The purchasing department is a cross-functional structure within the company. As such, buyers must not only know the suppliers and the market, but also all the internal stakeholders of the company, known as internal clients.
The “internal customer” culture
Historically, until around the year 2000, purchasing departments concerned: large industrial companies, for their direct and strategic purchases (purchases necessary for mass production), and mainly the purchase of equipment.
Today, purchasing departments are also able to address the needs of smaller organizations such as SMEs and mid-sized companies, in the service sector as well as in the public sector, for so-called indirect purchases (non-production) and for services or intellectual services. It is no longer a single “supplier management” role, but rather a multifaceted role aimed at optimizing overall costs within the company.
A major shift in approach is therefore necessary within purchasing departments to maximize added value for the company. Buyers must consider other departments within the company as their internal clients and do everything possible to ensure customer satisfaction, whether in terms of price, procedures, or responsiveness. They must be trusted partners who, above all, have a deep understanding of their clients. This requires developing a genuine culture within the company itself.
What do you need to know about your internal clients?
First, you must identify ALL internal clients likely to use the purchasing department. For direct purchases (materials related to the company’s production), it’s important to know all the departments that will use these products in order to find various potential areas for optimization: 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 stakeholders can be time-consuming, but will be necessary to achieve real overall cost optimization. This will result in a contact map for each of the purchasing categories and families.
The objectives, constraints, and functioning of your internal clients
Fundamentally, Procurement is expected to create value along 5 priority lines:
• Cost optimization:
Total acquisition cost impacting the financial margin
• Business optimization and innovation:
Revenue and/or gross margin, finding the right partner
• Process and productivity optimization:
Quality, Efficiency
• Optimizing flexibility and speed:
Project, Supply, …
• Risk management:
no disruptions, no losses, regulatory compliance
Internal clients (including management) will have expectations on each of its axes, however with different levels of priorities and objectives depending on the client.
To satisfy your internal clients, it’s essential to understand their objectives and constraints: this will allow you to negotiate with suppliers more effectively and efficiently. By helping your clients achieve their goals and by integrating their constraints and needs with your own, you contribute twofold: to increasing the company’s financial results and facilitating internal relationships. You also gain significant recognition and respect.
The buyer’s daily work is also made easier if the internal client adheres to the purchasing approach (obtaining information for the preparation of the specifications, availability to validate a product or service, consideration in the management of supplier incidents, etc.).
It is useful to ask for feedback after a project from all stakeholders, without fearing negative feedback, both to be in a process of improvement and to have the opportunity to hear positive feedback!
These good practices will make your projects attractive, allow you to achieve your goals, and dare we say, a rich and constructive professional life.
We can thus see that the optimal functioning of a purchasing department will rely on a good knowledge of its internal clients in order to propose relevant improvements and work collaboratively on improving overall costs.