Tilting Back or Forward? - NIMA Jubileum/Prof. dr...CPO: differentiate between business critical supplier relationships and non business critical relationships ... Tilting Back or

Purchasing’s Future: Tilting Back or Forward?

100st NIMA Jubilee Conference Oslo, March 12th 2015

Prof dr Arjan van Weele

www.arjanvanweele.com [email protected]

@Arjanvanweele 1

NIMA 100th Anniversary

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Purchasing and supply management as a discipline has developed quite strongly during the pas decades:

From the ‘backroom’ into the ‘boardroom’…

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HERBERT DIESS Winterkorn holt BMW-Topmann und entfacht Nachfolgediskussion neu Volkswagen-Chef Winterkorn hat Herbert Diess höchst persönlich bei BMW abgeworben. Mit dem Manager kommt ein gefürchteter Preisdrücker nach Wolfsburg, die Diskussion um die Winterkorn-Nachfolge ist neu entfacht. Wolfsburg - Volkswagenchef Martin Winterkorn gibt die Leitung der schwächelnden Wolfsburger Hauptmarke Anfang Oktober 2015 an den bisherigen BMW-Entwicklungsvorstand Herbert Diess ab. Dafür war Winterkorn bisher als Konzernchef mit zuständig. Für Diess werde im Konzernvorstand ein Ressort "Vorsitzender des Markenvorstands Volkswagen Pkw" eingerichtet, teilte Europas größter Autobauer am Dienstag weiter mit. "Mit Herbert Diess haben wir eine herausragende Persönlichkeit und einen der fähigsten Köpfe der Automobilbranche für uns gewinnen können", sagte Winterkorn. Aus Unternehmenskreisen hieß es, Winterkorn selbst habe Diess bei BMW abgeworben und ihn Aufsichtsratschef Ferdinand Piech vorgestellt. (See: http://www.manager-magazin.de/unternehmen/autoindustrie/bild-1007392-786661.html)

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Professional purchasing has resulted in significant savings…

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Rabobank Netherlands: research among >1200 sourcing projects shows that

Early Purchasing Involvement leads to Internal Customer Satisfaction and

Incredible Cost Savings…




Professional purchasing has resulted in significant savings…

Many CFOs aware of purchasing’s cost savings potential…

Resulting in higher cost savings targets year after year…

Is Purchasing victim of its own success…? 8

Purchasing’s Future: Tilting Back or Forward

Purchasing and supply development seems to have also negative effects… strong price- and cost focus results in…

Slim supplier margins… Retail

Automotive

Healthcare

Care for the elderly

Cleaning

Contract catering

Etc.

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Slim supplier margins…

Stressed supplier relationships and labour union relations…

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Severe quality problems…

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Severe quality problems…

Irregularities in global supply chains…

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Supplier

relation-

ships..

Labour

conditions...

Waste and pollution...


Unilever’s Carbon Footprint: key responsibility area for purchasing

PAGE 18 (Source:Unilever Sustainable Living Plan)


As a Purchasing Community we seem to have arrived at important crossroads…

What is our future going to be…? 19


Question:

Would Purchasing tilt forward as a value generating business driver…

OR…

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Value

Risk Cost


Question:

Would Purchasing tilt forward as a value generating business driver…

OR…

Do we tilt back in our role of ‘deal-maker’ and ‘cost cutter’…?

How to proceed from here…?

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Value

Risk Cost

Value

Risk Cost


Some personal observations:

Challenges to be addressed different for mature versus immature purchasing organizations…

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Some personal observations:

Each individual company and CPO will need to find a solution to these challenges…

Company: choose between long term value creation or short term profitability…

CPO: differentiate between business critical supplier relationships and non business critical relationships

Each individual purchasing professional needs to follow his/her own value…whether to do as being told or to act as a world citizen…

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Societal Value

Shareholder Value

Customer Value


For mature purchasing organizations we need the Engaged Purchasing Leaders and Professional:

‘Courage to Challenge’….

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‘Creativity to Change’…

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‘Creativity to Change’…

‘Capability to Connect’…

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Dilemma’s in managing change in purchasing and supply management

Issue AND…

Goals and objectives • Cost reduction • Value and revenue creation

Style • Functional leadership • Serve the business • React to change

• Business driven leadership • Lead the business • Lead change

Supplier relations • Competitive • Local sourcing • Dyadic approach

• Collaborative • Global sourcing • Network approach

IT • Standardize • Localize

Staff • Functional expertise • Business expertise

Performance mngt • Cost savings • TCO • CSR • Customer satisfaction

Structure • Centralize • Decentralize 27

Back up slides

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Management Theory How Purchasing Adopted Its Strategic Role

Strategic and marketing planning

Ansoff’s Growth Matrix

PIMS studies Harvard Business School

Competitive Strategy

BCG Growth-Share Matrix

Porter’s Value Chain and Five Forces Model

Innovation and Competence management

McKinsey’s 7 S Model

Prahalad and Hamel Core Competence

Resource based management

Wernerfelt’s Resource Based Theory of the Firm

Olovarietta’s Dynamic Capabilities Theory

Four ‘schools of thought’ can be identified over the many years …

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PURCHASING

SUPPLY MANAGEMENT

SUPPLY RESOURCE MANAGEMENT

Management Theory How Purchasing Adopted Its Strategic Role

Western industry is subject to a never ending trend towards specialization…

Making Purchasing and Supply Chain Management and

Supplier Relationships…

Key drivers to competitive advantage…

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Tilting Back or Forward? - NIMA Jubileum/Prof. dr...CPO: differentiate between business critical supplier relationships and non business critical relationships ... Tilting Back or