Responsibilities of the purchasing department
Within the enterprise, the purchasing department should be a key department with clear division of labor and clear responsibilities, responsible for purchasing all kinds of materials and services needed to maintain the operation of the enterprise. Let's take a manufacturing enterprise as an example to discuss the organizational structure and job responsibilities of the purchasing department.
In large companies, the procurement organization structure is complex, and in different enterprises, the position of the head of the procurement department is also different. For example, the titles of department leaders include chief procurement officer, vice president, minister, director, manager and so on. , and the positions specifically engaged in procurement business include supervisor, senior procurement, buyer, etc.
For the convenience of description, this paper only adopts two purchasing responsibilities, namely, the purchasing manager, that is, the leader of the department, and the buyer, that is, the grass-roots staff of the department, who is responsible for the implementation of specific purchasing activities.
1. Purchasing Manager
As the department head, the purchasing manager is responsible for strategic formulation and planning, and his main responsibilities are as follows:
(1) According to the historical sales data, combined with the plans of introducing new products and withdrawing old products, and the future development plan of the enterprise, the purchasing plan for the next fiscal year is made. According to the company's annual sales, the purchase amount can basically be calculated.
(2) Maintain the existing supplier relationship and ensure stable supply. Whether the financial situation of existing suppliers is healthy or not, the relationship between suppliers with tight supply of key raw materials, especially the market, must be maintained. The stability of supply chain is the foundation of the company's business development.
(3) Develop new suppliers and constantly seek more cost-effective potential suppliers. On the premise of ensuring stable supply, we will explore new supply channels in a timely manner. Purchasing may feel that the old suppliers are happy to cooperate, and it is unnecessary to spend more energy to develop new suppliers, but we need to consider it from two angles.
The first is the survival of the fittest, so that suppliers will always remain competitive. Secondly, you should have a sense of risk prevention when buying, and you can't put all your eggs in the same basket. The COVID-19 epidemic is a warning to us.
If the main suppliers are concentrated in the same country or region, once a major disaster occurs in this region, the loss of the purchaser may be huge.
(4) Supplier contract management, regularly review prices with existing suppliers, and formulate annual price reduction plans.
(5) Review the supply performance, raw material quality and cost of existing suppliers, and formulate a supplier scoring mechanism as the assessment basis for the comprehensive performance of suppliers. Supplier evaluation is not a single purchaser's view, but needs to integrate delivery performance and product quality, and you can use the weight scoring method to see the overall situation.
(6) actively understand the market price and development trend, obtain the latest raw material price index, and reduce the procurement cost on the premise of ensuring quality. Purchasing managers need to care about all kinds of international geopolitics and domestic people's livelihood. It can be said that they care about everything.
(7) Be responsible for the management of employees in this department, formulate career development training plans and evaluate employee performance. It is also a compulsory course for managers to bring out an excellent team and make succession plans.
(8) Coordinate the communication between internal and external suppliers. Only by communicating more and being good at communication can you be comfortable in the position of purchasing manager.
2. Buyer
Responsible for more work is the operational level, which can include the following:
(1) Create new supplier information and new purchasing raw material master data information.
(2) The prices of purchased raw materials shall be maintained and updated regularly.
(3) According to the demand and inventory situation, make the purchase plan.
(4) Create a purchase order and send it to the supplier.
(5) Confirm the delivery date and track the delivery of the order.
(6) Solve the difference of order delivery.
(7) Supervise the supplier's delivery performance, collect relevant data, and report any abnormal problems in delivery to the superior supervisor.
(8) Arrange and track the payment of suppliers.
How to transform the purchasing department?
1. Change of ideas
In general enterprises, 65% of the value of products and services comes from their suppliers, so the purchasing department is very important in the company. Traditionally, cost saving is the primary goal of the purchasing department, but in the future, the purchasing department will expand its functions to help the company improve its operating performance and promote innovation.
Procurement leaders will actively adopt emerging technologies, formulate clear digital strategies and reconstruct procurement models, thus promoting this transformation. Driven by this change, the purchasing department will rethink the organizational structure, purchasing activities, resource allocation and related skills of the whole department.
In the traditional organizational structure, the business department thinks that procurement is an activity at the executive level and has no strategic influence, so it always informs the procurement department to implement the established plan after proposing the procurement demand.
With the development of market competition environment and business, this concept also needs to be changed. Business departments need to work closely with purchasing departments to achieve better performance.
In the traditional mode, buyers support business departments to carry out end-to-end professional activities, such as purchasing, category and supplier management, making purchasing strategies and negotiating with suppliers.
In supplier management, buyers can only find suppliers manually, and usually need the assistance of buyers. Buyers can only manage suppliers from the perspectives of price, quality, delivery, etc., statically evaluate supplier risks, and rarely actively update evaluation results.
In contract management, the buyer adopts manual production and execution process, lacking centralized document management positions, and sometimes electronic contract documents will be lost after purchasing substitution, which makes it difficult to ensure that suppliers abide by the contract.
After changing the concept, buyers need to work closely with business departments to integrate core procurement, contract signing and supplier management activities into supply chain activities to better meet customer needs.
At the same time, buyers will also actively participate in product design innovation and develop new projects with R&D, product design and suppliers. Buyers will work more closely with the business team, and their focus will be on gaining insight from the rich data of internal and external information systems.
2. Technological innovation
According to a survey conducted by SAP Performance Benchmarking, the purchasing department will spend 52% of its time on trading activities, such as reconciliation and compliance audit. This kind of work is not only time-consuming and laborious, but also purely reactive and cannot solve the root cause of procurement management.
In the future, enterprises will realize the automation of most trading activities, such as using robot process automation to automatically place orders for raw materials with high purchase amount and relatively stable demand, thus releasing human resources, freeing employees from boring repetitive work and focusing on creating higher-value jobs for enterprises.
In the end, the operating cost of the purchasing department will be reduced and more value will be contributed to the company. According to a study by McKinsey, 60% of the process from source to payment is likely to be completely or mostly automated, and the resulting cost savings account for 3.5% of the total savings.
In digital procurement activities, artificial intelligence and blockchain will be used to draft contracts and provide guidance for procurement decisions. The purchasing department will use forecasting analysis technology to improve the visibility of purchasing expenditure, which is conducive to making purchasing decisions.
The purchasing department can use the integrated analysis function and dashboard to highlight the actual performance of suppliers and predict the potential risks from different dimensions, so as to improve the overall supplier management process.
By adopting digital contracts, the procurement department can improve the quality, transparency and speed of negotiations with suppliers, strengthen cooperation, and reduce the concerns of enterprises about supplier compliance.
In the digital age, with the emergence of various new technologies, the purchasing department will use RPA, blockchain, machine learning and other technologies to improve the efficiency of transactional activities, reduce labor operation costs, expand business innovation thinking, and create more value for enterprises.