Procurement must ‘open up’ to suppliers to add value

16 October 2018

Procurement professionals should form deep and trusting partnerships with suppliers, having more honest and open conversations, delegates at ProcureCon Europe were told. 

A CPO panel agreed that nurturing relationships with suppliers was critical to adding value beyond savings.

Tomas Veit, head of procurement at brewers Asahi, said that he had introduced a dedicated budget for his team to spend time with suppliers at their factories, plants and farms.

“What can we change to make their lives a bit easier? It’s not about pushing on the margins of our suppliers anymore,” he said. “It’s about those other opportunities, from an innovation perspective, and it’s about partnerships.” 

He added that while supplier relationship management used to be about discussing “how business is going and how we can support each other”, now it was more about “opening up and showing your cards a bit more.”

“It’s about understanding what our suppliers can do for us, their capabilities and that they understand where we are going [as a business],” he said. “It’s about how we change for the future, rather than today. Today is already too late.”

Veit used the example of Asahi’s relationship with water and hygiene services provider Ecolab. “In the past traditional way, we would sit with them and push them on price,” he said. “It’s not like that any more. We talk about how we can lower water or energy consumption, and they are bringing solutions. It’s a new level of partnership.”

Ecolab’s VP procurement Christophe van Riel was on the same panel. He said that embedded procurement business partners, such as the one sitting in the R&D function, were helping to bring value via supplier-enabled innovation.

Ecolab has introduced workshops, bringing together suppliers, procurement and internal stakeholders to come up with solutions to business problems.

Van Riel encouraged procurement professionals to work closely with start-ups as well as big suppliers. “I’m not sure innovation always comes from big companies,” he said. “Keep a place for small companies with innovative solutions.” 

Pascal Gielen, CPO for aerospace firm Thales Netherlands, said his team had been working to “bring suppliers to the table” with engineers, who can think they have a monopoly on innovative ideas.

“We [have tried to] create a more open mindset around sharing technology and sharing knowledge,” he said.

He shared a “simple” example of success, where a supplier suggested to Thales that they split radars into two parts, ship them separately and then reassemble them. Doing so saved the company €90,000. 

“That was about thinking outside the box and using the expertise and experience that other people have,” he said.

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