Key Metrics and Supply Alert
Staff -- Purchasing, 6/6/2002 2:00:00 AM
Look for more improvement in the economy, according to the Institute for Supply Management's 63rd Semiannual Forecast. "Manufacturing purchasing and supply executives expect their 2002 revenues to grow modestly from 2001 as they now anticipate 2.8% annual growth in revenues," said Business Survey chair Norbert J. Ore at the ISM annual conference in San Francisco. Biggest worries: energy and healthcare costs followed by import restraints.
Software companies are planning a big swing into sourcing applications. That was a clear theme from visits at ISM and software companies in the Bay area. Revenues are strong and growing in procurement applications and weak in most other areas. Commerce One dismissed its president following a weak earnings report and announced plans to boost purchasing offerings. Agile Software of San Jose, Calif., is also developing a major new sourcing package.
Clamp down on your services spend. "Services may be as much as 50% of expenses—and it's largely uncontrolled," said Diana Jovin, CEO of CascadeWorks in an ISM conference workshop. Texas Instruments (TI) is saving around $5 million from a CascadeWorks'e-procurement program focusing on the mushrooming services buy, said Luther A. Harris, a procurement manager for TI in Dallas. The new program directs spending to suppliers with contracts and discounts negotiated by the purchasing department. Payment processes are improved and simple tasks like obtaining security badges and passwords for contractors are greatly streamlined.
Major changes are in the works at Ford purchasing. David Thursfield, CEO of Ford Europe, is taking Ford's top purchasing job, replacing Carlos Mazzorin. Ford wants supply management to play a big role in the company's campaign to boost margins. Just the opposite happened earlier this year when Ford took a $1 billion write-off because of poor purchasing decisions on precious metals... DuPont named John P. Campi its new VP-Global Sourcing and Logistics, replacing Henri E. Irrthum, who is retiring. Campi had been in charge of sourcing at GE Power Systems.
Expect more restructuring at Vopak, the No. 1 chemical distributor in PURCHASING's newest ranking. Management is asking shareholders to approve a separation of its distribution business from its tank storage and other logistics operations. The distribution business will be based in The Netherlands and will receive a new name. The businesses have different financing and capital requirements, prompting the change.
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