The keynote speaker was none other than Rio Tinto CEO Sam Walsh,
who started his career as a buyer for General Motors Holden.
No, he was not buying cars, he was buying the things that GMH
needed to make cars, and generally, run its business. From starter
motors to paper clips – some seemingly more important than
others, but each item in a company's procurement ecosystem has
a role to play in creating end consumer value.
Earlier in October 2014, the Australian Financial Review's
Rear Window column ran a piece on the profile (or lack thereof) of
the Chartered Institute of Procurement & Supply. Impressive
then, that they got the CEO of Rio Tinto to speak – Twiggy
Forrest also tuned in to speak via video about this Walk Free
Foundation and Victoria Cross recipient Corporal Mark Donaldson
gave a motivational talk.
Maybe Rear Window should start looking out front instead?
Procurement focused on strategy, governance and risk
Procurement enjoys a high profile as a professional and business
function with company board heavyweights in Europe and the USA. It
is common in Europe and the USA to see the Director of Procurement
sitting on the board or reporting directly to it.
Why then has Australian business been so slow to understand the
importance of this vital corporate function which has such a
profound impact on the bottom line?
Perhaps those days are now over, with more and more Australian
companies recognising the value add of professional procurement as
an important part of any well managed corporate entity.
Professional procurement is less about procuring at the lowest
price point and more about strategy, governance and risk
Professional procurement underpinning critical supply chain
Mr. Walsh told his audience at the Chartered Institute of
Procurement & Supply that Rio Tinto's procurement officers
spent $26 billion on goods and services in the 2013/2014 financial
year. As he pointed out, that is more than the combined GDP of
Malawi, Swaziland and Rwanda.
From the bits consumed internally (coffee and paper clips) to
the bits consumed by the consumer, professional procurement is
increasingly shaping decision making and strategy in Australian
Be it running tender processes, managing critical supply
relationships, mapping processes and supplier eco-systems,
re-shaping the likes of logistics and supply lines, professional
procurers are on the rise and in demand. A CPO (Chief Procurement
Officer) is as likely to sit on your board in the next five years
as your CFO and CTO.
We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
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