Thursday, 31 January 2013

Ain't no sunshine for Toyota procurement risk management (PS Enjoy the music)

You are enjoying the comfort of your new Toyota, cruise control takes the strain and you have Bill Withers "Lovely Day" serenading you. Suddenly the music changes. Wither's starts into "Ain't No Sunshine ..." and your Bluetooth phone goes:
"Hi, hate to have to tell you, but Toyota have been let down by their procurement again, and once again we've to recall your pride and joy ..."  
"Lean on medoesn't seem remotely appropriate.

"How I wish it was the car in front was a Toyota and not mine" is how you paraphrase your disappointment with the procurement outcome.

Yes, you guessed it, procurement risk management just keeps on giving, another procurement risk management failure, and fresh on the heels of one of the biggest recalls in history, Toyota now have issued another recall. 1.3m cars recalled for two defects. The latest recall is estimated to cost Toyota $55m for the airbag recall, of course there's the other recall too to be accounted for. Suddenly the claimed procurement savings take a bit of a dent.

How do you calculate procurement savings when you end up costing customer loyalty, cash and reputation? Or, put differently, how do you put a cost on procurement risk management?

A spokesman for Toyota said "[we] may ask suppliers to compensate"- that sounds like real purchasing power!

Will Procurement still be singing that other Wither's hit "Use me"?

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