Chemical companies spend enormous sums on the serving and maintenance of their assets, as well as on new investments. In daily business, however, staff often lacks the time and experience to optimize the procurement process. Achieving optimal practice here, which not only involves finding the best price but incorporates local and company-specific requirements too, can reduce costs. With some analytical application and more communication, it is possible to realize cost savings of up to 10% — if one just thinks beyond the conventional and, in general, historically developed price-oriented approaches.

"Price" is not enough
Usually, in order to make procedures in procurement and purchasing more efficient, administrative processes are tightened and streamlined. Although initial successes can frequently be realized in this way without regular readjustments, all participants tend to fall back into the old patterns and ways. This so-called "Philosophy of Procurement Power" is driven to such an extreme, for example by automotive suppliers, it can lead to problems in manufacturing and assembly, thus negating the short-term savings. For instance, when suppliers are continually changed, the quality wavers and promises of guarantee to the customers cannot be upheld.

In order to counteract this and to obligate suppliers to good practice, many large enterprises impose ambitious agendas. Time and again the bar is raised too high and the whole selection process proves overambitious. The enterprise dictates the manner of collaboration and ignores the interests and strengths of individual partners. The supplier must simply conform to each change in price and product strategy if it wants to remain involved. The problem is that many potential suppliers do not manage the leap into the pool of partners; for others the risk of adapting to the contractor is too great. The consequence for enterprises is that the number of suppliers from which they can

Thinking further
The time is ripe for a new approach. Most chemical industry companies already have developed internal processes that span across departments. But with the new definition of procurement procedures, optimization is both possible and necessary, especially at the point of interface with partners. Even if many enterprises have already prescribed to the "think global, act local" strategy, putting it into practice is at times more...(Read whole article)