Don't get too cosy, warns IT chief

16 October 2005
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17 October 2005 | Rebecca Ellinor at the CIPS Premier Conference in London

Purchasers should avoid becoming "too cosy" with their suppliers in order to ensure competitiveness, warned Mike Norris, chief executive of Computacenter.

"You have to keep us competitive and benchmark the hell out of us - keep us mean and keen."

The head of the IT firm then told the audience: "If you've been buying the same brand of PC for two years, you're paying more than 10 per cent more than you should be. If I bet 10 people that, I'd win more than I'd lose."

He also outlined how the current corporate climate created a unique opportunity for procurement. "Purchasing is in a better position than ever," he said. When high growth was the priority - "saving at the back end mattered less," he added. "Now it is about cost-saving."

But Mark Goyder, director of Tomorrow's Company, said: "I accept Mike Norris's point on commodities such as paperclips, but there's a distinction between buying those and the core work of the business. When do paperclips stop and relationships start?". He added that long-term relationships were crucial to protect a firm against risk, especially in a tough economic climate.

"You can adopt a strategic, long-term, relationship-driven approach or just keep changing businesses. But in the end the latter will fall down and the relationship-makers will use the economy to build win-win relationships," he told delegates.

It came as consultancy Envirowise revealed that the UK's retailers and wholesalers lack good supply chain relationships. While the majority (91 per cent) are in weekly contact with suppliers, few are focused on developing collaborative relationships that can help provide stability and competitiveness during tough times.

Kim Godwin, Barclays chief procurement officer, told delegates: "All the work you do in the first bit [before signing contracts] is wasted without the supplier relationship bit. The sooner you get involved, the better. I am convinced it's the next big area."

In summary, CIPS chief executive Ken James said maintaining ongoing relationships with suppliers could mean the difference between enhancing the value they can bring, or destroying it.

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