Managerial experts believe that in today's dynamic business climate, only those organizations with trained and proven professionals will survive. If so, then some of today's cooperatives must rethink current attitudes towards staffing, developing and endorsing professional supply management (purchasing, warehousing, etc.)

Supply personnel are a vital link in any successful operations chain and yet cooperative supply functions usually have fewer human and physical resources when compared to other departments. An electric system's procurement function should be adequately staffed so as to seek out greater sources of supply, maximize existing ones, closely administer contracts, forecast material requirements and anticipate market conditions. Increased efficiency is obtained by having a board-sanctioned centralized materials management program. Note the word centralized? It is the root core of any successful effort, of which the American Management Association states: "Multiple purchasing authority is inefficient because it results in duplication of efforts, dilution of the benefits of concentrated purchasing strength, demoralization of purchasing personnel, and confusion among company employees and vendor's representatives."

So how do today's coops promote this enhanced agenda? Well first, each coop should take a good close look at its existing processes and ask questions such as: Are purchasing, inventory control, and warehousing/stores represented in top level planning affecting future operation's procurement needs? Is the professional development and certification of supply personnel encouraged? Is there a formal inventory control system in place? Are competitive procedures used? Are purchasing and materials management policies and procedures documented?

Once established, an effective procurement program should be perceived as a source of revenue rather than an expense. Here's how: Say for example your coop's last reported percentage of gross profit was 8% (margins/income), meaning that in order to make one dollar of profit, your coop had to generate $12.50 of revenue. Fact: $1 saved through effective purchasing is equal to $1 free and clear of true profit. If efficient purchasing reduces your coop's cost of goods (for example…$7 million annually) by only one 1%, this savings of $70,000 is equal to the purchasing function alone generating revenues of $875,000 annually! ($70,000 saved x $12.50).

There is an organization that is uniquely committed to the education, certification and enhanced professionalism of cooperative supply personnel. The Rural Electric Utilities affiliate of the National Association of Purchasing Management (NAPM-REU) has been doing this since 1992. Since then, NAPM-REU has gained national recognition for having the largest percentage membership growth, exceeding Certified Purchasing Manager certification goals, and being a "best in class" affiliate. Many of its members have gained individual national recognition. Cooperative employee Dick Rich of Seminole Electric Cooperative in Tampa, Florida, recently served as president of NAPM, a 47,000 member international organization founded in 1915. To find out more about NAPM, please visit its web site at: www.napmreu.org.

If you would like further information or have any questions, please call Carl Liles of Western Farmers Electric Cooperative at (405) 247-3351, E-mail C_Liles@wfec.com, or Harvey Bowles, Chair, Technical Standards Committee "A" (Electric), at (202) 720-0980.