Purchasing Transformation

Apart from all the other spend management related issues going on in Stockholm at the moment – this week is also one of Stockholm’s fashion weeks. At first sight, high fashion might be as far away from classic corporate purchasing as is possible – low runs, design focused, pricey, you name it – yet last year big fashion talk of the town was all about supply chain management without lost focus on the design and fashion end of the spectrum.

This fall saw the dawning of a new swedish designer jeans brand (adding further competition to a marked blurred by hipster faves such as Nudie, Acne, Cheap Monday, Filippa K and Whyred) – Noko Jeans.

When other designers start with pen and paper and demin – Noko had another thing in mind. A North Korean supply chain.

It took the guys behind Noko 2,5 years to get 1100 jeans produced. So much for a lean supply chain.

The Noko-website does a great job when discussing the issues and ethical questions that arise when dealing with suppliers in countries that are »off the map« for most purchasing organizations. Highly recommended and in my mind there is a great management type book buried in this story.

The trials and tribulations of Saab continues – after months of rumors and cliffhangers, GM finally decided to sell Saab to Spyker last week. And although the deal is far from finalized, things seem to be falling into place – a great relief to the Saab/GM supply base.

So with Saab production finally at go-ahead all things should be rosy, right?

Well, not quite. For nearly a month GM has been steadfast in their decision to liquidate Saab. Vital to the liquidation process has been the cancellation of ordered parts, a decision that now – for the new owners – has brought on a new headache: supply shortage.

Saab used their in-stock parts to build 100 cars last friday – but today the plant in Trollhättan is at a stand-still. There are no parts to build cars from.

Getting the supply chain back on track will take up to two weeks according to spokes persons at Saab.

I’ve spent the best part of the last month and a half contemplating my life – taking care of my kids, listening to music, getting involved in two book projects – generally lazing about being utterly unproductive. And by accident, ignoring this blog and my publishing responsibilities.

So has this spend management hiatus been beneficial. Well to be honest, just like in the case of any interuption – two months down the line I’m back where I left off. A little behind my peers, playing catch up.

Recently The Economist (January 9th-15th issue) hid a rather interesting story on how Boing is planning to avoid these types of issues in the future. As many of you surely know Boing has had it’s share of supply chain issues that has delayed the 787 Dreamliner on numerous occations – the most famed being the Machinist union 57-day walk-out that cost Boing more than $2 billion dollars plus loss of business as some potential clients switched their orders to Europe’s Airbus.

So in late 2009, Boing responded by announcing that it will replicate the supply chain for all Dreamliner parts made in Washington so that their new South Carolina plant can operate independently. To avoid further interuptions in their much delayed production schedule Boing has sourced a second supplier for every part.

Now this tactic may be as far away a step from single sourcing and “winner takes all” negotiation tactics as one can ever imagine, but in the drag race for the sky between Boing and Airbus it actually makes sense.

Now if only I had though of this two months ago – getting a replacement me to handle my job as I went wandering. Then maybe I would be getting up to speed faster than I am at the moment.

I know that I’ve mentioned the brilliance of Hans Rosling before but he recently stepped into the limelight again as he made Foreign Policy Magazines  100 Top Global Thinkers list. I hope all of you have seen what professor Rosling does with data – it’s mindboggling to say the least, yet what struck me this morning was his clear take on the world of today. In an interview in Svenska Dagbladet he commented that the world is no longer divided into a developed and an under-developed  world, there are numerous levels in between and we need to understand this.

“We need to have a fact based world view and [unfortunately] we do not.”

From a supply management perspective this cannot be emphasized enough. In our state of volatile new normal bringing the facts into the open and making sense of them is of utter importance. Supplier information may be in vogue, but without strategies and ideas of how to analyze and visualize the indicators that may be found in this well of data chances are that one may be steering as blindly as before.

Over at Procurement Leaders, the staff reports that in the UK the “flood of jobless procurement pros creates ‘challenging’ environment” for those looking to staff up their procurement functions. Not only is there a bigger talent pool that needs to be navigated, but in many cases there are great retention risks involved as many companies hire over-qualified staff to fill the vacancies.

Last year I edited a book called “Purchasing Tranformation” and in it Björn Stenecker provided a solid skill mapping model which he had used to great effect when dealing with hiring, rentention, development and coaching issues of purchasing functions.

Simply put the model spreads 20 or so criteria across four dimensions which are graded on a scale of 1-5 for both the individual hire/employee and the role.

Education

• Level of education

General competence

• IS/IT
• IS/IT – ERP knowledge
• Project management
• Budget
• Business development
• Strategy development

Specific competence

• Purchasing skills
• Negotiations
• Contracting
• Supplier development
• Category expertise
• Logistics

Personal skills

• Leadership
• Analysis
• Communication
• Cooperation
• Stress handling
• Initiative
• Accuracy
• Flexibility

This model can be used as self assessment in the recruiting process for new hires to quickly see which candidates fit the proposed role. It is also a brilliant tool for seeing in which direction one could develop over-qualified staff in order to retain the competence in the company.