{"id":3010,"date":"2011-02-24T18:32:00","date_gmt":"2011-02-24T18:32:00","guid":{"rendered":"https:\/\/www.certitrek.com\/nlpa\/2011\/02\/24\/in-lieu-of-lamenting-the-lack-of-a-perfect-purchasing-instruction-manual\/"},"modified":"2021-07-14T06:38:46","modified_gmt":"2021-07-14T10:38:46","slug":"in-lieu-of-lamenting-the-lack-of-a-perfect-purchasing-instruction-manual","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/nlpa\/blog\/in-lieu-of-lamenting-the-lack-of-a-perfect-purchasing-instruction-manual\/","title":{"rendered":"In Lieu of Lamenting the Lack of a Perfect Purchasing Instruction Manual"},"content":{"rendered":"

I hate to break this to you, but there is no \u201cinstruction manual\u201d that can tell you exactly what to do in every specific purchasing situation that you will ever face in your career. Sorry.<\/p>\n

However, there is enough good education and information out there that can empower you to make the right decisions in most purchasing situations you face. But there is a caveat.<\/p>\n

The education and information that you receive must be interpreted, adapted<\/em> and applied<\/em> to your situation. Unfortunately, not enough people demonstrate the ability to learn about how one similar, but not identical, the problem was solved and then implement a similar solution to their own problem.<\/p>\n

Too many people will say \u201cBut that situation was different, that solution doesn\u2019t apply to me\u201d and not take anything away from the education or information they received. I\u2019m here to tell you that you can learn something applicable from almost every bit of purchasing education or information you receive.<\/p>\n

It may just require a little brain work. You\u2019re not scared of a little thinking, are you?<\/p>\n

Consider these situations\u2026<\/p>\n

1. A school district buyer reads an article in a supply chain trade publication describing how a prepared food manufacturer\u2019s purchasing department was given credit for helping their company survive because it contracted with its corn supplier such that the food manufacturer sustained only a 9% increase in the cost of corn from January 2010 to January 2011 while the market price for corn increased by 63% during that same period. The school district buyer may say \u201cThis doesn\u2019t apply to me. I don\u2019t work in the food industry.\u201d I would argue that the school district buyer could<\/em> learn something. If the school district buyer applied the same contracting techniques \u2013 understanding cost drivers, using market intelligence to predict future price changes, entering into a long-term contract, and accepting a fixed price that was slightly higher than the current price because of expected inflation \u2013 the school district could have better contained its costs for diesel fuel used in its buses, which increased by 18% in that same period. Different industries, different commodities, similar solutions!<\/p>\n

2. A purchasing manager for a bank reads a blog post about how to build a should cost model. The example used is one that involves the manufacture of a part that will be used in the production of automobiles. The purchasing manager scoffs, \u201cAh, should cost models are for manufacturers. I\u2019d never<\/em> need to use one.\u201d Yet, that very day the bank purchasing manager is reviewing three bids from providers who will produce and install decals with the bank\u2019s business hours to be used on the front windows of each of the bank\u2019s 100 branches. One bid is $2,000, the second bid is $5,000, and the other bid is $20,000. Wow! What a range of prices! Should the bank accept the lowest bid? It is<\/em> pretty cheap. But is it too cheap? Might the supplier not know what they are bidding on? And is the supplier who bid $20,000 trying to rip off the bank or might they know something that the other bidders don\u2019t? A should cost model would help the bank purchasing manager figure out the materials, labor, and the cost for each of those to determine what a range of legitimate bids is. Of course, a service industry would never use a should cost model\u2026right? Uh, wrong.<\/p>\n

I could sit here for days typing examples of how some people in purchasing roles refuse to think outside the proverbial box and end up limiting their potential and their success.<\/p>\n

So, instead of wishing you had the purchasing instruction manual that gives guidance on every specific problem imaginable down to the exact industry, commodity, and smell of the saleswoman\u2019s perfume, my advice to you is to have the willingness to say \u201cHmmm, how can I apply this to my situation?\u201d and spend a little time thinking creatively instead of saying \u201cThis doesn\u2019t apply to my situation.\u201d You may come up with more effective solutions to your purchasing problems than you ever imagined.<\/p>\n

Recommended Reading<\/b><\/p>\n