Speed key to buying 'revolution'

11 May 2005
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12 May 2005 | Geraint John

Speed is now a crucial factor for many purchasing functions, delegates at Ariba Live heard.

Willie Deese, senior vice-president of global procurement at Merck, said the need for "revolutionary change" had dominated his first 15 months at the troubled pharmaceutical company.

"How do you reinvent a global procurement function in one year? You run very hard and very fast," he said.

Over a five-year period, his team has to achieve annualised savings of $1.4 billion on a spend of $7.2 billion, Deese explained.

Thirty per cent of what Merck bought fell into the "just do it" bracket, where purchasing had the authority to make decisions for the company, he said. Such projects typically took 30 days.

Many other sourcing decisions were put on the "collaborative fast track", taking 90-120 days.

At Tyco, the security-to-healthcare conglomerate, a two-year-old corporate procurement function must deliver $1 billion of savings in a highly decentralised company by next year, said Shelley Stewart, its vice-president, supply chain.

Of the $250 million net savings targeted in 2005, about $90 million had been achieved to date, "so we need to speed up", he told delegates.

Passion and energy were vital in the quest for speed, argued Bill Patrizio, senior vice-president of strategic sourcing and procurement at the Walt Disney Company. Opening a new theme park in Hong Kong by a deadline of this September meant that "many [traditional] approaches needed to be challenged", he said.



SMmay2005

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