Purchasing Training

Purchasing training is widely available on all functional areas in purchasing from transactional procurement in its simplest form through to leadership training and the management of large procurement teams. Training is delivered in workshops, classroom training, using on-line video and by distance learning. There is a course for everyone, at whatever stage in their personal and professional development.

Educational opportunities are available at all levels too. Diplomas, degrees and post-graduate courses can be undertaken in most developed countries. Many large companies require a post-school qualification in business for people entering the profession and often further education is expected for people wanting to advance to a higher level of achievement.

Training that is delivered in person, in the classroom, has the benefit of interaction with the other participants who can share their experiences. Learning from the trainer or presenter only is not as useful as working with a facilitator that can encourage discussion and debate. A combination of face-to-face training with examples and case studies, with work done outside the classroom to support it, works well. This method is particularly successful when applied to strategic sourcing of commodities, contract management and negotiation skills.

Courses that are available electronically by e-learning, distance learning, home DVDs, and webinars can be just as successful for those people who are comfortable working alone. Entry level courses such as “introduction to purchasing” are successful when delivered this way as they are instructional rather than interactive. Feedback is given, both directly on a one-to-one basis and as a class report, which creates the involvement needed. Continuing professional development is also achieved through this route where the latest trends are shared and discussed.

People starting out in purchasing or considering changing career should look into the various options offered by the national procurement and purchasing associations in USA, US and other countries which offer training courses from beginner level. Through these organizations seasoned professionals can also take advanced courses right up to masters level.
There are many private training companies that provide purchasing training in most countries. Anyone considering undergoing training in purchasing should first establish the reputation of the institution and the relevance of the course material. Employers will look for suitable accreditation of course content such as those courses approved by e.g. Institute of Supply Management (ISM), Chartered Institute of Purchasing and Supply (CIPS).

On-the-job training is not to be ignored. In purchasing any opportunity to move around in an organization to learn more about the various functional areas in purchasing should be taken up. From procure-to-pay, sourcing, vendor management, contracts administration through risk and compliance, any good purchasing training can teach a person more about the functional areas in the purchasing function.

Expense reduction experts

Expense reduction experts and consultants offer to make savings of up to 15% - 20% on your current costs, assuming that the specific areas have not been tackled actively in the past three years. These experts can provide you with advice and support to identify and understand the cost drivers of any commodity or service throughout the supply chain and show you how to make it happen:

In each stage of the supply chain there are potential areas for cost reduction. The challenge is to identify those that can deliver savings with the least disruption and with the fastest results.

Purchasing from Suppliers

Direct and indirect materials are an obvious candidate for cost reduction. In a manufacturing organization the following big ticket items are areas that the experts will target for trimming.

• Raw materials
• MRO (Maintenance, Repair and Operating expenses)
• Packaging
• Tools and consumables used in manufacture

Essential and business support services often have more scope for cost reduction than materials. High spend areas should be the main focus although the experts will go for some “quick wins” to demonstrate what is possible. Some main areas for savings:

• Energy and Utilities
• Facilities, security and safety
• Courier and travel
• Temporary labour and HR services
• Telecommunications

Production

Production expenses can be tackled in many areas. Experts will identify opportunities as follows:
• In the design of the product. Product development determines up to 80% of product cost and this is hard to remove later.
• In Lean Production. You can improve labor productivity, cut production throughput times, reduce inventories and cut out errors and reduce scrap.
• Overhead Cost Reduction. Inventory carrying costs, power, and administration costs can be reduced.
• Product Line Rationalization. Focus is on the most profitable product lines and products that are losing money should be highlighted for attention.
• Quality. The cost of quality can be 15% to 40% of revenue. Experts look for areas that are over-managed.

Distribution to Customers

Potential areas of expense reduction are the big spend items, warehousing, rail and road transportation, air-freight and reverse logistics. Specialist consultants should conduct an audit to establish details of the current operation, both in-house and outsourced, including all modes of transport. Potential costs that can be reduced may come from

• Operational improvement of modes of transport and rates negotiation
• Review of warehousing and distribution centre operations to identify possibility for centralization
• Use of technology and software to provide efficiencies
• Review of the allocation and use of labour

Employee costs are a big slice of overall operating costs. Cutting staff may be costly in the long term as skills may be in short supply in a buoyant market. Reliable and noteworthy expense reduction experts will ensure sustainability of the business over short-term cost cutting.

Supply Chain Trainings

Supply Chain training is available locally and internationally for all aspects of the supply chain for everyone, irrespective of their current level of achievement. In fact, the amount of choice is overwhelming. Courses and workshops are delivered electronically by e-learning, distance learning, home DVDs, webinars and in the classroom. Events and conferences are held in most developed countries on a regular basis to keep a person up to date with the latest thinking and trends.

If you are starting out in supply chain, there are courses available on the supply chain “foundation skills”. This will cover the concepts and processes, the tools and techniques of supply chain management. This provides a base to build on and will highlight areas of interest for further study.

The functional or subject areas in supply chain are highlighted here:











Graphic courtesy of Accenture, 2010

Topics include planning which spans the entire scope of the supply chain. The functional areas listed vertically above are underpinned by inventory management and customer service management. All these topics have available training at entry level through to professional competency.

Anyone considering undergoing training in any of these functional areas should first establish the reputation of the institution and the relevance of the course material. Look for certification of courses by the association that endorses the course content, e.g. Institute of Supply Management (ISM), Chartered Institute of Purchasing and Supply (CIPS) or The Association for Operations Management (APICS).

Many academic institutions and business schools provide graduate and post-graduate training in supply chain management, some specialize by industry sector or by technical content. In the USA, W.P Carey Business School at Arizona State and Rutgers Business School are two of these. These institutions will try to anticipate evolutions in supply chains and apply creative thinking to produce workable solutions. A noticeable trend is the transition from an industrial operation to a more scientific and technology driven one. This implies a substantial change in logistics practices between supply chain partners as they struggle to establish efficient and effective solutions for end-customers.

As with all professions, leadership is taught with particular reference to the overall function of supply chain. Leaders in this context learn how to integrate all aspects of the supply chain for optimum performance. Advanced technical skills such as “lean” manufacturing and Six Sigma are taught to enable employees to implement solutions that lead to value creation for their organizations. Experienced people with abilities in computer simulation, financial modeling and statistical analysis will be increasingly sought after. With the advent of the many different ways of delivering the training, everyone can find a medium to suit themselves. Supply chain training can benefit all those working in the profession to advance their career.

Purchasing Experts

There are purchasing experts available in the global marketplace for every conceivable requirement. Most international procurement consultancies offer services in designing and determining your strategy, setting out purchasing plans and identifying opportunities for cost reduction. There are specialists in e-sourcing, risk management, compliance, transactional procurement, and in every commodity or category that you wish to name from medical, aerospace to textiles and food.

Cost reduction

Cost saving is the #1 area of expertise where claims of potential and measurable savings of up to 20% are offered. Teams of specialists identify those areas where the greatest opportunities exist by providing visibility and analyzing third party spend. They look to leverage volume in both direct and indirect materials and in services by various means from a change in sourcing strategy to re-negotiation of existing contracts. Using commodity expertise and in-depth market knowledge, these service providers can reduce the true total cost of ownership (TCO) in any given area. There are experts in sourcing high value goods and services such as natural gas and fuels and innovators that can trim the costs of an item through a better design.

Becoming more efficient

There are many other ways to introduce efficiencies in the purchasing process. Professional expertise can assist with broadening the supplier base and breaking into new markets. Benchmarking services can highlight areas of improvement and provide information that will increase competitiveness. A service that is most often used is to mapping existing processes, perform a gap analysis and introduce procurement best practices. This is achieved through implementing new technologies such as e-procurement and supplier relationship management (SRM) which help to provide a more effective procurement service to the business.

Compliance, risk and controls

Experts in this area abound. The growing incidence of corruption and fraud, especially in emerging markets, has opened up opportunities for consultants and purchasing specialists and advisers. In addition, tighter internal rules for reporting exceptions and incidences of maverick spend and some new compliance requirements to laws and regulations mean that organizations need help and advice to fulfill their obligations.

Hot topics: sustainability, “green” issues and waste

Evidence of embracing green procurement is becoming more important. External assistance will be needed to provide guidance on developing a sustainable purchasing policy and suppliers will be required to conform to buyers’ guidelines and report on their carbon footprint. Recycling of waste is key to many companies especially in medical supplies and packaging/bottling companies. Many organizations are struggling with environmental regulations and a poor record of managing these issues can impact on sales. Purchasing experts have a role to play in this unchartered territory.