The purchasing function: everything you need to know

The purchasing function is indispensable pillar of any production. This concept, which appeared at the end of the 80s, refers to those responsible for the company's raw materials.

Like the supply chain, the purchasing sector has undergone major changes in recent years. This particular context is prompting companies to rethink their strategy. How can the purchasing function be optimized? What does the future hold for buyers? Procemo tells you all.

Understanding the purchasing function

What is the purchasing function?

The Purchasing function is the first link in the value chain. Buyers align themselves with the company's strategy to identify the best suppliers to meet the company's functional needs. Purchasing is therefore a decisive preliminary stage in a production process.

In practical terms, buyers select suppliers who meet the company's requirements : budget, lead times, characteristics, supply conditions. 

On a day-to-day basis, the buyer maintains relations with the various service providers and seeks to optimize the company's strategy.

What are the challenges facing the purchasing function?

The purchasing function plays a vital role in a company's performance. The French Ministry of Finance has identified 3 main challenges for the sector:

• A financial challenge : the buyer negotiates prices and supply conditions for greater profitability.
• A strategic challenge : the purchasing function is a major competitive lever. If well managed, it enables a company to stand out from the crowd in terms of price and product quality.
• A commercial challenge : buyers adjust their criteria according to consumer expectations in terms of demand, quality and budget.

In order to meet these 3 challenges, the purchasing function draws up - usually in collaboration with the company's technical departments (design offices, general resources, quality, etc.) - precise specifications in line with the company's positioning. This reference document enables informed choices to be made regarding suppliers.

The buyer, a multi-faceted talent

Everything you need to know about the purchasing profession

The buyer: a versatile profile

On a day-to-day basis, buyers combine technical skills with emotional intelligence. 

He knows how to juggle company demand and market realities to choose the best sources of supply. His interpersonal skills enable him to establish long-term relationships with suppliers , and successfully negotiate and conclude contracts.

Here are the different stages in the purchasing process :

1. Analysis and expression of needs: definition of specifications
2. Analysis of supplier markets
3. Sourcing and supplier evaluation (note that the "multi-sourcing" aspect, i.e. diversifying the portfolio of suppliers for a given product, is becoming increasingly important).
4. Purchasing strategy
5. Consultation
6. Negotiating and contracting with suppliers
7. Supplier relationship management

Buyers are constantly on the lookout for the most profitable offers, and do not hesitate to adjust their specifications according to the state of the market. They also work closely with the company's other departments to control the entire production process.

How do I become a buyer?

Most buyers have a higher education diploma. 

According to recruitment agency Michel Page, 80% of them have a Master's degree in Supply Chain and Purchasing. The profession is also accessible after a professional degree in Purchasing and Logistics, but positions of responsibility are best filled by those with 5 years' higher education.

As with all supply chain jobs, experience in the field and ongoing training are the keys to a fulfilling career. Note that in 2023, purchasing jobs will appeal equally to women and men.

The buyer's career 

Buyers can join a company as juniors and gradually acquire new responsibilities. There are 2 main stages in a buyer's career:

• Junior Buyer or Senior Purchaser (0 - 5 years) : talent acquires a good knowledge of the field and develops technical skills.
• Senior Buyer and Category Manager (5 - 10 years) : Senior buyers are responsible for implementing and enforcing the purchasing strategy for their family of products and/or services.

Entry-level salaries range from €33k gross/year to €43k gross/year, depending on experience and sector. IT Telecoms and CAPEX investment buyers are among the best paid in France, according to the Michel Page study.

Purchasing managers can expect to earn a minimum of €75,000 gross per year, depending on their level of responsibility. A job that offers excellent prospects for long-term progression.

Concrete advice on how to optimize your company's purchases

Adopt a retention strategy

The purchasing function faces a double challenge: recruiting and retaining talent. A few simple tips will help you achieve your retention objectives:

• Introduce an incentive-based salary policy based on results and employee needs.
• Giving women access to positions of responsibility : women are often confined to junior roles and often struggle to reach the top of the hierarchy.
• Unite talents around a corporate culture : schedule weekly meetings, connect the various links in the production chain, create team-building events...
• Define an effective onboarding strategy for young talent, as retention objectives are at stake from the very first months on the job.

Continuing training as a performance driver

We've already mentioned it, but continuous training is essential to keep talent up to date, especially in a function as dynamic as purchasing. Buyers need to cultivate their soft skills and interpersonal skills if they are to perform at their best. Group workshops, conferences and real-life situations are all ways of developing their human qualities.

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Young talent also needs to benefit from this training. It's an increasingly important recruitment argument for them. Think, for example, of a mentoring system to learn the job on the job, alongside a senior member of staff.

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Finally, don' t hesitate to introduce a culture of feedback within the company. Constructive feedback enables your talents to make daily progress on specific points and to take a step back from their work.

Ongoing training is essential for buyers. 

Towards a responsible purchasing function

The Green Supply Chain or responsible value chain is the fruit of a collective effort. Purchasing, production and transport have to be rethought to respect the ecological context.

Here are our practical tips to help you optimize your purchasing function: 

Making informed choices about suppliers

Buyers prefer low-CO2 supplies, and are attentive to product traceability, supplier transparency, harvesting conditions and supplier commitments. 

The RFAR (Relation Fournisseur et Achats Responsables - Responsible Purchasing and Supplier Relationship) label is thus in full development. It rewards responsible collaboration between buyers and suppliers. It's a good indicator for identifying environmentally-conscious suppliers.

Training employees in responsible purchasing

As part of your ongoing training, consider including modules on green supply chain and sustainable purchasing.

Keeping a constant watch

It's vital to keep abreast of the best practices adopted by the competition or recommended by the government, to stay up to date and set an example. 

Your company's reputation is also at stake when you adopt a responsible approach.

What does the future hold for the purchasing function?

A fragile geopolitical context

The purchasing function is largely impacted by the current geopolitical and economic context. Recently, the war in Ukraine led to a sharp rise in raw material prices and disrupted supply flows. A reality which has repercussions on production and company performance.

To protect themselves, buyers need to limit their dependence on suppliers. How can they do this? By multiplying the number of service providers, refining their market analysis, and using technological tools to anticipate economic upheavals. In short, the buyer is the company's new strategic talent.

A changing supply chain

In recent years, the supply chain has undergone major changes. Digitization is the new challenge for the supply chain and affects all companies.

Today's buyers have mastered data analysis and the workings of artificial intelligence. Digital tools enable them to automate certain redundant tasks and optimize their time. Companies need to redefine the missions of their talent and embrace the shift towards the connected value chain.  

Coping with the recruitment crisis

All links in the value chain are affected by the recruitment crisis. This is due to outdated methods that are not attracting qualified talent.

At present, less than 1/3 of companies have a dedicated talent management program in place. Yet young candidates are increasingly interested in quality of working life and career prospects.

The purchasing function also faces a retention challenge. The sector is not dynamic enough, and is not aligned with the ambitions of its talent. Over the past 2 years, 50% of buyers have changed jobs. To retain your staff, offer them opportunities for internal mobility, enhance their skills and diversify their missions.

Conclusion

You've got it, tomorrow's buyer is innovative, resilient and responsible. They mobilize their soft skills and technical expertise to optimize corporate strategy.

If you want to improve your purchasing, logistics or supply chain performanceour consultants at Procemo are ready to support you. Discover our customized solutions and contact us.