A lot of the articles I write are about optimizing the tools in our Procurement toolbox and then using them effectively. These are certainly important practices, but what happens when we rely too heavily on this procurement toolbox? I’m going to use a phrase that I’m pretty hesitant about bringing up: “Think outside the box.” 

Wait – don’t stop reading. Seriously.

Don’t get me wrong, I realize why you’d want to. This bit of business speak has been overused to the point of becoming meaningless. It’s a challenge every management team has placed on every team performing every function in an organization for years. And, you know what? That’s a shame – because there are opportunities to think outside the box to achieve amazing results.

Think outside the cylinder
Let's talk about a relatively common category of spend – air & gases. If we worked for a brewery, for example, we’d be spending a good bit of money to buy the gases needed to carbonate our beer. These gases aren’t cheap – anything a brewery can do to reduce this cost will help the bottom line. So let's go to work.

Projects in this space follow a pretty typical process. In other words, we’re going to break out a pretty reliable and pretty heavily used set of tools from our toolbox. We may seek to go to market with an RFQ or RFP, intending to use supplier consolidation to drive cost savings through a common enough carrot/stick combination (“Win more of our business with a competitive bid… or do poorly and lose it all”). If we do well, we might save, say, 10% of our annual spend on gasses using these strategies. Not bad.

But let’s think outside the box. What if we could reduce the need to purchase these gases in the first place? Cutting the need for half of our yearly volume or more could dramatically reduce our production costs.

Carbon reclamation technologies aren’t necessarily new, but they may not be utilized by breweries. They may have a home in larger operations, but smaller breweries may not have any such systems in place. However, there are firms that are helping smaller breweries implement these systems - So, what if our hypothetical brewery bucked the inside-the-box sourcing strategy and elected to research a reclamation system? Not only are you eliminating a large portion of purchase needs, you’re also able to capture and reuse a high-quality, contaminant-free CO2 product.

What Makes this “Outside-The-Box” Thinking?
A lot of companies that purchase industrial gases view the transaction as a highly commoditized one. When going to market for commoditized products, we’re all conditions to view the event as one focused heavily on price.  The more mission critical the product is (such as gases used in beer production), the higher the degree of product specification. However, checking those boxes off puts us back in the realm of pricing.

Because of this, it can be easy to fall into the same old routine – get a few bids, make a buy. This is what makes thinking outside the box challenging – we have to force ourselves to reconsider that tried and true path. What other trails could we take instead?

It isn’t always easy to blaze a new trail. Attempting to do so won’t always be a success. Yet bringing about real, impactful change will often require this type of thinking. After all, you can’t get somewhere new by following the same old path.

Share To:

Unknown

Post A Comment:

0 comments so far,add yours