Deadly Mistake #2:

Establishing Purchasing Value for Management & Customers

Time to write your regular status report for your manager; two weeks went by so fast!

Do you cringe?

Do you hate doing it, or do you delight in having the opportunity to capture and communicate the great, tangible value you’ve added to the company since your last status report?

It’s not just you.  Purchasing professionals hate doing status reports.

The reason is that we get sucked into putting out so many fires on a daily basis that don’t merit going on the status report.

Our job is to deliver total cost savings.  How did putting out 50 fires and responding to 1,000 emails in the last 2 weeks contribute to that?

The problem is that putting out a fire is not an accomplishment, and neither is responding to a seemingly endless parade of voicemails, emails, texts, and people knocking on our cubicle doors.

Now, if you had a job with nothing to do all day, like the aviation security personnel that just watch people leave the airport security area (which gets my vote for the most boring job on the planet), it would be understandable if you drew a blank when you went to write your status report.

That’s not what’s happening though!

We are running around frantically all day and feeling highly productive yet still not knowing what to write.   Sometimes we have to re-write something that is still in the works using different words so it sounds new!

Why is this happening?  Is it bad memory?  Poor writing skills?  Poor selling skills?  The answer is none of these.  You have to get to the root cause.

Get to the Root Cause

When I was diagnosed with ongoing anemia (low blood iron), my doctor made me do all kinds of tests – the kind that my dad promised me would never happen until I was eligible for social security.

In the end, after all those procedures, they still couldn’t figure out why my blood iron was low.

My doctor told me to take massive doses of iron for 3 months, and then we would test my blood again to see where the iron levels were at.  My response was “well, guess what, my blood iron will show perfect, but we won’t have solved the problem!”

He knew I had caught him addressing a symptom instead of finding the root cause, but he was out of ideas.

A week later, he called me at home, clearly exasperated, and asked if I was donating blood.  I told him that I was, once every two months.  He laughed and said “ I’ve been doing all sorts of tests to find out where your blood is going, and you are voluntarily giving it away!!”

Sure enough, when I stopped donating blood, I was no longer anemic.  The moral of the story is to never attack the symptoms of a problem, because then the problem itself never actually goes away.

Back to why you are spinning your wheels trying to establish value for customers and internal management.  Your status report and how you are spending your time are symptoms of the problem.

Your Days Are Getting Sucked Up By Unplanned Activities!

First off, if you are like 99.9% of purchasing professionals out there, your entire days are getting sucked up by unplanned activities.

If you don’t believe me, find a day in your calendar with a minimum of six free hours and block out that time completely and schedule six hours worth of strategic deliverables you plan to get done during that time.  At the end of the day, do the math on what was supposed to happen and what really happened.

You would have had more time to work on those strategic things if you were watching quintuplets instead of reacting to the fires, requests, urgent needs, etc that came up all day long instead.

We’re still not at root cause, but we’re on our way.  In future follow-ups, we’re going to discuss how and why we get 75%+ of our days tied up in non-value added activities.

The other issue then is how we capture the results for the things we actually do find the time to accomplish.

In all my years in this business, I’ve yet to find just ONE purchasing professional that I thought was effectively capturing their value add – and I’m just talking about accurately and completely capturing cost savings!

Most purchasing professionals don’t recognize all indirect/soft cost savings opportunities or they don’t know how to capture their value even when they do.

How do they deal with this challenge?  By either not reporting or under-reporting them!

What a career killer. The same goes for cost avoidance.  The only thing I’ve found that purchasing professionals consistently track and report is direct cost savings, and there are still some missing pieces there.

Back to root cause.  Why is this the case with savings reportings?  There are multiple issues involved.

Weak Internal Training & Reporting to Unrelated Function

One is that most companies have very weak internal training for purchasing personnel, and therefore the knowledge level is less than what it should be.

Another problem is that, even when the purchasing professional has good recognition of such opportunities, often their management chain does not.

Almost always, purchasing eventually reports into some obscure and unrelated function, such as operations, finance, accounting, manufacturing, and sometimes even into the customer – talk about a conflict of interest!

Try explaining soft cost savings and cost avoidance to those folks.  Good luck with that.  It’s like trying to explain how whales and dolphins used to be land mammals right after a Sunday sermon; it may be true, but people will still think you’re crazy.

So guess what happens?

Groups outside of purchasing and the organization or organizations that purchasing eventually reports into typically do not accept anything other than direct cost savings.  Even if they let you roll it up to them, at some point, indirect and avoidance savings information end up ignored completely.

They just don’t get it.   If you don’t believe me, try and find a shareholder’s report from any public company that talks about indirect or avoidance savings achieved.  This information just stops getting rolled up at some point.

Wouldn’t you love to hear the senior management conversation on this topic: “Let me get this straight, purchasing is saving us all this money but there’s no money to show for it?  How come we don’t have all these savings left over in our budget?  Where’d they go?” 

Can you imagine trying to argue with this logic?  It’s just too much to bear.

No wonder purchasing professionals have a hard time establishing their value for customers and senior management.

There is a way out of all this though, and I have managed this transformation both personally and helped others do it as well.  I’ll show you exactly how you can do the same.  I’ve put all the pieces together for you in my new course, POWER PURCHASING PRO.

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