Among
These Indiana Executives, Purchasing Tops the List for Growth Strategies
Fort
Wayne, Ind., April 27 - Indiana executives express growing interest in managing
profitability from the cost side of the ledger rather than by relentlessly
pushing sales growth. Of six topics included in the Business Efficiency Testing
(BET) survey conducted in April by the Roster Network, CEOs and executives
selected cost control as the topic that reflects a chief concern at their
companies. The result indicates that these Hoosier business leaders are
interested in effective purchasing as a route to improving their profits.
"The executives we talk to are realizing they can achieve profit growth
quickly through purchasing and supply management and not just through new
sales," said John King, president of Roster Network, a professional
services alliance with operations statewide.
Things
have changed significantly since a 1993 survey reported by William A. Bales and
Harold E. Fearon, Ph.D. of the Center for Advanced Purchasing Studies. Their
report showed that while two-thirds of CEOs they surveyed view the purchasing
function as very important to the success of the firm, only 55 percent of those
who feel it is very important perceive that it also is very effective. There
appears to be a large gap between what CEOs want and what they think their
organizations are receiving. Bales and Fearon reported that, "CEOs do not
have a keen interest in measuring the effectiveness of purchasing in their
firms. Evidently, purchasing is not felt to be of significant importance and/or
is not recognized by the finn's top executive. Considering the large percentage
of the sales dollar spent by purchasing, this is a surprising view."
Times
have changed. Show them the tools, and CEOs jump at the chance to benchmark
their purchasing power, King said.
"Purchasing
is not as 'sexy' as talking about new sales revenue," King said after a
recent seminar on enhancing purchasing effectiveness. "But a gain of 2
percent in purchasing efficiency can be more profitable than a 10 percent
increase in sales," King said. "Every dollar you save in purchasing
goes directly to your bottom line. There is no 'margin.' It's 100 percent
profit. When we remind CEOs of this simple fact and give them proven management
tools that work, they get very excited about the potential profit growth."
Other
topics high on the Indiana executives' list of priorities are the need for
effective business planning, succession planning and ISO registration.
Roster Network uses feedback from executives as the basis for seminars and workshops that it offers free to Indiana businesses. The next seminar, to be scheduled in May, covers tools and technologies to help manage costs and enhance results of projects. For information, call (219) 436-6330.