As management guru Tom Peters walks among his audience of 1,600 purchasing professionals, his voice reaches a crescendo and begins to crack. “You’ve won!” he screams. “Business-to-business is the economic story of the day. That’s cool, and so that department ought to be cool. The only issue for purchasing people today is whether you have the guts, determination, imagination and willingness to put yourselves at risk. The greatest danger for most of us is not that our aim is too high and that we miss it, but that it is too low and we reach it.”

Radical change is in, incremental change is out, Peters, the author of key management text In Search of Excellence, tells delegates at the US National Association of Purchasing Management’s (NAPM) annual international purchasing conference in New Orleans at the beginning of May. Supply chains are at the centre of corporate restructuring in the new economy to such an extent that purchasers will be the ones to reinvent their companies, he insists.

But Peters, who is not known for pulling his punches, also warned delegates that they may have a hard time driving home this message to their chief executives. “Get rid of this ‘purchasing manager’ crap. I hate it,” he says. “I don’t even think you are ‘supply chain people’. I call you ‘TERs’ - total enterprise reinventors. That’s what this is all about and you are leading this revolution.”

The revolution is about productivity for white-collar workers, explains Peters. “We have been obsessed in this country, as have our counterparts in Japan and Germany, with blue-collar productivity, and during that time we have not laid a glove on white-collar productivity.”

Peters believes that, just as forklift trucks increased productivity for blue-collar workers, business-to-business e-commerce and supply chain integration are the “forklifts” for white-collar workers, and this will “raise havoc”. “The heart of the matter is taking risks and taking leaders,” he says. “You are in the leadership business. The 20 per cent of you who really grasp this will be the leaders in the reinvention of all the systematic activities that go on throughout your supply chain and corporation.”

Peters also warns that anybody who thinks business-to-business e-commerce is the latest cost-cutting tool is missing the point. Business-to-business e-commerce has created a medium, or community, for exchanging information, he says. “The community rules and you are creating the community, not just transactional markets.”

New wave

The message was not lost on the delegates attending the three-day conference. In the UK, there is a tendency to believe that the US is ahead in its thinking. This is not necessarily so, says David Nelson, vice-president of worldwide supply management at agricultural-implement manufacturer Deere & Company. “Generally speaking, we are just coming around the corner on all of this,” he says.

“For us older folks, this concept is harder to grasp. But there is a community inside our supply management group of 1,300 that is always grabbing the new stuff,” says Nelson, outgoing president of the NAPM.

Richard Bradshaw, purchasing director at the Boston University Medical Campus (BUMC) and incoming president of the NAPM, knows that, although being a conduit for change will be difficult for many purchasing professionals, it is absolutely essential. “Universities are not normally on the leading edge of these things, but they do recognise technology when it becomes worthwhile and a good tool. Our university wants to push us to do more.”

The BUMC has just implemented an electronic system for its requisitioning, which has eliminated the need for paperwork. “About two-thirds of the departments are using it,” says Bradshaw. “When it is finished, you will be able to receive a Boston University purchasing order in the middle of the Amazon jungle, as long as you can access the net.”

The need for supply chain management to be a change facilitator is well understood by Lloyd Ward, chairman and chief executive of Maytag Corporation, a major commercial and household-appliance maker in the US, with a turnover of £2.5 billion. Being innovative means that the company’s supply chain must react quickly to mistakes and successes, Ward told delegates.

Maytag has brought the new product cycle down from five years to 18 months, but it still wants to bring it down to one year. It has also reduced inventory by 50 per cent over the past four years and is looking at having virtually no inventory when it produces to demand. This means capturing a customer’s order and having it ready to be shipped in five days. (If an order were to be captured electronically today, it would take about 25 days to be ready.)

The company is also reducing its supplier base from 1,800 to 300. “In the end, consumers will have it their way,” says Ward. “If you look back 20 years or so, manufacturers had the power. Consumers have it now, thanks to the Internet, and supply chains have got to be prepared to support that major change.

“We operate with margins of between 13 per cent and 15 per cent and now fight to improve our bottom line by a tenth of a percent. With the Internet, through supply chain leverage alone we have the possibility of doubling our margin - not just a percentage point’s difference, doubling it.”

Ward believes that supply chain management is the driver that can change an old-economy company into a new-economy one. “As a chief executive, I want to know that purchasers are still very focused on price, price, price. But I also need them to expand their thinking to total cost, not just component price.

“Part of the problem is that people expect chief executives to know it all and have all the answers. What I want purchasers to do is educate and train me, to bring a more holistic solution to the table. And they can’t do that if they say they are no longer interested in price. If purchasers aren’t interested in it, who in the organisation is?”

Chief reasons

There is plenty of awareness that bringing about change will depend on how well purchasing professionals communicate with their chief executives and how open the latter are to change.

Even if you have a great idea, if you haven’t co-opted some of your peers to support it, it is likely to carry less weight with the chief executive, Thomas Stallkamp, vice-chairman and chief executive of automotive supplier MSX International and former vice-chairman of DaimlerChrysler, told conference delegates.

“If your chief executive says they will think about your idea, that means they will ask some of their finance or manufacturing people. If they are dead-set against it, it will be an uphill struggle, no matter how great the idea. So you need to work internally. You can’t just bomb out e-mails.”

“Don’t think that the first time you say something, people are going to get it,” says Ward. “I am not clairvoyant. Chief executives are learning at warp speed. Come to me a second and a third time, but don’t give up.”

“I agree with not giving up,” says Roy Ayliffe, CIPS’s director of professional practice, who was at the conference. “Some purchasing staff have no chance of talking to the chief executive. All they can do is hope that the person at the top of their department is doing their job well. One of the reasons that the people at the top are there is that they are good at persuading the chief executive.”

Change can bring about confusion, but the focus of the purchasing professional as a leader in the new economy should remain clear, says Peters. “You have to be in the business of getting other people shockingly excited about this new world you are attempting to create and implement.”