What the Experts Don't Teach - Seven Lessons from the School of Experience

Purchasing people are constantly being advised by experts. Lawyers and accountants provide the latest advice on contract issues. On negotiation methods, the input might come from a psychologist. Management gurus explain how to refine and standardize purchasing processes to make them more efficient. Then, of course, there’s the IT profession, showing how to best use technology to expand capabilities and eliminate grunt work.

All this being said, many aspects of purchasing cannot be taught by experts or found in purchasing textbooks. In this issue, we took a look at the kind of purchasing acumen that can only be acquired on the job. By way of homework, we spoke with nine purchasing professionals from companies large and small, in a variety of sectors. Together, these individuals bring over 150 years of purchasing experience to the discussion. Their collective input covers a variety of purchasing topics, but the upshot is clear: there’s a lot more to purchasing than what can be conveyed in books and lectures.

Our panel consists of the following individuals:

Chris Dodds, purchasing director, Federated Co-operatives Ltd, Canoe, B.C.

Lionel Bordage, manager of supply and services, Saint John Energy, St. John, N.B.

John Robertson, senior advisor, supply chain management, Petro-Canada, Mississauga, Ont.

Lise Bilodeau, purchasing, Corus Coil Coating, Toronto, Ont.

James Heaton, senior buyer, University of Western Ontario, London, Ont.

Stephen Bauld, manager of purchasing, City of Hamilton, Hamilton Ont.

Mike Goloubes, director of strategic operations, MDS Sciex, Toronto, Ont.

Brian Benko, purchasing, Dofasco, Hamilton, Ont.

Roy Thomson, MRO buyer, Supply Chain CSO, United Farmers of Alberta, Calgary, Alta.

Our panel members were asked to discuss how non-textbook knowledge makes a difference. We asked them to describe processes that cannot be automated. We also discussed survival skills, and the use of everyday knowledge to get out of tough situations. From their answers, we have consolidated the following seven lessons.

Lesson 1: Turn Off Your Computer and Go Talk to Somebody

Speaking directly to people is a key skill for purchasing professionals. There is, however, a tendency for people to stay at their desks and rely on e-mail for communication. As a result, some organizations are taking active measures to get people talking to each other, both internally and externally.

Stephen Bauld: “I’m seeing it in segments across the board, not just purchasing, where so many things are done on e-mail. I probably get over 100 a day myself. It’s probably as effective or more effective to pick up the phone and have a conversation with somebody.”

Mike Goloubes: “I’ve often thought that if I could turn off e-mail for a week, what would that do? People would get out of their offices and chat with people. It’s not only about the conversation. It’s about the relationships that you develop. Having a conversation around something that’s been bugging you and trying to find a way around it. You don’t do that when you’re totally wired. There’s just not that opportunity. I think that what the computer has done for us is make us very tunnel-visioned.”

John Robertson: “We get together as a group every week or so, and I think that that’s really important to understand what each of my colleagues is working on. I think on a very basic level, it’s very important. We communicate a lot by e-mail transmission, and I think very often we rely too much on e-mail. I think sometimes it’s far better to pick up the phone.”

Lesson 2: Learn How To Manage Long-Term Supplier Relationships

Getting the best price is a big part of purchasing, but the best price can be fraught with hidden costs that can hurt an organization. On the other hand, good long-term relationships can help organizations reduce their exposure to risk, and decrease their overall costs.

Mike Goloubes: “A buyer needs to inherently understand value. It’s not necessarily the lowest cost. You can bring in anybody and get lowest cost, but are you getting lowest cost from a supplier that is absolutely horrible to deal with or are you getting best cost from a supplier that you want to have an ongoing relationship with? So it’s that management of value that’s a big thing nowadays. So as we as an organization tend to outsource more and more, you’re looking for suppliers that can do more than supply that commodity. They can provide a bit of assembly, or design expertise, or expertise in logistics, or whatever, which adds value. And what that allows you to do is reduce your overall cost component to your organization.”

Chris Dodds: “You have to earn the respect of your suppliers. And that might lead to extra on their part as well. For example, we have a company in Kamloops that didn’t handle a certain product, but because of the relationship we have, this company went out and actually found it for me and told me where to get it and who to contact, etc. So those are the kind of extra efforts that, if you can get them to work for you, make your job that much easier. And that again comes from having a good relationship.”

Lesson 3: Network With People to Get Information

In most companies, purchasing people need to access much more knowledge than a single person could possibly retain. Once again, purchasing professionals rely on people to bridge this important gap. Knowing how to manage a people-based information network is essential.

Stephen Bauld: “No one person can know everything, but one person can certainly know where to go to get the information, and I think that’s critical.”

Lise Bilodeau: “You get to know the people, and you know who can help you – that’s the main thing. You have to find the right person to help you do whatever. You can waste a lot of time asking around, but if you know where to get the information, it’s a lot easier. I’m talking about 50 people you work closely with. I know what they know, but they know the details, so I have to go through them.”

Mike Goloubes: “If they’re a critical supplier, and I have a solid relationship with them, I’ll know six months or a year before they run into trouble, and we would have a plan in place.”

Lesson 4: Devote Extra Effort to Assessing Requirements

Assessing client needs involves much more than getting somebody to fill out a form. It requires careful listening, and the ability to add value to what the client is trying to achieve, while ensuring that proper purchasing guidelines are followed. Creativity is also critical here, as requirements change, and new ground is frequently being covered.

Roy Thomson: “You have to know what your objectives are, and how what a vendor is giving you is going to fit in for your company… I don’t think you have to do this all the time, but sometimes you have to ask, ‘Why are we doing what we do? Is there another way of doing it?’ One of my objectives for the company is to find areas for savings. I have to go into areas where people probably don’t want me to be there.”

Brian Benko: “Requirements do change in the business units. As Dofasco shifts its business, and moves into different markets, different products are produced, and business units will have different requirements for raw materials inputs. Or even if we’re putting in a new line, or a new process, our requirements for our construction and manufacturing and maintenance do shift… I think the buying teams do a very good job of working with business units to understand those relationships and understanding those requirements, and then utilize the relationships with the suppliers to actually fulfill the requirements of Dofasco. That process involves more human interaction as opposed to filling out a form on a database.”

James Heaton: “From our perspective, we work within a very large environment with several thousand people that we interact with on a daily basis, just here in our own university community… There’s a need for us to work with the community to guide and assist them in making proper decisions… We can’t be experts in every field, but we can apply the same principles and apply the same aspects in interacting with everyone on campus.”

Lise Bilodeau: “You have to listen to needs, because sometimes it’s very specific. Especially if you talk with these guys regarding something in a plan … somebody working with a drawing and all that, when they have to rely on their knowledge and information too. There’s no way you can automate that.”

Lesson 5: Stay Ahead of the Learning Curve

Purchasing people need to keep current on many issues, not only in their own industry, but in their suppliers’ industries as well. In order to remain proactive, purchasing professionals need to be in constant learning mode.

Lionel Bordage: “You’ve got to march to the way the trends are going. And you’ve got to keep ahead of things. I’ve been tracking metal prices for about a year and I read a lot of different articles, and I’ve filed bits of information because I knew metal prices were going to go through the roof. You have to think globally. I’m always at our planners in our engineering department, saying ‘plan well in advance, because what used to take six to eight weeks now takes ten to fifteen weeks.’”

Roy Thomson: “We have deregulated power. When it first came here there was a big learning curve for me. I had to keep being prepared to feel that I don’t know as much as I think I do - like a little information is dangerous. It probably took me three or four months to understand this before I could go to the public and the retailers out there and say ‘this is who we are, this is that we need, give me the best package to meet my needs.’ … I had no prior experience on the power requirements for a corporation. So there was a big learning curve there.”

Brian Benko: (Note: Brian moved from IT to purchasing 2 years ago) “From purchasing, I’m learning more on what the real business at Dofasco is all about. I’m much more integrated into what the plants’ requirements are, that we are a manufacturing company, and I found that IT are more insular. So I’m learning more about what Dofasco is all about.”

Lesson 6: Use Teamwork to Bridge Differences

The interests of a number of stakeholders come to play whenever a purchase is made. Purchasing professionals are often called upon to make sure that everybody’s issues are addressed. Ultimately, teamwork is usually the most essential ingredient.

Roy Thomson: “It’s interesting how, in every organization, there are some people that basically carry the weight of procurement on their shoulders. And yet we’re told ‘Don’t think tactically, think strategically.’ But it’s the tactical people in a whole lot of cases that make the whole thing work. Co-operation and motivation are key. You see it in the sports world. We saw it in the last NHL season. The [Calgary] Flames weren’t one of the better teams throughout the season, but low-priced guys, relatively speaking. But the whole thing pulled together and they almost won the thing.”

Brian Benko: “We have some amazing buying teams, and they have a lot of knowledge on how to build relationships, and sustain relationships long-term. I find this is very beneficial to Dofasco, and to suppliers as well. It’s mutual success for both parties.”

Lionel Bordage: “I guess what they don’t teach you in school – and it’s a learned skill – is the skill of working with people. You can read as many books as you want, and you can study the psychology things you want, and it gives you a handle sometimes, but you’re always surprised by the way people think. I’m 52 years old, and a guy or a gal 20 years old thinks a whole lot differently than I do. The books don’t tell you this.”

James Heaton: “There have been several cases where we’ve had conflicts, and the end user was not receiving the service that they were promised and the vendor had a different perspective. And then when we had heard both sides, we were able to dig a little deeper and then make both sides satisfied… We fact find, and get the perspective from both sides, draw the two sides together and find a common ground for a solution.”

John Robertson: “Most of the challenge is in what I call the change management process… It’s in trying to understand where these people’s interests are – the individuals involved in the change, and why they may be reluctant to change, and understanding their concerns and tailoring your message to them to address those concerns. You’ve got to tell them what’s in it – both for them and for their department.”

Lesson 7: Enjoy!

There are many stressful aspects of purchasing: delivery deadlines, enforcement of procedures, price negotiation and dealing with contentious contract issues, to name only a few. When it comes to survival, passion for the job is the most important asset a person can have in the profession.

Stephen Bauld: “The environment you work in has to be the most important factor. My recommendation to everybody is to enjoy doing what you do and working with the people you work with, because if you don’t, it’s just an arduous time to get through. This is a field that you go into because you have a passion for it. And it sounds bizarre that somebody would have a passion for purchasing. But purchasing is one of the best professions for working with people.”

Lionel Bordage: “I look forward to going to work every day, and to working with the people I’m working with. I’m very lucky that way.” b2b