What qualifications are needed to be a procurement manager?
A procurement manager is a company’s interface with its suppliers, vendors and contract manufacturers. A good procurement manager can help the company reduce its input costs, minimise supply chain risks and enhance operational efficiency. Given the ever-increasing focus on controlling costs in recent years due to global competition, the procurement manager’s job becomes more pivotal.
The roles and responsibilities for purchasing managers can be found in the linked article on job description and profile along with estimated salary & pay packages. This article focuses on the qualifications and skills necessary to land a job in procurement and excel at it.
Purchasing managers need to perform analytically complex tasks while also possessing the ability to negotiate hard with vendors. This usually means that they need to have a good understanding of business operations, business law, and people skills. Therefore, a degree in business would be the most beneficial as it usually covers the basics of business law and negotiations. However, economics accounting or law degrees might also be acceptable in certain cases. A lot of skills can also be learned on the job.
For manufacturing companies with complex supply chains, purchasing managers are usually expected to have an engineering degree. Engineering courses can cover the basics of production, manufacturing, quality assurance, etc. and these are all skills that purchasing managers in such companies would be expected to have. To increase the chance of selection, such courses are recommended.
MBA courses can also be very beneficial for senior purchasing manager roles in large companies. These courses not only cover the basics of business law and negotiations but also cover things like operational management, operations research, process optimisation and so on.
There are several certifications available for purchasing managers. However, it should be mentioned at the onset that not all the certifications are specifically designed for just procurement. They usually contain elements of a supply chain or inventory management as well. This means that procurement managers in companies where such a focus is required would benefit more than others.
The Institute for Supply Management offers some certifications which might be helpful for purchasing managers:
Certified Professional in Supply Management (CPSM) – This course covers things like complex global supply chains, technological innovations, and several other skills that purchasing managers use in their day-to-day operations.
Certified Professional in Supplier Diversity (CPSD) – This course is beneficial for purchasing managers who need to learn how to better identify opportunities in vendor management, vendor onboarding, supplier selection, vendor risk management and so on
The Associations for Operations Management (APICS) also offer certain certifications like:
Certified in Production and Inventory Management (CPIM) – This course is designed for those looking to improve their production and inventory management skills.
Certified Supply Chain Professional (CSCP) – Focuses on streamlining supply chain operations.
Procurement is a good department for young graduates to start in. There exists the possibility to get entry-level jobs without much prior experience. This does not mean that senior-level positions are not available, it just means that there is a lot of variability in terms of role seniority. The designation for such entry-level positions might be different and they may instead be called purchasing agents or procurement officers who will eventually get promoted to full-time procurement managers.
The bottom line is that there are usually roles available for people at all levels of experience.
What skills do procurement managers need?
The job of the procurement manager has become increasingly complex over time. Part of this has to do with the way technology has evolved over the decades but there is also a significant contribution from changes to the way business is done. Companies now focus increasingly on their own core competencies and outsource everything else, including the use of contract manufacturing.
This means that procurement managers have an ever-increasing role to play in the overall value chain of the company. Therefore, the modern procurement manager’s role is more than just a support function. The role is now central to the overall strategy of the business.
Perhaps the most evident value addition that purchasing managers add to their organisation, is by way of negotiating the most lucrative sourcing contracts with vendors. The ability to juggle multiple bids, evaluate them and then negotiate on price and other aspects with the most promising leads is crucial for purchasing managers. As the market becomes ever more competitive, it is very difficult for companies to raise prices. The focus then shifts on reducing input costs and that is where purchasing managers come in.
There are two multiplicative effects that are affecting the way companies manage their operations. Not only are more and more activities being outsourced, but the supply chain is also getting longer and more complex. For example, a company might be sourcing the materials or partially manufactured components from a dozen companies while also employing dozens of vendors to handle services like IT, security, market research, infrastructure services, transportation, legal and so on.
The procurement manager must handle all this complexity and the only way to do it is by using purpose-built software and other such tools. There is a multibillion-dollar industry for software companies selling specialised enterprise resource management and supply chain management software to corporations. The purchasing managers must be well versed in the use of such software just to ensure that they can keep operating with maximum efficiency.
Operations management is a broad discipline that covers a great many activities that are necessary for the operations of the company. For example, within the manufacturing department, it might have to do with production philosophies. For procurement managers, this might mean working with philosophies like just-in-time inventory management all improving efficiency and reducing mistakes using Six Sigma techniques.
For companies which have a lot of moving parts, very complex models must be designed and operated to ensure smooth operations. For example, consider a situation where shipments from five different locations must arrive at their predetermined schedules and any deviations could lead to a massive backlog at the unloading docks.
The reason supply chains have become so long, and complex is to extract maximum cost efficiency from the market. While this means that costs are kept to a minimum when things are running smoothly, it can make things very difficult in case of any exceptions or disruptions. For example, there was a time when a steel company would manufacture everything that it needed on its own and even mine the raw ore itself. That meant that it was immune to any supply shocks, but it also had the downside of not being able to access cheaper vendors.
Today, it is the opposite and many large companies have completely outsourced a good chunk of their operations to reduce costs. This leaves them vulnerable to disruptions. The procurement manager’s job is to identify, measure and mitigate these supply chain risks. This can be a complicated task involving a multidisciplinary approach and utilising cross-functional domain experience. Multiple departments must be consulted with and alternate plans were drawn up. For example, if an alternate supplier is to be activated in a different country by the procurement manager, the finance department will also need to have plans drawn up for making payments in that country.
Unparalleled coordination skills
In order to effectively execute their duties, purchasing managers must coordinate their activities with scores of individuals across dozens of departments or vendors. Any delays or disruptions can lead to significant losses. For example, getting a new vendor-approved would require coordination with multiple executives at the vendor company, the in-house legal team, finance department, compliance department, external lawyers, the management team, operations team and so on.
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