I particurly enjoyed reading some of the lessons learned and recommendations from Dell’s former CPO, Martin Garvin, in a recent Purchasing article. While at Dell, Garvin reported directly to the CPO which he thought "says a lot about the value of procurement -- that a Global 25 company would have procurement report to the CEO." Perhaps the most telling recommendations Garvin makes are in response to the question: what are the top priorities in designing a successful procurement organization? To this, Garvin responds that procurement leaders should focus on three areas: "First, you have to establish where the money's going. Secondly, you need to establish what are the most critical technologies to the company -- sometimes that means cultivating new suppliers for a critical component. And then you need to establish which suppliers are most strategic."
I like how Garvin focuses his second recommendation on technology -- the kind suppliers can contribute (not just the type companies can use to automate and improve the procurement function and process itself). Turning to suppliers for innovation is nothing new in high tech. In fact, it’s business as usual. But the rest of us outside the industry should take this recommendation to heart. Whether it’s looking to suppliers to spec an alternative material that meets the same performance requirements as what is currently used but can save money or otherwise improve the total cost/value equation, or working with your supply base to take greater ownership of a specific process (e.g., inventory management or after market support), there are significant savings and opportunities to be derived from engaging suppliers in new ways.
- Jason Busch