The purchasing department of a company is the area whose main function is to acquire the goods and services it needs to operate. It is therefore responsible for its supply, whether raw materials or other specific supplies.
Nowadays, we live marked by the constant turbulence that shakes the markets and widespread uncertainty worldwide, its role becomes highly relevant.
The productivity and profitability of the company in the short and medium term may depend on their success and good work. In 2023, these professionals will have to overcome important obstacles.
The 5 challenges facing the purchasing department
How to succeed in a scenario of a growing economic crisis caused by factors such as inflation, rising energy prices, or shortages of raw materials? If this question is on your mind, you must be aware of the situation you are facing to make the best decisions.
There are many current challenges that you have to overcome as head of the purchasing section of your business. We have highlighted the 5 most important ones.
1. Guarantee your company’s supply
The aftermath of the pandemic in China and the war in Ukraine are events that have pushed a re-geolocation of large supply chains.
We are witnessing a deglobalization, in which many companies are moving their production to closer countries to avoid tariffs and obstacles in the distribution of goods.
This is translating into an increase in costs that, logically, is being reflected directly and significantly in prices.
Then we must add that the shortage of materials and products is still a reality, although in the last months of 2023 we are witnessing a stabilization.
The fact that the supply is no longer greater than the demand in many markets has caused buyers to lose bargaining power with suppliers.
En este contexto, tu primer y más importante reto será garantizar el suministro de tu empresa para que, de este modo, no se vea afectada su actividad regular.
In this context, your first and most important challenge will be to guarantee the supply of your company, so its regular activity is not affected.
2. Establishing strategic relationships with suppliers to achieve cost improvements
The game board has changed, as we have explained, and, therefore, your strategy needs to change as well. It is a good time to strengthen long-term relationships with sellers, beyond the purely transactional.
Since competition between them has decreased as a result of the imbalance between supply and demand, you will have to look for another alternative if you want to get better prices.
This involves turning them into allied partners that help you guarantee your supply and design contingency plans that allow you to solve any unforeseen event that shakes the market.
3. Adapting the professional profile of the purchasing department to the new paradigm
It is reasonable to think that, if the paradigm has changed, it will be necessary to adapt the professional profiles of the purchasing department to the new demands.
It is no longer enough to manage a portfolio of suppliers, launch requests for quotations (RFQs), or make comparisons. It is now essential to comprehensively understand all the ins and outs of the supply chain.
To do this, you need leadership, teamwork, and analytical skills. Continuous education and training of purchasing personnel plays an important role.
Another challenge you have in front of you is to make the most of the potential of your buyers. Attract, develop, and retain top talent.
4. Digitizing the purchasing area
In the Fourth Industrial Revolution, digital transformation has become an urgent need. Also, about the purchasing area of your organization.
It is a requirement to have advanced information systems to enter the market on equal terms with other competitors.
The automation of tasks is key to optimizing the order-receipt-invoice cycle and, in this way, freeing up resources that allow you to develop the strategic management of the department with greater guarantees.
That is the identification of suppliers, the analysis of what the market offers you, the promotion of commercial agreements, etc.
5. Adapting your purchasing policy to Corporate Social Responsibility
Implementing measures that contribute to the reduction of the environmental impact of your activity has become a requirement.
We find ourselves in a global scenario of important changes in this direction. It is key to be aligned with the ESG (Environment, Society, and Government) criteria that represent the pillars of business sustainability.
Another of the great challenges that you will have to face will be to adapt your purchasing policy to Corporate Social Responsibility, even if this means a presumed increase in costs.
In short, the purchasing department of your organization will have to adapt to the new times.
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