Basics of Purchasing - Why Purchasing?
Summary
TLDRIn this engaging discussion, the host interviews Sana, a seasoned purchasing expert with 20 years at Young and a decade at Walmart. Sana shares her passion for the field, emphasizing the continuous potential for development in purchasing. She highlights the evolution from operational to strategic purchasing, focusing on total cost of ownership and risk management. Sana stresses the importance of education, noting a shift towards hiring educated professionals in purchasing. She illustrates how understanding purchasing's value can benefit various company roles, not just purchasers, and the significance of internal collaboration. The conversation underscores purchasing's critical role in business strategy and competitiveness.
Takeaways
- 🌟 Sanna has a rich background in purchasing, with 20 years at Young and 10 years at Walmart, highlighting her expertise in the field.
- 📚 Sanna's motivation in purchasing stems from the potential for development and the excitement of meeting new purchasing teams and their challenges.
- 🚀 Purchasing has evolved from an operational role to a strategic one, focusing not just on transactions but also on total costs, risk management, and creating value for customers.
- 💼 The education and development of purchasing professionals have become more important, with an increase in educated individuals in the field over the past decades.
- 🏢 There's a significant need for further education in purchasing, especially in smaller companies, to enhance competitiveness and professional development.
- 🌐 Sanna emphasizes the importance of internal collaboration, suggesting that understanding purchasing can benefit various departments, not just the purchasing team.
- 💡 Purchasing can bring value to a company by looking beyond immediate costs and considering the total cost of ownership, which includes all expenses related to the acquisition and use of a product.
- 🔍 The total cost of ownership is crucial for making informed decisions that affect the entire business, not just the purchasing department.
- 🛍️ Purchasing is not just about finding the best price; it's about understanding the full financial impact of business decisions, including make or buy decisions.
- 🌐 Sanna encourages cross-departmental communication and understanding, such as involving sales managers in purchasing discussions to align business strategies.
Q & A
What is the background of Sana, the guest speaker in the discussion?
-Sana is a teacher at Young and has been working there for 20 years. Prior to that, she worked at Walmart in various purchasing positions for 10 years.
How does Sana stay inspired and motivated in the field of purchasing?
-Sana finds inspiration in meeting new companies and purchasing teams, as she sees the potential for development in purchasing management and business development through purchasing.
What has changed in the field of purchasing over the years according to Sana?
-Purchasing has evolved from being an operational part of businesses to a more organized, managed, and strategic aspect. It now involves considering total costs, risk management, and creating value for customers.
Why is purchasing education still necessary despite the advancements in the field?
-Purchasing education remains necessary because there are still many professionals in the field without proper education, and companies, especially smaller ones, are increasingly hiring educated individuals to develop their purchasing capabilities.
How does Sana convince smaller companies of the value that purchasing can bring to their business?
-Sana educates and works with smaller companies to help them see the whole business as their playing ground, encouraging internal collaboration and a broader understanding of how purchasing can contribute to overall business success.
What is the significance of 'total cost of ownership' in purchasing?
-Total cost of ownership is significant because it shifts the focus from just the purchasing price to the entire cost structure, including costs associated with ownership, which helps in making more informed and strategic decisions.
How does understanding total cost of ownership impact business decisions?
-Understanding total cost of ownership helps in making strategic decisions such as the make or buy decision, which can set the stage for the purchasing department's success and the overall business's financial health.
What is the role of purchasing in creating value for customers?
-Purchasing plays a role in creating value for customers by collaborating with other departments like sales and R&D to understand market needs and offer products or services that meet those needs more effectively.
Why is it important for professionals in other departments to understand the value of purchasing?
-Understanding the value of purchasing is important for professionals in other departments because it fosters internal collaboration and allows them to work together more effectively to improve business processes and outcomes.
What advice does Sana give to those interested in pursuing a career in purchasing?
-Sana advises those interested in purchasing to pursue education in the field and to stay open to learning and development, as there is still a significant need for professionals with purchasing expertise.
Outlines
📚 Introduction to Purchasing and Its Importance
The video script begins with an introduction to a discussion on purchasing, featuring a conversation with a colleague named Sana. Sana is a teacher with 20 years of experience at Young and previously worked at Walmart in various purchasing roles. The host expresses interest in Sana's long-standing involvement in purchasing and seeks to understand what motivates her to stay inspired in the field. Sana shares her excitement about meeting new companies and the potential for development in purchasing, emphasizing the importance of enhancing both individual competence and business competitiveness.
🚀 Evolution and Education in the Purchasing Field
Sana reflects on the evolution of purchasing over the past decade, noting the transition from an operational to a strategic function within businesses. She discusses the increasing importance of education in purchasing, highlighting the need for further education even after 30 years of experience in the field. Sana observes a disparity between large corporations with advanced purchasing management and smaller companies that still operate on a more basic level. She emphasizes the potential for growth and the necessity for professionals to drive competitiveness at both the company and national levels.
💡 The Value of Purchasing and Total Cost of Ownership
The conversation shifts to the value that purchasing can bring to a company. Sana uses her experience educating a Finnish company to illustrate how purchasing education can lead to a broader business perspective, encouraging collaboration across departments. She stresses the importance of understanding the total cost of ownership, moving beyond just the purchase price to consider the full scope of costs associated with a product or service. Sana argues that this holistic approach is crucial for the success of the business and that it should be central to the decision-making process in organizations.
Mindmap
Keywords
💡Purchasing
💡Strategic Purchasing
💡Total Cost of Ownership (TCO)
💡Global Sourcing
💡Competence Development
💡Risk Management
💡Value Creation
💡Internal Collaboration
💡Education and Training
💡Operational Purchasing
💡Supply Chain
Highlights
Introduction of the discussion topic: the importance of purchasing in business.
Sama's introduction: a teacher with 20 years at Young and prior experience at Walmart.
Sama's motivation in purchasing: the potential for development and meeting new teams.
The evolution of purchasing from an operational to a strategic business function.
The increasing education and professionalism in the field of purchasing.
The ongoing need for purchasing education despite advancements.
The variety in purchasing practices across different company sizes.
The potential for educated purchasing professionals to impact business competitiveness.
Sama's experience educating a Finnish company to expand their purchasing team's perspective.
The importance of internal collaboration for business development.
Encouragement for cross-departmental understanding of purchasing's value.
The concept of Total Cost of Ownership (TCO) and its significance in purchasing decisions.
The shift from focusing solely on price to considering the total cost of ownership.
The impact of make or buy decisions on the purchasing function and total cost of ownership.
The necessity of TCO in ensuring the success of the whole business.
Conclusion and appreciation for the discussion on the importance of purchasing.
Transcripts
hello everybody
i have today here uh with me my dear
colleague
sana and we're going to discuss some
topics
about purchasing and why we think it is
important
but i will let you introduce yourself
now
thank you very much it's nice to be here
um
so my name is sama and i'm teacher here
at young
i've been working here at young already
for
20 years and before that i worked
at walmart in different purchasing
positions
for 10 years so that's briefly my
experience in
the field of purchase thanks anna very
very nice to have you here
when i listened and i know your
background you have
a long history already with purchasing
as you said you've been with young
for years already and you've been
working in
an industry as well but i know you've
been educating companies tens of
different companies here in finland for
example
how do you stay inspired about
purchasing what
is it that gives you keeps your
motivation
in this subject oh it's so nice you
asked because i never think about that
but yes i am inspired and i'm so excited
every time i meet a new company i
meet a new group of purchasing people
a global sourcing team at one company
etc
it's very inspiring it's exciting
and what made what
uh what happens there is that uh in
purchasing there is a lot of potential
always
uh to develop that's what i've seen
during the last two decades in the
education field that
whichever company i enter there is
always
room for development when when it comes
to
purchasing purchasing management and
developing
business through purchasing and it's
always a question of
uh developing uh competence
uh of the individuals the workers there
but it's also the question of
developing the business itself so that
it's not only individuals
nor only business but it's the
combination
how to make uh how to increase the
competence of people
and then it creates competitiveness for
the business and that's
the that's just amazing still today
still today after developing and
developing and i'm sure there has been a
lot of
development in the area what would you
say has happened
over the years now how has purchasing
changed
yeah that's a that's very interesting
actually when
when you look back for five years
10 years in the field of purchasing a
lot has happened
companies used to
[Music]
have purchasing as an operational part
of business and
company so it was very common that
someone just started to make purchases
just started to order things for the
factory
just started to find suppliers
and it was very operational we just had
to buy something
and that's how it started and there were
one or two people who were
maybe doing it for full time or not but
then uh
year after year uh purchasing has become
more and more
organized and more and more managed
holistically and it's becoming more and
more
part of the business in a strategic
sense so that it's not only the
operations the transactions
but it's more about really
[Music]
thinking about the total costs thinking
about the
risk management thinking about how to
create value for the customers and their
customers so it's
it's becoming more and more wide in the
sense of
what we are interested in and what kind
of effort we are going to put there
and at the same time the people who are
actually doing the purchasing
in companies they have become more and
more educated
so they really have an education for
that
10 20 years ago you really didn't meet
people who were educated in purchasing
even they were working there full-time
yes a lot has changed but is there still
potential for
for further education so do we need to
have purchasing education still
definitely that's that's why i'm so
lucky that i
somehow chose
purchasing already 30 years ago oh my
god
because still yes there is still need
for
further education because we still have
a lot of people there
already in working life without the
proper education for this topic
and at the same time what's happening in
the companies we have a
huge variety of situations in the
companies
in some big companies for example
connect corporation
in finland they are very advanced
they're very advanced
in in purchasing management and in their
global sourcing teams etc
but then when i enter any um mid-sized
company
small or mid-sized company in finland
it's
very very very operational still today
and and what is what happens right now
is that more and more companies smaller
companies also
are hiring educated people for
to develop their purchasing so there is
a huge
possibility still in the markets to make
companies more competitive
and in that sense also to create
competitiveness for the whole
nationally and european level so it's
there is a huge potential still
and a huge need of professionals
as well so it's definitely
it's needed so when you have been
developing those
small and mediocre companies how do you
convince them that
purchasing can bring value so what is
the value purchasing can actually
bring for a company yeah well
for example i um i educated
mehra finnish company a couple couple of
years ago
maybe two years ago and they had a small
purchasing team in the company and
when we worked together
through the education and development
project
what happened there is that yes they
were professional
already but typically in a smaller
company
they start to see the whole business
as their playing ground normally in a
smaller
company they there tend to be the idea
that okay we need to develop purchasing
we need to develop our purchasing
process
we need to develop a better purchasing
information system or or we need to find
better suppliers which is of course
definitely that's also required
but what happens through the education
in many cases is that
they start to see the whole business
okay let's talk to our r d
department what can we do together let's
do let's invite our business manager
here
for example at mera we studied one of
the
education days so that we brought in the
sales manager
to start the day and just to tell what's
the business like today just today
what's the next
six months what's happening there in the
sales markets so that we really
understand the business
the whole business not just the
purchasing and the supplier market
and that's i think one one of the great
potential is there how to how can we
actually help our business
to create more sales by the end of the
day
yeah yeah so not so for for everyone
who's listening here is that you don't
maybe necessarily have to be a purchaser
but if you have the know-how and
understanding of what value purchasing
can bring for a company
no matter what your position is there is
a lot of potential to develop the
business in overall
exactly and and i encourage so that if
if one of the final one of you will be
for example working in sales definitely
get to know the purchasing people
because they they can help you
they can really help you to create
something more for the customer
and then you can proudly present okay we
have this kind of offering
of course purchasing found the guy there
in the supply market so
it's really a lot of internal
collaboration as well
hey another topic that is related to
everything that we've discussed already
money talks as we all know so a term
total cost of
ownership why is it important uh when we
are
discussing about purchasing so important
because it's
you earlier asked what has changed uh
that luckily this has changed uh
10 years ago purchasing was
hugely concentrating on price
so we were talking about prices humid
prices
maybe transportation prices but we
didn't really bother about the total
cost of ownership
but now that's also actually the same
thing happens here when we talk about
the costs so that we
start to see the whole picture the
bigger picture
you know so so that in purchasing we're
not only interested in purchasing price
and purchasing costs
but we when we start to see the whole
business and we start to help
our business to succeed
then we start to see the whole cost
structure as well
and then we start to see the whole
um uh our our own
business figures whatever it's
sales or it's purchasing its labor cost
so we we start to get interested in the
big picture
because then we can actually start to
optimize the things we do actually in
purchase
and one important question there is that
when we start to see the bigger picture
in in terms of total cost of ownership
we also get interested in
other decisions which are made already
before
purchasing because when we are running a
business
there's always the question that okay
this is what we are selling out
which part we are doing ourselves
and what is bought outside and that is
this make or buy decision is one of the
key
decisions in the company where we
actually set
some marks for the purchasing people if
that
is a wise decision then we have a nice
play
ground for the purchasing but if that
decision is not
good in terms of total cost of ownership
for example then it's it's really
hard to correct the situation only
through purchasing so that total cost of
ownership it's
it's really really important for the in
order to make the
whole business successful it sounds like
it should be in the heart of everything
and in the decisions of what companies
and organizations are doing
exactly yeah thank you son so much for
for a valuable
input for for this discussion and i'm
sure our
our listeners are now more convinced
than ever
about the importance of the chasing
thanks once again sana for being here
today
thank you very much and take care and
good luck with the studies
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