Purchasing Managers: Minding Everyone’s Business
As key players in the supply chain, purchasing managers have to think about innovation, growth, and cost-savings in all aspects of the company’s business.
Purchasing managers once toiled away in relative obscurity, but today they occupy the hot seat. With so many business leaders looking to the supply chain to realize efficiencies and cost-savings, purchasing managers have emerged as key players in the corporate strategic game.
And as key players, purchasing managers need to make the entire business their business.
"The idea of sourcing or purchasing being an entity separate from the rest of the organization is flawed," says Chuck Franzetta, CEO of Franzetta & Associates Inc., a Pennsylvania-based consulting firm specializing in supply chain and logistics issues. "The purchasing manager’s function is integral to everything a company does."
To perform effectively, purchasing managers must firmly grasp their company’s marketing plan and its strategic goals. The best purchasing managers continually source new materials and products with innovation and growth in mind. If they’re working for a manufacturer, they frequently recalibrate sourcing to ensure a fluid production plan and, ultimately, a steady flow of goods to the consumer. Just as importantly, they conserve the company’s capital by timing purchases so that products don’t languish needlessly in a warehouse.
"Good purchasing managers understand how and why quantity and price relate to carrying costs and logistics costs," Franzetta says.
So what miracles can an effective purchasing manager deliver?
Franzetta cites one example drawn from his client list. The purchasing manager for a manufacturer of bottled luxury cosmetics reviewed the billings on bottle caps and noticed something peculiar. Up and down the production line, different unit managers were ordering bottle caps. Each was ordering a different-sized cap for a different-sized vessel. All these caps were then stored for significant periods. Couldn’t the bottles be redesigned so that regardless of their capacity—one ounce, three ounces, or eight ounces—they all sported the same cap?
The purchasing manager found that they could. What’s more, the new containers and single cap could be produced, delivered, and stored more efficiently. The purchasing manager had instigated a small, but significant, change.
That cost-saving idea did not begin with a purchasing manager married to a "we’ve always done it this way" mindset. Rather, it originated with someone brave enough to raise questions and act on conviction.
"Have the courage to step out of the norm and do something different," Franzetta urges purchasing managers eager to make a mark. "Ask yourself, ‘Where is the next opportunity?’"
Meet two purchasing managers who enrich their organizations with innovation and efficiency:
Keith Attman: Always Looking for a Better Way
As a student at the University of Michigan, Keith Attman studied sociology, economics, and psychology. He puts those three disciplines to use as the purchasing manager for his family’s business, Acme Paper and Supply.
Sociology provided insight into systems and processes, while economics offered an understanding of production, consumption, and everything in between. Meanwhile, his psychology background gives him a leg up when he’s negotiating with a vendor or quizzing a sales rep about a new product line. Because he draws on many different disciplines to perform many different tasks, Attman loves his job.
Founded by Attman’s grandfather, and in business since 1946, Acme Paper and Supply ranks as one of the Mid-Atlantic region’s largest wholesale suppliers of disposable food-service packaging, janitorial and restaurant equipment, and retail and industrial packaging. To service its extensive client list—which includes major sports franchises, hospitals, and transportation companies—the business maintains a sizable infrastructure. It operates a warehouse/headquarters complex in Savage, Md., and a regional distribution center in Virginia, as well as a delivery fleet.
Attman started working at the company while in college. He tried his hand at various divisions and positions, but purchasing lured him with its varied challenges. Every day, he gets to ask the question that keeps him interested: "Could this be done a better way?"
Given the vast size and diversity of its operations, Acme affords plenty of opportunities for improvement. "You have to be amenable to changes, and you have to be able to make them," Attman says.
Although the various units have their own managers and buyers, Attman has to be well-acquainted with the many products Acme supplies—everything from toothpicks and toilet paper to walk-in freezers and shop vacuums.
Attman’s day begins just as the previous day ends. Every evening, he prepares for the next morning by monitoring his e-mail for emerging issues and sending inquiries to suppliers, sales representatives, and anyone else who might be able to answer a pressing question. By acting at night, he ensures that his issues are at the top of the agenda the next morning.
At noon, he attends a daily meeting with the company’s buyers and receiving manager. The team identifies potential problems—such as a missed delivery appointment—and takes whatever action is required to rebound.
Given the vast demands of Acme’s client base, Attman spends a lot of time researching new products. When a client identifies a new need, he tries to source the products that will serve it. "My grandfather, who started this business, always said, ‘Never turn down the sale.’ If a need exists, we’re going to meet it," Attman says.
Shades of Green
In recent years, Attman has devoted a lot of time to researching products with environmental benefits. "Our facility is in the federal government’s backyard, so we hear a lot about green," he says. For example, a green initiative in the U.S. Capitol’s cafeteria resulted in demand for compostable cutlery and containers. Other clients want cleaning products made from environmentally friendly compounds. To oblige, Attman has researched the possibilities and even consulted with manufacturers about developing new options.
"Green has become a huge part of our business," he says. "We pride ourselves on finding products that are unique to our industry and have a green spin.
"We have put together a hierarchy of shades of green," explaining that a light-green product on the scale might be recyclable, while a darker green would be compostable—"the ultimate green product," he notes. Before Acme will add a product to its inventory, Attman must scrutinize its green credentials. Not every assertion passes muster.
In analyzing data, Attman seeks to put company technology to better use. For example, he asked the IT staff to fine-tune stockout reports to afford him adequate notice of items in short supply. Prior reports typically sounded an alert, but it often came too late to avoid a shortage. Attman asked that the report be structured with a single question in mind: "Based on daily product demand, what will we run out of in five days?"
Once he had this data on hand, Attman found he could ensure timely delivery. "Getting the product one day sooner allows us to avoid stockouts," he explains, adding that such adjustments require ongoing analysis. "I have to continually refine our data."
Refining the data often means working closely with partners outside the firm. Attman cites one example that proved beneficial to both Acme and a long-standing vendor. When an analysis of comparative data showed that this vendor, a large paper manufacturer, was taking too long to fulfill orders, Attman asked to meet with the company’s sales representative and logistics manager.
"It was taking the vendor eight days from the time we placed the order to deliver the product," he recalls. "We told them their competition was delivering better service." In fact, other suppliers were getting the same job done in five days.
Eager to preserve the relationship with the vendor, Attman worked with its sales and logistics staff to identify the cause of the delay and forge solutions. Upon learning that the slow delivery stemmed from a truck availability issue, they figured out a way to pre-book orders and shave three days off the process.
One of Attman’s biggest challenges is "keeping my vendors honest on pricing," he notes. He makes it a habit to question every invoice, and he follows market news—monitoring prices on commodities, materials, energy, and transportation. He knows when the market justifies a cost increase, and if he doesn’t believe a price hike is warranted, he calls the vendor to negotiate. Because Acme works with so many suppliers, and can quickly shift trade from one firm to another, Attman is able to leverage his purchasing dollars to the company’s benefit.
"Being aggressive helps in this job," Attman says. "You have to be able to make quick decisions, multi-task, and, most importantly, listen."
For example, he builds relationships with his vendors and their sales teams to learn more about his competitors. Just by listening, he gleans a lot of information about the marketplace.
Learning from manufacturers also allows him to educate Acme’s clients. "I always show new products to our clients, even if they won’t buy them," he says. "They benefit from understanding the marketplace just as our company does."
With intelligence gathering, good vendor relationships, and attentive customer service in mind, Attman maintains an open-door policy at Acme. Communicating with clients and vendors helps him make decisions that position Acme for continued service and growth.
Nancy Kocur: Collaborating to Optimize Opportunities
On a typical workday, Nancy Kocur, purchasing and logistics manager for Minnesota-based Buffalo Wild Wings Inc., arrives at the office just about the time the roosters stir.
A committed early bird, Kocur likes to stay at least one step and a few minutes ahead of the challenges associated with her demanding job. She’s responsible for ensuring that the growing chain of sports-friendly eateries, which now operates 822 restaurants, never lacks an ingredient for success.
Increasingly, Kocur’s job involves everything from optimizing the supply chain to sourcing and researching products. She negotiates prices, manages inventory, tastes and tests new menu items, supports the brand, and scrutinizes data with an eye toward slicing and dicing expenses while enhancing revenue opportunities.
"No two days are ever the same for a purchasing manager, but that’s exactly what makes it such a fun and interesting profession," Kocur explains. "You can be a technical writer, negotiator, and inventory manager in the morning, then source a product, analyze spend data, and put together a freight program in the afternoon."
Kocur came to the company in 2008 with several years of experience as director of materials for a restaurant furniture manufacturer. That job demystified the supply chain for her and provided logistics expertise her new employer found attractive.
Kocur’s initial logistics analysis got her thinking. "I believed there were opportunities to reduce landed costs through freight savings," she recalls, "but I didn’t know how to go about realizing those savings."
She reached her solution by working closely with Buffalo Wild Wings’ suppliers and their logistics teams. "Suppliers and supply chain professionals put a wealth of information at your disposal," she notes. "You can’t be afraid to ask questions."
By tapping into such expertise and collaborating closely with vendors, Kocur was able to formulate a program that maximized parts of the supply chain. This resulted in lower landed costs to the restaurants, whether they operate in concentrated urban areas close to a major distribution center or in more remote locations far from the nearest hub.
Kocur also helps support Buffalo Wild Wings’ product-development efforts. She sits on the company’s menu-development team, and when a project leads to a new menu item, Kocur collaborates with suppliers to determine how much product to create to fill the system.
When reviewing potential suppliers, Kocur looks for companies with the production capabilities to meet Buffalo Wild Wings’ demands. She insists on reliable distribution channels, research-and-development capabilities, and favorable pricing. "We also look for transparency and collaboration," she adds.
Kocur’s move from furniture to perishables and limited-time offerings posed particular challenges. When sales exceed projections, working on replenishment can be time-consuming. And she faced a learning curve associated with the culture of a sports grill and bar. Before joining Buffalo Wild Wings, "I thought March Madness was a limited-time offering," she jokes.
One of Kocur’s responsibilities involves monitoring compliance from restaurants within the chain, making sure they order Buffalo Wild Wings’ signature French fry, its special sauces, and the many items that diners expect. Compliance, she tells restaurant managers, is all about consistency and protecting the brand.
"The items that we contract are tested, price-negotiated, and produced to align with our menu," she says, noting that diners expect to experience the same flavors from one venue to the next. Non-compliance can undermine the restaurant’s bottom line.
And that bottom line, restaurant by restaurant, is Kocur’s business. "We don’t want any restaurant to sacrifice quality or lose margin," she says.