About Philips Procurement

We perform together, we grow together

Our DNA is innovation - meaningful innovation to improve the lives of  3 billion people a year by 2025.  The more increasing pace of innovation means we work closely with suppliers and deliver innovation through   an End to End (E2E) value chain that works. We continuously aim to create value for the end customer and involve suppliers early in the design phase to help us innovate quickly and to meet or, even better, surpass our customers’ expectations.


Where possible, we design standard solutions to better capture value and reduce the lifetime costs of our products. To do this effectively we constantly review our supply base, selecting the best suppliers in terms of total cost of ownership, including quality, reliability and timely delivery. This allows us to create a strategic supply base and intensify our relationships.


A high percentage of components and products is purchased, rather than manufactured in-house. Overall, the majority of our Bill of Materials comes from outsourcing, long-term partnerships, Original Equipment Manufacturers and Original Design Manufacturers.

 

Perform and Transform


Procurement is transforming to become a more agile, more strategic key player in the Idea to Market (I2M)- space.  Procurement will bring market insights to the product and service creation process. We want to be stakeholder and player in this process by having a strong and capable Procurement Engineering, Commodity Management and Supplier Development function, all unified under one governance function. 

 

What does this Procurement Transformation mean to the suppliers?

 

  • General upgrading of skills and capabilities along entire Procurement in order to become a best-in-class function
  • Commodity Management / Procurement Engineering and Supplier Development, all embedded in one team.
  • Early involvement of Procurement to make sure  Procurement is leading in the Idea to Market space. This is a guarantee to  suppliers  they can bring in their insights  at  any  stage in the process.
    Procurement will have an important role in Market to Order (M2Oas well, to streamline the innovation of a new product and the pitch to the customer).
  • Channeling the entire communication with suppliers through Commodity Procurement that owns the contractual / commercial relationship with the suppliers, develops and owns commodity and supplier strategy end to end through a clear commodity management process in which the Philips Supplier Account Manager (SAM) will be the direct  interface of the suppliers.
  • Supplier Development is an important pillar to improve performance of Suppliers at the Supplier location.
  • Through all of the above we have a globally present organization, which is aligned across all regions and all sectors.

Competitive networks or supplier ‘ecosystems’

 

There is also an emerging shift from competing industries to competing networks or ‘ecosystems’. Best-in-class companies are those who successfully integrate their suppliers in both innovation and business fulfilment. These relationships are based on transparency, clear goals and honest relationships, creating a win-win situation for both parties through mutual trust, long-term contracts, and accountability and stretch targets.

 

 

Philips has a Supplier Development team, which is constantly looking, in close cooperation with our suppliers, for ways to optimize the  methods of working  together:

 

  • The Supplier Development team  offers ideas/support on how to reduce costs,
  • The Supplier Development teams can assess your factories on how to produce in a more cost effective way
  • We can work with suppliers on 6Sigma/ Waste elimination initiatives,
  • or on co-development,
  • and on Tier II sourcing

 

We are eager to listen to suggestions: how to reduce complexity, more platform, more ‘catalogue’, feed-back on Tech Specifications, etc.  Furthermore, we need innovative ideas from our suppliers; we want to be the first they come to for those ideas to be implemented in our Philips Products ("Innovation campaign")

 

They are the experts in their business, we count on them… For Philips the relationship with Suppliers is a partnership.

 

Policies and Procedures


Being socially responsible and making our products socially relevant is not an option, it is a must. Quality for the user and respect for the environment.


Philips General Business Principles of integrity, fair trade, non-discrimination and equal opportunity apply to both our corporate actions and to the behavior of individual employees on company business. Our employees must also act in accordance with the Philips Procurement Code of Ethics.


Philips uses a standard General Purchase Agreement (GPA) and standard contracts based on processes common to all our businesses. In addition, we have standardized processes for measuring and evaluating supplier performance, and for reporting the results.


Supplier Sustainability & Environment


Philips has a deep commitment to embedding sustainability in every aspect of our global organization and supply chain. We believe that for us to become a truly sustainable company, our suppliers must join with us in this commitment, based on a shared set of values and principles.


Philips is committed to improving the quality of people’s lives. This is what drives Philips in the development and manufacturing of our products. Promoting acceptable working conditions, environmentally responsible management and ethical behavior are important parts of our commitment.


In search of mutually beneficial relationships, we will award business to those suppliers who are committed to living up to these expectations. As part of this joint approach, we will be there to support our suppliers in cases where they need to improve their performance. Together we will strive for continued improvement.


Our suppliers also play a pivotal role in helping us achieve our EcoVision objectives. We continue to support them in their efforts to improve the overall sustainability of their business. To read more on our EcoVision: http://www.annualreport2013.philips.com/content/en/sustainability_statements/ecovision.html 


For further information on supplier sustainability, please visit http://www.philips.com/about/company/businesses/suppliers/suppliersustainability.page.

 
Philips Global Supplier Convention 2014: “Perform together, Grow together”

When: April 23, start at
10 am – April 24, end at 5pm
Where: Hilton Hotel Amsterdam, Apollolaan 138, 1077 BG Amsterdam

Royal Philips Global Supplier Awards 2014