"We intend to focus even more closely on internal customers"
At Deutsche Post DHL, more than 650 people work around the world on procurement - that is the purchase of products and services as well as fleet management. The global network handles a procurement volume of more than EUR 9 billion each year. The spectrum of purchases ranges from pencils and microchips to highly sophisticated sorting systems for letters and parcels. In the following interview, Chief Procurement Officer Michael Nießen discusses Deutsche Post DHL's approach to managing its global purchasing operation and the goals the Group intends to reach in this area.
Chief Procurement Officer Michael Nießen
Mr. Nießen, just what does a central procurement department do?
Michael Nießen: Corporate Procurement has a clear mission: We purchase products and services for our business departments and central units. In doing so, we help internal customers make cost-efficient investments. We operate around the clock in a global team that follows clear ethical and sustainability standards. One special challenge we face involves sensitive business relationships. Many of our suppliers are also customers of our Group.
You have been head of Corporate Procurement for more than three years now. How have the jobs done by the procurement department changed?
Michael Nießen: We have organized Corporate Procurement at Deutsche Post DHL as a matrix. This enables us to bundle needs in the Group worldwide and still address local requirements. Externally, we use our global presence and international approach to ensure that suppliers are selected on the basis of quality and cost effectiveness, and not on the basis of location. The worldwide bundling of needs prevents additional costs from being accrued. Internally, we are working to gradually change the image of procurement. We are increasingly training our employees to become purchasers who proactively approach the business departments. This bolsters our role as internal service providers and helps us move closer to business operations as we become better acquainted with the needs of our business partners - this is what we call our internal customers. After all, if we intend to run a successful procurement operation around the world, we must not only pursue a central purchasing strategy, but also must have a local presence. Our employees at our 45 locations are well acquainted with regional and local conditions and know exactly what our contacts in the business units need. We have also continued to streamline our procurement processes and have more clearly defined compliance guidelines for purchasing.
In the end, you have to measure your work on the costs. Doesn't progress in procurement always boil down to getting a better price?
Michael Nießen: We do not just measure our work on the basis of favorable purchasing terms. Let me give you one example: In the past, we obtained and managed our job systems on a decentralized basis. The result: a variety of terms, types of devices and services. Today, we take a bundled approach. As an outcome, we not only get better terms, but also ensure that we have uniform products, better processes and higher quality. In addition to bundling needs, we are increasingly focusing our work on optimizing procurement processes, employing effective purchasing management and carrying out strategic supplier selection and development. By taking this approach, we not only reduce costs, but also better address the increased needs for quality among our internal customers.
Do innovations really exist in procurement?
Michael Nießen: Of course. Procurement is also profiting tremendously from technological advances. As part of this, we are currently implementing an integrative platform internally. On behalf of our business partners, we consider ourselves to be drivers of innovations by bringing transparency to new products offered in the marketplace. The reason for this is simple: Every small advance helps improve the services and products of the business units. We also profit from the new approaches being taken by the Group as a whole. Group-wide improvement initiatives like the First Choice Way - a Six Sigma-based program - help to effectively and efficiently design processes.
Corporate responsibility has been a key issue at Deutsche Post DHL for years now. What is procurement doing to help Deutsche Post DHL be a 'good corporate citizen'?
Michael Nießen: Environmental factors play a big role in the procurement of products and services. For instance, the Group's investment guidelines clearly define the approach we take when we acquire replacement products. Under these rules, we may not repurchase any product if it is not more energy efficient than its predecessor or, at the very least, does not offer other environmental benefits. Procurement employees in the regions are working on a cross-division and cross-product basis to improve our environmental footprint. One good example of this is the switch from "gray power" produced from non-renewable sources to "green power" generated from renewable sources that is under way in such places as the United States, France, Spain and several European countries. Another is the procurement of vehicles with alternative drive systems. As good corporate citizens, we must also think beyond our company. We expect our suppliers around the world to comply with our environmental and social standards - including those that apply to child labor, forced labor, compensation, work schedules, discrimination and occupational safety. We spelled out these requirements in the Supplier Code of Conduct that we issued in 2007. This code defines the standards that apply to our business relationships and is a permanent part of our contracts.
What are your priorities for the next two years?
Michael Nießen: We intend to play a major role in the Group's pursuit of its international growth strategy. This will specifically mean that we will focus more closely on issues of strategic importance, including optimizing product systems and packaging materials and doing our part to help the Group hit its climate target. We want every employee to develop a direct line to procurement. This can occur only if procurement is viewed as a skilled adviser and offers good ideas that contribute to internal customers' success. It will require comprehensive training for our teams. We intend to provide it by setting up a procurement academy. Another focus will be placed on the integrative purchasing platform that we plan to gradually expand. It will help us further reduce administrative expenses so that we can have more time to do higher priority work. All of this demonstrates one thing very clearly: We are working extremely hard to "procure" competitive edges for Deutsche Post DHL.