Decentralizing Control Of Purchasing p. 8

By: Mark Fitzgerald

Newspaper purchasing managers see their roles changing again,
and some are having trouble handling the transition sp.

AFTER YEARS OF working to achieve greater status on their newspapers, purchasing managers in the “reengineering” ’90s are finding they have to fight for that recognition all over again.
What’s more, they are going to have to work in ways that once were anathema.
Nylan Bathke, St. Louis Post-Dispatch purchasing manager, analyzed the situation this way at the Newspaper Purchasing Management Association’s 37th annual conference held recently in Minneapolis: “What’s happening is that many of us came here when everyone [on the paper] was doing their own thing and we were told to get purchasing centralized,” Bathke said. “So we centralized and now we’re finding that, gee, all this control isn’t very efficient.
“Now we’re coming to the understanding we’ve got to give that control back to the people we took it away from 15 years ago, because it is more efficient.
“And we’re having a psychological problem with that,” said Bathke, the outgoing NPMA president.
Flashes of this cognitive dissonance appeared occasionally during the conference, especially as the purchasing managers discussed giving employees procurement cards to make small-dollar purchases. (See related story on page 13.)
Procurement cards are a kind of charge card that can be restricted to purchases of only certain supplies and services. The advantage for newspapers is they permit purchasing departments to make large numbers of small purchases without preparing costly and time-consuming purchase orders and payment checks.
Procurement cards are also seen by many as another step toward “empowering” employees.
In urging his colleagues to keep an open mind about procurement cards, one purchasing manager portrayed them as another tool that might be used to preserve their very jobs at a time of industry restructuring and downsizing.
“This could be a way of even saving ourselves,” said Mark Thomas, purchasing manager of Journal/Sentinel Newspapers in Milwaukee.
It is an ironic worry, given the achievements newspaper purchasing managers racked up during the last recession.
“We’re coming out of an era in which if you couldn’t be a hero in purchasing, you didn’t belong there,” Bathke told the group.
“When we were in recession, it was a buyer’s market,” Bathke added in an interview. “Vendors were fighting to keep market share . . . . You could get savings or cost reductions very easily. You really didn’t have to be a great negotiator.
“Now,” he added, “it’s going to be a different story.”

Ways to save

Certainly, purchasing managers are still intent on saving money wherever they can.
This year, NPMA’s popular “Good Buys/Bad Buys” session included a thick binder with suggestions that found cost reductions in virtually every nook and cranny of newspapers.
For example: “Our cashier department electronically pre-codes and endorses checks before depositing them in the bank. This saves us 21/2? per check in bank service charges,” wrote Regina George, buyer for the Louisville Courier-Journal.
A 21/2? per check reduction ? yet annual savings amounted to $13,750, George reported.
Indeed, for all the talk about restructuring, much in a purchasing manager’s job will not change.
At the Minneapolis Star Tribune, for example, change is the order of the day. The traditional newspaper hierarchy has been replaced by business groups with names such as “marketer customer unit” and “reader customer unit.”
Yet the kind of “cross-functional team” that this new organization is supposed to build is pretty much what purchasing departments have done for years.
“Getting out there and being innovative, looking at new ways of doing business ? that’s what we’ve always done,” said Richard Greene, Star Tribune general services manager.
And some newspaper corporate restructurings are being designed to enhance the position of purchasing.
Chicago Tribune controller Michael Kelly, for example, heads a project that intends to reengineer accounts payable and purchasing at Tribune Co. properties.
One goal is to cut virtually in half the number of full-time employees working in finance departments for Tribune newspapers and broadcast outlets.
A happier fate, however, awaits the purchasing departments.
“What we’re going to try to do is make purchasing more visible, more important in Tribune Co.,” Kelly told the NPMA.
The intention, Kelly said, is to free up purchasing personnel for better management by standardizing and streamlining the function.
For instance, Tribune wants to reduce the number of suppliers with which purchasing has to deal.
A Tribune survey found that 865 different vendors are used for hardware and software purchases, Kelly said.
“There’s got to be something we can do to narrow the universe,” he said.
In another effort to end “non-value-added tasks” purchasing managers must contend with, Tribune has adopted procurement cards that eliminate the need for many purchasing orders and payment checks.
At the same time, purchasing will become more involved in capital projects, Kelly said.
In the past, he said, large capital expenditures came to purchasing only when it was time to execute the paperwork.
If there is a theme to newspaper purchasing management these days, it is that managers must be more involved in the big picture ? and less in routine.
“A good example . . . is the stockless purchasing programs that many have implemented over the past several years,” said Thomas Miller, manager of purchasing and office services for the Houston Chronicle Publishing Co.
“The purchasing department is responsible for vendor selection, negotiations and logistics. But once the program is established, purchasing has little or nothing to do with this daily operation . . . . In other words, it enables us to be managers, rather than just performing a buying function,” Miller added.
Similarly, some newspapers are adopting procurement cards to free up their departments.
“I want to get on with truck leasing, with helping maintenance [departments], with finding second-party suppliers for Ferag [equipment],” said Donald Woodworth, purchasing manager for Newsday. “But if your people are busy with [small] purchasing orders, they are not out there finding alternate sources for TKS press parts.”
And even as purchasing departments continue to spin off some functions, they are lobbying ever more vigorously to be major players in the new corporate environment.
At the New York Times Co., for instance, there is no centralized purchasing department, “but we [in purchasing at the Times newspaper] think of ourselves as one company ? and we encourage suppliers to think of ourselves as one company,” said William Spina, director of purchasing for the New York Times.
“Purchasing,” Spina added, no longer can be just a traditional support service.”
Times purchasing, he said, is pursuing a “new strategy of becoming a partner with and contributor to other [Times Co.] business units.”
There are good reasons for purchasing managers to keep their eye on the big picture, executives said at the NPMA meeting.
Consider, for instance, that most basic of newspaper purchases: newsprint.
“The concept that newsprint is a global commodity will become a reality for you,” Karen Moreno of Gannett Supply Co. told NPMA members.
U.S. and Canadian newsprint makers are finally able to make their price increases stick, Moreno said. As a result, newspapers should look to Latin America, Europe and Asia, where newsprint capacity “continues to grow unabated,” she said.
Gannett Supply itself intends to buy about 10% of its newsprint this year from “off-shore” producers, Moreno said.
But in addition to developing a global perspective, Moreno said, purchasing executives still need to watch suppliers with a gimlet eye.
“With 83 [Gannett] newspapers, suppliers have been known to quote one price to Louisville and quote one price to Detroit and quote another to Chillicothe [Ohio],” she said.
Even purchasing managers with responsibilities for single newspapers need to beware, Moreno said.
“Suppliers have a tendency,” she said, “to work directly with production, directly with circulation, directly with MIS [management information systems] ? all in an effort to do an end run around purchasing.”

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