Achieving Competitive Advantage through Procurement. And Beer…

Just before Christmas, I attended the Mars Alumni dinner. I hadn’t been for a few years – it could be a little depressing for those of us who haven’t made it to the top, or become millionaires, to be surrounded by the likes of Justin King (CEO of Sainsburys), Allan Leighton, Richard Baker (ex CEO of Boots) , Neil Record (Record plc).

Windsor & Eton Brewery

But I was persuaded and actually, it wasn’t too bad. Perhaps because of my age, many acquaintances of similar vintage are into second careers, and most exciting was the discovery that two people I know, one a graduate trainee of my intake, are now owners / directors of the Windsor and Eton Brewery, a young micro-brewery situated in the Royal Borough. I’ve tried one of their beers, and very good it was too, and they have a range that I’m hoping to work my way through.  I’m also planning to see them soon and come up with some supply-chain related articles that can justify regular visits!

On a more serious note, it reminded me of one of the great strengths of the Mars organisation, which is, by any measure, one of THE business success stories of the 20th century.  And that is a relentless focus on competitive advantage. The mission statement for the procurement function at Mars started, “To achieve competitive advantage....”. And when the Mars family came to visit, and if you were unfortunate enough to be selected to present to them, their first question would be,  “what have you done to buy skimmed milk powder / corrugated boxes / marketing services better than Cadbury and Rowntree”?

It strikes me that not all senior procurement people keep this in mind as much as they should. It’s not just about following best practice for instance – it’s about creating your own best practice that moves you ahead, not just in line with the competition. Yet for all organisations, there are decisions to be made about where to seek competitive advantage – no-one can possibly have the resources needed to be the absolute best in every aspect of procurement.

A good example was the discussion we featured last year at the IIAPS event about the Oil and Gas industry shared supplier database and management platform, run by Achilles. Weren’t individual firms giving up the chance of competitive advantage by co-operating in the venture? No, was the answer. The effort for a single firm to gain advantage in this area would just to too great to contemplate.

But, as one of the firms pointed out, there was still the opportunity to gain an edge through being better in terms of how you worked with the suppliers, managed them, captured their skills, and so on, even if the suppliers worked for your competitors as well.  So those might be areas in which to focus the search for competitive advantage – not in the processes around pre-qualification of suppliers and  managing supplier information that were provided by the shared venture.

That seems to be the right approach – to think carefully about which elements of our procurement roles and activities are going to help us answer that Mr Mars question. So a good thought for January – what are you going to do in your job this year that provides competitive advantage for your organisation?

Very Good Beer

(And to readers in the public sector, we’ll come back to this issue in another post soon, because I accept that your world, and the concept of competitive advantage, is somewhat – but not totally – different).

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