The good news is that there are an increasing number of good practices to be followed to overcome this challenge. Thinking about helping the purchasing professional in this, we list seven essential tips based on what market leaders have been doing on the subject.
Concepts and trends
Historically, the concept of resilience refers to the work carried out by CS Holling, an ecologist responsible for its creation, in 1973. From then on, the meaning that this word carries keeps spreading, being applied in different areas, which range from psychology, systemic thinking and, of course, supply chain management.
With specific reference to this last point, authors Steven A. Melnyk, David J. Closs, Stanley E. Griffis, Christopher W. Zobel and John R. Macdonald, references in the area and authors of the article “Understanding Supply Chain Resilience”, this concept can be translated as “the ability of a supply chain to withstand problems and recover operational capacity after disruptions occur.”
That is, resilience and recovery form the basis for a resilient supply chain. Looking more closely at these elements, it is possible to understand that:
- Resilience is the ability of a system to totally prevent an interruption from happening or to minimize the time between the start of an unforeseen event and the time to recovery (damage containment)
- In addition, the ability to recover is linked to the ability of systems to resume production after an interruption occurs. This is done in two stages: after identifying a crisis, there is the stabilization phase and, after that, the return of productive capacities. The final performance analyzed here may or may not acquire the original performance levels, related to the type of interruption made.
Strengthening these two aspects is crucial in terms of productivity and market leadership. Companies with low resistance are not able to identify potential risks quickly, delaying the entire process of the production chain and, consequently, are identified as problematic suppliers.
However, those that manage to adapt these processes within their chain, are often considered market leaders and better quality business partners.
On the buyer’s side, this is mainly linked to mitigating risks and finding contingency plans that are elaborated in a proactive way, accelerating the response capacity in case of unforeseen circumstances – or new practices adopted quickly by the market.
How to bring this into your daily business
#1 Exploiting the full potential of data
In an increasingly data-driven society, it is clear that there is potential to generate value from it also in the supply chain. Even with the constant focus on cost reduction, investing in technology always has the potential to add value and help in decision making processes.
For example: identifying the best time of the year to get parts at the best prices from a specific supplier. In addition to generating preference vis-à-vis suppliers that, for example, have better lead time and better payment terms. The measure can reduce costs and generate more efficiency – contributing to the financial health of the area as a whole and the organization.
This is a basic step when it comes to data. There are companies that have taken advantage of the global crisis to invest in real-time vision, planning and agile methodology. Everything to respond in the best possible way to the challenges of the future, in a healthy work environment, capable of identifying and selecting talents.
#2 Be aware of the nearshoring concept
Covid-19 and the recent US restrictions on Chinese companies have put many sectors in check. As a result, companies around the world reduced prices and companies started to choose geographically closer suppliers, able to serve them in faster terms and minimizing risks.
The movement gained strength with the restrictions of international trade, but it has been a trend present in the sales ecosystem since the beginning of the 90s, with the slowbalization.
At Soluparts, we help our customers with this task through an extensive network of suppliers spread across the world. We have access to more than 15,000 brands and are always ready to meet the needs of our customers and facilitate their work with the best cost-benefit ratio.
#3 Understanding compliance rules in depth
Supply chains are growing more and more, and as a result, many companies are forced to follow an increasing number of rules and regulations. Understanding all of them may seem like a complex process, but it is necessary to have partners capable of applying them in order to generate the greatest possible security for the purchasing process.
In this sense, Glenn Yauch, a risk specialist at Deloitte, points out that leaving this aside and giving up a complete understanding of the rules is “a step towards disaster”.
With that in mind, Soluparts has already identified some compliance benefits for the purchasing department, analyzing how it is possible to go beyond avoiding risks and guaranteeing a more sustainable production chain for all involved.
#4 Investing in Research and Development (R&D)
Companies close to their customers are able to quickly identify their needs. For this to have an effect, they must foster an innovation ecosystem, capable of developing new solutions quickly.
A clear example of this is cited by Gartner when looking at what Lenovo does: the company is working to create a closed circuit of R&D for new products and, today, translates digital actions demanded by its customers into clear orders for its supplier base .
#5 Sharing knowledge with other branches
With more and more companies becoming global, it is essential that the knowledge acquired in the supply chain also gains scale. The purchasing area performs complex analysis, planning and information processing – fundamental tasks to generate efficiency and productivity in different parts of the world, knowledge and analysis that must be shared with other branches and areas such as maintenance, for example.
#6 Proactively establish contingency plans
Instead of thinking only about the negative potential that risks can bring, companies can think about mitigating this component as part of the corporate strategy. To make this task possible, Deloitte recommends that processes be rethought from end to end.
After a careful assessment of the risks that each party offers, it is possible to take advantage of the data collected to identify potential disruptions – be it good practices already recommended by the market or completely new attitudes.
The importance of this can be translated into numbers: According to Deloitte’s 2017 global business risk management survey, 74% of organizations surveyed have faced serious problems with third parties (such as suppliers) in the past three years. Up to one in five companies has experienced a complete supplier failure or an incident with serious consequences.
For this reason, it is essential that the purchasing area has contingency plans prepared even before crises happen – in addition to generating productivity, the task reduces the chances of reputation damage.
Bryan Goshorn, senior manager of Financial and Risk Consulting at Deloitte, referred to this as “staying Agile“ during the company’s Strategic Risk and Reputation practice.
#7 Adopt a centralized process flow
In areas that are so essential and require rapid adaptation, such as purchasing, implementing simultaneous rather than sequential processes can accelerate the recovery of the area after an unforeseen innovation process.
An article published by HBR exemplifies this by showing the Lucent Technologies case, which achieved significant benefits by integrating the supply chain with other areas of the company directly linked to logistics work, such as engineering and sales, integrating them through the same process chain.
Transforming the supply chain to make it more and more efficient and resilient is an increasingly coveted goal – and more current than ever – for companies around the world. To adapt in the midst of rapid changes and manage risks effectively, it is necessary to invest: in people, technologies and new management models.
This way, it will be possible to go beyond meeting the needs of the company to generate value for the area and make it possible for companies to expand their business performance potential over time.
For more tips on supply chain and purchasing, keep reading our blog.
The current economic scenario poses a number of challenges for organizations’ supply chains. In previous posts we discussed some trends related to the need to bring more agility to projects and processes, the insertion of advanced technologies in operations, among other topics.
In this post, we talk about how to make Supply Chain more ethical. Actors such as governments, activists, the media and the employees themselves are increasingly checking the social impacts of companies’ actions. Therefore, it is necessary to create strategies to manage the growing external and internal pressures.
Concepts and trends
Making business operations more ethical is a topic widely discussed by experts and professionals from different fields. Responsible business conduct must be assimilated by different areas of organizations, such as marketing, finance, logistics, among others.
Companies, even if focused on profit, also need to be concerned with the social impacts generated by their actions, that is, issues such as sustainability and interaction with their different audiences have become a priority agenda for everyone. There is also attention to the environmental issue, presented in our texts on sustainable purchases and circular economy.
Companies’ supply chains also become a sensitive issue. Because they are currently global and complex, it is common to see unethical actions taking place without the company’s knowledge, damaging the corporate image and generating, in many cases, legal problems.
Therefore, it is important to know what all the parties involved are doing, ensuring that everyone fulfills their responsibilities.
There are many recent cases that serve as an example of “unethical actions”: in recent years, we have seen on the news organizations that had industrial plants in developing countries being exposed for hiring labor in regimes similar to those of slavery, violating human rights, or for doing unfair and predatory business with small suppliers.
And this type of conduct is being questioned more and more. Today, buyers of indirect materials, for example, are better informed and ask the following questions of suppliers during the purchasing process:
- Do you trust your suppliers and supply chain partners? Do you keep your word about ethics and morals, regardless of possible additional costs?
- Does each link in the supply chain care for its workers with fair pay and workloads and ethical conduct at work?
- If unethical behavior is discovered, how will it be remedied? Will each partner in the supply chain work actively to ensure that it is corrected?
This way, strategies related to corporate social responsibility become a guide to address the following concerns:
- Elimination of child and slave labor;
- Safe and hygienic working conditions;
- Fair wages and working hours;
- Rules to combat bribery and corruption;
- Ethical purchasing.
There are a number of approaches that help mitigate the topics mentioned above. One is Fair Trade, an economic system based on fair trade relations for those involved, especially small producers and workers from peripheral countries.
The idea is to allow economic development and an increase in the well-being of all, unlike the traditional model focused on maximizing profit. Fair trade allows for more balanced exchanges between those involved, helping to reduce poverty and promoting awareness of socially responsible consumption.
Through a certification issued by the International Fair Trade Association, products that meet the criteria receive an identification seal. These products do not need to be necessarily related to the food sector. Know more about the subject.
How to develop ethical Supply Chains
Recent studies confirm the importance of adopting an ethical conduct in supply chains:
- According to Nielsen’s Global Corporate Sustainability Report, up to 66% of people are willing to pay more for products that have positive social and environmental impacts. Another report found out that customers were willing to pay an additional amount of up to 25% for “ethical” products which were made fairly;
- A study by the Association for Supply Chain Management (APICS) indicates that 83% of professionals in the field consider ethics to be an important element in their work;
- In addition, according to the APICS survey, 71% of companies have a code of conduct for their supply chains, but only half of them apply it;
- It was also observed that 70% of the interviewees have policies to understand the conditions of production of the materials, but only 43% understood the operations of their suppliers;
- Estimates by the Organization for Economic Cooperation and Development (OECD) indicate that companies gain value by adopting ethical measures. In response to these challenges, the institution has prepared a document with guidelines for organizations to promote ethical supply chains. For more information click here.
These surveys show how crucial it is for organizations to bring more transparency to policies and practices related to supply chains, making them more ethical and socially responsible.
To this end, professionals in the field must be attentive to the forms of hiring, working conditions, among other points, in addition to being able to identify misalignments in their ethics policies and take action towards them. To go deeper into the topic, also read our article on compliance.
Tips for ethical Supply Chain and Purchasing departments
The Purchasing department plays a strategic role in companies’ supply chains. By being attentive to the issues discussed in this post, it also has the opportunity to attract more value, by negotiating fairer agreements with small entrepreneurs or poor communities, for example.
Our suggestion is to offer more and more operations with this concern, focusing on:
- Implement contract codes and fair contracts with their different partners;
- Access information about your suppliers and their activities in order to check their behavior history. Click here for tips on how to manage your suppliers with excellence;
- Check national and international laws of the places where your company operates, avoiding legal problems related to unethical actions;
- Make your information available to the public by turning it more transparent;
- Use technology to your advantage, with the use of softwares to assist in the management of your acquisitions, with data on suppliers;
- Have a team trained with ethical thinking, able to conduct fair negotiations with all suppliers.
What can you do as a consumer?
It’s our role, as consumers, to be aware of the important issues raised in this text. Businesses are increasingly oriented towards the satisfaction of their customers, and they are increasingly informed and engaged in social and environmental issues.
Therefore, keep an eye on the news on the subject and purchase products from companies that conduct ethical business and respectfully treat their suppliers and employees. External and internal pressures are also an important way for companies to change companies, and today there are different mechanisms for dialoguing with them (such as social media).
To learn more about new-age trends in supply chains and indirect material purchases, follow Soluparts’ blog.
In a world characterized by the presence of numerous global supply chains, with products being marketed by partners in different countries, the import process gains strength, agility and practicality, becoming an advantageous decision for buyers interested in getting the best deals.
In the automotive sector, for example, a survey carried out by the Brazilian magazine Quatro Rodas reveals that importing parts can be 80% cheaper than buying from local suppliers.
As much as this practice is commonly adopted around the world, there is still a certain fear in the business sector regarding the procedures that involve importation. In many cases, buyers end up preferring to keep local partners, even if that means paying more for parts, rather than establishing agreements with international suppliers.
In this article, we will discuss the benefits of purchasing indirect materials abroad, in addition to give you some relevant tips to increase the degree of success in this type of negotiation.
Why make international purchases?
There are a number of reasons why importing a replacement part or indirect material is interesting compared to buying locally, other than optimizing the procurement process and increasing the companies’ profit margin:
● Conditions are advantageous: factors related to the country where the purchase will be made (taxes, average wages and other expenses with the production of parts) must be considered in the import process.
● Smaller costs: in many cases, the cost of each part is lower compared to the local market. When the buyer purchases a nationalized part (produced abroad and imported by a national supplier), the value includes the cost of production, its nationalization and the profit of those who sell.
● Product quality: if you choose an international purchase, you can acquire indirect materials produced from more advanced technologies and processes.
● Access to exclusive resources: some materials can only be found in some parts of the world, guaranteeing direct access to them.
9 ways to increase the benefits of importing
Here are some tips for conducting purchases in an international context:
1. Analyze your supply chain frequently
It is important to review your supply chain from time to time as a result of possible changes in the foreign market (such as the formation of alliances, the end of trade embargoes or the adoption of new practices by countries). In other words, it is important to discuss periodically new and favorable trade agreements that can reduce or eliminate taxes, interesting global trends in the production of a certain product and new bilateral agreements between nations.
Another point of attention is the lead time and the type of transport adopted. Depending on the piece, the most convenient is air freight, used 80% of the time by companies. In this case, the deadline for receiving the material can reach one week, which sometimes corresponds to the delivery of a piece purchased in the national market.
In cases when the part requires sea freight, which average delivery time is over a month, it’s important that you can count on a structured purchases plan. It is also worth remembering that when buying in large quantities the price of your freight decreases.
2. Understand in depth the origin and availability of parts in the domestic and foreign markets
Before defining which parts will be purchased abroad, it is important to make a careful assessment to identify and understand the availability of this material in the national and international markets.
An indirect material of smaller dimensions and high demand, for example, is probably constantly imported in large quantities by the national supplier, which makes its cost advantageous even in the domestic market. In such cases, the part may even have prompt delivery.
It’s also important to check the existence of similar parts, it’s possible some of them are available in the national market. For this, try to understand well the demand of the company’s maintenance area.
On the other hand, in the case of an obsolete part or a part used only in more specific situations, it may be worthwhile to import. Also note if the required part is produced only on demand or if it is always available on stock for purchase – if so, try to understand if your company has a warehouse near a particular manufacturer, this will lower the delivery costs.
3. Conduct risk assessments
In addition to having a team focused on risk management, it is suggested that your company’s logistics team assesses risks in a way that allows you to be informed about possible delays or other issues before their occurrence. This way, you can have alternative options to increase the security of your business operation.
When planning nationalization, ensure that your company is working with good agents (insurance companies, carriers, forwarders and freight agents recognized in the market) and keep in touch with everyone throughout the process.
4. Maintain relationships with local trade associations
Associations focused on this topic, whether in the country where the company is located or where you intend to make a purchase, provide important news and information on international trade and safety tips. They can even help you secure new business opportunities, broker new partnerships and increase your list of trusted suppliers and contacts.
5. Have good software for managing acquisitions
Working with different cultures, monetary systems, laws and languages can make payment control, compliance and deadlines very complex. Having a good information system to manage purchases, contracts and communication with partners and other audiences is crucial to prevent something from being overlooked. To know more about the subject, read our article on the best software for purchasing management.
6. Define work goals
Setting goals is crucial to achieving the expected success – a good way to start is to determine the cost savings that can be achieved by starting to buy more parts from the international market instead of the national one.
It is a highly complex activity, since it involves issues external to the company, escaping its control. However, even if the goal is not achieved, it is a good way to assess business practices and create strategies for future business negotiations with international partners.
Before setting your goals, it is important to try to understand the forecast of the demands for a certain period and consult the budget available to your department.
7. Consolidate shipping
Bulk orders help reduce costs related to payment, shipping and custom fees. When developing a good relationship with the supplier, it is possible, for example, to negotiate the import of more products at a reduced cost. In this sense, Soluparts offers the possibility of cargo consolidation.
It is also a good strategy to buy products at certain times of the year, eliminating the need to order them when demand is high, and preferring to place large orders over requesting smaller one-off shipments. On the subject, find out the Annual Contract, offered by Soluparts.
8. Research the local area to understand its concerns
Knowing the area well in order to map possible points of attention and mitigate them before closing deals with the international partner is essential to have a successful purchase – the task is time-consuming, however it’s extremely necessary. Therefore, the ideal is to have an international partner who already knows all the markets and operates in over 40 countries – like Soluparts.
9. Define clear expectations
Having signed commercial agreements in writing with suppliers and partners reduces the possibility of problems and offers ways to assess the conditions established in the event of a conflict, ensuring security for both parties. On this point, see our article on the benefits of contract management in companies.
In this article, we discuss the benefits of purchasing indirect materials in the international market, helping to optimize the supply chain and reduce the company’s operating costs.
The value of your purchases will be lower if you choose to do this type of transaction from a supplier abroad. Sometimes, importing an item requires planning, but when you have a partner specialized in purchasing indirect materials in other countries, you can achieve a lead time very close to that practiced by national sellers.
Tip: The important lesson in this article is not to avoid making a great international deal because you do not fully understand the import logistics. Buying parts abroad can offer several benefits and greatly reduce purchasing department expenses. Soluparts logistics team and your company’s logistics will take care of the entire process, so the part arrives, at the right time, in your industry.
At Soluparts, we have highly reliable logistics agents that work with modern technologies (such as GPS tracking) to ensure the monitoring and inspection of cargo in order to avoid delivery problems or delays.
Usually, we use Incoterms EXW, however, we can adapt our logistics according to your needs, leaving you free to choose the Incoterm that is most convenient for you.
Contact a Soluparts specialist, today.
In the corporate environment, budget planning is intrinsically linked to the maintenance and growth of a company.
In the purchasing department, particularly, the collection for reduction and control of expenses, on the part of the management is enormous. The profitability of the whole company depends on the good management of the department and the activities directly linked to it, such as logistics and maintenance. Thus, the purchasing professionals stop acting only in the acquisition process and start to participate actively in the budget discussion.
In this article, we will discuss the importance of budgeting for the purchasing area. Also, we will bring some tips on how to stay in line with it and even reduce costs (a great challenge, facing the complex, volatile, dynamic and competitive reality of a company).
Why is the purchasing budget important?
The experts who discuss the subject point out some factors related to the relevance of a budget for purchases:
- It informs the purchasing strategy, making clear what is possible or not to buy, according to the established budget;
- It helps to measure spending, signaling when there are problems with finances, if there is a spending beyond the forecast that can hinder the acquisition process, or if there are parts being purchased with the value above the market average;
- It ensures transparency between the areas of the company, and the purchasing department can be responsible for their finances;
- It assists in a more effective management of the acquisition finances, since a budget will allow the appropriate allocation of resources for purchasing projects;
- It provides insights for decision making. Purchasing budget information (spending trends) can help you make better choices.
- Because of the advantages described above, budgeting for the procurement area is essential for reducing short, medium and long term expenses.
Tips to stay within your purchasing budget
In order to obtain success in the elaboration and monitoring of information regarding the purchasing budget, there are several guidelines that can be followed:
1. Identify the products that need to be purchased
Define which parts should be purchased, how much, when they will need to be used and how much you are willing to pay. Search supplier options and consider those that have a good reputation, good prices, customer service and better response time. Finally, close the deal with the supplier that offers the best conditions.
This process can become tiring, as it involves negotiation steps, but it is extremely necessary!
Stock management, which extends to other branches or other plants, is also very important to maintain the budget of the area. Before buying a part whose use is low, it is worth to verify if it is in stock in other branches and, if so, request the part to the branch that needs it.
When this stock check is not done in the correct way, there is the risk that parts are scrapped – and this is the main cause of unnecessary expenses and waste.
It is worth remembering that low turnover indirect materials stored in fixed assets deposits decrease the working capital and can lead to the loss of good purchase opportunities due to lack of available capital.
2. Get approval from other stakeholders
Promote budget credibility and legitimacy by involving other strategic areas (such as accounting and finance), which may suggest savings.
Some companies have the annual budget defined by the financial board and, during the month, a meeting is held with the entire purchasing department and the board to follow up on expenses. Similarly, other internal department meetings are needed to study spending reduction strategies – these periodic budget-focused meetings are important to keep expenses under control!
3. Plan your expenses in advance
The person responsible for the purchasing area needs to know the amount available to purchase a specific item, and they should clarify to the suppliers how much they are willing to pay for a certain product.
Planning here is also essential to understand what the negotiated condition for delivery should be. A purchase made a few months in advance allows the low price to be prioritized over lead time, for example.
A last-minute purchase, even if it is very necessary for the production, ends up having a higher price – not to mention the price of urgent freight, which ends up being more expensive.
A well-planned budget allows load consolidation, which decreases the price of material shipment. This is because a unique shipment is made of all the parts – but, for this it is important to have a partner that supplies several brands and that is able to keep the products in a warehouse for a unique shipment, something that Soluparts offers.
4. Have a margin to make your budget more flexible
This margin will help adjust the purchasing area’s budget when faced with uncertainties and risks such as those related to projects, acquisitions and deliveries. It is important to keep stakeholders aware of these changes, so that they understand the real situation and how much of this margin has already been used. This caution is fundamental in times of economic crisis like the one we are living at the moment.
5. Document and monitor the terms with your suppliers
This step is essential to assist in the control of the agreements signed, which consequently keeps the budget updated.
Among the essential points it should be clear what the supplier should offer (and what the price, payment conditions and delivery terms are), conditions in case of breach of contract and the guarantee of confidentiality – check out the full article on the benefits of contract management in purchasing.
6. Use technology to your advantage
Use software that updates spending in real time and helps track orders and approvals. This way, the information will be more organized and the professionals will be able to focus on less operational activities and perform a more analytical work, seeking to optimize processes, reduce expenses and, consequently, increase the company’s profit. See our article about the 10 softwares for the purchasing department for tips.
Some purchasing department software issues automatic purchase orders for parts that are purchased regularly – for example every three months – based on the last price offered by the supplier. It is necessary to follow these orders closely so that it is possible to renegotiate the prices, which tend to increase depending on the contract.
It is ideal to try to understand why the possible increase happened and in what way it will impact on the expenses – this readjustment can be due to tariffs, for instance.
Keep quotations and contacts of other suppliers that have this same piece to contact them in case the price increases to the point of it not being feasible to purchase with the same company. As we can see, renegotiation and contract control are very important and need to be monitored.
In addition, create in your Business Intelligence software, a unique dashboard to analyze metrics related to expense reduction and budget control.
7. Have a team that understands budget
Large companies offer their purchasing professionals training on cash flow, financial management and budgeting to qualify them to make important decisions to control spending.
Knowing the operation of the supply chain and having logistics knowledge is fundamental. Also try to understand the productivity and profit cycle generated by each part purchased. This will help you define the priority and urgency of a specific purchase and the ideal Incoterms and payment conditions for it. For example, if the valve you purchased needs to produce for X months to generate Y of profit in 180 days, and this amount pay the valve, you can negotiate the payment for 180 days after shipping it.
In this article, we discuss the importance of closely controlling the purchasing area budget. The growth of a company, in today’s world, is complex and brings several challenges, which makes budget planning an important part of its success and profitability.
It is important to have a frequent dialogue between the purchasing team and the financial department in order to have an alignment among all. In addition, it is necessary to maintain flexibility, control and transparency over the decisions made.
The effectiveness of strategies to reduce spending in organizations makes them more competitive, by enabling investments in their growth and in people, for example:
- Renewal of machinery;
- Training of employees;
- Improvement and expansion of the physical structure.
To make purchases with good prices, a great option is to count on a company like Soluparts. Our team of experts in indirect material procurement always gets the best commercial proposals for your company.
We also offer an Annual Contract: from your subscription, the prices quoted for each piece remain unchanged for a period of one year, which assures more freedom to make purchases in the period you prefer.
This helps you to map and plan the approximate costs of spare parts for the next year, allowing better control of your budget. Try these benefits and keep your budget under control: Learn more about our Annual Contract.
Emotional Intelligence (EI), also called Emotional Quotient (EQ), is a concept that emerged in the 1990s among psychologists, spreading rapidly to other sectors, including the organizational environment.
Read on and learn how this ability can generate benefits in many areas, including the purchasing sector!
Emotional Intelligence in the corporate environment
Emotional Quotient was first defined academically in an article published in 1990 by American psychologists Peter Salovey and John D. Mayer as “the ability to monitor one’s own emotions and those of others, using this information to guide thought and action.”
However, the psychologist and writer Daniel Goleman, Ph.D. at Harvard is considered the father of Emotional Intelligence for having popularized the subject by publishing a book on the subject (in 1995). And it was precisely this work, titled Emotional Intelligence: Why it can matter more than IQ, that moved the corporate world by stating that IE plays a particularly important role in the work environment.
In order to verify if this statement is correct, a survey conducted with 2,662 American managers revealed that 71% of those interviewed value the Emotional Quotient more, when compared to IQ, in their employees. Of those, 75% said they were more likely to promote an employee with high EQ and 59% said they would not hire a candidate with high IQ and low EQ!
The study, conducted after the 2008 financial crisis, showed that in periods of economic uncertainty – such as the one we are currently experiencing because of COVID-19 – companies need people who can handle high levels of stress.
In this sense, it is natural to prefer professionals who can make better decisions to solve difficulties, keep calm under pressure and have greater empathy – typical characteristics of those with high EQ.
But, it is necessary to highlight: the Intelligence Quotient (IQ) will always be very important for professional development because it involves, eloquence or learning capacity – among other essential requirements in any function.
Emotionally intelligent professionals and teams
We can say that Emotional Intelligence is able to help in the evolution of any career, because emotionally intelligent professionals can have self-control and maintain their motivation, enhancing their performance. But what about teamwork: does IE influence the community?
According to the researchers Druskat e B. Wolff, this is a reality. Teams with a high Emotional Quotient build a solid foundation of trust, effectiveness and cooperation, which is reflected in overall performance. Not to mention that organizations with a culture of emotional intelligence reduce absenteeism levels, while those with engagement increase.
However, attention is needed to excess Emotional Intelligence, say teachers Nikos Bozionelos of the French EMLyon Business School and Sumona Mukhuty of Manchester Metropolitan. Investigating the performance of 309 managers, the analysis concluded that managers with too much QE can have difficulty making difficult decisions – such as letting go of a team member who is not meeting expectations.
In other words, the balance between the two quotients will make the professional more complete. And the same goes for team building: by mixing individuals with higher IQs with others with good EQs, the team will tend to be more efficient.
Emotional Intelligence in the Purchasing Sector
Digital transformation has been influencing the purchasing sector, and it is essential to act in a way that is compatible with this technological advance.
In addition, the area is subject to changes in the economy, in the supply chain and in company policies, requiring procurement professionals to remain flexible – the attachment to old processes, for example, could be very bad for the company and for the professional’s career.
Given these factors, or even during a complex negotiation, a good EQ level can be very useful. But is it possible to develop Emotional Intelligence? According to experts, yes!
Accompanied by psychologists, 132 people had the opportunity to develop their emotional skills and, at the end of a year, not only demonstrated (lasting) improvement in this type of intelligence, but also experienced greater physical and mental well-being, lower levels of stress and improvement in their social relationships.
Based on this experience, to achieve a higher degree of Emotional Intelligence, here are some guidelines to follow:
- Recognize your own emotions and how they influence your performance;
- Accept the fact that you cannot control everything and avoid making hasty decisions based on intense emotions – learn more in an article that shows how to use emotion for better negotiation;
- Find ways to relieve stress at work – it can be a hobby, watching a good movie, or a physical activity;
- Listen actively to what others have to say;
- Empathize and pay attention to how you respond to people;
- Work on your motivation, emphasizing what you love about your work and maintaining a positive attitude.
Experts say that we are all emotionally intelligent, but each one needs a different time to work on their feelings and develop the Emotional Quotient which can undoubtedly be a great ally for the procurement professional.
Another way for the procurement area to obtain benefits in their routine is by hiring a company specialized in indirect materials to optimize the purchasing process and obtain the best results.
Get to know Soluparts and discover the advantages of having a specialist in the purchase of spare parts. Request a quotation without any commitment and try it out!
You can probably agree that boredom does not exist within the purchasing department. With responsibilities ranging from complex negotiations to supplier management, the industry has a strategic role within a business and a stressful routine.
When well planned and executed, the purchasing process becomes an important ally for the success of the organization, contributing to greater productivity and also reducing costs.
However, due to its importance, certain precautions are essential in order to avoid the main problems related to this area. Check out, below, the main ones, with their respective solutions.
1) Purchase orders with unclear requirements
Purchase orders usually come from the industry that will be the end user of the ordered material, and not always do these areas send the necessary (or correct) information for price research, negotiation and procurement.
However, the purchasing department needs the order to contain precise information: part number, manufacturer, quantity, minimum and maximum delivery time, and the cost center where the value of the acquisition will be directed – to name a few items.
This clarity in the issuance of the order, which will make all the difference so that the best possible work occurs in the selection and delivery of requests, can be guaranteed with the use of specific software for issuing the order – which, also, will allow additional benefits such as:
- overview of all the company’s purchase orders;
- time optimization;
- real-time monitoring of processes.
The choice of the ideal tool should be part of a broad process, where digital security is also considered – no company wants to see its data leaked, leading to financial and image losses.
Regarding the use of technological tools, check our Top 10 software for the purchasing department.
2) Difficulty in Negotiation
The purchasing process requires good negotiation strategies, and it is up to the professional of this department to know how to negotiate values, deadlines and other payment conditions in order to reach an agreement that offers the best possible conditions for your company.
Negotiation skills can be learned – or improved – with experience and with an attention always focused on market trends, following the movement of the economy and the reality of each supplier.
Due to the importance of the subject, we have created several articles on the subject – among them:
3) Untrained staff
To work well, any team, from any industry, needs regular training and capacity building – and with the purchasing department it’s no different. It is about improving employees’ skills and knowledge, as well as keeping them updated about new systems and ways of operating in a certain segment of the company, or even keeping them aligned with the goals and objectives of the organization.
A training program, which can be conducted through virtual channels, is an excellent way to ensure better team performance.
It is also essential for the team to be up to date with the novalties and news in the sector, by getting to know new methodologies such as Strategic Sourcing, which greatly improves the acquisition process, and is focused on generating results and reducing costs for the company.
4) Lack of transparency in the purchasing process
Among several aspects, the purchasing process involves the judgment of the best proposals for the supply of materials and services; the selection and contracting of suppliers; and the work with bids, whenever appropriate.
The best option to avoid problems such as fraud in the purchasing process is the implementation of an efficient compliance program in the company – we talk specifically about this subject in another of our articles, check it out: Benefits of Compliance in the Purchasing Department.
Another important factor is to make use of Business Intelligence indicators and software, as we show in the article on this subject.
5) Inadequate evaluation of suppliers
Among the several variables within the purchasing process, it is essential to consider the cost-benefit ratio in terms of suppliers. Remember that the quality of your suppliers’ products or services affects your company’s product or services – in other words, it impacts the progress and evolution of the business. This is also why the process of selecting these partners requires a great deal of attention and dedication.
In this sense, when choosing suppliers for your company, search for references, seek the opinion of other companies that are already customers of the supplier in question, and check whether it is aligned with the goals and values of the venture in which you are inserted.
After acquiring the products, give feedback to the selected partners, observe if they will take this into consideration and if they will try to adapt to your notes (if any); also evaluate if the partner is flexible in terms of negotiation, if there is room for this; analyze, also, the general progress of this partner; and implement improvement policies for this whole part of the purchasing process.
Also, remember that to avoid or minimize the negative effects caused by adversities such as those mentioned above, especially regarding the relationship with suppliers, you can also count on the help of a company specialized in indirect material procurement, which offers numerous benefits to your purchasing process!
Soluparts is a global company – with offices in Brazil, Germany, Portugal, Hong Kong and the United States – that is able to connect your company to the most relevant manufacturers in the world. We specialize in purchasing all types of industrial materials and have access to thousands of products and suppliers worldwide. Learn more about our value proposition!
To better understand how Soluparts can facilitate your company’s purchasing process, please contact our team!
New technologies influence much of our daily activities. And one of them has been standing out in our days: podcasts.
Similar to a radio program, but with the hability to run anytime, anywhere, podcasting is a tool that can help any professional in the purchasing department to gain repertoire, besides being a source of new ideas.
It is not by chance that the consumption of this media grew 67% in Brazil, considering the interval of only one year, according to a survey by Deezer (a company in the sector), 25% of the interviewees said they listened to more than one hour of these audios a day.
The benefits of Podcasts
But why is this media so successful, whether for fun, study or professional updating?
They are free, have no ads to interrupt the broadcast and are available on and offline. In addition to these facilities, there are other good reasons to incorporate podcasts into your routine – we listed a few:
It improves knowledge and exercises the brain
According to studies by Sage Publications, our brains notice no difference between hearing and reading content. Both ways allow you to acquire knowledge – of course, continuously reading will always be very important to improve writing, for example.
In addition, it allows you to exercise your brain, as by listening, we build images to help you retain information – to learn more about brain functioning, read the article about the Triune Brain!
It provides variety of information
There are so many different podcasts in various different platforms that practically all subjects can be found in this format. That is the case, for example, of podcasts for the purchasing department.
It allows multitasking
Want to listen to quality content while you organize your emails or organize your agenda for the day? Podcasts may be the best solution for that, by allowing you to gain time and productivity!
One of the reasons is that podcasts can be listened to in many situations: in traffic, during sports practice or even in the waiting room, while waiting for a negotiation to start.
8 podcasts not to be missed for the shopping sector
Below we separate 8 podcast options dedicated to the purchasing sector. They offer market data, a collection of interviews that are capable of bringing new ideas to your work and technology.
Topics such as Artificial Intelligence and Negotiation Techniques are part of the varied menu of this podcast that presents research, news and works on the purchasing sector – the interviews and debates from the community also encourage reflections on the purchasing career.
It is possible to download the application and create segmented playlists, which makes it easier to create a specific learning trail for each person’s needs.
This podcast led by Sarah Barnes Humphrey, a supply chain consultant, uses the interview format to discuss with professionals – who are a reference in the supply chain – the best practices in the industry, market trends and other details.
Within the audio options, the Women in Supply Chain series is a great highlight, focusing on workday challenges women face in the area.
Updated weekly, the more than 430 podcasts cover advanced technology, augmented reality, 3D simulation, the internet of things, Big Data analysis, cyber security and global supply chains.
This podcast stands out because they analyze the impacts of technology on the supply chain and the role of cyber security to achieve the best possible performance in the purchasing industry.
This podcast is focused on discussing tactics, strategies and cases with a track record of successful negotiations, including showing effective strategies to negotiate.
The site offers detailed information on each audio, with a brief summary of the content, participant information and even contact details for each individual cited in the podcast – so you can get in touch with the greatest trading specialists in the market!
The varied repertoire of this podcast includes: contract management tips, procurement planning, the importance of communication and teamwork, or reflections on how economics and politics interfere with the procurement landscape.
Current issues, such as Covid-19, are also on the list of the American, and experienced procurement professional, David Byrne.
The company that develops software for the purchasing area, uses all its experience in the sector to produce content relevant to daily purchases. Technology, costs, compliance, supplier management and interviews with experts make the collection unmissable.
Philip Ideson, responsible for creating a global community with thousands of procurement executives, leads this podcast ranging from interviews with leading professionals in the field to information aimed at improving industry performance and building stronger business partnerships.
You can check out the list of the most popular podcasts – podcasts on the role of purchasing in overcoming the current economic crisis are among them – or search for topics of interest.
8. Sap Ariba
This is a series of 10 podcasts on digital transformation in purchasing, with the participation of 10 experienced industry leaders, anchored by Eric Kavanagh, strategic consultant to the United Nations. From the changing role of procurement to the role of emerging technologies, they reveal what it takes to succeed in today’s marketplace procurement.
Following the podcasts for the purchasing department will provide insights into your work routine.
But if you want to optimize the purchasing process in your company, stay on top of the content available in Soluparts’ blog, starting with the article we selected below: