Purchasing and Supply Chain decisions have been key to innovation for over 150 years. As Innovation becomes the key item sourced there will be a strong need for professionals expert in Purchasing and Supply Chain to support the organizations and industries driving technology forward.

1. For 150 Years Purchasing and Supply Chain Has
Been Important to US Innovation
There has been talk recently, including by me, that innovation sourcing will be the
next big thing. However, Purchasing decisions have made a tremendous impact on
all major technology drivers for the last 150 years.
Bill Kohnen February 2015

2. Overview
• Purchasing and Supply Chain decisions have been key
to innovation for over 150 years
• Generally the real impact so far has come from people
outside the formal Purchasing and Supply Chain
Organization
• As Innovation becomes the key item sourced there will
be a strong need for professionals expert in Purchasing
and Supply Chain to support the organizations and
industries driving technology forward

3. 1870 to 1900
• Modernized Logistics
• First Professional Purchasing Jobs and Discussion
• Demand for steel created industry
• Purchasing's First Professional and Educational
Hero Marshall M Kirkman author of The Handling
of Railway Supplies; Their Purchase and
Disposition 1887
• Standard Oil Negotiates Favored Shipping Rates With
Railroads
• Manages suppliers by controlling demand
• Creates alternative to single source suppliers (pipeline)
• Make Buy Decisions for critical items

4. 1890 to 1920
• Supply Chain flexibility to transition from railroads to
structural steel
• When industry was in trouble focused on suppliers and
cost cutting led by one of the most notorious
Purchasing Manager /industrialists in US history Henry
Frick
• Massive Capital Spending
• Decision by Nicola Tesla to “Open Source” Alternating
Current
• The entire industry and standards wee set by 2 requests
for quote:
• Chicago Worlds Fair
• Niagara Falls Power Plant

5. 1920 to 1950*
• Fords assembly line creates requirement for supplier
management
• View Final Product as “pieces put together” creates
opportunity to negotiate by category
• Supplier Quality and Reliability become important
• Ultimately Automotive Industry Supply Chain and Purchasing
simply becomes based on leverage and bully tactics
culminated in second most notorious Purchasing figure Jose
Ignacio Lopez
• WWII and subsequent cold war requirements result in
massive scaling of concepts initially developed by Ford:
• Driven by spend requirements rules and regulations related
to Supply Chain and Purchasing and process are established
and influence practice outside of military spending
• Product Specifications, Inspections and Supplier Audits
become practice
• In practice some brilliant and dedicated but unheralded and
forgotten purchasing professionals* Defense influence felt until fall of
Berlin Wall 1989

6. 1950 to 1975
• Mass consumer products demand supply chain
flexibility
• Technology cost reduction for affordability
(transistor)
• Logistics Improvements make foreign sourcing a
possible option
• Space age drives technology and innovation sourcing
• Everything for US space programs is purchased
• New sourcing approach combining defense type
purchasing with new technologies
• “It's a very sobering feeling to be up in space and realize
that one's safety factor was determined by the lowest
bidder on a government contract.” Alan Shepard

7. 1980-2014
• Computer Hardware and Software Enables Advanced Supply
Chain and Purchasing ERP Systems
• Moore's Law – drives tech industry to continuous cost
reduction mentality. Gordon Moore Greatest Technology
Supply Chain Influence of all time
• Purchasing across supply chain enables and drives
continuous cost and performance improvements
• Electronics and Tech industries challenged by corporate social
responsibility issues but respond actively with numerous
industry standards and programs
• Global sourcing and Supply Chain become “table stakes” for
success
• Supply performance expectations for quality, productivity
and innovation sustain and enable growth.
• Tim Cook of Apple as Greatest Operational Supply Chain
Person Ever

8. What's Next- Key Things Really are Supply Chain
and Purchasing Driven
• Supply Chain linkages via Machine to Machine and
Internet of Things drive unprecedented efficiency and
lower total cost eliminating 90% of todays tactical work
and even a healthy portion of professional activities
• Untethering of connections and reductions beyond
mobile to access anywhere at essentially no cost where
Open Source Application based tools replace
proprietary legacy systems
• 3D Manufacturing Technologies that eliminate need for
shipping many components

9. Where Is the Next Great or Notorious Influential
Supply Chain and Purchasing Leader?
• They will have significant experience outside of Purchasing
• They will have real Global experience and are as likely to from India, China
or SE Asia as from the US
• They may or may not ever actually work in a traditional Purchasing/Supply
Chain Role
• They will be part of a transformational industry
• Their Vision will be supported by a team of talented, well trained and
highly compensated core Purchasing and Supply Chain Professionals
People that choose Purchasing and Supply Chain Management as a career can be
successful but Key is to learn core concepts and apply them to evolving needs and NOT
get stuck in a traditional Purchasing/Supply Chain Roles