{"id":1849,"date":"2018-01-17T15:36:04","date_gmt":"2018-01-17T15:36:04","guid":{"rendered":"https:\/\/www.certitrek.com\/nlpa\/?p=1849"},"modified":"2023-05-31T05:34:35","modified_gmt":"2023-05-31T09:34:35","slug":"escalating-plant-procurement-problems-centralized-procurement","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/nlpa\/blog\/escalating-plant-procurement-problems-centralized-procurement\/","title":{"rendered":"Escalating Plant Procurement Problems To Centralized Procurement"},"content":{"rendered":"

There is a common procurement evolution among multi-plant manufacturers.<\/p>\n

Initially, all plants perform their own procurement.\u00a0 At some point, some parts of procurement become centralized while other parts remain at the plant level.<\/p>\n

The centralized procurement activities usually involve selecting, contracting with, and managing strategic suppliers.\u00a0 The decentralized procurement activities usually involve placing orders, expediting shipments, and communicating with supplier operational staff on day-to-day matters.<\/p>\n

This common evolution has a common problem:\u00a0 the suppliers that centralized procurement selects fail to meet the expectations of one or more plants.<\/p>\n

Suddenly, the plant buyers feel \u201cstuck\u201d with suppliers with whom they seemingly have lost all of their influence.\u00a0\u00a0Now, the plant buyers\u00a0have to direct their complaints to an intermediary \u2013 the centralized procurement team.\u00a0 And those complaints often fall on deaf ears.\u00a0 Centralized procurement teams are enchanted with the thrill of chasing savings through sourcing, don\u2019t see their role as one of providing service to the plants, and are ill-equipped to respond to problems.\u00a0 \u00a0As such, the plant buyers complaints are ignored.\u00a0 The supplier problems continue unabated.\u00a0 And the business suffers.<\/p>\n

So, what can a plant buyer do in this situation?<\/p>\n

Well, complaining that his one or two emails to a centralized\u00a0sourcing specialist\u00a0have been ignored is not the right answer.<\/p>\n

Instead, here\u2019s what I recommend.<\/p>\n

The plant buyer should put together a small team consisting of the plant buyer, the highest ranking procurement person at\u00a0his plant, and the plant\u2019s general manager.\u00a0 Then,\u00a0that team should call a meeting with the highest ranking centralized procurement people and whomever they report to (usually the COO or CFO).\u00a0 A meeting \u2013 especially involving senior managers \u2013 will communicate the seriousness of the matter.\u00a0\u00a0Other methods of communication\u00a0(like those one or two emails)\u00a0can make major problems seem like minor inconveniences.<\/div>\n
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At that meeting, the plant team should come prepared with operational metrics, the financial consequences of poor supplier performance, and what is likely to happen if the problem is not solved.\u00a0 Data is key.\u00a0 It separates true business problems from mere complaints.<\/div>\n
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For example, operational metrics and financial consequences could include data that tells a story, like:<\/div>\n