Crossing the Maginot Procurement Line — Can a French/German Procurement Merger Work?

After a series of posts a few weeks back on the procurement merger between France Telecom and Deutsche Telekom (Parts 1, 2, 3, 4), I had the opportunity to talk to a friend about the announcement, and this individual had some insightful and curious things to say. Among other observations, he believes that in this particular situation, France Telecom's challenges go a bit deeper than sub-optimizing procurement processes in the past. Being a French organization, they've resisted the difficult layoff decisions and are keeping employees in non-value add roles where their self worth becomes more and more diminished.

The Germans are similar to the French in that they value employment rights very highly. But while it is very difficult to sack Germans, they are nothing if not efficient -- in procurement and everywhere else. When it comes to the procurement merger between the two organizations, the Germans are likely to want to invest in synergies and deploy technology to make savings. In contrast, the French will likely attend the workshops, scenario planning exercises, etc. And perhaps they'll even seem invested in the whole thing. Then, with little more notice than a TGV train whizzing through a secondary station stop, they'll go on strike.

While such a working procurement merger that creates a purchasing and supply chain shared service for both organizations might make potentially excellent sense on paper, the likelihood of it amounting to anything the consultants and executives involved planned is low. It could very well fail because of cultural challenges more than anything else, even if both sides are capable of bringing together both internal and external best practices to attempt to implement savings programs. Indeed, crossing the cultural procurement Maginot line for France Telecom and Deutsche Telekom will prove far more difficult that creating category strategies, rationalizing suppliers, driving buying compliance and the like.

Jason Busch

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