Two roundtables were conducted on this topic. The roundtable theme was how purchasing leaders are setting priorities for their team and developing skills for a successful 2024. Highlights of the roundtable discussions are summarized below.
- Director of Strategic Sourcing for a plumbing products manufacturer shared that their priorities for 2024 are both cost savings and risk mitigation. The purchasing team exceeded their cost savings goal of $8.5M in FY 2023 and are on track to deliver $15M for FY 2024 (on a $700M annual spend). They cited resins and corrugated packaging as two commodities they’ve been able to achieve substantial savings. They mentioned that building relationships with suppliers has been key to their cost savings success.
- Director of Procurement for a paper and packaging company shared that they are focusing on building strategic capabilities in the purchasing organization that has been purely tactical up until now. They are focusing on developing processes and building skills, and are beginning to add staff, including bringing technical people from the organization onto the purchasing team.
- Vice President of Strategic Procurement for a hatchery manufacturer shared their priorities for 2024:
- Quantifying KPIs for suppliers
- Treating suppliers as partners
- Monitoring China/Taiwan situation re: risk for electronics
- Negotiation skills training or the team
They also mentioned that they are gathering the global purchasing team periodically to share pin points and success stories, and are inviting suppliers to visit their factories to bring in ideas from outside the organization.
- Sr. Director of Procurement for a frozen foods manufacturer shared that their 2024 priorities are cost savings and cash management, as well as laying the groundwork for fulfilling client requirements for sustainability reporting. They plan to focus resins for cost savings, and are separating the source-to-contract role from the procure-to-pay role and aligning individuals with the right skill sets to be successful.
- Vice President of Procurement for a manufacturer of tank and trailer equipment shared their 2024 priorities are:
- Inventory management
- Updating human rights/child labor reporting processes (new Federal law)
- Skill building for the team
Specific activities for inventory management included updating min’s & max’s in the ERP system, doing more kitting, and working with engineering and sales to standardize products.
- Head of Procurement for Americas at an automotive chemicals supplier shared that their priorities for 2024 are:
- Optimizing logistics for their global spend
- Balancing long-term supplier development with optimizing costs on a monthly basis with raw materials
- Directory of Category Management for an automotive fluid routing systems supplier share that their 2024 priorities are:
- Consolidating and developing the supply base
- Standardizing category strategies globally
- Proactively monitoring anti-dumping tariff risks
They also shared that they have a robust savings roadmap for 2024.
- Director of Global Supply Management for a high tech glass company shared that priorities for 2024 are (1) understanding “hot zones” in the supply base that could constrain growth and (2) collaborating with engineering and product management to revise the cost structure in 2024 to better reflect the cost structure in 2019. They also shared that many in the purchasing team acquired skills sets by rising to the challenges in the past few years, and they are focusing skill development efforts on those that did not. While discussing cost savings vs. cost avoidance, they acknowledged that cost avoidance was more the focus in recent years (post-covid), and they met with Finance to convey the impact of cost avoidance achievements.
- Director Indirect Sourcing at a windows and doors manufacturer shared that their priority for 2024 is investing in procurement technology, specifically P-to-P, data analytics, and RPA (Robotic Process Automation). They’ve found at previous companies that RPA is extremely helpful for removing administrative tasks that purchasing teams are burdened with. They expect skill development efforts will be focused on the new technology as well as soft skills.
- Vice President of Purchasing for an automotive and truck driveline components supplier shared that their priorities for 2024 are (1) cost reduction, (2) localization, (3) flexibility to more efficiently meet the needs of customers who need highly engineered, single application components. They commented that people have come to rely on email communications in the past few years, and plan to promote more cooperation with suppliers by encouraging site visits and phone calls. They also shared that they have been able to manage executive expectations for cost savings by making savings opportunities visible and rejecting unrealistic cost savings targets.
- Managing Director of Indirect Procurement for a recreational marine products manufacturer shared that their market has softened since late Q3 2023 and is expected to rebound by Q3 2024, requiring a focus on cost management. Their priorities for 2024 are:
- Cost reduction – they mentioned they were able to maintain a cost savings pipeling during the covid years
- Forging supplier synergies with recent acquisitions
- Putting controls in place for indirect spend – they mentioned specifically rogue travel & entertainment spend and bringing spend transparency to VMI items
- Rationalizing usage and bringing visibility to cost increases for subscriptions and licenses
They also shared that they are investing time and energy into building relationships with strategic suppliers and are moving people on their team to match skill sets. They have been able to manage executive expectations for cost savings by informing leadership early in the year of their savings pipeline and engaging them to explain why and why not specific things can be achieved.
- Vice President of Global Strategic Sourcing for a medical device manufacturer share that their main priority for 2024 is cost savings. They mentioned three specific ongoing efforts:
- Finding duel sources – not always possible due to the highly regulated products they produce, but savings are significant when they are successful
- Cutting distribution – they have grown large enough to supply directly to many of their customers
- Consolidating the resin buy for their parts suppliers – they buy the resins and have them shipped to the suppliers
They also shared that they are moving to a centralized corporate purchasing approach since their purchasing function has been siloed at manufacturing sites. They have been able to manage executive expectations for cost savings by briefing leadership on the FRED commodity price changes vs. their cost increases.
- Vice President of Global Supply Chain and Operations for construction equipment manufacturer shared that business leadership is expecting them to unwind the cost increases of recent years and get the volume/cost mix back to 2018 levels. Other things shared:
- The organization lost the thread on a savings pipeline, and they’ve begun the process of building it back up
- They’ve found the it helpful to present cost savings separate from cost avoidance to avoid push-back from Finance
- They have grown by acquisition and are very siloed, with 7 disconnected ERP systems in the company – they are doing a category spend analysis with a 3rd party
- They are building a centralized sourcing process for both direct and indirect, although they are being challenged by leadership that is used to being siloed and has to be sold on the benefits of centralization
- They are instituting an SIOP process to bring visibility to demand streams and capacity plans
- They are developing a risk map to proactively identify small suppliers that may cease operations upon retirement
- Supply Chain Director of a firefighting airplane provider shared that they have been at the company for three months, and are in the process of reorganizing the team and processes to become more strategic buyers. The team is currently siloed regionally and they have many single sourced items. They plan to develop Robust KPIs in 2024 and focus on aggressive savings next year.