Purchasing Manager and Purchasing Agent Career and Job Highlights
Purchasing Manager, Agent, and Buyer Career Overview and Job Description
Companies hire purchasing managers, buyers, and purchasing agents to find the best merchandise at the lowest possible purchase cost. Purchasers typically buy goods and services for their company or organization to use, while buyers ordinarily buy items in order to resale them for profit. Purchasers and buyers find the best goods or services, choose suppliers, negotiate prices, and grant contracts that ensure that the right amount of the product or service is received when it is needed. Purchasing managers, buyers, and purchasing agents take several steps to reach these goals: they research sales records and inventory levels of current stock, find foreign and domestic suppliers, and stay current on any changes in either the supply of or demand for needed products and materials.
Finding good suppliers is crucial to the work of purchasing managers, buyers, and purchasing agents, who evaluate suppliers on multiple criteria (price, quality, service support, availability, reliability, selection, etc.). Purchasing managers, buyers, and purchasing agents study catalogs, industry and company publications, directories, and trade journals, often on the Internet. Reputation and history of a supplier is important, and future purchase actions may be advertised in order to solicit bids.
These workers use meetings, trade shows, conferences, and suppliers’ plants and distribution centers to inspect products and services, assess a supplier’s production and distribution capabilities, and discuss other relevant considerations. Once they have completed their research, suppliers who meet the purchaser’s needs will receive orders and contracts (which often last several years and may stipulate a narrow range of prices to allow purchasers to reorder as needed). Purchasing managers, buyers, and purchasing agents’ further responsibilities vary according to employer and type of goods or services with which they deal.
In government agencies and manufacturing firms, purchasing specialists typically are dubbed contract specialists; buyers or industrial buyers; or purchasing directors, managers, or agents. These specialists acquire various elements necessary for production: materials, parts, machines, supplies, services, etc. They can obtain anything from raw materials, machinery, and construction services to fabricated parts, office supplies and airline tickets. If the right materials, equipment, or supplies are out of stock when needed, work and production can be slowed or even halted. Effective purchasing specialists need to be deeply familiar with the technical aspects of the goods or services they purchase. Some purchasing managers, known as contract or supply managers, concentrate on negotiating and supervising supply contracts.
In large industrial companies, buyers and purchasing agents are often seen as having a different role from purchasing managers. Buyers and purchasing agents tend to concentrate on standard purchasing tasks; they frequently have a particular area of specialization, such as in a commodity like steel, lumber, cotton, grains, fabricated metals, or petroleum products. Purchasing agents follow market conditions, price trends, or futures markets in order to conduct the more complicated or crucial acquisitions. They also may oversee a team of purchasing agents who deal in other commodities and services. In choosing between the titles of purchasing manager, buyer, or purchasing agent, specific job duties matter less than the particular industry and employer.
The traditional roles of purchasing or supply management specialists in many industries have changed because of evolving business practices. Throughout product development, for instance, manufacturing companies increasingly rely on these specialists to forecast the cost, availability, and suitability of parts and materials. Moreover, conferring with the purchasing department during the early stages of product design can help prevent problems with the supply of materials.
Integrated supply contracts, which involve all members of the supply chain (including suppliers, transporters, and retailers), can also be useful for businesses. Because the nature of these broader and longer lasting agreements affects the buying firm’s performance, companies must be especially careful in selecting a supplier. Purchasers are generally responsible for working out any potential problems with a supplier.
Many firms utilize a strategy known as team buying, where purchasing specialists coordinate with other employees in their own organization when negotiating purchases. For example, before making a purchase, they might consult with company design engineers about the design of custom-made products, seek advice from quality assurance engineers and production supervisors concerning the quality of purchased goods, or tell managers in the receiving department about any shipment problems.
Contract specialists and managers work throughout the government, where their role is to award and oversee various types of contracts, such as providing public services, completing construction projects, and providing office and building supplies. They might, for instance, review a contract for landscaping services of a government-owned property to ensure that all provisions of the contract are being performed. While they do award contracts from sealed bids, they generally negotiate contracts for complex matters. Purchasing specialists in government often use the Internet to post solicitations for services and to accept bids and offers. Strict laws and regulations for government purchasing agents and managers are set up to ensure that they avoid even the appearance of impropriety. Agents and contract specialists must stay current on any changes to these legal requirements.
Wholesale and retail establishments employ purchasing specialists who buy finished goods for resale. These specialists, commonly referred to as buyers or merchandise managers, play a crucial role in a complex distribution and merchandising system that serves a wide range of consumer wants and needs. Wholesale buyers purchase merchandise from other wholesale firms or directly from manufacturers and resale it to retailers, commercial establishments, and other organizations. Buyers employed by retail firms purchase merchandise from wholesale firms or directly from manufacturers for resale to the public. Because buyers are largely responsible for determining which products their establishment will sell, they must know what will attract consumers. It is crucial for them to keep current with the latest trends—not doing so could endanger profits and their company’s reputation. Buyers monitor competitors’ sales activities by following advertisements, and they anticipate consumer buying patterns by monitoring general economic conditions. Buyers employed by large and medium-sized firms usually only focus on acquiring a single line or a few lines of merchandise; in small stores, buyers might purchase the entire inventory.
Private-label merchandise, created for a specific retailer, obliges buyers and vendors to work closely together to produce the desired product. The demands placed on buyers have further increased because of the downsizing and consolidation of buying departments: the amount of work stays the same, but it must be done by fewer employees. Consequently, everyone’s workload and level of responsibility increases.
Many merchandise managers help develop and implement sales promotion programs. They consult with merchandise executives to establish the sale’s character, purchasing items accordingly. Merchandise managers and advertising personnel sometimes collaborate to generate ad campaigns, deciding details like which media to advertise in and how long to run the advertisements. Merchandise managers also pay frequent visits to the selling floor to make sure that products are displayed appropriately. It often falls to assistant buyers to place orders and check shipments.
The work of purchasing managers, buyers, and purchasing agents continues to be influenced by computers. These machines can efficiently take care of much routine work (such as storing past bids and offers, tracking supplier performance, and issuing purchase orders), thereby freeing purchasing workers to focus on the analytical and qualitative side of their job. These workers also use computers to find current listings of products and prices, to track orders and inventory levels, and to help them make purchases.
Computerized systems allow purchasing managers, buyers, and purchasing agents (and in turn the companies that employ them) to operate much more efficiently. With these systems, acquisition functions are dramatically simplified and sales patterns can be identified much more effectively. For example, through point-of-sale terminals (cash registers monitored by computers), organizations can instantly access current sales and inventory figures, which they can then use to produce accurate sales reports. Being able to quickly ascertain customers’ buying habits enables buyers and supply managers to maximize profits. Computer systems give buyers instant access to the specifications for thousands of commodities, inventory records, and their customers’ purchase records. Such information allows them to make more efficient purchases: they can avoid overpaying or ending up with shortages of popular goods and surpluses of less popular goods. Firms use electronic purchasing systems, the Internet, or Extranets to stay connected with manufacturers and wholesalers. Through these systems, buyers can better evaluate how they can select goods and suppliers, and can select, customize, and order products faster.
Purchasing Manager Training and Job Qualifications
Potential managers and specialists often start as trainees, purchasing clerks, expediters, junior buyers, or assistant buyers. Retail and wholesale firms like candidates to have a college degree and to be familiar with the goods they sell and with the nature of the wholesale and retail industries. In some retail firms, qualified employees are promoted to assistant buyer positions; in others, college graduates are recruited and trained. Most firms combine both techniques.
Formal training requirements generally depend on how large an organization is. Large stores and distributors, particularly those in wholesaling and retailing, like candidates to have a bachelor’s degree that emphasized business. Manufacturing firms tend to value formal education; they generally prefer bachelor’s or master’s degrees in business, economics, engineering, or an applied science. Many upper positions for purchasing managers essentially require a master’s degree.
Even with the best degree, new employees still need to learn the ins and outs of their employers’ business. Policies vary, but most training periods last 1 to 5 years. Most wholesale and retail firms start their trainees off in merchandise sales, supervision of sales people, and monitoring shipping and stock. Retail trainees gain more buying-related responsibilities as they gain experience.
Many manufacturing firms enroll their new purchasing workers in company training programs. These employees spend a substantial amount of time working with experienced purchasers to learn the details of their firm’s practices (for example, about commodities, prices, suppliers, and markets). They may also spend time working in the production planning department to gain insight into the inventory and material requirements systems the company uses to efficiently operate its production and replenishment functions.
Computer skills are important for purchasing managers, buyers, and purchasing agents. They must be proficient in word processing and spreadsheet programs, as well as in the use of the Internet. They should also know how to analyze technical data in suppliers’ proposals; be good communicators and negotiators; have solid mathematical skills; understand supply-chain management; and be able to carry out financial analyses.
Potential wholesale and retail buyers should be interested in merchandising and need to be effective planners and decision makers. They should be willing take risks and able to make fast decisions. They need resourcefulness, good judgment, and self-confidence to anticipate consumer preferences and to ensure that merchandise is in stock when it is needed. Candidates should know how to market products and identify items that will sell well. Employers also expect their buyers to have leadership potential because buyers constantly supervise assistant buyers and interact with manufacturers’ representatives and store executives.
Advancement for veteran buyers can come by becoming a merchandise manager or by transferring to a department that deals in larger quantities. Others move to a manufacturer or wholesaler to work in sales. Before promotion to a position as purchasing manager, supply manager, or director of materials management, experienced purchasing agents and buyers often work as assistant purchasing managers over a group of purchasing specialists. Responsibilities of top supervisors coincide with other management functions—logistics, marketing, planning, production, etc.
Continuing education is necessary for advancement in all industries. Professional certification is increasingly valued, particularly for those new to the field. Seminars offered by professional societies are popular among purchasers, as are college courses in supply management.
Private industry has several standard indicators of experience and professional competence: the Institute for Supply Management confers the designations of Accredited Purchasing Practitioner (APP) and Certified Purchasing Manager (CPM); and the American Purchasing Society confers the designations of Certified Purchasing Professional (CPP) and Certified Professional Purchasing Manager (CPPM). In Federal, State, and local government, the National Institute of Governmental Purchasing confers the marks of professional competence: Certified Professional Public Buyer (CPPB) and Certified Public Purchasing Officer, (CPPO). Most of these certifications require work-related experience, a certain level of education, successful completion of some type of exam.
Purchasing Manager Job and Employment Opportunities
Through the year 2012, overall employment of purchasing managers, buyers, and purchasing agents is predicted to grow slower than the average. Increases in the services sector should offset some of the waning need for purchasing workers in the manufacturing sector. Purchases in the services sector have traditionally been made on an ad hoc basis, but firms are starting to realize the improved efficiency of centralized purchasing offices. As software continues to improve, demand for purchasing workers will continue to be limited. Such software has significantly reduced the paperwork needed to order and procure supplies; increased credit card transactions, thereby letting employees purchase supplies without using the services of the procurement or purchasing office; and allowed a growing number of purchases to be made electronically. Even with slower-than-average growth, some job openings will come from the need to fill positions left by workers who change occupations, retire, or leave the labor force for some other reason.
Expected changes in employment vary considerably by specialty. Through 2012, employment of purchasing managers is forecasted to grow more slowly than the average. Electronic commerce via the Internet has made information easier to get hold of and thereby increased purchasing managers’ productivity. The Internet has leveled the playing field in some ways, permitting both large and small firms to bid for contracts. Because of changes in the nature of contracts (specifically, exclusive supply contracts and long-term contracting), companies interact with fewer suppliers less often.
Employment of wholesale and retail buyers, except farm products, is also forecasted to grow at slower-than-average rates. Mergers and acquisitions in the retail industry have brought about the consolidation of most buying departments. Furthermore, larger retail stores are eliminating regional buying departments and relocating them at their headquarters.
Conversely, employment of purchasing agents through 2012 (except wholesale, retail, and farm products), is projected to grow about as fast as the average for all occupations. Purchases of complex equipment, which are difficult both to automate and to transact electronically, should not be significantly affected by the increasing use of electronic transactions. Employment of purchasing agents and buyers for farm products also is forecasted to grow about as fast as the average for all occupations because the ease of making purchases electronically is restricted by the need to evaluate the quality and freshness of farm products.
The best prospects for being hired as a buyer in wholesale or retail trade or within government should be enjoyed by candidates with a bachelor’s degree in business. Those interested in working for a manufacturing or industrial company will benefit from having a bachelor’s degree and industry experience and knowledge of a technical field. A master’s degree in business or public administration is usually required for top-level purchasing positions in larger companies or in government agencies.
Historical Earnings Information
In 2002, purchasing managers reported median annual earnings of $59,890. The range of annual earnings for the middle 50 percent was from $43,670 to $81,950. The earnings of the lowest 10 percent were under $32,330, while the earnings of the highest 10 percent exceeded $108,140 a year.
In 2002, purchasing agents and buyers, except in farm products, reported median annual earnings of $40,900. The range of annual earnings for the middle 50 percent was from $31,390 to $55,440. The earnings of the lowest 10 percent were under $23,850, while the earnings of the highest 10 percent exceeded $76,740 a year.
In 2002, wholesale and retail buyers, except in farm products, reported median annual earnings of $40,780. The range of annual earnings for the middle 50 percent was from $30,040 to $55,670. The earnings of the lowest 10 percent were under $23,270, while the earnings of the highest 10 percent exceeded $76,070 a year.
Successful purchasing managers, agents and buyers may make substantially more than the figures presented above.