Yesterday we examined the strategies Coors Brewing Company is using to drive continuous improvements in direct materials performance and begin to capitalize on the huge opportunity of indirect supply management.

As a reminder, this interview came compliments of eyeforprocurement, the procurement events company, which is hosting the Supplier Management Forum in Miami April 17 - 18, 2007. Check out the full conference agenda and registration information here.

Today we spend time with Scott Searls, Senior Vice President of Procurement and Logistics for Alltel, the owner and operator of the U.S.’s largest wireless network. Searls  heads the company’s centralized supply management organization overseeing $4 billion in annual spend.

Searls shares insights into his company’s category approaches and plans to increase low-cost country sourcing. He also projects new moves into collaborative sourcing and waste-reduction initaitives with his suppliers. Here are some of the excerpts from the interview:

Question: A recent Capgemini survey of global chief procurement officers found the most significant business driver for 2007 is compliance to contracts and improved visibility of spend with suppliers. Are these also your priorities and if yes why are they important to you? What priorities do you have for 2007?

Answer: Wow, if folks are worried about compliance and visibility I hope they let their SarBox guys know. Sure, I expect suppliers to do what they sign up to do – a deals a deal, (price, terms, delivery, interval, quality) so in that sense compliance is always important. In a larger sense I’m always thinking more in terms of what are these guys doing for me that I can’t get otherwise from someone else and is something that helps us win with our customers. I think about how we win – and who is helping us put the points on the board. That – and overall simplicity are real important stuff …. Simplicity in everything.

Question: With the rise of new technology focused on sourcing and supplier management, buyers are more often faced with the decision of which tool to take out of the toolbox. What was your best investment in terms of technology and what benefits did it give to you.

Answer: Well, I never found anything that beats commonsense, but that said – for the commoditized sourcing areas where we buy predominantly on “price” and where relationship is not so critical I think Reverse Auctions are doing a good job. In those sourcing areas with high switching costs and long technology cycles I think Scorecards that focus on meaningful improvements and building trust pays off the best. So – like any tool, it’s more about how gifted you are at using it – I mean, if every time you hit the nail you find yourself bending it over …. Put the hammer down.

Question: What strategic direction are you gearing toward in order to better your position for long-term security and continuity of your supplies?

Answer: As we lean out the SC, buy in low-cost regions and get closer to the manufacture …. “Being there”, being informed and using sound supplier quality management practices becomes more critical – also, I’m paying more attention to the physical logistical flows than in previous years.

Question: Good relationships come out of good performance. What metrics do you use in regard with your suppliers and how do you measure their performance. Delivery, quality, cost – what message do you give to your suppliers and what do you expect from them?

Answer: When I think about a good relationship I think about my wife Cristi – we have to make each other look good and create something together that we each couldn’t create individually or with anyone else… that’s about trust and results. (Oh yeah … and of course switching costs … I think Cristi has that one figured out). Frankly – no matter what folks tell you, there really are not that many relationships you have to emerse yourself in at that level, and it is work. I think you also have to know when you fail at being partners and just get over that and get on.

On metrics – yeah, I suppose the ones you mentioned are okay with the addition of some forward-looking metrics – my point is, cost, quality and delivery all occurred in the past. Also – these are most powerful in time series where you can trends, and it’s helpful to be constantly showing suppliers where they stand against others and what the consequences are if improvement doesn’t happen (Warning on that: not to be tried at home …. Don’t ask me how I know).

Question: Low-cost country sourcing seems to be vital to maintaining competitiveness, but execution pitfalls remain. Are you sourcing in low-cost countries and if yes, how did you organize your low-cost country supplier management? What obstacles did you have to overcome?

Answer: Yeah – for sure we buy in [low-cost regions (LCRs)] …. I mean, doesn’t everybody ….Is that still a debate? Big suppliers, little suppliers, suppliers on the moon – they all fail at some level and LCR suppliers are no different so get over that and work the problem — not the fear. Be committed to the possibility that LCR sourcing is the best thing you got going – we just try to learn a lot first, move in measured ways, be present, and think through every single thing …. With a checklist. That – and get lots of folks involved.

Question: Collaborative Sourcing is the next stage of the advanced supplier management . How much value do you currently create because of the way you work with your suppliers?

Answer: Collaborative sourcing …… who puts all these words together anyway? So, I might not even know what this is. I guess I need to get out more. If you mean bundling your needs with others and leveraging that spend – I think this has real merit for the classic areas of Indirect Supply. If you mean collaborative supplier management where the emphasis is on open and honest communications of where we are headed, what we need , what we don’t understand and honestly listening to how others can bring a solution. I’d call that the priceless outcome of a well managed supplier relationship … again, I thought that was just what smart people do.

Alltel is in good hands with Searls pragmatic approaches and his sense of humor. You can hear from Searls and dozens of other supply management executives in person at the Supplier Management Forum. Register by yeard end to get the early bird discount of $400 off the full registration price. Supply Excellence readers will get an additional $100 discount when you cite “supply excellence” in the discount code field of your registration form.