27 April 2010 | Rebecca Ellinor in San Diego
Purchasing professionals who focus on the end product will be considered part of the creative process and therefore be more effective, a senior film industry executive told the Institute for Supply Management conference in California yesterday.
Steven Miller, senior vice-president of strategic sourcing and procurement at the Walt Disney Company, was making a presentation on strategic sourcing for the entertainment supply chain.
“Creative folks need to not view you as a different part of Disney or a different part of the team – you’re part of their team – singularly focused on their success and showing as much passion for their creativity as they show.
“Alice in Wonderland was a gift to us: a phenomenally big movie, the cast was great and the box office sales far exceeded what we expected and that will translate to DVD sales. That’s what it’s about – the creative content more than cost savings or sourcing initiatives.”
Miller gave an overview of Disney’s multiple supply chains. These support a set of five business areas including theme parks, movies, television and consumer products, with commodity categories spanning everything from costumes to call centres.
Strategic sourcing was introduced in 1999, a move Miller admits was “maybe 15 years behind some industries”. The sourcing department was expected to save $300 million (£195 million) a year within five years. By 2008 it achieved $1 billion (£650 million) cumulative annual savings.
Approximately 300 people work in purchasing and the company has about 70,000 “high-level active suppliers”, with the top 200 accounting for about 23 per cent of spend.
The future for Disney – and therefore the focus of the sourcing teams – is more investment in theme parks (it is hoping to build a Shanghai resort), fit-outs of its stores and film franchises. Meanwhile, purchasing is also working on increasing sustainable procurement and anti-piracy innovations.