Analyzing GM's New Procurement and Supply Chain Leadership
In other words, Lopez is the one who fouled the Detroit procurement waters. And Andersson did little to curb the pollution (even if his team did not perpetuate such behaviors to the same degree ). But might change finally be in store for GM's procurement and supply chain function now that Socia is in charge? ADR's Bill Michaels suggests it might be, if GM changes five things about how it approaches procurement and supplier relationship management. For Spend Matters readers, a number of these suggestions are nothing new, but they're interesting nonetheless.
These include focusing on how best "to rebuild the supply chain" beyond "choosing winners ... based on the simplistic price formulas of the past" to those built on "deep analyses of the long-term prospects of a supplier delivering innovation, sustainable prices and low risk." In addition, GM must "recognize that suppliers are an extension of GM's manufacturing capability" and "stop looking at the supply base as a source of incremental profit by insisting on price cuts every year". Third and fourth, GM should "develop suppliers with the capability to generate high productivity and automation" and "launch a formal supplier development and support program focused on supply chain optimization". And last, GM should "build a better risk management program with predictive modeling".
While these are all good suggestions, Rome was not built in a day. Nor will the new "Government Motors" rebuild itself in a single quarter. With much of GM's supply base in shambles, I suspect a lot of these suggestions will be easier said than done, even though the rumor is that Socia is much more open to change than his predecessors. But just as in politics, hope is not an answer.
Jason Busch
I'd be interested to hear your thoughts on a more, shall we say, currently relevant industry - healthcare. When thinking about e-procurement in healthcare, what are your thoughts on the 300 lb gorilla, GHX, and the second tier guys, Ariba, Coupa, SciQuest, and Ketera? You're insights would be very much appreciated by someone just wading into this area and looking at which solutions would best fit her 400-bed hospital. Thanks!
There are two sides of cost reduction in small to medium-sized hospitals -- demand and supply. Changing demand patterns (and making sure inventory does not walk away) and reducing costs through lower purchased prices (gained from negotiation and compliance) are key. You have a good list of vendors on the eProcurement side, but I would also look at spend analysis to identify opportunities (definitely tossing BIQ onto the list as an inexpensive tool to hunt and peck around even if you go with a broader spend analysis platform from a P2P vendor). I'd also consider sourcing platforms as well and would add Iasta onto the list in addition to the others. On the invoicing automation side, Basware is hands down the pick to consider (check out their eProcurement as well -- it might be sufficient). I doubt you have a significant Oracle back-end, but if you do, it's worth exploring their capabilities in the spend management arena as well.
Good luck. We'll explore the topic more here as well. And I agree that healthcare is a more relevant industry at the moment. Moreover, reducing the costs to deliver care should be the most paramount issue -- not simply creating single payer or government mandated healthcare, which without cost reduction, is an insane move.
Very well said!!