What is the Salary for a Procurement Manager?
(Note: Please note that salaries can differ significantly based industry, experience, and company policies. The above figures are based on estimates taken from glassdoor.co.uk.)
The employees that are paid the most are usually the ones who bring in the maximum revenue for the company. Usually, these roles are client-facing like the sales department. However, companies these days focus just as much on cost control as they do in increasing their top lines. This has become necessary due to global competition and tightening profit margins. This bodes well for people employed in departments like procurement who play a very crucial role in cost control.
It is possible to objectively measure the benefit that a purchasing manager provides to the company’s bottom line. This is done by assessing the amount saved in purchasing goods and services from vendors. Procurement managers can have objective targets and their ability to meet them decides their compensation. All of this eventually leads to a situation where the procurement department is not considered as a cost centre but rather as a cost-saving centre. This means better compensation, especially if cost targets are met or exceeded.
Some companies have begun to offer larger variable compensation packages for these roles. This means that the total compensation for procurement managers depends a lot more on their actual performance as determined by them meeting their cost targets. It is best to ask a potential employer about their compensation practices beforehand.
Salaries across industries
In terms of compensation, the sectors most lucrative for procurement managers are the ones with a large chunk of the final value of the product is sourced from external vendors. This naturally follows from the logic that purchasing managers would be able to have a significant impact on the cost of such products. Therefore, sectors with a large number of raw material imports or contract manufacturing would fall under this category.
Sectors which require a lot of technical know-how and skills are also considered good picks for procurement managers. For example, in the automobile or aerospace manufacturing sector procurement managers may be expected to have engineering degrees and expertise in operational management, inventory management, supply chain optimisations, etc. Such experts can undoubtedly expect to be well compensated in these sectors.
Procurement managers can have varying degrees of responsibilities in different companies. In some companies, they are only expected to procure materials or services at the lowest cost. Whereas in other companies, they need to be supply chain experts and play a crucial role in maintaining peak production and operational efficiency. Therefore, the compensation for these professionals also varies depending on what is required of them in each corporate setup.
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