"Buying Well to Sell Better"

My Speech about The Lavergne Procurement Matrix for Turkish Procurement Summit (02/12/2017).

The Motto of the Summit is: Change The Future under Purchasing 4.0

Merhaba, benim ad?m Rémy de Lavergne.

Hello my name is Rémy de Lavergne.

I am a Procurement Consultant in France.

First of all I would like to say thank you.

Thank you to Mr. Gurka Huryilma, President of Tusayder The Turkish Procurement Association for his invitation to the 7th Procurement and Supply Chain Summit.

Thank to Turkish people for its welcome in Istanbul.

Turkey is a great nation.

A member of G20 with a strong exporting economy in automobile, textile, home appliance and steel industries (for examples).

I have been working in procurement for over than 15 years now:

In different industries such as retail, public hospitals, automobile, oil and defense, as a buyer, a purchasing manager and a consultant.

And I came to the conclusion that, very often, buyer’s job was not understood inside and outside of procurement world.

Then I had wondered: " but there should be à clear and simple tool explaining the evolution of this job?"

As I did not find any thing I decided to create my own tool:

A one-page matrix explaining clearly and simply:

- Possible Missions of a buyer

- Skills and Behaviors for each type of buyers.

We were in the beginning of 2017 and I gave to this tool following name:

" The Lavergne Procurement Matrix"

A tool made for education and corporate world.

This tool is an invitation: “ To Buy Well to Sell Better "

Buying well to sell better does not only mean reducing costs to increasing profit it also means creating value for clients and that is what I am going to tell you today.

This tool has been teached at ITESM business school since 2017.

ITESM is the best business school in Mexico according to several international Rankings (such as the one of Shanghai for 2017).

The Italian Procurement Direction of MOL Group (a European Oil and Gas Company which employs 25 000 people) has also used this tool. It helped them to reorganize their own procurement direction by defining new roles and new skills for their buyers.

Many other companies or universities have been using this tool worldwide in countries such as France, Colombia or Morocco for examples.

And now let me tell you how I started to build this tool.

I have simply started from the very beginning.

In private sector, an entrepreneur creates a company to earn money.

He creates jobs, buys from suppliers and sells to clients.

His company grows and he needs to delegate some functions to specialists such as buyers.

According to Wikipedia: “Purchasing refers to an organization attempting to acquire goods or services to accomplish its goals”.

It is clear.

But How to do it efficiently?

And the problem is that many CEO and GM underestimates the potential contribution of buyers to optimize goods and services acquisition process.

As I have just said, in private sector, a company’s goal is to make money.

And to reach this goal a company defines a strategy and objectives.

For Procurement Professionals the 3 main objectives assigned by GM are:

-      To Supply.

-      To Reduce Costs.

-      To Create Value for Clients.

Some people say that buyers should all these 3 actions at the same time, personally I disagree with that. In fact, buyers should not supply. Major administrative time consuming actions should be delegated to clerks.

According to buyers contribution to value creation for clients (mainly trough innovations or changes) and cost reduction we can say that there are 4 different types of buyers:

-      a Bureaucrat only supplying,

-      a Cost Killer only reducing costs,

-      an Innovator mainly focused on innovation and changes so as to cerate value for clients,

-      and a Business Developer focused on optimizing, at the same time, value creation for clients and costs reductions.

Thanks to my own procurement experiences, for each type of Buyers I have identificated key:

-      Behaviors

-      Qualities

-      Defaults

-      Skills.

1° Mr. Bureaucrat is a lawyer-buyer, litigious and conservative.

He stays static and passive in his office.

He has no global vision, decides slowly and has generally no procurement education.

Very often he or she works in Public Administration.

2° Mr. Cost Killer is an active negotiator all the time benchmarking.

He masters Global Costs and knows very well suppliers markets.

Often, not always, you can find him or her in Retail Industry.

3° Mr. Innovator has a salesman attitude, is fast and creative.

He has a strong project Leadership, promotes Changes with Diplomacy, Pragmatism and Agility.

He is a great Networker, Pro Active and Collaborative.

You will probably find him or her in an innovative company such as Apple.

If you take the case of the IPhone, you can wondered what is the first priority of Apple: to reduce Costs or to Create Value for Clients?

Probably first to create value for clients!

In 2010:

The IPhone 4’s price was 519 euros (in France)

47 million units were sold worldwide.

In 2017:

The IPhone 9’s price was 1 159 euros (in France).

In 2016:

231 million units were sold worldwide.

In 7 years time, the IPhone’s price increased by 120 % and during almost the same period of time, sales raised by around 400 %.

IPhone product is a good example of: “Buying Well to Sell Better”.

4° Mr. Business Developer has a businessman attitude; he moves fast and often goes on the field. He is a great communicator, he knows how to pilots projects with pro active-mess and emotional intelligence.

Frequently, you can meet him or her in Fast Moving Goods Companies such as Procter and Gamble (for example).

Conclusions:

1° Buyer’s Job has evolved a lot over last 30 years.

2° Buyer’s Image does not correspond to reality.

Buyers are too often only perceived as Cost Killers or Bureaucrats.

3° New Types of Buyers (Innovator or Business Developer) require Strong relational Skills.

4° Buyer’s Procurement Education is often too low.

My Proposals for Turkey:

1° Promoting 3.0 and 4.0 buyers to Key Decision Makers:

Businessmen, CEO, GM or Entrepreneurs.

Trough Turkish Business Associations (for Examples: TUSAID or MUSAID).

2° Building a strong and Powerful Turkish Procurement Association:

Active as a Think Tank, a Lobby and a Place for Networking.

3° Teaching Procurement in the Best Turkish Management Universities:

In KOC, SABANCI and BILKENT Universities (for Examples).

In Turkey, more Innovators and Business Developers Buyers, it means more profits for companies, better salaries for buyers and a stronger national Economy.

This is how I see the Future under Purchasing 4.0 in Turkey.

Let’s “Buy Well to Sell Better”

Istanbul, Turkey, Europe – 02/12/2017

Rémy de Lavergne.