Procurement at the time of boom: purchase as a driver of innovation

Already 4th edition of conference Procurement Forum with the main topic purchase at the time of boom was held on May 25, 2016 in Prague hotel Pyramida. More than 160 experts attended the conference. The event focused on current changes in purchase at the time of the economic prosperity. Program addressed topics ofstrategic partnership, the impact of the increasing economy, possibility of cooperation with external partners, qualification of suppliers and role of the procurement in the success of companies. The event was organized by Blue Events with the cooperation of program guarantor Marek Rokoský, and the support of many partners, especially SAP Ariba.

Dana Hájková, the analyst of Česká spořitelna, opened the event with the attributes of current economic situation and its global context; and focused on the way how to read economic trends that influence the price formation. The analyst spoke also about the exchange rate of CZK and the exchange rate commitment of CNB: “Economic rate will stay solid, the foreign demand and domestic consumption will be the driver of the increase. The companies will stay cautions regarding the salary increase. We do not expect the decrease of prices; the exchange rate will stay stable for one more year. The purchasers should monitor the demand and cost factors in their fields, and prices of petroleum and the development of Chinese and German economies."

Jiří Steif and Lenka Krobová from A.T. Kearney spoke about the transformation of the procurement with the external partner. Transformation of the purchase as a source of an additional value is a concept, which was created in the 80s. The understanding of the purchase moves from transaction role to real value creator. The procurement participates newly on the formation of business strategy, development of the product, control of financial flows and cultivation of suppliers. According to the study of global trends from 2014, procurement has been more accepted in companies and its role increases in the time of crisis. “Procurement has a potential to move further on the trajectory of sophistication and effectiveness. The integration of suppliers into the process of research, development and concept of new products – especially in case of manufacturers and innovations, is crucial. It is important to have a sponsorship – leader of the change, to put the transformation into the broader context and gainthe support of employees for it; to provide continuous communication with employees and their motivation both financially and by assigning of new responsibilities to them."

Martin Šustek, Purchasing Director, TATRA TRUCKS, spoke about the cooperation with suppliers at time, when important Czech company showed profit after years of problems and loss. With the new owner, TATRA came to life and started to produce more vehicles. The amount of purchase increased significantly. Currently, the procurement works with 40 thousand active items and more than 800 suppliers. Bad experience with the collaboration with more than 1000 suppliers in the past lead to restrictions in the capacity and slow down of the production.

“The cooperation with suppliers is crucial. We changed their attitude, flexibility, unification, early supplier involvement and active re-sourcing of key commodities.We expected proactive and market –oriented attitude. With suppliers, we share data, including current technical documentation, and we communicate online using web portal for suppliers on the internet. This brought us savings. Today, companies perceive purchase as a driver of innovations."

Beáta Vlčková, Purchasing Manager at Slovenské elektrátne, opened the topic of qualification of suppliers. Slovenské elektrárne belongs to ENEL group, they have 37 power stations, 4 500 contracts and 1 300 suppliers, broad purchase portfolio and restricted possibilities of standardization. The process of qualification of suppliers is important while dealing with technically sophisticated tasks. Its main goal is to create a list of suitable suppliers and verification of their technical capabilities.The list accelerates the process of selection and gathers demands and conditions for suppliers. The model of qualification was adopted by ENEL. It is composed of three groups of commodities – registered ones (which are not technically demanding) and globally and locally qualified. The conditions of qualification are applied from public procurement low. The criteria are financial, technical and safetyarrangements, safety and health protection at work. The company runs purchase web portal for suppliers, were the supplier may select group according to the qualification and may submit the documents, which are evaluated afterwards. In case of orders which have impact on nuclear safety, the audit of supplier is required.

Josef Zrník, independent consultant and pioneer of electronic auctions, introduced trends in purchase strategy. “Strategic attitude in purchase has been developing from buying of things, moving to direction and establishing of relationship with suppliers, up to making strategies at the level of categories. Strategic trends in the global context are managing of transaction by supplier and outsourcing of global sourcing activities. Purchase becomes a center of shared services."

Tomáš Koutek, partner of KRC Partners, showed on two case studies, how a project on reduction of costs with the intervention of external partner evolves. “Procurement is not disappearing; it gains a significantly different role. Job which is not a core of company operations, shall be given to somebody else = by outsourcing." The trend is to outsource not only the print solutions, transport or IT, but also solutions of cost reduction. Successful projects have in common great buyers, good implementation of processes, SW and automatization. The result is significant decrease of transactional costs. Nevertheless, outsourcing has its barriers: unwillingness to make changes, need to give up the relationships with suppliers, no interest in adoption of analytical commodity-strategic attitude even to small items and also fear that due to the cooperation with external partners the internal purchase becomes useless.

Zdeněk Mikeš, Procurement Solutions Specialist at SAP CZE introduced implementation of P2P (by electronization of the procurement). SAP offers new strategy: complex cloud solution for managing of all categories of expenses SAP Ariba Network. It allows cooperation with suppliers in real time and serves as an instrument of communication.

Marek Rokoský, the expert guarantor of the forum, hosted the final panel discussion of businessmen. The cooperation between merchants and purchasers was the main topic of the discussion. Among the panelists, there were: Matěj Smolař, Lawyer at Felix a spol., Attorneys at Law; Pavel Zaal, Sales & Marketing Director, Etnetera; Igor Zahradníček, General and Sales Director, Touax (modular buildings) and Roman Zúrik, Sales Director, Kofola.

Roman Zúrik shared both his positive and negative experience with the purchase: “I would mention only pressure on the prices and costs as the negative experience during the crisis. We needed to renew the confidence of consumers and to innovate. It is really great that we are able to run a dialogue not only about the price, but also about the innovations and services, e.g. about the healthy products with additional value."

Igor Zahradníček prefers politeness in procurement, the same quality we value at personal life too. “I experienced braking of good manners during the crisis few times. From the very beginning the issue was how to reduce prices, not the customer´s satisfaction. Some of the purchasers tried to take advantage of us and cheat; or they just wanted to acquire low price benchmark. The positive experience was with tough but fair negotiations."

The audience asked about the attitude of purchaser and its impact on the negotiation, cartel agreements, experience with e-auctions and communication platforms for suppliers. The legal responsibility of purchase manager, providing of gifts to suppliers and the ethic codex were discussed too.

Further information:
Antonín Parma, Managing Partner, Blue Events

Media contact:
Lukáš Koutník, Blue Events
tel.: +420 730 804 077, e-mail:

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