CPOstrategy – Issue 10

Page 1

Building supply chain capability I s sue 10 • www.cpostrateg y.com

Evolving procurement’s risk language: Sören Petsch explores the shift in language towards procurement risk

A PROCUREMENT EVOLUTION CPOstrategy speaks to Michael Leiken, Senior Director, Spend Management at LendingTree regarding its procurement transformation

Jon Vass EXECUTIVE INSIGHT

Global Industry Lead at Tradeshift, discusses the shifting perspective of procurement technology


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Welcome to issue 10 of CPOstrategy! Our cover star this issue is Michael Leiken, Senior Director, Spend Management at LendingTree, as we explore the procurement transformation of America’s largest online lending marketplace. LendingTree is a growing business that needs a procurement department that can bend and flex with every new acquisition and expansion of its operations and so Leiken was brought in to oversee a a root and branch overhaul that has seen procurement taking on a massively strategic role at the ever-expanding LendingTree. Elsewhere, SÜren Petsch, former VP of Global Procurement at Alliance Data Card Services, examines how procurements risk language is evolving and looks closely at how data is different. We also hear from Jon Vass, Global Industry Lead at Tradeshift, as he takes a deep dive into the shifting perspective of procurement technology and how it aligns and influences the strategic shift in procurement. Finally, with 2020 in full swing, we asked procurement executives all over the world what they consider to

EDITOR IN CHIEF Andrew Woods

EDITOR Dale Benton

SOCIAL MEDIA MANAGER Callum Rivett

CONTRIBUTING EDITOR Kevin Davies

CREATIVE LEAD Mitchell Park

VP GLOBAL FINTECH & INSURTECH

be the biggest challenges facing procurement this

Alex Page

year. From market uncertainty to standardisation of

VP TECHNOLOGY

processes, find out in The Big Debate.

Andy Lloyd Craig Daniels

I hope you enjoy the issue!

VP PROCUREMENT Heykel Ouni Greg Churchill

PRESIDENT & CEO Kiron Chavda

PUBLISHED BY

Dale Benton, Editor content@b2e-media.com

3


CONTENTS

Lendingtree

8

KPMG

62 Jon Vass

26


Evolving procurement’s risk language

54 Barratt Developments

36 82 Access

Americas Procurement Congress 2020

114

5 things

94


May 13-14 2020 | Intercontinental London, The O2

DELIVERING ON C-SUITE PRIORITIES

800

attendees

150+

global 500 companies

FIND OUT MORE WORLDPROCUREMENTCONGRESS.COM

6tn

annual combined spending power

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


A PROCUREMENT EVOLUTION CPOstrategy speaks to Michael Leiken, Senior Director, Spend Management at LendingTree regarding its procurement evolution WRI T T EN BY PRODUCED BY

8

Andr ew Woods Hey kel Ouni


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P

rocurement is undergoing nothing short of a revolution right now, as a traditionally

transactional function evolves into a truly strategic resource that provides leadership and business owners with insights and guidance, gleaned from its holistic purview of the work being performed across all areas of the enterprise. A prime representation of this can be found at LendingTree, America’s largest online lending marketplace. LendingTree has grown tremendously over the past several years and needs a procurement team that is able to flex and support increasing demand resulting from the expansion of its operations. . When Michael Leiken started at the company in 2016, as Director of Procurement (since re-branded as Spend Management), there was literally no procurement function. Nearly four years on, under Leiken’s guidance, the company has benefited from an intentional and systematic overhaul that has seen the Spend Management team become a trusted business partner, delivering significant value to its customers. There was little to no comprehension of the procurement function at LendingTree when Leiken joined, seeing as it was a new endeavor and most 10

LENDINGTREE


employees lacked prior experience working with procurement or sourcing teams. Understandably, Procurement was initially thought to have a very narrow scope (to negotiate pricing), a transactional purpose (process contracts), and be optional. Transformation of any kind requires disruption, and it could be said that the decision to hire Leiken was the integral disruption leading the way for what has followed since. “I joined the company in April ’16, to design and build a procurement function from the ground-up,” he explains from his North Carolina office. “I was brought in by, and reported directly to, the CFO. This began as a one-person show.” Leiken opened his eyes and ears and went straight to work—meeting with business owners to learn about their roles, the overall LendingTree business model, current tools used, the various processes followed and seeking to understand pain points. In a relatively short period of time, he was able to identify areas that could be tweaked and drafted an initial design for his new function. Any significant change to a company’s operations and processes faces hurdles and number one on that list is M I C H A E L L E I K E N , SENI O R DI RE CTOR, SPEND MANAGEMENT AT LENDINGTREE

change management. Successfully driving change requires collaboration with w w w . c p o s t r a t e g y. c o m

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w w w.th e intransunion.com/business te r fa ce . n e t 13


and support from all involved stakehold-

they’re accustomed to managing.” Leiken

ers affected by the change. Garnering

explains. “That’s why it’s essential to look

buy-in from internal customers, who are

at things from the perspective of others

now being asked to adapt to new ways

and accept the fact that human nature

of working, is always a tricky obstacle

makes people want to know what’s in

to overcome. LendingTree’s culture and

it for them. So, how was I going to get

core principles are embodied by an

their support?”

entrepreneurial spirit. Employees are

Procurement’s greatest ally at

encouraged and empowered to be ambi-

LendingTree was the CFO, who involved

tious and creative, challenge ideas, take

the team (essentially Leiken) in every

charge, and make things happen. This

project that crossed his desk and appro-

further complicated the task at-hand.

priate email thread that reached his

“It’s common for people to resist change

Inbox. The CFO’s support really drove

and fear giving up control of things

the early engagement from the business.

Zylo is the leading SaaS Management Platform for enterprise businesses. Zylo empowers your organization to discover all applications, manage SaaS licenses, and increase cost savings.

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YEAR FOUNDED

1996

CORPORATE HQ

Charlotte, NC, USA “In my different stops along the way, in different companies and industries, I’ve always developed great relationships. I’m proud to say that once somebody becomes a customer, even if they don’t want to be my buddy, they recognize and appreciate the work product and value I’m delivering to them and the company. It starts with one opportunity, and once you do something for them that far exceeds their expectations— either saving the day when they’re in a tough spot or helping them accomplish their goals and deliver a “win” for their team— that’s what truly converts them into being believers. From that point forward, they come back as a repeat customer and share their experience with others, becoming an ambassador of sorts for you and the team.” It’s easy to take for granted the notion of having a blank slate. However, navigating a greenfield opportunity, such as the establishment of procurement at LendingTree, requires a vision and framework that fits the culture, supports achieving company goals and adds value to all involved. Yet, it must remain flexible and agile to account for the many bumps in the road. “You always have to be ready and willing to change, as long as it’s focused on accomplishing the specific objective(s) and is aligned with the big-picture goal, then it’s fine. Be w w w . c p o s t r a t e g y. c o m

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“Procurement needed to adapt quickly and evolve to effectively support the business as the company continued to scale” — MICHAEL LEIKEN, SENIOR DIRECTOR, S P E N D M A N AG E M E N T AT L E N D I N G T R E E

realistic; it’s not easy and will not unfold

Over the past few years, LendingTree

how you originally planned, but you can’t

has experienced significant growth. Nine

let that get in your way. Although it can

acquisitions have seen the company

feel like trying to race uphill on roller-

grow from three offices in two cities

blades, making headway and seeing

and approximately 250 employees to

progress is exciting and provides further

11 offices in seven cities and more than

motivation to continue the effort.

1,100 employees. As companies grow,

“None of this is about ego, it’s about

through further acquisitions and the

making things better. And when it comes

scaling of operations, so does the need

to transformative efforts like this, I’m

for a robust procurement strategy and

sure changing gears midstream is pretty

high-performing team to execute upon

common.”

that strategy.

16

LENDINGTREE


According to Ryan Quinn, LendingTree’s

real comprehension of what a procure-

SVP and Co-General Counsel, “Our team

ment function meant. In addition to

works closely with Spend Management,

educating folks and promoting aware-

and shares many parallels. I joined the

ness of their “new” support resource,

company in 2017 and can’t begin to

establishing credibility—both with lead-

imagine how things would function if

ership and customers—was an impor-

their team and the procurement process

tant early goal. “As I learned the busi-

weren’t already engrained in how we

ness and researched historical data, I

operate.”

was able to identify key areas of spend.

Leiken was on his own for that first year

Although we have strong relationships

at LendingTree. When he started, there

with all credit bureaus, the relationship

weren’t any tools, processes, policies or

with TransUnion was not only critical, but w w w . c p o s t r a t e g y. c o m

17


shifting towards more strategic. It was an

before entering into negotiations. Also,

opportune time to recognize what would

while they always look for mutually bene-

be most impactful for LendingTree and

ficial outcomes, they aren’t afraid to

work with TransUnion to jointly develop

stand their ground and push back during

longer-term goals.

a tough negotiation. Put simply, our

“Building the right internal team

business is in a much better position with

was critical, but so was establishing

Spend Management on our side of the

a good rapport with corporate part-

bargaining table.”

ners like TransUnion,” says Leiken.

Leiken had a roadmap for the future

Indeed, LendingTree had – and contin-

of procurement at LendingTree, based

ues to enjoy – a great relationship with

upon his initial vision. First and foremost,

TransUnion. “I was fortunate to have

Leiken knew the importance of under-

worked with them (TransUnion) early on

standing LendingTree’s spend profile.

in my role – it was huge. They have a

“Part of the vision was to develop strate-

nimble, knowledgeable team, much like

gies around categories of spend and to

ours. They worked closely with me and

prioritize our time and efforts—in order to

our Product team to evaluate ways to advance our business, and they’ve been terrific to work with from a day-to-day perspective. Having a like-minded partner in place helped me hit the ground running and build momentum.” “I’ve worked with the Spend Management team on several successful deals and I partner with them closely to manage our strategic relationship with TransUnion,” said Charles Battle, LendingTree’s Senior Director of Product Management. “What I appreciate most about Michael and his team is the way they commit to fully understanding the business value of any given partnership 18

LENDINGTREE


“Procurement leaders should embrace both innovation and disruption to drive successful transformation. You can’t be fearful or ignorant about what is involved in the process. Be aware of it, plan for it and focus on how you’ll position and use the innovation” — MICHAEL LEIKEN, SENIOR DIRECTOR, S P E N D M A N AG E M E N T AT L E N D I N G T R E E

maximize our contribution. To do this, I needed to know the nature of these relationships, so I could start working backwards through the contracts and then engage the respective business owners and supplier contacts. I was walking blindly into all of this. It was 100% reactive. Spend analytics was one of my top priorities. We don’t have a formal ERP, so there weren’t any historical purchase requisitions and purchase orders that could be leveraged as part of the process. Fortunately, our Accounts Payable team was very helpful in providing data until we implemented a spend analytics solution” LendingTree evaluated several products and ultimately partnered with Suplari for its spend analytics system. In order to have proper utility for Leiken’s team and then extend the value to business owners, the system had to be highly intuitive, easy to use and generate a positive overall user experience. “Despite having robust functionality, it was important to feel and seem light. Those factors, along with an exciting future product plan, contributed to our decision to partner with Suplari. I’m all about working with startups, and early w w w . c p o s t r a t e g y. c o m

19


stage companies, and testing new technology,” he enthuses. “Suplari’s system has a great look and feel, delivers artificial intelligence (AI)-powered insights and they’ve continued to expand their capabilities.” In November 2018, with the procurement transformation well under way, the Spend Management team partnered with Scout RFP and rolled out its sourcing platform. This took the team from disparate systems and manual tasks into a streamlined tool. Scout serves as the intake funnel for all requests from the business. Requests are then reviewed and managed through an end-to-end process, involving review and approval from relevant stakeholders, through contract redlines. RFx events are issued via Scout and the team books its savings within each project. With all of this data now in one place, Leiken can leverage the reporting features to better understand the nature of what his team is managing, as well as easily sharing information with other internal stakeholders. “Scout has helped our team become much more efficient, enabling us to allocate more time to value-add activities.” The Spend Management team also identified an opportunity and led the effort to better manage its travel spend. 20

LENDINGTREE

“ It’s great that technology can enable communication, but you can’t lose sight of the fact that collaboration can’t be stuck in systems; people need to connect with people” — MICHAEL LEIKEN, SENIOR DIRECTOR, S P E N D M A N AG E M E N T AT L E N D I N G T R E E


Although a travel policy exists, there hasn’t been much focus on ways to reduce costs, add visibility, and enhance the traveler’s experience from booking through reimbursement. Considering LendingTree’s growth and expanding footprint, its travel spend had also grown quite a bit. “We spent roughly $2 million in travel the prior year,” Leiken says, “and so we thought we should do something about it. We were just spending it, with zero rigor. So, we aligned with leadership, went through a formal process, and launched a new travel program using TripActions’ platform.” The tools and platforms available to the Spend Management team at LendingTree were further bolstered by Zylo’s Software-as-a-Service (SaaS) Management Platform. Similar to spend analytics solutions, Zylo analyzes all of your spend data to identify SaaS applications you own. “The end game with Zylo is to manage your SaaS investments in an optimal manner,” Leiken explains. “It’s pretty amazing. It gives you the full visibility into your SaaS spend, associated contracts, license counts, utilization, etc. I’m excited to work with the Zylo team to complete our initial analysis and identify ways to save money. Plus, we’ll use this moving forward to further assist our customers when somebody wants something. We can say, let’s start with what we have right now.” As procurement at LendingTree continues to evolve and new objectives are defined, addressing tail spend is on the list for 2020. Tail spend accounts for a relatively small percentage of a company’s overall spend, but can account for a disproportionately large percentage of its total transactional volume. “I think Fairmarkit’s product w w w . c p o s t r a t e g y. c o m

21


is pretty cool. Of course, it’s focused on

able to complete 60 or so projects from

tail spend; everybody has tail spend, and

April through to December. In July 2017,

many don’t really pay a lot of attention

I made my first hire and we completed

to it, which is a shame. Fairmarkit lever-

around 130 projects. Six months later,

ages the community concept, and the

another team member joined and the

notion of getting to bids faster, because

team completed more than 400 projects

it’ll automatically populate suppliers and

in 2018! Clearly, the introduction of tech-

already hosts the provider’s information.

nology to manage our work was neces-

You can check a box if you want them

sary. And this past year, we managed

to receive the bid. One of the things

555 requests via Scout. In total, the

I’m pretty big on is extending the value

Spend Management team has booked

and letting our business try to maintain

more than $18M in savings. Each of us

ownership and do more on their own.

always has 25-plus projects we’re manag-

We’re working through how a product of

ing. But I promise you we’re going to

this nature will impact existing processes.

ensure we have high quality contracts.

Hopefully we’ll be able to figure things out and be in a position to go-live in Q3 or Q4 of this year. “You always have to work to stay relevant. This aspect of the job is never done. It’s nice to be able to recognize that things are good today, but you always have to review and refresh and push to improve. These changes can sound like a scary, monumental shift, but it doesn’t mean that you have to be complicated in achieving it. When it comes to transformation, the simpler you can make it, the better. “It’s pretty interesting to look back at where things started and where we are today. In 2016, I was a solo act and was 22

LENDINGTREE


Michael Leiken Senior Director, Spend Management Lending Tree Michael Leiken is the Head of Spend Management at LendingTree. He is a strategic sourcing professional with demonstrated success in leadership, negotiation and supply chain management. With a proven ability to partner with stakeholders, foster strong relationships and drive change, Michael motivates his team to excel and achieve maximum value for customers while minimizing risk and streamlining processes. Prior to LendingTree, Michael spent seven years at Visa. He has experience negotiating and managing initiatives in the Quick Service, Print/ Media, Payments and FinTech industries. His responsibilities have spanned North America, Asia, Latin America, and the Caribbean. Michael obtained his bachelor’s degree from the University of Miami (FL). He earned his Certified Purchasing Manager (C.P.M.) and Certified Professional in Supply Management (CPSM) certifications from the Institute for Supply Management. He also holds certificates from Harvard Law School and the Jack Welch Management Institute. Michael resides in Charlotte, NC with his wife and two children. w w w . c p o s t r a t e g y. c o m

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24

LENDINGTREE


We’re not going to rubber stamp something and roll over for the supplier or just process paperwork. We’re here to drive and maximize value from LendingTree’s investments with suppliers, which is not just about pricing. Although I enjoy negotiating and pride myself on my expertise, much more goes into doing a (quality) deal. I am very passionate about, and love, what I do. Somehow, I got lucky; it’s what I’ve done my entire career. One of the most important things I learned early on is it has to be all about your customer. You have to focus on how you make them successful, because it’s a win if they’re successful.”

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

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Jon Vass

Global Industry Lead at Tradeshift, discusses shifting perspective of procurement technolo Jon Vass, the Global Industry Lead at Tradeshift, explores the shift in perspectives within procurement supply chain towards technology, and how it has changed the way in which organizations connect, and engage with suppliers WRI T T EN BY

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D a le B e n t o n


s the ogy

L I S T E N TO T H I S PODCAST ON THE DI G ITAL I N S I GHT ’ S OU TPU T CH AN N E L S B E LOW

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JON VAS S GL OBA L I NDU S T RY L E A D AT T R A DE SH I F T

What would you say are some of the biggest shifts that have happened in the supply chain and procurement space, thanks to technology? There’s been a huge shift in terms of technology. The functionality that’s taken place hasn’t really changed. If you think about a sourcing event, or receiving an invoice electronically, some of those technologies, the actual functional piece of it looks a lot nicer nowadays and it’s delivered in a much faster, easier to consume way, but what you’re actually doing is fairly similar. 29

E XC LU S I V E I N T E RV I E W W I T H J O N VAS S


The biggest shift is the thought process around technology. Rather than using a technology for doing something tactical, it’s actually being used to connect with your supply base. Organizations, or the forward thinking organizations, are really looking at technologies which reach out to their entire constituency. They understand that procurement is actually a participation of the supply chain. The supply chain is a much bigger, broader place than the four walls in which that particular company, that particular procurement organization live in, and therefore they need to connect with that supply chain holistically, in order to get the best out of it.

How has this technology shift aligned with the shift in procurement? I think that a few CPOs have realized that they would like to have a seat at the Board. Previously, that was very difficult. A CPO was seen as somebody who would simply get things cheaper. So, there has been a big shift from that. If you think about what a CEO is interested in, a CEO is interested in shareholders, long term plans for the business, and the revenue, environmental impact. The CFO is interested in similar financial incentives, how well the company’s performed, share price, etc The CPO, in order for them to align with the business, needs to be interested in the same things as the CEO and the CFO.

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

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“Most organizations are willing to embrace technology, they want to embrace technology. They have a transformation team, or a procurement transformation team, they might have a finance transformation team. The intention is there” — J O H N VA S S , GLOBAL INDUSTRY LEAD AT TRADESHIFT

There’s been a big shift toward actually

embrace technology, they want to

being more aligned with those goals,

embrace technology. They have a

rather than being more aligned with cost

transformation team, or a procurement

saving. If you optimize the cost saving,

transformation team, they might have a

your output is going to be cost saving,

finance transformation team. The inten-

rather than innovation and growth.

tion is there. What I think has happened is,they tried

Are companies afraid to embrace technology or are reluctant because they don’t quite have the knowledge and the requisite skills to successfully embrace that change? Most organizations are willing to 31

it once, and it didn’t work, so they’ve quit. As we know, you have to fail a few times in order to succeed. You only see success, that’s just the tip of the iceberg, and there are many failures behind that. What’s been missing is how does that

E XC LU S I V E I N T E RV I E W W I T H J O N VAS S


actually connect with the supply base?

have provided some efficiencies, but

How do the suppliers and the vendors

the rest of them don’t use it, therefore

interact with that? How do they bring

we process manually. That technology is

value into your organization, how do they

touching 15% of their suppliers, whereas

collaborate with you? That’s certainly the

you want your technology to touch as

big thing that’s happened.

close to 100% as you can. It doesn’t

I think a lot of organizations have

matter whether you’re tech savvy or not,

adopted some more traditional procure-

you’ve probably got a mobile phone.

ment technologies, and their frustrations

Think about some smaller suppliers, they

are always the same, or largely always

might not have SAP or Oracle running

the same, which is great, we’ve got 15%

their backend systems, but they’ve got a

of our supply base connected. They

mobile phone in their pocket.

happen to be some larger suppliers that

If you can be in touch with the supplier w w w . c p o s t r a t e g y. c o m

32


in the same way they’re in touch with

zero help, in order to participate in this

Facebook, and LinkedIn, and text

incentive you’re giving them. You’re basi-

message, and email on their phone,

cally saying, “Come into our world, use

then you can connect with them, and get

this technology.” It has to be super easy,

them to contribute and participate in your

running on either a web app, or a phone

incentive.

app, and something intuitive that they don’t need an instruction manual to use. Then technology becomes their friend,

How do you communicate what automation and technology can bring above the human element?

and it becomes a much more comforta-

In terms of the way you would explain

ence to using their phone. Everybody is

these technologies, it’s no more difficult

comfortable using Facebook, Instagram,

than a mobile phone. If you think about

and Twitter, LinkedIn. There’s no reason

what a mobile phone does, it’s actually

why B2B technology should be any

amazing when you break it down and we

different.

ble situation, because there’s no differ-

intuitively just start using it. What you’re asking people to do is no more difficult than using a phone. I think, maybe some historic, or traditional technologies, don’t lend themselves to that, and therefore seems complicated. Then you need to have training, in order to better use it, and it seems a little bit scary to some people. I think most modern technologies, if they can start using it, then I think that’s what really, really changes things. It’s not just the buying organization, it’s not just the procurement team that applies to, it applies to everybody in the supply chain. If you think about it, your supplier is going to get zero training, 33

E XC LU S I V E I N T E RV I E W W I T H J O N VAS S


Are people investing in tech for the right reasons or just to compete? People tend to use the term best practice. I think once something becomes best practice, it means that lots of people are doing it, therefore, by default, it’s average. If you are an organization, a forward thinking organization, you don’t want to be average, because you need to start competing in a different way. Organizations need to be doing something different, and that applies to how you buy things, as well as how you sell things, how you innovate, because you’re dealing with your supply chain. That supply chain is going to help you move your organization forward, no matter what you do. w w w . c p o s t r a t e g y. c o m

34


“ People tend to use the term best practice. I think once something becomes best practice, it means that lots of people are doing it, therefore, by default, it’s average. If you are an organization, a forward thinking organization, you don’t want to be average, because you need to start competing in a different way” — J O H N VA S S , GLOBAL INDUSTRY LEAD AT TRADESHIFT

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E XC LU S I V E I N T E RV I E W W I T H J O N VAS S


If you could give one piece of advice to someone and say, this isn’t going to guarantee success, this is going to at least help you navigate along the right path, what would you try and say? Look at who you’re interacting with, both internally and externally, and how those people, whether they be in your organization, or other organizations, are going to contribute towards your future success? How are they going to align with your goals? And, how they’re going to move the department forward, so that it can be seen as a more strategic department within the organization, rather than just a tactical cost saving department. If you do that, then you open up a whole new area, and a new way of thinking. By saying that to somebody, it’s getting them thinking of how they might interact with their supply chain in the future. Then, when they come across the relevant technologies, they will know themselves, whether those technologies enable that or not. They can ask the right questions as well. Look at it holistically, rather than looking at technology as something that enables feature, or function, look at it as an enabler for connecting to your supply base.

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

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

37


WRI T T EN BY PRODUCED BY

D al e Bent on Hey kel Ouni

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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 recognise 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 39

B A R R AT T D E V E LO P M E N T S


businesses generally should 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

YEAR FOUNDED

1958

REGION HQ

London, UK

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

40


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very heart of what the company does. In

costs us more not to have components

order to realise this vision, Barratt has

than it does to have cheaper compo-

spent the best part of the last decade

nents,” explains Adams. “The availability

investing in and reorganising its supply

of product is of course very important but

chain in order to redefine how the busi-

there are many other areas such as the

ness works with its customers so that it

sustainability angle which are becom-

can better serve them. For any business,

ing increasingly prevalent and heavily

the supply chain is a complex ecosys-

influencing the supply chain and how it

tem that needs to run like a well-oiled

operates.”

machine and for Barratt Developments,

“I spend a lot of time with some of the

this is no different. “In the role I’m in it

key stakeholders in the business trying to w w w. c p o s t r a t e g y. c o m

42


“ 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

43

B A R R AT T D E V E LO P M E N T S


help them understand why supply chain

the end of the day, we are not neces-

is important, why things they do influence

sarily the subject matter experts on

what the supply chain can, and cannot do

everything,” he says. “So we need those

for us, and how they can change some

subject matters to be engaged with the

of their behaviour to enable the supply

suppliers so we can get the best answers

chain to be more effective and more effi-

to them.”

cient, which then benefits them.” The goal here for Barratt is to engage

Barratt Developments central procurement team controls around £500mn

all facets of the organisation into the

of annual spend, both direct and indi-

importance of the supply chain, remov-

rect. Direct spend accounts for close

ing the reliance on the notion of a single

to £450mn of that overall spend and

procurement responsibility but a much

Barratt’s success is defined by its aim

more shared one. Adams believes that

to provide its customers with the prod-

everyone should be talking to suppliers,

ucts they want at the right time and of

not just procurement professionals. “At

the right quality in order to receive the w w w. c p o s t r a t e g y. c o m

44


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positive experience of a new build. In

there’s a skill shortage that’s coming and

recent years, the scrutiny on the quality

we have to be ready for that.”

of the products has tightened while the

In order to ready itself for this skills

volume output has rapidly increased in

shortage, Barratt works to either de-skill

recent years and so Barratt works tire-

or remove the requirement for skill onsite

lessly to ensure that it has the supply

wherever possible. This is where the

chain in place in order to feed the

company embraces ‘modern methods of

machine. “Our main focus has been

construction’ in which Barratt’s design

making sure that we have a supply chain

and technical teams work closely with

in place that’s capable of feeding the

the supply chain in order to both trial

machine that we’ve got now and the

and mature technologies and practices

one that we will have in the future,” says

the business wouldn’t traditionally use.

Adams. “We also have to look at new

Barratt will then integrate this into its

ways of producing housing because

day-to-day business as usual production w w w. c p o s t r a t e g y. c o m

46


47

B A R R AT T D E V E LO P M E N T S


facility and capability. “From a

of order and that they were able

strategic point of view, it is match-

to support us in the upturn.” This

ing supply chain capability with

approach saw Barratt work with

our demand,” says Adams. “And

suppliers during this downturn

then in the long term it’s looking

and then continuing to work with

at new methods of construction,

them during the upturn so that

and developing a supply chain

the suppliers had the capacity to

capable of supporting us over a

meet the demands of Barratt and

long period of time.”

its customers. This required more

One of the largest challenges

focused and sometimes challeng-

in trying to constantly feed a

ing conversations. “It’s been an

machine that is responsible for

interesting journey because in this

more than £500mn in spend is

industry, some of the supply chain

that of coping with demand fluc-

partners are not necessarily as

tuations. Over the last decade,

mature in their thinking in capacity

market upswings and downturns

planning, in root cause analysis,

have been unavoidable and this

and all the things that we need

of course will impact the supply

to be good at, in order to make

chain ecosystem. Trying to trans-

sure that they make the best of

form a supply chain while operat-

the capacity they have available,”

ing in a volatile market is no easy

says Adams. “We’ve spent quite

task and Adams acknowledges

a lot of time trying to develop the

that Barratt has had to ride both

supply chain because I’d much

the highs and the lows in order to

rather work with somebody that

remain successful.

I know is willing to work with us

“Market upturns and down-

than bring somebody in that I

turns both present challenges,

don’t know, and start a brand new

just different ones!” he says.

relationship.”

“Through the downturn we very

Refocusing supplier relation-

much had to focus a demand on

ships is never an easy endeav-

fewer suppliers so that we keep

our. On paper it makes sense

those suppliers in a good state

and is easy to break down, but w w w. c p o s t r a t e g y. c o m

48


the reality of the situation is never that simple. For Adams, the key to successfully navigating this was to break down what he describes as ‘very adversarial’ old working practices that are common within the industry. “It’s about trust. If 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 49

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.

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, what the vision for the future is and what expectations Barratt has for its supplier base. “They understand our objectives and how they fit into that,” says Adams. “We then have somebody in our team who is specifically engaged to look at supply chain development. They 50


have tools for cause analysis that can

chain now for over a decade and in that

help the suppliers.”

time, thanks to shifting market dynam-

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

ics, it has been clear that the road is

just go to the supplier with the tools and

never truly a straight line. In order to

say: fix this. We provide a methodology

successfully navigate this and any jour-

and a suggestion as to how they can

ney, organisations need collaboration.

understand the problem and solve it.”

This is where Barratt’s supplier relation-

For Adams, this all forms part of the

ship model really stands tall above others

broader commitment that Barratt has to

as a true competitive edge. “Not every

its supply chain and make sure that the

egg is going to be a bird, so you have to

company has a set of suppliers that can

be prepared for investing in something

deliver what it needs to the right quality

that may not provide a business benefit

and at the right price. Barratt has been

in the end,” says Adams. “You will have

investing in and reshaping its supply

failures and you can take learning from

51

B A R R AT T D E V E LO P M E N T S


“ 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

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 state of constant conversation and investment. As Adams noted, it’s about having to constantly feed the machine of today and of tomorrow. The w w w. c p o s t r a t e g y. c o m

52


53

B A R R AT T D E V E LO P M E N T S


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

54


Evolving Procurem Risk Language Sรถren Petsch, former VP of Procurement at Alliance Data Card Services, explores the evolving language surrounding procurement risk WRI T T EN BY

54

S รถr en P e t s c h


ment’s

55


T

oday’s risk language oftentimes utilizes one-size-fitsall categorizations with final

risk scores generally ranging from low to high, least risky to critical, or similar scoring nomenclatures. In short, a lot of inputs boil down to just one rating. Although efficient and easily understood, this approach comes at the peril of a company’s leadership appreciating the fast evolving risk picture – namely that of data risk.

Data is different – driving new organizational structures In recent years, many forward-thinking companies have split the responsibilities of their CIO) into the newly-created roles of Chief Data officer (CDO) and CTO . The main driver behind this organizational evolution is the insight that the skillset required to run operational IT doesn’t naturally lend itself to implementing the necessary digital transformation. In addition, CDOs are needed to evangelize digital thinking and apply it across the wider business. In short, IT’s future focus has shifted for many CTOs to tech architecture exclusive of deriving information from data because – simply put – data is a business asset, not an IT asset. 56

E V O LV I N G P R O C U R E M E N T ’ S R I S K L A N G U A G E


So How is data different? Data value can increase dramatically when connected to other data This network effect provides companies like Facebook, Google, and many others with exponential benefits by connecting various disparate points of data into highly marketable information.

Data is easily replicable Copy, paste, done. Once your data is outside of your company’s “four walls”, control over it is very hard to maintain or reclaim. Blockchains may address that but the technology has not reached its cresting point into mainstream applications.

Data valuation approaches are not standardized Although valuation models of data are inexact and vary greatly – significant value is still being generated. Still, value generated is generally valued, not data itself – a meaningful distinction with realworld financial implications.

Data value is fast diminishing over time – but is highly reusable and non-depletable If data goes unrefreshed, it becomes stale and loses its value fast. However, w w w . c p o s t r a t e g y. c o m

57


many leading companies abstain from ever deleting any data as they expect to “daisy-chain” that data at some point in the future to convert it into actionable information.

Data is not represented in auditable financials (like other assets on the Balance Sheet) and, hence, cannot be capitalized Whereas a physical asset always has an assigned value of at least $1, most companies do not assign any value to their data, hence, explicitly valuing their data at $0. To state the obvious: The way we understand and mitigate data risks has significantly evolved from ten years ago and will definitely evolve further over the coming years. Consider these recent events that changed the way we

horses, ransomware, spyware,

perceive the complexities related to

adware, and scareware) have nega-

data risks:

tively impacted not only organizations

• In 2010, the Stuxnet computer virus leveraging previously little-known

of all sizes and kinds but also millions of people directly.

zero-day flaws. • The 2013 Target breach was caused by hackers gaining access via an

the way data risk is perceived. Future

integration of the retailer with an

events will change our perceptions

HVAC services provider.

and understanding even further. At

• A wide variety of malware (including computer viruses, worms, Trojan 58

These “black swan” events changed

the risk of discounting the incremental evolution of companies’ handling of

E V O LV I N G P R O C U R E M E N T ’ S R I S K L A N G U A G E


operational risks, data risks have driven

I see the following outcomes of sepa-

significantly greater changes – and the

rating data risk scoring from operational

data risk mitigation revolution is not

risk scoring:

over by a long shot. Now that data is different from other

More granular risk assessments

assets, we need to recognize that data

Instead of condensing all risk inputs into

risk is different from operational risks.

one score, any potential supplier can

Operational risks and data risks should

now be scored along both risk compo-

be evaluated by different teams, have

nents independently. Frequency of each

different guardrails, require a different

risk review would be driven by respec-

focus / type of evaluation, and a different

tive risk ratings and types. Also, with

assessment frequency.

the data risk picture likely to evolve w w w . c p o s t r a t e g y. c o m

59


faster, any corporate updates or regu-

customer data. From third-party data

latory requirements to data risks scor-

bought from data providers to hashed

ing weights and components could be

email addresses to anonymized, aggre-

discreetly initiated without necessarily

gated file data to transaction-level

driving the operational risk review.

purchasing first-party data‌each data type and source has different privacy

More strategic conversation by type of data

implications, requires different handling

So far, I have intentionally referred to

a variety of ways. Companies need to

data in general because data comes in

step into this discussion strategically

many forms and formats, with different

but deliberately so that the way they

strategies or regulatory requirements.

handle and manage data is driven by

To illustrate the point, let’s consider

their respective strategies and values.

60

and protections, is owned/originated in

E V O LV I N G P R O C U R E M E N T ’ S R I S K L A N G U A G E


“ Now that data is different from other assets, we need to recognize that data risk is different from operational risks” —

SÖREN PETSCH, FORMER VP OF PROCUREMENT AT ALLIANCE DATA CARD SERVICES

More deliberate conversation about data by each stakeholder group

develop its data strategy. That strategy

With no single owner of all data, the role

needs to incorporate considerations for

of data in any organization carries stra-

risk assessment and mitigation standards

tegic implications and has many stake-

that become part of the Procurement

holders: internal (master data architects,

processes for both new and existing

marketers, finance, innovation and prod-

vendors. By deliberately leveraging and

uct teams, field operations etc.) and

operationalizing an articulated data strat-

external (regulators, customers, others)...

egy, Procurement can help lead this

Different stakeholders have different

mission-critical and cross-functional align-

agendas and should carry different

ment in support of the long-term success

weights, decision rights, and implications

of their company. And do it again and

as to what can and cannot be done.

again – as this effort will be iterative.

As a first step, any company needs to

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

61


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

62

Tre t t F i l m s


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

63


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

64

KPMG


its clients’ issues – is transforming its

Martin feels his experience and passion

procurement processes in order to bring

for procurement has prepared him well

visibility, control and influence across an

for this next evolution of procurement at

increasing proportion of spend to drive

KPMG. “I definitely think it’s one of the

informed decision-making for the business.

best jobs going, with an unparalleled

Spearheading this transformation journey

involvement in helping an organisation to

is Chief Procurement Officer, Martin Lee.

ensure trust and deliver value and growth,”

With over 20 years in the sourcing

he explains. “You touch everything from

and purchasing space and a key focus

marketing, to the running of our buildings,

on procure to pay (P2P) implementation,

through to the services we deliver to our w w w. c p o s t r a t e g y. c o m

65


Throughout history, there have always been problems. No one likes them. But problems inspire us to make things better.

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clients. It’s such an impactful role. Gone

differently than it did in the past. More so,

are the days of buying; it’s about how you

the demands, expectations and skill sets

work with the business to impact how

– and ultimately the very role of the CPO –

they invest and leverage themselves in

has changed too and this is something that

the marketplace to get the right solution,

feeds into this transformation. “Historically,

at the right value and risk profile. With the

buying was quite simple. Now you’re trying

executive sponsorship and appetite, the

to work people around, ‘what’s their

platform for procurement is set, like never

business case?’ What are their change

before, to be value creators.”

drivers?” he says. “It’s less about being

The broader evolution of procurement

a reactive service, but more proactive,

has certainly played its part in KPMG’s

working to understand what they’re actu-

transformation strategy and so the

ally trying to achieve and how you might

CPO now has to communicate to each

bring the supply base and commercial

and every part of the business a little

models to that.”

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

67


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 technology, the opportunity to control, visibility 68

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

69


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 efficient cost model and from a skill sets

IBM became one of identifying a way of

and capability perspective that procure-

moving towards a more transactional way

ment in KPMG did not have at that stage,”

of operating, particularly when it came to

says Martin. “And so, it has allowed us to

deploying procurement feeds from 15,000

grow our strategic sourcing together with

users across the business which in turn

their breadth and depth of market knowl-

expanded procurement’s interaction with

edge and commercial impact. That was a

the business significantly. For Martin, IBM

very positive thing from a strategic sourc-

was integral in this regard and a reflection

ing point of view.”

of how the relationship between the two

The challenge then for KPMG and 70

KPMG

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 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

YEAR FOUNDED

1987

REGION HQ

London, UK

network,” says Martin. “I can tap into the knowledge and insights from this network and their own procurement capabilities w w w. c p o s t r a t e g y. c o m

71


72

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

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

73


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 leaders is to help support people, understand and appreciate what the opportunity for them is and where they can learn new skills or adapt 74

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

75


“ 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

to roles, or in fact take on new accounta-

The main procurement transformation

bilities in that process. It’s about making

began in early 2019 and so, as Martin

sure that people understand what we are

admits, KPMG is still at the very beginning

trying to achieve and communicate the

of this journey. The first 12 months will be

vision, so they could then understand,

seen as laying down the foundations for

appreciate and get excited about it. Of

future growth, with the implementing of

course, throughout that process, you will

the technology, and the new operating

find people that have to take time to learn

model focused around creating a plat-

about what that change means for them

form and new ways of working. 2020, as

and their function.”

Martin describes, is about “leveraging

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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.” Ultimately, the key to successfully navigating a journey is understanding that changes will happen, whether they are that platform to grow our visibility over

foreseen or not. More important, is taking

the supply base, understanding how our

key learnings from these changes and

business is going to work with us through

using the knowledge or the data and

those systems, and helping us unlock the

insight and turning that into smarter and

opportunities the visibility creates”.

more informed decisions moving forward.

The challenge for any transformational

This is something that Martin, despite

journey revolves around external factors.

being at the very start of this journey,

Business needs and demands, as well

has already begun to do. “We’ve built

as market dynamics, will all heavily influ-

a team around us that are now owning

ence a transformation. The trick for an

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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 position where we’re thinking proactively rather than reactively,” he says. “Examples where we’ve been able 78

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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.

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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.”

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

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Building best-inclass procurement and sourcing WRI T T EN BY PRODUCED BY 92

D al e Bent on Hey kel Ouni


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This is certainly the case for Bill Barry,

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

Vice President of Procurement and 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 bestin-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

W

ith the world of sourcing,

the benefits in terms of the value creation,

supply chain and procurement,

savings and operational efficiencies that

undergoing 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? 94

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the sourcing and procurement group has

great opportunity to leverage the skill set

brought to the business.

of relationship-building in sourcing out to

Over the past five years, Access has

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 function

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YEAR FOUNDED

2004

ACQUISITIONS

139+

was also seen as a trusted business part-

departments and functions of Access and

ner. This he feels is what made the deci-

asked them all the same questions. How

sion to work with Access something of a

are they learning from their business? How

no-brainer, as the senior level support and

are they managing their departments? What

the collaborative efforts throughout the

are some of the pain points and areas of

organization made for a unique fit.

opportunity? “I also asked the business

As with any journey, the first steps are

functions as to how they have dealt with

often the hardest. Barry set out by taking

making procurement decisions or purchas-

simple steps and holding conversations

ing decisions in the past” says Barry.

with all senior managers across the various

“It was really a case of trying to get an w w w. c p o s t r a t e g y. c o m

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understanding of what they, and by extension, the business, needed.” When Barry entered the business, he found himself in the unique position of not having a procureto-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 around

planning and communication, and then the

how to act upon that, “bringing some good

following 12 to 18 months was focused on

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

the necessary policies and procedures

same time, we ended up making a deci-

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

sion to roll out a procure to pay solution. To

part of that, the next six months was about

ensure it was successful, we were focused

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“ 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

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 looking to on communicating the change to the organ-

achieve and what it would bring to the busi-

ization and training on the system.”

ness as well as opening the door for the

This approach enabled Access to break

next stage of the journey. “The so-called

down this roadmap into ‘very simple math’

second stage is actually more like the

which allowed Barry to walk the business

second roadmap. We’ve already laid down

through his thorough process, taking on live

the groundwork and now we’re continuing

feedback and making revisions and tweaks

to operationalize it, ingraining best prac-

that were communicated to the business in

tices and really looking at the spend to w w w. c p o s t r a t e g y. c o m

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uncover where those additional areas of

the business we couldn’t put a solution in

opportunity from a sourcing perspective

place that would have fulfilled the needs of

are, versus what we were doing before.”

a large segment of our business. You need

A journey like this, building a best-in-class

to understand that you’re not going to solve

sourcing organization from the ground up,

every issue that revolves around a specific

will never be a cakewalk and challenges

philosophy or even the goals you set in the

are inescapable. Not only will there be

beginning. But making sure you’re at least

risks and unforeseen circumstances that

addressing the vast majority of them, in that

can plague the journey, but there will also

you’re getting buy-in on the overarching

be the moving of goalposts. The end goals

goal – then you can manipulate the process

will evolve as the demands of the business

underneath that’s going to drive you to that

evolve and this is where Barry’s philosophy

goal to account for those potential changes

comes into play.

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.” “Had we not been constantly talking to 100

ACCESS CORP

One of the core elements of the building out of Access’ procurement and sourcing


“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

function is to create one that can be defined as best-in-class. But what does best-in-class 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 by a number of sources; the federal government, w w w. c p o s t r a t e g y. c o m

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“ 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

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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 bestin-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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THE BIG DEBATE: KEY CHALLENGES FOR PROCUREMENT IN 2020 WRI T T EN BY

D ale B e n t o n

2 0 2 0 I S I N F U L L S W I N G, A N D Y E T T H E P RO C U R E M E N T I N D U S T RY I S I N C R E D I B LY F LU I D A N D CO N S TA N T LY E VO LV I N G W H I C H M E A N S T H A T W I T H E A C H P A S S I N G D AY, T H E C H A L L E N G E S W E F A C E C O N T I N U O U S LY C H A N G E . H E R E , W E TA K E A LO O K AT T H E K E Y P RO C U R E M E N T C H A L L E N G E S FAC I N G P RO F E S S I O N A L S I N 2 0 2 0 , A S TO L D BY T H E P RO F E S S I O N A L S T H E M S E LV E S

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ncertainties in the global market leading U into complexities of business partnership. Locking the right partners at the right time and at the right cost and knowledge transfer among different team members

Musbah Abu Jarad, SCP Corporate and Assets Management Procurement, ALDAR Properties

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T H E B I G D E B AT E : K E Y C H A L L E N G E S F O R P R O C U R E M E N T I N 2 0 2 0


Mahmoud Alalawi, Director of Procurement and Contracts, Higher Colleges of Technology

I believe people will be a challenge in the digital & AI transformation journey that most procurement functions are undertaking. Most of the focus from businesses is on systems, technologies and yet people are the main element in this equation. Having people adapt to new technologies and upscaling them to work with AI/ML and technology with trust is a challenge that will need to be tackled wisely

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Vivek Saluja, PMP, SAP Project Manager

Standardization of processes. Cloud procurement solutions demand that organizations change their custom processes in favour of best practices based standard processes to reduce

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T H E B I G D E B AT E : K E Y C H A L L E N G E S F O R P R O C U R E M E N T I N 2 0 2 0


I believe people will be a challenge in the digital & AI transformation journey that most Procurement functions are undertaken. Most of the focus from businesses is on systems, technologies and yet people are the main element in this equation. Having people adapt to new technologies and upscaling them to work with AI/ML and technology with trust is a challenge that will need to be tackled wisely

Sammeli Sammalkorpi, CEO and Co-founder of Sievo

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Supplier consolidation and innovation with top suppliers coupled with leveraging AI to automate internal processes improve data quality and deliver real time spend / supplier analytics

Jill Robbins, Senior Director, Global Procurement - Indirect Goods & Services, Elanco

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T H E B I G D E B AT E : K E Y C H A L L E N G E S F O R P R O C U R E M E N T I N 2 0 2 0


Dana Small, Senior Category Manager, Global Strategic Sourcing, BioMarin Pharmaceutical Inc.

Incorporating AI technology into procurement practices. There are a lot of great products out there that leverage this technology, but a lot of organizations are still hesitant to implement them

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Iain Campbell McKenna, Managing Director, Sourcing Solved

Implementing digital procurement transformation and having the right talent to do so. Transformation starts with people and without these key people in place, it becomes even more challenging

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Americas Procurement Congress 2020:

We take a look at what makes Americas Procurement Congress 2020 an unmissable event in the procurement calendar WRI T T EN BY

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P r oc ur em ent L e a d e r s


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Congress Overview and what we aim to achieve Americas Procurement Congress 2020 brings together 300+ of the region’s leading procurement minds from across North, South and Central America, to determine how to drive the pace of business change and ultimately business impact realised through procurement activities. The Congress content is targeted at Chief Procurement Officers and their senior leadership team and will provide a platform for those CPO’s at the strategic decision-making level as well as those within the leadership team actioning the CPO’s vision, to evaluate their own functional impact towards overall business objectives and growth.

Why is this focus important now? Chief Procurement Officers face a whirlwind of change: from geo-political and economic uncertainty, to rapidly chang-

As CPOs plan for the year ahead, it

ing requirements from the business. To

is critical they realise that tried-and-

tackle this, procurement must expand

tested procurement processes and

its capabilities and deliver greater busi-

approaches are no longer going to be

ness impact across all its activities. One

appropriate to achieve their objectives.

common issue faced is that change is

Although CPOs are recognising the need

not happening nearly as fast as it should

to change, the annual planning process

across procurement functions and there-

demonstrates that more can be done to

fore business impact from procurement

push the boundaries of what procure-

not realised.

ment can achieve. CPOs must plan for a

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AMERICAS PROCUREMENT CONGRESS 202


and realised value for their businesses through greater stakeholder collaboration and partnering, upskilling of talent and capabilities, operational efficiencies and digitalisation efforts.

value proposition and operating model

What is in store at APC 2020? Why attend?

will take on a very different shape and

This year’s agenda will focus on the key

format, while also having to deal with

challenges currently faced by the global

increasing value chain pace of change,

procurement community: digitalisation,

disruption, regulation and complexity.

risk, sustainability and talent, but all

data-driven future where procurement’s

APC 20 will address the bottlenecks

through the lens of how these areas of

to delivering business impact as well

focus can help achieve business objec-

as deliver insights from those that have

tives and deliver impact to global busi-

effectively delivered business impact

nesses. The Congress aims to provide a w w w . c p o s t r a t e g y. c o m

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roadmap for the modern CPO of how to develop their function, ensure the function’s value proposition is fit for a new world and reach procurement and business overall goals through value creation and sustainable growth in ever changing and volatile environments. APC is the perfect opportunity to meet with a global community of the most senior, progressive procurement leaders from around the world. With time set aside for formal and informal networking to expand personal and professional networks, content to inspire and aspire to, and an array of the most innovative technology and solution providers to help execute strategy, APC 2020 brings together the entire procurement ecosystem to help develop practical and tangible strategy to deliver true and meaningful impact to the business.

How are these key areas of focus explored at the Congress? Morning of Day 1 - sets the scene around the change imperative, providing a strategic look at procurement’s continued journey towards value beyond savings can be achieved and how to deliver in the face of dynamic markets shifts and trade scenarios. Afternoon of Day 1 - sheds light on the 118

AMERICAS PROCUREMENT CONGRESS 202


need for continuous innovation to deliver

and how best to set goals and map

continuous results. One key aspect of

strategically.

this is how to create and maintain a of change and the different internal and

What makes APC stand out and different from other events?

external stakeholder's procurement

APC 20 is a true representation of

needs to be engaging with.

Americas procurement as a region. The

culture of optimization during a period

Day 2 will take a look at how to reconfigure the entire value chain and what

congress has companies and delegates attend from Canada to South America.

is required for procurement to leverage revenue generating opportunities. Day 2

What does procurement look like for businesses in 2020?

rounds off with a look to the next decade

We strongly believe that procurement

greater customer centricity and possible

will become far more strategic to the business, continuing the trajectory it has been on for 20 years from its legacy as a back-office function. However, many of the current tasks will become automated and digitalised, leaving procurement professionals to focus on the management of complex, reciprocal relationships in the supply network; supplier-collaboration initiatives for the collective good of the value chain and harnessing data to inform better business decisions. There is a risk that those procurement functions that don’t evolve quickly become obsolete.

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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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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 126 EVENTS


AN AGENDA BUILT TO HELP YOU DELIVER

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

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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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BE LIKE SAM

Are you leading a Procurement or Technology transformation? CPOstrategy & Interface Magazine offer a unique opportunity to showcase your story and give a voice to that journey Get in touch. Be like Sam and share your story!

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