Zycus’ annual user conference, Horizon 2013, was held this past week and offered up a blend of thought leadership, customer case studies, company vision, and a celebrity keynote (Archie Manning). Zycus is solution provider that offers a suite of solutions that support the source-to-pay process and a host of data, performance, and information management needs. Customers were on display at this year’s Horizon conference and none more prominent than AMD.
AMD’s Pathway to Procurement Excellence
Alex Brown, the Chief Procurement Officer at AMD (or Advanced Micro Devices, Inc) delivered the Day 1 Keynote in which he discussed AMD’s ‘pathway to procurement excellence.’ First, a little about AMD which was founded in 1969, has 10,000 employees working in 50 global locations and generated $5.42 Billion in revenue in 2012. AMD which operates as a semiconductor company worldwide with two segments – (1) Computing Solutions and (2) Graphics. The company designs, develops, and sells microprocessor products, such as central processing units (CPU) and accelerated processing units (APU) for servers, desktop PCs, and mobile devices. The company serves original equipment manufacturers, original design manufacturers, system builders, and independent distributors directly, as well as through independent distributors and sales representatives.
After the background Alex gave a very clear and focused view on the responsibilities and general focus of a Chief Procurement Officer. Simply put, Alex believes that CPOs face three standard challenges that emanate from procurement’s main constituents – executive management, suppliers, and budget holders.
Satisfying the CEO/CFO – Alex believes that the executive leadership of a company has a very strong interest in cost savings and in ensuring that procurement is aligned to support the business. Improving the Supply Base is clearly an important element of procurement and Alex believes that procurement can begin to achieve this by tracking and then improving supplier performance while also working to mitigate financial and supply risk. Stakeholder Satisfaction – for AMD, the path to achieve this was driven by process simplification, which it enabled via automation, and global standardization of products, suppliers, and information.
To serve those three constituents very well, Alex said that there were several keys to the AMD procurement team’s success – (1) Having a clear vision which it accomplished by developing a detailed strategic plan and developing and documenting lean processes (2) Created an environment that fostered creativity by trusting that “capable people love a challenge” and can be incentivized to be strong performers. (3) Develop an environment of continual innovation that leverages knowledge management and drives for new technology. (4) Regularly sought outside support including performance benchmarking, networking, and a focus on industry best practices.
Another critical element to that put AMD on the path to procurement excellence was its strategic sourcing operation which utilized Spend Analysis, eSourcing, Contract Management, and Supplier Management solutions (including those provided by Zycus). Alex believes that the technology was absolutely critical to AMD’s strategic sourcing success but that it also had three other key enablers –
- Organized Methodology drives the sourcing engagement model.
- Standard Process for identifying and driving sourcing plans.
- Internal Alignment to ensure key business requirements are met.
With the technology and other process, people, and vision enablers in place, Alex and his team were able to drive value across the organization and has seen its staff labor cost decrease by 26%, its supply base reduce by 30% all while improving its savings per FTE by 26%.
AMD is on the path to procurement excellence and with a great staff that includes rising stars like Director, Gary Christie and others, it should reach its destination soon.
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