ZNS Forum ob 15.-letnici: Arjan Van Weele
Purchasing: from backroom into the boardroom
Arjan Van Weele holds the (part-time) NEVI-Chair of Purchasing and Supply Management at Eindhoven University of Technology, Faculty of Industrial Engineering and Innovation Sciences (IE&IS). He acts as a boardroom consultant to many large companies on procurement strategy and governance issues. He also acts as Supervisory Board Member for a few companies and organizations. We talked with prof. Van Weele, one of the guests of the forum, about how the buyers changed, which global trends are affecting supply chain management and why procurement should change its traditional cost focus.
How did buyers change in the last 15 years?
During the past two decades purchasing evolved from the backroom into the boardroom. Information and communication technology enabled buyers to delegate operational purchasing to the user. As a result, buyers could focus on tactical and strategic sourcing. As purchasing cost today, due to outsourcing, account for the majority of the company's cost, purchasing needs to contribute to both the bottom line and topline growth of the company. In many cases purchasing is too important to leave it only to buyers. Purchasing certainly is a cross functional activity which can best be executed through cross functional category sourcing teams. The buyer's role changed dramatically from operational purchaser to category sourcing manager, who supports and leads the often global/regional cross functional category teams.
Which main global trends are affecting supply chain management?
Dominant global trends are: the globalization of international trade, the expected resource scarcity that will limit economic growth and lead to geopolitical tensions among nations, the further development of ICT and the impact of social media that will lead to increasing supply chain transparency, and the circular economy that will increase requirements on suppliers to get paid for materials consumption rather than supply.
You said that procurement should change its traditional cost focus into a value and business driven focus. Why and how?
An old Japanese wisdom says: if you focus on cost you will drive out quality. However, if you focus on quality you will drive out cost. Buyers that consistently focus on continuous cost reduction will in the end destroy value, ruin supplier margins and damage supplier relationships. This complicates the buyer's task. First, he or she needs to drive cost down to competitive levels in order to make the company's products cost competitive. However, when that is accomplished, the buyer needs to explore how to create better value for money by mobilizing supplier expertise, as the knowledge within the supplier community usually is much bigger than within the buyer's own organization. Mobilizing supplier expertise is far from simple, as the buyer usually is limited by his shadow of the past. New paradigms as best value procurement and vested outsourcing have been designed to overcome this shadow of the past.