Purchasing Department Mentality

"Don't go to war with Procurement....it'll never end well"

I'll agree with this statement totally.
Because of it I've been un employed since april.

Good answer!

The engineer is expected to lay out the needs and specifications. Just as long the engineer does not leave anything out, usually by assumptions.

But that does not leave a vendor with a silver tongue tell procurement, that the product is just as good as...... or you don't need that because....... when this happens, procurement would usually bring engineering back into the picture.

The engineer has to state his case. Savings are usually up front. And the costs for buying cheaper items are incurred down the road, the difficulty can be in configuration changes, Difficulty in implementations, robust of the item, actually lack of.....

But fighting a system in place is difficult,

Procurement has the duty to be miserable / stingy / say no and one must apply some psychology / break them in.

option 1: decide what you need but get a quote for something twice as expensive and really go for it. Then you submit to them and except the cheaper item (win win situation)

Option 2 : Be prepared to loose once. Leave a clear paper trail of your objections and motivations. When trouble strikes you can then offer help for his predicament.

You need to keep a case/experience ready to argue with purchaser stating clear difference between quality and price.

Also sometime being an engineer we have to be stubborn for our demand and than only we may overcomethis situation and that is one of the reason that a pure technicle engineer can never be a MD or Chairmen of the company.

Hi..

I've too worked in large engineering companies both in the tech dept & purchasing depts. All high value purchase orders comprised of:

1. Technical specification sheets listing the operational & inspection requirements.
2. Data sheets listing material specs of all major components.
3. Quality assurance plan listing all test requirements & customer hold points.
4. Commercial conditions etc with formats of bank guarantees.

Of the above Sl no 1 to 3 used to be recieved before hand from the Technical department(s) and used to form part of the tender enquiry along with the commercial conditions. The tender enquires were invariably floated only to approved & qualified vendors. The bids recived were then made into a comparative statement which was commented upon by the originating engineer. No questions were there after raised as the final decision for award of work solely rested with the management and the purchasing head.

Interesting

Sounds like capital equipment purchasing for in-house needs, which justification write-ups were requireed

I think it does boil down to company policy.

I am a buyer and actually work very closely with the engineering dept.

I can only buy according to Source Control Document and Engineering Standards indicated on the drawing notes.

The more specific those are,the less room for interpretation. The more we work together, the better product we get. That makes everyone happy!!

Kbirdnest

Well said. You get a GA from me. If Engineering can't spell it out well enough, they shouldn't complain.

Last 15 years back happened this,When I asked purchase officer to procure some spares for company equipment. He told me where is the money. Can I bring my home. Today he is the production manager, he is commenting on purchase dept. this is mentality of purchase dept.

Hi...

Please don't make this a Purchase bashing site.

I was initially a shop in charge for many years and thereafter successfully headed the Materials dept of a large turbine manufacturing facility for 8-years. It was a 20man strong dept with 8-engineers. I never experienced any such hick ups. In-fact the owners exposed more trust on the material chaps for ensuring quality inputs in time. Even the customers were more inclined to believe the completion dates given by the Materials since critical components including castings, forgings had to be globally sourced.

The production guys had the advantage of having everything under one roof. Their shop was well equipped with CNC machines of high accuracy leading to hardly any rejections.

I don't believe he was bashing, just related his experience.

As far as your experience, you had good people in place that cared about the job. With procedures in place that worked well for your company.

And your comment.

Their shop was well equipped with CNC machines of high accuracy leading to hardly any rejections.

That again comes down to quality personnel.

phoenix911

Hi..

Their shop was well equipped with CNC machines of high accuracy leading to hardly any rejections

I'll elaborate...i wanted to say that the shop guys usually have everything under their command & control unlike the purchasing fella. Their job does not involve so much of co-ordination with outside agencies.

The Purchasing guy is always dependant on somebody else for his input. Firstly it is the engineer who should be clear what he needs, then the supplier who is neither a colleague nor a subordinate of the purchase guy. At times the suppliers can be very large companies and can't be pushed beyond a point. Sometimes the custom officer at the port can holdup a import for any reason. Last year, American Express Bank suddenly refused to honour LC documents for 5-container loads of material shipped by my supplier from Spain. Why? because the carrying vessel was a Iranian flag carrier! It was a CIF supply and the Spaniards felt nothing wrong as Iranian ships regularly call at their ports.

There are several such issues which purchasing has to tackle which do not get appreciation. What the users generally forget is that purchase offers service to the other departments. In my company the Head of purchase is a power of attorney holder from the Managing director and orders signed by him only are considered as legally binding on the company. This of course is resented by others.

Dealing with import/export can be a nightmare, a leading Pneumatic supplier SMC until they built a plant domestically, all parts came from Japan.

Your comment Head of purchasing is a power of attorney holder, Allot of people do not recognized that. And even if they did they also do not recognize that the responsibility also comes upon their shoulders.

I had a secretary who wanted this and basically through a fit when I decline, on reason I did not trust her, and my instincts on this was correct and justified.

Thank for elaborating on this

Your problem is universal.

I am the control systems lead in our company. We are in the power generation business.

The procurements dept told us , "leave it to them" and they can buy anything as long as we write a good specification.

The problem is, many systems will meet the specs but they will all not perform the same. Some systems run for years troyble free. They are really the install and forget variety. some others need poking and twiddling continuously. And guess what., they all have the same specification.

paramaters like ; Mean time Between failures ( MTBF) can be misleading. Can modules in the control system be hot swappable? Is it dual or triple redundant?

How long has the control system family been in service and what is the manufacturer's guarantee that will will be supported for the next 15 years?

And the most important question"what is the impact of malfunctions on the company's bottom line ".

You need to work out hese answers and impress them with your knowledge and methodology.

Get the user experiences of the systems which the Procurements intents to buy and you must have a choice for the one you prefer.

Remember ,when the plant shuts down, the procyurements guys will not be blamed, you will be in the hot seat. state your objections early.

Find a few technical flaws in what they are doing.Bring it to the attention( subtly) of the CEo or upper level executive.

GA answer guest, Initial costs does not mean upfront costs.

Engineer - duty is to provide proper specification of the product required, particular make or brand if necessary, reliable source if known, urgency, etc..

Purchaser - duty is to get the necessary quote, ensure the specs do match, negotiate as usual, find out if alternate source or brand is better and pass the information for approval, Procure at the lowest price, earn on the deal if possible...

Full stop.

Engineer is not to involve in purchase if he is not interested in kickbacks.

If it is a matter of ego - vendor not recognising the engineer, Then he has to find out ways of making his presence/ value noticed.

If it is purchase department making the engineer uncomfortable then he has to put up the issue to the management if he is sure of winning the case.

Regards,

Ragotham

My little underhanded trick for procurement is that I never order my automation equipment hardware alone. I always include a listing for software and for training. Most of the times I only need to list the existing purchase order number for the support maintenance or upgrade of the software, so the price frequently gets a N/A listing in my form so the only price listed is the preferred vendor's price on the hardware. Also the vendor of choice is almost exclusively the vendor listed on the software purchase order. But this leaves the bean counter purchaser with the responsibility of explaining why they didn't also purchase new software for this better, cheaper piece of equipment or for them to explain why an already negotiated contract was being nullified by them for a tiny price break on some hardware.

Some times to fight an accountant you have to think like an accountant.

All companies face similar problems . Purchasing agents usually come from from administrative areas. A lot of times they are promoted from clerk positions in the purchasing department. Its rare to find technically trained purchasing people at all. They are usually judged on how well they handle all of the contacts and contracts they make with vendors. They are sometimes penalized for providing comparisons from one vendor's items to another vendor. They also wade in legal waters a lot. Big purchases can generate lawsuits pretty easily. Don't be too upset when a spec is overlooked if its not included initially. Most purchase contracts prohibit changes like that.

If you write a spec that can be understood by the average person off the street (I know how that sounds) , things can be a lot smoother. If you ever find a purchasing agent that understands most of what you say, give them a lot of support and rave about them to their superiors, in hopes they will stay in that position.

I recall the IBM would not allow a salesman to be alone with an Engineer. They were required to have a representative from Purchasing with them in all discussions. A bit over the top I'd say.

I spent the last 15 years of my career as a dedicated Engineering Buyer reporting to the VP of R&D. I was brought on board when the company had one engineer and stayed through growth to 40 and 200 million is sales.

I was tasked to see that the talented engineering group had all the contacts, equipment, parts, materials and tools they needed to develop and prepare for product introduction.

They put me right in the middle of the group where I could hear everyone's conversations and they could hear mine. I worked with the group to develop and define our needs for equipment, processes and completed components. This involved having me spend time investigating processes and suppliers in order to be ready with options for the group. I was a key member of the supplier qualification team.

I kept the eventual purchasing folks aware of what our path might be, and they joined our product introduction teams fairly early on in the process. All engineers had signature authority but orders were placed by me, or a regular buyer could perform the function for standard tools and parts. Simple orders were usually placed the same day as the request.

When we had major equipment to purchase, it was a team effort to evaluate the original needs, to define the specifications and to choose the eventual supplier. Always, the PRICE was only part of the package. We spent just as much time on the details of the deal, Schedules, Installation, the number of people to be trained at installation and later, the service agreement, preventative maintenance and tooling.

Sellers hate to discount beyond their plan, and even more hate to admit discounting to other customers or competitors. So often you can get their planned price, but get tons of extra stuff included in the package. The seller can always talk like he got his price, but you in reality got a great deal more than he has to admit to others.

Yes, I've also worked in other companies where Purchasing tried to control everything and usually got tripped up. You have to have Engineering Management as well as Corporate who understand the value of a team in getting the most for the company's money.

In my carrier of Marketing of 35 years, I have broken many nuts to solve this problem of pricing. Even though products sold by us were highest priced (H1) we had finally succeeded in being the market leader. It is product which sells for itself. We had established brand reputed for its best quality which had given customer full satisfaction and value for the money.

Even in Govt. Dept who usually buy lowest priced (L1) products we had succeeded in selling them as proprietary product.So it is brand building which is most important aspect of selling the product.

Suresh Sharma.

Do not know haw H1 and L1 if thats a common odentifier. But you comment;

Even in Govt. Dept who usually buy lowest priced (L1) products we had succeeded in selling them as proprietary product.

On proprietary product when you basically buy a product and its a secondary product that is needed you are forced to buy it to support the primary. I press to look for alternatives. I do not like being held captive for replacement parts or service which is usually the case. I can think of a number of examples of this happening, and how the market made adjustments to these, I do not feel I am the only one that does this.

phoenix911

Hi Phoenix,

I assume you are other side of the table. I agree with your views about looting customers by selling them spares at very high prices. This was not policy of the company where I worked for 33 years. Whenever any customer complained about higher cost of the spares I would personally look in their complaint and see that either the spares prices are revised or we would justify the price charged by us.

Well, we had long term association with your customers who even respect me till to-day even after my retiring 10 years back. There are many customers who will blindfoldedly buy our products, without bothering about the prices.Motto is serve customer with best quality, charge reasonable price, maintain good relations, and finally you are the winner.

Suresh Sharma.

Hi Suresh,

what are your fundas to convince people that you are giving them best product or spare in good price

so I will come to know that what I am purchasing is a worth

I once worked for a Major Computer System/High end Software company. We typically charged 300 percoent over our piece part cost in selling spares. The group barely made money, even at that percentage.

one project that comes to mind, and NTS post 25 touch off on.

I had justified a waterjet from Flow International back in the mid 90's, but requested a controller to operate G-code controls, ( FANUC or equivalent) . We went back and forth Flow Corp. took the stance that their software did not use G-Code and would not elaborate on their proprietary software. I did not see this as a huge issue but I was looking at running off of one programming software.

We bought it, of course the first thing I did was sift through the files and found out that the propriety software did generate G-Code for the machine to operate off of, of which the NC code was over written after each new run. The propriety software was just the software and not the control aspect of the machine. On the propriety software the PMAC Motion Control card on the computer failed often, which was difficult to have Flow replace at first.

And the engineers I initially talked to.....weren't.

The following waterjets that was acquired, had FANUC controllers on it. Expensive, yes, Reliable Yes

p911