Intel’s Journey to Affordability: Indirect Spend Management Competitive AdvantagePosted: May 10, 2012
Mark Campbell, contracts and negotiations senior manager, corporate procurement at Intel Corporation, has been with the organization for 17 years. All that time, he and his team have felt like they were “doing well” — but he contended that there’s always room for improvement.
Judging by his function’s growing cost savings — especially in the areas of human resources, IT, engineering and sales/marketing — year after year, it appears he’s right.
As Campbell points out, one key to driving cost savings across the organization is to “speak the same language” as the business unit stakeholders you’re working with — in other words, not to focus so much on “cost savings,” per se.
“Engineering, for example, is measured by ‘take-down’ — getting the product out the door. And if it’s at a 10-percent higher cost than projected, then so what, right?” he explained. “See, cost isn’t something any other department but procurement talks about in its measurables. Although we drive out costs, those executives really want to know, ‘Where’s my money?'”
To this end, he recommended speaking in terms beyond “cost savings” and “spend reduction.” Why?
“Because when it’s phrased that way, business unit leaders sense the potential for their budgets to be slashed,” Campbell advised. “Instead, change the tone to, ‘Your business unit can spend that money elsewhere.'” In practice, Intel now has a spend-those-savings-by-[X date] framework that has been very well received across the organization and increased his function’s visibility into difficult-to-access spend categories.
Aside from getting on the same page in terms of language and metrics, driving savings has also required Campbell and his team to “get out in front” of long-range business unit planning. They did so by engaging with business unit leaders three to five years out to find out what their teams would ultimately need to be successful. Then, they looked one to two years out and developed quarterly metrics to keep the one-to-two- and three-to-five-year plans on track.
Developing his team’s collaboration skills and driving them to be more strategic in their dealings with business unit leaders were critical in making this happen. “We needed people who had influencing skills, as well as business acumen,” he told attendees.
As Campbell explained, getting out in front of long-range planning meant his team needed to be “trilinguial.” Today, they focus on understanding:
(1) Intel and how it works
(2) Collaborative procurement strategy, and
(3) Business unit goals.
“We couldn’t have me telling business unit owners a ‘whole story’ about what indirect procurement could do for them while my team focused on price, price, price,” he pointed out.