Congratulations to P&G
CPG giant landes the Purchasing magazine Medal of Professional Excellence
By Paul Teague, Editor in Chief -- Purchasing, 9/11/2008 6:00:00 AM
Alexander Norris was a shrewd businessman and an early advocate of leveraging a supply base. He was also a dad who wanted his daughters to have a good life. So, as the story goes, he convinced the men who married his two daughters that a good way to prosper during the weakened U. S. economy of 1837 was to join forces. The sons-in-law had separate businesses—one made soap, the other made candles—but they relied on the same raw materials from the same local suppliers. By forming a new company and working together, Norris said, they could leverage their joint suppliers and get better pricing. William Procter and James Gamble did just that, and eventually built what today could be the largest consumer-products company in the world.
Along the way, the company learned that favorable pricing was only one of the benefits that could come from leveraging suppliers. There was also the value of being able to tap supplier expertise. By working closely with suppliers over the years, Procter & Gamble brought numerous product innovations to the marketplace. In fact, P&G relies on suppliers for product innovation. You need a strong instinct for collaboration and supplier relationship management to pull that off, and that instinct, shared by Norris and his sons-in-law, is part of the DNA of the company. "SRM is not a set of guidelines," says Vice President for Global Purchases Richard A. Hughes. "It's a way of thinking."
Just as it did in the beginning, the example for collaboration at P&G comes from the top. CEO A. G. Lafley has referred to himself as the chief "external" officer. He learned a bit about supply issues as a supply officer in the Navy in the 1970s before he went to work at P&G. In a recent interview with consultant Scott Anthony for Harvard Business Publishing, he said his liberal arts education left him open minded and interested in collaboration.
Hughes began to appreciate the benefit of collaboration when he served as an officer in the Army Ordnance Corp. in Germany. He was with the 11th Armored Cavalry protecting the Fulda Gap on the border of then East Germany, the hypothetical route for a Russian invasion. "We thought they might invade Western Europe through the Gap," he says. "That's when I realized we're here for a short time and we have to collaborate."
An emphasis on collaboration
Lafley's and Hughes' military experiences have left them with a deep appreciation for people who can think outside of the box, be aggressive and make decisions in uncertain times. Hughes looks for that kind of experience as he evaluates candidates for jobs in the Global Purchases organization. And he gets many of those candidates from other departments within P&G, a testament to the respect Global Purchases has within the organization. Recruits get skills training facilitated by a small staff called Purchases University. There are on-line courses as well as one-to-one and small-group conversations. And always, an emphasis on collaboration.
It has been said that no one ever built a statue to commemorate a committee. Maybe that's not such a good thing. Committees, by definition, are groups of people working together—collaborating. Purchasing is honoring the Global Purchases organization at P&G in part for the record of success it has achieved by collaborating—working with internal departments as well as external suppliers as if on a series of committees—and showing that collaboration pays off big. Congratulations to our new Medal of Professional Excellence winner.
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