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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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
SCHNEIDER ELECTRIC
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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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