In a match up, engineers win over purchasing all the time. In most segments of the electronics industry engineers sit atop the food chain; they earn more than any other group aside from senior executives (many of who have engineering background, anyway) and the industry defers to them on many of the strategic issues affecting the process of getting products to market.
Purchasing and supply chain management folks, on the other hand, are only to be found in the smallest offices at many OEMs, EMS providers and other service providers to the electronics industry. They are largely invisible, earn much less than engineers and aren’t involved in making many of the key decisions affecting their companies or the industry at large.
This favoritism of engineers over purchasing and supply chain is decades-old although the situation has begun to change, albeit still too slowly, in my opinion. We still worship engineers, pay them multiples of what purchasing and supply chain employees earn, give them major awards recognizing their intellectual “superiority,” and too often credit them with helping companies win “big” in the marketplace. Nowadays, though, executives in the corner offices are beginning to take a closer look at the role purchasing plays in moving a company towards the achievement of its profit goals.
Over the course of the last 10 years or so many of the industry’s leading companies have elevated purchasing/procurement and supply chain positions to vice president or senior vice president levels, moving them from lower ranking positions to make them a part of the enterprise’s senior management team. At companies like Cisco Systems, IBM, Intel and STMicroelectronics, the heads of manufacturing, procurement and supply chain operations report directly to the CEO, recognizing the important contribution of these individuals to the operational success of their employers. Laggard enterprises still have these key supply chain functions reporting to junior ranking executives or, at best, to the CFOs.
It’s the CFOs, though, who most appreciate purchasing and supply chain employees, sometime only because they see them helping to reduce or stabilize operating costs but also because fundamentally these functions directly are responsible for long-term success at manufacturers. The role purchasing plays in the industry has changed and, while it is still evolving, it is becoming even more central to the global enterprise due to the interconnected nature of most operations and regions. To be really successful on a consistent basis, companies must continually tap into the skills and expertise of their purchasing/procurement and supply chain employees.
Let’s dive back into the comparisons between design engineers and purchasing employees in the electronics industry. I am often amused when I hear executives at distributors and components suppliers complain about how a sale of parts they thought was imminent fell through even though the OEM’s engineer had included the item in the design. It’s not a tough riddle; the design engineer may accept the “design-win” but it’s often the lowly purchasing employee or components engineer who makes the final decision as to which components make it through to production.
Of course, I am not asking anyone to ignore design engineers. They are highly trained and very important to the industry but they are also generally glad to hand over a design to purchasing/procurement/manufacturing/supply chain for fulfillment so they can be free to move on to the next project.
So, here’s my tip for the distribution and component sales executives. Visit and exchange information with the engineer but know the buyers, socialize with them and find time to buy the men and women in purchasing/procurement a drink. You won’t regret it.
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