Purchasing management may be the most did not fully leverage the commercial area, but it from executives to the position of decision-making the transition will go through a long process of natural fission.
Procurement into the decision-making problems faced in China
Wen / Liu Richard
Procurement management in the financial, strategic and operational aspects of a key role to play, yes company's short-and long-term performance of the main driving force, procurement management may be China's most fully leverage Wei Ling Yu role of the business.
In the area of finance, procurement and supply management can be a company to maximize the performance of the most effective way. Procurement of materials and services for a cost of 60% of the total cost structure of a typical manufacturing enterprise, if the profit margin is 10% of sales, procurement can bring savings of 5% profit growth of 30%; However, to achieve the same results will need to increase sales 30%. In fact, the difficulties faced by procurement and supply management company the best hope in achieving a major breakthrough performance, even in the selected range of products to reduce 30-40% of the cost.
In the strategy, procurement is to obtain the export market, as well as in the international market to achieve sales and profitability a key driver of sustainable growth.
Finally, at the operational level, the procurement activities to achieve the perfect operation of the main attributed factor. Depend on the performance level of the supply base and supplier and buyer relationship, continuous innovation to provide customers with high quality products to achieve a high degree of delivery reliability, and control related budgets.
Bipolar model
The basis of sustainable development, procurement activities in the global competition plays an important role. Western world (USA, Europe) and Japanese companies have long realized the strategic importance of procurement management. However, they appeared in the issue of procurement polarization, resulting in two different procurement concept.
American / European model in this was identified as "market driven" model, its essence is dependent on the Shang in the global supply market competitiveness, many large industrial companies in the supply within the Shang Xuan Ze. Western buyers are skilled to carry out rigorous discipline based on the facts and tender, the company aims to select the most appropriate development and production requirements of the material suppliers. Very typical situation is, buyers often have regular procurement activities, challenges supply business situation, re-combination of traditional suppliers, hope the material He services procurement activities to achieve double-digit cost savings. Western buyers not hesitate to change the supply base, active use of the world economy is producing the structural advantages. The past five years, many large Western companies in China to open an international procurement center, why they want to re-supply base, using competitive cost structure with the perfect example. Of course, this can not be said price is the only selection criteria for Western companies, in fact, they are equal attention to all factors in procurement, and even more focus on quality, delivery reliability and product innovation. But it was also stated that if the cost / price have a significant breakthrough in the quality of services and products without any derogation of the case, the Western companies willing to take risks and be ready for new suppliers who bet. Buyer supplier relations with the West to maintain the appropriate distance, because they themselves do not identify this relationship is the medium-term or long-term.
Japanese companies use different purchasing patterns, known as the "relationship" model, the absolute focus on buyers and suppliers to establish long-term relationship between. According to this known as "Keiretsu" procurement methods, or sometimes in bilateral commercial reliance on a small part of the stock exchange based on the cross, the Japanese company has established a very close relationship between the supply base network. They are usually not tender, not by the adoption of new potential suppliers to challenge the practice of the existing suppliers. On the contrary, they are digging through existing suppliers to achieve the savings potential of the procurement cost. Their long-term suppliers and the manufacturing, engineering and quality departments with multi-functional team formed to continuously improve supply chain performance to achieve the purpose. In order to save costs and continuously improve product quality, these groups can be the basis for sustainable development re-engineering the procurement process.
We do not compare the merits of these two models, a number of companies are now two modes of absorption benefits of establishing a procurement organization. In some product development process and supply chain in close connection with the procurement project, the relationship between buyers and suppliers is an important factor in creating sustainable value, and more use of Japanese models and a number of suppliers with long-term partnership-type relationship. In other types of procurement activities, some of the same companies and suppliers using the practice to maintain a certain distance, when the supply market, the emergence of new attractive price point, they did not hesitate to change suppliers. In reality, success depends on the company purchasing the "static" approach of flexibility and adaptability, using various means, to apply to supply the market with different complexities and dynamics.
Puzzles tactical and strategic
In our view, the Chinese company is at the crossroads of these two concepts. One hand, they attach importance to the interaction between people, the implementation of the procurement Shique opportunism; on the other hand is the value of value of trust and relationships, which can only trust and relationship between the long-term buyer - supplier relationships established, and therefore they are ideal to include the procurement culture and in Western and Japanese models and values. But until now, China-based companies in the procurement of very small progress.
On the one hand, they are the same as the Japanese company has established the relationship between Keiretsu-type network, but do not use those established relationships with their suppliers not to work together to improve the performance of the whole supply chain, to their mutual benefit. On the other hand, often too much emphasis on business relations with suppliers have to bargain, and often regardless of quality, delivery reliability, innovation and sexual defects. The lack of world-class in China has established procurement capacity of the capital and effort is understandable, and easily explained by the following factors.
The West / Japan and China in economic growth mode differences exist
Western power production and procurement capacity development is the product of slow growth of its economy. Early 70s of last century since the first oil crisis, Western countries have suffered low GNP (gross national product) growth of the bitter, and frequently face economic recession; Japan since the 90s of last century, has stood for 15 years at least zero growth economy, and even negative growth. In these very difficult economic conditions, only in all aspects of business operations to effectively increase productivity, be possible to achieve profits. For manufacturing companies, the procurement accounts for more than 50% of the cost structure, so by the company's senior management attention, in the past 20 years, procurement has been elevated to a professional level. In China, they found that the situation is completely different.
Decades of economic isolation from the outside world, China's industrial revolution began a strong, exponential growth in the domestic market and export market demand driven by China's industrial output value of the last 10 years achieved double-digit growth year after year. China's management did not feel the pressure to improve the value of procurement management is not surprising, because these growth is not achieved through the procurement management. Currently, most management is still to maintain a growth on the primary position, the company focus is on capacity building and product utility construction, procurement activities more remain at the tactical level, rather than strategic level. Interestingly, it is in the process of the pursuit of product availability, the management of major companies in China until recently to be attention to procurement management and the procurement activities to a strategic level. In the past few years, China's economy enjoyed exponential growth and the shortage of key supply markets in many sectors of the economy have become issues of concern, and prompted senior management to procurement management activities included in the company's top agenda.
Lack of procurement of technology transfer channels
Chinese companies to the West and Japan are strong partners in learning, technology transfer over the past 15 years, the speed is unprecedented.
However, in China, the procurement is still a lack of skills, an area more. The best way to purchase technology transfer may be by Western companies to achieve the confidence of the Chinese market, and these Western companies in China's supply market, the Chinese method of managing the supply relationship is not particularly understand. They may first need to learn how to Chinese partners in the local business, rather than teaching a new procurement management.
Prompted the company "release" difficulties in procurement activities
In the West, procurement through a very difficult time to get everyone's approval, was that with the marketing, finance, engineering and manufacturing and so on an equal footing, professional buyers gradually won the trust of the majority of managers. In the West, marketing manager, purchasing advertising, IT manager for the purchase of computer ... .... Not surprisingly, in China, the company uses a dedicated professional buyers release purchase management - including abandoned supplier selection and negotiation activities - is still considerable resistance. In addition, in Chinese history, procurement was a plant manager, general manager and control the area, they established a closer supplier relationships, and continued for many years. Require companies to these procurement responsibilities to the professional buyers and thus put the risk in the company, without regard to the relationship between the advantage has been established, which is China's managers are reluctant to have taken this step because professional procurement.
Market pressure is small, inadequate technology transfer, and release associated with the procurement responsibilities of cultural communication difficulties, the result is so far neither the establishment of specialized procurement department, the management did not want to take the outstanding procurement activities as a professional gambling chips . In China, the general lack of procurement professionals create a vicious circle: the buyer is not enough skills to Zhenzheng distinguish the nature of the procurement and use it to Chongfen show's success procurement activities on the value, the results only based on their own understanding of the procurement management, does not deny the role of procurement activities, nor to strengthen procurement management activities.This shows that companies are willing to begin to improve, the purchasing management there is still considerable room for improvement.
