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	PURCHASING & SUPPLY SOLUTIONS
	The Irish Jourbal of Supply Chain Management Best Practice

Pat Ryan offers some material support from his base in Cork

Pat Ryan has, since 1993, operated his consultancy Material Support, doing 'exactly what it says on the Tin.

It's a scientific fact that about 5% of any statistical population is extremely successful - the remainder falling under varying categories of victory and defeat. Examples are students passing examinations, athletes and even business people. Following that postulation I recently examined some of Ireland's business high-achievers to see if I could glean some common denominator and I found one.

They all buy well.

I can't list these companies here because I am sure that they want to keep this fact secret. Just open your eyes.

They are fairly obvious if you look.

There are two routes to Bottom-line profit; bring more money in or stop it from going out. Even with the irrefutable facts that saving money through proper purchasing management is far easier than through increased sales purchasing has always been fighting, and losing, the battle for the higher ground with sales and marketing.

Sales volume has always been seen as the symbol of the upward moving company but what is the real cost of sales? What is the cost of winning the contract? The meetings, the quotations, the travel, the accommodation, the lost time, the frustration, the cost of training nomadic selling people, the missed opportunities when concentrating on the wrong market segment, the systems, and particularly the stupid, un-educated, arrogant, ignorant buyers who wield power in their little fiefdoms like gods.

The benefits of buying well is not just my opinion, it is a scientific fact. Delivery is not quite so simple however. The principles are easy but, like Johnny going to Cuba, the execution requires a modicum of commitment.

1. The winning organisation must have a passionate strategic vision that they should never have to pay for anything that they can avoid paying for. This is not driven by meanness, rather by a belief that hard fought for income should not be relinquished easily. This philosophy can be achieved easily because supply companies want to associate with the Alpha business community.

2. Make sure that all outflows of money are seen as a
form of buying. By this I mean all labour costs, direct, indirect, fixed variable, manufacturing-related, administrative and managerial. I also mean public relations, entertainment, and advertising - the soft stuff. And the big stuff too like capital equipment, utilities, insurance. Even the annual audit costs!

3. Understand that reward will always lag costs and be prepared to redress it. We work for nothing and then get paid a week later or for some of us a month later. Think of credit. The supplier accepts, as part of a culture of trade, to, effectively, act as bankers for their customers for 30, 45, 60, 90, 120 or even more days. Think about it.

4. Make everybody responsible for creative alternatives to old ways. Mandate all employees to reduce outflows of costs. Mandate all suppliers to do the same with the incentive of being retained as a supplier if, and only if, they provide genuine opportunities to reduce costs.

5. Examine the areas of barter, consolidation and counter-trade

6. Remember systems are only there to help. They are not an end in themselves. A good spreadsheet has maintained many profitable purchasing systems and 'Name-branded' integrated systems may not deliver on all the promises made at the marketing meeting.

7. Expand the potential market by investing in cost-slim suppliers

8. Never, ever, close your Approved Vendor List and constantly explore the marketplace. I am convinced that Research is the most valuable but yet totally under-utilised function of Purchasing.

Buying well is a state of mind. Like a puppy... It's for life.

I recently helped a small upwardly aspiring company recruit a Purchasing Manager and I was quite surprised that at the beginning of the 21st century the general opinion of the purchasing professional has changed little since this profession of ours was recognised.

Their specification was, essentially, a clerical one where the main duties were to prevent the other functional area leads from back-door buying, to maintain a system that fed into an orderly but predictable accounting process and never deviating from the directors vision of the world.

Maybe it's because I was born a grumpy old man but I don't think much of a buyer who can't or won't investigate, probe, inspect and generally question the status quo. From my first reading of Basics for Buyers by Somersby Dowst I was excited by the directive to 'challenge but not change'.

I recently noted how resistance to Out-sourcing, (Buying-in), continues, particularly amongst the trades unions. Is Out-sourcing the only solution? What alternatives, if any, have been explored?

I know one thing. The organisations that starve themselves of productive, profitable and sustainable solutions - whether in an effort to maintain outdated practices or because of genuine ignorance, are doomed.

Someone once told me that the population is made up of three groups: the tiny number of people that talks about ideas, the larger number of people that talks about things and the huge group that talks about other people. Which category are you in, but more importantly, which one are you striving to be in?