Beverage Giants Sign Cost Saving Purchasing Agreement
Friday October 16, 2009
Two beverage giants have signed a procurement agreement that should allow their combined US spend on non-beverage items to reap significant savings. The PepsiCo and Anheuser-Busch agreement will allow them to jointly purchase goods and services not directly related to making drinks, such as computer hardware, office supplies, facilities services, transportation, and maintenance, repair and operating supplies. The combined purchasing power allows both companies to cut costs at a time when increasing sales is not an option. Suppliers that are left out of the new purchasing arrangement will be unhappy, while favored vendors could use it as an opportunity to increase volume and expand the number of products they are selling to the two companies. With this type of procurement agreement, some rationonalization of the combined supplier base is expected, however neither company have determined how much money the procurement agreement will save them.
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One can’t always have their cake and eat it at the same time…. so the saying goes. And what these two beverage companies have done may have been unthinkable a few years back, but is actually a groundbreaking mindset if you think of it from the business progression point of view.
This way, what they miss in information transparency, can now be made transparent and tangible in the form of a congruent, easy replicate, Business Intelligence system built just for their industry.
I’ve personally had experience building similar projects, and especially in distribution and retail-heavy countries like the Philippines, Indonesia, and Malaysia, where independent distributor/warehouse depots operate each of their own teams covering their respective geographic areas, vendors like these two giants would actually gain a substantial savings in implementing a few key tools to measure KPI’s and KSI’s on various levels of the distribution chain.
What they saved in TCO by combining purchasing efforts for hardware and computer technology could easily be lost by not having the right reporting and data collection system in place.
Several really good and reputable companies provide such transparency such as SAS, Cognos, and Microstrategy. Of course then comes the price tag.
But here comes in smaller companies like nxlevel solutions, that have the capability and expertise, and ground proven skills to transform ideas of savings into realized projects that save tangible dollars in the form of route path optimization, delivery and load optimization, and best of all, by deploying simple yet very effective KPI/KSI frameworks and reports that really show what’s happening on the field.