Purchasing management and its evolution in recent years

evolution_purchasing_management

 

Purchasing management and its evolution in recent years

The purchasing department is an important part of a company's operations. Therefore, institutions that want to foster healthy growth and remain competitive in the market need, more than ever, to understand the importance of purchasing management and seek ways to make the area strategic.

In the past, most of the work performed by professionals was done manually, which required a lot of the team's time and increased the risk of recurring errors. Over time, companies realized that if they did not invest in tech and good purchasing management practices would be left behind, since this department concentrates a large part of the revenue. Strategic positioning has become vital for institutions to gain a competitive edge in the market.

Purchasing management as a strategic factor today

Due to the various transformations in the market, companies have started to view the purchasing sector in a different way, and thus the area has taken on a more proactive profile in relation to decision-making. In other words, purchasing products or services based on the best cost-benefit ratio has proven to be one of the best management practices.

This ensures the quality of materials for production, resulting in items with greater added value and increasing customer satisfaction. At the same time, finding good suppliers, knowing how to negotiate lower prices, and better payment and delivery methods are essential skills for purchasing professionals.

In this way, the purchasing sector can make purchases that can make a company more competitive. Thanks to its potential for negotiation and profitability, the area gains strategic contours aligned with the institution's objectives and begins to interact more with other areas, in order to identify needs in the supply chain and also act in acquisition planning.

Os professional buyers They began to be seen in a different light, as they mastered the skills needed to assess costs, manage suppliers and negotiate better conditions to close a deal with supplier companies.

The biggest demands of the B2B market

The purchasing relationship between the supplier and the purchasing company is more complex than that of stores that sell directly to customers. This is because the B2B market has different demands and exhibits very different behaviors and procedures when making purchases than B2C. Below, we will look at the main demands:

1. More careful purchasing process

Business-to-business transactions often involve large amounts of money, as well as more complex technical and economic considerations. The products purchased will often be directed to multiple areas within an organization, thus reaching a larger number of people.

In this sense, the purchasing decision process is much longer and also involves a series of formalities, such as product specifications, detailed orders, approvals, contracts, among others.

Therefore, due to the great responsibility associated with a purchase order, the supplier selection must be done very carefully. It is essential to find partners who can offer products that meet production requirements while also offering a wide range of payment options, since the order value is substantial. Delivery times and storage methods are also important points to be discussed between the parties.

2. Good business relationships

Good relationships are crucial for successful purchases in the B2B market. It is through them that it is possible to build bonds of trust and establish a lasting partnership, which will bring benefits to both businesses for a longer period of time.

Long-term purchases, i.e. those that are repeated over a period of time, are common in the B2B market. Establishing a good relationship with a supplier ensures that your production will not be affected, since the supplier will be able to continually meet your needs. At the same time, the supplier company will retain a customer, proving that this collaborative strategy benefits both sides.

Companies and suppliers depend on each other to remain in the market. Together, they can define problems, find solutions, and design more customized services or product improvements.

3. High quality offers

B2B buyers have a very responsible role: to make the best purchasing decisions for a company. risks are much higher if the quality of the product is not adequate.

Therefore, suppliers must always invest in innovation to offer more expertise, quality and support in the products they sell, in order to meet the needs and expectations of companies.

It is worth remembering that the complexity of products in this context differs from the B2C market. The supplier needs to have mastery of the information regarding the service or item, both technical issues and factors related to after-sales.

Before digital transformation

As we have seen, some time ago, the role of the purchasing department involved operational and bureaucratic tasks with no relation to the company's strategy.

This reality certainly created challenges for buyers, who often did not have access to tools capable of offering more innovation and advancement for purchasing management processes. Learn what some of these obstacles were:

1. Find good suppliers

As we said before, a good relationship with suppliers is ideal for ensuring good business for the company. To achieve this, the ideal is to find qualified and complete suppliers, which proves to be a difficult task.

Before the inclusion of digital tools, the purchasing department needed to dedicate itself to intensive market research, contacting each supplier and surveying them to check product specifications, study various catalogs and request quotes.

This extremely laborious activity still required analysis and classification of data received from suppliers, as well as a lot of team time. Even so, all these procedures did not guarantee a portfolio of reliable and quality suppliers.

Problems such as late deliveries, defective products or lower quality than promised were constant, further straining the relationship between the company and the supplier.

2. Negotiate in person

To ensure better prices, conditions and deadlines, companies and suppliers needed to schedule process alignment meetings and negotiate in person. Managers needed to visit the supplier, as this allowed the company to have a more concrete understanding of the service provider's routine.

The disadvantage of this method was that it took time and prolonged the decision-making process even further. After all, it was necessary to reconcile schedules and agree on dates that were viable for everyone, which was not always possible.

3. Failures in communication and evaluation

The work of the purchasing department does not end after the contract is signed or the products are delivered. This department is also responsible for monitoring supplier commitments, establishing communication channels and maintaining relationships with suppliers.

Many companies had difficulty establishing criteria and indicators to effectively evaluate suppliers. It was necessary to carry out detailed manual monitoring and record the entire work cycle with partner companies to observe points such as compliance with deadlines and quality of products delivered, for example.

Based on this analysis, the company was able to distinguish between a reliable supplier and one that did not meet the requirements and, therefore, remove them from the contact list.

This practice is essential to avoid rework, unexpected expenses and disruptions with future purchases. Since this entire process was not automated, it took much more time and consumed the team, which was not always able to make this assessment or communicate with the supplier effectively.

As a result, failures continued to occur, as the sources of the problems were not identified in time by the sector.

After strategic management through systems

Nowadays, many companies have embraced technological solutions to improve their purchasing management performance. These tools have proven to increase productivity and facilitate the daily work of the team, ensuring that the sector will be able to find products and suppliers according to its demands. Examples of them include:

1. E-procurement

E-procurement is a solution designed for purchasing management for the B2B market. The system creates a virtual environment in which companies can find qualified suppliers, make quotes and close deals online in a practical and efficient way. safe.

E-procurement platforms unify and automate the purchasing process, supporting users through electronic methods for each phase of the purchasing process — from request to payment.

Buyers can make requests, place orders, participate in auctions, manage contacts, manage inventory, check receipts, payments and monitor all these processes in one place.

Therefore, this tool is very welcome to optimize purchasing management and negotiation flow.

The time to close transactions can be significantly reduced: as they can be programmed directly into the system, there is no need for human intervention to approve or continue the procedure, which can even be carried out outside business hours, in accordance with the production calendar.

This means that processes do not need to be delayed or interrupted due to waiting for approval. The acquisition of inputs can happen automatically, without affecting the production chain. In general, the entire purchasing decision process becomes faster and more assertive with the help of this tool.

Since the e-procurement system automates most of the tasks Within a purchasing process, it is possible to observe a reduction in operational costs involved in all stages of the cycle.

Furthermore, the buyer no longer has to perform purely bureaucratic tasks and can therefore focus on more strategic business factors, such as investing in relationships with suppliers or prospecting new contacts.

In just a few clicks, the purchasing team has access to analysis reports generated by the system, with data and statistics, which provide extremely important information for the strategic planning of the company and the sector.

2. Unification of information

E-procurement software helps the sales team standardize supplier selection processes, approvals, work routines and procedures involved in each transaction.

The entire supplier contact database is centralized in one place, which makes it easier to manage information related to compliance, perform audits or check legal matters. Contact with your suppliers is also centralized on the platform, so managers can monitor the performance of partner companies more assertively.

Centralizing information allows the purchasing department to have greater control over workflows. Through the platform, managers can simultaneously have an overview and detailed view of all processes.

This makes it easier to identify deviations and errors, predict problems and control stock movement, for example. The purchasing department can know what is missing before those responsible for stock are aware of the situation, and thus plan the point of repurchase.

Negotiation histories are recorded in the system and can be accessed at any time, allowing new orders to be generated based on existing ones. Records of past requests serve as a source for analyzing expenses and studying ways to obtain better quotes in the future.

A fully integrated electronic system also simplifies work and communication between departments. Each sector can have access to data that is relevant to each one, streamlining internal processes and decisions.

No longer do you have to worry about unread emails, lost physical documents or lost supplier orders. Everything is recorded in the system and can be checked at any time.

If there are several departments in a company that make different types of material requests, it is likely that each one is carrying out the work in its own way, and not necessarily in a strategic way.

The e-procurement system ensures that everyone can conduct the purchasing process in a standardized digital manner, in accordance with the institution's policies and parameters.

The purchasing department handles a large volume of money and any movement can be decisive in generating profit or loss for the institution. In this sense, transparency is very important, both in negotiations with suppliers and when reporting. It is good to know that the company can count on a modern tool that will generate accurate and complete data when an audit is carried out.

3. The possibility of easy comparison

As we have already mentioned, it is not easy to find good suppliers, especially for companies that need specialized raw materials. The e-procurement system allows companies to access the contacts of several suppliers duly registered on the platform.

This makes comparing and selecting suppliers much easier. Instead of having to search extensively for contacts, the system presents options that can be sorted by categories according to the buyer's needs.

In addition, many supplier companies develop electronic catalogs to offer their products. This detail brings more transparency and assertiveness to negotiations. The buyer can easily view the price of materials, without having to ask for quotes or contact the supplier. This way, they can compare different prices and choose to contact only a selected group and propose more objective deals.

A very interesting possibility that these systems offer is the creation of a competition. In other words, the company presents its proposal and the volume it wishes to negotiate and several suppliers can give sets with different offers. This tactic is extremely advantageous for the purchasing department, as the team will be able to analyze the alternatives and choose the one that offers the best cost-benefit.

This model, known as e-sourcing, is a way to identify potential suppliers and increase your contact portfolio. The system allows a greater number of companies to find the offer displayed by the purchasing department and place their bids. Buyers can then select the offers they consider most attractive and even register interesting contacts for the future.

Since the system aims to connect companies and suppliers in the B2B sector, the purchasing team has access to a huge range of contacts from all over the country and the world. This means that if the institution is unable to find supplies locally, it will certainly be easier to find remote partners with the help of this platform.

4. Streamlined approval and evaluation processes

A large part of the success of a production chain is being able to count on the right suppliers to establish stronger ties, align processes between parties, and ensure good communication and interaction based on respect and trust.

In this context, supplier approval is, right at the beginning of the prospecting process, the process of confirming that the selected company meets the requirements stipulated by the buyer. This step basically ratifies the partnership and certifies that the future supplier has the characteristics and qualities that the purchasing department was looking for.

After this phase, a supplier qualification process begins. Throughout the work, purchasing managers need to observe and evaluate the progress of the partnership and the performance of the contracted company. At this time, points such as compliance with deadlines and conditions that were agreed upon at the beginning, during the approval stage, are analyzed.

The evaluation period is a fundamental part of efficient supplier management. If the supplier continues to meet deadlines, maintain a good price, offer good payment terms and, above all, offer quality products, it contributes to the final satisfaction of the customer and brings more profits to the company.

Therefore, institutions need to find ways to constantly analyze suppliers through performance indicators in order to find out which companies should be partnered with. It is worth remembering that good partnerships with suppliers always guarantee a good cost-benefit ratio and more flexible negotiations.

Supplier management is an ongoing, long-term task. It is essential that managers focus on this evaluation process in order to establish successful partnerships that will add value to the institution and help with business growth and expansion.

In all of these processes, technology can be an ally to facilitate the work of managers. With the e-procurement tool, the responsible team can approve suppliers with the speed of a click and monitor the performance of the contracted company more quickly and conveniently, in addition to evaluating performance data over time.

All analysis work can be done digitally and managers have access, in real time on their platform, to all relevant information that will help them in decision-making.

If any setback arises, the root of the problem can be identified quickly, giving buyers time to think of solutions and contact the supplier before something more serious happens.

The globalized world encourages companies to constantly think innovatively and seek out differentiators that can make them stand out in the market. Ensuring competitive advantages in today's competitive market and ensuring profitability are daily challenges in the lives of managers and entrepreneurs.

It makes sense to replace the traditional purchasing sector model, in which the team assumed a mechanical and repetitive way of working, with a reformulated concept aligned with the company's strategy and the best market practices.

This shift in the mindset of organizations has opened up space for purchasing professionals to demonstrate how their negotiation skills can bring great profits to an institution.

Investing in strategic purchasing management, combined with technology and modernity, is a tactic that is placing companies on a higher level, enabling institutions to establish successful partnerships and achieve increasingly higher goals!

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