A Refreshing Perspective from a Seasoned Procurement Pro

The history of procurement practice is probably one of the most boring topics on the planet. Characterized by pushing paper requisitions, purchase orders and matching delivery verifications with invoices that office boys carted off to accounts payable perhaps once per day. And that would be to ignore the volume of invoices that arrived by mail for which there was no paper work what-so-ever. Sounds like ancient history, but as we all know -- while innovation has since occurred at a lightening pace -- procedural changes rarely keep pace with technology.

I attended Elemica's Power Your Supply Chain day last week in Philadelphia and was refreshed by the honest transparency that the conference attendee's and speakers exuded at all levels of discussion. And it's always intriguing to hear a veteran practitioner discuss the present without a hint of condescension or cliché posturing like "been there, done that." Gary Miller, Vice President of Global Supply Chain and CPO of A. Schulman fit the bill perfectly. Gary spoke on "Driving Global Procurement Excellence in an M&A Environment" and had previously been CPO at Goodyear for 20 years. Having moved from a $20 billion to a $2 billion helm, Gary offered a cache of fascinating insights.

Gary succinctly stated that the past 3 years have been completely unlike the past 40 with 2008 ushering in "a complete collapse of demand for almost everything with no ability to grow revenue ... Working capital became the only controllable factor and eliminating unprofitable products, plants and customers became top priority." All of which was exacerbated by needing to reduce inventory and ordering cycles which then resulted in lower tier supplier inability to gear back up as demand recently started to turn around. Making matters even worse, Gary described his newly acquired purchasing environment as atomized: "no policies, procedures or coordination between corporate areas."

He credited Elemica with enabling essential guiding principles to facilitate open and honest communication with suppliers, operating with urgency and the relentless pursuit of reducing working capital outlay with the largest percentage savings derived from the procurement function. He claims that Elemica was a key element in achieving category efficiency, improving negotiations and contracting with bandwith that A. Schulman simply did not have the time or resources to accomplish on their own. Gary also believes that auctions are essential in setting the stage for market price awareness.

The subtext of this presentation was clearly one by which adversity can accelerate meaningful innovation and change – a silver lining if you will. Gary closed most eloquently by citing his primary procurement objectives: "to be valued by suppliers, chosen by customers and bench marked by competitors." A bit fluffy perhaps, but darned good pragmatic advice too.

- William Busch

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