Procurement in 2021 is no longer just finding a supplier and triggering a purchase order. Legal requirements, internal goals regarding cost management and sustainability lead to a broad specification for award decisions and processes. If a commodity group management is important for the target definition, a clearly structured supplier management is increasingly important for the daily doing. #itbecomesmore shows the development in an increasingly fast and transparent digital world.

Efficient suppliers – more than delivery capability

In the good old days, once a supplier was approved for their products and delivery performance remained consistent, they were set for life. Depending on sales, there was an annual meeting, price demands were rejected by procurement, and meetings were held at the halfway point. Thus, the sales department had achieved its goal and the procurement department its success. If the turnover was not so high, the annual meeting was not necessary. In our projects, we have talked to suppliers who were happy about an invitation after eight years with our customer.

The next stage was ISO certification with the requirement of a supplier evaluation. Strategic suppliers were then defined in procurement, they didn’t want to evaluate all suppliers (what an effort). #itbecomesmore was narrowed down to a one-time evaluation of the TOP 30 suppliers.

The next step was a self-disclosure of the suppliers, which was required, suppliers had to sign the Code of Conduct, had to send in certificates. And #itwillbemore, procurement spent their time scanning and filing these documents.

Everything up to this point is more like supplier administration and has little to do with management. Management (Latin manus, „hand“ and Latin agere, „to lead“, „to lead by the hand“) rather means interaction and joint cooperation with suppliers. #itbecomesmore means collaboration with the supplier, means working together and exchanging information.

#itbecomesmore – from administration to management and collaboration

Supply chain legislation, sustainable products and companies, ESG reports, CO₂ balances of companies, Sustainable Development Goals of the UN – all buzzwords that companies are currently dealing with. And of course, in the first step, with the effects and implementation in their own company. A natural second later, however, procurement takes center stage. What good is a well-positioned company if the upstream supply chain has weak points? A good example is the current discussion about the sustainability of e-cars. It is not the producer that is under criticism, but the supply chain.

#itbecomesmore means for procurement and especially for supplier management: not only the delivery performance and good prices make a supplier, a multitude of proofs, certificates and information have to be provided by the supplier, checked, archived and evaluated by procurement. In addition, suppliers should be supported by procurement in this development, especially the small ones, and the time investment in the exchange must be increased.

Supplier management means effort for procurement. However, #itbecomesmore also means that if procurement deals with the issues early on and can reduce the administrative effort from the start, it has a chance to work with the right suppliers early on.

 

Oliver Kreienbrink

Managing Diretor. ADCONIA GmbH