The supply area tends to be increasingly strategic within companies.
To get an idea of its relevance, the Purchasing Department currently accounts for 47% of expenses in the industrial sector, and can reach 80% in the chemical industry.
Next, the executive Paulo Augusto Freitas talks about the new profile of the Purchasing professional and tells what his day-to-day life is like as Procurement Coordinator at Samarco Mining Company.
CostDrivers Blog – What is the profile of the “new” purchasing director and/or manager? What has changed in this area?
Paulo Augusto Freitas – The role of the Purchasing department has evolved over the years, as can be seen in the title of the department itself, currently referred to as Supplies or Procurement. More than a simple change in title, the change reflects the evolution of the scope and performance, which has mainly changed from a tactical/operational profile, in which the main objective was to place orders and meet the internal customer's lead time, to acting at a strategic and collaborative level, delivering results, reducing costs and developing partnerships that allow the viability of the business strategy.
BCD – What are the signs of this change?
Paulo Some signs of this evolution can also be seen in the increase in the level of executives in the area, who have started to act as directors or presidents of supplies (CPO – Chief Procurement Officer) and in the adjustment of the hierarchy in most companies, moving from subordination to Operations to the Financial Directorate, which certainly reinforced the importance of the area for delivering results, given that a large part of the company's disbursement will go through an acquisition process conducted by the department.
The current profile of the Procurement professional has been evolving, as has the role of the area. Among the main characteristics of this evolution, knowledge of Finance and analytical capacity stand out. This professional also needs to have a good business vision and understanding of their internal customer and the process they are serving; this is because they will need to act as an interface between several areas and always recommend the best decision for the business. This does not simply mean evaluating the best supplier, acquisition timing or adjusting the product specification, but also evaluating the coherence of the purchase requisition itself and understanding it in a broader organizational context.
This decision will involve the search for consolidation, productivity, process readjustment, development of new products and suppliers, aiming not only to reduce TCO – Total Cost of Ownership, but also business sustainability and maximization of the company's results (often these gains are not reflected in lower acquisition costs, but in higher sales margins). It is worth noting that, in this context, lead-time and compliance are not differences, but premises for any acquisition process…
BCD – Does this mean that the Purchasing sector is already preparing for a new wave of evolution?
Paul - A new wave of evolution is already underway and will increase the complexity of operations in this area. The advent of disciplines such as intelligence, open innovation and the increased complexity of the business environment are compounded by the rapidly growing tidal wave of information.
Supply professionals will increasingly need to know how to use all this information, classify it and generate meaning for decision-making; they will need to cross-reference the correct information and analyze it, seeking solutions and causes that increasingly go beyond the limits of the organization and its surroundings.
In this sense, positions such as “data scientist” and “supply researcher” are already a reality and reflect these new professional profiles. Despite being an evolution that is still timidly appearing in Brazil, this movement had its origins portrayed in the article Competing on Analytics (read here), by Thomas H. Davenport, published in the Harvard Business Review Magazine, January 2006.
BCD – What kind of information does this new professional need to respond quickly to the demands of the Purchasing sector? What are these new demands?
Paul - For this new professional to be able to meet the requirements of the role, he will increasingly need information from the company's internal and external environment.
Externally, this information ranges from a macro level to specific information about the product or service you are purchasing. At a macro level, macroeconomic and sectoral information, supply and demand, competing demand, foreign trade information, supply base, cost driver trends and prices.
It is also necessary to understand development and innovation in product groups, where competitors and suppliers are investing, what the main bottlenecks in the sector are, disruptive technologies and application methods.
Furthermore, it is increasingly necessary to understand details about the business partner, from a cost breakdown that will allow greater negotiation capacity, to the financial health of the supplier and the sustainability of their companies.
This buyer will also need to be connected with best practices in Procurement, whether linked to processes, category management and benchmarking centers that allow them to seek new opportunities, map risks and seek validation for their decisions.
No less important, the provision of internal business information, from demand planning, price history, suppliers, purchase volumes and also data relevant to the business, such as sales plan, product mix, organizational strategy will be crucial for an adequate cross-referencing of information and analysis of the interconnections between them, adjusting decision-making to the reality and coherence of the company in which it operates.
BCD – What is of direct interest to Procurement?
Paul - This professional will increasingly be interested in “tailor-made” information, adapted to their specific needs. Large news clippings and diverse sources of information are not efficient in a work environment and reduce the productivity of this professional.
In this customized base, this buyer will need both data that supports him in his day-to-day decision-making, as well as information that allows him to evolve as a professional.
In the context of supplies, market analyses of your product groups, dashboards with prices and data that require continuous monitoring, information on competitors and suppliers. For the medium and long-term bias, new technologies, R&D, open innovation and sustainability.
This buyer will also require information to carry out their activities, such as analysis models and tools, best practices, processes and methodologies.
In a broader context of the profession, he will demand information about megatrends, the evolution of companies and business models, trends about the profession and its level of employability, as well as courses aimed at its development.