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Service vs Manufacturing: How to Apply Cross-Industry Best Practices

It is easy to see how purchasing for both the service industry and the manufacturing industry overlap due to the way both industries overlap as a whole.  That means that there are purchasing best practices that can make things easier for all involved in any such transactions.  Many purchasing professionals incorrectly assume that there is an unbridgeable gap between the purchasing practices that are best for the manufacturing industry and those that are preferred for the service industry.  Nothing could be farther from the truth.  Cross-industry best practices do exist, and once a purchasing manager knows of them they can be used for great benefits.  Here are some thoughts on how such best practices can be identified and utilized.

Organizations that specialize in manufacturing purchasing generally buy goods but leave the issue of purchasing services to other individuals.  At many businesses, the purchasing department buys all of the products, but then each individual department makes its own purchases for services.  This can have catastrophic consequences if it is not given the proper oversight.  That is because not everyone employed at the business has the necessary training, experience and knowledge to be able to make the best purchasing decisions.  That is why there is a Purchasing Department in the first place!  Purchasers in the service industries sometimes do buy goods, but generally only when they are necessary to achieving the goal of selling services.

So how can the two industries come together?  What are best practices that can be employed both by professionals in the service purchasing industry and professionals in the manufacturing purchasing industry?  The first things to consider are the various similarities between the two industries.  Professionals in both industries need to keep costs low, need to monitor the performance of suppliers and need to maintain good relationships with the suppliers they work with.  That means that any practices that achieve those goals well for one side will likely work just as well for the other.

One manufacturing purchasing practice that is an excellent best practice for service industry purchasing as well is consignment.  Certain types of items can be purchased on consignment rather than purchasing them brand new, which can save companies a tremendous amount of capital, especially when the company is making extremely large purchase orders.  For example, if a large company is going to purchase office supplies or office furniture for a new location that is to be opened, choosing to purchase via consignment is an excellent idea whether the company is a manufacturing business or a service business.

Individuals who work as purchasers in the service industry can keep up to date with trends and best practices in the manufacturing industry by continuing their education.  As in any professional industry, continuing education is essential to staying abreast of the new changes in the industry.  Large businesses may even wish to consider building a library of purchasing books that is updated quarterly and then establishing a professional reading program that requires purchasing managers, buyers and purchasing agents to read at least three new purchasing books every year.

August 9, 2012
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BY Bellwether
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