What Does It Mean To Be A BuyerDirect Material Procurement | July 28, 2023 | By
What are the core responsibilities?
Buyers, purchasing agents, procurement specialists, purchase executives, irrespective of how they are referred to in an organization, are primarily responsible for purchasing materials, supplies or equipment for a business. Their roles & responsibilities include:
- Identifying the right suppliers
- Negotiating with them for best price and quality
- Processing requisitions and purchase orders and tracking their status
- Working with internal teams such as design, quality, and stock teams to ensure parts are received as planned
Here, it is important to note that buyers can either belong to the sourcing team or the procurement or purchase team. The primary difference between the sourcing and procurement team is that sourcing specialists work on identifying the right supplier whereas the purchasing teams work with the identified suppliers to ensure supply meets demand. For the purpose of this blog, we’ll look at buyers in the sourcing team, particularly in the discrete product manufacturing industry.
How does the role vary in different organizations?
In some organizations, it is considered a merely transactional role whereas, in others, it is rightly looked at as a strategic role. In smaller organizations, the buyer is expected to manage the end-to-end process right from scouting for suppliers to receiving parts and inventory control. However, in some large organizations, due to the sheer volume of purchases, buyers primarily focus on identifying the right supplier, negotiating prices and other terms, releasing purchase orders and monitoring their status. In addition to the core responsibilities, buyers are expected to deliver on the following fronts based on the organization they work with:
- Draft and execute contracts
- Nurture supplier relationships
- Track transport of goods and to ensure timely delivery
- Assess quality of stock received and escalate any discrepancies to suppliers and internal teams
- Update inventory and ensure optimum stock level
- Process vendor invoices and follows up till payment is made
- Plan and formulate annual strategy identifying opportunities for cost savings
- Participate in the development of ISO documents for the purchasing function
What is the organizational impact of the role?
As a buyer’s core role is to make purchases for the organization, how cost-, quality- and time-efficient these purchases are have a direct impact on an organization’s profitability. Cost has, is, and will always be the primary impact of the buyer’s role in an organization. However, as the buyer’s role has evolved over the years, there many other ways these specialists can make an impact:
Reputation: Purchase agents are the frontline staff of an organization working with suppliers—communicating and clarifying requirements, negotiating, sharing feedback, and finalizing commercials. These specialists have to tread a thin line to ensure they are not overly aggressive or are not considered easy to manipulate. While individual working styles may differ, buyers should be able to build trust with suppliers they would like to work with in the long term. Though working with suppliers day in and day out may look or be treated as a routine activity, getting better at this skill helps sourcing specialists make decisions that serve them and their organization well in the long term.
ESG Framework: Buyers have the responsibility to choose suppliers who follow sustainable and ethical practices. Buyers can contribute to an organization’s sustainable objectives by sourcing from environmentally conscious and socially responsible suppliers. This approach can in turn attract environmentally-conscious customers, thus moving towards a sustainable ecosystem, one step at a time.
Innovation: Buyers can contribute to innovation by maintaining a diverse set of suppliers and looking out for innovative technologies and solutions. Once they have a clear idea of the requirement, buyers can come up with creative solutions within the given constraints.
Cross Functional Collaboration: Purchasers are front line staff not only externally but also to internal teams. Their ability to collaborate among teams increases the quality, timeliness and cost efficiency of the products manufactured. The skill to coordinate, persuade, and lead teams reduces errors and wastage of resources and also fosters good will among team members.
What are the key challenges?
Managing supplier relationships: Though supplier relationship management is a common term, it is not a common or easy skill to manage a group of people from whom demands are constantly placed for better quality at better prices, better lead times, and all of this for the long term. It takes a lot of discussions, constant follow ups on phone and email, periodic evaluations etc. And as the buyer is the face of the organization for the supplier, they are also responsible to ensure that payments are made on time, and serve as the contact point if suppliers have any issues with payment or other internal teams.
Lack of access to complete and real-time data: When companies don’t have the systems to capture real-time sourcing status, the responsibility falls on the buyers to manually track status and consolidate status reports. Buyers spend a significant portion of their work week preparing these reports. Moreover, as the status is bound to be dynamic, the reports do not accurately present the real picture. It is challenging to decide the course of action based on a partially accurate report.
Keeping a track of items that need their attention: Buyers are required to be on top of their email lest they miss a critical one. And this is a challenging task when working on hundreds of parts and multiple suppliers, each part requiring multiple rounds of discussion and follow up.
Getting Recognition: Buyers work behind the scenes ensuring that requirements are understood and clearly communicated to suppliers, parts are delivered on time, payments are made, queries are responded to, management is updated, suppliers are kept informed, etc. However, if there is one slip on their side, all hell breaks loose. The painful truth about their job is that no one notices when they are doing a good job. Also, there are no clear metrics as to how much cost saving happens because of their efforts and how they are able to influence suppliers to work in the organization’s best interest.
Managing the conflict between speed and compliance: On the one hand, they are asked to deliver fast and with less and on the other hand, they are required to document every correspondence and adhere to the policies, procedures and best practices. Not to mention that buyers who are able to create a rapport with the internal stakeholders and suppliers are more effective in their job. It’s a tough spot to be in—performing a buyer’s role in a manufacturing industry—where you’re always racing against time.
How can organizations empower buyers?
Technology: The basic definition of technology? A device or software that simplifies the effort required to carry out a task. As simple as that! So the easiest way to empower buyers would be to identify their manual tasks and automate them. The other ways would be to:
- Give them complete, real-time data and useful insights for decision making
- Display all their actionable items in one place in a streamlined format
- Ensure that their workload is well distributed
- Capture all of their activities in one system so that it is easier to gauge the effort they have put in and also enable them to adhere to the organization’s policies and procedures
Clear distinction between guidelines and policies: One would think that this is a given but the distinction is not very clear in many organizations. A policy with too many exceptions is no policy at all. It is better to present such a course of action as a guideline with sufficient use cases as examples. The reason this is important is that when buyers are out in the market talking to different suppliers, it is essential for them to know where the red line is and where there is room for negotiation and compromise. When there are situations when it’s complicated to interpret the policy given that there is more gray than black and white in the real world, buyers should be given enough support to make decisions that are beneficial for all stakeholders involved.
Workload: Even if there are resources to enable and support the buyer community, if the work assigned is more than what can be managed on a long term basis, it is an issue that needs to be addressed. Purchase executives will not be able to adhere to procurement best practices, which will not be in alignment with organizations’ championing procurement as a strategic function.
Because the procurement function directly impacts the bottom line, organizations stand only to gain by empowering this group of unsung heroes who silently contribute to the factory hum—BUYERS.