The demands of the purchasing profession

By Victoria Fraza Kickham BUYERS EARN THEIR KEEP Electronic components buyers count government regulations, the IoT, and outsourcing as ongoing professional challenges, and they predict a modest pay increase of 2% this year. The demands of the purchasing profession continue to grow, but compensation levels remain stable as electronic components buyers anticipate a modest 2% pay raise this year. Staying up-to-date on the latest government regulations, sourcing a wider variety of products to meet Internet of Things demands, and keeping up with outsourcing trends in an increasingly global economy are some of the issues keeping buyers on their toes. We are being asked to handle a broader range of issues and teach younger employees how to manage major issues on their own, said one of the more than 700 respondents to Global Purchasing s annual Salary & Profile Survey, conducted over the summer. The purchase of electronic parts is an ever-changing world, added another respondent. And we are all asked to do more with the existing resources we have in-house today. Despite such challenges, electronic components buyers remain largely satisfied with their average annual salary of $83,000, which is higher than the average of $79,000 reported in last year s survey. Many also report receiving higher bonus pay these days an average $4,500 yearly bonus compared to the $4,000 bonus reported in last year s survey. Bonuses are fairly consistent, but raises are getting smaller and smaller due to corporate pressure to get rid of them, one buyer said, while another added that bonus plans are improving at his company, with a stronger linkage between performance and compensation, [along with] educational/skill development opportunities. For the first time, we asked buyers to weigh in on the importance of government regulations to their jobs, and the majority said it s vital for them to keep up with certain issues especially surrounding counterfeit electronic components, conflict minerals, and environmental concerns. We also took a closer look at professional differences between men and women responding to this year s survey. Women represent almost a third of respondents, which is in line with what we have seen in past years, but continue to earn less than their male counterparts an average $67,000 per year compared to an average $90,000 for men. A variety of factors play in to the disparity, of course, but we decided this year to compare some of the survey s other data as well to get a glimpse of the typical male versus female buyer. Subscribe to GLOBAL PURCHASING 1 GO TO GLOBALPURCHASING.COM / SUBSCRIBE

AVERAGE SALARY BY GENDER Global Purchasing s 2016 Salary & Profile Survey asked buyers about a wide range of compensation, workplace, and general economic trends. THE TYPICAL PURCHASING PRO Average Years Experience on the Job: 20 Average Number of Years at Present Company: Average Age: Gender: 51% have a bachelor s degree or higher Average Compensation: Average yearly bonus: Expected pay increase this year: AVERAGE SALARY BY EDUCATION Bachelor s Degree or Higher: $95,000 14 52 Male (68%) $83,000 $4,500 2% Men: $90,000 Women: $67,000 The 2016 survey results paint a picture of the typical purchasing professional: He (68% of respondents are men) is 52 years old, has been in the industry for 20 years, and working at his present company for 14 years. He earns an annual salary of $83,000 with a yearly bonus of $4,500, has a bachelor s degree or higher, and expects a 2% raise this year. As in past years, the 2016 results show that the higher the education, the higher the wages. Looking at earnings by education level, those with a bachelor s degree or higher earn an average $90,000 per year and those with an associate s degree or less earn an average $70,000 per year. Experience plays a role as well: those with more than 25 years on the job report earning an average salary of $93,000 while those with 15 to 24 years on the job report earning $90,000 a year, and those with less than 15 years experience say they earn $68,000 a year. The gender gap persists as well; men responding to this year s survey say they earn an average $90,000 a year while women earn an average $67,000 per year (more on the gender gap below). Associate s Degree or Less: $70,000 DO YOU FEEL ADEQUATELY COMPENSATED FOR THE WORK YOU DO? AVERAGE SALARY BY EXPERIENCE Less than 15 years on the job: $68,000 15-24 years on the job: $90,000 More than 25 years on the job: $93,000 39% 61% Subscribe to GLOBAL PURCHASING 2 GO TO GLOBALPURCHASING.COM / SUBSCRIBE

WOULD YOU RECOMMEND PURCHASING AS A CAREER OPTION FOR YOUNG PEOPLE ENTERING THE WORKFORCE? THE GENDER GAP: KEY DIFFERENCES BETWEEN MEN AND WOMEN RESPONDING TO OUR SURVEY. MEN Average Salary: Average Bonus: $90,000 $5,000 Anticipated Pay Increase in 2016: Number of Years in Purchasing: 2% 21 16% 84% Average Age: 52 Would you recommend purchasing as a career? : 79% : 21% Do you feel you are adequately compensated for your work? : 65% : 35% As in past years, buyers say they are satisfied with their compensation package: 61% of survey respondents say they are adequately compensated for the work they do. The 39% that disagree say it would take a pretty hefty increase for them to feel adequately compensated: they say they d need an average 16% increase. matter how they feel about their pay, the majority of buyers (84%) say they would recommend a career in purchasing to young people entering the workforce. I find [purchasing] very challenging and rewarding, said one survey respondent. It allows interacting with various people and requires using all available knowledge and experience of yourself and others to make the right decisions. Another buyer added: It is a rewarding experience being involved in new ideas and watching them move from idea to prototype to marketable product to mainstream distribution. WOMEN Average Salary: Average Bonus: Anticipated Pay Increase in 2016: Number of Years in Purchasing: Average Age: Would you recommend purchasing as a career? : : $67,000 $3,400 2% 19 91% : 9% Do you feel you are adequately compensated for your work? 51 52% : 48% We have pointed to the pay gap between men and women in past surveys, and this year decided to compare some other factors as well to get an idea of the typical male versus female electronic components buyer. The $23,000 salary gap between the two is the biggest difference, although women also report receiving smaller annual bonuses than men do: $3,400 compared to $5,000. In addition, more women than men would recommend a career in purchasing (91% of women compared to 79% of men), but they are less likely to feel adequately compensated for their work: 52% of women say they are adequately paid for the work they do compared to 65% of men. Subscribe to GLOBAL PURCHASING 3 GO TO GLOBALPURCHASING.COM / SUBSCRIBE

IS YOUR COMPANY FUNDING PART OF YOUR RETIREMENT? : 72% : 27% DOES YOUR COMPANY OUTSOURCE ANY WORK? 35% 65% IF YES, IN WHAT WAYS? 401k plan 80% Profit Sharing 22% WHERE IS THIS WORK BEING OUTSOURCED? Bonus or other incremental income Pension Program Stock Options Ownership in the company ESOP IRA/SEP IRA 18% 13% Other 3 The majority of buyers surveyed said their company is funding part of their retirement (72%), primarily through the availability of 401(k) plans. Profit sharing, pension plans, and company stock ownership plans are also available at some companies, though to a lesser extent according to our survey. 9% 8% 8% 4% Other locations in the United States 78% China Mexico India Europe Canada Pacific Rim South America 34% 17% 14% 13% 10% WHAT TYPES OF WORK IS YOUR COMPANY OUTSOURCING? Manufacturing services 75% 8% 4% Design services Information Technology Quality Control Supply Chain services Procurement/materials management 21% 17% 14% 10% 9% Other 14% Subscribe to GLOBAL PURCHASING 4 GO TO GLOBALPURCHASING.COM / SUBSCRIBE

Outsourcing continues to be a factor in the electronics supply chain, as 65% of buyers say their companies outsource work primarily manufacturing services (75%), although some report that their companies outsource design work as well (21%). Just 9% of respondents say their companies outsource procurement/materials management. Most of the work is being outsourced elsewhere in the United States (78%) and China (34%). DOES YOUR COMPANY PLAN TO HIRE BILINGUAL PURCHASING/ PROCUREMENT PROFESSIONALS DUE TO OUTSOURCING TRENDS? 18% 82% HOW CONCERNED ARE YOU ABOUT LOSING YOUR JOB DUE TO OUTSOURCING TRENDS? 12% Somewhat concerned t very concerned 5% 33% Very concerned 50% t at all concerned Although some respondents to this year s survey said their companies are outsourcing the purchasing function (9%), most remain unconcerned about the effect this trend will have on their jobs. When asked whether they are concerned about losing their job due to outsourcing, 83% said no. Twelve percent of respondents said they are somewhat concerned and just 5% said they are very concerned. What s more, when asked whether or not their companies have eliminated jobs in the purchasing department due to outsourcing, 82% said no, 8% said yes, and 10% said they were not sure. HAS YOUR COMPANY HIRED BI-LINGUAL PURCHASING/ PROCUREMENT PROFESSIONALS IN THE LAST 10 YEARS DUE TO OUTSOURCING TRENDS? 25% 75% Subscribe to GLOBAL PURCHASING 5 GO TO GLOBALPURCHASING.COM / SUBSCRIBE

HOW IS THE INTERNET OF THINGS AFFECTING THE PURCHASING DEPARTMENT? Increasing demand to source new or different electronic components: Increasing demand for product knowledge on new or wider variety of components: Increasing time-to-market demands: Driving the need to find new sources of electronic components and services: 36% 39% 20% 33% But when it comes to product development, many buyers say the connectivity behind the IoT is nothing new in the electronics supply chain. IoT is a buzzword and hype for what was already going on anyway connectivity of devices which already had I/O built in, said one buyer responding to our survey. [Today], it s more software and cybersecurity issues and efforts. BUYERS SAY THEY FACE A NUMBER OF CHALLENGES IN TRYING TO STAY CURRENT ON WORK-RELATED ISSUES AND INFORMATION. SOME OF THE GREATEST CHALLENGES ARE: DO YOU THINK THE TREND TOWARD IOT AND GREATER CONNECTIVITY IN GENERAL WILL HELP STREAMLINE THE PURCHASING FUNCTION? Sifting through the many sources of information relevant to the job Work-Life Balance Keeping up with technology changes Keeping up with standards and regulations 49% 56% 37% 32% 37% 63% Finding the right work-life balance remains the greatest challenge for electronic components buyers, as 56% of respondents rated that issue as the top challenge they face in trying to stay current at work. Navigating the maze of job-related resources and information came in second (49%), followed by keeping up with technology changes (37%), and keeping up with standards and regulations (32%). Buyers agree that the Internet of Things is having an effect on the purchasing department when it comes to sourcing components. Demand for greater product knowledge (39%) and the need to source a wider variety of components (36%) are the top two areas, followed by the need to find new sources of products (33%) and meeting shorter time-to-market demands (20%). Buyers also report that IoT trends are likely to help streamline the procurement function, due to greater connectivity across the supply chain. Subscribe to GLOBAL PURCHASING 6 GO TO GLOBALPURCHASING.COM / SUBSCRIBE

WHICH MOBILE DEVICES DO YOU USE IN YOUR DAILY JOB? iphone 38% Android-based smartphone ipad Other Devices ne 30% 12% 16.7% 33% WHICH SOCIAL MEDIA PLATFORMS DO YOU USE FOR WORK? LinkedIn 60% Facebook Twitter My company s own social media site Google+ Blogs YouTube Other Do not use social media 26% 11% 18% 21% 7% 19% 3% 26% The iphone remains the most popular mobile device procurement professionals use in their daily jobs (38%), followed closely by the Android-based smartphone (30%). Interestingly, 30% of buyers say they do not use a mobile device for work. LinkedIn remains the most popular social media platform among buyers by far, as 60% say they use it to stay up-to-date; Facebook plays a distant second to LinkedIn, as 26% of buyers cite using it for work. Of those who use mobile devices on the job, usage is growing. Fifty-five percent of respondents say they have increased their use of mobile devices for work in the last 12 months while 44% say their usage has remained the same and 1% say it has decreased. Social media is having less of an effect: 32% of respondents say they have increased their use in the last 12 months while 65% say their use has remained the same and 3% say it has decreased. Subscribe to GLOBAL PURCHASING 7 GO TO GLOBALPURCHASING.COM / SUBSCRIBE

ARE GOVERNMENT REGULATIONS/ LEGISLATIVE ISSUES A CONCERN TO YOU PROFESSIONALLY? 42% 58% WHAT IS YOUR GENERAL OUTLOOK ON THE ECONOMY FOR THE COMING YEAR? Very positive Somewhat negative 6% 3% 20% 30% Very negative 41% Somewhat positive IF YES, WHICH ISSUES ARE MOST IMPORTANT TO YOU? Counterfeit electronic components regulations and standards Conflict minerals legislation and standards Environmental issues 48% 47% 45% Other 25% New this year, we asked buyers how important government regulations are when it comes to doing their jobs; 58% listed them as a concern, with issues surrounding counterfeit components ranking at the top (48%), followed by conflict minerals (47%), and environmental issues (45%). These issues are prime concerns at all levels of the supply chain, as there was no difference in response between the executive and purchasing manager levels: 54% of each group listed government regulations as a professional concern. Neither positive nor negative The economy remains a prime concern throughout the electronics supply chain, but purchasing professionals remain fairly optimistic about the economic outlook this year. Forty-seven percent of survey respondents said they have a positive outlook on the economy, with 23% reporting a negative outlook; 30% reported a neutral outlook. A diverse economy may well be the key to many buyers optimistic outlook. I think the underlying fundamentals are stronger than what is being publicized, one buyer said. Sure the energy sector is down, but all areas can t click all the time. We have a diversified economy. Still others point to the seemingly limitless potential of the electronics market in general. As another buyer said, There is plenty of opportunity for business in this industry, so the potential for income is as limitless as you allow it to be. Subscribe to GLOBAL PURCHASING 8 GO TO GLOBALPURCHASING.COM / SUBSCRIBE