Archive for August, 2009

Purchasing silly season

August 31, 2009

In Europe the first few weeks of September are do or die for “HR departments” of football clubs across the continent. This silly season is over and the costs have little correlation to the cost awareness that most other companies adhere to. According to official figures from the clubs, the top five on the plus/minus list are the following:

  1. Real Madrid (Spain) – 166.5 Million Euro
  2. Manchester City (UK) – 123.6 Million Euro
  3. Barcelona (Spain) – 88,5 Million Euro
  4. Bayern Munich (Germany) – 56 Million Euro
  5. Napoli (Italy) – 34.5 Million Euro

For purchasing departments everywhere – recruitment season is ripe. Downsizing in traditionally purchasing centric industry segments have increased the available talent pool and as many universities have been adding purchasing related courses to their curriculum there are more professional purchasers available than ever before.

The question is; how does one replace the loss of the purchasing equivalent of Christiano Ronaldo and how does one build the perfect team that can manage the challenges ahead.

Every year this brings me back to  Michael Lewis book Moneyball: The Art of Winning an Unfair Game in which the author describes the processes and strategies behind how the Oakland A’s for a few years won more games per spent dollar than any other team in the Major Baseball League.

What the Oakland A’s back office did was quantify the factors that had the biggest impact on actually winning games and then draft, buy and trade for those assets instead of the traditional “toolsets” sought after by other franchises.
Purchasing departments have often looked for negotiation skills first and foremost but I see strong trend that this is about to change. A walking poll I did at an industry event recently highlighted the following skills as most important in recruitment situations:

  1. Analytical skills
  2. Sales drive (and communication)
  3. Business savvy-ness

Add whatever industry sector experience you need to this list and I believe you’ve got the perfect shortlist for successful recruitment – without the need of digging too deep into the budget.

And then you might not get into the situation where you spend 45 Million Euro on Zlatan Ibrahimovic (who scored 1 goal per 121 minutes played over the past 12 months) to replace Samuel E’to (who scored 1 goal per 96 minutes played over the same time period) in an attempt to win even more games. Which, of course, is done by scoring more goals than your opponent.

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Car leasing statistics show a rebound, yet cost awareness has reshaped the market

August 28, 2009

One of the more interesting effects of the downturn has been the increased cost awareness of companies of all sizes – and this cost awareness is showing itself in numerous ways. Swedens Dagens Nyheter just published some statistics regarding leasing cars and how the market finally is beginning to swing back to pre-downturn numbers. But all is not what it used to be. Dealers are beginning to feel pressure they’ve been spared from before.

  • Companies are now beginning to limit the number of brands employees can choose from in their leasing offers.
  • Cost caps are beginning to become more and more commonplace
  • Companies are steering employees towards brands and models with low emissions

Another fact that can be drawn from the statistics of the number of registered new cars is that supplier risk is also playing into the equation. The GM brands that have been on thin ice have plummeted over the last year. Saab lost 62 percent of their sales due to the GM uncertainty, while Volkswagen increased their numbers by 44 percent.

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Green cell phones abound

August 24, 2009

With sustainability high on the agenda for many forward thinking manufacturers it seems inevitable that the consumer electronics segment would be quick to the plate especially with their somewhat shade past (check out this little primer in Cell phone recycling courtesy of The Secret Life Series).

Cell phones in particular seem to be the hot thing this summer; Sprint and Samsung just launched their Reclaim service and Sony Ericsson was a few weeks earlier with the launch of their Greenheart. Now whilst I applaud both of these initiatives, both Samsung and Sony Ericsson still have a lot of explaining to do.

The Samsung/Sprint Reclaim boasts 80% recyclable material and is made out of a bio plastic derived from corn. Unfortunately the sustainability dangers of a cell phone lie mostly in the other 20 % which most likely contains: Lead, Cadmium, Gold, Beryllium, Silver, Chlorine, Bismuth, Aluminium, Tin, Zinc, Copper, Chromium, Bromine, Arsenic, Nickel, Palladium and Tantalum.

Sony Ericsson takes another path down the sustainability highway; they focus more on Life Cycle Assessment – although they are careful to actually say anything – and CSR issues such as working conditions in Congo – one of the most corrupt countries in the world, which makes one wonder if there is a reason that Sony Ericsson actually need to get their Tantalum for their Greenheart phones from there. Never the less, Sony Ericsson have a constant information feed regarding these issues, so let’s hope their on top of their game.

Let’s just hope both of these forerunners are as open with their data as they portray themselves as being.

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Sustainable supply indexing 101

August 20, 2009

Even those with keen interest in sustainable supply chain measures and green procurement might have missed how Walmart quietly released their new Sustainable Product Index earlier this summer. Now, this index is still in its early stages – which is also highlighted by Walmart CEO Mike Duke in his presentation (available here) – still it’s a great primer for companies, especially retailers, looking into sustainable supply chain practices.

To build the index, Walmart offer suppliers to self assess their sustainability practices by asking questions around four areas:

  1. Energy and Climate
  2. Material Efficiency
  3. Natural Resources
  4. People and Community 

The questions are not complex, yet they provide a great starting point for companies striving towards a systematic approach to sustainable supply chain practices.

The 15 questions are available online here: http://walmartstores.com/download/3863.pdf

Posted in Supplier Management, Supplier Performance, green procurement | Leave a Comment »

Unbloating IM&S catalogs

August 17, 2009

Bloated gadgets aside, this recent Economist column entitled “When Less Is More” got me thinking in more than one direction.

Especially the poignant and precise quote from Antoine de Saint Exupéry which sums up the argument: “Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.”

In my mind this is something that all purchasers in the indirect area should take to their hearts. It perfectly sums up why there is no need for unmanaged 5 million SKU catalogs that need to be browsed using a 25 000 node UNSPSC tree and – ultimately – forces the end user to become a maverick.

Next time you’re looking over your indirect contracts – don’t try to find stuff that is missing, try to weed away the stuff that (nearly) no one is buying.

Posted in Change Management, IM&S, Procurement, Supplier Management, Supplier Performance, eprocurement, procure-to-pay cycle | Leave a Comment »

IT sourcing revisited

August 12, 2009

Whilst the general consensus is that the economic downturn is near bottom, the service sectors are still feeling the pressure. In the first seven months of 2009, more than 200 IT companies declared bankruptcy in Sweden alone (as reported by IT 24 - in Swedish), an increase of 73 percent from the year before.

Now many of these companies no doubt had troubles beforehand; but during the past year we’ve seen an increased engagement of professional purchasing in IT-sourcing. The great divide separating purchasing and IT has been bridged; and due to this fact IT vendors are exposed to healthier competition, which in turn will lead to a healthier IT market for the future.

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The end of the long hot summer

August 12, 2009

Just to clear things out a bit; I’ve spent the past six weeks chopping wood, painting old windows, doing yoga and being generally lazy.

Now, I might have noted this beforehand and I’m sorry if this has caused any confusion. In any case, Purchasing Transformation is now officially back from summer vacation.

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