Business & Technology Nexus

Dave Stephens on technology and business trends

Procurement’s “Long Tail” – Tactical Buyers

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Service can be very important. I know a few friends who don’t shop at The Home Depot anymore. For them, the superior service they receive from the local Ace Hardware is more important. They are “sourcing for best value” – placing a premium on their time. Which begs an important question – whose efficiency should be maximized in a Procurement implementation? The central buying organization’s -or- the business units they serve?

With that kind of a setup, I’m sure it’s clear I’m a fan of optimizing Procurement “services” for the convenience of business units. And it’s a tough job. The variety of “you’ve got to be kidding me” types of goods and services each business unit calls on Procurement to help with can be daunting.

But with new systems, tactical buyers can be, well, pretty darn strategic. Instead of pushing paper in Bangalore, they can work efficiently with business units in Baltimore, and add value along the way. That’s not a knock on tactical buyers working from India – the talent of the resources in India is truly amazing. But it is a knock on tactical buyers working from India for a largely US-based company. Why? #1 the 12 1/2 hour time difference almost guarantees a day’s delay for each interaction. #2, if you solve #1 by having your tactical buyers work the night shift you are really asking for trouble. And #3, why on Earth do you need 20 people in India to process requisitions – what is the root cause for this kind of labor need? And how could they possibly ever add value in your local markets?

Tactical buyers were “invented” before systems existed. Their job was to literally push paper. If your organization is still pushing paper, albeit in eletronic fasion, you’ve got the wrong system. Paper-pushing, for companies with decent solutions in place (and I know of at least 3 solutions with some market share that don’t qualify!) just doesn’t need to happen anymore. Transaction automation can handle 90+% of the workload.

These lucky companies, with good tools already in place, can take their tactical buyers and use them for value-add with the business. More than figuratively, these buyers are your ambassadors; the service you provide sets the business’ impression for your organization.

So why is “onshoring” Tactical Buyers a Procurement “Long Tail” concept? Well, leading systems and technology are enabling tactical buyers to spend more time on the value add, and less worrying about the electronic paper pushing. As a result, the Procurement organization, for a very reasonable labor cost, can serve up great transaction support across a more and more diverse range of goods and services. Instead of focusing tactical buyer efforts on the “mass market” (in this case aggregating requisitions, fixing them, grouping them, and pushing into Purchase Orders) tactical buyers can spread their wings and grow into some of the most strategic resources you have, serving the “long tail” of specialty categories that really, truly, help a business operate effectively.

Great execution is more than a tactic – it’s how you win. So, while this recommendation is controversial, do consider it. Imagine serving up great tactical buying support for business units through local resources. You’ll spend more on your labor costs than if you offshored the work. But the business may value your work more as well.

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Written by Dave Stephens

04/10/06 7:16 AM at 7:16 am

Posted in Opinion

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