In 2005 the Japanese car maker Toyota made more money (over $11 billion) than all the other major automotive firms put together. This year it may well overtake General Motors to become the world’s largest producer of cars. And while GM is struggling to stave off bankruptcy, Toyota is powering ahead not only in terms of sales and quality, but also through its industry leadership of hybrid engine technology.
How have Toyota and fellow Japanese producer Honda managed to trounce their US rivals? One reason, argue Corey Billington and his colleagues at the IMD business school, is the investment they have made in key supplier relationships. They describe this as “super collaboration”, and its aim is not only to cut costs and improve efficiency, but also, crucially, to create competitive advantage for both sides.
In the West, the openness and trust required to make these “super-supplier” relationships work is often lacking, note Michel Philippart, Christian Verstraete and Serge Wynen. “The individualistic nature of North American and European societies,” they write, “does not promote collaboration, it pushes competition.” Trusting suppliers is seen by managers across the business – not just those in procurement – as inherently risky.
Recognising and managing risks such as dependency and complacency, to name but two, are essential if CPOs and their teams are to break down organisational barriers to greater collaboration, they suggest.
Risk is the theme of several other articles in this issue. Christina De Luca, CPO of the refining and marketing arm of BP, the world’s biggest oil company, is concerned that her peers may not fully understand the risks to which they are exposing their organisations. Demand and supply base consolidation and low-cost country sourcing have certainly saved money, she says, but what about the “cumulative impact of those individual decisions”?
Global supply chains are longer, slower, more complex and prone to disruption. Top of mind for risk managers right now is the threat of an avian flu pandemic among humans, which has the potential to shut down entire companies and supply lines, notes Neal Drawas of the risk consulting firm Kroll.
Risk is also a huge issue for banks and insurance companies, which not only have to weigh up who to lend money to and what assets to cover, but also ensure that they safeguard their customers’ interests. For purchasing and their suppliers, keeping business-critical IT systems running smoothly is a key task.
But here, too, risk need not necessarily impede collaboration. At the insurance giant Axa, global CPO Alain Page-Lécuyer and his team are working hard to change mindsets internally and externally in a bid to “make claims management a competitive advantage”.
Geraint John
geraint.john@cpoagenda.com
