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April 19, 2005

Long-Time Purchaser Shares Lifetime of Lessons

By Katrina C. Arabe

30-year purchasing veteran Herb Shields looks back at the changes that have redefined his profession throughout the years:

HerbShields.JPGWhat's run-of-the-mill now was nothing short of revolutionary back in the days when Herbert Shields first embarked on his career as a purchasing professional. "Buying not made-in-the-U.S. products was really strange. For example, bringing in ball bearings from Japan in the 1960s was revolutionary," he tells Industrial Market Trends in a recent interview.

Indeed, Shields' 30-plus years of experience in the purchasing field have given him front-row seats to the dramatic shifts that have reshaped his profession. He spent three decades working for major corporations such as Westinghouse, Ingersoll Rand, Alberto Culver and Helene Curtis (purchased in 1996 by Unilever). During this time, Shields climbed steadily in the purchasing ranks, eventually assuming the position of vice president of materials management. In 1999, he left the corporate world to set up his own firm, HCS Consulting, which helps companies maximize their purchasing dollars, reduce costs and boost operating efficiency.

Looking back at the trends that have impacted his profession, he pinpoints three that have exerted the most influence: commoditization, globalization and the Internet. Even specialty chemicals have become commodities, Shields points out, marking a dramatic shift from the days when purchasers could only choose from a limited number of suppliers for certain products. Today, people in procurement have nothing less than the world to consider. "The purchasing function is of strategic importance to the company," he says. "Purchasers have an obligation to strategically source and have to think globally."

Today, locally sourced items only have a slight edge over globally sourced ones. "If everything else is equal, there's an advantage to buying locally--timing and transportation cost--over buying across the world," he tells IMT. Meanwhile, the third major trend, the use of the Internet, has been a driving force behind globalization, immensely widening the scope of suppliers that purchasers can choose from. Moreover, it has accelerated processes, he says, allowing procurers to quickly complete transactions that once required paper-based documentation.

Purchasing practices and strategies for the 21st century not only represent his field of expertise; it's also what Shields is teaching at the Illinois Institute of Technology. He teaches a newly offered purchasing course, which is part of the logistics program at IIT. While he expects that most of his students will never work as purchasing managers, he says that the course will help prepare them for a career in logistics, in which purchasing plays an integral part. He points out that "logistics represents more and more jobs" but interestingly, the "average person doesn't understand the impact of logistics on his/her daily life."

Purchasing is similarly shrouded in obscurity even though its strategic role in the corporation has been emerging since the late 1980s, he says. Shields estimates that "99.9% of high school students don't have a clue that purchasing even exists as a profession...and that's a problem." Fortunately, he says, "any number of different educational backgrounds are perfectly acceptable routes into the purchasing function." Shields, for example, was an electrical engineering major.

In fact, the educational path that will best prepare a student for a career in purchasing depends on the industry in which the company belongs, he says. For instance, students with a technical background tend to be well-suited for the purchasing departments of firms with a technical orientation. In short, purchasing is often a career that people gravitate toward not actively pursue, but it's one that can be especially rewarding and eye-opening. Just ask Herb Shields.

"My purchasing career has been a terrific learning experience. I have traveled the world and visited hundreds of manufacturing companies in the process," he says. "Working in the purchasing profession has given me the opportunity to interact with people from every business function. No two days were ever the same and there was always some new process or product to understand."

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28 Comments

Joey Iazzetto said:

Very true and right on! Commoditization, globalization and the internet have had a huge impact on purchasing as well as many other areas of business. This author certainly knows what he's talking about!

April 20, 2005 12:11 PM


Rob Engelman said:

Herb Shields' sentiments that Purchasing should take a front seat within the business plan certainly make a lot of sense. I had not really considered this before...but he is absolutely right. Thanks.

April 21, 2005 12:06 AM


Herb knows of what he speaks. He says it the way it is. Very well done.

April 21, 2005 9:09 PM


Herb is right on about commoditization. I spent a number of years in the specialty chemicals industry and it was interesting to see how the intersection of time and global competition reduced some of our best specialty products to commodities.

April 21, 2005 11:35 PM


Great insights on why things are the way they are today - especially in the business-to-business world.

April 22, 2005 10:20 AM


Bill Brennen said:

There is a new book, "The World Is Flat" by Thomas Friedman, columnist for the New York Times, in which the concepts discussed by Herb Shields are emphasized. Right on, Herb.

April 23, 2005 12:32 PM


Mohamed Mehta said:

Very true even in 21st century compnies dont give due share to purchasing forget about high school. It is challenging position and can make or break the corporations. 1% saving in Purchasing is equal to 10% increase in sale. Work locally but you have to act glbally.
Thanks
Mohamed

April 26, 2005 11:56 AM


Matt Koivisto said:

Its guys like this that are responsible for our huge trade imbalance. Buy it cheap Herb and eventually they'll be no jobs left in the USA.

April 26, 2005 1:52 PM


Apparently some people still believe in isolation as a solution. Herb recognizes that you can't hold back the tide. But he emphasizes the challenge that faces the US, like it or not. Good article that spells it out clearly!

April 26, 2005 6:15 PM


Jai said:

In the present context the job profile of the purchasing man needs to be redefined. Specialised purchasing managers who do not have a clue about sales, marketing and customer service create more problems than they solve. Today we need well rounded professionals. Herb would do a service to the industry by teaching his students and clients the importance of understanding customers requirements first and working backwards to the purchase function.

April 27, 2005 1:06 AM


Like it or not...Herb is right on! We are in the middle of an Internet revolution that is changing how we buy and sell everything from nails to jet engine parts. As we see it, the internet is accelerating globalization and is making the purchasing mgr's job easier. More choice, higher efficiency lead to lower costs. That's great for buyers but not good for sellers. It's forcing sellers to lower costs or go out of business. But, we like to remind our sellers that they are a buyer too. So, use the internet and technology to cut your costs and compete successfully in this new world!

April 28, 2005 12:05 PM


Javaid Khan said:

Being an engineer and having worked in the purchasing/logistics function at times, all I can say is that Herb's insight into the overall context of the purchase function is really good.
I pity guys like Matt Kovisto who cannot visualise beyond their nose.
Javaid

April 29, 2005 9:26 AM


Matt Koivisto said:

I pity people who don't see what NAFTA has done
to the USA. Of course, some of the people who write in are not from the USA, are they?

May 23, 2005 4:06 PM


Interesting point about 99.9 percent of high-school students don't know that the field exists. I'd say 90% of people in large corporations don't know the Purchasing Departments exist either. That is a real problem operationally within companies.

It's true about people coming from so many different backgrounds and ending up as buyers and purchasing managers. I have worked with former lawyers, engineers, retail managers and EMTs, to name just a few of the backgrounds of my various purchasing colleagues.

February 22, 2006 6:31 PM




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