Philips CPO plans further headcount reduction

Will Green is news editor of Supply Management
13 November 2013

The CPO at electronics multinational Philips said an overhaul of purchasing is likely to reduce the headcount in procurement.

Fredrick Spalcke told the ProcureCon Europe conference in Amsterdam, when he arrived in the post in 2012 there were 2,300 people working in procurement across 40 business units.

“Within a short time we reduced that by 400 people,” he said.

Spalcke added there were “40 people doing things their way” and “23 people calling themselves CPO”. There were 256 different job descriptions, which has now been whittled down now to 23.

“Going forward we can maybe reduce the headcount by three to four hundred people,” he said. “Not because we’re merciless, but because we don’t need them; we find them something else to do.”

Spalcke said he had carried out a “Design for X” cost and value review across the product portfolio, and he wanted to shift the balance so staff spent more time on strategic sourcing and less on transactional work.

The changes were prompted because “we had threats coming in from the competition” and “fundamental processes were not played the right way”.

Spalcke said a change programme required 5 per cent of people in an organisation to be “believers”.

“Don’t underestimate the power of a developed organisation when this company is motivated,” he said. “You can’t go out there and say: ‘I’m going to fire people.’ You need 5 per cent believers at key points to drive transformation.”

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