2016: A Year of Challenges and Silver Linings?

Date: 11/11/2015

In a matter of days, the American Purchasing Society will release our 2015 salary and benchmarking reports. It’s an annual event here that always generates a lot of discussion and interest.

Our salary report last year uncovered some slightly unsettling news: 

• Average salaries had declined for nearly every job title – from buyers, purchasing agents and purchasing directors to vice presidents of purchasing.
• For nearly a quarter of you, raises evaporated.
• Three-fourths of you worked in departments with hiring freezes.

It also revealed that purchasing jobs aren't as plentiful as they've been in recent years. And no wonder. As many leading consultancies out there have already noted, many purchasing departments have become so good at their core tasks, fewer people are needed to do them.

It’s beginning to take a toll, however. According to a Staples Advantage Workplace survey released in early November, for example, the majority of surveyed employees (53 percent) report they are burned out. Of course, the record number of mergers in 2015 is causing a degree of displacement as well.

You may be wondering, what will our 2015 reports reveal? Will salaries be ticking upward to more closely reflect changes in the cost of living? Will hiring freezes thaw? We recently spoke with Kevin Rohan, director, procurement recruiting lead, at JP Canon Associates, a New York City based executive recruiting firm specializing in Fortune 500 companies.

Don’t expect seismic changes in compensation and bonuses, Rohan predicts. The market for talented sourcing professionals, for example, has gotten tighter and a bit less “aggressive” pay-wise than it was prior to 2008. While incentive plans will continue to reward many of you for surpassing goals and targets, the reward levels between meeting and exceeding may not be as great as you may be accustomed. (The exception Rohan has seen is among private companies “that directly tie bonus to procurement savings and goals” – some as high as 50 to 100% of base salary.) But beware: “These companies also tend to be very unforgiving when those goals are missed.”

Meanwhile, Rohan offers promising news for purchasing pros in a number of key sectors, noting that the most robust hiring activity is currently in consumer products (food, beverage, personal care, beauty care, etc.), financial and professional services, and pharmaceuticals/consumer health. Rohan notes that he’s seen “a lot of leadership change” over the last five-plus years, as new chief procurement officers or category leads are beginning to build their own teams.

“Most of the positions are at the strong individual contributor levels, the most active market segment being category managers and sourcing/procurement managers focused on a specific buying area such as technology, marketing, professional services, packaging and direct materials and capital/MRO, etc.,” Rohan tells APS.

There’s also a silver lining in the current M&A activity, as those firms look to hire experienced managers to manage the change, as Rohan points out. And so, another positive trend: Private equity investors, who are becoming “very active in acquiring companies or as activists in publically traded companies,” are “usually very aggressive in cost cutting, resulting in many new procurement functions.”

Still, there are immediate challenges ahead, particularly for recent college graduates looking to land a purchasing job with unrealistic expectations. For those of you possessing a degree in finance, supply chain or logistics, chances are you’re faring better than those with English literature sheepskins.

If you are a purchasing pro looking to trade up in the job market, being a “quick learner” isn’t necessarily a positive trait to have these days. If JP Canon’s leadership searches over the past year have revealed anything, it’s this: “Companies are laser focused on interviewing candidates with relevant industry experience and prior category expertise and who have already served in a similar level or capacity,” Rohan tells us.

And you may fare better looking for work in a familiar sector. “More often than not, companies will hire from within the industry even when much of the procurement/sourcing best practices were built by adapting practices from more progressive industries,” Rohan adds.

But that doesn’t mean there isn’t wiggle room to aspire to different functional areas. “Over the past five years, we’ve noticed more candidates move successfully into procurement/sourcing from other supply chain or functional disciplines like planning, logistics, marketing, IT, engineering or operations,” he adds.

Some suggestions for the year ahead

Keep focusing on the fundamentals. “Generally, we have seen companies reward those who manage their portfolio well and punish those that don’t, especially with all of the private investment and activism,” Rohan advises. For those of you involved in mergers or acquisitions, you may have “a lot more opportunity to take advantage of the ‘low hanging fruit,’ which improves your compensation potential.”

Some other general advice from us: 

• Claim your role as a trusted advisor. Those in this profession for the long haul want C-level people in their companies to rely on them for sound advice.
• Think like an entrepreneur. Companies today are looking for outside-the-box solutions. Mine the expertise and talent from peers on the inside and your rich and talented supplier community on the outside.
• Never forget you are a lifelong student of purchasing. Exploit all the opportunities you can to participate in continuing education. APS offers a rich variety of professional development offerings, including one of our newest courses, Forecasting for Buyers, Managers, and Business Executives.

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