10 April 2008
Li Yanling, one of the senior buyers for the Beijing Olympic Games, tells Rebecca Ellinor about planning for the eventWhat did you have to buy for the games?
There are many categories of materials needed to host a successful Olympic Games. Some are "must haves", some are "nice to have". Must haves include sports equipment, furniture and appliances, technical equipment, transport and accommodation.
What is the overall amount of spend the procurement team oversees?
A lot of people ask me how much we want to spend on the Olympic Games. I cannot say. It's not just
that it's confidential, it's because each financial area, for example security, materials and equipment, hold their own budget. They forward their requirements to us, tell us the
budget, timings and quantities for a particular project, and we start the procurement. So we don't have an overall procurement budget. What makes purchasing for an Olympic games different?
Some of the suppliers are very limited. For example, with sports equipment, there may be only one, two or three suppliers, so you have to account for that in the production cycles - you have to be organised. This can also make it hard to negotiate.
The second factor is the large quantities required for an Olympic Games event. For example, with furniture and appliances, I read an article that said half a million furniture, facilities and equipment items such as tables and chairs were needed for the Sydney Olympics. We're still doing the statistics but we think the number required for Beijing is more or less the same - it's huge. And again, while there are many furniture suppliers, very few have experienced such a big order, so it's a challenge for them too. They need enough time to prepare the raw materials, for processing, and sufficient human resources.
The third factor is that after the Olympic Games everything disappears. So instead of buying tables that are used again and again, they are used only once, so many things are still new. When we buy them we need to consider disposal. During the procurement process we'll try to negotiate with the suppliers to buy back some of the materials, such as the working boats used in the sailing competitions.
It's not normal business procurement. It's challenging but it's interesting. If you're a purchaser working in one company, doing routine work for a long time, it's really boring. For the Olympics, every day you meet with new challenges, you need to make new decisions.
Olympic games often cost more to stage than originally thought - it's already happened in London in preparation for 2012. will it happen in Beijing?
I don't think so. We will keep tighter control of the budget than in previous Games. China is a big manufacturer for the whole world so we have a lot of local products, which helps save money. Also, when we do the material planning, we keep tight control on the quantity required. We say to departments, "Why do you need this? What's the purpose of it? If you need such a quantity, do you have enough space to store it?" Through these careful discussions, and sometimes very tough negotiations, we come to a reasonable quantity.
What has been the largest/most difficult procurement project so far?
Purchasing sports equipment is one of the most difficult. We have 28 sports, each with about 35 different disciplines. Every sport requires specific equipment and for each product we'll contact several suppliers around the world. So it not only one contract; it means maybe 28, 30 or perhaps even 50 contracts. It's very complicated.
Also, each sport has its own international federation with very strict requirements. If we procure tables and we have a 1.6 metres specification and we end up with them at 1.5 metres, it doesn't matter. But with sports equipment, if the standard height for a diving board is 1.2 metres but we actually get them at 1 metre, that's wrong and we need to redo it.
The third reason is that every country has professionals that are good at particular sports. China is a large country, so we have professionals in many of the sports, but some we are not so familiar with, such as the equestrian competition and the canoe/kayak contest, so we are still learning.
In those instances do you try to seek advice from the sports federations?
We have maintained very good communication with international federations. So a lot of experienced sports people have given us advice and we haven't made any mistakes. But the Olympic Games haven't started yet, so it's still early. But we try our best and we are confident.
Have you had any problems with the movement of goods from inland china?
No. This is because of our knowledge of China and because the Chinese people welcome the Olympics being held here. Every supplier and factory involved with the Olympic project is passionate about it.
Also, many Olympic partners and sponsors have bases or factories here, such as Coca Cola and Samsung, which makes communication, sourcing and transportation easier. To some extent it is local procurement, but it is also about involving the whole world - we may produce locally, but some of the suppliers are from global companies in other countries.Were there any first-time procurement/supply chain techniques used on this project?
BOCOG [The Beijing Organising Committee for the Games] is the first to integrate the procurement, logistics and material planning functions into one department so it can form a whole supply chain. As far as I know, in previous games procurement came under finance or games service and logistics was under another functional area, so the natural communication between procurement and logistics and the supply chain was cut off. It's not a technique but I think it's important and necessary. It also helps to save time and money because when procurement negotiates business terms, logistics will get involved and say, "You should negotiate with the suppliers to deliver it like this."Was CSR applied to this project?
We paid a lot of attention to this. When we selected suppliers we evaluated if they were socially and environmentally friendly. On some occasions we refused potential suppliers because we didn't think they met the standards. One example was a supplier of sprinklers that used a chemical ingredient. For the Beijing Olympics we have the three basic rules: free Olympics, hi-tech Olympics and the people's Olympics, and we adhere to that. For example, for logistics we need a lot of pallets, so we bought some made from recycled paper.
If you had your chance again would you do anything differently?
I would get logistics involved as quickly as possible. We appointed the procurement and logistics managers in time with the master plan agreed with the IOC [International Olympic Committee]. The IOC rule about appointing logistics is usually games minus four years. We started work six or seven years ago and I suggest that one person needs to be nominated to take charge of this work from the start. We may have done it earlier than for previous games, but earlier still would have been better. This is because at the very beginning many things relate to logistics. For example, when we do the marketing agreement there are a lot of stakeholders involved and each has logistics clauses/terms. Any advice for the London 2012 procurement team?
Proactively communicate with other functions. Procurement and logistics are a service department for the others and if there's no communication things could be neglected. If this happens, you won't have prepared the resources for them and you might not be able to provide the service. The stakeholders for the Olympics include not only BOCOG functional areas, but also many government authorities, sponsors and contractors - so there will be a lot of logistics service requirements.
Also, hire some good staff in the planning period then use them to train the others - one experienced candidate at that stage is better than 10 unqualified people. In the operational stage you may need 1,000 or more people and you cannot expect to find enough experienced candidates in a short period of time. Li Yanling
is deputy director of the logistics department of the Beijing Organising Committee for the 2008 Games