Global supply chain management: Down economy brings new procurement challenges

Patrick Burnson -- Logistics Management, 11/13/2008 3:06:00 PM

SAN FRANCISOCO—Given the vicissitudes of procuring product for distribution in a down economy, many new strategies have been put into place. Most of them center on the “now,” rather than the future. Capturing revenue today remains the challenge.

 “Doing more with less is something we all facing,” intoned Andrew Bartolini, vice president of global supply chain management research for the Aberdeen Group. “But how? is the question.

 Attempting to find an answer at the “Chief Procurement Officer’s Summit” here today was a panel of experts comprising finance, logistics, and manufacturing sectors.

 “There is no real “recession-buster,” said Jean-Jacques Beaussart, CPO, National City Corp. “We have to concentrate on the immediate needs, and worry about demand later. The cost pressure is intense.”

 Mitch Plaat, vice president of procurement for Con-Way, concurred, noting that the trucking business is a direct reflection of the current economy.

 “We are gaining market share, but losing margin,” he said. “The best hedge we have is to grow our logistics offerings.”

 He added that the volatility of the fuel prices has not helped to capture revenue, as shippers today negotiate the “all in” contract with surcharges built in.

 “As a consequence,” he said, “there are not many off-setting opportunities.”

 Multinational manufacturers are up a similar challenge, said Ken Syme, CPO, Xerox, who noted that doing business in more than 140 different countries complicated the process.

 “On the one hand, inflation was tough for us to deal with,” he said. “But now we may be facing deflation, and working with so many different currencies is a problem. How do we solve it? But keeping to a standard…by staying consistent.”

 But staying the course in all aspects of supply chain management is not easy, the three concurred. Failing businesses are causing further disruption.

 “We had one truck manufacturer go under,” said Platt, “and now we are searching for another partner to supply us with needed equipment.”