With Purchasing being viewed as more and more valuable, we are seeing Purchasing taking responsibility for more and more categories of goods and services that have not historically been part of Purchasing\u2019s portfolio: travel, fleet management, HR benefits, advertising, etc.<\/p>\n
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But, in many companies, getting the opportunity to be responsible for every dollar spent on goods and services is still challenging. Especially when there are internal politics involved.<\/p>\n
Sometimes, senior management needs that little extra push to feel comfortable in reigning in spend. I found an interesting push.<\/p>\n
I was listening to a recent Business Week podcast called \u201cSelling To Giants,\u201d which discusses how small companies can sell to big companies and the advantages of doing so. There were a couple of quotes from host Michelle Nichols and guest Jill Konrath that I think could help convince senior management to ensure Purchasing\u2019s involvement in more services purchases. Check these out:<\/p>\n
Konrath says: \u201cBigger companies pay better than smaller companies and they\u2019re willing to pay higher prices for products and services,\u201d but then sheepishly adds \u201cMaybe not always \u2013 if they\u2019re in supply chain.\u201d<\/p>\n
Nichols asks: \u201cSo you mean we can actually sell that same hour of that same service for more per hour to a big company than a small company?\u201d Konrath replies affirmatively and explains how small companies\u2019 purchasing decisions have the built-in control of the fact that purchases take money away from the owners for the owners\u2019 personal financial needs such as funding their children\u2019s college education or even their kids\u2019 school shoes. No such control exists in large corporations where budget holders have total responsibility for their purchasing decisions.<\/p>\n
Nichols then replies: \u201cSo what you\u2019re saying is (that) small businesses \u2013 their purchasing is personal because they had to decide between (doing business with) Jill or (buying) shoes for the baby. But (for) big companies it\u2019s impersonal \u2013 it\u2019s just a bucket of money called \u2018my budget.’\u201d<\/p>\n
To me, these quotes reinforce the truism that budget holders are not all that fiscally responsible when Purchasing is not involved. Obviously, I\u2019ve seen this behavior first-hand in companies and, as a purchasing guy, was able to introduce more fiscal responsibility into those areas.<\/p>\n
Does your senior management need that extra piece of ammunition to understand how the company\u2019s money is being spent?<\/p>\n","protected":false},"excerpt":{"rendered":"
With Purchasing being viewed as more and more valuable, we […]<\/p>\n","protected":false},"author":12,"featured_media":4114,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2329","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-procurement"],"yoast_head":"\n