Procurement Lessons

from World War I

The first in a special 2014 series from Zycus:
Procurement Lessons from History
INTRODUCTION:
2014 will mark the passage of a century since the First World War broke out. It was
possibly the first strategic war ever fought, with multiple product innovations, use of
modern arms and ammunition and with partnerships forged. Let's look at one of the
biggest operational exercises in the history of human existence and seek to gain
procurement lessons from it.
It was June 28, 1914 when Archduke Franz Ferdinand, heir to the throne of the Austro-
Hungarian Empire, and his wife Sophie, Duchess of Hohenberg, were assassinated in
Sarajevo, Bosnia. Serbia wanted to gain control and ownership over land from Bosnia to
expand its province. Serbia's intentions came from a simple fact - the critical importance
of land as a strategic resource for its nation. And this laid the ground for World War I.
Over the next four years and eleven months, the participating nations wrote a new chapter
in world history, and this chapter was replete with many milestones and events, big and
small. Let us have a look at what modern procurement professionals can take from it.
Disclaimer
This whitepaper/article from Zycus is intended only as an example of historical procurement lessons from World War I. Zycus does
not endorse any innovations/strategies that are unethical or immoral. Neither does Zycus support the idea of war, nor any nations
engaged in war.
Management of
many is the same
as management
of few. It is a
matter of
organization.
- Sun Tzu, The Art of War
Procurement Lessons from World War I www.zycus.com
It all starts with a motivated team
The UK secretary of state war, developed and publicized the slogan Your King and Country Need You for the first 100,000 men to enlist in
Kitchener's New Army. The call, launched on August 11, 1914, was answered within two weeks. If the CPO doesn't have the right people with
the right mindset, it would be difficult for procurement to win battles for its business. Attracting and inspiring the right talent in procurement
is as important as it is for warring nations to inspire and retain loyal soldiers.
Procurement Lessons from World War I www.zycus.com
Get the heaviest and the lowest hanging fruit first
In the Battle of the Somme, on July 1, 1916, about 750,000 Allied soldiers are unleashed along a 25-mile front; but by the end of the day nearly
60,000 are dead, wounded or missing for very little gain. It is the worst single day's fighting in British military history.
Mismanagement of resources results in heavy losses to the organization. Procurement team leaders also need to understand the critical needs
of a project and allocate resources accordingly. A huge budget and many man-hours allocated to a project of small savings opportunity results in
waste. Appropriate technology and visibility of enterprise-wide action can help you identify the fruit that is the juiciest and the most easily
reached.
Procurement Lessons from World War I www.zycus.com
Grab your opportunity
When the British entered Basra on November 23, 1914, they wisely set about securing oil supplies in the Middle East needed to supply most of the
Royal Navy. The British strengthened their foothold in the war, thus staying ahead of their enemies. Capturing critical resources early in the game
is necessary, if the procurement organization wants to strengthen its supply chain and be at a greater advantage.
Even the Battle of Lens (Hill 70) highlights the benefits of securing scarce resources. Hill 70, being 15 feet higher than the surrounding landscape,
dominated the battlefield. On August 15, 1917, the Canadian troops took the hill and held it against five German counter attacks. Allies lost 9,200
men; and the Canadians were successful in preventing German formations from transferring local men and equipment to aid in defensive
operations. For a company, Hill 70 could be having the safest supplier mix that distributes your risks by covering you against delivery failures,
competitive supplier poaching, or supplier bargaining power. It could also be the most convenient distance for your company between the factory
and the market, a place where the raw material is abundant or a country with low labor costs. Procurement needs to highlight its Hill 70.
Procurement Lessons from World War I www.zycus.com
Mark your time of action
The British launched a night attack with all three of their armies on October 23, 1918. This time the British advanced six miles in two days. The
British were now just 20 miles behind the rear of the Hindenburg Line. If the British had launched the same attack during daylight hours, with just
one army, they probably wouldn't have achieved much success. Just like the British attacked when the sun went down, procurement teams can aim
to source when prices go down. Knowing the best time to strike by tracking market indices is important!
Procurement Lessons from World War I www.zycus.com
Make your supply-chain hole-proof!
In the third and the final Somme Offensive on September 15, 1916, the British army failed to break through German lines and is unable to achieve
the objective of cutting a hole in the German line by using massed artillery and infantry attacks. Positioned at the head of a company's supply
chain, it is a huge responsibility for procurement teams to make it formidable and immune to demand fluctuations, supply shortages or market
transformations. A healthy supply-chain would not only keep the company ahead in the race but also create a moat that would protect the
organization against larger natural disasters/socio-economic uncertainties.
In the third phase of the Ypres Offensive, on October 9, 1917, the British and French troops took Poelcapelle with considerable bombardments. But
in the next 48 hours, 25mm of rain fell on already saturated ground; the remnants of the explosives join the downpour smashing the drainage
systems and turning the battlefield into a quagmire that is difficult to survive in. Natural disasters can create havoc for any organization. They can
ruin the supplies leaving procurement highly vulnerable. Procurement teams, by nature, are vulnerable to external forces and must carry out
adequate risk analysis from time to time.
Procurement Lessons from World War I www.zycus.com
Innovate to stay ahead
In the Battle of Arras on April 9, 1917, the British successfully employed new tactics of creeping barrages, the 'graze fuse' and counter-battery fire.
Procurement also has to evolve with changing circumstances. The CPO needs to devise innovative strategies for the company to stay ahead and
stay profitable. Procurement is also important in the way it contributes to product innovation. World War I was replete with examples of innovation.
On April 22, 1915, the second battle of Ypres witnessed the first use of the chemical weapon 'poison gas' by Germany
At Hooge, German troops used flame throwers for the first time against the British lines (June 30, 1915)
Steel helmets were introduced on the British Front on October 31, 1915 to protect their troops from lethal head wounds
On September 2, 1916, the first Zeppelin is shot down over Britain. The Royal Flying Corps used a new combination of explosive and incendiary
bullets to great effect.
Just like the warring countries constantly innovated to get an upper hand over their enemies, the modern business landscape is no different than a
war. Procurement departments need to innovate to stay ahead of competitors; be it in procurement technology, supplier strategy, sourcing plans,
or the overall procurement game plan.
n
n
n
n
Procurement Lessons from World War I www.zycus.com
Never compromise on quality
On March 10, 1915, the British Offensive at Neuve Chapelle began; Allied losses amounted to 12,800 in just 2 days. Some of the blame fell on the
shortage and poor quality of British shells that tended to explode before penetrating. The phenomenon initiated the infamous 'Shell Crisis' which
soon created political fallout.
Procurement teams are undoubtedly under heavy pressure to source good quality direct and indirect materials. No wonder that shortage of
supplies and quality issues can lead to major losses as consumers, both internal and external, would lose trust in the company. A good example
that comes to mind is the recent horse meat scandal that affected the European regions. The performance of your company is dependent on the
performance of your suppliers, and quality is an essential factor linking the two, which today's supply chain managers cannot ignore.
Procurement Lessons from World War I www.zycus.com
Use technology for speed and economies of scale
German assaults reached the Somme Line on March 23, 1918, initiating the greatest air battle of the war, with 70 aircraft involved in a single battle.
Whether it is analyzing your enterprise-wide spend, or keeping tabs on the performance of hundreds of suppliers, or holding a huge sourcing event,
when done piece by piece and manually, it can prove to be time-consuming and even counterproductive! With advanced technology, procurement is
in a lot better position to devise strategies and get higher returns. Perhaps this is what Germany tried to achieve by using 70 aircraft in a single
battle. Indeed, within a few days in March of 1918, the ground was once more in German hands
Procurement Lessons from World War I www.zycus.com
Be close to supplies and ensure a continuous flow
On November 22, 1915 in the Battle of Ctesiphon, 25 miles south of Baghdad, allies inflicted heavy casualties on the Turks, but were forced to retire
to Kut due to lack of supplies. The Turkish soldiers gave chase and besieged the town. The battle of Ctesiphon highlights the impact of having low
stock of required items. Building a good relationship with suppliers will ensure supply of essentials, even during times of emergency.
Yet another example of poor planning was seen in the reversal of German success over Allied territory in March 1918, as gradually its troops began
to tire, having been on the move without relief for four days. Added to troop fatigue was the fact that the supply of food, equipment, ammunition
and horse fodder became problematic, the farther the infantry advanced ahead of their supply columns.
Procurement Lessons from World War I www.zycus.com
Spend and source responsibly
One estimate put World War I's total cost at $400 billion. That is said to be five times the value of everything in France and Belgium at that time.
There has been a lot of criticism of the economic loss resulting from World War I. Even when a company spends, it is acting on the money
entrusted to it by its shareholders. And sooner or later it has to justify the spending to them. A responsible procurement department can help the
company build a positive and trustworthy public image, leading to investor confidence.
World War I also contributed to the 1918 influenza epidemic that killed millions of people. It is also claimed that military forces in East Africa may
have sparked the outbreak of what became a global AIDS epidemic. Any business operation in today's global economy has to take into account
human rights, environmental implications and health hazards. While sourcing products and services, it becomes important to ensure that there are
no blood-diamonds on your shining bottom-line.
Procurement Lessons from World War I www.zycus.com
Final remarks
Businesses today are very similar to battlefields, sans the blood. We hope we have been successful in our attempt at providing you glimpses of one
of the first biggest strategic battles spanning the globe. May you gain valuable lessons that help you and your team in the daily combat.
It's interesting how history has such valuable lessons to teach us, personally and professionally. George Santayana once remarked - Those who
cannot remember the past are condemned to repeat it.
So, we will be back soon with a different chapter from world history and its procurement lessons.
Does your company have its own interesting procurement stories from history? Write to us about them on roshnee.mistry@zycus.com and we
will share it on our procurement blog.
Procurement Lessons from World War I www.zycus.com
About Zycus
Zycus is dedicated to positioning procurement at the heart of business performance. With our spirit of innovation and a
passion to help procurement create even greater business advantages, we have evolved our portfolio to a
complete Source-to-Pay suite of procurement performance solutions which includes - Spend Analysis, eSourcing,
Contract Management, Supplier Management, Financial Savings Management, and Procure-to-Pay.
Behind every Zycus solution stands an organization that possesses deep, detailed procurement expertise and a
sharp focus on being responsive to customers. We are a large 600+ and growing company with a physical
presence in virtually every major region of the globe. We see each customer as a partner in innovation and no
client is too small to deserve our attention.
With more than 200 solution deployments among Global 1000 clients, we search the world continually for
procurement practices proven to drive competitive business performance. We incorporate these practices into easy-
to-use solutions that give procurement teams the power to get moving quickly from any point of departure and to
continue innovating and pushing business and procurement performance to new heights.
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