Who's got strategic sourcing on the brain?

Staff -- Purchasing, 6/2/2005

Goodyear Tire & Rubber will raise its procurement in low-cost China to 10% of global sourcing by 2010 from the current 1%, its chief executive said recently. "We purchase about $8 billion of both raw materials and other products and services...10% would be $800 million, so it's a considerable increase for us," CEO Robert Keegan told Reuters in a recent interview.

Colgate Palmolive is saving 10-12% annually using e-auctions, according to its latest annual report. "In just one example, Colgate has saved close to $10 million in bidding online for the trucking of goods in Europe and North America," the report says. The company also set up a team in China to pursue new raw materials suppliers in that market.

Bank of America, the nation's largest retail bank and one of the world's largest consumers of paper products, has devised a new, more environmental-friendly paper procurement policy. In addition to simply encouraging best practices that protect endangered forests, the new policy has teeth and aligns with the bank's forest practices lending policy, said supply chain management executive Greg Taylor. The new procurement policy has three primary goals: Minimize the bank's consumption of paper products containing virgin wood fiber; Ensure that forests from which virgin wood fiber is procured are managed using environmentally preferable practices; Require the bank's suppliers of paper products to identify and appropriately manage endangered and high conservation value forests. The bank developed the policy in partnership with a group of key suppliers, such as International Paper, and environmental organizations such as Metafore, a nonprofit group that works to conserve, protect and restore the world's forests, and the nonprofit organization, Environmental Defense.

James River Coal Co. is implementing a company-wide procurement initiative to reduce the costs of some of its major materials including steel (roof bolts and miner bits) and rubber related products (rubber belting). In its first quarter, the mining company reported higher costs for purchased materials including steel- based products (45%), higher labor and benefit costs (16%), higher trucking costs (16%) and other increases (6%).