Development Trends of Strategic Procurement Organizations of Foreign Companies in the Fortune Global 500 companies.
I am fortunate to have been the purchasing manager and purchasing director of the world's number one German auto parts manufacturing multinational group for more than 18 years. At the same time, many colleagues and friends in other multinational group companies often exchange topics on procurement management and procurement strategies. It is a summary of the work experience of other colleagues in the same level of multinational companies based on their actual work experience and share it with everyone, hoping to help colleagues who are interested in procurement management.
Strategic procurement organization transformation
Multinational companies are called multinational companies because their production and business entities span different countries, such as the German auto parts giant Robert Bosch Group, Continental Automotive Electronics Group, Schaeffler Germany, and Valeo France And other companies, each group has hundreds of operating entities in different countries around the world [including R & D centers, manufacturing centers, regional headquarters and other types of operating entities]
Their organizational structure is completely different from the ordinary corporate organizational structure. They mostly adopt a matrix-type organizational structure, which is also the same for purchasing organizations:
Horizontal organization:
Group Headquarters-> Business Department-> Lead Plant or Regional Headquarters-> Plant Manager [General Manager]-> Deputy General Manager-> Department Manager-> Supervisor-> category manager
Vertical organization: Group headquarters-> Material group purchasing director of group purchasing center-> Regional purchasing center material purchasing manager-> category manager located in the factory or regional purchasing center.
Generally speaking, the management influence of horizontal organizations is gradually weakening, and they are only involved in administrative management and coordination.
The real direct management is the vertical business line, which also becomes the direct reporting line. The planning and implementation of all purchasing strategies are planned by the purchasing director and purchasing manager at the headquarters.
For example, if a steel procurement strategy is to be planned immediately, the purchasing director in charge of the steel materials group will convene steel material procurement engineers in all factories around the world to conduct project start-up meetings, then collect and analyze demand information, and analyze the steel materials of all the plants in the group. Demand quantity, demand volume, current price, existing suppliers and their performance, then centralize the steel demand of all plants and negotiate directly with 5-7 high-quality steel mills selected by you, and finally maintain 2-3 simultaneous supply Different factors such as the installation price, the installation price, and the product quality level are balanced.
So in the end, the purchase prices of these groups are beyond expectations, and the service is beyond expectations. This is the power of the multinational group purchasing strategy. The more excellent the more demanding the companies, the more their procurement costs will be higher than ordinary. The purchasing cost of the company is 20 ~ 30% cheaper. This is the real direct net profit.
After the framework contract is signed, the purchasing director of the material group puts the contract on the company's intranet, and then writes an email to each relevant person to execute the contract.
After the purchasing engineer of each factory maintains the supplier information in the factory's internal SAP system, the logistics planning department can directly place the order. Very simple and efficient.
This kind of procurement organization and model is already a trend. Many multinational organizations are advancing, and some have been advancing for many years. They have also tasted the sweetness early.