Procurement pros share best practices for buying in a recession

Five industry-specific examples demonstrate how some purchasing professionals are adjusting their strategies to the realities of today and the hope of tomorrow.

There are plenty of positive signs in the economy, including growing consumer confidence and an increase in the number of buyers telling Purchasing that they plan to write more purchase orders in the next three months. But, still, we're in a recession and have been for awhile. How have purchasing professionals been reacting? How should they react? And, do these times call for a radical change in practices?

Click here to read more about the examples below.

Put the pressure on business stakeholders
Finance
Laurie Manderbach joined US financial services firm TIAA-CREF in November 2008 when the economy's slide became a nosedive. As the new vice president of strategic sourcing, she faced the task of realigning the procurement function—immediately.

Check your suppliers' health
Electronics
"Let's face it, CPOs love a recession," says Korea-based LG Electronics Chief Procurement Officer Tom Linton. "I am the only executive of the company who has walked into a conference room with a smile on over the last several months," he jokes.

A recession, of course, means a buyer's market for many production materials so prices are low, which makes buyers smile. But, it's also cause for concern for buyers, who need to monitor financial health of key suppliers, says Linton.

Help your suppliers
Industrial Products
The manager of general procurement at a tool factory doesn't like surprises, at least not with his supply chain. To avoid the ultimate surprise—bankruptcy of a key supplier—he and his team put a great deal of effort into keeping up to date with supplier financial health. "You have to be proactive, before things happen," he says. And sometimes, being proactive means helping suppliers weather financial storms.

Stick with the fundamentals—but push the envelope
Metals
While an economic crisis may draw more attention to how a company manages its supply base, purchasing professionals need to stay focused on the fundamentals—and the strategies and tactics they've developed and put in place.

So says Eric Sandford, director of purchasing and inventory management at OmniSource Southeast in the US. Sandford works in an industry—metal-scrap processing—that's been hard hit by the recession. Both output and productivity are down by about 50% from last year, he says.

Get Lean
Consumer Products
Since joining HPI in November 2008, Michael B. Carr has been implementing a two-pronged strategy for working through a recession: control inventory, and control—as much as possible—commodities costs.

At Homecare Products in the US., where he is vice president of operations and supervises purchasing, inventory, engineering and quality, he is instituting programs to reduce the company's inventory of aluminum, particularly. He has implemented kanban programs that will emphasize automatic replenishment of direct materials for the company's portable and modular ramps. He is also taking steps to reduce the supply base.