CPOstrategy – Issue 9

Frank Vorrath’s predictions for procurement in 2020 I s sue 9 • www.cpostrateg y.com

John Adams, Group Procurement Director at Barratt Developments explores how the company’s competitive edge comes from supply chain capability

EXECUTIVE INSIGHT

George Booth, Chief Procurement Officer at Lloyds Banking Group explores risk assurance

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Welcome to the January issue of CPOstrategy!

Our cover star this month is John Adams, Group Procurement Director at Barratt Developments. We travelled down to Barratt’s London office to sit down with John and explore how the company’s competitive edge comes from supply chain capability.

“Our main focus has been making sure that we have a supply chain in place that’s capable of feeding the machine that we’ve got now and the one that we will have in the future,” says Adams.

Elsewhere, Frank Voratth, Executive Partner, Supply Chain, Gartner, outlines his 10 predictions for the supply chain and business procurement landscape for 2020.

We also discuss strategic procurement with George Booth, CPO of Lloyds Banking Group, and how to build a best in class procurement and sourcing strategy with Bill Barry, VP of Procurement and Sourcing, Access Information Management.

EDITOR IN CHIEF Andrew Woods

EDITOR Dale Benton

SOCIAL MEDIA MANAGER Callum Rivett

CONTRIBUTING EDITOR Kevin Davies

CREATIVE LEAD Mitchell Park

GRAPHIC DESIGNER Rebecca Side

VP GLOBAL FINTECH & INSURTECH Alex Page

I hope you enjoy the issue!

VP TECHNOLOGY Andy Lloyd Craig Daniels

VP PROCUREMENT Heykel Ouni Greg Churchill

PRESIDENT & CEO Kiron Chavda

PUBLISHED BY

Dale Benton, Editor content@b2e-media.com

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CONTENTS

Barratt Homes

8

KPMG

38 George Booth

26

Access

70 Frank Vorrath

58 5 things

82

May 13-14 2020 | Intercontinental London, The O2

DELIVERING ON C-SUITE PRIORITIES

800

attendees

150+

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FIND OUT MORE WORLDPROCUREMENTCONGRESS.COM

6tn

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62%

‘Head of’ or above

MAKE CONNECTIONS THAT WILL DRIVE YOUR BUSINESS FORWARDS. WHO WILL YOU MEET? Visionaries

Leading the function, mapping long-term goals

Achievers

Tackling the pragmatics of implementation

Influencers

Creating the blueprint for strategic delivery

@procurementleaders #PLWPC

LIST EN TO JOHN ADAMS ’ PODCAST ON THE DIGITAL INSIGHT ’S OUTPUT CHANNELS BELOW

8

WRI T T EN BY PRODUCED BY

D al e Bent on Hey kel Ouni

9

JO HN A DA M S, G R O UP PROC U RE M E N T D I R E C TO R AT BA RRATT D E V E LO P M E N TS E XPLO RE S H OW T H E CO M PANY’S CO MPE TI T I V E E D G E CO M ES FRO M S U PPLY C H A I N C A PA B I LI TY

I

n recent years, an increasing number of organisations have begun to recog-

nise supply chain and procurement as a key facet to their operations. As a result, the very perception of supply chain has changed and is now being positioned as a key competitive advantage and in places where it can’t it represents an opportunity for businesses to unlock opportunity and other greater benefits. To put it simply, gone are the days where supply chain simply represented a means of saving money. “Clearly that’s part of what we do, but there’s much more to it than that,” explains John Adams, Group Procurement Director at Barratt Developments Plc. “The business or businesses generally should 10

B A RR AT T D E V E LO PM E N TS

see it as a strategic operation now. It’s about a much broader span of topics, and the organisations see procurement as an integral part of the efficiency of the business, not as a side act.”

Barratt Developments Plc. is the largest house builder in the United Kingdom and is the only major house builder that has successfully achieved and retained the highest customer rating for ten consecutive years. Key to this success is a vision for leading the future of house building that is driven by putting customers at the very heart of what the company does.

YEAR FOUNDED

1958

REGION HQ

London, UK

w w w . c p o s t r a t e g y. c o m

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In order to realise this vision, Barratt has

cheaper components,” explains Adams.

spent the best part of the last decade

“The availability of product is of course

investing in and reorganising its supply

very important but there are many other

chain in order to redefine how the business

areas such as the sustainability angle

works with its customers so that it can

which are becoming increasingly prevalent

better serve them. For any business, the

and heavily influencing the supply chain

supply chain is a complex ecosystem that

and how it operates.”

needs to run like a well-oiled machine and

“I spend a lot of time with some of the

for Barratt Developments, this is no differ-

key stakeholders in the business trying to

ent. “In the role I’m in it costs us more not

help them understand why supply chain

to have components than it does to have

is important, why things they do influence w w w . c p o s t r a t e g y. c o m

13

“ T H E B U S I N E S S OR BUSINESSES G E N E R A L LY S H O U L D S E E I T A S A S T R AT E G I C O P E R AT I O N NOW. IT’S ABOUT A MUCH B R OA D E R S PA N O F TO P I C S , A N D T H E O R G A N I S AT I O N S S E E PROCUREMENT AS AN I N T E G R A L PA R T O F T H E EFFICIENCY OF THE B U S I N E S S , N OT A S A S I D E AC T ” —

J O H N A D A M S , G RO UP P RO C UR EM E N T DI R E C T OR , BA R R AT T D E V EL O P M EN T S

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B A RR AT T D E V E LO PM E N TS

what the supply chain can, and cannot do

“So we need those subject matters to be

for us, and how they can change some of

engaged with the suppliers so we can get

their behaviour to enable the supply chain

the best answers to them.”

to be more effective and more efficient, which then benefits them.”

Barratt Developments central procurement team controls around £500mn

The goal here for Barratt is to engage all

of annual spend, both direct and indi-

facets of the organisation into the impor-

rect. Direct spend accounts for close

tance of the supply chain, removing the

to £450mn of that overall spend and

reliance on the notion of a single procure-

Barratt’s success is defined by its aim to

ment responsibility but a much more

provide its customers with the products

shared one. Adams believes that every-

they want at the right time and of the right

one should be talking to suppliers, not just

quality in order to receive the positive

procurement professionals. “At the end of

experience of a new build. In recent years,

the day, we are not necessarily the subject

the scrutiny on the quality of the products

matter experts on everything,” he says.

has tightened while the volume output w w w . c p o s t r a t e g y. c o m

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has rapidly increased in recent years and

or remove the requirement for skill onsite

so Barratt works tirelessly to ensure that

wherever possible. This is where the

it has the supply chain in place in order to

company embraces ‘modern methods of

feed the machine. “Our main focus has

construction’ in which Barratt’s design

been making sure that we have a supply

and technical teams work closely with

chain in place that’s capable of feeding

the supply chain in order to both trial and

the machine that we’ve got now and the

mature technologies and practices the

one that we will have in the future,” says

business wouldn’t traditionally use. Barratt

Adams. “We also have to look at new ways

will then integrate this into its day-to-day

of producing housing because there’s a

business as usual production facility and

skill shortage that’s coming and we have to

capability. “From a strategic point of view,

be ready for that.”

it is matching supply chain capability with

In order to ready itself for this skills shortage, Barratt works to either de-skill

our demand,” says Adams. “And then in the long term it’s looking at new methods w w w . c p o s t r a t e g y. c o m

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B A RR AT T D E V E LO PM E N TS

of construction, and developing a

the capacity to meet the demands

supply chain capable of supporting

of Barratt and its customers. This

us over a long period of time.”

required more focused and some-

One of the largest challenges

times challenging conversations.

in trying to constantly feed a

“It’s been an interesting journey

machine that is responsible for

because in this industry, some

more than £500mn in spend is

of the supply chain partners are

that of coping with demand fluc-

not necessarily as mature in their

tuations. Over the last decade,

thinking in capacity planning, in

market upswings and downturns

root cause analysis, and all the

have been unavoidable and this

things that we need to be good

of course will impact the supply

at, in order to make sure that they

chain ecosystem. Trying to trans-

make the best of the capacity

form a supply chain while operat-

they have available,” says Adams.

ing in a volatile market is no easy

“We’ve spent quite a lot of time

task and Adams acknowledges

trying to develop the supply chain

that Barratt has had to ride both

because I’d much rather work with

the highs and the lows in order to

somebody that I know is willing to

remain successful.

work with us than bring somebody

“Market upturns and downturns both present challenges, just

in that I don’t know, and start a brand new relationship.”

different ones!” he says. “Through

Refocusing supplier relation-

the downturn we very much had to

ships is never an easy endeavour.

focus a demand on fewer suppli-

On paper it makes sense and is

ers so that we keep those suppli-

easy to break down, but the real-

ers in a good state of order and

ity of the situation is never that

that they were able to support us

simple. For Adams, the key to

in the upturn.” This approach saw

successfully navigating this was

Barratt work with suppliers during

to break down what he describes

this downturn and then continu-

as ‘very adversarial’ old working

ing to work with them during the

practices that are common within

upturn so that the suppliers had

the industry. “It’s about trust. If w w w . c p o s t r a t e g y. c o m

19

you haven’t got that between yourself and your supplier, you’re not going to get very far,” says Adams. “The first thing to do is to change people’s view of what our supply chain is, what it does for the business and how important it is. Once you achieve that, then you have a much easier engagement model.”

Barratt has a tiered approach with regards to its supplier engagement model that sees the executive engagement level shift accordingly based on the strategic nature of the supplier relationship. “As you go down the tier of the supply chain, the relationship engagement will fall to either myself to have the leading relationship or my team leading the relationship explains Adams. “We ensure that we have a relationship with a senior management team of all of our suppliers, so that we can get the right level of engagement with them.”

Through this approach, Barratt is able to work to identify any issues between it and the supplier that will prevent either party from being efficient and get to the root cause of those issues by making changes where necessary. Part of this dynamic is built upon that trust and understanding and so in order to achieve this Barratt hosts a number of supply chain conferences that brings all of its suppliers together to explain what is going on, 20

B A RR AT T D E V E LO PM E N TS

John Adams

Group Procurement Director Barratt Development Plc.

Experienced Director Of Procurement with a demonstrated history of working in the construction, manufacturing, Automotive, Nuclear and Telecommunication industries.

Responsible for sourcing strategy, supplier management and supplier development of all goods and services for Barratt Developments, the largest housing developer in the UK.

21

what the vision for the future is and what

broader commitment that Barratt has to

expectations Barratt has for its supplier

its supply chain and make sure that the

base. “They understand our objectives

company has a set of suppliers that can

and how they fit into that,” says Adams.

deliver what it needs to the right quality

“We then have somebody in our team who

and at the right price. Barratt has been

is specifically engaged to look at supply

investing in and reshaping its supply chain

chain development. They have tools for

now for over a decade and in that time,

cause analysis that can help the suppliers.”

thanks to shifting market dynamics, it has

“But, what’s important is that we don’t

been clear that the road is never truly a

just go to the supplier with the tools and

straight line. In order to successfully navi-

say: fix this. We provide a methodol-

gate this and any journey, organisations

ogy and a suggestion as to how they can

need collaboration. This is where Barratt’s

understand the problem and solve it.”

supplier relationship model really stands

For Adams, this all forms part of the

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B A RR AT T D E V E LO PM E N TS

tall above others as a true competitive

“ O U R M A I N F O C U S H AS B E E N M A K I N G S U R E T H AT W E H AV E A S U P P LY C H A I N I N P L AC E T H AT ’ S C A PA B L E O F F E E D I N G T H E M AC H I N E T H AT W E ’ V E G OT N OW A N D T H E O N E T H AT W E W I L L H AV E I N T H E F U T U R E ” —

J O H N A D A M S , G RO UP P RO C UR E M E N T D IR E C T O R , BAR R AT T D E V E L O P M E N T S

edge. “Not every egg is going to be a bird, so you have to be prepared for investing in something that may not provide a business benefit in the end,” says Adams. “You will have failures and you can take learning from them. What’s important here is sitting with suppliers and working it all out.

What went wrong? Why did it go wrong?

What was the process? And so on.”

“I think it’s incredibly important to be able to go through that with your suppliers in a structured way, regardless to the success of the project or not, and be honest so that every single person understands the highs and the lows so that you actually learn from the whole experience.

That’s what our approach allows us to do.”

After 10 years of change, Barratt is already having discussions about the next 10 years. The future is very much here and now for Adams and Barratt and so this supplier engagement model becomes a w w w . c p o s t r a t e g y. c o m

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B A RR AT T D E V E LO PM E N TS

state of constant conversation and investment. As Adams noted, it’s about having to constantly feed the machine of today and of tomorrow. The market is already showing signs of significant change with sustainability impacting the legislation and governance of building homes. Barratt’s approach remains the same. “There’s quite a challenge for us to make sure that the supply chain is aligned to those changes,” says Adams. “Key to any of that, is people.

People. People. People. The ability to deliver absolutely rests on the people who are doing that delivery. They are pivotal to what we do, and to everything we do. The basic building block is people in the team and their capability, and their ability to be able to relate to, develop and embrace the supply chain that they’re working with.”

LIST EN TO JOHN ADAMS ’ PODCAST ON THE DIGITAL INSIGHT ’S OUTPUT CHANNELS BELOW

w w w . c p o s t r a t e g y. c o m

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STRATEGIC PROCUREMENT WITH GEORGE BOOTH, LLOYDS BANKING GROUP G E O R G E B O OT H , C H I E F P R O C U R E M E N T O F F I C E R AT L L OY D S B A N K I N G G R O U P E X P L O R E S R I S K ASS U R A N C E A N D W H E T H E R I T ’ S B E CO M E A TO P P R I O R I T Y F O R T H E C P O O F T O D AY

WRI T T EN BY

26

D al e Bent on

LIST EN TO GEORGE BOOTH’S PODCAST ON THE DIGITAL INSIGHT ’S OUTPUT CHANNELS BELOW

27

to understand global macro-economic and geopolitical factors and the impact

GEORGE BOO T H CP O OF LL OYDS BA NK I NG GRO UP

they have to the supply of your goods and services. Being a business professional, ultimately delivering through sourcing or

HOW HAS THE PERCEPTION OF

procurement, the core skills are commer-

SOURCING AND PROCUREMENT

cial business acumen, supply risk assess-

CHANGED, AND HOW THE ROLE

ment, your ability to build and forge

ITSELF HAS CHANGED AND BECOME

strong, deep relationships, your ability

MORE STRATEGIC TO A BUSINE SS?

to manage multiple tasks, operating in a

There is no doubt in my mind that

24/7 environment.

procurement has firmly established itself

The sourcing skills have also evolved

at the board table in most organisations

from looking at one or two local suppliers

as they better understand organisations

where you had long term arrangements, to

compete through their supply chains.

a much more agile world where you’ve got

Procurement drive competitive actions

consortium buying and many new players

for organisations in gaining first mover

coming into various technology markets.

advantage to access supplier’s tech-

All of the big established suppliers are

nology innovation, risk assure extended

changing, disrupted, and even going out

supply chains, secure value and build in

of business, alongside many new entrants

sustainability. In addition, the profession

coming in. It remains a very exciting, chal-

has had to become very international in

lenging, ever evolving career path.

your outlook, understanding different cultures, working across multiple time

WITH CONSTANT DISRUPTION AND

zones where relationships skills have

EVOLUTION IN THE INDUSTRY HOW

evolved from being able to do business

DO YOU STAY IN TOUCH WITH WHAT’S

face to face every day, to having supply

GOING ON?

chains and factories and clients that are

I always remain plugged into our busi-

global, often communicating through

ness clients, colleagues and supplier to

technology. You have to be able to adopt

ubder5sand their business drivers and

and evolve in that world as it’s much

what innovation is landing. I also meet new

higher paced. Procurement leaders have

entrants in the market and I regularly go

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STR ATE G I C PRO C U RE M E N T W I TH G E O RG E B O OTH

to industry forums. I’m part of the World

understanding things like blockchain, AI,

Procurement 50, so that’s a peer group

big data. What are these things and how

of CPOs from all different industries, all

do they impact my function? What are the

geographies, all cultures and backgrounds

tools and activities that drive us versus

around the world on a range of subject

how they are transforming our ultimate

from talent, ERP technology, supply

customer’s lives? Within that, the supply

market innovation etc.

chains between us, how do we shape

In addition,I keep tuned in, I look at Ted

them, evolve them? So it’s just keeping

talks, I’m regularly on YouTube. I read a lot

plugged in and being rooted in the reality

of industry articles, and I talk to my team.

that the very basics of what we do remain

I’ve got 340 practitioners in my function,

consistent.

and every day there are various conferences with all the well known brands.

HOW DO YOU COMMUNICATE TO THE

They’re talking to my business clients,

WIDER BUSINESS THE VALUE AND

but ultimately solving customer prob-

IMPORTANCE, AND THE STRATEGIC

lems. So it’s just constantly tuning in with

NATURE OF PROCUREMENT?

what’s evolving, what’s changing, and

I spend half my life probably talking w w w . c p o s t r a t e g y. c o m

29

internally to business clients and execu-

dial to say, “We understand the market

tives, selling what we do, talking to them

you’re in, and the evolving customer chal-

to understand the business problems

lenges that are out there. We believe there

they’re trying to solve, and giving them

are solutions that are rooted in the supply

a sense of the value we bring. Five years

chain that we can help you access and

ago we changed the title of our function

source in a much more collaborative way.”

from procurement to sourcing, because

It was all about becoming more proac-

procurement had evolved out of purchas-

tive as opposed to being seen as red tape

ing and it was very functional and we felt

or a transactional functional role, and

sourcing better reflected that at the core

that’s been a massive breakthrough. We

of what we do, it’s all about understanding

are rebranding sourcing, having much

the business problems and matching them

more proactive deep and meaningful,

to supply side solutions vs. the businesses

richer conversations with the business.

bringing us the answers to put a contract

That’s upped the game in terms of capa-

in place for!

bility in the team as we need professional

Being able to speak the language of your

business people who have particular

business in the context of the customer issues they’re trying to solve, and how do we go and source in a very complex supply chain environment is crucial. A lot of the procurement/purchasing practitioners were very functional in their language and approach. They would talk about a process where, “once you’ve decided what it is you want to buy, you can come and speak to us, and we’ll help you find the right supplier, put a contract in place, get you the right commercials, and we’ll help you manage that through its life cycle in terms of supply chain or supply and relationship management”.

What we wanted to do was move the 30

STR ATE G I C PRO C U RE M E N T W I TH G E O RG E B O OTH

“ I F T H E Y D O N ’ T U N D E R STA N D T H E S U P P LY M A R K E TS A LO N G S I D E T H E B U S I N E SS M A R K E TS , T H E N T H E Y ’ R E N OT G O I N G TO S O U R C E T H E B E ST O U TCO M E ” —

GEORGE BOOTH, CPO, LLOYDS BANKING GROUP

sourcing, procurement, purchasing skills, but very much as a secondary consideration as opposed to the primary of business acumen, relationship building and innovation curiosity. If they don’t understand the supply markets alongside the business markets, then they’re not going to source the best outcome.

WITH A NUMBER OF FINANCIAL CRISES IN RECENT YEARS, HOW HAS THAT SHAPED AND INFLUENCED THE ROLE OF THE CPO? I think there’s always that absolute truth or truism within sourcing, that you have to deliver on your numbers, you have to deliver value and you have to deliver savings. If you do that you get to play with the business. That’s being replaced with managing supply chain risk, and at a very basic level, knowing who your immediate third tier suppliers are. But who’s supplying them? For us in financial services we’ve outsourced in banking, quite significantly over the years. That includes credit and debit cards, ATMs, the cash that we print and issue out, right through to all sorts of very intimate customer services that financial service organisations rely on others to perform. We don’t build any of it. We buy it, we integrate it, we increasingly leverage through SAAS relationships access to the very w w w . c p o s t r a t e g y. c o m

31

latest technologies.

We then think about who’s got our data, who’s got our customer data our corporate data, who ultimately services our customers? Where’s the potential for customer detriment or conduct risks? We think about who’s got a permanent or intermittent connection to the group. If somebody is going to pipe into the group or connect with us through a VPN, we need to know about it and we need to know who services our ability to constantly provide 24/7 online digital banking. Just look at the industry stats, banking like many industries suffers service outages, and I’m very conscious of the fact that it can in certain cases be down to a supplier failure, either in terms of a component or an individual making a mistake.

My number one priority as a CPO is ensuring that we manage that supply chain risk. We help educate our business colleagues who choose suppliers who manage suppliers on these risks. We still deliver value, we still look to achieve optimal outcomes with our suppliers and we look at sustainability, we look at innovation. But of all the things we do, which deliver value, innovation and manage a sustainable and resilient supply chain, risk is definitely the one that tops the pole right now. You just have to look at the global nature, and the depth and breadth, the complexity in these supply chains, which are interdependent to you understanding the reasons behind that.

WHAT DO TECHNOLOGIES SUCH AS BIG DATA AND ARTIFICIAL INTELLIGENCE MEAN TO YOU IN SOURCING? What it ultimately means to me is that it gives us the chance to go beyond human limitations in terms of 32

STR ATE G I C PRO C U RE M E N T W I TH G E O RG E B O OTH

compute power, knowledge and an aggregate awareness. As an example, let’s say I’m looking to solve an issue to ensure ongoing supply for our data centres. Our data centres run computation and data storage for, in the case of Lloyds Banking Group, 30 plus million UK customers. If that supply chain is in any way threatened in terms of assurance of supply or compromise, I need to be able to know who supplies the first tier suppliers we deal with. Who supplies the second, third,

w w w . c p o s t r a t e g y. c o m

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“ T H E C H A L L E N G E F O R T H E I N D U ST RY I S TO F I N D T H E O P T I M A L B L E N D A N D M I X O F H U M A N AWA R E N E S S A N D M O N I TO R I N G , CO U P L E D W I T H T H E T E C H N O LO GY A N D W H AT I T G I V E S U S ” —

GEORGE BOOTH, CPO, LLOYDS BANKING GROUP

fourth, fifth tier?

Whenever there is an issue that arises

humans to analyse at the scale and pace we need in order to convert data into

globally, by accessing the big data avail-

insight at the scale and pace required.

able through a number of tools monitor-

The challenge for the industry is to

ing global supply chains 24/7, it’s possible

find the optimal blend and mix of human

to take effective and proactive action to

awareness and monitoring, coupled with

avert disaster. It can be impossible for a

the technology and what it gives us. There

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STR ATE G I C PRO C U RE M E N T W I TH G E O RG E B O OTH

are huge strides being made but there are

It is here to stay, we’re going to become

still issues in integrating it all and giving

more and more reliant on it. I’m a big fan,

you the risk vectors down to supplier

I just wish we could get to some of the

brand in the scale of what we want. There’s

nuances being wrinkled out of it, other-

a lot promised, but I’d say we’re proba-

wise we’re not far away.

bly 50-60% of the way toward optimised solutions, but we have to keep pushing it. w w w . c p o s t r a t e g y. c o m

35

LIST EN TO GEORGE BOOTH’S PODCAST ON THE DIGITAL INSIGHT ’S OUTPUT CHANNELS BELOW

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STR ATE G I C PRO C U RE M E N T W I TH G E O RG E B O OTH

HOW MUCH DO YOU INVEST IN BRINGING YOUR TEAM ALONG THIS TRANSFORMATIONAL JOURNEY OF SOURCING AND PROCUREMENT? I run monthly colleague engagement calls and site visits and I always bring the latest technology thinking. We invite our teams to tell the story of the technology insight they’ve gained and/or the technology breakthrough they’ve made. It doesn’t always happen within the IT teams. It’s happening more and more across the different sourcing teams. Right across my entire team we’re uplifting their awareness of the digital transformation that’s around them, because everybody is doing digital today. The key is that everyone has to develop and learn and evolve their skills so they can speak the language of the business and their supply chains and they ultimately become an even better sourcing professional.

WHAT WOULD YOU SAY IS THE KEY TO ACHIEVING SUCCESS IN A DISRUPTIVE MARKETPLACE? Ensure that you remain relevant in the conversation by experiencing disruption yourself – ut will be there in your supply chains, you just have to look for it.. As a procurement or sourcing professional by nature, you’re going to buy different things, some are human capital in nature, some are more physical, parts and products that you can touch, other things are more virtual like software. My advice is understand the common language of digital technology and the digital age that we’re in, and its potential to dis-aggregate the supply chains. Think about what customers, your peers and competitors use it for, what you could use it for? What are the risks and issues with it? Ultimately, always remain agile and nimble in your approach and be prepared to rip up what worked in the past and build a new approach for the future.

w w w . c p o s t r a t e g y. c o m

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Value in procurement transformation WRITTEN BY D a l e B e n to n PRODUCED BY H ey ke l O u n i VIDEO BY

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Tre t t F i l m s

LISTEN TO MARTIN LEE’S PODCAST ON THE DIGITAL INSIGHT’S OUTPUT CHANNELS BELOW

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Martin Lee, CPO of KPMG, explores how a procurement transformation, centred around spend control, brings greater value

H

istorically speaking, procure-

invested heavily into transforming it.

ment has often been seen as a

Procurement can truly bring great value to

mere cost centre and the part

an organisation, if the organisation recog-

of the business where buying was done.

nises that procurement can be a trusted

In recent years however, procurement

partner to the business. This certainly

has taken a dramatic shift as more and

forms the foundation procurement trans-

more businesses around the world, from

formation... in which one of the UK’s lead-

large scale global organisations to smaller

ing providers of professional services,

and younger companies, have redefined

including audit, tax and advisory special-

their understanding of procurement and

isms - delivering integrated solutions to

40

KPMG

its clients’ issues – is transforming its

procure to pay (P2P) implementation,

procurement processes in order to bring

Martin feels his experience and passion for

visibility, control and influence across an

procurement has prepared him well for this

increasing proportion of spend to drive

next evolution of procurement at KPMG.

informed decision-making for the busi-

“I definitely think it’s one of the best jobs

ness. Spearheading this transformation

going, with an unparalleled involvement

journey is Chief Procurement Officer,

in helping an organisation to ensure trust

Martin Lee.

and deliver value and growth,” he explains.

With over 20 years in the sourcing and purchasing space and a key focus on

“You touch everything from marketing, to the running of our buildings, through to w w w . c p o s t r a t e g y. c o m

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KPMG

the services we deliver to our clients. It’s

every part of the business a little differ-

such an impactful role. Gone are the days

ently than it did in the past. More so, the

of buying; it’s about how you work with

demands, expectations and skill sets –

the business to impact how they invest

and ultimately the very role of the CPO

and leverage themselves in the market-

– has changed too and this is some-

place to get the right solution, at the right

thing that feeds into this transformation.

value and risk profile. With the executive

“Historically, buying was quite simple.

sponsorship and appetite, the platform for

Now you’re trying to work people around,

procurement is set, like never before, to be

‘what’s their business case?’ What are

value creators.”

their change drivers?” he says. “It’s less

The broader evolution of procurement

about being a reactive service, but more

has certainly played its part in KPMG’s

proactive, working to understand what

transformation strategy and so the CPO

they’re actually trying to achieve and

now has to communicate to each and

how you might bring the supply base and

w w w . c p o s t r a t e g y. c o m

43

commercial models to that.”

As CPO, Martin is tasked with looking at how procurement, as a trusted partner, can bring information to the table, to help people understand the art of the possible from the marketplace. This, he feels, is something that has developed increasingly in recent years. “Data is key to everything now and you need to be able to provide that data in a way that people can use and understand,” he says. “There is now an expectation of the ease of use as a business, all the way through from the people on the ground delivering services through to the executive board who want to know how they can consume data in a way that gives them an actual insight.”

In early 2019, KPMG set out a procurement strategy, one that would ultimately see procurement play a key role in seeing the company increase its UK business to £3bn by 2022. A key enabler of achieving this is through greater spend control, changing how KPMG buys goods and services across KPMG UK, and through a new procurement organisation and operating model, including the implementation of a new P2P tool. “As an organisation we really wanted to build upon an already successful strategic sourcing team,” explains Martin. “Over time we built a program to implement procurement 44

KPMG

“ Historically, buying was quite simple. Now you’re trying to work people around, ‘what’s their business case?’ What are their change drivers?”

— MARTIN LEE CPO, K P M G

w w w . c p o s t r a t e g y. c o m

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technology, the opportunity to control, visibility and influence our spend across our supply chain. Technology is at the heart of the change. It’s about creating efficiencies for how we transact, creating the visibility of our spend and our third-party engagement, allowing strategic sourcing decisions with our business stakeholders to be more innovative while delivering greater value, at the same time enhancing the ownership of the solution through an effective controlled purchasing environment.“ A key part of the transformation saw KPMG work closely with IBM to extend its sourcing capabilities. This has seen the building of a hybrid across multiple locations, delivering strategic, tactical and a procurement operations model to enable KPMG to influence spend across the entire firm. “The relationship with IBM has allowed us to deliver a leveraged procurement model across multiple locations of onshore, near shore and offshore from an

sourcing point of view.”

The challenge then for KPMG and IBM

efficient cost model and from a skill sets

became one of identifying a way of moving

and capability perspective that procure-

towards a more transactional way of

ment in KPMG did not have at that stage,”

operating, particularly when it came to

says Martin. “And so, it has allowed us

deploying procurement feeds from 15,000

to grow our strategic sourcing together

users across the business which in turn

with their breadth and depth of market

expanded procurement’s interaction with

knowledge and commercial impact. That

the business significantly. For Martin, IBM

was a very positive thing from a strategic

was integral in this regard and a reflection

46

KPMG

of how the relationship between the two companies far exceeds a simple project delivery relationship. “The relationship is an opportunity to provide an agile operating model that we can adjust to how our business evolves. It gives us a way of

YEAR FOUNDED

1987

REGION HQ

London, UK

getting to skill sets that we didn’t have and thanks to the many clients that they work with in a similar capacity. It creates a useful network,” says Martin. “I can w w w . c p o s t r a t e g y. c o m

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KPMG

“ The relationship is an opportunity to provide an agile operating model that we can adjust to how our business evolves” — MARTIN LEE CPO, K P M G

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tap into the knowledge and insights from this network and their own procurement capabilities to know whether it validates what we are doing, or to help stretch and challenge my team through insights that create the credibility to be able to help my business.”

The very idea of change, particularly in an organisation the size of KPMG, can understandably be very fearful in many respects and so it’s important that the drivers (in this case the procurement team) work to help the business understand what that change means. Martin stresses that one of the biggest early learnings and advantages for his team was utilising the capabilities that existed across KPMG, encompassing Change, Communications, Programme Management and Systems Implementation. The team built out a change journey, engaging with business stakeholders to determine their P2P understanding and readiness. Early understanding of P2P was relatively immature and the team had to help them understand the impact, and the opportunity it provided. “I think we’ve realised that throughout that period, we’ve had to put more direct effort into certain groups to help them understand what the opportunity is and understand how they can adapt to that change,” he says. “Our role as 50

KPMG

Martin Lee CPO, KPMG As CPO of KPMG’s UK Member firm, Martin leads a team responsible for over £1/2bn of indirect spend. He has a passion for Procurement and transformation, having been in the industry over 20 years, with significant leadership, sourcing and P2P experience.

Over the past year, Martin has led the Procurement transformation at KPMG, creating a new Procurement operating model, expanding the scope and influence of the team, and implementing the Coupa platform to over 15k users, helping to realise enhanced spend control and a step change in value delivery for the firm. w w w . c p o s t r a t e g y. c o m

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“ It’s about making sure that people understand what we are trying to achieve and communicate the vision, so they could understand, appreciate and get excited about that” — MARTIN LEE CPO, K P M G

leaders is to help support people, under-

process, you will find people that have to

stand and appreciate what the opportu-

take time to learn about what that change

nity for them is and where they can learn

means for them and their function.”

new skills or adapt to roles, or in fact take

The main procurement transforma-

on new accountabilities in that process. It’s

tion began in early 2019 and so, as Martin

about making sure that people understand

admits, KPMG is still at the very beginning

what we are trying to achieve and commu-

of this journey. The first 12 months will

nicate the vision, so they could then

be seen as laying down the foundations

understand, appreciate and get excited

for future growth, with the implementing

about it. Of course, throughout that

of the technology, and the new operating

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KPMG

Business needs and demands, as well as market dynamics, will all heavily influence a transformation. The trick for an organisation is to be flexible and proactive enough to be able to evolve with the shifting landscapes, whatever they may be. “Throughout the journey we’ve had to make a few adjustments. Whether they were parts of our business that had changed how they operate, or in effect the relationships that we brought in, it was about learning what they were going to do differently to perhaps what we first thought,” says Martin. “One of the things you have to do is be very clear about what you’re trying to achieve. We had a governance model so that we could operate it with consistency with decisions and make sure that each of those changes was something that considered and made a formal decision against, rather than just meandering through a journey.” model focused around creating a platform

Ultimately, the key to successfully

and new ways of working. 2020, as Martin

navigating a journey is understanding

describes, is about “leveraging that plat-

that changes will happen, whether they

form to grow our visibility over the supply

are foreseen or not. More important, is

base, understanding how our business

taking key learnings from these changes

is going to work with us through those

and using the knowledge or the data and

systems, and helping us unlock the oppor-

insight and turning that into smarter and

tunities the visibility creates”.

more informed decisions moving forward.

The challenge for any transformational journey revolves around external factors.

This is something that Martin, despite being at the very start of this journey, has w w w . c p o s t r a t e g y. c o m

53

already begun to do. “We’ve built a team around us that are now owning our technology, our processes and our operations.

It works on an agile basis, so that if we learn that our approvals aren’t quite right, or we learn that our data isn’t in exactly the right place, we can make quick and easy changes to it,” he says. “Working across our business, we’ve also put in place change agents that enable us to work with key individuals across the business on a more regular ongoing basis to talk about feedback, to talk about new ideas, to talk about change that we’re bringing through and get them to communicate to us about how we can improve and change things.”

Looking at the first 12 months of this journey, Martin can already begin to look at key successes that have been achieved and start to plan out how to build on those for the coming years. KPMG has successfully rolled out the initial stage of the transformation on time and on budget.

Both the hyper care team and the project team that worked with Martin throughout the journey have now completed their activities and moved on to their next project, leaving Martin in the wonderful position of knowing that his team has delivered the solutions and the operating model in place. “We’re now into the 54

KPMG

David Braid, Procurement CoE Lead - SRM, Sustainable Procurement and Supply Chain Risk: What were the challenges you faced during the transformation?

It often felt like a procurement-only programme, but actually, it was a business-wide programme. It was key to ensure that everybody within the business, came into support and sponsorship of that program and worked together. For many business functions the new technology will become their shop window of products and services to the internal business functions.

The transformation teams were able to take away a lot of the pain from us as a procurement team, ensuring that the best practice communications and training was built and delivered. Quite simply, investment in skillful change management pays great dividends.

What will continue to be the key challenges?

As you would expect, delivering to business expectations will continue to be our challenge. Perception of the solution delivered in August could inevitably be misconstrued as, ‘Well it’s done now, isn’t it? It’s fixed.’ Actually it’s not, we’ve just started this journey, we learn every day and the work that has to be done now is about ensuring we’re able to continue providing, and improving the service, through measuring the performance and taking action where required.

There will be wobbles. The journey so far has been a bit like riding your bike with stabilisers. Now hypercare is finished we’ve taken the stabilisers off and all of a sudden

we’re on our own now. Through being on your own, you build that confidence up and in six months’ time we’ll for sure have forgotten that we even had the stabilisers on at all.

How has the transformation been received on a business level?

People know what the big picture is, they know it’s about getting the costs under control, it’s about being able to get the transparency on a supply basis, about being able to take that information and gain increased value. If you’ve got transparency on data, all of a sudden you are a much better partner to the business. Doing the simple stuff really well drives credibility through our business and demonstrating this will deliver on the investments and create greater value going forward.

The successful transition has created energy and engagement, so we take that momentum we now have across the business and focus on delivering our own procurement 2020 strategy and goals across five activity pillars of Spend Control, Customer Experience, Value Creation, Delivery Excellence – all underpinned by Enhanced Capabilities and Behaviours.

How will it impact KPMG from an external perspective?

It allows us to demonstrate that we are operating a trusted and value generating function, raising the profile of KPMG as a forward-looking procurement activity, whilst also providing our business the trusted licence to operate in our client marketplace.

w w w . c p o s t r a t e g y. c o m

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position where we’re thinking proactively rather than reactively,” he says. “Examples where we’ve been able to take business cases to our board to shift policy. That’s been a real game changer for us, and it’s been positively received by them.”

Over the course of the next year, KPMG will look to focus on its pipeline of procurement engagement and projects that will drive the business forward. KPMG will continue to make sure it has the right teams, with the right skill sets and experience in place to succeed.

For Martin, this is ultimately the one true key to success both today, and in the future. “Program would have achieved nothing without putting people in who are committed and who understand and are excited about it,” he says. “Without that, we would never have gotten to where we are. In reality, we’re now shifting up a gear and those people are evolving, alongside us, providing new people to further expand our capability to get to where we want to go.”

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Frank Vorrath’s predictions for procurement in 2020 F R A N K V O R R AT H , E X E C U T I V E PA R T N E R , S U P P LY C H A I N , G A R T N E R , E X P L O R E S H I S PREDICTIONS FOR THE PROCUREMENT BUSINESS LANDSCAPE IN 2020

WRI T T EN BY

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D al e Ben t o n

LIST EN TO FR ANK VORR ATH’S PODCAST ON THE DIGITAL INSIGHT ’S OUTPUT CHANNELS BELOW

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FRANK VORRAT H E XE CU T I V E PA R T NER O F SUP P LY CH A I N AT G A R T NE R

THE FOCUS FOR CEOS AND BUSINESS LEADERS WILL REMAIN ON BUSINESS GROWTH AND NEW BUSINESS MODELS There’s been an enormous amount of focus from companies on growing their business, and creating more shareholder value. Roughly 63% of all CEOs will change their business model going forward over the next few years. That’s being triggered by a shift from traditional business models to new business models, from selling products or services to potentially selling outcomes. CEOs will look at growing and positioning the company successfully in the marketplace to be able to grow further That will remain a strong focus for CEOs and business leaders in 2020. There’s an ongoing shift to becoming successful in selling different things, outcomes, solutions and driving growth.

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F R A N K VO RR ATH ’ S PRE D I C TI O N S F O R PRO C U RE M E N T I N 2 0 2 0

TECHNOLOGY AND PLATFORM DRIVEN ECOSYSTEMS WILL FURTHER DISRUPT TRADITIONAL BUSINESS MODELS Over the next 10 years the financial performance of approximately 25% of enterprises will be weakened because of competition which does or does not exist today. 2020 will be the perfect storm.

In recent years traditional companies were disrupted from technology driven companies or platforms. We will probably see that happen even more in the future.

An old traditional business model was absolutely required to be successful in the marketplace. Now, that’s not necessarily a competitive advantage anymore and a lot of disruptions came from technology providers or from companies who are offering platforms.

There is a strong focus on building cross industry ecosystems.You need to look wider, into your ecosystems and go deeper and you need to understand that when you look at the competition which is there today and see it will be different in the future.

In essence, every company needs to reflect and look into what is my ecosystem? How will my ecosystem develop or extend in the future? And also am I a participant in that ecosystem or am I a leader in an ecosystem? Or do I want to be a leader in the ecosystem? And what is that ecosystem?

What does it consist of? w w w . c p o s t r a t e g y. c o m

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A CULTURE OF DISCIPLINE OF EXECUTION AND SPEED OVER PERFECTION WILL BE THE KEY DIFFERENTIATOR TO GO THROUGH THE NEXT ECONOMIC CYCLE If you look into what makes companies very successful. At the end of the day, it’s all about people, but it’s also about a company’s culture and discipline to execute. There’s always a trade off when you look into going faster, or being perfect in what you’re doing.

Increasingly, we see that companies are making the trade off in a way of saying,

“ If you look into what makes companies very successful. At the end of the day, it’s all about people, but it’s also about a company’s culture and discipline to execute” —

F R A N K V O R R A T H , E X E C U T I V E PAR T NER O F S U P P LY C H AIN AT G AR T N E R

perhaps it’s better to have speed over perfection. When you combine that all together you have a culture and a discipline to execute and you have chosen to make the trade off for speed over perfection, and you can accelerate on that, that can and will be a key differentiator.

We believe that we will see an even

digitalization in your current and future business models. When it comes to emerg-

bigger gap between leading companies

ing technologies, there’s always hype and

and laggards, which are falling more and

there will always be hype, and that’s why

more behind.

we also have to have the hype cycle.

Sitting on top of that is the structure of

DIGITALIZATION AND EMERGING

an organization in the future. When you

TECHNOLOGIES WILL FURTHER

look further into the digitalization of a

DRIVE ORGANIZATIONAL AND

supply chain, we’re talking about auto-

STRUCTURAL CHANGE

mating certain business processes and

You need to understand the driver of

that will trigger off organizational change,

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F R A N K VO RR ATH ’ S PRE D I C TI O N S F O R PRO C U RE M E N T I N 2 0 2 0

structural change and it will trigger off new roles for supply chain functions.

This will continue to increase in 2020

and it will drive structural change.

A war for talent, new data and technology driven supply chain roles will see

because companies are very busy in

leading companies investing to build

either deploying their digital strategy or

diverse talent pools and strategic part-

designing their digital strategy and there

nership to share talents

is pressure coming from the senior lead-

You need talent in your organization to

ership to get on it fast. That will drive even

be able to execute or to even accelerate

more change and more complexity in the

digitisation. Looking across the access

beginning because they still have to figure

to and the availability of talent related

out how they’re going to execute on that

to the new data or technology driven w w w . c p o s t r a t e g y. c o m

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supply chain roles, you’ll see that leading

PRESSURE ON OPEX AND CAPEX

companies are investing to build diverse

SPENDING, WORKING CAPITAL

talent pools, which means they’re really

IMPROVEMENTS AND COST

using positives from globalization. There

OPTIMIZATIONS WILL SET THE

is a scarcity, so you need to build from

TONE IN MOST COMPANIES

the inside as much as you’re looking on

Within many companies there’s an enor-

the outside.

mous amount of pressure on OPEX and

The leading companies are building

CAPEX spending as a result of that.

strategic partnerships across different

When you run an organization, you have

industries to share talents. These are

to act, which means you have to read

roles such as analyzing data, preparing

the signals, what the market and your

data, and give it to you as a company to

customers are telling you, and then you

make a decision.

have to act. The pressure in 2020 will be

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F R A N K VO RR ATH ’ S PRE D I C TI O N S F O R PRO C U RE M E N T I N 2 0 2 0

on OPEX and CAPEX spending, but also

SUSTAINABILITY WILL DRIVE FUTURE

on working capital improvements, and

CONSUMER BEHAVIOR AND COMPA-

that’s really all around the cash you have

NIES FURTHER DEVELOPING FUTURE

in an organization. Cash gives you the

CIRCULAR ECONOMY CONCEPTS

ability to invest into your future growth.

Every company is looking at sustainability

In 2020, the focus will be on how can we

and saying, what does it mean to us for

optimize our cost? How can we improve

our future? Some of them they have acted

our working capital? You have to have

years ago, but as we move to the future

cash otherwise it will hinder you in future

consumers, especially younger genera-

to actually grow again when we come out

tions, will think very hard before buying

of that cycle.

a product. That comes into play with how a company has positioned itself. For these younger generations it’s less about the w w w . c p o s t r a t e g y. c o m

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“ Complexity drives cost.

If you’re not able to handle that through, better systems, better technologies, more skills, or talents in your organization, you could end up with a whole heap of cost, which then actually impacts your EBIT margins” —

F R A N K V O R R A T H , E XE C U T I V E PA R T N E R OF SU P P LY C H A I N AT G A R T NE R

product and more about the brand. What

that everything we do today doesn’t have

is the brand really representing in the

negative impact for generations to come.

marketplace? Can I trust that brand? Is the brand really focusing on sustainability? Or

PERSONALIZATION OF PRODUCTS

is it just talking about it?

AND SERVICES WILL BE A DRIVER OF

That will be the deciding factor for younger

CO M P L E X I T Y AN D COST FO R M OST

generations going forward when they make

CO M PAN I E S AN D N OT N E CE SSARY

their buying decisions. We predict that by

INCREASE REVENUES, EBIT MARGIN

2029, in certain ecosystems, you could run

EXPANSIONS AND SHAREHOLDER VALUE

supply chains totally waste free. We must

There is a strong drive to become more

make the right commitments now, so

personalized and give better experiences

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F R A N K VO RR ATH ’ S PRE D I C TI O N S F O R PRO C U RE M E N T I N 2 0 2 0

organization, you could end up with a whole heap of cost, which then actually impacts your EBIT margins.

THE RISE OF PROCUREMENT PROFESSIONALS THROUGH VALUE BASED AND RISK MITIGATING SOURCING STRATEGIES What we will see in 2020 is a rise of procurement professionals. Companies are starting to understand the true value of a procurement professional, which is not just reducing spend, but also about a value based sourcing model.

A value based sourcing model is about how I can drive value for the consumer in the future and how am I going to generate sustainable business performance and results, but also shareholder value? What that means is your sourcing is not only about sourcing the right material at the and service. It will create more complex-

right cost. It is also looking at sustainabil-

ity because you are planning your product

ity. That’s where the value comes on top.

not based on a consumer group, but on an

Risk mitigating sourcing strategies will

individual person and individual needs of

be also more on the focus, especially when

that person.

you think about shortage of certain mate-

You have to be geared up to execute on

rial and how to source them. Some indus-

that, because it is a highly complex envi-

tries they have experienced that are ready

ronment you’re dealing in. Complexity

with shortage of certain raw material.

drives cost. If you’re not able to handle that through, better systems, better tech-

It’s about making sure that you have a sustainable end to end value chain.

nologies, more skills, or talents in your w w w . c p o s t r a t e g y. c o m

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HUMAN INTELLIGENCE CAN’T BE REPLACED AND IT’S ALL ABOUT PEOPLE AND TECHNOLOGY AS AN ENABLER We’re forgetting we still have people, and we have human intelligence and that can’t be, and it shouldn’t be replaced. ultimately, people and technology act as an enabler together to drive better outcomes.

Technology is being seen as the silver bullet, but we know it doesn’t exist. Technologies have always come and disrupted the environment and that won’t go away.

I would rather have the conversation and focus more on people and human intelligence, and how we can use technology to enable people to further involve human intelligence instead of just talking about technology as the answer for everything.

INCREASE OF PROMOTIONS OF CSCO’S INTO CEO POSITIONS TO MANAGE ON-GOING BUSINESS COMPLEXITY AND SHAREHOLDER VALUE CREATION Many chief supply chain officers got promoted in leading companies into CEO positions. As a matter of fact, because they understand end to end value chain of an organization and they really have the ability to run a company on sustainable basis and generating also sustainable business performance and results.

We will see it even more because of all the complexity we have to deal with, with all the changes, ongoing changes in the world, having the top senior leaders who are supply chain professionals who have the ability to further grow the company and making a real impact.

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Building best-inclass procurement and sourcing WRI T T EN BY PRODUCED BY 70

D al e Bent on Hey kel Ouni

71

Vice President of Procurement and

Bill Barry, Vice President of Procurement and Sourcing at Access, explores how engaging with the business proves crucial in building best-inclass sourcing

Sourcing at Access, one of the fastest growing paper and digital document services and storage providers in the world.

Barry, upon joining the company in 2018, was tasked with a vision of building out a best-in-class sourcing and procurement function, developing and implementing the policies and procedures in order to achieve that vision. Within a year and a half of this journey, Access has already begun to realize the benefits in terms of the value crea-

W

ith the world of sourcing, supply

tion, savings and operational efficiencies

chain and procurement, under-

that the sourcing and procurement group

going significant sea change,

it can often be forgotten that one of the biggest challenges any company investing and reinvesting in their sourcing functions faces is one that centers around legacy.

After all, investing in new and disruptive means of working that are often entirely different from what has been the case for several successful decades can be seen as a risky pursuit. Why fix what isn’t broken?

But for many, over the course of the last decade, there has been something of cultural awakening toward procurement and sourcing. No longer is the question around why, it’s more a question around what – what can we do to bring more value to our business and our business customers?

This is certainly the case for Bill Barry, 72

ACCESS CORP

has brought to the business.

Over the past five years, Access has

of relationship-building in sourcing out to the various locations of Access and work

grown as a company largely through acqui-

to build rapport and to gain the trust from

sition. Part of this growth has seen the

each business unit and start to work hand

company work to develop and build out

in hand with procurement and sourcing.”

all of its centralized corporate functions,

In order to embark on this journey, Barry

including sourcing and procurement. “The

stayed true to a philosophy he has held

company saw an opportunity to better

with him throughout his career. This philos-

leverage the collective spend of the organ-

ophy is one of collaboration and support,

ization and the scale had gotten to a point

in which he has often sought out oppor-

where it made sense to try to coordinate

tunities in working environments where

and centralize that,” explains Barry. “Both

sourcing and procurement would not only

myself and leadership thought it was a

have senior level support but the func-

great opportunity to leverage the skill set

tion was also seen as a trusted business

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ACCESS CORP

YEAR FOUNDED

2004

ACQUISITIONS

139+

partner. This he feels is what made the

and asked them all the same questions.

decision to work with Access something

How are they learning from their business?

of a no-brainer, as the senior level support

How are they managing their depart-

and the collaborative efforts throughout

ments? What are some of the pain points

the organization made for a unique fit.

and areas of opportunity? “I also asked

As with any journey, the first steps are

the business functions as to how they

often the hardest. Barry set out by taking

have dealt with making procurement deci-

simple steps and holding conversations

sions or purchasing decisions in the past”

with all senior managers across the vari-

says Barry. “It was really a case of trying

ous departments and functions of Access

to get an understanding of what they, w w w . c p o s t r a t e g y. c o m

75

and by extension, the business, needed.”

When Barry entered the business, he found himself in the unique position of not having a procure-to-pay solution in place and a very antiquated ‘as and when’ approach to sourcing and invoicing. “There was zero centralization of the function or even oversight of purchases. So, I started at the ground level and just tried to understand how each department was making those purchasing decisions and how they were doing it.”

From this, Barry consolidated all of the feedback and information and began building out a vision of a best-in-class sourcing and procurement organization and in turn developed a roadmap to get there.

Working closely with the company’s CFO, Barry set about building out this journey in six-month stages. The first six months of this journey was a journey of discovery, focusing on understanding the business and most importantly, where procurement can drive true value. The next six months saw the development of the processing

planning and communication, and then the

around how to act upon that, “bringing

following 12 to 18 months was focused on

some good hygiene to the business”.

business integration and supplier manage-

“By good hygiene, I mean that we can

ment, while still remaining focused on

get better control over our spend and get

communication and training, because at

the necessary policies and procedures we

the same time, we ended up making a deci-

need to get us there,” says Barry. “As part

sion to roll out a procure to pay solution. To

of that, the next six months was about

ensure it was successful, we were focused

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ACCESS CORP

“ The company saw an opportunity to better leverage the collective spend of the organization and the scale had gotten to a point where it made sense to try to coordinate and centralize that” — B I L L B A R R Y, V P, S O U R C I N G A N D P R O C U R E M E N T, AC C E S S

business in order to maintain that position of a trusted business partner. Running alongside this was the implementation of a P2P solution that Barry feels was key in being able to show exactly what he was on communicating the change to the

looking to achieve and what it would bring

organization and training on the system.”

to the business as well as opening the door

This approach enabled Access to break

for the next stage of the journey. “The

down this roadmap into ‘very simple math’

so-called second stage is actually more

which allowed Barry to walk the business

like the second roadmap. We’ve already

through his thorough process, taking on

laid down the groundwork and now we’re

live feedback and making revisions and

continuing to operationalize it, ingrain-

tweaks that were communicated to the

ing best practices and really looking at w w w . c p o s t r a t e g y. c o m

77

the spend to uncover where those addi-

“Had we not been constantly talking to

tional areas of opportunity from a sourc-

the business we couldn’t put a solution in

ing perspective are, versus what we were

place that would have fulfilled the needs

doing before.”

of a large segment of our business. You

A journey like this, building a best-

need to understand that you’re not going

in-class sourcing organization from the

to solve every issue that revolves around

ground up, will never be a cakewalk and

a specific philosophy or even the goals

challenges are inescapable. Not only will

you set in the beginning. But making sure

there be risks and unforeseen circum-

you’re at least addressing the vast major-

stances that can plague the journey, but

ity of them, in that you’re getting buy-in on

there will also be the moving of goalposts.

the overarching goal – then you can manip-

The end goals will evolve as the demands

ulate the process underneath that’s going

of the business evolve and this is where

to drive you to that goal to account for

Barry’s philosophy comes into play.

those potential changes in your business.”

“It’s highly important that you stay engaged in the business. Our business is one that’s grown through acquisition, so it was imperative that I was continually talking to the business because throughout this journey, we entered not just new markets but new countries. All of a sudden, we took a business that was US based and set out in creating procurement practices here in the US to take them to an international level,” explains Barry. “It changes so much.

For example, our vendor management is completely different now because with us now operating across multiple countries we now must screen our vendors on a global scale across numerous databases and lists more than ever before and that adds new complexities into the process.”

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ACCESS CORP

One of the core elements of the building

“You need to understand that you’re not going to solve every issue that revolves around a specific philosophy or even goal statement that you said in the beginning” — B I L L B A R R Y, V P, S O U R C I N G A N D P R O C U R E M E N T, AC C E S S

out of Access’ procurement and sourcing function is to create one that can be defined as best-in-class. But what does best-inclass mean and more importantly, how can a company know it has achieved it? It is not uncommon across procurement functions all over the world to look to their peers and to tap into their vast supplier and vendor networks to benchmark against them in order to truly define what best-in-class means to their business. With Barry, it is no different. “Very early on in my career I would get together with a number of my peers: investors, VPs and Directors of procurement across a number of companies we worked with. And we’d meet regularly and bounce information off of one another,” says Barry. “Even today, time permitting, we’d speak regularly through emails and look at the policies we’ve been working on and get insight from one another.”

Barry also engages in documents published w w w . c p o s t r a t e g y. c o m

79

“ I know what I think is bestin-class, but if it doesn’t fit the needs of the business then it’s not best-in-class” — B I L L B A R R Y, V P, S O U R C I N G A N D P R O C U R E M E N T, AC C E S S

80

ACCESS CORP

by a number of sources; the federal government, consulting organizations, etc, pertaining to their procurement and sourcing practices. Access works closely with consulting partners, not directly for consulting in the procurement space but rather their business insight. All of this comes together with an internal steering committee that will review any policy and procedure that’s drawn up before publishing. “Another philosophy I follow is; I know what I think is best-in-class, but if it doesn’t fit the needs of the business then it’s not best-in-class,” he says. “So again, it’s about feedback and engaging with the business and really listening to them. Only then can you become a best-in-class sourcing function.”

As Barry has recognized, the future will not be a simple straight line. There will be challenges, opportunity and evolution. The goals will change and the roadmap may evolve, but the approach must remain the same: to listen, to engage and to collaborate. ‘The future for any business will be defined by your willingness to continue to evolve as your business changes,” he says. “I mean, I’ve been here a year and a half and I don’t think there’s a policy out there still, that’s on version one. There are changes that we’re making to address new challenges or new opportunities.”

“But ultimately for me, and for Access, what we want is for that best-in-class approach to be ingrained in our philosophy and in our business that this is just how we do it. It’s no longer a case of ‘Oh, procurement’s making me do this.’ This is the way we do it. This is why we do it this way and this is way we’ll continue to do it.”

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\

SIE VO’S FIV E PROCUREMEN T T RENDS FOR 2020 Sammeli Sammalkorpi, co-founder and CEO of Sievo, and Heiko Schwarz, Managing director and co-founder of riskmethods, look to five key trends for procurement in 2020 WRI T T EN BY

82

D al e Bent on

83

\

1

T HE AU T OMAT ION ( R)E VOLU T ION

“It’s going to be an evolution for those who

that the CPOs and procurement leaders,

are already driving the digitization of their

want to invest in over the next year. These

procurement and supply chain functions.

include data visualization, predictive analyt-

It’s going to be a revolution for those who

ics, RPA and AI and are clearly digital levers

are wondering if its is just a trend, or some-

that procurement as a function can leverage

thing that is completely changing the way

to automate more of the manual work.

our organizations are going to work over

“Where automation has the greatest

the next 10 years. The later you start the

potential is in applying it to ‘boring’ tasks.

more it’s going to feel like a revolution.”

One of the core challenges for lever-

- Heiko Schwarz, Managing director and

aging any procurement data is to have

co-founder of riskmethods.

clear visibility on spend, and instead of

According to the Global CPO Survey 2019

doing that manually, we can apply artifi-

from Deloitte, many procurement leaders

cial intelligence to actually predict where

are having trouble determining how to best

to spend or for supplier consideration -

meet their supply related commitments.

Sammeli Sammalkorpi, co-founder and

This is evidenced by the most desired skills

CEO of Seivo.

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SIEVO’S FIVE PROCUREMENT TRENDS FOR 2020

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SIEVO’S FIVE PROCUREMENT TRENDS FOR 2020

\

2

FROM DATA PL AT FORMS T O DATA ECOSYS T EMS “One of the biggest trends in procurement software is the need for one true ERP, be it SAP, or Oracle that has all of your data. What’s happening is there’s a lot of innovation around procurement software models. There are numerous players with great innovation and an increasing number of external data providers with new data sets. With all that change taking place, it’s unrealistic to purchase one procurement suite and solve all the solutions with that. Instead of creating one data platform, you need to embrace the data ecosystem thinking.

You need to realize that you will have multiple different data sources. Your data access will be in multiple different places and you have to figure out how can you bring them all together” - Sammeli Sammalkorpi, co-founder and CEO of Sievo.

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3

UPCOMING RECE S SION AND VOL AT ILI T Y

“We see a downswing in the growth of our economies through Brexit, trade wards, climate change and the change of behavior in how consumers and enterprises are making buying decisions.”

“We have to prepare and adapt to all of these changing circumstances like a chameleon as we need to leverage those digital capabilities and skills to be adaptable to that change,” You need to be agile, but it’s impossible without technology. Technology is only one part of the solution. We need skills, we need to develop our talent within our function and we need cadence and governance. The ones who will outperform the rest of the peer group are the ones who incorporate all those to become agile.” - Heiko Schwarz, Managing director and co-founder of riskmethods.

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SIEVO’S FIVE PROCUREMENT TRENDS FOR 2020

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SIEVO’S FIVE PROCUREMENT TRENDS FOR 2020

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4

NE W SOURCE S OF VALUABLE DATA

“We as a procurement function need to rethink what data and valuable data really is. Structured internal data from ERPs, purchase orders, invoices and so on has been and continues to be very valuable when building an automation strategy and analytics strategy as such. This traditional procurement data, is perhaps 1% of all the valuable data that can be leveraged for your procurement strategies and procurement execution.

What you need to do is catch that 99%.Through technology and machine learning, we can look closer at unstructured internal data (transactional data, risk data, financial data, economical data etc) and unstructured external data (supplier data, categories, innovation trends etc). As soon as you can automate information gathering, the sooner you can automate the analytics, the sooner you can automate the recommendations you will be much more adaptable.� Sammeli Sammalkorpi, co-founder and CEO of Seivo. w w w . c p o s t r a t e g y. c o m

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5

SUS TAINABILI T Y AND CSR

of organizations to comply with those standards, and it also relates to pressure from the capital markets, there are more

“Within the last decade, we have seen

and more professional investors that are

an incredible rise in regulations that

putting CSR standards into their deci-

are targeting sustainability and ethi-

sion making.” - Heiko Schwarz, Managing

cal aspects, such as the corporate

director and co-founder of riskmethods.

social responsibility, regulations that

“Looking at your CSR and sustainability

we are facing into our economies. There

performance is not something that you do

is a strong new factor that influenced

as a quarterly or annual exercise, but it’s a

the buying decisions, which is the CSR

near real-time integration, both in terms

component. This makes and leads to

of the spend data that you have and the

pressure for adding compliance and

data you are getting from external provid-

corporate social responsibility into our

ers. Gone are the days when it was good

procurement and supply chain practices.

enough to have sustainable reuse. Now,

It’s not a question of if you should do it,

you really need to have sustainability over-

it’s a question on how to do it. We see in

view, risk overview, a performance over-

many industries that the B2B customer

view, and so forth.” Sammeli Sammalkorpi,

requirements are increasing the efforts

co-founder and CEO of Seivo.

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SIEVO’S FIVE PROCUREMENT TRENDS FOR 2020

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EVENTS OF 2020 W R I T T E N BY Kev i n D av i e s

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CONFERENCES AND EVENTS PROVIDE INDUSTRY PROFESSIONALS WITH A FORUM TO SHARE KNOWLEDGE AND BEST PRACTICE WHILE GAINING STRATEGIC INSIGHT INTO INDUSTRY TRENDS AND CHALLENGES. OVER THE NEXT 12 MONTHS, THE PROCUREMENT INDUSTRY HAS A NUMBER OF HIGH-LEVEL EVENTS LINED UP ACROSS THE GLOBE, EACH ONE ADDING PRACTICAL BUSINESS VALUE FOR ATTENDEES

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03.03.20 EWORLD PROCUREMENT & SUPPLY Since 2001, eWorld Procurement & Supply has provided a unique insight into the latest innovations and technologies for senior procurement, supply chain and finance executives. eWorld provides a highly time-effective platform to keep up-to-date with the latest developments, market trends and hot topics.

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EVENTS

31.03.20 PROCURECON INDIRECT 2020 “We launched ProcureCon in 1999 and have been dedicated to supporting the growth of Procurement ever since. What started off as 100 people in a room discussing where this sector is headed, has led to over 5000 senior-level procurement executives being inspired whilst learning and developing their company as well as their careers over the past 17 years.�

Onsite you will receive a memorable learning and networking experience. With over 45 interactive case studies, drill down roundtables, workshops and networking functions ProcureCon Indirect will provide you with insight, intelligence and contacts that will benefit you and your organisation for years to come.

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EVENTS

13.05.20 WORLD PROCUREMENT CONGRESS 800 procurement thought leaders came together across three days in London (2019) for the inaugural World Procurement Week, and at the heart of this was World Procurement Congress.

Co-chaired by Jet Antonio and Joe Agresta, who encouraged delegates to Be bold in your vision. “Be fearless in all you do, the event broke down barriers and channelled high velocity procurement across highly immersive and thought-provoking sessions.�

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March 19-20, 2020 | Eden Roc, Miami USA

DRIVING THE PACE OF BUSINESS IMPACT 300

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50

30

Senior Procurement Attendees

Unique Organizations

Expert Speakers & Facilitators

Industries

FIND OUT MORE AMERICASPROCUREMENTCONGRESS.COM 100 EVENTS

AN AGENDA BUILT TO HELP YOU DELIVER

Increasing the rate of business change Continuous innovation for continuous result Reconfiguring the whole value chain

@procurementLeaders #PLAPC w w w . c p o s t r a t e g y. c o m 101

17.05.20 PROCUREMENT SUMMIT Procurement Summit is the new event for procurement in Germany. We have set ourselves the goal of adding to the landscape of procurement events in Germany with a modern, entertaining event featuring leading minds on the subject.

Procurement Summit has been held annually in Hamburg since 2018 and brings together top experts from the fields of purchasing, procurement, logistics, supply chain management and sourcing to discuss current trends.

The target group ranges from medium-sized companies to global corporations and professionally from users to consultants and other service providers, as well as technology suppliers for purchasing.

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EVENTS

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