The task: Deliver group cost savings using a Global Purchasing Strategy

Below is a brief outline of the tasks that need to be completed for a robust global purchasing strategy that delivers significant synergy cost savings.

From experience the creation and success of a Global function is not simply a “Tick the boxes” task. It requires the committed buy-in from key members of the executive board and regional teams.

The tasks will split into to 2 primary activities, one mostly non-tangible, covering what I term as political in-house lobbying, strategic planning and ongoing management buy-in. These tasks should not be underestimated as they can be the primary source of costs and sadly time wasting.

The other being more tactical, covering strategy implementation, personnel, global buying groups, supplier negotiations and financial synergy savings delivery.

Group buy-in

Any Group initiative will firstly require a visible high profile sponsor to both launch and engage with the project. It requires a clear collective vision and commitment from all participating group companies. The organisation and business processes will need to be reengineered to accommodate the Global initiative. And finally a commitment from Group and Operating companies to provide the resources and skills to deliver this project.

Collaborative initiatives

Before delivering a global strategy, you must first agree those areas of collaborative working, the following are just some of the areas that need to be covered:

1. Internal Group Alignment

2. Global supplier strategy

3. Group supply contracts

4. Product specifications, conformance and testing

5. Forecasting, purchasing & logistics organisation

6. After sales service & support

7. Accessories

8. Group intranet (forecasting, supply and stock info)

9. Ethical trading

To put a little more meat on the bone, I’ve broken a few of these a little further into some of the Key tasks:

Internal Group alignment

After agreeing the collaborative initiatives, the Group must then begin to align products and procedures to leverage the groups operating strengths in areas of:

• Products selection & roadmaps
• Logistics & after sales
• Commercial terms
• Group purchasing volumes
• Inter-Group visibility & communication

Global Supplier Strategy

Before deciding upon those manufacturers you wish to work with, the group must also decide the criteria upon which a Global Supplier can be measured and selected. The following principles should be considered:

• Geographical location
• Technology capabilities
• Production capacity
• Quality
• Ethical trading
• Complementarities

Group Supply Contracts

I would suggest the best solution here are Global framework agreements, that locks down the key supply terms, but that allows flexibility for the Operating companies to negotiate local “Special” terms to meet their requirements. Key areas that will require negotiation are:

• Product specifications & samples
• Testing, conformance & acceptance
• SAR, WEE and Euro standards conformance
• Forecasting & purchase orders
• Logistics specifications
• Stock protection & late deliveries
• Payment terms & invoicing
• Product warranty
• DOA & epidemic failure
• Software fixes
• Termination
• Governing laws
• Legal warranties & Indemnities
• Intellectual Property Rights
• Limitations of liability

And many more….

Product specifications, conformance & testing

Acting as a suppliers briefing pack and bible for all product supplied, this document will cover many topics including:

• Product evaluation & range review processes
• Samples & dummies
• Hardware & software requirements
• Packaging requirements both warehouse and retail
• Factory acceptance & testing
• SIM card management
• Data files & labelling
• Pre & Post customer management requirements
• Training
• Service levels & performance evaluation
• Legal liabilities & documentation