Bo Andersson, CEO, AvtoVAZ © Getty Images
Bo Andersson, CEO, AvtoVAZ © Getty Images

Bo Andersson: Why 'Mr Purchasing' made a fresh start in Russia

Paul Snell is managing editor at Supply Management
19 February 2016

After achieving rock star status at General Motors, 'Mr Purchasing' headed to Russia for a fresh start

It is a measure of the level of recognition Bo Andersson achieved as the CPO at US automaker General Motors (GM) that he had to leave the country to make the next step in his career.

“To restart in a new role in a country where you are known as Mr Purchasing would be difficult,” he told an interview in 2013.

“Having been something of a rockstar in the US, wherever I went in Detroit people talked to me about purchase orders. So I said to myself that if I were to restart, I would like to restart in Europe. And then I asked myself what the most challenging place in Europe was. It was Russia.”

Having left GM in June 2009 Andersson became president and CEO of Russian truck manufacturer GAZ Group, and in 2014 became the first foreign leader of AvtoVAZ, manufacturer of the Lada. In 2011 he was named automotive executive of the year, and in 2013 was inducted in the Automotive Hall of Fame.

He turned the finances of GAZ around, from losing $1bn a year in 2008 to the company’s best financial performance in its history, and at AvtoVAZ launched the first new Lada in two decades.

“You know what distinguishes me from the Russian top-managers? I don’t give the promises I can’t keep,” he was quoted as saying.

Andersson has been credited with bringing a fresh perspective. He took the decision to terminate the underperforming Volga brand – a Russian household name – after more than 50 years in production. And he has confronted suppliers that haven’t changed their practices since the days of the Soviet Union. When the vendors complained to Russian president Vladimir Putin, the government backed Andersson’s approach. “They are working to my terms now,” he said.

Andersson spent more than a quarter of a century working in purchasing at GM, following six years at Saab and 12 years in the Swedish army prior to that.

He built his reputation at GM by transforming its supplier relationships at the same time as saving an average of £3bn a year. The focus on suppliers combined hard metrics such as delivery, quality and productivity with softer factors such as communication, visiting plants and spending more time with suppliers.

“The deeper you work with the supply base, the more transparency you have… the better results you will get,” he told CPO Agenda.

He dispatched his buyers to the factory floor, to give them a better understanding of the production process, labour and cost structure of components. He instituted a communication programme with the company’s top 300 suppliers. And he strengthened the relationship between procurement and engineering functions at GM, and encouraged vendors to do the same to break down barriers.

Not that the hard facts were put to one side. “I have been described as ‘overambitious’ by some of our suppliers. Well, I have detailed data on day-to-day performance, and you simply can’t talk yourself past that kind of performance.”

Between 2005 – when the US firm hit rock bottom – and 2009, GM improved its score on the Planning Perspectives Working Relations Index, which measures supplier relations at the big six US automakers, by 69 points – passing rival Chrysler and significantly closing the gap on Nissan, Honda and Toyota.

But even though he was credited with revitalising the relationships between the company and its vendors, he had no truck with the idea of positioning GM as a “customer of choice”. “We spend $110 billion a year and if that’s not enough, we’re OK with that.”

As a CEO, Andersson says there are four things he does every day. He gives hope. He gives direction – “but I don’t tell people what to do, I say what I expect.” He allocates resources. And he follows up on things.

An example would be his first day at AvtoVAZ. Instead of listening to presentations from executives, he went to the factory to examine the toilets. “It was dirty there, taps wouldn’t open and, on the whole, being there was really unpleasant,” he said. Andersson told them he expected it to be fixed by 6pm. It was.

He has cited diplomat Henry Kissinger as his inspiration. Recalling sitting next to Kissinger at a dinner, Andersson said: “He made a big impression on me. First, he was very humble. Second, he had a lot of experience. Third, he still had a lot of energy and he wanted to change. His passion was that we need to continue to change, we need to continue to improve.”

And his advice for purchasers who want to achieve a similar level of career success?

He told SM in 2009: “The motto of any person working in procurement should be ‘to buy the best quality at the right price’. Also important is communication, teamwork, treating people with respect and being transparent. In doing all these things you can achieve any goal you set for yourself or your company.”

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