Discussion Highlights: 2024 Purchasing Priorities

Two roundtables were conducted on this topic.  The roundtable theme was what purchasing leaders are hearing from top executives and plans to fulfill expectations.  APD shared a short presentation on results from the 2024 survey of manufacturing C-level executives.  Highlights of the roundtable discussions are summarized below. 

  • Director of Purchasing – North America for an automotive supplier shared that their organization has a global 2.5% cost savings goal on controllable spend.  Only cost savings are counted towards this goal, with the exception of recognition for coming under budget on capital projects.  They shared that had three focused initiatives last year: a supplier suggestion program, global market test, and clawing back temporary price increases granted.  The focus for 2024 will be on VAVE, with 12 people trained to conduct workshop with suppliers and tasked with running 3 each over the course of the year. 
  • VP of Supply Chain for an electrical products manufacturer shared their focus this year will be on direct materials cost savings.  They have developed very targeted metrics for this, including one for design-to-value, and mentioned that they will sometimes forego service to get better pricing.  They also do not credit for cost avoidance, except for capital projects coming in under budget.   
  • Direct of Strategic Sourcing and Procurement Transformation for a float glass manufacturer share that because they are privately owned, the purchasing teams’ focus is on value creation rather than cost savings.  For example, they work closely with the commercial team to support product mix optimization. 
  • Director of Strategic Sourcing for a Life Science company shared that they granted a lot of cost increases in the last 3 years and business leaders are expecting costs to be reset at pre-covid levels.  They feel executive leadership doesn’t understand sourcing and isn’t aware of challenges, so they are focusing on educating them on what’s needed to drive costs down.   
  • Director of Procurement for a liquid waste disposal company shared that they have a 2024 cost savings goal of $1M on a $120M spend.   They are new to the organization and found that it had been growing rapidly and didn’t have a mature purchasing organization.  They shared that supplier price increases have given them an opportunity to be a resource to stakeholders who didn’t have any experience fighting price increases.  They mentioned they are communicating a vision of purchasing in non-procurement terms and focusing on developing relationship and solving problems. 
  • Sr. VP of Supply Chain for a property services company shared their cost savings goal is $1M on $154M actionable spend.  They are consolidating supplier and identifying preferred vendors.  To manage leadership’s expectations, they are sharing metrics monthly and updating progress weekly with the C-suite.  One of the issues they are combatting is the “need it now” tendency that can result in buying from higher priced sources – they are clarifying lead times to understand if quick delivery is really needed. 
  • Director of Commodity Management – Indirect for an aerospace supplier shared that savings goals are assigned to purchasing based on Finance’s evaluation of commodity markets.  The savings goals are integrated into business operating budgets, so stakeholder engagement isn’t a problem.  However, some suppliers have been reluctant to change suppliers.