Importance of purchasing
As a result of globalization, the volume of world trade has increased to almost twice the volume of world production of goods. In Germany, the share of material and service purchases has increased by 75 percent in most sectors. Accordingly, three quarters of the parts have to be procured by the purchasing department.
The task of modern purchasing is to supply the company on time with all required goods and services in sufficient quality. However, many companies are not aware of the growing importance of purchasing. Sometimes too little attention is paid to this or simply too few resources are available.
Importance for corporate success
Since the proportion of purchased parts is high, their quality is decisive for the quality of a company’s entire product. However, quality is indispensable in order to meet customer expectations. Consequently, an established quality management in purchasing is decisive for the company’s success.
Quality management basically deals with the management of the organization with regard to quality. This includes the control, planning and improvement of quality.
Systematic supplier evaluations, which provide information on the quality of suppliers, are also important. After all, a properly working quality management system also includes the inspection, selection and assessment of qualified suppliers. This is an essential element of quality assurance in materials management, including certification and evaluation of the price/performance ratio.
In the representative purchasing manager study of the year 2014 by M. Schmieder, numerous purchasing managers were asked about their quality policy in purchasing. A quarter of the participants stated that they quality management had been very well integrated into purchasing. 40 percent said they had integrated it well. Only 5 percent described their integration of quality management as poor.
Defining a strategy
A strategy defines how the goals set by the company should be achieved and which resources will be used. By defining selective focal points, entrepreneurial action can be planned in various areas.
The strategy of the company is also decisive for the strategy of quality. This determines the basic direction of entrepreneurial action within the framework of quality management. At this point it is defined which resources are used to achieve the objectives.
When developing a quality strategy, several fundamental decisions have to be made, such as the quality position in the market environment. Furthermore, it is important to decide which parts are manufactured by the company itself and which are purchased from the supplier. This is decisive for quality management in purchasing.
In order to successfully integrate quality management into purchasing, it must also be part of the quality policy and management of the entire company. Only if the quality requirements are met in all areas of the value chain the quality of the end product will be right.
Many of the companies surveyed reported significant deficits in this area. Just one quarter of the participants had fully integrated quality management in purchasing into the company’s quality management system. The rest stated that they had partially or not at all implemented it.
Nevertheless, the coordination between the purchasing and production departments is particularly important for ensuring quality and avoiding duplication of work and the associated costs. This can be ensured, for example, by checking incoming goods.
The majority of companies sees medium to large savings potential in this area. Successful integration of purchasing quality management into overall quality management is particularly important for complex products such as machines and systems.
The most common reason why quality management in purchasing is neglected is limited human resources. One third of the participants stated that they did not have enough personnel for implementation and that they considered this to be a disadvantage of quality management in purchasing.
Another point of criticism was the limited time for implementation, which in turn goes hand in hand with the resource problem. It was also criticized that the processes were not considered sufficiently because of the focus on the product – often the link with supplier evaluations was simply too weak.
This shows that purchasing focuses on the realization of savings and that the quality of the purchasing only follows this. In addition, some suppliers have such a strong position that the implementation of quality requirements is not possible at all.
To sum up, it can be said that the profit and the quality of the products are decisively determined by the purchasing department. Reducing the depth of value added of OEMs also contributes to the central role of purchasing.
This is also reflected in the results of the survey: For two thirds of the participants, quality management is part of their purchasing. Two thirds of them have very good integration. Another fifth stated that they had achieved strong savings potential through strong integration. Approximately half of the participants said that this area had a medium savings potential.
In order to achieve optimum quality management in purchasing, good coordination between suppliers and OEMs is important. In this way, friction points in customer complaints are avoided and problems in quality and precision in implementation are avoided.
In addition, it is recommended to include quality management not only in the definition of materials, but also in the selection of components. After all, the existence of a quality management system in the company is self-evident, but a good application is not yet ensured – here lies a high development potential.