If you are a regular reader of my column, you’ll know that I advocate for significant change in corporate supply management strategies and practice. Sometimes it may seem that I am but a “single voice in the wilderness” regarding this issue, but I can assure you that is not the case. During my consulting career, I occasionally encountered executives that understood the purchasing function had the potential to contribute significantly more to their company’s competitive advantage and, consequently, were looking for the type of changes to facilitate this.
In my role with IndustryWeek, I have also become aware of companies where the purchasing function has already started down the path towards progressive step-function-magnitude changes in how they work with suppliers. And they have found that that these changes indeed have increased supply management’s positive impact on their employer’s overall financial results. In fact, the impacts are significantly above-and-beyond what is typically achieved with a primary—many times sole—focus on piece-price reduction.
Oshkosh Corp. Supply Chain Vice President Sean Ketter will be presenting on one such company at this November’s annual IndustryWeek conference in Cleveland. In talking with Mr. Ketter, I’ve come to understand that his company has truly adopted innovative “win-win” type supply management practices that facilitate a more effective supply management function. Their practices are based on supplier development, expanding collaboration into other elements of their supply management practices.
If you plan to attend IW’s upcoming conference, you owe it to yourself to attend Sean’s session. This session is not targeted just for supply management personnel and managers. Executives in other functional areas within a company and/or corporation will also benefit by learning how new purchasing strategies and processes can positively—or negatively—affect financials in their areas of responsibility. If you are not presently planning on attending, you might reconsider once you check the conference content.
I’ve lifted the following blurb from the conference web site, which lays out what Mr. Ketter will be presenting on and the takeaways:
Corporate purchasing development has been stuck in a tactical silo, mostly operating separately from other company functions and, for the most part, their suppliers. Supplier development can play a pivotal role in breaking down the walls of this silo and in doing so dramatically increase the positive impact a purchasing department can have on company financials. This presentation will review in detail several examples of these impacts.
• Understand how to change purchasing from tactical to a more strategic arm of a company’s resources.
• Be able to detail financial impacts of supplier development’s support of suppliers.
• Provide a template for companies wanting to transition to more progressive supply management strategies and processes.
• Gain appreciation for how purchasing must evolve over time to adjust to changes in business and markets.
Note from the above that the presentation will not only document how Oshkosh updated supply management strategies and processes, but also how the company initially justified those changes. More than just ideas, they can provide proof of concept.
There are already companies pursuing and obtaining significant competitive advantage by considering more than initial piece-price in selecting suppliers and piece-price reduction in managing them. Oshkosh is an excellent example of this. If you check their financials over the last decade or so, you’ll see that company has had increasing positive results, and I have no doubt that their progressive supply management program has contributed to this.
Hopefully I’ve caught your attention with this column. My next one will detail another such company whose supply management function has increased its contribution to overall financials by selecting and managing suppliers outside the boundaries of current practice.
If you work in a similar company and want to share your story, contact me and let’s talk about it. If warranted, I’ll highlight your contribution to the momentum for change that is being created and provide some positive visibility to your employer.
Paul Ericksen’s book is Better Business: Breaking Down the Walls of the Purchasing Silo. Ericksen has 40 years of experience in industry, primarily in supply management at two large original equipment manufacturers.