Vodafone and MTS Russia explain collaborative procurement strategy

9 November 2012

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9 November 2012 | Adam Leach

Vodafone and MTS Russia have built a strong strategic alliance between procurement teams as the number of people involved in decisionmaking is kept to a manageable number.

In a joint presentation in Brussels yesterday, senior buyers at both organisations explained while there have been a number of challenges during the partnership, these have been outweighed by the positive aspects.

Vodafone’s motivation for building the alliance was its revenues have dropped, while costs have remained the same. So by teaming up with an operator it does not compete with, it has been able to reduce these.

During the presentation at Procurecon 2012, Nicola Delargy, director SCM operations AMEAP and partner markets at Vodafone explained one of the strengths of the relationship was both sides have a centralised procurement function.

“We have much fewer collaborators, so it’s much easier to actually make decisions and act on those decisions at the same level and the same speed,” she said.

Through the relationship, the two companies have pooled their spend to get economies-of-scale benefits on a range of commodities. But areas of spend of strategic value to the two companies proved more challenging, so the two companies worked closely together and now issue joint RFPs that fit both parties requirements.

An area where the companies have collaborated is on X86 servers. Valery Shorzhin, CPO at MTS Russia, explained the benefits the two companies got included volume bundling, savings across the entire supply chain, simplification and standardisation, and simpler interfaces. Further, he said that the suppliers benefited from selling a more standardised product at higher volumes.

Delargy said having a common vision, concrete opportunities and a strong business need is vital for a successful relationship. She also said adopting common technologies and standards is important.

Both parties agreed that one of the potential challenges is vendors may need to overcome internal challenges to such partnerships. When asked whether there was an issue on anti-trust laws and rules, Christian Linhart, deputy CPO at MTS Russia, explained it was common issue raised by suppliers, but added it was not a problem.

“Vodafone is not working in Russia, MTS is not working [in Vodafone markets] and the supplies are always the same, so if you look at the addressable markets the spend is bigger, so in this case it is not a problem.”

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