Purpose in purchasing — buzzword or success factor?
What am I doing here actually? And above all, for what? "Purpose" has long since ceased to include only the question of meaning in private life. It is increasingly becoming a relevant concept at the corporate level. And although this word has not yet found its way into the active vocabulary of many purchasing departments, it is one of the key success factors in the transformation to innovative and crisis-proof purchasing.
What does "purpose" mean? According to the Merriam-Webster Dictionary, "purpose" comes from the Latin proponere "to propose." This term is mainly used with the question of meaning, which in the face of global challenges, such as climate change, the Corona pandemic, and current wars, is increasingly on the minds of an increasing number of people. Especially the younger generation in industrialized countries is requiring organizations, governments, and companies to contribute more to sustainability in this context.
The question of purpose beyond financial goals
As a consequence, it is necessary for the business world to define the meaning and socially relevant purpose of business activities. The question, "What are we doing this for?" needs to be be answered with a clear commitment to social and corporate social responsibility (CSR) well beyond the profit motive. It is precisely this sense of purpose that employees, suppliers, and customers will expect more of in the future. Specifically purchasing will be assigned the central role of aligning operational and strategic tasks to the defined purpose.
Purpose is extremely important in everyday purchasing.
Although the term purpose is not yet familiar among buyers, its underlying concept is nevertheless highly significant in their everyday work. Among other things, this becomes evident in a quick survey I conducted on LinkedIn in mid-2022. The responses of the specialists and managers, most of whom came from the purchasing department, show: The everyday values of buyers are strongly oriented toward future sustainability and appreciation for colleagues and suppliers. When asked about the relevance of purpose for purchasing, keywords such as success, clarity, appreciation, sustainability, and the current market situation were mentioned most often. Especially for sustainability, purpose in procurement plays a major role along with communication and innovation. You will also find the details of the flash survey in my new book Purchasing in Transition [Der Einkauf im Wandel].
Let's get to the question of meaning in purchasing. As a buyer, what am I actually doing and why? What is the purpose of purchasing in the company and in the business? The basic purchasing task is the cost-effective and timely procurement of required goods, energy, and services in the appropriate quality and optimal quantity. Purchasing's responsibility in the sense of purpose thereby includes sustainability, i.e. climate protection, human rights under the German Supply Chain Act, global and local supply chain logistics, material supply security, along with innovation.
A success factor for sustainable purchasing
An actual example from my work with clients shows how important a defined purpose is for internal and external impact. In the focus: a company from the renewable energy sector. The goal: a sustainable realignment in purchasing. Specifically, the recruitment, commitment, and continuing professional development of employees were elementary components in the realignment and thus focused on implementing the purpose in their everyday work. The purpose of the company is "to enable people and companies around the world to be more independent in the use of energy." It also determined the company's philosophy of showing appreciation toward all employees. Workload reduction and smarter operations through state-of-the-art technology, software, facilities, independence, creative freedom, active appreciation, and sustainability in everyday business were just a few of the measures that made the company's purpose tangible. In the end, the success was not only obvious, but also measurable thanks to the mood barometer.
As a purchasing executive, it’s important to keep the big picture in mind and to include purpose as an important success factor in transforming to sustainable purchasing. Clear commitments by a company to social responsibility and an associated set of values have far-reaching effects on purchasing.
Many more details on this subject are available in my new book Purchasing in Transition [Der Einkauf im Wandel]. I will also be happy to answer your questions about purchasing and purpose in particular in a free appointment or on LinkedIn.
For more on this and other issues for sustainable purchasing strategies, also listen to my podcast.