Discussion Highlights: 2023 Purchasing Priorities

1.24.2023 Executive Roundtable

The roundtable theme was how companies are returning to a more strategic focus and setting purchasing priorities for 2023 to move beyond ensuring supply. A question came from the group on how companies are handing work-from-home and several participants shared their company’s approach. Highlights of the roundtable discussion are summarized below:

• President of an automotive electronics supplier shared that they moved some manufacturing operations from Florida to Mexico in 2022 and with the help of the shelter company JAVID (www.javidllc.com). For 2023, they plan to focus on improving their management of end-of-life inventory to better handle unreliable customer forecasting; solutions may include switching from ocean freight to air freight. They also shared that they are adopting a flexible in-office work schedule to allow most people to work from home on Mondays and Fridays (some are able to work 100% remote). This is to balance the need for continuing a company culture with the risk of losing people who are able to get jobs that are located closer to home or accommodate work from home.

• Vice President of Purchasing for an RV manufacturer shared that they developed new suppliers in 2022 to diversify the supply base (historically, 70% of suppliers have been located within 50 miles). They plan to focus on getting the best prices on purchased materials in 2023 after a prolonged period of supply disruptions and price increases. IN addition, their 5 Purchasing Directors are going through a leadership program. They also shared that they developed a training division with the purchasing group to onboard new hires with 3-6 weeks of training mixed with increasing work assignments that has helped with retention.

• Vice President of North American Purchasing for an automotive sunroof supplier shared that they implemented a supply network optimization program (SNOP) to localize their supply base in 2022. In addition, they started “fading out” suppliers who were not willing to “share the pain” on economics during time of rising costs. In 2023, they will continue the SNOP while launching three strategic initiatives:
  1. Putting the entire purchasing team, including executives, through a cost management training program with an emphasis on standardizing processes
  2. Meeting with suppliers to emphasize expectations going forward, with a focus on returning to a partnership mindset and shifting leverage back from suppliers
  3. Launching a culture change process focusing on retention through values and behaviors

• Managing Director of Indirect Procurement for a boat and motor manufacturer shared that in 2022, they focused on giving the purchasing team strategic work opportunities due to fatigue from prolonged tactical purchasing needs. This included changing the management structure, moving people to new position, and bringing new people in. They plan a 2023 strategic training initiative, putting all buyers through a negotiations training and building category knowledge. The share that manufacturing roles required to work 100% in-office but get financial incentives, while other staff decide as a team to work either 100% remote or 3 days/week in-office.

• VP of Operations and Supply Chain at a electronic toy manufacturer share that they are planning strategic initiatives for nearshoring and training in 2023. Nearshoring includes both expanding the western hemisphere supply base and insourcing some operations. Training will include coursework through APICS as well as strategic sourcing initiatives. In addition, they are sponsoring one person through Six Sigma green belt certification. They shared that they have evolved requiring individuals to work 3 days/week in office, to 4 days/week, and are now moving to 100% in-office with some managerial discretion.

• Group Vice President of Supply Chain for a packaging manufacturer shared that they rolled out an online training initiative in 2022, developed with a University, focusing on 100-level courses. In 2023, they will add 200-level courses based on participant feedback on the initial launch. In 2023, they are implementing supply chain planning and material flow integration across platforms (groups of divisions) and begin some integration across all platforms. They shared that their company requires 100% in-office work until individuals understand the business, then provide flexibility to work 1 day/week from home.

• General Plant Manager for an automotive engine component supplier shared that in 2022, all manufacturing staff were required to work 100% in-office and received a bonus, while others had flexibility to work from home. They stated this approach helped with retention of. In 2023, they are requiring everyone to work in-office.