Capable Human Resources

The key to the success of any company is the quality of its employees. This is certainly true for purchasing. Exhibit 1.5 identifies, from focus group research, the various kinds of knowledge and skills demanded of today’s supply chain professional. The knowledge and skills that purchasing and supply chain professionals require are different from just a few years ago. Research indicated that the top five knowledge areas for purchasers in 2010 would be (1) supplier relationship management, (2) total cost analysis, (3) purchasing strategies, (4) supplier analysis, and (5) competitive market analysis.

Effective supply chain management requires close collaboration with suppliers as well as internal coordination with engineering, procurement, logistics, customers, and marketing to coordinate activities and material flows across the supply chain. These relationships with key suppliers become the basis for purchasing strategies. The Babson College Good Practice Example illustrates how suppliers and the college benefit from developing these strong ties. Developing strong ties often requires purchasers to take a more entrepreneurial approach to running their business.

Cost management has become an integral part of purchasing and supply chain management. With an inability to raise prices to customers, cost management becomes essential to longer-term success. Purchasing specialists at a major U.S. chemical company, for example, evaluate major supply decisions using total cost models with data provided by suppliers and other sources. Another company requires its teams to identify upstream cost drivers past immediate suppliers, which the teams then target for improvement. These analyses of total cost are then imposed upon the market situation and analysis of supplier capabilities to arrive at an overall purchasing strategy.

Gaining access to the right skills will require a sound human resources strategy that includes internal development of high-potential individuals, recruiting talent from other functional groups or companies, and hiring promising college graduates. This occurs to satisfy one primary objective—ensuring that qualified participants are available to support purchasing and supply chain requirements.

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