PURCHASING IN THE SERVICE INDUSTRIES

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According to the U.S. Department of Labor, the most rapidly growing segment of the United States work force is the service industries, a category that includes banking, insurance, and other financial and information activities. Since growth also involves a trend toward consolidation and acquisition, numerous companies are emerging as corporate giants that are acquiring other insurance companies and banks that, in themselves, are service systems with many regional branches. One of the tempting benefits to be gained from consolidation and acquisition is the ability to centralize many of the internal functions such as purchasing and general accounting. Contributing to the centralization trend are continual advances in computer technology in information processing industries. Although early proponents of the computer forecasted a paperless society, the reverse of that forecast is currently taking place, as banks and insurance companies now are one of the primary markets for paper products.

As these service industries consolidate, the purchasing function is moving from the branch to the regional headquarters and, in some cases, to the national corporate headquarters, resulting in higher purchasing volumes and increasing specialization. Since, however, consolidation or centralization involves tiie distribution of products and services to hundreds or even thousands of branch operations, the need for highly sophisticated control and expediting systems is becoming critical.

This continuous growth has transformed the purchasing function from a part-time job for one of the junior loan officers or a senior clerk at a branch location to a full-time position for a highly professional specialist whose purchasing responsibilities involve millions of dollars per year. Now the purchasing department is a vital part of corporate operations, with the head of the department usually occupying a vice-president's position.



THE NATURE OF THE WORK

A buyer in the service industries usually is involved in the procurement of forms and other paper products, office equipment, computer hardware and software, office furnishings, and warehouse equipment. In larger operations, buyers specialize in the purchase of products in two or more categories. A multi branch bank or insurance company uses hundreds or even thousands of different forms, some adapted for computer operations and others to be prepared manually. The design and purchase of these forms require a thorough knowledge of computer-driven communications and internal organization. In service industries, forms are the basis for almost all data and information entered into the company-wide compute system and also serves as a vital reporting link to thousands of clients.

Purchasing office and computer equipment has evolved from the procurement of relatively simple bookkeeping equipment, adding machines, typewriters, and filing system equipment to the purchase or lease of highly complex computer and word processing equipment. Since equipment buyers must work closely with the using departments or branches and the suppliers or contractors, the amount of technical knowledge required has increased tenfold. Distribution of the thousands of products and equipment to the network of branch offices is usually the primary responsibility of the purchasing department. Some companies operate their own central receiving and distribution centers while others depend on suppliers to distribute the products. Either method, however, requires an intricate scheduling system to ensure that the many branches receive their supplies and products on time and that these items are compatible with the entire network.

ENTRY REQUIREMENTS AND QUALHICATIONS

Since buyers do become heavily involved in preparing contracts and specifications, they must possess excellent verbal and writing skills and the ability to organize business communications in a logical format. Most buyers in the service industry have had enough general business experience to understand the needs and the complexity of a large business organization.

The consensus among senior buyers and purchasing managers is that the best background for someone entering the service industry is a bachelor's degree in general business rather than finance, principally because the understanding of business systems and organization is so critical. A proficiency in mathematics is necessary, and management and computer training is preferable.

Work experience should be centered on business and customer relations. Some officials favor retail experience because of the emphasis on customer service, and they feel that the branches of the company are their customers. Computer experience is becoming a necessity since all information transfer systems are now computerized. Experience in internal communications is also a plus.

Since many of the products are purchased through relatively long-term purchase agreements, excellent negotiating skills are a must. These skills, however, are often considered to be part of the in-house training process because the contracts are so specialized.

WORKING CONDITIONS

Service industries, especially banking, are goal oriented. Employees are expected to establish work-related objectives, and, through review and evaluation processes, their progress towards those objectives is monitored. Supervision, however, is general, and purchasing professionals are usually given considerable freedom in meeting their responsibilities.

The work environment is usually pleasant and professional. The facilities are generally modem and extensive, with heavy emphasis on the proper corporate image. Compensation levels are low average to average in comparison to other industries, but fringe benefits are excellent. The opportunities for advancement are good, especially in organizations that are expanding and acquiring other companies and financial institutions.

High ethical standards are required, and personal appearance must be in line with the overall corporate image. The work environment is somewhat structured, although not to the extent of some other industries.

If you are considering the service industries as a career goal, then you must be detail oriented, disciplined, a team player, and self-directed. Since you will often be working with intangibles, the ability to think out or project how a systems change will affect an entire network is very important.
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