The Changing And Challenging World Of Procurement In Wholesale Distribution

The purchasing role at a wholesale distributor is a particularly fraught and arduous position. NetSuite's John Bek sorts out the top priorities for this position and everything purchasing officers need to be aware of.

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All jobs have their challenges, but the purchasing role at a wholesale distributor is a particularly fraught and arduous position. To be effective, the buyer has to have amassed a wealth of product knowledge, access to real-time accurate market and inventory information and then be able to act decisively based on those insights. The buyer needs to purchase the right kind and the right amount of merchandise, at the right time at an advantageous price, which they can then sell on down the supply chain. Meanwhile, every transaction the buyer engages in needs to benefit the bottom line of their employer, the wholesale distributor. All of this needs to happen at a time when customer buying behaviors are changing rapidly and product lifecycles continue to shorten; when existing market players are being disrupted by startups with new business models; and when all markets are becoming global markets with the emergence of new international entrants. Good luck to that purchasing officer.

Wholesale Buyers Have to Counter Internal and External Forces

But, wait that’s not all, the buyer also often find themselves in the middle of an internal tug of war between their sales and finance. Sales, naturally enough, wants to have as much stock on hand as possible to meet the needs of the company’s customers, while the CFO and finance team want the polar opposite, as little merchandise sitting on the shelves as possible to mitigate risk, putting the buyer directly in the middle of these conflicting goals. Here, data is the buyer’s friend allowing them to share relevant historical and real-time information with sales and finance to make the buyer’s case for the optimal amount of stock to retain.

On top of internal factors, the buyer also has to be fully aware of the potential impact of geopolitical events impacting manufacturing operations and delivery routes on the supply chain. The buyer must have already identified alternative suppliers and markets for its purchased merchandise. A key consideration is having instant access to a trusted rich source of supplier profile data, enabling a buyer to quickly research brand-new product providers and be confident in then partnering with organizations with which the wholesale distributor may have no previous working relationships.

Access to Unified Data Is the Key to Success for Wholesale Buyers

In all of the scenarios laid out above, the buyer needs real-time accurate information to act effectively. A buyer also has to deal with a great deal of complexity in managing the purchasing process particularly in relation to high volume, high SKU count environments, where erratic demand is often the norm rather than the exception. Matters become more complex when the buyer is working with poorly integrated supply chains where data isn’t flowing from the product’s point of manufacture and origin through its storage and shipping to the wholesale distributor. Having the ability to manage by exception is vital to ensuring that the buyer can successfully execute their role.

In the optimal business scenario, a buyer at a wholesale distributor is able to work collaboratively with their supply chain partners and exchange and share real-time relevant information. The buyer is also able to apply analytics to supply chain data to compare and contrast supplier performance. In effect, the successful buyer is one who is able to use technology to turn what may previously have been a fragmented disorganized set of relationships into a connected virtualized network.

Wholesale Buyers Embrace Cloud Procurement for Real-Time Data Access

Increasingly, wholesale distributors are adopting cloud computing to streamline and unify business processes and use the cloud as their platform for exchanging key information with supply chain partners. For buyers, that requires that procurement is tightly integrated with the supply chain and with the wholesale distributor’s own finance and sales operations. Rather than multiple sources of supply chain data truth, there’s one single unified source of information that the buyer can use to share externally with supply chain partners and internally with finance and sales.

At the same time, leading procurement organizations are augmenting their core information with data from trusted third-party information sources. For example, data from leading firmographic information providers helps buyers assess risk and performance profiles of prospective supplier or manufacturing partners to make informed, data-driven decisions. Prebuilt integration between a cloud business platform and a firmographic data provider simplifies the process and equips buyers to track, compare and manage risk in partner relationships and adapt as necessary. Other benefits of cloud procurement software include the ability to create supplier scorecards and to engage in competitive pricing management as well as ongoing risk mitigation.

Cloud and Real-Time Data Access Empower Wholesale Buyers

Wholesale buyers are under increasing pressure to make the right decisions rapidly and to be able to support the reasoning behind those decisions. By adopting cloud procurement, a wholesale distributor is putting in place the tools to enable its buyers to act nimbly, effectively and successfully.

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