Behind Yesterday’s Press Release Regarding Anheuser-Busch InBev’s Decision to Expand Their Utilization of Emptoris’ Sourcing Solution

Posted on November 5, 2009

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A beverage company buys large quantities of aluminum, which it uses to manufacture cans to package its products.  They would like to periodically take advantage of spot markets for recycled aluminum.  They can use numerous approaches to buy recycled aluminum from the spot market including bid automation software, auction services, and industry exchanges, but their issue is not related to making the bid process faster and more efficient.

Instead, the problem is that they are unable to turn off their panned purchasing processes when a spot market purchase is made.  In other words, the strategic sourcing decision of making spot aluminum purchases is not coordinated with the planned production process for ordering aluminum.

The result is over-ordering throughout the supplier network . . .

The above excerpt from a research paper provides just one example of the complexities of the procurement process, and in particular sourcing within the beverage industry.

Understanding the interconnecting elements of a global supply practice and the impact of purchasing decisions at the regional or local levels is, according to Anheuser-Busch InBev’s Chief Procurement Officer Tony Milikin, why “sourcing and procurement is a critical component” in terms of “building a truly global brewing company.”

The significance of Milikin’s statement speaks more to the merits of the Emptoris solution, and the expansion of its usage across InBev’s “entire global operations,” than the announcement itself.

The reason of course is that it demonstrates the emerging recognition that procurement including strategic sourcing is no longer viewed as an adjunct functionality of a finance department.  It is in its own right now recognized as a competitive advantage . . . at least when it is successfully executed.

While the recognition of procurement’s strategic importance is reflected in Milikin’s comment that it will help InBev to become “The Best Beer Company in a Better World,” the acknowledgment of sentiments such as those he expressed have been a long time coming.  You merely have to refer to my August 3rd, 2007 article titled “Procurement’s Expanding Role and the Executive of the Future” to appreciate just how far we have come from the Rodney Dangerfield era in which the profession “got no respect.”

Herein of course rests my point.  Elevated to a higher standard of awareness, it becomes increasingly important to make the right decisions especially given the underlying belief by most senior executives that the best people to run a procurement department are those who do not have a purchasing background.  Specifically, there is no room for error in the realms of heightened importance and expectations, which is especially critical in a tight economy.

This to me is the litmus test regarding the viability of a particular vendor’s solution, and is the real message behind a press release such as yesterday’s regarding Anheuser-Busch InBev’s decision to expand it’s use of Emptoris.  It is also the reason that through its evolutionary transformation, including the appointment of a new CEO, Emptoris has to be considered one of the “Emerging Titans” in the shifting landscape of supply chain solution vendors.

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The World Leader in Supply and Contract Management

Use the following On-Demand Player to access my September 29th interview with Emptoris’ VP of Marketing and Product Management Kevin Potts:

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