CASE STUDY / ELECTROLUX
CASE STUDY
Contacting your suppliers to get priority only when the situation is dire will not help a lot. Suppliers are inclined to do their best but if they need to prioritise where supplies go, the decision is not only financial, it can be driven by emotion and relationship.”
Peter Truyens, senior vice president group purchasing, Electrolux, says: “Many customers who are not spending money on holidays or other events at the moment have been buying equipment to refurbish their homes instead. We have seen significant growth in demand in every part of the world. People are also buying more electronics in general – such as computers, extra telephones and TVs – to be able to work from home, which has put a stress on the entire electronics industry. “We continue to have a close dialogue with our suppliers to mitigate the supply challenges and we have had a lot of help from them during this time. We are working with them to try to do whatever is necessary to keep supplying products to our customers.” The company already has long-standing relationships of 10 to 20 years with some of its key suppliers, but it has been keen to make these more formal, since Truyens recognises that: “What you measure, you improve. SRM helps you to build a more continuous relationship, he adds. It ensures you consider how to progress things on a more regular basis and take a more systematic approach. We want to make sure that we build from both sides, so we each can highlight frustrations and share ambitions, and that will make the relationship more solid.” Work on this had already begun before Covid-19 cast its shadow across the globe, but the ramifications of the disease only strengthened the business case for investment into supplier management. While formalising supplier management is a vital first step, as Truyens points out, formal SRM in and of itself is not a magic bullet. “The key lies in the discipline of applying it. If you put little effort in, little will come out, it’s as simple as that. This is a lesson many industries will learn:
Starting the SRM journey
The challenge for a company of Electrolux’s size and scale is to
overcome the spread and separate nature of purchasing operations split by region and product line. This has left SRM practices somewhat fragmented and inconsistent. Like many businesses it wished to discover how its practices compared with others in the same industry and regions in which it operated. It also wanted to find out how effectively existing technology was being used or could be leveraged for SRM purposes; and if relevant stakeholders had the skills needed to perform current and future roles. The knowledge that it would benefit from the conscious application of formal supplier management led Electrolux to engage State of Flux to assist. And in 2020 State of Flux carried out a first phase of work split into three streams. It conducted ‘Voice of the Supplier’ research with around 200 third-party providers, ran an internal SRM review and a competency assessment. Veronica Schiavon, VP indirect materials and logistics, group purchasing, Electrolux, who is heading up the SRM work, says all the suppliers reacted positively to the research and prospect of closer working. “We had a 100% good reaction from suppliers and confirmation that they would like to take this journey together.” “Some were pleasantly surprised to be invited to take part," adds Truyens. “That in itself is an opportunity. It demonstrates that we don’t simply want the relationship to be a continuation of the past but to take the next step.” State of Flux also conducted surveys with internal stakeholders to gain an insight into their views and experiences with SRM practices. It used the outcome of surveys with staff and suppliers to identify key themes and outlying →
RECIPE FOR SUCCESS
S WEDISH APPLIANCE COMPANY Electrolux is a household name that is likely to literally be found in your kitchen. The business, which has a 100-year-plus history of delivering time-saving devices to families across the world, counts AEG, Zanussi and Frigidaire among its brands, in addition to the Electrolux name itself. It makes everything from washing machines and dryers to refrigerators, cookers and hoods to dishwashers and sells 60 million products a year in 120 markets. Behind the scenes it is served by 1,500 suppliers at a group level globally and more than 10,000 providers for services and logistics. It has a third-party spend of around $7 billion a year, and is supported by around 48,000 employees based in more than 61 countries. Like all electronics businesses it has been experiencing the dual challenge of heightened demand for products prompted by the pandemic and a tight supply market for a crucial component – microchips.
The century-old global white goods manufacturer is formalising supplier management to boost resilience, reduce risk and sustain strong performance.
THE KEY LIES IN THE DISCIPLINE OF APPLYING SRM. IF YOU PUT LITTLE EFFORT IN, LITTLE WILL COME OUT, IT’S AS SIMPLE AS THAT.
4 5
4 4
STATE OF FLUX
2021 GLOBAL SRM RESEARCH REPORT
Powered by FlippingBook