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Details

  • Service: Advisory, Management Consulting, Business Performance Services
  • Industry: Financial Services, Telecommunications, Life Sciences
  • Type: Video
  • Date: 2/21/2014
  • Length: 5:07 Minutes

Joint Venture, Joint Value: Driving Impact through Procurement Alliances 

Dr. Volker Pyrtek, CEO of BuyIn:

KPMG
cutting through complexity


EXECUTIVE TALKS


JOINT VENTURE, JOINT VALUE
Driving impact through procurement alliances


Dr. VOLKER PYRTEK
CEO, BuyIn – The Procurement Joint Venture of Deutsche Telekom and Orange


in conversation with


CHRISTIAN RAST
Partner, Head of KPMG Global Procurement Center of Excellence


JOINT VENTURE, JOINT VALUE
Driving impact through procurement alliances


In a scale business, size matters


DR. VOLKER PYRTEK: At Deutsche Telekom and Orange, former France Telecom, now Orange, have built a procurement joint venture, because they realize that we are in a scale business, and with a tremendous pressure on our margins, and with a tremendous effort, we have to put into the build of our networks, that we believe in the scale business, that size matters.


JOINT VENTURE, JOINT VALUE
Driving impact through procurement alliances


Procurement can be a challenger and a strategic weapon within the company


I think we have established the joint venture at the peak, at the high level of problems,


[00:01:00]


so there was a strong desire of [PH] bull sharers to do something disruptive, and certainly this joint venture’s part of the transformation of both Deutsche Telekom and France Telecom Group, and in that regard, also the way we are working is becoming more strategic, so we are part of the transformation, and some of our stakeholders say Volker, you should drive transformation a little bit more, because as I say, we are not any more only part of the system, you are already now a little kind of challenger of the system, which is a very interesting role of procurement, so if, from a CFO perspective, from a certain perspective, it is very attractive to use procurement as a challenger in your own company, and that is, I think, right now the driving force behind most of my activities, is just to help Deutsche Telekom and France Telecom


[00:02:00]


to transform, and in that regard, it’s certainly kind of strategic rapport.


JOINT VENTURE, JOINT VALUE
Driving impact through procurement alliances


To be successful, joint ventures must focus on driving simplicity


Complexity is certainly something you have to pay a lot of attention to, because if you have two shareholders, you easily combine the complexity of two shareholders if you don’t do it right, so there’s an underlying risk that shareholders just want to kind of inherit, to a certain degree, the complexity of your shareholders, and my shareholders are large operators with many, many, many affiliates, so we’re just inheriting the complexity of them, I would multiply the complexity. So you have to find your own way and create simplicity, and by doing this, helping also shareholders to create a little bit more simplicity in their world, but that is a challenge, not easy. So complexity, you should not underestimate, or raise the complexity which is inherent by the shareholders, although we are a small company


[00:03:00]


with 20 nationalities, but only 250 employees, so our lives should be easy and simple, it’s not, unfortunately.


JOINT VENTURE, JOINT VALUE
Driving impact through procurement alliances


Joint ventures are not simple to achieve, but can have a strategic impact


I would immediately do it again. I would immediately create the joint venture again. The joint venture turned out to be more successful than we expected in some areas. It turned out to be more complex than we expected in some other areas. Honestly, I don’t know how we could have avoided the complexity. We underestimated just the time which is required to, two different cultures, to different organizations, glued together to something better, that it takes some time, so besides the fact that we underestimated the timing, I think the procurement joint venture is running pretty successfully, so we get a lot of attention in the marketplace. We have applicants of companies who would like to join us, so I think we are on a good track, and I would, I think it’s the right move, and it turned out to be the right strategic move


[00:04:00]


for both companies.


JOINT VENTURE, JOINT VALUE
Driving impact through procurement alliances


Procurement alliances are becoming an essential part of procurement strategy across industries


CHRISTIAN RAST: We see that not only in the telecommunication industry, we do see that also in FMCG, so if you look and see an example of AB InBev and British American Tobacco, they also have established one procurement joint venture, Agrega is the name of that, and we know, out of our current projects that procurement alliance is an essential part of all procurement strategy projects, which are running all over the globe.


KPMG
cutting through complexity

 

[Disclaimer]

Procurement alliances are becoming an increasingly viable tool enabling procurement organizations to impact the bottom line. Dr. Volker Pyrtek, CEO of BuyIn, discusses the procurement joint venture between Deutsche Telekom and Orange. Dr. Pyrtek addresses the complexities and risks inherent when bringing two shareholders together in a joint venture, as well as the intensifying importance of creating simplicities within the organization.

Volker Pyrtek, BuyIn

Volker heads BuyIn, the 50:50 Procurement Joint Venture between Deutsche Telekom and Orange with offices in Paris and Bonn. He is responsible for strategic procurement activities in the customer equipment, network and service platforms areas of both operators, covering a spend of approximately 13 billion euros in almost 50 countries. Volker has more than 20 years of experience in various executive positions and sectors. He joined Deutsche Telekom in 2002, as Head of Procurement for T-Mobile International, Bonn. In 2007, he became Chief Procurement Officer for Deutsche Telekom. Before that, Volker held various management positions at Bayer in Leverkusen. In 1997, he became CEO of Investment Bank Spütz, Düsseldorf, and simultaneously became Chief Finance Officer (CFO) of Tullet&Spütz, London. He was co-founder of the E-Procurement marketplace Goodex in 1999 as CFO and Director for Central Europe.

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