In Logistics, shipper collaboration gets a lot of press, white papers, topics at industry conferences, and various ” thought leaders” pontifications. But the questions are who does it well, does it bring added value to an organization, and why do it in the first place ? In my career, I tried many times to collaborate with internal customers( other divisions of the company I worked for) and external companies, and for the most part the results were unsatisfying both professionally and financially. Collaboration among shippers is hard and it takes time and commitment from both parties. PepsiCo and AB InBev agreed to selected joint purchasing in 2009 for indirect items including transportation and conducted joint Transportation RFP’s( not sure what the results were) but since then I have not heard of other companies attempting joint purchasing collaboration in transportation. With shrinking truckload capacity and the relentless pressure that shippers and carriers are under for cost reduction, shipper collaboration remains an important tool in the tool kit. Perhaps we need to see a Renaissance in the formation of shipper’s associations and joining existing ones for medium, small size, and in certain instances larger companies given the apparent advantages of pooling spending power. Your comments are always welcome. Joe Lombardo, NGNF nice guy no freight
Top tips for a successful procurement joint venture
4 February 2013 | Gurjit Degun
When forming a procurement joint venture with a competitor, companies should assess whether there is a business opportunity, select the right entry strategy and make sure it adds value.
That’s the advice from Salvador Serra de Paz, chief procurement officer at NH Hotels, who was speaking at the Procurement Transformation Summit in London last week.
NH Hotels formed a procurement joint venture with Husa Hotels four years ago to create a new company called Coperama. Through this, the hotel chains buy items such as food and beverages, cleaning supplies, room items and temporary staff.
He offered three top tips for companies thinking about launching a procurement joint venture:
• Assess whether there is a real business opportunity. “There are some countries and industries that it will work and others where it won’t work,” said Serra de Paz.
• Select the right entry strategy. “You have to find the right partner,” he said. “Usually procurement professionals are reluctant to share their job because we all feel that we are being measured, and if someone gets better prices on common categories we might be blamed for not doing the job properly.”
• Show your company that this is a business, and that it is going to create added value.
Serra de Paz added when creating a joint venture parties must create a “really clear and transparent” business model so everyone understands what they are putting in. “I think this is where similar initiatives may fail as one of the partners may think he’s getting less than he deserves,” he said.