Diageo CPO advises purchasers to take risks in recession

18 April 2013

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18 April 2013 | Paul Snell

A recession is a good time for procurement to take risks to give a company a competitive advantage, according to the chief procurement officer at Diageo.

Thibaut Eissautier, who joined the drinks manufacturer in August 2012, told buyers a downturn often makes CEOs more receptive to new options and approaches.

“It is an opportunity to try new approaches and develop a competitive advantage. I’m convinced one of the roles of buyers is to test the riskiest solution and to try and syndicate that within the company,” he said.

Speaking at the ProcureCon Indirect conference in London yesterday, he highlighted the foresight of investor Warren Buffett, who invested $5 billion in bank Goldman Sachs at the height of the crisis to achieve a great deal.

“When there is a recession it is the moment to think with a lot of lucidity what deals you can make that other people would not think of, or would think are too risky, to give your company a competitive advantage.”

Eissautier said although recessions present both positives and negatives for purchasers, they do advance the cause of the profession by providing a more visible profile for activity and stakeholders who are more willing to listen.

But, he warned, if the opportunity is not taken, you might end up in a weaker position than you started in when economic recovery takes place. “Unless you had the lucidity to strike incredible deals when there was a recession - to think ahead, protect yourself and get incredible terms – the chances are, on balance you might be worse off,” he added.

He also said purchasers need to take a broader view of their role.

“I’m convinced that procurement is so much more than reducing cost,” he said. “What buyers need to think about is maximising the company’s profit, and that can be in so many ways. Obviously cost is the first one because if we don’t do it who else will? But in some cases you ‘win’ by having better quality, by being faster, by having better service – that’s what you need to focus on.”

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