Why procurement needs to move towards 'supplier ecosystems'

Decarbonisation projects are driving a change in procurement away from traditional competitiveness with suppliers and towards collaborative relationships.

Delegates at the Ivalua Now 2022 conference heard companies aiming to cut carbon footprints needed to develop both an internal ecosystem of stakeholders and an external ecosystem of suppliers.

Dominique Lebigot, CPO at Moët Hennessy, said internal stakeholders would best drive carbon footprint production by connecting with the supplier ecosystem.

“I strongly believe that this is going to be on of the main drivers for the procurement job going forward, because we are clearly moving from the traditional supplier relationship management approach [to] what I call supplier ecosystem management,” he said. 

“Clearly the challenge in the future will be to move from supplier competition to supplier collaboration, making our suppliers collaborate with each other, which means creative collective intelligence between suppliers. That’s the job of purchasing, to drive that.”

Speaking on a panel, Johan Marchner, senior vice president of powertrain and fossil-free materials at Volvo, said his team started supply chain collaboration almost five years ago. “We were creating a dedicated department that we call responsible purchasing, and the purpose with that was to put sustainability high on the agenda for our organisation and also for our suppliers. 

“With that incentive, we have spent a lot of time when it comes to training and making the supply chain aware.”

Marchner said Volvo was part of the First Movers Coalition, a group of companies aiming to spur investment in low carbon technologies. 

“We have a true role to play here also to connect the right supplier partners to our engineering offices,” he said. “We also need to address other types of suppliers, perhaps not the traditional suppliers… We have a good sort of understanding for that and a very good interest from our engineering teams to connect with the right supplier partners.”

Marchner explained that traditionally Volvo allowed tier one suppliers to source their own raw materials. “However now, in this decarbonisation journey, we are extending that and engaging ourselves directly with our raw material suppliers, and that is to be able to promote the conversion journey and also to support our midsized suppliers with the ambition of doing this decarbonisation journey.”

Frédéric Lino, executive vice president of purchasing and supply chain at aerospace company Safran, emphasised the importance of collaboration with internal stakeholders. “The same trend can be observed within Safran, with the strengthening of the relationship between purchasing, R&D, engineering, and specifically for the development of new products or new technologies that we want to embed in our proposal to our customers.”

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