How can you strengthen your purchasing department’s knowledge of the company’s needs and internal operations?

The purchasing department is a cross-functional structure within the company. As such, buyers must know not only the suppliers and the market, but also all of the company’s internal players, referred to as internal customers.

The “internal customer” culture

Historically, until around the 2000s, purchasing departments were found in: large industrial companies, for their direct and strategic purchases (purchases required for mass production), and mainly for the purchase of equipment.

Today, purchasing departments are also able to address the challenges of smaller organisations such as SMEs and mid-sized companies, in the service sector as well as in the public domain, for so-called indirect purchases (outside production) and for service or intellectual services. It is no longer a single profession of “supplier management”, but multiple professions aimed at optimising costs across the company as a whole.

A major shift in mindset must therefore take place within purchasing departments in order to bring the maximum added value to the company. Buyers must thus consider the company’s other departments as their internal customers, and do everything possible to master “customer satisfaction”, in terms of prices, procedures, and responsiveness alike, and to be a trusted contact who must, above all, know their customers well. This is a genuine culture to be developed within the company itself.

What should you know about your internal customers?

First of all, you must identify ALL the internal customers likely to call on the purchasing department. For direct purchases (purchases of materials linked to the company’s production), it is important to know all the departments that will use these products, in order to find different possible sources of optimisation: on costs (recurring or non-recurring), but also on innovation or processes (flexibility, responsiveness, storage, etc.). For indirect purchases (supplies, various equipment, etc.), the task of identifying all the players can be lengthy, but will be necessary to achieve genuine optimisation of overall costs. You then obtain a map of the contacts for each of the purchasing categories and families.

The objectives, constraints, and operation of your internal customers

Fundamentally, Purchasing is called upon to create value along 5 priority areas:

• Cost optimisation:
total cost of acquisition impacting the financial margin

• Optimisation of business and innovation:
revenue and/or gross margin, finding the right partner

• Optimisation of processes and productivity:
Quality, Efficiency

• Optimisation of flexibility and speed:
Project, Supply, etc.

• Risk management:
no disruption, no loss, regulatory compliance

The internal customers (including management) will have expectations on each of these areas, but with different levels of priority and different objectives depending on the customer.

To satisfy your internal customers, you need to know their objectives and constraints: you will thus be able to negotiate with suppliers in a more relevant and optimal way. By contributing to your customers achieving their objectives as effectively as possible and by integrating their constraints and needs into your own, you contribute doubly to increasing the company’s financial results, and you make internal relationships easier. You also gain a great deal of recognition and respect.

The buyer’s daily work is also made easier if the internal customer buys into the purchasing approach (obtaining information to draw up the specifications, availability to validate a product or service, goodwill in handling supplier incidents, etc.).

It is useful to ask all of your contacts for feedback after a project, without fearing negative responses, both to be part of an improvement process and to have the opportunity to hear positive feedback!

It is these good practices that will make your projects attractive, enable you to reach your objectives, and, dare we say it, a rich and constructive professional life.

We can thus see that the optimal operation of a purchasing department will rely on a good knowledge of its internal customers in order to propose relevant improvements and work collaboratively on improving overall costs.