#ProcurementCan build a world class function: Tips from Tesla for disruptive innovation.

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The Procurement Leaders 2016 World Procurement Congress at the Intercontinental O2 in London opened with a challenge to the function to continuing evolving in order to meet the needs of the future market.


Sidney Johnson, chair of the event and SVP, global supply chain management at Delphi, painted a stark picture when he took to the stage and said that the automotive sector would "change in the next five years more than it has changed over the last 30”.


That velocity of change has not been felt anywhere more than at Tesla, the innovative, electric car manufacturer that itself is disrupting the automotive industry. Peter Carlsson, former CPO at Tesla, outlined the approach of a company led by revolutionary thinker Elon Musk.


Thinking big is certainly Tesla’s mission.


Carlsson framed the challenge and the opportunity for business in the future. Simply put, AI (artificial intelligence) will eventually exceed the capabilities of human intelligence. As such “Data power, machine learning and big data will become a more important part of our workings as leaders” he suggested


To meet this need Carlsson outlined an ambitious thesis for the future of the function: increasing speed and increasing innovation.


“Chasing cost savings will not be seen as strategic,” he said “but bringing speed and innovation to the supply chain will be seen as increasingly crucial.”


Carlsson gave a number of examples to show how a creative, alternative approach can unlock additional resources in the supply chain.


In one example, Tesla was attempting to source a rare component from US suppliers. Unfortunately, only one manufacturer was available to them. However, that firm was facing cash flow difficulties and struggled to find the available resources to sustain maintenance operations. A deal was, with some difficultly, forged to provide Tesla with the vital materials.


When a key member of staff resigned from the supplier at the eleventh hour, a radical plan was hatched: recruit the departing person and buy the company. It was filled with Tesla staff and the productive capabilities were eventually brought into Tesla’s Californian facilities.


Carlsson noted that episodes like this will define the future of the function. “Procurement is going to move into a facilitating role in a strategic network."


In another example, procurement helped mobilise the entire organisation around achieving objectives by publishing real-time KPI performance to the entire company. This helped galvanise workers, testified by the logistics team working the last Sunday of the quarter to help pack products. Buyers also brought creative solutions to meet the targets, such as phoning the captains of key cargo-ships to negotiate for two knots of additional speed to secure early delivery.


Carlsson concluded: "If procurement can stop the organisation falling behind and being disrupted, they will be the heroes.”


To follow live coverage of the World Procurement Congress click here.

Jonathan Webb
Posted by Jonathan Webb

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