Buying vs Shopping Part II
Thank you everyone for all the comments on my first blog. It’s been a real gift for me to read your ideas and absorb your enthusiasm for good procurement practice. To continue our discussion on what the difference is between a professional buyer and a shopper, I’m going to focus on my favorite aspect of my job- data. Maybe it’s a sign of mental unbalance, but I love the super detective work we professional buyers do to gather data!
Shoppers always tell me they also love data. Here is some “data” that a typical shopper considers before making a sourcing decision:
- Lowest price
- Recommendations from friends
- Unconfirmed market intelligence a.k.a. “sales rep gossip”
- Hunches, guesses, and gut feelings
- The supplier rep who brings in the best cupcakes
- Magic 8 Ball, tarot cards, and horoscopes
I am just kidding on that last one. And FYI, I love cupcakes.
Unlike shoppers, professional buyers know what good data is and how to find it. To begin with, every manager should provide a budget to the chemical buyer to purchase a Chemical Info subscription. (Chemical Info. did not pay me to say that.) My experience with this tool has been very positive. Information provided by the DWCP is a proven efficient and accurate gateway to gathering the data I need to do my job well.
What kind of data does a buyer need? For purchasing API (Active Pharmaceutical Ingredients) for example, I suggest the following as a basic table of market and SRM (Supplier Relationship Management) metrics to begin with.
This basic information can be harvested with the use of the DWCP, a Request for Information (RFI) event, Dun and Bradstreet, the FDA.gov website, and internal SRM (Supplier Relationship Management) metrics. It would be nice if all sales reps would just put this information on the back of their business cards. But again, if collecting good data was easy, we’d be called shoppers instead of buyers!
A good buyer will use a basic table like this to craft a sourcing strategy. I may blog about the analysis procedure in the future. In many cases the next step in the process for a buyer is to harvest more data with a Request for Proposal (RFP) event. The key components of a good RFP include a supplier profile, material manufacturing and quality profile, the business proposal which would include supply chain efficiencies such as JIT or VMI, and the price and terms proposal. This information is the foundation for planning a data-driven supplier selection and negotiations strategy.
A frustrating reality for professional buyers is that shoppers without good data can occasionally get lucky enough to achieve a successful project and impress management. Another frustration for buyers is the fact that we can never achieve the condition of perfect information. For buyers, the magnitude of our success on each project is directly proportional to the effort we invest into acquiring as much good data as possible. One of the best moments in my buying career was the feeling I got after reading feedback comment in my annual review from a manager that said, “I bet Penny looked under every rock on the planet to get this (project) done.”