Formula one – lessons for procurement?

I attended a dinner a little while ago where the Chief Executive from one of the Formula One constructor teams spoke. I didn't have any real expectations; I'm not a huge F1 fan and I had expected some 'petrolhead' character to talk about boys toys, the lure of speed and so on.

But he was nothing like that.  A modest, engaging but highly professional chap, a successful career in the conventional automotive industry before he got into F1, and a big music fan; we bonded over his choice of “best gigs ever” - the Clash  in 1979 and Elvis Costello on several occasions.  What taste...

Why was he relevant to procurement people?  Well, apart from the fact that he runs the business through SAP (you don't tend to think of F1 teams needing procurement and finance systems,but of course they do), he gave some fascinating general management insights that seem applicable to pretty much any organisation.  I’ll cover those tomorrow.

We ran out of time unfortunately just as I got the questions round to supply chain, but he did have time to say that yes, they treated their key suppliers very much as partners; but actually, they made 80% of the 'product' themselves.

“The problem for most things we buy in is that 12 other teams will all want the same as us, at pretty much the same time.  So we are vulnerable to suppliers either exploiting their position commercially, or supply risk issues.”  An interesting take on the make / buy decision process.

And one note of caution for anyone who thinks his is the perfect job. When he started this job, his brother sent him a good luck card, saying “How does it feel to get your performance appraisal live every two weeks in front of 130,000,000 people?”  Because that is what happens; that global audience can see his and the team's success or failure in real time.

How would we like that?

“So Peter, we're on live TV now, tell me where that negotiation went off the rails?  You now realise that Barclays got a 10% lower price out of that supplier – what went wrong?  And why have you still only got 65% compliance to corporate IT contracts in your Frankfurt office?”

Now that would sort out the procurement 'stars' from the b.s. merchants!

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