Whilst the current economic environment is challenging, even today there is enormous value to be had in spending wisely and well. And it’s something that Procurement and Supply Chain consultancy Proxima know all too well, having been founded out of a recession itself back in the 1990’s. Today the company has offices in Europe and North America and is working with some of the world’s largest businesses.
“Around seventy percent of company spend is on supply,’ says Dan Collings, COO at Proxima. ‘Getting that spending right is a valuable differentiator for businesses in the good but especially in the not so good times. It is more critical than ever to ensure that suppliers are perfectly aligned to the rhythm of a business, and that every cent is working in pursuit of objectives”.
“And objectives evolve”, adds Collings. “Early in my career, nearly every client was asking us to focus on driving savings, something that we still excel at. However, today the definition of value can be much broader, aligned to the realization that there is a powerful ‘external enterprise’ made up of suppliers. Whether it’s a question of cost, risk, resilience, ESG or innovation, invariably supplier networks are a key part of the answer”.
Walgreens is a perfect example of how Proxima partners with businesses, and ambitious CPOs who want to drive real change. “We want to help CPOs to put procurement at the heart of driving profitable and purposeful change. With Walgreens this means helping them to achieve ambitious financial targets while at the same time supporting the transformation of procurement”.
“We were originally involved in assessing Walgreen’s property portfolio - everything from signage to snow clearing to the day-to-day operations of a Walgreens store. We are now into year seven of our partnership, and it’s one that we deeply value, based on trust and results delivery. What started in property now extends across a significant breadth of procurement and supply chain topics including sourcing, complex transformation and the deployment of deep subject matter expertise”.
And what of savings, are these a thing of the past? “Absolutely not, there is still enormous financial value to be had in most organizations, if you know where to look. Although perhaps in today’s environment the job is more ‘Commercial Architect’ than pure savings machine”.
“Surprisingly businesses can still save money in these difficult times, and of course every business should be doubly cost conscious right now”, says Collings. “Inflation is prompting businesses to be more open about where to look, but also to take bolder decisions about what they do and how they do it. This means that they are often looking at things that don’t traditionally get lots of attention, like indirects, or reengineering products and processes, or even driving deeper structural business transformation”.
“There is a lot of talk about procurement now being at the top table, but the simple matter is that there is a match between what we excel at, and what businesses want to do right now. Execs need to face up to inflation, address climate change and navigate the complex geo-political challenges facing our supply chains. At the same time want to be more agile, more resilient and more innovative. All of that is complex and costly to achieve”.
“We can help with this. As commercial architects we can lead by example, putting together the right supplier networks but also helping our organizations to eliminate waste and challenge every cent spent, to ensure that it’s powering those objectives. It is a perfect storm which is putting procurement into the spotlight, but we have to act now or someone else will step up, and the chance may be gone forever”.