The European Supply Chain Excellence Awards 2007, Sourcing & Procurement Winner: Vodafone Group Services

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Among this year’s finalists, two entries stood-out for the Sourcing and Procurement Award – Nuon, from the public sector, utilities and services pool, and Vodafone.

Nuon Corporate Purchasing in Amsterdam invited the judges to consider a capability development programme based on the MSU/Monzka benchmarking model for procurement (although Nuon have also cross-referenced this to insights gained across the wider supply chain from the SCOR model). But benchmarking for Nuon isn’t a sitting target; they say In 2007 the effort is moving forward and new shared targets are set. The specific best practice in this is the change effort itself. No sweeping capability development effort if it is contained in parts of the organisation or run by a specific centre of excellence” and the judges were indeed impressed by the way that, although this is nominally a Purchasing initiative, the effects permeate every function and division. They commented ”Nuon showed us a good strategy based on collaborating with the supply base and using benchmarking to make major improvements in purchasing practices”.

But preferred to Nuon was the entry from Vodafone Group Services. Vodafone are actually getting rather canny at ”segmenting” the ESCE Awards ”market” – they won Awards last year and have two this year, themselves or through their logistics partners. But this year’s entry is by no means merely a repeat or update of the previous one – it represents a whole new development within the past year that has created a single integrated and aligned materials organisation from 18 geographically separate functions. This, they say, has enabled Vodafone to ”maximise the full extent of its global scale and scope, streamline processes, deliver clear and consistent visibility of the value delivered through high quality supply chain management processes and provide a platform to capture the maximum benefits from global initiatives around supplier performance management, low cost sourcing, e-supply chain and the creation of a Vodafone Procurement Company (to be based in Luxembourg)”.

Which is quite a lot of work in a year! The scope of the approach covers almost all procurement, with the exception of terminals, from network and IT infrastructure to services such as media, consultancy and local indirect consumables, and the approach has seen the implementation of centrally-defined but locally implemented category management, spreading operational excellence across geographies and enabling cross-functional support for these activities.

The assessors noted ”an extremely clear strategy, supported at the highest level in the organisation. The organisational change and the collaborative approaches on the customer side represent best practice and the degree of change over a short time is impressive”, as were supply side structures for commodity management, although we were left slightly less clear about supply side collaboration.

If there were any criticisms they would lie around systems architecture and centralised planning, although this apparently is on the agenda for the coming year, and that the integrated strategy hasn’t, yet, resulted in appreciable rationalisation of the supply chain network, although, rationalisation takes time.

Maximiliane Glas, for Vodafone, says that throughout the transformation ”Quality of service has been maintained and enhanced, using a comprehensive governance system operating under stringent service level agreements with the operating companies and a common set of KPIs. Business benefits include greater transparency of spending patterns and savings, more streamlined processes and increased opportunities to leverage global scale and scope.

”The single point of purchase for global suppliers represented by the new Vodafone Procurement Company concentrates our buying power but also leads to simpler business processes for our partners.”

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