Supply Chain World - Volume 7, Issue 3 - 120

food & beverage conagra brands inc.

O'Rourke had to admit he was not
ready to commit to that kind of
meeting because he still needed
time to get Conagra's stakeholders
in line. He could do this because of
the trust already established.
"He knew I wasn't gaming him
because we've spent enough time
together, I was just telling him I
need a little more time," O'Rourke says. "I was not wavering
on the commitment to do the
project, but I had to make sure our
R&D, engineering and operations
are aligned as well. And so the
trust goes - it's internal and external in procurement."

Long-Term Thinking
Conagra believes in building
relationships with its people and
suppliers from the start, even
when costs come into play. This is
something O'Rourke learned early
in his career when he was working
for Procter & Gamble. He was
learning the procurement ropes,
and went with other professionals
to find a special vegetable oil for
Pringles. The team was traveling
around the world, meeting with
potential suppliers, and they found
two suppliers that could provide
the oil. O'Rourke didn't see a
difference between the companies
in terms of logistics or quality, but
one company was quoting a price
that was a half-cent per pound
higher. So O'Rourke asked one of
his colleagues why he didn't push
for the extra half-cent.
"He looked at me and said,
'Taking the last half cent off the
table is not the best for the relationship,'" O'Rourke relates. "They
didn't know us and we didn't know
them. We could have pushed, but
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Supply Chain World VOLUME 7, ISSUE 3

that might have resulted in us not
getting any oil. He explained to
me that over time, we would gain
efficiencies and the price would
harmonize. But seeking to purchase the lowest-priced material in
procurement is not necessarily the
best thing if margins are low and
it impacts the supplier's financial
viability and ability to provide the
materials or service. It's about longterm thinking, and that left a lasting
impression on me."
This is key especially when it
comes to commodities, which
is what Conagra deals in much
of the time. Commodities have
pricing windows, O'Rourke notes,
and sometimes supply can drive
demand, while other times the
technical side of the market can
drive it.
"Definitely, the market will
vary," he says. "But if you're really
trying to build a relationship and
you think price is very important
to a supplier initially, you want to

Every summer at its Supplier
Excellence Summit, Conagra gives
out awards to suppliers. Its entire
senior leadership team attends to
drive engagement.

see if you can do it. Because then,
once you get delivery on the offer,
you can get service, you can get
quality and you can get performance. Over time, you determine
what the total cost of ownership
is that you want. If we pushed for
that last half-cent, we probably
were not going to get their best effort to get the best oil delivered to
our plant, which is counter to what
we're trying to do. Quality is really
important, and we have to focus
on that. The other way to look at it
is power. When you have absolute
power in a relationship, should you
leverage it or not? And if you leverage it, does it cause resentment?"
He adds that creating value for
all parties involved can go a long
way in ensuring relationships with
suppliers and vendors are secure.
"I've learned some hard lessons,
I've learned some good lessons,
but I've certainly figured out that
trust continues to be important,"
O'Rourke stresses. "Commitment is
Supply Chain World - Volume 7, Issue 3

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