2023-10-16 16:57:12
Its activity is not visible to the eyes of consumers, but occupies a strategic place in the proper functioning of the company. The purchasing department is constantly evolving while guaranteeing the supply of the company. And although it has sometimes been an area maligned, confused in many cases with customer service or linked to marketing, the truth is that much of the value that makes up the company is born from this department. And how is it achieved? This is the question that wanted to answer the expert panel Challenges and value creation of purchasing departmentsorganized in Madrid by “actives”, the Prensa Ibérica group and Amazon Business.
When managing a department of this nature, one of the main challenges is controlling costs, but it is not the only important thing. “Purchasing must incorporate efficiency by flag,” points out Pedro Gascón, senior manager of the Corporate Services Transformation area of KPMG Spain. After all, shopping is the last link in the chain. And a fundamental pillar to underpin the company’s strategy, for example, on time to achieve the sustainability objectives linked to the ESG criteria (environment, society and corporate governance for the acronyms in English). “Many employees require their companies to buy sustainably, but they do not have the necessary tools to do so, we provide a solution,” adds Christopher Kallscheid, CEO of Amazon Business España.
In the debate on the application of ESG criteria when negotiating the purchase of different products, there is no doubt about the commitment to sustainability, even if sometimes this effort makes the process more expensive. For Josetxo Pérez Apesteguía, Palladium’s corporate director of Purchasing and Logistics, it’s about finding a balance. “With sustainable shopping you always think it will be more expensive, but maybe you can make up for it by buying less. It will also depend on the specific product and other variables. Sometimes buying local raw materials can be cheaper and in our case sustainability is a competitive advantage,” he emphasizes. “You need to guide the user and show that these products are actually not worth much more money,” says Kallscheid.
Essential requirement
Experts say that sustainability in purchasing departments is a requirement that is here to stay. That’s why the big companies they are increasingly extending this criterion in their purchasing policy, how to see who is the supplier of your supplier. “It is essential that we align our sustainability strategy with the company’s values,” says Gascón, and even more so when consumers and stakeholders demand more eagerly the incorporation of ESG in companies.
Now, the challenge is to consolidate the use of sustainability throughout the value chain. It is a strategy that affects the entire organization and in which the purchasing department plays an important role. “The challenge is transversality, to give value to all areas of the organization such as operations, human resources and marketing,” says Pérez. at the same time, companies will have to bet on communication. “Sometimes the client doesn’t appreciate the efforts we make because we don’t convey it to them well, this pedagogical culture is important,” notes Collado.
At the same time, the purchasing departments are very aware of the increase in efficiency produced by the introduction of digitization to processes. For example, a lot of money can be saved by using the digital invoice. Grosso Napoletano is one of the firms that has gained efficiency thanks to innovation. “Traditionally, in hospitality, digitization has not been a competitive advantage, but when you have a dimension it is necessary. That’s why you need to focus and look for simple tools”, explains Javier Collado, the purchasing director. After integrating the purchasing systems and seeing the savings in operational and management costs, “it begins to generate value that a priori did not have any”.
It is something shared by everyone present at this round table. “I’m in favor of being more agile and that means not being completely digitized,” says Pérez on the basis that sometimes it’s more efficient opt for a smaller and more agile tool that provides the solution sought instead of a big project that digitizes all processes without an end goal in mind. “A digitization project can only be successful when the user is not forgotten, which requires simple processes. It is part of the success of Amazon Business, as buyers know Amazon from private life. It is time to bring simplicity in business,” adds Kallscheid.
Used correctly, digitization involves a reduction of administrative burden, allowing time to be spent on tasks that create value, such as analyzing data and working on the future. In addition, it is key to have easy and fast shopping solutions. “We have employees who are in contact with the customer in the hotels and use Amazon Business to be able to attend to their demands and give them satisfaction very quickly”, develops the corporate director of Purchasing and Logistics of Palladium, especially for “products which cost little, but which give value to the customer”.
More diversity
What does the integration of ESG criteria bring to the value chain? The implementation of sustainability in purchasing departments can achieve the acquisition of new customers. Consumers are paying attention to certain characteristics of the companies they work with and also to products that are being consumed by those who previously did not pay attention. For example, the diversity.
For economic growth, employment rate or development of professionals, “diversity in the supply chain brings great benefits to the communities in which it impacts”, assures Gascón. And it also influences consumer decisions, aincrease the degree of loyalty and buy more. “Implementing diversity has clear benefits for both the affected community and the company implementing these plans,” he adds.
Flexibility and speed
This factor adds flexibility and can bring speed of delivery in case of small and local suppliers, which lead to one increase in competitiveness which ultimately results in the price. Kallscheid agrees: “We don’t just offer products like Amazon, many Spanish SMEs sell their products on our marketplace and contribute to this diversity of suppliers.”
However, and despite inflation, rising costs affecting the entire supply chain and the international macroeconomic situation, there are ways to achieve an experience of excellence for a procurement department. The most relevant is guarantee the basics, have the base supply chain well established to progressively add value. “It is up to the Purchasing professionals to add value to the company. The purchasing challenge is to be well positioned and to have influence in the organization,” summarizes Pérez.
The relationship of trust with suppliers is crucial in a moment of uncertainty like the current one. “You have to put all the information at the service of the people you want to work with and not just be a demand manager,” says Collado. There is a part of cost reduction as a result of innovation and of other solutions that go beyond the quotation of raw materialss in the international stock markets and Excel panels. “Look for the basic, the simple, and here you will innovate and reduce costs.”
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