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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.