An important goal of the purchasing department is to select, develop, and maintain suppliers, a process sometimes referred to as supplier performance management (SPM). The purchasing department must grasp the latest market shocks to ensure that: 1, choose competitive businessmen, 2, identify the best business that can provide quality services and establish a more regular cooperative relationship with it, 3, improve the existing business, 4, develop a lack of competitiveness. In this way, the purchasing department can select and manage high-quality bases. Such a first-class base can provide products or services that have advantages in product cost, quality, technical distribution or new product development.
* Business performance management requires the purchasing department to be able to establish better cooperative relations with external suppliers and establish a reliable source of quality. Achieving this goal also requires the procurement department to work directly with the best suppliers to refine existing capabilities and develop new ones. In some cases, managers have to face the challenges posed by in-house customers who want to add new but unqualified customers to their base. This chapter will focus on how effectively the procurement department should achieve the goals.
1. Goal: Establish consistent development goals with internal stakeholders.
Industries that still retain traditional organizational structures often lack connections between functions and flows between different domains. Purchasing departments must strengthen communication with other functional departments, i.e. their internal consumers. Stakeholders within an organization have a strong say in the effectiveness of procurement performance. As a result, procurement activities are largely driven by the needs of stakeholders. If the parts provided by a supplier are defective and there is a problem in the production process, then the purchasing department must try to improve the quality of the supplier. Similarly, the marketing department may spend a lot of energy on advertising and advertising, so the buying department must understand the capabilities of the supplier and assist in signing effective service level agreements and formulating reasonable services. In order to achieve this goal, the purchasing department must establish good relationships and close communication with internal departments such as marketing, manufacturing, engineering, technology and finance.
2. Goal: Develop a comprehensive strategy to support the organizational goals of the enterprise.
*The most important goal of management is to support the ultimate goals and specific goals of the enterprise. While this sounds easy, procurement goals don't always align with business goals. This means that the purchasing department can directly influence (positively or negatively) the overall performance of the business, such as long-term growth rate, total revenue, operational performance, and internal customer plans. Assuming that the company's goal is to reduce the working capital of the entire chain, procurement can cooperate with the first merchant to reduce inventory and operating costs by reducing the number of deliveries and increasing the number of deliveries. These practices can improve performance and will be reflected in the company's balance sheet and revenue statement. In this way, the Purchasing Department will become a strategic asset that provides a strong competitive advantage for the company.
Unfortunately, management is often unable to develop strategic plans that match or support corporate strategy or the goals of other business units. There are many reasons for this, starting with the fact that procurement is often seen as a "strategic" support department, and procurement staff may never have attended a high-level meeting to discuss the strategic planning of the business. Second, the executive often fails to realize the benefits of a world-class procurement department in a timely manner. With the above two perceptions changing, managers are gradually promoted to higher positions and invited to participate in strategic planning. Examples include automotive, consumer goods, electronics, and manufacturing, which have recognized the value of being strategic. Managers who actively participate in corporate strategy discussions can provide market decision intelligence, budget planning, and other effective information for the development of corporate strategic planning, including:
Observe the supply market and its trends (e.g., material changes, market shortages, business changes) and explain the impact of these trends on the company's strategy
Identify key materials and services needed to support the company's strategy in key areas, especially during the new product development phase
Develop programmes and contingency plans to reduce risk;
Supporting the establishment of a diverse and globally competitive base.