| XXXX Business School | |E-procurement | |Case study : Thomson – Saint Gobain | | | |B.R. & A.A. | |17/05/2010 |
|This report point out the approaches of Thomson and Saint Gobain regarding the e-procurement. |
Establish an « Astonishment report » listing the most surprising aspects of the procurement management for each of the two groups before the implementation of the eprocurement solution.
Globally, the problematic of non-production purchases at Thomson Group seems to be very neglected despite of its importance. Indeed, even if Thomson Group is one of the most important electronical devices manufacturers, its purchasing policy was archaic and anarchic before implementing Hubwoo.
The fact is that for its nonstrategic purchases, there were about 50000 suppliers, against 10 for the vertical purchases. This number is very excessive and should have never been reached. And this is even more worrying that these suppliers represent about 2 billion euros in 2002. Something very interesting is also that these figures are not exact because the IT system and the multiplicity of the suppliers do not allow to measure the exact amount of the expenditures.
This situation is the result of the total absence of horizontal integration in the purchasing management. Naturally, there are no economies of scales, no commons purchases, despite of the huge amount spent each year.
Something very relevant about this lack of horizontal integration is the fact that there were no “real objectives”. Actually, for the production purchases, the aim was to decrease the global amount by 8% per year. But this objective was not followed till the project Hubwoo.
This situation led also the purchasers not to follow the rules. Indeed, the administrative constraints were so heavy that they often placed orders outside the “normal purchasing framework”. Moreover, their job, due to the complexity and the multiplicity of suppliers was reduced to an administrative one. It was almost impossible to have a real purchasing policy common to all the suppliers. To illustrate this fact let us pay attention at the following figures: 180 buyers all around the world were in charged of the 250 000 orders per year to the 50 000 suppliers. Naturally it was impossible to give them the order of having a common purchasing policy.
The situation at Saint Gobain was almost the same. The amount of non-production purchases was higher: 2.5 billion Euros (on 13 billions Euros of total purchases). The problem was probably worst in terms of administrative constraints because applying and being a supplier of Saint-Gobain took on average almost one year.
Although the horizontal integration was a little bit better because there was a “G.I.E” which is a strategic group with the main aim of organize the integration of the purchases. But even if this structure exists, the fact is that Saint-Gobain has known a very important external growth with more than 60 acquisitions. Naturally, each structure has its own purchasing department and its own purchasing policy. And of course, it leads to a mess in terms of nonstrategic purchases. For example for some of its acquisitions the purchasing...
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