Posted: Tuesday, August 26, 2008, 2:57PMAuthor: David Rae - Procurement Leaders
Published in: Edition 15 (August 2008)
Running on empty
The cover of this magazine offers of a glimpse into a procurement executive’s worst nightmare. To the layman; it may seem insignificant but to those operating at the sharp end of procurement, logistics and supply chains; empty freight containers are as bad as it can possibly get.
The reality is that a lean, modern business will often operate with enough inventory to last hours worth of trading rather than weeks. In this environment, an empty shipping container caused by scarcity of supply can mean failure. Fullstop.
So, there’s a bit of a theme running through this issue. As we continue to limp towards recession, procurement executives are faced with an unusual set of circumstances – despite the economic downturn, prices are high and raw materials are in short supply. It’s a curious situation and one which demands a whole new set of skills to deal with than those procurement teams have been using and passing on for the best part of two decades or more. In fact, there will certainly be buyers and even managers in every procurement team who have never experienced a market quite like the one we are seeing today.
In this issue’s cover story on page 34, Malcolm Wheatley talks to several procurement leaders and supply chain experts and reports on the strategies they are employing to deal with this brave new world. It’s a fascinating read and one gets the impression that those businesses employing the most advanced tactics in order to secure supply will be the ones whose companies come out of the other side of this downturn in good health. As Sammy Rashed of Novartis says, “We’re undeniably moving from a buyer’s market to a seller’s market and we’re having to switch our focus away from paying less, and looking instead to ensure that we have a consistent supply at a reasonable price.” So how exactly have we found ourselves in this situation? Our resident economist Philip Thornton takes us through recent global economic events on page 12.
In case you haven’t checked out the spine of this issue, it reads like a who’s who of the procurement profession and points to exclusive interviews with Rob Hemsley of Heinz (who, keeping to the theme, says that global food shortages and price hikes are “totally changing the game”, on page 28), John Paterson of IBM, Detlef Schultz of Vodafone and David Pritchard of HSBC.
IBM’s Paterson and Vodafone’s Schultz certainly share a few things in common – they are both in procurement and they both live a long way from home for starters. But they have also established dedicated, independent procurement companies on behalf of their organisations as well. Paterson did so two years ago, and we caught up with him to see how it went; Schultz did so two months ago, and we caught up with him to see how it’s going...
There’s been a few developments in the Procurement Leaders Network. New Masterclass sessions, three new categories in the Procurement Leaders Awards, new Working Groups and the beginnings of our new advisory board which will help to drive forward network activities.
As ever, I would love to hear your views...
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