When Coors Brewing Co. embarked on its strategic sourcing transformation journey six years ago, the Golden, Colo.-based company introduced three new procurement and supply chain processes to drive the efforts: a strategic sourcing process (spend analysis, customer requirements, etc.); a supply management process (continuous improvement, supplier scorecards, early supplier involvement, etc.); and an operational transactional process. The goal was to ensure that Coors receives “the right quality materials and services at the right place, at the right time, and for the right cost.”

But along the way Coors realized there was a major piece missing from its procurement transformation. As H. Darrall Loggins, group manager, strategic sourcing, says, “We realized we were not tapping into the savings opportunities we had in areas such as sales, marketing, legal, HR benefits and print and promotional items.”

Loggins, whose primary area of concentration in recent years has been on the indirect spend side, says the biggest obstacle Coors had to overcome early on was dealing with all of the maverick spend that was taking place in indirect, especially in the sales and marketing area.

To formalize the indirect spend process, Coors developed a format that includes conducting a feasibility study and detailed spend analysis, assessing customer requirements, conducting a market analysis, and setting strategies. “We may then go out for an RFP, depending on the strategy,” he notes. “We will then negotiate a contract within the functional area where the spend resides.”

A major part of the success involves getting as much input as possible from the indirect suppliers for each project. “The sooner we can bring the players to the table and they can see what we are trying to accomplish, the better results we can achieve,” states Loggins.

In the past, Coors would tell suppliers what it wanted, and it then accepted the first thing that the suppliers offered in response. “In other words, the suppliers would simply do what we asked them to do,” he states. This resulted in spending a lot more than was necessary.

In the new process, Coors tells supplier clearly what it wants to accomplish, but not necessarily how it should be accomplished. Example: “If you bring a printer to the table and tell him what you want to accomplish, he may be able to let you know a better way to accomplish what you want than what you were originally thinking, which may be less expensive,” explains Loggins. “They can also tell us about new innovations that are coming to their market or industry that may provide additional benefits and/or reduced costs.” With this approach, suppliers operate more in the role of consultants, and they begin adding more value earlier in the process.

Suppliers were thrilled with the concept, according to Loggins. “When we first told them that we were going to give them a place at the table, they looked at us like, 'Hey, you guys finally get it! You understand it!'” Coors' indirect suppliers had been seeking a place at the table for a long time and “They realized that being in this position helps them to secure business, because they become valued partners,” he explains.

Now, Coors and its indirect suppliers work closely together, with both looking for ways to cut cost from the process. In addition, Coors sets expectations up front with suppliers, so they know what they are supposed to be doing. “We have cost-savings objectives for suppliers, and they are responsible for coming back to us and telling us how much can be saved in specific areas,” notes Loggins. In sum, suppliers not only have the opportunity to be proactive with Coors, they are required to do so. For example, they can say, “If you change this, this, and this, we can save you this much money.”

While suppliers were excited about the opportunities, it took some time to convince some of the internal departments of the value of supplier involvement. “The real key to success before starting something like this is to get the change management piece of it in place internally,” suggests Loggins. “You have to get senior leadership in each department on board in terms of what you are trying to accomplish.”

For example, sales and marketing expressed some concern at first. They were concerned that the sourcing department would be coming in and attempting to alter the creative process to cut costs. And that's where the internal selling comes in.

“That is not our role,” Loggins says, adding that convincing the sales and marketing team was key to this win. “Rather, our role is to better control the costs that are associated with the creative process to support them in their role.”

As a result of the teamwork between sourcing, the internal departments, and the indirect suppliers, Coors now has a much better grasp of its spend while its final product has improved as well.

“We understand where our money is flowing,” Loggins says. “Over the last six years, we have driven tremendous savings to the bottom line.”