Schneider Electric – Brochure 2020

Sustainability, resilience and innovation through procurement P ROJ E C T PA RT N E R

Schneider Electric: Sustainability, resilience and innovation through procurement Dan Bartel, CPO of Schneider Electric, walks us through a significant transformation journey designed to drive new value to the company through procurement

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D al e Bent o n Gr eg Chur c h ill

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n the procurement conversation, the discourse is often dictated and dominated by

the latest technologies that continue to digitise the procurement process, or in the current landscape how procurement has responded to the COVID19 pandemic. Sustainability is very rarely the topic that the limelight shines upon.

For a company like Schneider Electric, leading providers of energy and automation digital solutions for efficiency and sustainability, it’s very much cemented into the core foundation of the company.

Sustainability is the conversation at Schneider Electric and procurement is but one of the key ways in which it champions and commits to its sustainability goals. This is particularly uncom-

the company to be successful with its

mon when discussing the concept of the

strategy.”

transformation of procurement and for

This procurement transformation

Dan Bartel, CPO of Schneider Electric,

of Schneider falls under three pillars.

sustainability is a key driving force for its

The first pillar looks at enabling growth

current procurement journey.

through those high quality and innovative

“What we’re trying to do is orient

products in order to bring in technolo-

ourselves [procurement] toward where

gies to improve Schneider’s market offer-

the business wants to go,” he says. “So

ing. The second pillar falls in line with

our vision for procurement is to bring

the traditional perspective as to what

top quality and innovative suppliers with

procurement does for a business; driv-

competitive solutions into Schneider, with

ing bottom line results. “It’s absolutely at

the best procurement team in our indus-

the core of what we do in procurement

try. We think that’s required in order for

in Schneider,” says Bartel. “And to be

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honest, I think it needs to be, given the

also the offer itself which adds tons

strategy of our company.”

of complexity and a lot of noise to the

The third pillar is sustainability and helping Schneider advance their sustain-

system.”

Bartel, whose career has been heav-

ability agenda by being leaders in the

ily industry focused as opposed to the

industry with suppliers, with respect to

more common CPO journey that jumps

corporate social responsibility as well as

across multiple industries, has had a

product and material compliance prof-

number of CPO roles throughout his

its. “Supporting that is, of course, all the

career. Having joined Schneider from

talent and competency development

ABB in 2019, Bartel reflects on how the

actions that need to be taken,” he adds.

procurement conversation has changed

“There’s a massive effort on complex-

so dramatically over the course of his

ity reduction throughout Schneider and

career. “I find myself very fortunate,” he

that’s on the organisation design, but

notes. “I came into procurement when it 5

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For over 20 years, Drozak Consulting has successfully provided innovative solutions in order to realise substantial and sustainable cost reductions and efficiencies for global organisations, their supply chain and procurement functions. As the procurement conversation has continued to be defined by transformation, both strategically and operational, Drozak has stood out as a crucial consulting partner and has played a key role in enabling these organisations to successfully navigate the increasingly complex nature of procurement transformation.

Through a combination of expert knowledge, international presence and years of experience, Drozak achieves fast and measurable results and increases profitability and efficiency for customers. Simply put, Drozak is committed to results.

It is this commitment to results, and the innovative approach to delivering them, that saw Schneider Electric seek to partner with Drozak as part of a procurement transformation in which Schneider looks to redefine its global supplier negotiation model. In order to achieve this, there was a significant amount of training and upskilling and the development of an organisational capability that would see the company unlock greater value from its supplier relationships. This is where Drozak’s role, led by Dr Kai Michael Dresch, Associate Partner, is critical. In early 2019, Drozak was called upon

by Schneider Electric to support a series of material productivity days (MPDs) for negotiations with some of the company’s biggest global suppliers. “In the beginning there was the usual skepticism about what an external Consultancy like Drozak could achieve or contribute to success. Schneider, a hugely successful company, had some bad experience with consulting firms in the past” he explains.. “Our approach is about knowledge sharing.

From minute one, we look at how we can help you based on our approach and deep expertise in negotiations.”

To allay this initial resentiment , Dresch speaks to a broader conversation surrounding procurement transformation, particularly one that revolves around supplier negotiation. Results and Trust. “This is important because you can only convince people of change when you are delivering outstanding results,” he explains. “In some businesses, the CPO is not as powerful as he or she wishes to be, but at Schneider, Dan (Bartel - CPO) has been pushing very strongly from the beginning, involved us early and has been fully backed by the board in order to foster change and deliver results. That may have made it a little bit easier for us to finally get through to everybody.”

“Schneider is incredibly diverse and truly global, but still like one big family. We are now a part of that family. So when there are hurdles or roadblocks, we can pick up

the phone and speak directly to Dan or other executives in the business and overcome them together. It really is a trustful relationship.”

That trust becomes extremely important when developing and executing on a transformation roadmap. Given the complexity of procurement and the volatility of the marketplace, the road ahead is never going to be pain free and the pressure to deliver will always be high “In the beginning of the Covid-19 pandemic situation we switched from face-to-face negotiations to 100% virtual and hybrid negotiations. In this case we could bring in our deep knowledge of virtual negotiations. We were one of the first companies offering this completely virtual negotiation package at the market. Our unique selling proposition is also based on the collaboration with 2 companies - institutes in the fields of (body) language, voice and surrounding elements. A virtual negotiation is definitely different, but by considering all the important aspects you can be as successful as in a face-to-face negotiation. Virtual will be the new normal in the field of negotiations. Definitely an outcome of a transformation process” Dresch said.

Continuously challenging and pushing Schneider is exactly what Drozak has been asked to do. Dresch recalls Bartel’s demand that Drozak should never stop “shaking” his organization, bringing in new and particular unconventional ideas. “We can bring in our expertise, speed and insatiability for savings of our experienced consultants and when you see the improvements on the client side – this is outstanding and our philosophy of a trustful partnership.

Drozak has already delivered incredible results for and with Schneider Electric and it will continue to do so in the future. These were projects focusing on classic methods for material cost reductions, Health Checks of regional procurement units and reorganization, as well as Innovation & Engineering driven concepts “The trick is”, Dresch emphasizes, “to implement all these concepts in a sustainable way and to ensure the knowledge transfer needed. The only thing a client needs is honest willingness to embrace change. We never stop until we reach best in class solutions in every single topic.”

This willingness, and indeed trust, is built from Drozak’s expertise and previous successes as well as it’s collaborative approach with Schneider. “It has to be fact-based on the one hand, which is where the data and the results come in, but social factors matter as well,” he says. “Be open, be communicative, hold your hands up and say you were wrong, and praise when you achieve success. This is not 80 - 20%, this is 50 - 50% from the very first moment you enter into a partnership.”

w w w. cp o stra te g y. co m

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was less strategic and have seen a trans-

the world over ‘woke up’ to procure-

formation over the last 25 years where, if

ment, has Schneider always been ahead

a company like Schneider is not thinking

of the curve? “In Schneider, the external

about this function as being strategically

spend that we manage is equal to half of

important or relevant, then they’re miss-

the revenue. A previous mentor of mine

ing the boat completely. I think nowadays

would take the targeted cost reduction

it’s a function that’s viewed by companies

and divide it by the operating margin of

as not only relevant, but critical to the

the company and say, ‘That’s the equal

success of the organisation.”

value of procurement in our company in

Procurement is absolutely key to

terms of sales,’” says Bartel. “That was

Schneider’s success and future growth.

really powerful and it helped people

That much is clear. But as organisations

understand the relevance of the function.

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I think it’s come a long way but we’re not

backwards towards the main actions that

done. There’s still more we can do.”

have to be taken this year, next year, the

This procurement transformation is

year after, in order to get there,” he says.

very much the answer to that belief that

“There is a process in place where once

there is more to be done, and over the

a year, we refresh this thing and we roll

course of the next three years, Bartel

it forward a year. The process has to be

and procurement will roll out a number

dynamic and any time there’s a need

of changes and smaller projects that

to change something we should step in

form a broader alignment with the global

and evaluate that need and decide if we

supply chain strategy of Scheider. “We’ve

change or not, and if we do, what that

defined where we want to be three

change is.”

years from now and worked our way

Given Schneider’s large global

“ It enables us to get the investment allocations that we need to really reach our full potential, but of course we still have to deliver a believable business case and we have to have the trust of the organisation to go deploy that” — DAN BARTEL, CPO, SCHNEIDER ELECTRIC

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footprint, Bartel is keen to stress that he and his procurement function form part of a broader procurement organisation that enables him to achieve things at speed as opposed to a traditional and rigid decentralised supply chain approach of many other companies in similar positions.

Normally as part of a transformation story, we hear of the CPO coming in and having to gain operational buy in from leadership. This is often challenge number one.

For Bartel, he admits to being “incredibly blessed” to be a part of a company in which procurement is recognized for the true strategic arm of the business that it is and how he has not had to invest time and effort in convincing them of the road ahead. That being said, he understands that results still speak volumes. “It’s really liberating and is attractive, not just to me but to everyone in my organisation, he says. “It enables us to get the investment allocations that we need to really reach our full potential, but of course we still have to deliver a believable business case and we have to have the trust of the organisation to go deploy that. The door’s open and they expect us to come with those proposals. It’s just more fun to spend time doing things that we enjoy doing rather than fighting for our survival or working to justify the organisation’s incentive.”

So just how will this transformation improve on Schneider’s current market proposition? Bartel has outlined the means in which procurement will look to bring in more competitive solutions through a realigned approach to supplier relationships, but what will be the real tangible benefit from that? “That’s a good question,” he muses. “We’re looking to improve the external 10

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“ We weren’t focused simply on what we could do differently to get better results, but how we could better partner together to create value?”

— DAN BARTEL, CPO, SCHNEIDER ELECTRIC

perception of quality in the marketplace

and his team have been delivering

thanks to how we work with our suppli-

against this strategy and fine tuning it

ers. We should have a more attractive

where possible. One such part of this is

product, service and software offering in

improving the way in which Schneider

the marketplace because we worked on

looks at the market and how it influences

innovation. We should absolutely have

the business offering. “You don’t want

tangible, very easy to see improved

to build a functional strategy just based

financial performance as a result of the

on what the trends are and what every-

work that we do and we should have

body else is doing. It needs to come from

achieved our sustainability targets.”

within and needs to be really closely

When Bartel entered the business, the

linked with what the business is trying to

strategy for procurement had already

achieve,” he says. “But you really need

been laid out and defined. This is what

to understand a lot about what competi-

he described as a ‘luxurious’ thing for

tors are doing and what’s going on in the

any new CPO. Over the past year, Bartel

industry and so we have amped up quite

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a bit our efforts to exchange externally

procurement function and Schneider has

with other companies like Procurement

looked extremely closely at how it can

Leaders and the Hackett Group that have

improve its supplier relationships. As

very good information on how the others

part of this, the company held a global

are doing so we can compare and get

strategic supplier day in which it invited

insights from that.”

100 strategic suppliers from all over

Another key change that Bartel has

the world. “We spent a day and a half

focused on has been a multi-sourcing

together with all of these suppliers. Half

strategy which wasn’t part of the over-

of our executive committee was partic-

all functional strategy previously. Where

ipating directly, including our CEO, our

once there were spot assessments,

CFO and our chief supply chain officer

Schneider now looks more closely at

engaging together with our suppliers,”

how it can increase the resiliency of its

says Bartel.

supplier network. The supplier relationship model is a crucial element for any

“We weren’t focused simply on what we could do differently to get better 13

results, but how we can better partner together to create value?”

For Bartel, this supplier event was all about broadening the mindset of the category managers and senior leaders to think outside their own business mindsets to foster innovative ideas and overall greater relationships with those suppliers. “It’s about really taking those partnerships forward in a meaningful way and how this is also key for Schneider as a business going forward,” he says.

“We intend to become less transactional and to invest more in the relationships of suppliers, to create something together.

It’s a real one-plus-one-equals-three principle that our competitors aren’t doing.

We want to create an advantage and the advantage can come from growth or financial performance or sustainabil-

been very successful for a long time and

ity. Those are the three things that we

asking people to change can often be a

have our eyes on with these strategic

little difficult, so how does Bartel over-

suppliers.”

come this? “On one hand, expectations

Procurement, and in turn the supplier

need to be well understood and mutu-

relationships, are defined by people.

ally aligned from the very beginning. This

All the best tools and processes are

creates pressure, should you not meet

no good without the right people at

those expectations at times,” he says.

the very heart of it all. This transforma-

“It’s about making sure that the people

tion is focused very much on changing

have the support around them to do the

that relationship and enriching it, so it

job beyond the support provided directly

starts with the people. Schneider has

by me. I take a lot of pride and put a lot

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of energy into making sure our people

They bring very good training and good

are successful and so we have a matrix

advice and coaching and mentoring

manager in some places who provides a

of the teams to better prepare them to

similar type of support in the onboarding

engage in discussions with suppliers,”

of our people into the procurement role,

he says. “In parts of our business, we

who clarifies the expectations and really

did need to shake things up. The rela-

enables our people to be successful.”

tionships were just getting stale and the

Training and upskilling is also key to

way that we were approaching those

this and Schneider works closely with

negotiations was very unorganized.

Drozak Consulting on this front. Bartel

Drozak brought a process, a standard-

asked Drozak to come in and shake up

ized way of working as well as train-

his organisation, but recognises it goes

ing and key support. They’ve done an

well beyond that. “They bring a process.

exemplary job in helping us get enabling 15

and empowering our people to really

this, and Bartel admits that the company

drive more value from those supplier

has seen both setbacks as well as oppor-

relationships.”

tunities to grow.

Practicing what he preaches, Bartel

There have been things we had to

describes how Drozak and Schneider

accelerate and some things we had to

have to continue to innovate in their

slow down and in the long term, the strat-

own relationship in order to continue to

egy remains but with a couple of addi-

succeed and drive innovation together.

tional elements,” he says. “It has really

“If a partner wants to stick around, they

shined a bright light on the single source

have got to innovate because if you’re

situations that we have in the business

a one trick pony it doesn’t make much

and it’s given us an opportunity to take

sense to continue the relationship for the

action and make the investments that we

long term,” he says. “Drozak has inno-

need to make in order to build a more

vated with us tremendously. Looking at

resilient supply chain for the future.”

COVID, we can’t do site visits anymore

The financial strain caused by the

so Drozak has assisted us with some

pandemic has also forced a rethink for

very creative ways to make that process

many of where their priorities lie with

entirely virtual and it works.

regards to digital, as Bartel note: “We’re

“The longer you work together with

making big investments in digital and

a company like Drozak who innovates

some of those were slowed down a little

along with you, the better you get to

bit but there’s other aspects of digital,

know each other’s strengths and weak-

like how we interact with our suppliers.

nesses,” says Bartel. “It then becomes so

As an example, we have procure-to-pay

much easier to find things that you can

on source to contract that we acceler-

continue to do, that you should continue

ated substantially because it helped

to do together.”

us through the crisis. As it is right now,

At the time of writing the world has

we’re at the moment where we’re getting

been gripped by the COVID19 pandemic,

back to what our CEO calls ‘business

which has seen major disruption to a

as unusual’, which is back on track to

number of global businesses, along-

execute our strategy but still handling the

side the significant toll on human life.

impact of the crisis.”

Schneider has not been invulnerable to 16

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Despite this sudden and difficult

“ ...it’s given us an opportunity to take action and make the investments that we need to make in order to build a more resilient supply chain for the future” — DAN BARTEL, CPO, SCHNEIDER ELECTRIC

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obstacle in the road, the future is bright for procurement at Schneider. Thanks to a well defined commitment to redefining procurement, supported by a truly collaborative culture and a drive for innovation and sustainability in line with the broader business strategy, Schneider is well placed to succeed on this journey of procurement transformation. Bartel can reflect on what has made this journey successful so far and how that will continue to pave the way for that future success.

It’s about developing relationships with the people, with your colleagues, your peers and your superiors and really understanding the challenges faced and assessing them and working with the team to come up with something new that you’re going to accomplish,” he says.

“You need to make bold proclamations of what we’re going to change. wake people up and make those changes. Create a more balanced, simplified, energized, rejuvenated team that is more effective. We have been truly rejuvenating the organisation and it sends a strong message that we’re serious about shaking things up. That we’re going to be doing things different now and you can expect, if you’re in procurement, you can expect great career opportunities and if you’re one of our clients, you can expect better results.”

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