Former Dell CPO Garvin provides insights on driving procurement success
High-tech industry veteran provides insights in exclusive Purchasing.com interview
By Dave Hannon -- Purchasing, 8/25/2008 4:46:00 PM
Martin Garvin spent a career in the high-tech industry, the last10 years working in the procurement organization at Dell, a high-tech company known for its cutting-edge supply chain practices. Earlier this year, he retired from his post as CPO at Dell, but is still active in the high-tech industry, now serving on the board of directors for Entorian Technologies, a supplier of memory modules to the PC industry. Purchasing recently caught up with Garvin to discuss the state of the procurement function today.
Q: How have you seen the role of procurement change in the past 10 years?
While I can’t put it to a timeline, things have changed in a very positive way for procurement professionals over the years. The reality is companies are working harder to compete globally and manufacturers especially are starting to realize that the procurement role has an influence on a tremendous amount of spending and, thus the top and bottom lines at a company. At Dell, I reported directly to the CEO, which says a lot about the value of procurement—that a Global 25 company would have procurement report to the CEO.
Q: How has global sourcing changed the role of the procurement organization and procurement professional?
If you’ve never dealt with international suppliers, you’re now faced with dealing with new business cultures and companies that may have different business practices than you’re used to. It’s a different playing field. You have to become more culturally aware of how business is done. I’m a big advocate of building relationships and understanding the companies you’re doing business with in terms of financials, culture, challenges and labor issues. But on a global scale, it becomes a very complex challenge.
Q: What’s the key to global sourcing?
Leveraging local government or civic officials to put you in contact with possible suppliers in the region is always a good start. You have to be in the region and spend the time developing the relationships. Ideally, you’d like to have locals who speak the language to represent you in the markets you’re sourcing from and have them build business connections. But developing those people that may not have the same experiences we have in the U.S. takes time. In China, for example, keeping local talent is very difficult. So that creates a lot of turnover, which can be costly. And sometimes the people you hired to get started in a region aren’t the ones to grow with the organization—so it can mean some tough human resources decisions, but it has to be done.
Q: What advice do you typically give to buyers starting out?
Over the years, the advice I’ve given young professionals most often is a golf analogy. There’s 14 clubs in your bag and there’s a time for the driver and a time for a putter. Some of that finesse and breadth is what younger folks may lack most—knowing which club to use and when. The more instinctive procurement pros have good strategic thinking skills and are good at reading people and understanding how to build relationships.
Q: What are the top priorities in designing a successful procurement organization?
If someone hired me to go in and in 90 days analyze a company and design an affordable and high-impact procurement organization, the analysis should focus on three areas. First, you have to establish where the money’s going. Secondly, you need to establish what are the most critical technologies to the company—sometimes that means cultivating new suppliers for a critical component. And then you need to establish which suppliers are most strategic—either because of their relationship or they’re most closely connected to your company. Beyond those three key areas, having organization leaders that can work cross-functionally is critical. If you can’t work with the product development organization, for example, then it’s a weakness.
Q: Is today a good time to be in the procurement function?
Absolutely yes. If you’re interested in the global supply chain and the complexities of dealing with a set of cultural challenges then it’s a good field to be in. And your ability to influence the top and bottom line is phenomenal because the organization you’re working in controls as much as 90% of the dollars spent in the company. The old purchasing image of “don’t spend more than $20” is dead. It’s a hugely important function in most companies today.
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