A leading procurement industry expert has called for more proactive thinking in supplier relationship management, risk assessment and category management in the light of the recent carbon dioxide shortage.
The gas is used in multiple processing procedures in the manufacturing industry, from carbonated drinks to meat processing and other areas of food production. It has suddenly become scarce because a number of chemical plants (notably fertiliser manufacturers) simultaneously initiated planned, short-term shut-downs. The gas is a by-product of their chemical manufacture.
Former CPO and independent procurement consultant, Peter Smith believes that procurement professionals should have seen this coming: when everything is running routinely, certain materials – like carbon dioxide – seem relatively inconsequential. Until they become unavailable, and then they suddenly seem highly “strategic.”
Smith suggests that procurement-as-a-service consultancies may have helped to minimise the impact of the shortage by deploying supply chain risk management platforms. These systems may have flagged up the factory shutdowns in advance. Identifying latent problems throughout the supply chain, and having a plan in place to deal with them because they become serious issues, gives any organisation genuine competitive advantages.
Addressing the issue of category management, Smith writes: “Category management strategies should have addressed issues such as single or multiple supply for the product, optimum stock holding levels, whether the suppliers of CO2 should be part of an SRM (supplier relationship management) programme and so on. Presumably specification is not a huge issue here, CO2 we assume is CO2, but are there alternatives?”
Finally, there is also the issue of corporate social responsibility to contend with. A substantial quantity of carbon dioxide is routinely used in British slaughterhouses as a “kinder” method of killing poultry and pigs. This has been seen as a questionable claim, however, and the head of Compassion in World Farming, in fact, is calling on the UK government to prohibit its use.
All in all, Smith believes this episode will prove to be another opportunity for procurement professionals “to demonstrate their worth to their organisations.”
Steve has over 28 years of success as CPO, MD and Procurement BPO leader in a range of industries. Steve is COO at Odesma, responsible for Odesma’s delivery capability & infrastructure.