A detailed look at the role of Purchasers, also known as Buyers, in an Original Equipment Manufacturer (OEM) or System Integration (SI) company and what they do.
Hello again 👋.
Welcome back to the Roles in OEMs and SIs series where I am giving you an introduction to the different job roles that exist in Original Equipment Manufacturer and System Integration companies.
In the previous parts of the series, I introduced you to the Field Service Team. In that post, I explained what the Field Service Team does and how technology is changing the way they work.
In this part of the series, we will learn what Purchasers, also known as Buyers, do in an OEM or SI company.
Before we move on, I would like to take a moment to introduce myself to anyone who might be new to the blog.
My name is Ken Bourke and I have worked as an automation professional for almost a decade. During this time, I have worked on large global projects in different industries around the world.
In the last year, I have started producing content online to share my knowledge through free blog posts and free or very reasonably priced courses.
If you get some value out of this post then consider checking out my courses, joining the mailing list using the form at the bottom of this page, or, if you’re feeling very generous, buying me a coffee using the Buy Me a Coffee widget on this page.
With that bit of shameless self-promotion out of the way, let’s get back to talking about what the Buyer does in an OEM or SI company.
A Buyer is a person who works in the Purchasing department and is responsible for purchasing all of the components and outside labour that is required to build and deliver a machine or system.
The Buyer’s key metrics revolve around reducing the cost of the components that are used in a machine and reducing the overall supply chain costs for the OEM or SI.
Roughly half of the cost of a machine comes from the components that are used to build it, so a Buyer’s ability to get better prices for components can have a huge effect on the company’s profit margins.
For this reason, OEM’s tend to hire aggressive buyers who focus on securing reduced prices from vendors and on reducing the company’s supply chain costs.
Occasionally, these goals conflict with each other.
To reduce the price of a component like a sensor, a buyer will typically go to multiple vendors and try to encourage those vendors to compete with each other to secure the lowest price. This strategy leads to lower component costs for the company.
In contrast, to reduce supply chain costs, the Buyer may try to use less suppliers and order more components from a single supplier. When the company is dependent on a single supplier, it is harder to aggressively negotiate on the price of components.
As you can imagine, the most successful buyers tend to be more commercial than technical. This can cause some friction with the engineering team who may see the value in using premium components in machines.
In this post, I introduced you to the Buyer, also known as the Purchaser, in an OEM or SI business as part of my Roles in OEMs and SIs series.
I explained what Buyers do in an OEM or SI company and what metrics they are judged on.
So far, we have talked about the roles that exist in end user factories and OEM/SI companies. These are not the only kinds of companies that are involved in industrial automation. In my next post, I will explain types of companies exist in the industrial automation space and what each type of company does.
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