The State of the Buying Profession

August 7, 2007

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Purchasing managers, buyers and agents are key components of a firm's supply chain. The following is a rundown of salary and discipline trends, as well as the state of the sourcing job function.

Overall employment of purchasing managers, buyers and purchasing agents is expected to grow slower than the average for all occupations through the year 2014, "limited primarily by increased globalization," according to the U.S. Bureau of Labor Statistics.

As more materials and supplies come from abroad, firms have begun to outsource more of their purchasing duties to foreign purchasing agents, as they are located closer to the foreign suppliers of goods and materials they will need. The Department of Labor expects this trend to continue, but it will likely be limited to routine transactions with complex and critical purchases still being handled in-house.

Offsetting some declines for purchasing workers in the manufacturing sector will be increases in the services sector, according to BLS: "Companies in the services sector, which have typically made purchases on an ad hoc basis, are beginning to realize that centralized purchasing offices may be more efficient." Companies in the services industry are searching for purchasing professionals with experience in manufacturing who've worked for companies that have world-class supply management operations.

Despite the slightly weak outlook from the Dept. of Labor, last month Purchasing magazine noted that "buyers are working in a field that's red-hot right now: Demand for purchasing and supply management pros has exploded."

Plus, according to a recent study, trends show that companies are hiring more purchasing employees, paying them higher salaries and spending more to train them. CAPS Research, a supply management research organization jointly sponsored by the W. P. Carey School of Business and the Institute for Supply Chain Management, created a purchasing benchmark by studying 20 industry sectors over a three-year period. (Source: IndustryWeek)

Moreover, a recent Aberdeen Group study of top purchasing and supply management executives refutes BLS' claims, reporting that "top CPOs rank recruiting, training, retaining and aligning their organizations as their No. 1 goals."

Meanwhile, the Office of Federal Procurement Policy recently released its Annual Report on the Federal Acquisition Workforce showing the number of procurement professionals in government rose slightly less than 1 percent in fiscal 2006, to 59,997 from 59,477 in fiscal year 2005.

The trade-off: Purchasing managers, buyers and purchasing agents frequently work more than the standard 40-hour week, because of special sales, conferences or production deadlines. Add to this the threat of outsourcing and the pressures of current materials prices, and the procurement profession is a stressful one. How are they being compensated?

Compensation Results of Purchasing magazine's most recent annual salary survey show compensation rising by 6 percent last year. And according to the second comprehensive salary survey by the Institute for Supply Management (ISM), released in May, the average annual compensation of supply management pros was $88,380 (for the 2006 calendar year, based on 1,155 surveyed supply management professionals).

ISM further established average salaries for the following specific job titles:

Chief Purchasing/Supply Management/Sourcing — $247,685 VP, Purchasing/Supply Management/Sourcing — $185,343 Director, Purchasing/Supply Management/Sourcing — $124,948 Manager, Purchasing/Supply Management/Sourcing — $87,676 Agent, Buyer, Senior Buyer, Planner, Purchaser — $61,645 Consultant — $107,032

For companies whose gross revenue was lower than $500 million, their supply management professionals made an average of $75,480 or less, according to ISM. For the companies whose gross revenue fell within the range of $500.1 million to $10 billion, ISM data reveal that supply managers made an average of $90,116 to $93,892. Finally, supply management professionals working for companies with more than $10 billion in revenue brought home approximately $103,486 last year.

Bonuses were earned by 61.7 percent of all respondents. On average, bonuses received were $16,118, which was representative of 13.5 percent of total gross salary received.

For tips on how to negotiate a bump in salary, see Purchasing Compensation: How to Negotiate a Higher Salary at Purchasing.com.

What It Takes to Be a Pro Purchasing professionals are concerned about supply and demand. That is what they do, Purchasing pointed out in late 2005. "But if they haven't recently had to fill a job opening or look for a new position themselves, they may not be aware that there's a shortage of individuals with the right skills, education and experience to develop sourcing strategy and manage supplier relationships in today's global economy."

As supply management becomes more strategic as a discipline, the kinds of activities supply managers perform become more strategic. Talented purchasing professionals who can think and act this way are those more likely to get ahead.

Linda Tuck Chapman, senior vice president and chief sourcing officer for Ohio-based Fifth Third Corp., maintains that, "An effective sourcing professional must possess a deep understanding of business drivers and strategies, and how third-party relationships enable their success. Gone are the days of three quotes and you're done."

Tuck Chapman recently told Supply & Demand-Chain Executive:

The 21st century sourcing professional must blend sourcing technical competence — deal structuring, negotiating and innovation — with the skills of a trusted advisor. Active listening is the first step toward sourcing excellence.

For much more on what it takes to be "a sourcing professional who brings advantage to the larger organization," see Supply & Demand-Chain Executive's DNA of the 21st Century Sourcing Professional and SupplyManagement.com's Know Your Type.

Earlier:

The State of the Federal Contracting Workforce

Mixed Outlook for Hiring and Salaries

Resources

Purchasing Managers, Buyers, and Purchasing Agents U.S. Bureau of Labor Statistics

Purchasing Compensation: How to Negotiate a Higher Salary by Susan Avery Purchasing, July 14, 2007

Are You Getting What You're Paying for? by Traci Purdum IndustryWeek, May 1, 2007

The CPO's Strategic Agenda Aberdeen Group (via Procuri.com)

New Acquisition Workforce Report Shows Number of Contracting Professionals Increased Office of Management and Budget, June 4, 2007

2006 Salary Survey: Purchasing Paychecks Get Fatter by Susan Avery Purchasing, Dec. 14, 2006

ISM Issues Report on Salaries of Supply Management Professionals Institute for Supply Management, May 15, 2007

Improve Earnings by Improving Talent Management by editorial staff Supply & Demand-Chain Executive, July 27, 2007

Buyers Are Red Hot by Susan Avery Purchasing, Nov. 3, 2005

DNA of the 21st Century Sourcing Professional by Cyndi Joiner Supply and Demand-Chain Executive

Know Your Type SupplyManagement.com, July 19, 2007

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