Suppliers have the advantage as improving economy shifts balance of power

Gurjit Degun
10 April 2014

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11 April 2014 | Gurjit Degun

Suppliers will gain a position of power over buyers as the global economy improves, which could lead to capacity constraints.

That’s according to Ron van den Akker, vice president of indirect procurement at science company DSM, who was speaking at the ProcureCon Indirect conference in London last week.

He told delegates to make sure they have good relationships with their suppliers. “There’s a change coming up,” said Van den Akker. “We went through an economic crisis and put a lot of pressure on the supply base but there’s a moment that this is going to turn.

“The economy is going to pick up and the power balance is changing. You need to make sure you have good relationships because there could be a scarcity of supply.”

Van den Akker also spoke of his work on transforming indirect procurement at DSM, and how the team reduced spending by €100 million (£82.4 million). He explained he decided to focus on the company’s 17 main sites to cover 95 per cent of spend.

He split the transactional part of the procurement team from the sourcing division “because day-to-day operations will always get the most attention”. Therefore the sourcing team “can have a really strategic impact on the business”.

Van den Akker said one of the most important changes his team made last year was to control spend. The team monitored expenditure throughout the business and shared the data with the company. He then segmented the spend into essential and non-essential categories.

“This whole process – with some policies, mindset changes, behavioural changes, and support from the management board – created a value of around €50 million (£41.2 million) to €100 million last year,” he said. “If you compare spend between 2012 and 2013 on a like-for-like basis, the overall spending went down by around €100 million.”

 

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