The entry into the procurement sector by Siemens IT Solutions and Services in March with Siemens Global Procurement raised a few eyebrows. But according to director of portfolio and strategy for Siemens Ray Crowe, it has long been part of the company culture to take commercial advantage of the areas of expertise it acquires while running its own business.
“Because of the depth and breadth of what we do, we are able to take what we use internally and commercialise it for clients and since we have a compelling procurement organisation, we have been able to offer it to external clients,” he says.
“Most clients have a procurement organisation but we can help in a couple of areas that typically go unmanaged such as one-time or minor purchases. We don’t necessarily replace their existing procurement service, we compliment it and drive savings.”
Typically, most companies manage their big spend through an internal or external procurement organisation but there is a significant number of indirect or one-off purchases that often gets overlooked. Crowe agrees that procurement is not an obvious fit with Siemens’ IT solution because it is part of the back-end system but Siemens’ purchasing power is huge – it is a $90bn business. “We cover all aspects of internal procurement: software, hardware, buildings and facilities. We have tremendous buying power,” he says.
The company has outsourced its expertise in other areas, too. “We are one of the largest users of SAP and Microsoft and we supply SAP and Microsoft services to clients, host their exchange, help them adopt these functions, design it, help them build it, host and maintain it for them,” says Crowe.
Providing an outsourced procurement service started with existing clients, where Siemens had an established relationship and the client company had regular minor purchases it was not managing. Siemens offered to take those over and manage them. “We provide a full portfolio of procurement technologies, consulting and outsourcing and we can create a relationship with their [incumbent] procurement provider,” says Crowe.
Siemens Global Procurement Services has sourced items ranging from car parts to castles. “One company was doing an event and needed a castle in Great Britain for a month. It was not something they typically purchased, so they came to us,” he says. “We were able to locate what they wanted and at a significantly lower price than they would have paid. We take a split of the savings. It was a good opportunity for the client and they had little risk upfront.
“For us, it is about adding value to the client experience and adding to our portfolio of services. It allows us to have a proven solution – we can demonstrate that it works. There is no better way of testing it than using it ourselves and that concept is important for the customer, they are not tasting the first oyster,” he says.
Now, Siemens is beginning to approaching companies outside its client portfolio. “At the moment, we are looking to drive the business based on opportunity. Our existing clients know the excellence of the service we bring to them but we are introducing it to other companies as well. We can put a good value proposition to them.”
Source:http://www.procurementleaders.com/news/latestnews/1211-siemens-outsourcing-space/
