “Flabby buying can drain a company’s coffers and impair its performance. Companies need to be entrepreneurial when buying from suppliers as well as entrepreneurial when generating revenues from customers.”
A team led by Coulson-Thomas examined buying across Europe. The findings summarised in the report ‘Effective Purchasing, the critical success factors’* suggest many companies could ‘buy smarter’. According to Coulson-Thomas:
Coulson-Thomas describes the ‘winners’, the companies that secure the benefits of effective purchasing: “Winners work with their suppliers to reduce costs, innovate, and improve quality or speed up deliveries. Involving purchasing and preferred suppliers earlier in the new product development process can often reduce the time required to bring new products to market by a quarter or more.”
The Professor finds: “Winners are more likely to build longer-term and partnering relationships with strategic suppliers, and integrate purchasing into group strategy. They recognize building value can be as important as controlling costs, and working with suppliers can lead to more competitive offerings that benefit both parties.”
Coulson-Thomas explains: “Squeeze suppliers too hard and they may lack the margins needed to fund investments that would enable them to stay at the top of their game. Collaboration to find new ways of working together can lead to opportunities to save both sales costs for the supplier and purchasing costs for the customer.”
Winners prefer longer-term contracts with reviews, and framework contracts with local call-offs. They build collaborative relationships with a smaller number of strategic suppliers, monitor quality, and are better at using IT and e-business technologies to support buying. When assessing suppliers, they look for a willingness to enter into a partnership, flexibility and senior management commitment.
Coulson-Thomas believes: “You need to understand where you are in relation to the differing approaches of winners and losers.” The ‘effective purchasing’ database has been constructed to allow companies to benchmark their approaches against their peers and the winners who derive most benefits from their purchasing. The fifteen page bespoke report* that is produced covers 137 purchasing issues and enables those who complete a questionnaire to identify the areas they most need to improve.
* ‘Effective Purchasing, the critical success factors’ and related bespoke benchmarking reports that compare corporate performance with the average for both all companies and those companies that win most benefits from their purchasing functions are available from Policy Publications by: Tel. +44 (0)1733 361149; E-mail: colinct@tiscali.co.uk, or from www.ntwkfirm.com/
Prof. Colin Coulson-Thomas has advised over 100 boards on director, board and corporate development, reviewed the processes and practices of over 100 companies and spoken at over 200 national or international conferences or corporate events in over 30 countries. He can be contacted by Tel: 00 44 (0) 1733 361 149; email: colinct@tiscali.co.uk and via www.coulson-
