The current economic scenario requires faster responses from both companies and their employees. Aspects such as late deliveries of indirect material, for example, can generate a series of problems within the operations chain, impacting productivity and, consequently, financial return.
In order to try to respond to these demands, the Agile methodology becomes fundamental. In this text, we talk about the main concepts of agile mindset and give some tips on how to implement it in the purchasing sector.
What is the Agile mindset?
There are many cases that can exemplify the moment we live in: considering the field of technology, for example, extensive communication networks have been developed that allow instantaneous interaction between individuals in different parts of the world. Regarding the economy, we have seen supply chains become global, influencing and changing processes that involve a number of actors (suppliers, buyers, logistics companies, among others).
There are many experts and academics who seek to conceptualize what we live in the modern world. An example is the term VUCA, created by the US military to define scenarios and contexts of war, which has come to be used as a business strategy as well – long story short, VUCA is an acronym composed by the first letter of the words: Volatility, Uncertainty, Complexity and Ambiguity.
More recently, in order to expand this concept, the term MUVUCA was also introduced, with the addition of two new elements: Meaningful (all actions are guided by a purpose as a result of the search for a meaning for life and the world) and Universal (concern about the global impact of what we do).
In order to find a way to follow up a reality in constant change, the agile methodology emerges: coming from the Information Technology sector, it seeks to reduce the rigidity of traditional organizations’ processes and procedures, encouraging smaller and faster deliveries, constant reviews and collaborative work. Read our Agile Supply Chain article to understand more about it.
What are the agile principles?
Even though it emerged in the IT area, the set of principles and processes that make up the agile methodology started to be used by different types of departments and organizations. In the purchasing area it is also incorporated as an alternative to the traditional model of acquisitions.
It is important to emphasize that the adoption of agile thinking is not an easy task, it requires organizational changes and the willingness of employees to change. The use of this methodology also depends a lot on the context, but there are some topics that can be applied in all situations:
1- Consumer / customer satisfaction is the main element: highest priority, with a focus on deliveries happening correctly and in a short time. This customer or consumer can be thought of in many contexts: in the case of purchasing indirect materials, for example, it refers to the company that needs a spare part to continue its production.
2- Change as an opportunity: this new way of dealing with challenges is extremely important, regardless of the context in which the change occurs, helping to increase the competitive advantages and the satisfaction of the clients served. The focus now is on solving a problem and not on the problem itself.
3- Speed and value go together: in short periods of time, high value-added deliveries must be made, whether the value is tangible or intangible. These deliverables can be products or services resulting from a process or project, which must be regularly revisited with updates. Here, “value” can be understood as the customer’s view (or expectation) of benefits and sacrifices in relation to what is offered.
4- Collaboration overcoming conflict: members of a project must develop the team mentality, in order to guarantee the transparency of communication and the shared commitment to guarantee success.
5- Power to people: projects are built and led by people and teams engaged. That is, they must be given the tools and working conditions necessary to succeed and complete the assigned tasks. Soluparts already understands and applies this concept since its creation, reflecting it in our purpose: Empowering Buyers, a maxim that reinforces the company’s focus on customer satisfaction.
7- Demonstrable values and results must guide each project: deliveries that meet or exceed expectations in terms of precision and value (tangible and intangible) become useful references for future initiatives and projects.
8- Keeping activities stable and sustainable: while delivering value is a priority, processes must be developed and optimized from a sustainable perspective to ensure that everyone is involved in a stable manner, without surprises that hinder decision-making.
9- Continuous improvement ensures agility: processes must be increasingly efficient through regular changes.
10- Simplicity is an essential element: maximizing returns using the least possible resources.
11- Self-managed teams are more successful: better results come from agile teams that are able to organize themselves.
12- There is always room for improvement: reassessing processes and making necessary changes to bring more efficiency and effectiveness are always welcome.
The twelve principles shown above, are based on the Agile Manifesto, which is the basis of mentality and all agile methodologies around the world. These principles were designed and coined by the Agile Alliance, a global non-profit organization committed to supporting people who explore and apply agile values, principles and practices to make the development of solutions and projects more effective, humane and sustainable.
This alliance was created by a group of 17 developers who, at a meeting in Utah, USA, from February 11 to 13, 2001, developed the Manifesto for Agile Software Development. Read more about the Manifesto and its principles on the alliance’s official website.
Agile thinking in the purchasing department
Unlike traditional models, most commonly focused on cost reduction, Agile thinking in purchasing seeks to generate value by supporting the organization’s objectives and business needs. Considering some crucial aspects of the procurement sector, it is possible to raise the main differences between the traditional and Agile forms of purchasing:
Instead of fixed and extensive planning and documentation, with the Agile methodology, a more responsive, objective and iterative position is valued, attentive to the real needs of the moment. Thus, identifying priorities becomes very important for purchasing employees.
The focus should be on elaborate more collaborative terms and built stronger relationships with suppliers, having as a result the gaining of shared success (questioning the competitiveness and rigidity present in traditional format contracts). Learn more about the topic.
They have to be iterative and responsive, in other words, suppliers can be changed after a round of work, as required by changing circumstances. On this topic, see the article we have specifically prepared on the application of agile methodology in the context of supply chains.
4 steps to make your purchasing department more agile, today
Below are some ways to make your purchasing process more agile:
1- Daily meetings at the beginning of the work day: lasting between 15 and 30 minutes, these meetings help to establish the day’s tasks, encouraging collaboration between team members to solve possible problems. In many companies, to encourage agility, it is proposed that participants remain standing;
2- Apply the notion of sprints, which would be small projects or project fragments, sequences of iterative work (with repetition of actions) in order to have a more compartmentalized notion of the whole, speeding up possible reevaluations and changes in the acquisition path;
3- Definition of priorities: in the face of frequent changes within the company, establishing priorities and regularly reviewing them helps to streamline the purchasing process;
4- of software that helps in Agile management: technology can help centralize data related to a purchase, in addition to facilitating communication and alignment between dispersed teams. There are a series of programs aimed at the application of Agile methodology in companies.
In this article, we show how Agile methodology can help a lot to optimize the projects and processes of purchasing departments. Even though the method was originated to meet the demands of software development, many business areas have adopted these guidelines, resulting in more effectiveness and efficiency. Responding quickly to market changes has become a competitive advantage.
The purchasing department has a lot to learn from Agile, but for that it is necessary to be sure that its organizational culture and professionals in the area are flexible and resilient. To help you optimize your purchasing department, we suggest the following readings:
Another way to streamline the activities of your purchasing department is to count on a company specialized in the search for spare parts (MRO) from more than 15000 brands anywhere in the world, such as Soluparts.
In the current moment of economic crisis that the world is experiencing, the purchasing area is going through several challenges.
These include the increasing pressure to reduce costs and optimize financial and operational performance, the increase in the complexity and volume of contracts to be managed, the need to automate processes related to this area and the emergence of new regulatory requirements.
These factors make it essential that procurement and contracting processes converge very closely. This statement, made by the Chartered Institute of Procurement and Supply, clarifies the relevance of this issue for organizations.
In addition, this scenario requires procurement professionals to increasingly develop certain soft skills (such as judgment, strategic thinking, analytical thinking, common sense, cultural and emotional intelligence) to manage demands related to contract management.
In this text, we will discuss the benefits of contract management in purchasing, in addition to presenting strategies on how to adopt it successfully in your company’s day-to-day.
The importance of contract management in purchasing
In short, the contract management process can be understood as the interaction between suppliers and buyers that guarantees the performance of obligations (by both parties) in a purchasing relationship.
There are five essential points that should be contemplated in this process, whether in the purchasing sector or any other department:
- Goods and services: accurately describe what will be provided by the supplier, which avoids misinterpretation;
- Prices and payment: define what are the costs of each product or service, how and when it will be paid and what are the penalties in case of delays;
- Confidentiality and proprietary information: decide who will own the intellectual property if something has been developed in partnership. In addition, in the case of information that cannot be disclosed, it is essential that there are confidentiality clauses to protect the company that owns it, in the best possible way, against leaks;
- Disclaimer: limit the other party’s ability to file a lawsuit and recover possible damages – see more details on this item at Incoterms 2020;
- Violations and breaches of contract: set conditions if either party decide to terminate the contract.
In addition, according to the Purchasing and Procurement Center article, the contract management process includes the following steps:
- Manage the delivery of services in order to ensure compliance with the deadlines set;
- Establish a fruitful relationship between suppliers and buyers;
- Manage the contract itself, ensuring that the clauses are in line with the negotiation and respected by all. Make sure that the purchasing activities follow what has been agreed upon;
- Seek improvements, consequently increasing efficiency and profitability;
- Implement changes when necessary, as in long-term contracts, changes regarding activities, requests and available products are common.
There are also strategies that can be adopted that help in the better management of purchasing contracts:
Using contract management software for organized archiving of information is a great option, since it allows having a single database of related documents. If this management is done by different areas (Purchasing and Legal), it is important to ensure coordination and communication between them.
Audits are crucial to improve supplier performance (punctuality, quality controls, pricing and payment schedules) and ensure the organization is acting in accordance with defined rules and regulations – see the benefits of compliance in purchasing.
Improve risk management
Delays in the delivery, late payments, mistaken inventory counts, among other risks, can be avoided if there is an efficient management of the contract with the supplier.
Practical tip for contract management: prepare checklists
Performing checklists is an efficient way to describe aspects and good practices related to contract management. The checklist can be divided into three columns, contemplating the activities to be performed, the stakeholders involved and the frequency to perform them (use the periodicity that makes more sense for your work routine: daily, biweekly, monthly, semiannually, annually, at the beginning or end of the contract).
In order to optimize the purchasing sector’s time and make the list of activities more organized, it is ideal that they be divided into four main blocks. See below the topics and some suggestions of tasks to be contemplated in the checklist:
1. Planning and Preparation
The definition of policies and procedures for contract management (e.g., establishing the responsibilities of the parties, assessing the need for staff training, creating an action plan, and listing possible risks).
2. Pre-contract period
Phase after the negotiation, in which the document is revised again in order to detect possible errors, which avoids risks for the company. In addition, at this stage it is important to ensure that the documents related to the contract are consistent and that all parties receive the updated versions.
3. Contract period
It refers to the moment when the contract is active. One should pay attention to its optimization and the detection of trends and opportunities for future contracts. It is important that the documents are in the management tools and their execution is monitored through performance indicators.
4. Post-contract period
Stage in which the contract is no longer active. It considers the tasks related to its closure and the elaboration of final evaluation reports.
In this article, we brought some aspects related to contract management in purchasing (its importance, strategies and practical tips to adopt it), which helps the procurement team to promote the operational and financial optimization of its sector.
The purchasing professional must be attentive to strategies that guarantee the best products and services for a fair price, with the fulfillment of the responsibilities formalized during the contracting process.
Soluparts offers the Annual Purchase Contract. With it, the client guarantees the prices quoted for one year – from the signature of the document – and only needs to send the purchase order of the desired part when it was necessary, increasing productivity, reducing costs and optimizing the time of the professional in the area.
Talk to our specialists and learn how to simplify contract management in purchasing: CHECK OUT THE ANNUAL CONTRACT
The changes seen in recent decades in the world economy have brought a number of challenges for organizations. With a more connected world and a globalized economy, intercultural management has become an important dimension to be worked on by companies that deal with audiences in other locations (consumers, suppliers, employees, among others).
But what is culture, anyway?
Culture can be understood, in short, as the set of values, beliefs and habits of a given group in a specific context. It reflects what we consider normal, present in our daily interactions and, many times, we only realize its relevance when we leave familiar environments – which makes Cultural Intelligence in Purchasing a very important factor.
And we don’t need to go far to confirm this. When traveling to another city, is it not possible to notice differences in the customs of its inhabitants (food, forms of leisure, schedules of expedients, greetings, expressions)? These elements can bring challenges to those who are inserting themselves in a new context, depending on the distance between the cultures involved.
In the case mentioned above, language would not be a great difficulty (only some expressions would not be understood). But in an international context, dealing with this important cultural element becomes crucial to ensure success in communication and negotiations. For example, the growth and expansion in the last decades of the Asian market in the global economy has brought challenges for those dealing with companies from these countries.
Culture in the corporate world
In the corporate context, the examples on this issue are diverse: probably, when working with colleagues of other nationalities, you have already encountered some difficulties. By sending an e-mail, for example, you may have been concerned to ensure that there was no communication noise (a more informal greeting could be understood as a coarse attitude, or a less direct writing would cause difficulties of interpretation).
In a face-to-face meeting with a client, did you need to pay attention to behave in line with the space where you were? For example, was it customary at the venue for people to stand up to greet someone? Was the atmosphere of the meeting more relaxed or did the participants go straight to the issues on the agenda, without giving space for other types of interaction?
These situations help to highlight the importance of understanding the differences between groups. Thus, managing cultural diversity becomes a recurring activity in organizations. And this diversity can be understood in multiple dimensions: whether to deal with employees in different locations, but also for departments within a company that have particular cultural characteristics.
There is also a concern in the market and in academic studies of the area to understand issues related to cultural diversity. According to Harvard Business School research, companies with diverse teams had a 77% growth in employee engagement. In addition, where diversity is recognized and valued, there is a 50% decrease in conflicts.
To deal with these challenges, the concept of Cultural Intelligence (CI) has been used by professionals in the area. In this article, we will present what IC is and discuss its value to all areas of the companies (including the purchasing sector), giving tips on how to acquire this relevant skill.
What is Cultural Intelligence?
Different experts discuss the importance of Cultural Intelligence in the organizational environment. Tom Verghese, a consultant in the area, defines Cultural Intelligence as the ability to work efficiently between cultures, making interactions easier and providing insights and understanding about behaviors, values and attitudes of people from other cultural perspectives.
For Verghese, Cultural Intelligence is composed of four dimensions:
1. Objective: the interest and motivation to adapt to a multicultural context, whether for intrinsic issues (being involved in significant work, for example) or extrinsic (financial return), with the goal of understanding other cultures, norms and behaviors.
2. Knowledge: to understand similarities and differences between different cultures and the particularities of each context.
3. Strategy: ability to plan multicultural interactions, applying the knowledge that was previously acquired.
4. Skills: apply in (verbal and non-verbal) communication situations the repertoire obtained and adapt it according to the moment.
In an article published for the Exame magazine portal, Sofia Esteves, chairman of the board of the Cia. de Talentos group, talks about factors related to Cultural Intelligence: motivational, cognitive, metacognitive and behavioral. These elements are presented in different categories for conceptual purposes, but interact with each other in practical situations.
The motivational factor has to do with the willingness to know and deal with differences, to your interest in learning new things, being open to understand them and accept them, even if they represent values that differ from yours.
The cognitive factor refers to the respect for the norms of another culture, namely to behave in these spaces according to the social norms of the group.
The metacognitive is related to the “ability of transcultural awareness” and the capacity of “interpretation of texts”, that is, to understand the culture of the other from his/her own, to learn to read attentively, to absorb the message passed and to question when something is not clear.
Finally, the behavioral factor is our ability to respect and adapt to the other culture. As we have already commented, displays of affection in different cultural contexts can have multiple meanings: a strong handshake can be understood as a symbol of trust or disrespect, depending on where you are.
According to an article published in the Harvard Business Review, there is a dialogue between emotional intelligence and cultural intelligence: the former is related to what makes us human and, at the same time, different from each other. The second refers to detecting elements in a person’s or group’s behavior and checking whether they are true to all persons/groups or peculiar to these individuals.
That is, whether they would be universal or not when compared to other realities. In other words: when we are surprised by an attitude of a coworker living in another location, it is possible to observe whether it is related to the person’s personality or the common behavior of the group. This construction of values and habits among people, which are crucial to understanding them, would be what we call culture.
Cultural Intelligence in the purchasing area
In recent years, Cultural Intelligence has become a skill to be developed by all company employees. As already commented, it is important in the management of intercultural teams in different countries, but also valid to reduce cultural tensions between areas of an organization located in the same place.
For example, in projects involving participants from different areas, there is the challenge of understanding the culture of each one, allowing the alignment of employees. Information Technology teams have some different characteristics of business professionals, while the purchasing department has a different rhythm from the legal area. Understanding these differences is fundamental to the success of the company.
TMA World, a consulting firm specialized in Development and Learning, focused on training for intercultural teams, lists reasons why it is important to be concerned with Cultural Intelligence in the context of organizations and their different areas (among them, the purchasing sector):
- IC helps to develop a deep understanding of working styles in other cultures, which builds tolerance, trust and understanding among employees. Cultural differences become strong points in problem solving, while enhanced collaboration creates the ability to respond more quickly to market changes;
- Managers who work with teams on the production line, with different degrees of education, should deal with the cultural dimension carefully, as it may be relevant to ensure the engagement of these employees. The company’s top management must also pay attention to the challenges faced by those who manage these areas;
- Local partners, customers and outsourced sectors will become closer with Cultural Intelligence, as it no longer will be an obstacle to success due to their differences;
- IC is also important in the context of emerging markets, because of the differences in management styles and expectations created. In some situations, these markets can achieve success in their operations without necessarily following all the protocols defined by the companies of the country of origin.
- A culturally intelligent individual gains confidence. By assimilating into a local culture, immersing oneself in its ways and mirroring the gestures of the people around it, one becomes more empathetic – as long as one’s immersion in the other culture is genuine;
- Culturally sensitive leaders are better managers, as they are able to resolve conflicts, including in negotiations, more efficiently, and they understand clearly the dynamics of multicultural groups;
- Training is crucial for employees and their families, who move to work in a branch of the company, as it helps to reduce culture shock and makes the individual more effective and prepared to integrate the new workplace.
- Multicultural marketing is important for all areas of the company, since understanding your consumer and their needs is an essential element of IC, respecting their gender, age, race, ethnicity, sexual orientation, among others.
- Cultural awareness helps individuals to recognize areas of their own communication that can be improved, to make their daily interaction with international – and national – colleagues more effective and enjoyable. In addition, by developing communication skills, the individual’s interactions (with family, friends, neighbors) also improve.
When we make acquisitions in our country, not many differences in terms of culture are usually felt. However, when the purchasing sector deals with suppliers from other nations, we become aware of these issues, requiring us to think globally.
One of the biggest misconceptions in the procurement process is that people will act in a similar way to us, which can generate noise during the understanding between the two parties. Therefore, bringing the concepts of Cultural Intelligence into the purchasing context is very valid.
For Fabio Hoinaski, CEO at IBID – E-procurement, there are a number of issues that impact a good relationship between people of different cultures in the purchasing process:
In the globalized world, English is fundamental for communication; however, not all countries have the custom of using it frequently, and prefer the local language. We can mention here the French, who generally use their mother tongue more. There are also nations that have begun to encourage learning English only in recent decades, and it is still a challenge to interact with the majority of the population.
However, by learning basic local language terms and showing that you are making an effort to speak in the language of your interlocutor, a barrier is broken and the person is more open to communication and negotiation.
2. Form of treatment between people
There are cultures where relationships are marked by more formality and hierarchy, without affective demonstrations in public, for example. Work relations also change: Brazilians develop more close and friendly relationships than colleagues of other nationalities (such as the United States and Germany).
It is also important to point out that there are countries that present a more collectivist culture, while in others people are more individualistic. This ultimately defines how teams interact in a working environment, with different degrees of cooperation among their members.
3. Time Zone
It generates differences in business hours between countries and can make some communication formats difficult, such as video conferences and phone calls (when an email and text message are not enough to align a subject). Citing a case, when doing business with Asian countries, be prepared to deal with an eleven hour time zone difference, approximately, depending on the position on the continent.
4. A country’s history
Understanding how the main values of a country have been constituted and how they impact the organization of the State is another point to be observed. Nationalist governments, for example, present more protectionist measures, such as taxes and customs duties.
Moreover, the history of a country makes some issues (such as episodes of difficulties faced by the population) become taboo, and understanding whether this exists before a conversation is extremely important in order to avoid possible inconveniences.
Cultures deal with it in different ways, and it is necessary to make clear the time for the accomplishment of a certain activity in order to guarantee the alignment of expectations. There are studies that demonstrate the productivity rates of workers in each country. Sometimes forcing employees to adapt to the pace and culture of the organization’s home country can lead to reduced engagement.
6. Trade laws and standards
Understanding how the laws and tariff rules of a country have been structured helps to improve the understanding of its culture, avoiding difficulties in the processes of exporting and importing products – in this sense, we suggest that you know the main changes at Incoterms 2020!
Tips for developing Cultural Intelligence
Cultural Intelligence is very important for day-to-day business. Therefore, we listed some tips given by experts that will help develop this important skill, that will positively contribute to the purchasing departement’s activity performance. Take a look!
- Acquire knowledge about a culture in which you are interested. Read books, magazines and news, watch movies and TV shows about the country, listen to radio shows, podcasts. From these materials, you can observe people’s reactions and customs, and acquire vocabulary and expressions of the spoken language.
- Visit historical spaces, museums, art galleries and places where you can learn more about other cultures. There are several cultural spaces around the world that already offer their collection digitally, which are also an interesting option. In this way, you will acquire a relevant repertoire, which can be used in future work situations;
- When dealing with people from other countries, observe their body language, gestures and facial expressions. It is important to better understand people’s reactions, reducing possible noise;
- Always do a self-analysis, reflect on your emotions and behaviors in these situations of cultural differences, discover how you can change them in order to have a better interaction (for example, change your tone of voice and speed in speech to become clearer);
- If possible, immerse yourself in the country of your interest in order to better understand their culture. Take advantage of a vacation or leave to take a course abroad in another place, and you can have a very enriching experience when interacting with the locals;
- If you are unable to travel, learn the language of the country of interest at a distance. There are several options of websites and apps to acquire this type of knowledge, aimed at users of different levels (basic, intermediate and advanced), which allow you to interact, in some cases, with international teachers;
- In interaction, avoid reproducing common sense and existing stereotypes. That is, do not make comments that in some way generalize the group in which you are inserted (often this attitude can be understood as a sign of disrespect to the culture of your interlocutor);
- Do market research in order to detect perceptions and behaviours of the inhabitants of a region where you will do business;
- Search for information about the desired country in publications of companies and government agencies. This data is often available and published on the Internet;
- If you are a manager, implement intercultural training with the teams. This reduces cultural shocks and makes the individual a more effective, prepared, creative and open minded professional in their workplace, by allowing them to deliver their work without worrying about solving possible noises;
- If it is necessary to hold virtual meetings, try to respect as much as possible the working hours of your interlocutor, showing that you are attentive to this issue. Many people are bothered by having to extend their working hours, as they may have other social commitments;
- Study new technologies that make your work easier in the context of intercultural management (Speaking of which, check out the essential skills for the purchasing professional in the digital age). These new forms of communication can be important allies to ensure the engagement of teams in different locations;
- Ask! Don’t be afraid to question – respectfully – people about their cultures, this is an important way to create bonds and relationships, by showing interest and respect for others.
The documentary “American Factory” (United States, 2019, Netflix), winner of the 2020 Oscar’s Award, reports the entrance of a Chinese multinational manufacturer of automotive glass in the city of Dayton, Ohio. It is an interesting portrait of the challenges discussed in this text and an exercise to reflect on the importance of Cultural Intelligence within organizations.
The film shows that the city was in deep financial difficulties after the closure of the production yard of a U.S. automotive company located there, which guaranteed jobs to the population. The arrival of the Chinese organization brings optimism to everyone, however, its installation brings several tensions. Among them, the cultural clashes between American workers and the management of the emerging country, since the relationship with labor is deeply distinct in both countries.
In this article, we have seen how important Cultural Intelligence in purchasing is to ensure alignment between individuals in different cultures and situations. Whether dealing with different areas of the organization, or with employees and suppliers in other states and countries, being aware of the issue is paramount in our times. And this is a challenge for all people in an organization (not just managers).
Another important point is to have a specialized and culturally diverse team to facilitate acquisitions in different cultural contexts. For that, count on Soluparts.
Our employees, of various nationalities, speak several languages and many have lived abroad. Therefore, we have a team experienced in dealing with different cultural contexts, being able to conduct better negotiations and optimize the purchasing process. Request a quote!
From the time allotted to work meetings, studies and the time dedicated to the family, many activities compete for our attention during the day. And almost always we end up with the feeling that 24 hours are not enough to take care of all the commitments.
Because of this, the economist Daniel Hamermesh, in his book Spending Time: the most valuable resource, defines time as the most scarce commodity of today.
He goes further, stating that even if we manage to gain some time living near work or hiring a person to perform some tasks that can be delegated, there will still be a list of non-transferable activities left – such as an important meeting with a supplier, where complex negotiations will take place, or a child’s birthday. And again, time will seem insufficient.
One way to overcome this situation is with efficient time planning and administration – which will contribute to greater productivity in the purchasing industry.
To get that balance right for you, check out some time management tips below.
4 tips to optimize your time within the purchasing sector
“Until we can manage time, we can manage nothing else”. This quote from the father of modern administration, Peter Drucker, sums up the importance of time management and to help you get good administration on your agenda, we list some important tips. Check it out!
1) Count on solid procedures
When all the work within the purchasing department is carried out following previously planned standards and processes – based on both theoretical knowledge and practical experience – the risks of errors are reduced and, consequently, the need to spend time correcting problems in the future.
In this sense, it is important that the purchasing department:
- Has a good Compliance program;
- Be aware of the hiring process and make sure that all the hires are, in fact, qualified to be a part of the team and manage your purchase portfolio;
- Adopt appropriate technological solutions that automate repetitive tasks and offer agility to the processes and projects in the area. Tools such as Evernote (allows creating task lists and controlling deadlines, among other functions) or RescueTime (it helps understand routine work habits and generates reports for user analysis), is one of these options – see other software useful to work in the purchasing sector.
These measures, in the medium and long term, usually bring very successful results for productivity in the purchasing sector.
2) Counting on an efficient training program and teamwork
It is not enough to have a competent team, it is necessary to offer constant training that helps to develop the necessary skills for the digital era.
In this sense, two practices aimed at professional development deserve to be considered:
- Upskilling: refers to professional development in the field in which you already have a certain domain, improving and expanding your current qualifications.
- Reskilling: learning new skills in order to perform tasks different from those you already do.
Moreover, transparent and clear communication and well prepared employees are a great asset in optimizing time – since the work gains in quality, doubts usually appear in smaller numbers, possible mistakes are less recurrent and solutions for them often come from the team itself.
Therefore, invest in good communication channels, so that the whole team knows the objectives of the sector, the work process and has space to clarify doubts;
Moreover, a competent team is usually more creative and proactive. Therefore, it is important that everyone knows your skills and those of your fellow workers, and there is trust between everyone.
3) Adopt a time management method
There are techniques specifically developed for time management, that leverage productivity in the purchasing sector. Get to know some of them and see how they can help in your day-to-day.
3.A) GTD Method (Getting Things Done)
This methodology assumes greater control of the routine to obtain better results. To do this, it is necessary to follow 5 steps:
- Capture: gather everything that’s important and organize it into a task list – which can be done on the computer or on paper;
- Clarify: evaluate each item to define which ones demand an action;
- Organize: after the selection made in the previous step, organize a list grouping the tasks according to similarities and, within each group, by priority;
- Reflect: check this planning weekly to make sure it’s up to date and with all the necessary tasks – you can include something new or delete some items;
- Engage: it’s time to actually perform the selected tasks in your lists.
The market offers tools that help apply the GTD method, among them:
- Google Keep: available for Chrome, iOS and Android, it allows the user to create notes and task lists with audio, image and virtual “post-its”;
- Workflowy: It can be used on the site or on the app that creates lists by categories, organizing into areas of responsibility that help define priorities;
- Evernote: stores different content such as photos, drawings, audios and videos, allowing the organization of ideas in “notebooks” using the same concept of mind map. It also allows organization through notes, label, etc.
3.B) Kanban Method
This is a technique consisting of grouping tasks in a table divided into sections. Example: tasks to be started, tasks in progress, tasks completed.
There are computer programs that do this work – Trello is one of them – but this method can also be done manually.
In this case, you must have a board to place cards with a summary of the task in the appropriate section as the process progresses. This board can be personal or for the whole purchasing sector.
If it is the second option, it should be placed in a space where the entire team has access and the cards should have a specific color for each employee, who is in charge of allocating his or her card in the appropriate section according to the progress of the activity.
This method ensures transparency to the team, since everyone knows what is being developed and can collaborate with colleagues, giving suggestions that can facilitate and improve the activities. They also avoid the same task (such as product quotation) being performed in duplication.
Important tips for using the Kanban method:
- Set deadlines for each task;
- Plan weekly or daily priority tasks to be executed in the period, only adding other activities when these, considered most important at the time, are completed!
3.C) Pomodoro Method
Created in the 1980’s, this methodology works with the division of tasks in time intervals called “pomodoro” (each one with 25 minutes), aiming to stimulate brain focus and agility – check out the article about the Triune Brain and see how to use the knowledge about the brain in your work and relationships.
Put the Pomodoro technique in action, following the steps:
- List: make a list of the tasks to be performed;
- Work without pauses: after selecting the task you will perform, program a timer for 25 minutes and work on it without interruptions;
- Relax: as soon as the time is up, take a 5 minute break, doing something that relaxes you;
- Restart: after the break, resume the activities for one more “pomodoro”, always taking breaks at the end of each period;
- Pause for longer: after four “pomodoros”, take a 30 minute break – then restart the process.
- Finish: when you finish the task, cross it off your list and move on to the next one.
To make it easier to draw up your task list and get better results with the Pomodoro method, follow the step-by-step below:
4) Count on the best suppliers
Working with reliable suppliers is one of the most efficient ways to save time, by avoiding problems such as late delivery or purchasing the wrong product/material.
However, searching for and selecting suppliers is a time-consuming task. Therefore, the most efficient strategy is to count on the support of a company specialized in indirect material procurement, such as Soluparts.
We are a global company, specialized in purchases of all types of industrial materials, with access to the world’s most relevant and committed manufacturers. We make several quotations, with various suppliers and send our customers a unified offer, with the best options in terms of value and commercial conditions (of all materials requested).
We also work with annual contracts – please contact us to find out more. Based on a list of parts the company may need during the following year, we quote each item with suppliers around the world and send a consolidated document with all the information about the materials to our customers.
If, during the year, there is demand for any of the materials included in the planning, it will not be necessary to make a new quotation, if the contract has been closed. All you have to do is send us the purchase order that we have arranged for the purchase, as previously informed.
Please contact our team for more details on the operation and conditions of the annual contract.
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The process of purchasing indirect materials, which allows the continued existence of business, is essential to the functioning of an organization and requires proper management to avoid losses – this is because the lack of these materials may mean interruptions in production and delays in projects.
In this article, we will address the challenges one must overcome for a good management of indirect material procurement.
Purchasing indirect materials: challenges
The NelsonHall study, titled Improving and redefining the role of indirect procurement, revealed that only 47% of purchasing executives surveyed showed a high level of satisfaction with the purchase of indirect materials at their companies – and this percentage dropped to 45% when the management capacity of the indirect procurement team was analyzed.
According to the survey, the main challenges that contribute to these numbers are:
1- Strong demand for cost reduction
Often viewed as an area of expense, the purchasing sector is constantly charged to reduce organizational spending, which must be achieved without representing a loss of productivity for the company.
2- Difficulty managing suppliers
This stage of the purchasing process is considered one of the most complex, involving continuous research, often complex negotiations and, as a consequence, consuming a great deal of time in the procurement routine.
3- Lack of expertise
It is very complex to develop an indirect material procurement team that specializes in purchasing such varied and infrequently requested products. And this lack of knowledge can generate problems such as mistaken purchase of materials or inadequate negotiation.
Improving indirect purchasing management
Although there are obstacles to overcome, as already pointed out in Procurement Department 4.0: challenges and trends, it is necessary to see them as motivation to improve the work and management of indirect material purchasing.
Below are some suggestions for improving the way indirect procurement is managed.
1- Be a partner of the other sectors of the company
It’s necessary to get closer to other sectors, gaining their trust by understanding their main needs: what they are trying to achieve, what challenges they face in their routine, and how do acquisitions influence and collaborate in this regard?
Investing time and effort to really listen and deliver what they need will lead to the realization that indirect material procurement is an essential operation for all sectors of the organization to achieve good results.
It is also essential to collaborate to train the procurement team, with training and other resources that provide tools to improve the performance of all employees.
2- Use appropriate technology to identify and consolidate expenditures
The use of a holistic technology tool to track, identify and categorize the expenses of indirect material purchases will give the procurement manager the ability to add the needs of all sectors into fewer orders and, as a consequence, obtain benefits such as volume discounts and more favorable contracts.
To identify the level of digital maturity and the technologies most commonly used in the purchasing sector, check out our articles: The purchasing sector in Industry 4.0 and 4 technologies that will change global trade.
3- Control the stock effectively
The demand for indirect materials may occur due to unforeseen circumstances. But it is usually derived from predictive maintenance planning and the service life of equipment and parts.
Therefore, inventory control requires technical information on the condition of the equipment, as well as statistics that can project the need for indirect material purchases in the future. This must always be based on historical data, the criticality level of the operation and the difficulty of acquiring the items.
For this, stock management software can be used or RFID tags, intelligent sensors, among other options that we have already addressed in an article about the benefits of an intelligent supply chain – worth reading for more details!
4. Suppliers: essential for good indirect materials purchasing management
A healthy relationship with suppliers is essential to improve the management of indirect material purchases, which requires constant communication and analysis that transcends prices and deadlines, such as verification of risks that the supplier company may offer or legal requirements and social and environmental responsibility – among other factors.
This monitoring allows a clearer vision of the current conditions and the place that suppliers occupy in the market to always guarantee the best possible business and also to identify points for continuous improvement.
Counting on specialists in the search for the best suppliers in the international market offers many benefits, such as optimization of the purchasing process and cost reduction. In addition, a company specialized in indirect material purchases also allows the manager to optimize his time, focusing on more strategic functions.
Soluparts, with offices in Germany, Brazil, United States, Hong Kong and Portugal, maintains contact with the world’s main suppliers. All you need to do is send us the specifications of the material (manufacturer and part number) and we will find the best conditions in the market, sending you a consolidated quotation to optimize your time.
Discover all the advantages that only a specialized team can offer your company. Request a quotation now!
The concept of Compliance, already known in the corporate scenario, aims to adapt companies to legal and ethical rules that guarantee values such as transparency in business relations and procedures. It is also very effective to detect and treat possible frauds, deviations or non-conformities that may happen in the company.
But what about compliance in the purchasing department? What are its benefits? That is the subject of this article
Fraud in the purchasing sector
Among other responsibilities, it is up to the industry to judge the best proposals for the supply of materials, as well as to choose which suppliers will be hired.
By moving varying amounts of money, these negotiations can open up gaps for unofficial agreements – where the choice falls on the supplier that offers some kind of benefit. To investigate this scenario, Price Waterhouse Coopers (PWC) conducted a Global Survey on Economic Crimes – Brazil.
According to the study by the consulting and auditing services company, 44% of the companies that were victims of economic crimes in Brazil suffered fraud in the purchasing process. The survey also found that 69% of the victims detected fraud during the selection of the supplier, 63% in their hiring and 56% in the invitation to participate in bidding processes.
In addition, the survey pointed out the “opportunity” as the main factor to contribute to the criminal practice, since people who commit fraud usually know very well the existing regulations and know how to cheat them, which makes essential the existence of clear policies and training programs focused on ethics.
Continuing with the data, 64% of criminal attacks are committed by people who work in the company’s purchasing department. “When the fraudster is inside the company, his profile is balanced between middle management and team members, both slices with 39%. Members of the executive management account for only 17% of cases,” the survey found.
These data are ratified by Cláudio Marcelo Rodrigues Cordeiro, in his work “Internal and operational auditing: fundamentals, concepts and practical applications”, published in 2013. According to Cordeiro, fraud can occur when basic conditions such as intention, opportunity, insufficient internal control, weakness of an ethical policy associated with a weak code of conduct and risk inherent to the activity coexist.
Importance of Compliance in the Purchasing Department
The lack of compliance of the company’s performance both with the legislation and with its internal policies of good practices, regulations and codes of conduct may result in serious damages such as damage to the image of the company and its reputation in the market, compromise of the company’s results and, in more serious cases, criminal proceedings.
According to the author of the book “Compliance in Brazil: Consolidation and Perspectives (2008)”, Vanessa Alessi Manzi, four fundamental preventive and detective controls are required in a Compliance program:
- Establish a code of ethics for the organization;
- Develop professionals in the capacity to deal with ethical dilemmas;
- Create channels for identifying unethical conduct;
- Enabling the discussion of ethical dilemmas.
The author emphasizes that Compliance programs are not able to fully prevent illicit acts from occurring. However, risk management allows identifying, assessing, monitoring, recommending and reporting risks and combating them quickly.
Compliance in the purchasing department
Below are some practices that will help maintain compliance in the purchasing industry.
1- Creating a Compliance Program
The study by Price Waterhouse Coopers (PWC) pointed out that the most effective means of combating fraud is the prevention and mitigation of in-process risks and methods. In other words, the existence of a Compliance program in the purchasing department, establishing a code of conduct, training programs that involve ethical values and disseminate the established standards is essential. In addition to a channel for employees to report what they are seeing wrong, without having to identify themselves.
The main topics for creating a Compliance program in procurement are:
- Comply with existing laws, regulations and standards;
- Create a set of standards of conduct and ethical principles that are known to employees;
- Have clear and precise internal procedures and rules – to be obeyed by the entire team;
- Create reports that generate information and make the purchasing process transparent throughout the organization;
- Assist external and internal auditors offering all the items requested in an agile manner.
2- Frequent Audits
In addition to preventive controls and fraud detection, periodic audits are also a good tool within the Compliance culture in the purchasing department. These audits can:
- Avoid exchanging inappropriate favors or gifts between purchasing professionals and suppliers;
- Ensure proper control by preventing laws from being circumvented – even unconsciously;
- Verify that what is established in the contract is being duly fulfilled by the supplier;
- Observe if the business partners also follow compliance principles.
During the audit the entire acquisition process is evaluated. The user’s request (requirement, quantity and urgency), vendor selection, quotation, negotiation, order closing, physical receipt, storage. In addition to greater transparency, the audit allows improvement in the work of the sector.
3- Process standardization
This is a way to reduce loopholes for illicit acts that harm the company. Standardization will also allow the analysis of the strengths and weaknesses of the procurement process, identifying actions that lead to the continuous improvement of the Compliance process in the purchasing department – thus, the company will always be up to date with the changes that have occurred in the current legal norms.
The standardization of processes requires the structuring and documentation of activities in an archive that will be made available to the procurement team, who will be able to consult it in case they have any doubts or questions.
4- Partnership with suppliers who practice compliance
Make sure your suppliers meet specific ethical and transparency requirements and are qualified to maintain a business relationship with your organization. This verification process should be constant, also evaluating performance, and the supplier companies that prove more reliable should have priority in future negotiations.
This verification can be done with the monitoring of each of the suppliers in meetings, via social networks or verifying the mission and values of the company, for example.
The implementation of a Compliance program minimizes the possibility of illicit acts in the purchasing department and, in case of such occurrences, fights them more quickly.
In this process, good supplier management is essential. And the most practical way is to have a company specialized in spare parts.
Experienced in purchasing industrial materials – and with offices in Brazil, Germany, Portugal, Hong Kong and the United States – Soluparts has access to thousands of international products and suppliers.
Experience the advantages of having a team specialized in indirect purchases, by requesting a quotation right now!
What could be better than watching a good movie? Watching the movie and, on top of that, improving our performance at work!
With that in mind we made a list of 5 unmissable movies for the shopping professional’s routine – and that can be seen in good company, making better use of your time at home.
Prepare your popcorn, have fun and expand your knowledge!
1. 12 Angry Men (1957)
A classic movie with Henry Fonda as the lead character. It tells the story of a young Puerto Rican who goes on trial accused of killing his own father. After the evidence is presented, twelve jurors meet to decide the sentence, which must be unanimous.
In the first round to reach the decision, eleven jurors – each based on their own convictions – decide on charging him as guilty. But the 12th, Mr. Davis (Fonda), is not convinced of the boy’s guilt and starts a process where he will try to get the other members of the jury to review their decision.
Reflections provoked by the film
Even though he is a minority, Mr. Davis persists in presenting his point of view to the other participants in the group.
Controlling his emotions even when harassed by other people participating in the “negotiation” and using arguments to guide his point of view, he does not try to impose his opinion. His tactic is to get other people to consider other options in addition to the idea originally conceived.
Another point that deserves to be highlighted is that the protagonist is open to consider other opinions, as long as they are accompanied by good arguments. In other words, he has no intention of making his own prevail, but defends it in a respectful and intelligent way.
To have more details of the negotiation techniques used by the character and, mainly, to know the verdict, check out the film – it is certainly an excellent tool for the purchasing professional to evaluate his way of negotiating and even improve it to get better results.
2. Up in the Air (2009)
It tells the story of an executive, lived by George Clooney, who travels around the United States with the task of firing employees of multinational companies.
Ryan Bingham, Clooney’s character name, loves his work. However, his professional routine is put on the spot when his company hires the young Natalie Keener (played by Anna Kendrick), who has developed a dismissal process through videoconference, without the need for expensive travel.
Reflections provoked by the film
The clash between traditional and new management is represented very well by the protagonist’s struggle to defend his way of working, in some aspects already outdated, from the changes provided by technological transformation.
As the procurement sector is often guided by more traditional work models, the procurement professional has the opportunity to reflect on the importance of remaining open to change, reaping the benefits that transformation provides.
The difficulty of teamwork and communication are also explored in the film, where both characters wish to impose their point of view. Only when one starts to try to see the situation from the other’s perspective, do they start to respect each other and learn from each other’s experience.
3. Bridge of Spies (2015)
Based on a true story, the film features Tom Hanks and English actor Mark Rylance (Oscar-winning supporting actor for this role).
In 1957, in the midst of the Cold War between the United States and the Soviet Union, lawyer James Donovan (Hanks) is in charge of defending Russian spy Rudolf Abel (Rylance) in an American court and convinces the judge to leave him alive to serve as a bargaining chip, should any American be arrested in Soviet territory.
A few years later, the lawyer is invited to negotiate the exchange between the Russian spy and an American and to top it off, try to free an American student, imprisoned in East Berlin.
Reflections provoked by the film
When the lawyer was invited to defend the spy from the enemy country, everyone believed he would make a symbolic defense. However, he prepared himself for the clash and was able to identify an argument strong enough to have a turn at the “negotiating table”.
Not only did he surprise the others involved, who were so confident in winning they didn’t prepare themselves to negotiate, but he also demonstrated his negotiating value to the point of being called to an even more important and complex negotiation (because of the conflicts involved) in the future.
The movie portairs the perfect negotiation planning class, including listening to other people in the team to outline the ideal strategy and to have a “plan B”, always aiming for the best possible result.
4. Invictus (2009)
Another film based on facts. It touches on the power of leadership to solve conflicts and unite a team.
After the end of Apartheid, newly elected President Nelson Mandela (Morgan Freeman) needs to find ways to lead a South Africa that remains racially and economically divided.
To do this, he chooses the universal language of sports and joins forces with Rugby Captain Francois Pienaar (Matt Damon) to unite all South Africans in favor of the national team at the 1995 Rugby World Cup.
Reflections provoked by the film
After successive governments in which the rights of the black population have been repressed, the great leader Mandela does not think about revenge. Even under pressure from some members of his team, he opts for the path of pacification.
Often it is necessary to coexist, within the team itself, with individuals who have different ideas and even different behaviors. A leader is not afraid to keep at his side people with opposing points of view, he takes the best from each one, always aiming at a greater and collective good.
The film reinforces the importance of loyalty and commitment, revealing that in order for you to create a good team, including professionals in the purchasing sector, good leadership is needed.
Another very interesting aspect is the presence of two types of leaders: the born leader (Mandela) and one who is being molded to face a complex situation – in this case, the rugby captain.
5. The Social Network (2010)
It reveals what happened behind-the-scenes of the creation of Facebook, in 2003, by computer genius Mark Zuckerberg (Jesse Eisenberg), with the help of Brazilian Eduardo Saverin – making the American the world’s youngest billionaire.
The film also shows the personal and legal complications that occurred during the process that transformed the social network into one of the largest on the planet.
Reflections provoked by the film
The new media, which emerged with the digital transformation, has changed the way people interact, communicate and even work – working from home has proven to be a good option for many companies.
It’s a good way to understand the impact of powerful social networks today and how they can be used to benefit business – such as researching a supplier’s reputation and improving internal communication, for example.
So, did you like the suggested stories? Did you miss any movies you’ve watched and that have contributed to your training as a procurement professional? Send us your suggestion and we’ll expand our list!
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