Fearlessly expanding through procurement transformation Project partners
Fearlessly expanding through procurement transformation Piotr Teodorczyk, VP, Head of Global Procurement at Olam, discusses breaking down silos in a procurement transformation WRI T T EN BY PRODUCED BY
2
Dal e Bent on Gr eg Chur c hi l l
3
A
s a leading food and agri-business supplying food ingredients, feed and fibre to over
25,200 customers ranging from multi-national, world famous brands to small family run businesses, Olam is all too aware of how each and every one of its customers depends on the company to provide goods and services on time and high in quality. Recognised as one of the fastest growing food and agri-business firms, Olam’s involvement in the commodity value chain spans from upstream to downstream and encompasses selective upstream (perennial tree crops, broad acre row crops, dairy farming, and forest concessions); supply chain (global origination and sourcing, primary and secondary processing, inland and marine logistics, merchandising, trading, value-added solutions and services, risk management and commodity financial services) and; selective midstream/ downstream (value-added manufacturing, branding and distribution in Africa, ag logistics and infrastructure). Needless to say, Olam leads a complex product portfolio and so it requires a supply chain and procurement function that can support its global network across more than 60 countries. In 2018, Olam embarked on a massive 4
OLAM
transformation journey, one that would see the function become a more strategic unit that delivers additional value to the wider Olam group. “The goal was to move from a position of decentralised traditional buying, where each business unit and branch buys for itself,” explains Piotr Teodorczyk, VP, Head of Global Procurement at Olam. “The existing function could very much benefit from having a more solid and sharper mission and adequate strategy, as well as greater line of sight on performance metrics and deliverables.” The initial stages of Olam’s transformation journey saw the company implement a true hybrid globalised procurement model that consists of category
5
w w w. cp o stra te g y. co m
7
management practices embedded within the operating model. These practices are guided by a clear vision, strategy, and mandate to cover and influence non-agri commodity spend, set-up a hybrid procurement organisation and implement category management best practices in top categories. In the first two years, Olam also successfully launched a training academy, deployed an IT helpdesk, and launched Ariba across the board. “We are heading now, in the next two years, into what we call our Fearlessly Expand remit,” he says. “This will see us reach out to new geographies and categories through team expansion while deepening current team knowledge, supplier relationships and internal stake-
“ There’s still a long way to go for it to become a part of company culture,” he admits. “But it’s a continuous process requiring constant commitment, focus and persistent messaging across every part of the organisation” Piotr Teodorczyk, VP, Head of Global Procurement at Olam
only strategy, but business growth. As a procurement professional,
holder happiness by leveraging digi-
Teodorczyk has seen this evolution
tal tools. The key elements of this will
unfold firsthand. While he feels that there
include the expansion of organisational
has already been incredible change,
alignment and remit to new geogra-
Olam is now witnessing the most excit-
phies and categories, focusing on inno-
ing journey in procurement. “We have
vation and leveraging digitalisation as a
a unique opportunity to move from
key enabler all while establishing a P2P
a service function to becoming truly,
opportunity through shared services.”
trusted business partners,” he says. “By
Olam’s reorganisation of its procure-
building trust through delivering our
ment function aligns with a global busi-
core numbers of savings and cash flow,
ness shift that has seen procurement
we are now going very much beyond
become integral to business strategy.
simple material cost optimisation, moving
Once viewed as a back office function, it
procurement into end-to-end value
is now well and truly a key driver for not
creation.”
8
OLAM
In his own words, there are two key
expanding their value proposition and
enablers of becoming a world-class
focusing on five areas to differentiate
procurement organisation: technology
themselves: being trusted advisors to
and collaboration. “Today, many organi-
the business, driving suppliers inno-
sations are running in an extremely lean
vation, providing (big) data analytics
fashion, after years of self-cost optimisa-
insights, and proactively managing risks
tion. That might come at the cost of the
exposures.”
ability to reduce spending, levelling out
“A procurement, sourcing or supply
cost reductions and decreasing savings,”
chain function is only as strong as its
he says. “But world-class procurement
supplier base”, Teodorczyk says. “This
organisations are able to offset that by
journey is also impacting our supplier
9
relationships for the better.” According to Olam, the concept
“We do realise the value of supplier collaboration. We very quickly estab-
of collaboration within the supply
lished our SRM programme, with a target
management means much more than
of enhancing, formalising and structur-
the concept of open communication.
ing relationships with our most important
Collaboration involves the hand-in-
partners,” Teodorczyk says.
hand development (and execution) of
In his view, supplier relationships are
cross functional processes and capa-
assets that grow in value. For instance,
bilities. Procurement’s collaboration
suppliers can conduct needs-wants anal-
with its suppliers is a critical attribute
ysis to help prioritise and optimise spend
of leading-edge sourcing programmes
as well as provide a risk assessment of
and helps enterprises grow and adapt,
their own markets and solutions to help
consistently drive results and enable
sourcing teams mitigate various levels of
greater influence on strategic decisions
risk. Olam also uses suppliers to educate
by the entire procurement team.
sourcing teams on new products, price
10
OLAM
fluctuations and volatility as they often
generation within procurement. For him,
have a better understanding of the
the most important (and missing) piece
markets, risks, and customer needs.
of technology is spend analytics and this
“We have a strong desire to be
is something he is looking to address.
regarded as a “customer of choice” and
“Admittedly, we do not have perfect tech-
thereby gain access to the best offers
nology integration and we can struggle
from the highest-quality, most in-de-
with data quality internally, which can
mand suppliers,” he says. “We want to be
lead to lower efficiencies and high trans-
viewed as a company that’s easy to do
action costs,” he says. “We want to make
business with and operate with buyers
big data and spend analytics the crux of
that are easy to work with because it
all sourcing programs.”
helps them manage their own costs.” With regards to the technology compo-
“Making sense of the data is the key issue, both driving actionable insights,
nent, Teodorczyk recognises the grow-
and accessing them when needed. We
ing reliance on automation and insight
will continue to make further investments
11
int the right people and the right technology.” The most critical requirement for Olam’s procurement organisation was to adapt its service delivery model to an extremely diverse set of budget owners and functional partners in the Olam value chain and create a level of agility. “Delivering this level of agility required us to take a lot of time to understand the business culture and context of each business unit and country, the scope, requirements and the needs and wants of our various stakeholders across multiple business units.” he explains. “That helped us to define the most efficient way to implement the change and sustain it.” For this, Teodorczyk looked closely at the business, particularly around understanding the business culture and context of each business unit and country. This process looked at the scope, the requirements and the needs and wants of its various stakeholders across multiple business units. This helped Teodorczyk be able to define the most efficient way to implement the change and sustain it. Olam is a truly global business, or as Teodorczyk describes it, it had been a “coalition of very independent business 12
OLAM
“ From a procurement staffing perspective, my goal is to have people that feel comfortable being uncomfortable, understanding and embracing that real world-class performance begins where one’s comfort zone ends” Piotr Teodorczyk, VP, Head of Global Procurement at Olam
13
14
OLAM
units”.
These are:
In response, the procurement team
1) Aligning the organisation to create
took on the mission of working across
bridges between different business and
the business units and became a light-
synergise where possible by bench-
house of making the change in ways of
marking and building spend cube/ spend
working, embracing ‘ONE Olam’ as a
analysis
new approach. “There’s still a long way
2) Providing best practices and
to go for it to become a part of company
processes to develop and deliver stand-
culture,” he admits. “But it’s a continuous
ardised, scalable tools; map needed
process requiring constant commitment,
capabilities and ensure strategic sourc-
focus and persistent messaging across
ing process are scalable, repeatable, and
every part of the organisation.”
effective across enterprise
The concept of ONE Olam covers four
3) Developing holistic sourcing strat-
strategic principles that the company
egies to support Olam’s growth and
uses to operate within an enterprise
savings plan; collaboration is key and it
wide, holistic procurement function.
is important to build relationships and 15
influence without authority across all business units 4) Building a strong network, procurement identity and a feeling of belonging to a single procurement organisation measured by unleashment survey; develop measures to track overall performance In order to break the siloed approach, a common goal for many procurement organisations across the world, Teodorczyk sought to deliver quick wins and use them as user (business) cases to help people understand the benefits and how they can apply this new norm. As for the end-to-end transformation of the procurement function, Olam took a holistic view of establishing key building blocks in 2018. These building blocks saw Olam look at its operating model, spend management, supplier management and collaboration, and the concept of procurement value. “We looked at how our procurement team is organised to serve internal and external stakeholders and how it aligns and underpins the procurement functions and wider organisational objectives,� says Teodorczyk. “When looking at procurement value we asked the question: How does our procurement function engage key stakeholders in the development of 16
OLAM
Piotr Teodorczyk Vice President, Head of Global Procurement at Olam Piotr Teodorczyk is Vice President, Head of Global Procurement at Olam International, driving the transition from generating savings to creating business value. Prior to this, he worked at Mondelez Asia Pacific and Mondelez International for 16 years and was at other renowned food companies such as Masterfoods, Effem and Mars Inc. Piotr has 17 years of experience in leading procurement and supply in Global FMCGs in EU, GCC and Asia and is an expert in leading cost-effective procurement and achieving significant savings through strategic procurement processes, upstream innovation pipeline, end-to-end supply chain optimisation, and manufacturing productivity improvements. He has deep experience negotiating and partnering with vendors to improve total delivered costs, quality and service and is a visionary leader with strong business acumen and ability to elaborate and implement strategies for business development.
17
procurement strategy, and how aligned is it to the wider organisational strategy?” To that end, Teodorczyk looks to obtain an executive mandate to engage all business units and leverage team members to develop the procurement organisation and continue to measure stakeholder happiness through a number of means. “We established 360-degree feedback for the procurement function to measure success against set objectives and scored 4/5 in the first assessment. We call this our MeasureSatisfaction,” he says. “Through the use of steering committees, we established cross-functional, cross-business-unit steering committees to drive individual projects. As for our
“ We focused so much on getting the small wins chalked up, getting people onboard and winning their trust. To be successful in this game, it’s about making sure that differences we make continue to be visible and noticed” Piotr Teodorczyk, VP, Head of Global Procurement at Olam
‘status quo’. But what does he mean? “From a procurement staffing perspec-
executive mandate we were supported
tive, my goal is to have people that
by our Group CEO and Group COO to
feel comfortable being uncomforta-
include all non-agri third party spend to
ble, understanding and embracing that
procurement.”
real world-class performance begins
The final building block was centered
where one’s comfort zone ends,” he
around organisational alignment, which
says. “We have been extremely lucky
saw the support of individual business
and blessed to have teams like this in
unit CEOs and presidents to implement
procurement and that’s the most critical
the procurement strategy.
element of breaking the status quo. The
Teodorczyk truly believes that procure-
other typical characteristic of procure-
ment can be the change lighthouse
ment, enabling the change, is taking
that steers the transformational agenda
a customer centric approach and truly
across the wider organisation. He feels
understanding how you can make their
that procurement can in fact, break the
lives better, simpler and easier so we
18
OLAM
can all rest easy at night.” One of the key objectives for
so far. He does recognise, however, that there is still a long way to go and that
Teodorczyk and Olam when breaking
the journey is far from over. Still, he can
down the traditional siloed approach,
reflect on what were the key moments to
was to embrace a culture of innovation
get to this point.
and a truly global cross pollination of
“We are living in an age of constant
ideas from across the business. In setting
change, innovation and collaboration,
out the key procurement building blocks,
where the speed and complexity of busi-
working in unison to the ‘ONE Olam’
ness will only continue to accelerate,”
vision and obtaining buy-in from CEOs
he says. “The truly winning businesses
and COOs across the world, Teodorczyk
will be agile organisations that can tap
can look back on a successful journey
into expertise and find value wherever
19
it exists in the market. Connecting the people, process, and technology ‘dots’ will be mission critical to achieving both a sustainable advantage and overall enterprise success.” Teodorczyk is keen to highlight that regardless of the increasing complexity, the real secret to success can be broken down into three key areas: connecting the “sourcing dots” to ensure that strategic sourcing processes are effective and repeatable across the greater enterprise, making spend analysis the crux of the strategic sourcing program (or as Teodorczyk describes it “the gold that runs through the walls of an enterprise”) and understanding that collaboration is the key to the future. One thing that can be said of Olam’s procurement journey is that in order to get to its current position where it is ready for any future challenges, Teodorczyk had to take those small steps early on to make the giant gains it has achieved to date. “Small wins lead to large gains,” he says. “We focused so much on getting the small wins chalked up, getting people on-board and winning their trust. To be successful in this game, it’s about making sure that differences we make continue to be visible and noticed.” 20
OLAM
21
www.olamgroup.com