Lessons from the Chinese premier

Arriving at the Grand Hotel, Stockholm, last week for the latest Procurement Leaders roundtable was an interesting experience. A red carpet was rolled out as we arrived and the hotel’s foyer was conspicuous by the number of smart-looking Chinese businessmen trying to look inconspicuous.

Upon further investigation, we soon discovered that the red carpet wasn’t for our benefit at all but for that of Chinese premier Wen Jiabao who was in town for a round of trade talks. As a result, the smart-looking businessmen were perhaps something else altogether.

Nonetheless, it provided a good reminder of the power of global trade and how even the leaders of nations have to go on the charm offensive occasionally to try and win favour and trust with their trading partners. This particular visit saw premier Wen pop into Volvo cars in Gothenburg (in fact, owned by China’s Geely Group) and sign agreements in the areas of energy conservation and finance supervision. Ultimately, however, it was about forging closer ties for the benefit of both.

The parallels with procurement and supply chain are obvious and the visit reminded me of a recent discussion about supplier relations that I was involved in. One CPO said that he could see how being out of the office at supplier facilities as much as 40% of the time was a great thing for some of his team to work towards, but that for him it was unrealistic. Another CPO, however, said the opposite - that his responsibility as CPO was to spend as much time as possible with suppliers trying to understand how they could benefit his company.

I can’t help but side with the latter view - that CPOs should be the ones permanently on the road, visiting key suppliers, feeding back to the business information on the latest trends and advances in technology of opportunities available in the supply chain. It’s a role of facilitator, integrator - matching needs with capabilities. And It’s a role that’s very different to traditional procurement.

Perhaps this type of approach is more suitable for certain industries - hi-tech, consumer goods, for example. But the value and innovation available in the supply base is perhaps the biggest opportunity that procurement has to provide significant competitive advantage to their organisations and CPOs would be mad not to hunt that down regardless of the industry they are in.

David Rae is editor of Procurement Leaders. To subscribe to the magazine, click here.