- 06
- JUN
- 2011
Procurement, have you looked in the rear-view mirror?
Author: Maggie Slowik - Categories: Supplier Relationship Management, Best Practice & Benchmarking, Procurement Intelligence
Two weeks ago I attended the Procurement Leaders annual London Forum. Themed Building Competitive Supply Chains – The CPO’s Role, the event attracted some 300 supply chain executives, speakers and sponsors from across the globe.
After sitting in on a couple of keynote presentations and prowling the networking crowds of executives in between, I absorbed the notion that despite the event's theme, procurement is now surrounded by a perhaps unprecedented notion of open-mindedness and, dare I say it, self-awareness.
This thought first came to me when, during one of the morning sessions, Hartwig Michels, president of global procurement and logistics at Germany-based chemical company BASF, noted that in the chemical sector "your supplier is often your customer and competitor", referring to the complex networks in which most large buying organisations operate, where large product offerings and intricate manufacturing processes blur the lines of the key players involved.
I'd like to take this notion to another level and suggest that, in order to manage our supply chains as value chains, we need to start treating our strategic suppliers not only as customers and competitors, but as collaborators. Sure, our suppliers have their own agenda, but what if we could manage to help them to grow with us? We would be more likely to succeed at delivering value to our clients.
US food giant Kraft Foods, for instance, is working by this principle. I recently interviewed the company's Vice President of Sustainability, Steve Yucknut, who shared with me that that the company is pursuing rather aggressive waste reduction goals as part of its comprehensive sustainability vision. While food manufacturing inevitably produces waste that cannot be reintroduced into the organisation's production process, Kraft has nevertheless never ceased to explore alternative avenues. It is through this persistence and effective SRM that Kraft developed a trial with one of its key packaging suppliers, Sonoco. The supplier scours Kraft production facilities and finds a use for waste material that typically would be sent to landfill. While Kraft does not have the economies of scale to find a profitable end-of-life solution for its own packaging waste, Sonoco has the capability to transform it into a profit stream. Due to its success, the programme quickly expanded to several sites across the US and is in the process of being deployed to other countries.
This is what I would consider an example of turning a good practice supply chain to a best practice supply chain. But, to get there, to build that competitive supply chain, we need always to be conscious of our surroundings and never underestimate the value that certain players can deliver to help us to succeed. To that end, a check in the rear-view mirror has simply become a no-brainer.
Comments
Ahmedali Pirvani
Tue 7 Jun 2011 16:57
Good article. it has some good points. Your supplier is often your customer and at the same time your competitor. If we could manage to help them grow with us , we would be more likely to succed at delivering values to our customers.
Cassius via LinkedIn
Wed 8 Jun 2011 08:52
Supplier intergration is the key to a succesfull sourcing process in a supply chain environment, suppliers play vital role in unleasing the potentail of an operation, intergration leads to sharing of valuable information on cost, information technolgy manufacturing processes.
Lisa Ng
Tue 18 Oct 2011 05:09
There is a lot of value added elements which the supply chain could offer and by setting up Partnership Agreements with our major suppliers
we could enjoy dedicated prices; just in time supplies, proper product training and market intelligence. However, one should never be complacent and by exploring alternatives and by conducting eprice benchmarking exercice from time to time would help keep the pressure on the existing partners to perform consistently good.