ProcureCon Indirect, Amsterdam

I recently attended the ProcureCon Indirect conference held in Amsterdam April 28-29.

The mood of the meeting was quite sombre given the economic environment.

Not surprisingly, therefore a good deal of the discussion focused on cost cutting and even optimising the structure of corporate Purchasing Departments. Some striking takeouts from the conference:- 

•  Notwithstanding the need to reduce costs, a recurring theme within the conference was how best to handle suppliers. Here one speaker noted that up to two-thirds of the growth of his company was attributable to ideas generated by suppliers. So the goal is to optimise value rather than just drive down costs 

• To help optimise value, delegates were asked to review their practices when dealing with suppliers. New thinking suggests that suppliers should be thought of as part of a “cluster” comprising suppliers, the client organisations and consumers. All need to feed off and learn from each other.

•  Indirect expenditure can often exceed that of direct, especially for companies that have a significant services or maintenance business, or with high marketing expenditure. 

•  Marketing and advertising can be the largest single item of expenditure for some companies yet Purchasing is often excluded. (We wonder if this is still true in the USA?) Delegates were urged to get involved in these areas. 

•  Where functions and operations are fragmented within companies, Purchasing has the opportunity to take overall ownership. This is most effective if stakeholder buy-in can be secured. 

•  Indirect is different to direct purchasing in may ways, not least because much more time is required for internal stakeholder engagement. So indirect managers require strong expertise with “soft skills”. Generally indirect purchasing tends to be more complicated. 

• The economic downturn and resulting need for savings has led many companies to rethink the structure of their global Purchasing arrangements. There appears to have been much discussion about global vs local (the merits of a globally centralised Purchasing function versus a more localised and devolved approach). This dilemma seems to be being resolved on a case-by-case basis in which responsibility goes hand in hand with accountability. Accountability ensures that the Purchasing function ends up at the optimum point within organisations. 

Author: Derek Groom (Decideware)