Dow Chemical is embarking on a three-year campaign to improve on its procurement practices.
It's a huge effort and Susan Avery at does a great job in detailing how the chem giant is going about the shift to strategic sourcing

Writes Avery . . .
"Purchasing is all about relationships—building and maintaining relationships with suppliers and internal customers. While both kinds are important, it is relationships with internal customers that the global purchasing operation at the Dow Chemical Co. in Midland, Mich., is concentrating on right now. It's the next step in the company's major transformation from tactical to strategic purchasing.

Among its internal outreach efforts: internal customer-satisfaction surveys, recruitment of "the best and brightest" to work in purchasing and regular communication of purchasing successes.
Of course, underlying those efforts are the steps Dow has taken to strengthen its relationships with suppliers. And the first of these is centralization.

In keeping with corporate goals and objectives, management centralized purchasing in the mid-1990s. Since then, purchasing has taken on a more global focus, and provides its services to each of the company's businesses located at facilities in 175 countries.

With these pieces in place, global purchasing next turned its sights to sourcing and:

  • Introduced use of a strategic sourcing process called value-based sourcing (VBS).
  • Created a center of excellence that helps keep the company's purchasing pros up to date on the latest tools and techniques.
  • Added a dedicated rep from the company's HR function to help with recruiting and retaining talented, skilled individuals.

Now, the organization, led by Tim King, vice president of global purchasing, is working on forging closer ties with its internal customers, the Dow businesses or partners as the company calls them.

Management tapped King who was working as commercial vice president for North America, to take the top purchasing role in April 2007.

It's the job of this 31-year Dow veteran, who has a strong sales and marketing background, to continue the work of his predecessors and see the transformation of global procurement through to its completion. This means selling the ideas internally.

"We have updated purchasing processes and tools and put the right people in the right jobs to make the best possible decisions for the Dow Chemical Co.," says King. "We've made significant progress in all three areas. In the next two to three years, we will make this transformation a reality. It's all about how we focus our efforts internally with our business partners and externally with our suppliers."

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