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Paul Blackmore may work with tractors but he has got AGCO's global supply chain off to a racing start. Nick Edwards reports
Companies rarely exhibit seamless and consistent growth. Most expand by fits and starts - a merger here, an acquisition there, restructuring just about everywhere - and the process can have an interesting effect on procurement. Very different styles and strategies can be thrown together and the function's star can rise very quickly- or fall.
When Massey Ferguson, the world-famous tractor manufacturer, was bought by US agricultural distributor AGCO in 1994, the effect on procurement was destined to be profound. The former had big brands but was underfunded, mirrored in an established but traditional purchasing function in its plants in Coventry and France. AGCO was young, smaller but extremely acquisitive, with a management structure and style which was very functionally based. It was clearly going to be a challenge to integrate the two in a way which would allow continuing growth in the future.
It was against this background that Paul Blackmore was recruited as director of purchasing at the beginning of 1996 with a remit to control European strategy. Almost immediately, however, global consolidation and integration came to the fore. This had its roots in the acquisition of the Ioschpe Maxion agriculture business in Brazil in June 1996: the business was losing money and the management was trying to contain costs.
The high degree of overlap in component designs and suppliers with the Coventry plant meant Blackmore was given an opportunity to demonstrate purchasing's ability to affect the bottom line - which he duly did with an aggregation and re-sourcing programme, reaching $5.5 million in savings last year. He says it was something of an education to work in a South American business environment where commodity management was a relatively unfamiliar concept.
Even the initial savings experienced in Brazil were enough to alert management to the opportunity to consolidate supply management globally. This began in earnest at the beginning of last year, focusing largely on South America but also taking in Europe (including a number of newly acquired plants in Germany and Denmark from the acquisition of Fendt Tractors and Dronningberg combine harvesters during 1997).
An example of one of the...