Key Skill Sets for the Purchasing Manager of the Future Robert B Handfield, Ph.D Bank of America University Distinguished Professor of SCM Director, Supply Chain Resource Consortium College of Management North Carolina State University (919/ 515 4674); robert_handfield@ncsu.edu Larry Giunipero, Ph.D Professor of Supply Management Florida State University 89th Annual International Supply Management Conference, April 2004 Abstract: The objective of this study was to ascertain the state of purchasing/supply education and training as it currently exists and forecast what changes are coming in the next five years This includes the perceived needs for training, the types of training being pursued by Purchasing/Supply Management personnel and the contexts within which training is planned and delivered The results of the study suggest that the pressure to reduce costs across industries is increasing In response, however, purchasing executives will seek managers who possess skills in management of supplier relationships, improved communication and presentation skills, knowledge of ethics, and ability to effectively manage the end to end supply chain through improved business acumen and an understanding of the “big picture” from a strategic perspective Purchasing Education and Training (PET) are vital to the success of the organization and to the survival and growth of the profession Since the completion of the previous PET study in 1993 there have been dramatic impacts upon and changes within the field of purchasing/supply management Examples, but not limited to, are: 1) changing nature of supplier relationships and alliances; 2) the growth and use of the Internet to facilitate eProcurement; 3) significant reductions in purchasing staffs; 4) focus on strategic goals related to cost/value; 5) the evolution of supply chain management as an integrated competitive business strategy, and the contribution of purchasing to this strategy; 6) a shift from basic purchasing to more strategic supply management There is also increasing anecdotal evidence that many of the Chief Purchasing Officers (CPOs) of this decade are being assigned from outside the purchasing and supply field These appointments bring with them two strong implications: a) senior management want different things from the purchasing/supply management groups than they perceive would be obtained by promoting from within, and b) these new people appear to be appointed with short term employment contracts/agreements and have defined missions for change that must be accomplished in a defined period These conditions comprise the landscape within which traditional purchasing and supply personnel are operating in today It is appropriate to revisit the realm of purchasing education training in the new millennium in the context of this changing environment Research Approach: The insights found in this paper were taken from the participant’s feedback and discussion during four regional focus groups The top executives of 41 companies within the Boston, Phoenix, Raleigh, and Kansas City metropolitan areas attended the focus groups in 2002 The primary researchers conducted the focus groups The intent of these focus groups was to gain information about the type of training and education requirements that are needed for supply managers of the future, based upon what the represented companies believed to be the trends of purchasing and supply management Results: From the focus groups, a number of different trends came out during discussions Some of the findings included, but were not limited to: 1) the evolving character of supplier relationships and alliances, 2) the growth of the Internet to facilitate e -Procurement, 3) the use of strategic initiatives to further reduce cost and gain value, 4) greater integration of the procurement strategies with the competitive business strategy of the company, and 5) a transition from tactical purchasing to more strategic supply management The responses of the executi ves were combined into two major categories: ‘Problems, Trends, and Challenges’ and ‘Training Requirements’ Each category resulted in a number of notable areas The notable areas of each category were tabulated across all four focus groups to determine the Top 10 Trends and Top 10 Training Requirements of Purchasing and Supply Executives The following table shows the top responses for Future Trends: Top Problems, Trends, Challenges Total References Raleigh Phoenix Boston Kansas Strategic Relationship Management with Suppliers 53 22 10 15 Strategic Cost Reduction 49 15 11 17 Increasing Process Focus 34 14 Services-Based Suppliers – Need Experts 31 17 Larger Relationships With Customers and Sales Teams 28 8 Greater Focus on Supplier Selection 27 9 Global Purchasing 25 10 E-Procurement 23 7 More Industry -Specific Training and Professional Certifications 21 11 Big Picture (Strategic) Focus 27 5 10 From the focus groups, a number of different training requirements came out during discussions Some of the findings included, but were not limited to: 1) a need for more exposure to risk mitigation and legal issues within domestic and global environments, 2) better presentation and overall communication skills across employee levels, 3) an understanding of the concerns with using ERP systems, 4) new uses for e-Procurement, for example reverse auctioning online, and 5) business strategy skills The following table shows the top responses for training requirements: Top Training Requirements Total References Raleigh Phoenix Boston Kansas Effective Presentation SkillsNegotiating, Problem-Solving, and General Communications 33 19 Business Ethics 33 14 Global Diversity 27 13 5 Broader Business Skills 26 11 ERP Systems Implementation and Integration 26 6 Project Management 26 13 Leadership and Conflict Resolution 24 4 8 E-Procurement - Reverse Auctioning and Supply Market Research 22 13 2 Planning & Strategy 16 Legal Contract Writing and Risk Mitigation 12 0 Summary of Results Many things are changing in the world of purchasing It is maturing from its older, tactical ways to evaluating new ventures and strategic supplier selection using a big picture focus Suppliers will be assessed to a greater degree on their current capabilities and ability to fit into the company’s customized procurement strategy Relationship management will become even more important within the Supply managers role as greater input from suppliers will be required during the early cycles of product development Creativity of suppliers, a supplier’s willingness to invest resources to further company objectives, as well as overall ability of the supplier to reduce costs are a few of the determining factors for supplier selection of the future Supply management will not be just about bringing parts in anymore It will be about co-development with suppliers and sharing resources to reduce costs end-to-end Suppliers will be required to assess and align their current capabilities and be more of a team player in cost assessment to keep up with the pace of global competition Purchasing teams will leverage internal functions more and manage external relationships better to create the most competitive supply chain strategy for their enterprise, and ideally within their industry Leveraging internal functions will require a greater integration of sales and marketing, and more cross-functional and upper-management communication i n order to make business decisions that align with the corporate strategy The two primary drivers that will continue to drive the purchasing arm of companies are cycle time reduction and cost over time – which includes cost of poor quality At the end of the day, both are needed to get the products to market quicker These requirements will require a new set of skills for purchasing managers of the future Basic skills for understanding the elements of a company’s P&L, balance sheet, and cash flow will be essential, as well as being able to integrated this understanding into the decision making process in purchasing situations Associates are expected to be able to nail down the fundamental basics of business For example, associates must be able to answe r questions such as “What's going on in your business? Who are your competitors? What are they doing as well as the supply base that you're responsible for?” Corporations will also be looking for new hires that possess a strong knowledge within a particular industry in addition to basic knowledge of how the supply chain works Specialized knowledge for a particular industry will create better negotiations when communicating with suppliers Furthermore, the ideal candidate will have a number of certifications under her belt In contrast to hard skills, soft skills are also needed The ability to actively listen, communicate effectively, build teams, readily adapt, persuade people, sell the benefits of purchasing involvement, effective time management, and selling a common vision to internal customers are very important to enable the supply management profession to respond appropriately to changing client environments International awareness of business and cultural norms in foreign countries is also becoming more of a job requisite When it comes down to it, success relies on purchasers’ ability to come up with innovative ways of doing things and placing people in the top positions that will look for new ways to make a positive difference- whether it is saving on costs or inventing a new way for capitalizing on suppliers strengths