Speeding up key cost-reduction projects and keeping a much closer eye on suppliers at risk of failure are the two ways procurement at BT is responding to the global financial crisis.
Speaking to CPO Agenda, Neil Rogers, the global telecoms company’s chief procurement officer (pictured left), said events during the past two weeks had prompted “a series of urgent actions” in his 400-strong function.
The first was about “increased consolidation in the supply base to get costs down quicker”. To some extent this meant disrupting the “classical rhythm of procurement”, he said.
“Speed is key. We need to act immediately on things and we have a number of programmes around the business where we are doing that… We are going to do things four times faster than we would have done normally.”
The second was “a review of all the vulnerabilities that we may or may not have in our supply chain”.
Rogers said that, prior to the recent crisis, BT was keeping an eye on just five suppliers with financial difficulties – two in the US, two in Europe and one in China. But he expected more to join this group over the next 12 months and the company needed to plan for that.
BT was “ramping up” its risk evaluations and “creating a new watch list of suppliers”, particularly in single-source situations where switching suppliers could take time.
“When you look at what is going on around us, you realise that no company has a right to exist in its current form,” he said. “In terms of the just-in-time, optimised supply chains we’ve got, those could give us problems in the current climate.”
He noted that while a month ago having “pretty good visibility” might have been sufficient, today the requirement was “precision of exactly what might go wrong and what you would do about it”.
Rogers said that on both the cost and supplier risk fronts, procurement had agreed to borrow operational people with the right skills from some of BT’s business divisions to help address the need for speed.
It was right for procurement to draw on resources from across the business in this way, he added. “As a procurement function you are funded for peaks and troughs, but not these huge swings of activity.”
Neil Rogers will be speaking at the ProcureCon event in Geneva on 6 November. For more information, click here
CPO Agenda is conducting an online poll to gauge how the global financial crisis is likely to affect procurement. To take part, click here
