From the shortlist three organisations were recommended by the assessors for consideration in the Sourcing and e-Procurement category: Lafarge Nida, Rexam, and NHS Logistics Authority, while the judges also opted to consider Ducati – interestingly, three out of the four coming from the Engineering and General Manufacturing sector.
In general, the judges were slightly disappointed at the performance shown in sourcing and procurement by the entrants – there were few worthy of nomination to this category, and none that were truly outstanding.
Of the nominations, the judges were very impressed by the innovative systems NHS Logistics has put in place for end-to-end order capture and management, but while ‘they have made the tactical side more effective, with an impressive use of technology to improve the buying process, they don’t get much involved in sourcing per se’, this being the responsibility of a separate NHS agency.
Lafarge Nida was singled out by the judges not for purchasing excellence as such – there is still scope for improvement – but for the significant strides made in improving purchasing performance in the relatively short period of transition from state to private ownership. The firm has been part of the Lafarge Group Purchasing Performance Plan since 2001, and is already rated above the Group average, with a consistent and continuing record of savings achieved based around comprehensive procedures and three-year action plans.
Ducati depends even more than most on its relationship with suppliers, bought in components and assemblies accounting for 92 per cent of product value. The supply base is well differentiated, with different supply policies, such as JIT or kanban, applied as appropriate, and suppliers representing 60 per cent of total spend are connected with Ducati via web-based EDI.
The judges also like an innovative approach to reward-sharing: a third of savings from value analysis and cost production programmes go to the supplier, a third to Ducati, and the remainder is ‘invested’ in not increasing the price of the product to the consumer, thus building a larger market for everyone.
But overall, the judges preferred the entry from Rexam Beverage Can Europe. ‘The extensive improvements they have been able to make over the past two or three years have driven some very tangible results, and these should continue as the fiveyear transitional strategy rolls on’. The judges noted the way challenges such as seasonality and the need to respond to sudden market changes drive flexibility in sourcing and procurement. Attitudes to suppliers have undergone a sea-change: prior to 2001, the approach was ‘price down’ focused and relationships with suppliers were tense. The new approach, ‘the Rexam Way’, involves working more collaboratively with suppliers and recognising the influence of supply chain competitiveness on company performance.
There are some leading edge practices in place in areas such as total cost focus, supplier development, bringing suppliers’ manufacturing processes more closely aligned to Rexam’s own, developing supplier operations and driving value added operations from their own into the suppliers’ processes where appropriate using a total cost approach and value stream mapping, and the use of the ‘six-sigma’ approach in developing both their own and their suppliers’ operations.
There are some 47 quality and cost improvement projects currently under way with suppliers, ranging over areas from JIT to scheduling improvements and from the development of supplier portals to inventory reduction (in which there have been some impressive achievements: metals inventories were reduced from 14,000 tonnes to 8,500t in nine months, despite the need to ‘hedge’ against material price fluctuations, materials representing 70 per cent of product value). Improved relations with suppliers are also evident, for example, in the way their steel supplier is honouring deals made before recent price increases.
Additionally, the judges felt that Rexam is actively developing its own ‘best practices’ in sourcing and procurement, rather than merely applying known best practices from elsewhere. Rexam, therefore, wins the Award for Sourcing and e-procurement.