CPOstrategy – Issue 10

EXCLUSIVE

I s sue 11 • www.cpostrateg y.com

People-driven procurement

Five speakers at Digital Procurement World 2020

A procurement transformation We visit Danish Crown’s Group CPO, Lars Feldskou, regarding the company’s procurement transformation

Build your digital roadmap Transforming Procurement.

Enabled by Technology.

Powered by Intelligence.

DOWNLOAD OUR REPORT

What is the digital maturity of organizations and industries?

Download our report to find out how other organizations are building their digital roadmap for procurement. What technologies will deliver the most value for procurements?

What steps does procurement need to take to get the most out of their investment?

JAGGAER Global HQ Research Triangle Park, NC 3020 Carrington Mill Blvd, Suite 100 Morrisville, NC 27560 Telephone: +1 (919) 659-2600 Email: BSUK-Sales@jaggaer.com JAGGAER UK 103 St John St London EC1M 4AS Telephone: +44 (0)20 7796 4170 Email: BSUK-Sales@jaggaer.com

Welcome to issue 11 of CPOstrategy!

WE HOPE THAT you are safe and in good health and that our magazines come as a welcome distraction during these difficult times, whatever situation you may be in.

Our cover star this month is Lars Feldskou, Group CPO of Danish Crown. Earlier this year CPOstrategy flew out to Denmark to sit down with Lars and his procurement team to explore the company’s massive procurement transformation that saw a huge shift away from siloed working, creating a completely fast, agile and centralised procurement function.

“The old strategy was very much decentralised, while the new strategy is very much based around centralisation and a group perspective on many key areas,” he explains from Danish Crown’s offices in Randers. “I must say, I love the challenges of working with transformations, development projects and change management.”

Elsewhere, we travelled down to London to speak with one of the UK’s largest utility companies, ENGIE UK & Ireland to speak with Jonathan Sims, Chief Procurement Officer. Jonathan sat down to tell us all about how the strength of his procurement team is the key to successfully delivering a transformation.

“I think it’s probably one of the strongest procurement teams I’ve ever worked with. We’ve got people being seconded into international business units and I think that’s really starting to create a positive message. Plus, we over-delivered on our group savings target last year, which again shows that we’re backing that up with business results,” he explains.

Also in this month’s issue we have exclusive content from Mike Cadieux as he continues his quest to “make procurement cool” and Soren Petsch is back with another deep dive into the complexity around procurement risk I hope you enjoy the issue!

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 Alex Page

VP TECHNOLOGY Andy Lloyd Craig Daniels

VP PROCUREMENT Heykel Ouni Greg Churchill

PRESIDENT & CEO Kiron Chavda

PUBLISHED BY

Dale Benton, Editor content@b2e-media.com

3

CONTENTS

Danish Crown

6

Engie

40 Exclusive Q&A with Michael Cadiuex

28

Risk assessments made easy

62 Five speakers at Digital Procurement World 2020

70

6

A procurement transformation CPOstrategy visits Denmark to speak to Danish Crown’s Group CPO, Lars Feldskou, regarding the company’s massive procurement transformation WRI T T EN BY

Andr e w Wo o d s

PRODUCED BY

Hey kel O u n i

7

P

rocurement transformation represents a dramatic shift in an enterprise’s structure,

operations and bottom line, resulting from the establishment of a new collective mindset, processes and tech. Those tasked with rolling out new procurement strategies require experience, ambition and the ability to motivate and organise large numbers of staff.

Danish Crown AmbA is a food processing company, dealing primarily in the meat processing of pork and beef and through its subsidiaries, as part of Danish Crown Group, it’s Europe's largest pork-processing company and Denmark's largest beef-processing company. Like many traditional and well-established manufacturers, Danish Crown operated in a divisional, siloed structure that saw separate arms of the company working in relative isolation. However, the current demand of business owners, the wider market and the all-important customer focus now require companies like Danish Crown to be fast, agile and centralised.

In 2016, Danish Crown launched a new transformational programme across the Group called the 4WD Strategy (4WDS).

4WDS was established to reconfigure the €9bn company so it could break free from its different divisions, to work as one 8

DANISH CROWN

unified company. An integral part of the strategy involved the transformation of the procurement function.

Lars Feldskou joined Danish Crown as Group CPO in 2017 to help facilitate the 4WDS across procurement. A highly experienced procurement professional who has delivered many transformations at previous companies, Feldskou relished the challenge of delivering a Group-wide strategy. “The old strategy was very much decentralised, while the new strategy is very much based around w w w . c p o s t r a t e g y. c o m

9

Your partner in savoury food solutions

Solina, your partner in customized food solutions for food processing industrials, specialist in the area of meat, ready meals, snacks and vegetables, turning taste, visual, functional and nutritional ingredients into culinary promising and inspiring food concepts.

meat

NEXTERA® is Solina’s dedicated expertise in new protein foods, unlocking an incomparable eating experience to any consumer, absolutely delicious and nutritious.

snacks ready meals

vegetables

new protein foods

Exceeding consumers’ expectations by ‘rethinking’ food Solina’s aim is to draw on our unrivalled expertise and passion to create innovative food solutions. We want to contribute to the production of food that is good: delicious, healthy and environmentally friendly. Each solution is a unique combination of our expertise. Our role is to offer tailored market & consumer insights, technical expert advice and cutting-edge food solutions to our customers.’

Solina Group / P.A. du Hindré III / 35310 Bréal-Sous-Montfort / T +33 (0)2 99 60 07 60

www.solina-group.eu

You can’t underestimate the value of a great working relationship. The benefits of two

to success in the market,” says Moens. “We have

companies aligning together on key projects in a

the Pulled Beef. Those concepts have been

harmonious collaboration brings alignment on

launched into the market, and are now front

strategic goals, and nurtures innovation.

runners in retail.”

Solina is a leading designer of customised ingredient

One of the key trends linked to customer demand

solutions for customers operating in the savoury

is that of sustainability, of which an important

food industry, food service and butchery markets

element is strategic sourcing, being vital for

and a key customer in those endeavours is Danish

a modern food company. Therefore, Solina works

Crown, the global meat production group. Excellent

in close partnership with key suppliers to achieve

and trustworthy – the pair enjoy a long-term

full transparency related to the quality of the

relationship which goes back to the early 1930s.

ingredients, and their traceability. “We’ve really

One of Solina’s companies in Denmark (previously

been ahead of the curve with best practice, for

known under the name SFK), had been owned by

example with sustainable pepper. We are always

Danish Crown in the past.

investigating how we can value optimise our

several examples such as the Pulled Pork and

customers’ proposition and so procurement is “Solina is the leading European provider of taste,

a key aspect. How can we be more efficient for

texture and functional solutions for the savoury

them? We are all working in the same direction to

food industry,” Anthony Francheterre, CEO Solina

have healthier or cleaner products, for marinades

Group explains. Anthony Francheterre joined Solina

for example,” says Francheterre.

as CEO in September 2019, having worked at some major food brands, and was soon made aware of

NEXTERA® by Solina – the future generation of

just how intimately the two companies have been

Protein Foods – is a “new” business unit within

working together from day one. “Danish Crown is

Solina that is focused on the development of

one of our key customers because of its size, the

new protein foods. The concepts and creations

quality of the relationship, and the match of the

of NEXTERA cater to vegan, vegetarian and

respective DNA.”

flexitarians, people who simply want to eat less meat while retaining the full pleasure of food.

One of the key values the two companies share is

“It goes without saying that we used all our

a sense of being ‘glocal’. Solina and Danish Crown

know-how to develop with Danish Crown the

operate globally, but are keen to capture the local

first veggie based paté on the Danish market,”

trends and respond to consumer needs in each

says Moens.

market. “So, we’ve got a kind of mirror effect on how we operate. And it means that because we are

To meet these challenges, in a constantly changing

operating in a diverse market, we need to be agile,

environment, Solina and Danish Crown rely on

flexible and innovative.”

one vital aspect of their enduring partnership: trust. “Danish Crown is one of our key customers,”

Innovation is one of the main drivers between the

says Francheterre. “I think it’s a win-win relationship

two companies. Several growth platforms have

because we learn a lot from each other as we

been created completely in line with how they

build on the same platforms for the growth of

work together with customers. Kristel Moens is

both companies. You can’t discuss Solina, without

responsible for Marketing at the Solina Group: “The

discussing one of its most important customers,”

two sides come together in a partnership approach

he says.

working together to achieve innovation and to drive new concepts to market by doing workshops based on new ideas, new trend insights, exciting taste propositions and consumer preferences.

It’s so exciting the way our working together leads

www.solina-group.eu

centralisation and a group perspective

“Formerly, the business units had their

on many key areas,” he explains from

own local setup for procurement,” he

Danish Crown’s offices in Randers. “I

explains. “And so, the first thing we did

must say, I love the challenges of work-

was create a group of existing staff

ing with transformations, development

within it. I'm a very strong believer that

projects and change management.”

things are driven by people and not only

Feldskou’s procurement transformation

by Excel sheets and PowerPoints and

at Danish Crown was initially two-fold.

other systems. We had to get the people

The first element was to establish a

engaged and centralised. I had to create

number of initiatives to create some

a strong management team that under-

bottom-line savings. The second ambi-

stood the journey, the vision, while also

tion was to build up a centralised global

being prepared for a massive amount of

professional procurement department.

change such as the collective mentality,

12

DANISH CROWN

“ I now have a good set-up and a mix of people that know the business from the inside, and people that have come in with knowledge from the outside” —

LARS FELDSKOU, GROUP CPO, DANISH CROWN

involving the readiness to live in an envi-

existing staff, some of whom know the

ronment where everything changes week

business from the inside out including

by week and month by month. Some

Annette Jakobsen, Henrik Skov Madsen,

people live it and love it. Other people

and newcomers Chris Hoffmann, Niels

hate it. For me it was important to find

Hedegaard, Ole Mortensen and Adrian

out who could embrace this change and

Fisher. “I now have a good set-up and

the journey and who could not. Setting

a mix of people that know the busi-

the right management team and the right

ness from the inside, and people that

procurement team, was the first thing that

have come in with knowledge from the

we focused on.”

outside, from companies that have been

Danish Crown now has seven main leaders in the procurement management team with a mix of new and

on a similar journey over the years,” he says.

According to Feldskou it was the w w w . c p o s t r a t e g y. c o m

13

tangible business opportunities that were

The start of the procurement transfor-

the main drivers behind the new strat-

mation was about creating relationships

egy. “Danish Crown got a new CEO, in

with the businesses, as Feldskou talked

Jais Valeur in 2016, who saw that there

with them about their ambitions and the

was a number of opportunities that could

best strategies to achieve them. “Danish

be harvested in doing things in a differ-

Crown is a big company with nearly

ent way,” he explains. “This was about

25,000 employees and 60-plus facto-

working across the different businesses,

ries all over Europe and Asia also. So, for

some of which were better at it than

me, in the beginning, I was getting out

other business units, but it was never

and getting to know people to find out

really planned or managed in an organ-

what they were doing, as well as their

ised way. He saw that going a bit hori-

challenges, what they were good at, and

zontal instead of going vertical, in our

where they could see possibilities. It was

approach to a lot of things, could benefit

very much about creating some fast and

the company.”

significant results that we could use in w w w . c p o s t r a t e g y. c o m

15

our communications to prove that work-

at the heart of the Group, and Boston

ing together across the company was a

Consulting Group (BCG) came in to

greater benefit to working in silos. It was

recommend points of action. “We invited

very much about convincing people that

BCG to come in early 2019 and make a

this new setup was right with benefits

review about the level we had achieved

within it, so they could play an active part

to that point and asked them to come

to get something out of it. We established

with their recommendations about how

a very clear structure and organisational

we should take it to the next phase. They

plan, including a new reporting set-up.

(BCG) went around and talked with a

We outlined some very clear targets and

lot of people both in the business unit

KPIs.�

and the group setup and came up with

One of the key parts of the procure-

a model which introduced business unit

ment strategy involved the establish-

procurement partners, that represents

ment of a new operating model that

group procurement inside the business

would place the procurement function

units. The partners have a role in the

16

DANISH CROWN

“ It’s vital to have the support from the top management; support that is very visceral, very communicated, and fundamental to all layers of the company” —

LARS FELDSKOU, GROUP CPO, DANISH CROWN

challenge. “Danish Crown is a huge company and has a long, long history of being decentralised. Then, suddenly, you’re working on group targets, group mandates, group perspectives, which are a huge challenge. This is a 180-degree turnaround. There was also a massive job in terms of standardising master data across all the different levels of the company from business unit to business unit.” The technological side to the transformation addressed Danish Crown’s procurement tools. For many years, Danish Crown had been running SAP across the different business units and individual set-ups. However, JAGGAER

daily life in each of the business units,

was introduced as a procurement

but also play a part in our procurement

tool for source-to-contract which also

strategy and journey. They became

addressed e-procurement in the busi-

ambassadorial and acted as a bridge

ness units, acting as an umbrella across

between us and the business units to

the business.

ensure the projects and the strategy we

“From a procurement point of view, we

execute is also implemented out in the

can do a lot of stuff, having implemented

business units. It was a good, strategic

that system. This will give us transpar-

move to get an external company like

ency and knowledge about our daily

Boston Consulting Group to come in and

business. Right now, we’re creating the

do that for us because they were neutral

baseline or the foundation for taking the

and looking from the outside in.”

journey into a lot of other procurement

Feldskou has delivered a number of

activities and areas. We still have a way

transformations in his time, but even

to go to establish, for instance, transpar-

accounting for his experience, this shift

ency on our master data. In certain cate-

at Danish Crown represented a massive

gories, we're very good, because in the w w w . c p o s t r a t e g y. c o m

17

categories like ingredients and packag-

at challenging each other. I think that's

ing materials that goes directly into our

where we start to see things happen-

end products, we have a lot of knowl-

ing. This team are good at challenges

edge; we have item numbers, we have

and supporting each other, and they're

a specification and stuff like this. But in

good at moving each other into new

other areas like our logistics, our indirect,

levels. And by having such diversity in

our CapEx spare parts and stuff like this,

the team, we create a genuine speed

we don't have the transparency and we

that moves this transformation forwards,

really need to move as fast in those categories as we can. We're going live here in the second half of 2020 with our ePro as we call it, and that will take us into the next level with precise, described procedures and processes and even further transparency. We can then control our spend and eliminate a lot of the tail spend and maverick spending that we have today. That will probably take a couple of years before we are through with that journey.”

Niels Hedegaard is Senior Director Group Procurement, Business Development: “One of our levers for getting more in control with our procurement activities across the company is through implementing systems that will help us. So, we have invested in a piece of software called JAGGAER, consisting of two modules. We launched the “Source to contract” module on the 13th of December, so that all of our category managers can operate in our six-step 18

DANISH CROWN

Lars Feldskou Group CPO, Senior Vice President, Danish Crown For the past 20 years Lars has worked on establishing, optimising and restructuring and/or building up/downsizing organisations such as Ecco Shoes, BB Electronics, Vestas and MHI Vestas Offshore. His work has included major change management transformations with massive costout and source-to-pay-transformation programs within procurement, logistics and supply chain management areas.

Lars also has extensive experience in the management of big organisations including team establishing/team-building exercises.

Lars has been Group CPO, Senior Vice President at Danish Crown since 2017.

19

sourcing model, through that tool. The other part is the “E-procurement” tool.

That is more or less an eBay platform for all of our employees across our company. Whenever they want to buy anything from a pencil, to a spare part, a piece of machinery, or a marketing event, or whatever they want to buy, then they will actually go into this platform instead of just picking up their phone and doing maverick buying. Getting this tool implemented will be a great, great lever for us to be even more in control around our procurement activities. This will make us even better in securing the suppliers with whom we have contracts because their catalogues are available in the JAGGAER system. So, it's easy peasy for our colleagues to find whatever they need from the suppliers that are already approved.”

Feldskou is particularly enthused by his team, tasked with driving the massive operational changes across Danish Crown. Feldskou is determined to underline the importance of the team and constantly underlines the importance of a positive and talented workplace. “We have a very good mix of people that are thinking very pragmatic and operational, and others who are thinking very strategically, and together they're good 20

DANISH CROWN

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

21

Build your digital roadmap Transforming Procurement.

Enabled by Technology.

Powered by Intelligence.

DOWNLOAD OUR REPORT

What is the digital maturity of organizations and industries?

Download our report to find out how other organizations are building their digital roadmap for procurement. What technologies will deliver the most value for procurements?

What steps does procurement need to take to get the most out of their investment?

JAGGAER Global HQ Research Triangle Park, NC 3020 Carrington Mill Blvd, Suite 100 Morrisville, NC 27560 Telephone: +1 (919) 659-2600 Email: BSUK-Sales@jaggaer.com JAGGAER UK 103 St John St London EC1M 4AS Telephone: +44 (0)20 7796 4170 Email: BSUK-Sales@jaggaer.com

because there's always one in the team

easy to communicate. It's easy to make

that takes the next step and gets the

decisions.”

rest of them to follow. I think we've come

We've detailed a lot about the trans-

quite far in terms of the way we operate,

formation program at Danish Crown, but

communicate and the way we work in a

what advice would Feldskou impart to a

standardised, organised way. I think we

CEO or CTO or CPO contemplating such

are recognised for that, and we already

a large transformation? “It’s vital to have

reached the targets in 2019 that were set

the support from the top management;

for 2021. But that’s just the beginning of

support that is very visceral, very commu-

the journey and has created the path for

nicated, and fundamental to all layers of

the years to come. We are at a level now

the company. One of the strongest things

where we are very organised. We have

I have at Danish Crown, is a very precise

a structure and a governance around

strategy that runs the overall company.

what we do, which is working, and is

I have massive support from our CEO,

making a lot of things transparent. It's

COO and CFO in the journey, and that's w w w . c p o s t r a t e g y. c o m

23

important. I have strong support from the

Krakow within procurement. And last, but

management teams out in the business

not least, we also are heading up training

units, and I don't think we would have

and education of people within the group

been able to have the speed we have

procurement environments.

without that support. That's the main

The really big change Lars is leading, is

driver besides creating the right team to

one of the key strategic initiatives within

actually execute it. So, ensure you have

our organising, namely, to establish a

the right capabilities, the right skills, the

group procurement organisation and

right people with the right mentality. It is

thereby delivering on the strategic ambi-

the people that drive it. In daily life, it's

tions within procurement. Previously all

the people that engage with the relevant

procurement activities were handled in

stakeholders. For me, the most important

the different business units, and thereby

aspect of taking on a transformation like

the opportunities with leveraging the size

this is to ensure that you have support

of our company were simply not happen-

from the top, and that you set the right

ing. As part of defining the 4 Wheel

team in place from day one. Then you

Drive Strategy, we expect to improve on

can overcome a lot, and ensure that you have movement, and that you're moving forward, fast.�

Niels Hedegaard, Senior Director Group Procurement, Business Development, Danish Crown “Within the business development area, we have our strategic development that we are leading, we have our entire strategic governance structure, we have the controlling and reporting and KPI follow-up. We are also developing processes and systems in close cooperation with our colleagues in the Procurement Centre Of Excellence in 24

DANISH CROWN

“Right now, we’re creating the baseline or the foundation for taking the journey into a lot of other procurement activities and areas” —

LARS FELDSKOU, GROUP CPO, DANISH CROWN

the company's performance to start to join forces on procurement across the business. And that was why the group procurement organisation was established and Lars was hired to take the lead on that journey.”

Annette Jakobsen, Director of Procurement, Danish Crown “The main changes we are seeing now in the way we're doing procurement is how we involve the business and work together with the business. Previously, it was very much doing the procurement at a desk and only looking at what we buy today: ‘Let us go and find the same, just at a lower price.’ Today, we look into the whole value chain and look for optimisations. In order to do that, we need to work really close to the business. We also have the new operating model that ensures that we actually do work with each business unit. Each business unit has a business unit procurement partner with one leg in procurement and one in the business unit. They report into the business unit, but work closely together with us.

This brings us much closer to the business unit.” w w w . c p o s t r a t e g y. c o m

25

26

DANISH CROWN

Henrick Skov Madsen, Procurement Director, Danish Crown “The benefit of making it into one big organisation, where we pool the quantity is we’re much, much stronger together, in that we can start optimising. Now we can work across Europe on finding ways to focus on the best suppliers. Because if you want to be a good European supplier, it requires a different set of skills to being a good Swedish, Danish or Polish supplier. From an organisational point of view, we need to make sure we get the benefits out of the size we have when we're talking with suppliers.

We have opportunities that we simply didn't have before when we were operating as eight different units at the time.

When we put all the business units together, we can see the value of what it makes for us, but also what we can offer the supplier market, and help them with a totally different agenda than we have seen before.”

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

27

EXCLUSIVE Q&A WITH MICHAEL CADIE founder of Procurement Foundry Michael Cadieux returns to CPOstrategy, as we break down why he feels procurement needs to be made cool and why the world needs the Procurement Foundry right now WRI T T EN BY

28

D al e Bent on

EUX,

29

Canada. And by the time it was all done, I

MICHAEL CADIEUX F OU NDER OF P RO C UR EM E N T F OU NDRY

had a team of about 20 managing somewhere in the area of about $2 billion worth of spend under management, including the production spend.

Tell us a bit about yourself, who is Michael Cadieux?

I’ve been in procurement and sourcing for about 30 years. The first 12 -13 years of my career was actually in the

Looking back at when you were starting out in your first role within the sourcing area, what would you say have been some of the biggest and most dramatic changes?

seafood industry and I was sourcing

There certainly have been a lot of

live commodity goods in the seafood

changes, both from just a shift from the

industry and then I came to corporate

actual act of procurement and doing a

America about 20 years ago. I started

lot of transactional processing type activ-

off in IT and managed some IT depart-

ities and what I’ll call just rudimentary

ments and assets for some financial

paper pushing. Always adding value, but

institutions. Then I moved into advertis-

really just doing a lot of vendor sourcing

ing and marketing and went to work for a

and buying and purchasing. Now, I see

company called Digitas out of Boston and

it as a strategic sourcing partnership at

took over their sourcing and manage-

the back of the house where you’re part

ment and business operations for their IT

of the team that’s driving operational

organization.

efficiency, EBITDA, improved margins

A little bit later down the road, Digitas

for companies. Lots of procurement and

got acquired by Publicis Group and I

sourcing people are now working on

went to work inside of the Publicis Group

merger and acquisition strategies and

procurement organization. I was actu-

synergy saving models. So it’s really

ally hired in from the acquisition to build

a much more dynamic role than it was

out and manage the North American

years ago, certainly.

procurement organization for all indirect

In addition to that, there was the massive

spend for Publicis Group’s holdings. That

tsunami of technology and digitalization

expanded later on to South America and

of procurement as a whole. It sounds a

30

EXCLUSIVE Q&A WITH MICHAEL CADIEUX, FOUNDER OF PROCUREMENT FOUNDRY

Excel and Word POs back then. They

How has the perspective of procurement changed from an executive and overall business level?

weren’t procure to pay systems per se.

I think it used to be something that a

We’d cut purchase orders out of our ERP

long time ago they all used to do on

systems back then and now we’ve got

their own and considered to be part of

full blown integrated machine learning

their job description. Didn’t really see it

enabled procure to pay workflow systems

as a true niche specialty. And now it has

that are cloud-based, have punch outs

truly become a specialty and a leaned

and benchmarking. It’s just amazing

on partner in the space. You see stake-

what’s available today from a technology

holders that are bringing in strategic

perspective, which I think has enabled

sourcing at the inception point of new

the expansion and the growth of the job

activities, be it new technology needs

to what it is today, which is really enabling

or new process improvements. I see

the strategy side of it to take hold.

strategic sourcing being brought in on

lot like I’m using a lot of buzzwords, but it really is true. We did a lot of stuff on

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

31

“ Y O U N E E D A L O T M O R E EQ SKILLS, A LOT MORE Q U A L I TAT I V E S K I L L S . Y O U R C O M M U N I C AT I O N S K I L L S A R E C O M P L E T E LY D I F F E R E N T THAN THEY USED TO BE. Y O U ’ R E R E A L LY M O R E O F A MARKETING PERSON OR A POLITICIAN NOW” –

MICHAEL CADIEUX F OU NDER OF P RO C UR EM E N T F OU NDRY

annual budgeting and forecasting sessions now, so that people can know what sourcing can do to optimize their cost basis and their

With more influence, being more engaged and more involved in the business,does that create more opportunity, and also create more pressure?

budget. So we’re almost financial

That’s true with any expansion of respon-

advisors as well. It’s truly amaz-

sibilities and being part of a larger team

ing to go from somebody down

that’s delivering, and being seen as a true

the hall who just cuts the POs to,

piece of the equation in any enterprise

“Hey, I need your help strategi-

class program now, where you have real

cally aligning my business plan

deliverables as part of the team on either

for my P&L this year, and what can

cost saving initiatives or opportunities for

you do to enable me to hit my own

transformation, introduction, vendor inno-

targets and benefits?”

vation, continuous improvement models

32

EXCLUSIVE Q&A WITH MICHAEL CADIEUX, FOUNDER OF PROCUREMENT FOUNDRY

against services. You’re being asked to

cases than you are a finance operation

make some really hefty recommenda-

that you used to be. Certainly a lot more

tions on things, like potentially outsourc-

goes into your positioning in the room

ing some of the operations to third party

when you’re surrounded by the rest of

vendors and best cost country geogra-

the C-level executives. You’re no longer

phies and things like that.

that red headed stepchild that you used

The skill set is starting to change as

to be, and a lot of times the majority

well because of that. You need a lot

of the folks in the room are looking at

more EQ skills, a lot more qualitative

you to drive new innovative thought

skills. Your communication skills are

processes around significant business

completely different than they used to

goals and objectives.

be. You’re really more of a marketing person or a politician now in a lot of w w w . c p o s t r a t e g y. c o m

33

You’re obsessed with making procurement cool, but why does procurement need to be made cool and why isn’t it already cool?

in on my meetings to give us a fresh

I think anything worth doing is worth

worth doing, it’s worth having fun at.

perspective and just different verbiage, different person, different set of eyes.

Just make it exciting and interesting. If it’s

doing and having fun doing it. I think

sourcing demigods down the hall who

By bringing in that fresh perspective, what was the immediate impact of that?

are having fun and breaking new ground

At first people were like, “Hey, who’s

every day, have a lot more fun and enjoy

that person in the room or who’s our

what they do. Let’s face facts. Sourcing

new set of eyes or Jesus, this is a crazy

has a lot of conflict in it. Every day you

new approach.” Procurement, sourcing,

have a conflict of some type that you’re

supply chain management, in my opin-

trying to resolve and conflict can cause

ion, is an art form. So much so that, our

stress and it can get a little bit mundane

friend Phil Eidelson, he named his outfit

people who enjoy their jobs and think of themselves as the procurement and

from time to time. I met a gentleman a year ago who’s been buying spray enamels for a very large manufacturer for the last 30 years, and I thought to myself, “Boy, if I had to buy spray paint for 30 years, I think I’d be a little bit bored.”

But if you can figure out some way to make it cool, inject some life into it, maybe take a new lens at it every once in a while. I used to run a program where we did our weekly reviews and every once in a while I’d bring somebody from completely outside of the industry in.

I’ve got some friends that own auto dealerships and things like that. I’d have an auto dealership owner come in and sit 34

EXCLUSIVE Q&A WITH MICHAEL CADIEUX, FOUNDER OF PROCUREMENT FOUNDRY

“SEND YOUR PEOPLE IN YOUR PROGRAMS OUT TO THEIR MEETINGS TO GET NEW IDEAS ON HOW THEY RUN THEIR MEETINGS AND H O W T H E Y A P P R O A C H P R O B L E M S A N D W H AT T H E Y A R E U S I N G F O R C O L L A B O R AT I O N T O O L S . T H AT ’ S T H E R E A L C R U X O F W H E R E I N N O VAT I O N ’ S H A P P E N I N G ” –

MICHAEL CADIEUX F O UNDE R O F P RO C U R E M E N T F O U N D RY Art of Procurement. In my opinion, I think that a very well written contract is a piece of artwork, and I don’t see why you shouldn’t revel in that. I think that there’s a lot of artistry in what we do. Everybody thinks that it’s just head down grinding, accountant, procurement, finance type work in the background and legal work and jargon.

Good negotiations is definitely an art form. No question about it. So I think that when you start to inject some other folks into it, be it completely removed thirdparty outsources or just other peers from other departments and let them just sit in your meetings from time to time and listen. Send your people in your programs out to their meetings to get new ideas on how they run their meetings and how they approach problems and what they are using for collaboration tools. That’s the real crux of where innovation’s happening.

What is the Procurement Foundry?

The Procurement Foundry’s really an interesting phenomenon. When I left my role at Publicis Group a couple of years ago and started my own consulting w w w . c p o s t r a t e g y. c o m

35

firm, I was really looking for a way to collaborate with some peers and I started off with a really small online private group inside of LinkedIn, and it was kind of non published and I just wanted some people that I could talk to because when you rise up into the senior levels of procurement, your negotiation chops get a little bit rusty and opening up your own business, I had a calling to be back in the back in the fields negotiating real deals. So I needed some collaboration. I built a small little group for some of my peers and I to be able to chat and have discussions about different topics associated with terms and conditions and things like that and what they were seeing in the marketplace.

That went from 25 friends and colleagues to a bunch of invitations out to other people, all private, all practitioners. We ended up with like 1100 people in this group in like five months. And then I realized, “Geez, we’re building a community here and we probably need to be on another platform, something that’s certainly searchable.” So in June of 2019 we founded and launched Procurement Foundry, which is one of the fastest growing online private communities now for supply chain management and procurement, indirect sourcing people.

It’s fully vetted and manually vetted by our staff to make sure that you are actually a practitioner. We don’t let any sales or consulting folks into the community.

We want to make sure that our people feel comfortable collaborating and sharing inside of our community. It’s really built for the practitioners, so unlike a lot of other communities or other types of resources that are available that come through your current employer, this is 36

EXCLUSIVE Q&A WITH MICHAEL CADIEUX, FOUNDER OF PROCUREMENT FOUNDRY

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

37

38

EXCLUSIVE Q&A WITH MICHAEL CADIEUX, FOUNDER OF PROCUREMENT FOUNDRY

really, in my mind, built for the practitioners themselves.

Why is it important to step away from the comfort zone of the boundaries of your own business and to talk to people in similar positions?

Why is that so necessary?

I think at procurement and sourcing score, it’s all about knowledge. You don’t go into a contract negotiation or a sourcing event without knowledge. Communities like Procurement Foundry are offering people an opportunity to go in and network, collaborate, get information, share information about who to invite to their RFIs and RFPs, where they’ve had good experiences and bad.

There’s a very good community of people out there in supply chain management and procurement. The sharing and the networking and the collaboration people are willing to do, if you can find a place to ask them, is unbelievable what people are willing to offer other folks to help out to better their careers without asking for anything in return. It really truly is amazing.

What would the elevator pitch be for the Procurement Foundry If you’re looking for a place to collaborate on your time, when you can, at the pace that you can collaborate at and find peers that understand what you do and can attempt to help you, and it’s free and it’s really built for the practitioner to help advance your career, then Procurement Foundry is a place where you should absolutely come.

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

39

ENGIE UK & Ireland: people-driven procurement CPOstrategy talks to Jonathan Sims, Chief Procurement Officer, ENGIE UK & Ireland to talk about the utility’s massive procurement transformation…

WRI T T EN BY PRODUCED BY

40

Andr ew Wo o d s Hey kel Oun i

41

T

he modern Chief Procurement Officer currently occupies a space within enterprise hith-

erto unheard of in years gone by. The CPO and the procurement team are now armed with an incredible array of insights and skills that embolden the aims and ambitions of the business units. This shift heralds the procurement function as an integral strategic tool far more sophisticated than a merely savings-led practice. Procurement now has the ability and freedom to align itself to, and inform and strengthen, a company’s goals, through the provision of a 360-degree vision of a company’s operations. As a result, the origin stories of many modern CPOs are not following the traditional path of working their way from the top to the bottom of the procurement function. Many modern CPOs now have an array of skills and expertise that underscores this shift.

Jonathan Sims is Chief Procurement

by background. A development surveyor

Officer for the UK and Ireland business

and I worked in that field for about 10

of the French multinational electric utility

years before moving into mechanical and

ENGIE. However, Sims is not a procure-

electrical engineering in a work-winning

ment guy through and through. “I came

role before ending up in strategic busi-

into procurement a little later on in my

ness projects. And one of those change

career, having only been in procurement

programs was around procurement.”

for about eight or nine years,” he explains

Sims’ work involving the procure-

from the ENGIE offices in London’s

ment function was the springboard

Canary Wharf. “I’m a commercial surveyor

for a number of increasingly senior

42

ENGIE UK & IRELAND

procurement roles that led to his current position at ENGIE. “Procurement lends itself to a lot of transferable skills,” he explains.

“So, as a team, even through to our group CPO, many individuals have had a very transversal route into that role. I think the generalist skill set lends itself to procurement and I think as long as you have that kind of business acumen and an affinity with people and suppliers, then it’s a great function to work in.

The ability to make a significant fiscal impact on a business and to have that breadth of reach across people, teams and functions appeals to me significantly.”

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

43

The UK arm of ENGIE turns over £3.6bn

in 2018. The way procurement was posi-

with 17,000 staff while ENGIE as a group

tioned within the organisation “probably

is active in 70 countries with a turno-

wasn’t correct” according to Sims with,

ver of around £60bn and 170,000 staff.

from an engagement perspective, people

Sims’ role is responsible for all procure-

who were not as engaged as other

ment within the UK operation that has

central services teams.

a procurement team of around 60, split

Sims managed to retain and develop

across five operating divisions. The team

a significant proportion of the staff he

manages all aspects of procurement of

inherited, with a clear succession plan for

goods and services where they spend

the next two or three years in terms of

approx. £1bn annually. The procurement

where they were going as individuals and

community at ENGIE needed a little bit of

how ENGIE could get them to that next

a reinvigoration at the time of Sims’ arrival

level of procurement excellence while

44

ENGIE UK & IRELAND

driving performance. “For me, having

based on robust competency mapping

that succession plan within the business

and some really clear and insightful

is fundamentally important. I think for a

people assessments, which is particularly

number of key roles, when I joined about

important. We’re launching a strategy with

15 months ago, we didn’t have the right

the business where the key stakeholders

succession within the business and we’ve

have contributed and feel very much an

changed that significantly. So, all levels,

integral part of that.”

myself included, we have a clear line of

Retaining key talent has been one of

sight for who will be taking that next role.

the most important challenges for Sims

That’s something we’ve looked to drive

at ENGIE with an historically “higher than

across the wider group business whether

desired attrition rate” amongst procure-

the opportunity is within the UK business

ment staff. “It’s a very buoyant market

unit or another global business line. It’s

for senior procurement individuals at the w w w . c p o s t r a t e g y. c o m

45

moment. So, creating that clear pathway

within finance, many of whom felt a little

where people could see the next three

remote from previous procurement strat-

or so years of their working life at ENGIE,

egies within the organisation. Sims’ strat-

while enjoying incremental milestones of

egy was very much building a transversal

development linked to reward, was really

cross functional team with non-procure-

fundamental. Once we got that stability

ment execs as sponsors for each strand

in the team, we could then really start to

of the strategy. “I think that really helped

take things forward.”

us get traction and slip under the skin of

Integral to the procurement strategy

what the key stakeholders in the business

at ENGIE is early stakeholder engage-

wanted,” he says. And Sims feels fortu-

ment. Sims’ primary focus in the first few

nate to have garnered senior sponsor-

weeks involved concentrated stake-

ship from the CEO of the UK and Ireland

holder engagement with the divisional

business: “That really helped us drive that

chief operating officers, the commer-

message through the wider business.”

cial directors and the key stakeholders

ENGIE’s three-year strategy is

NATIONAL COVERAGE: REGIONAL DELIVERY! Newcastle | York | Birmingham | Bristol | Glasgow | London | Manchester

ENGINEERING EXCELLENCE SES Engineering Services is recognised as one of the leading M&E partners in the UK, delivering for a wide range of customers by creating environments where our clients can excel. As a market leader, SES delivers building services that are derived from an exceptional level of technical authority.

We deliver bespoke design-led solutions and optimise productivity for the whole construction team, by maximising offsite manufacture in our quadruple award-winning production facility, Prism.

CONTACT DETAILS: NORTH EAST OFFICE Centre for Advanced Industry Coble Dene, North Shields NE29 6DE

“Newcastle Energy Centre showcases building services engineering at its best delivering one of the most significant developments in the region. The offsite prefabrication strategy for constructing the M&E element of this scheme removed in excess of 70% of labour activities from site. Best value was delivered for the client by the collaborative and effective working relationship between ENGIE and SES.” STEVE JOYCE Business Director North and Scotland

TELEPHONE 0191 258 6627 EMAIL sjoyce@ses-ltd.co.uk

CREATING TOMORROW TOGETHER

ses-ltd..co.uk

Rethinking Procurement and one of

a better result for them. Responsible

the major focuses for Sims is around

procurement remains at the heart of

its Supplier Of Choice Strategy. “That’s

everything we do, making sure that we’re

ensuring we’ve got the right relationships

eradicating any potential risks of modern

with the right suppliers in the right place

slavery within our supply chain, while miti-

to really make a difference for our clients,”

gating any risks of counterfeit product or

he says, “so we’re engaging suppliers in a

child labour.”

mature and considered way. We need to

The biggest element to the new

stay at the forefront of innovation and our

procurement strategy lays with people,

clients are demanding much more than

as seen in some bold new ambitions in

just a compliant price. We really need to

that area. The Competency Matrix maps

be demonstrating over the duration of a

all procurement people to one of the

contract, how we’re going to fundamen-

seven strands of the strategy. “Working

tally enhance our offering and deliver

through 70 different competencies, we’ve w w w . c p o s t r a t e g y. c o m

47

understood how best placed that particular individual is to support a particular strand, or aspect of the strategy, be it innovation or responsibility or supply chain consolidation. All members of the team have objectives set specifically to a strand of the strategy and then from an overarching perspective, we have an executive director that’s non procurement who leads in a particular area, plus one member of the procurement SLT. To some extent it’s cascaded through the business and we’ve had some key conferences along the way with the procurement community to share how we’re launching the strategy, what it means for them and how we’re looking to evolve that over the next 12 months.”

There are of course challenges linked to any transformation, especially where people and work culture are concerned, with change management often cited as the number one obstacle. “I think the first few months were particularly crucial around that because there was a lot of change in a very, very short period of time; including change in personnel at senior level within the procurement function. There was definitely an aspect of winning hearts and minds, while moving very quickly to turning what we said we’d do into tangible action with people going through that Competency Matrix.” The manifestation of this action were individual training plans and incremental steps, so staff were being rewarded for delivery. “I think that helped to build that positive messaging. And I think the sponsorship we’ve had from the exec level and how that’s repositioned procurement has been particularly useful. I don’t think procurement had that profile within the business previously. The Competency Matrix has created some real expectation 48

ENGIE UK & IRELAND

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

49

“Externally, we’ve got a strategic partnership with EcoVadis and they’re really supporting our Responsible Business Development Initiative within the UK” — J O N AT H A N S I M S C P O, E N G I E U K & I R E L A N D

in our people. We’ve got a lot to deliver

down into a set of initiatives that we’re

on over the next 12 months to make sure

going after as a team. We attack that as a

people really feel that those commit-

team. We deploy the individuals with the

ments we made last year are being borne

best placed and most appropriate team

out in their development. That’s a real

members leading in that certain area.

pressure.”

But we deliver that target collectively

Procurement has always been decep-

and success or failure is determined by

tively people driven while from the

that rather than one individual feeling

outside appearing very much, the oppo-

they’re exceeding and another individual

site. Sims’ early conversations with

with a different set of addressable spend

stakeholders around how things had

or more complicated dynamics feeling

operated previously, had been incred-

unable to make the same level of contri-

ibly savings orientated and yet had

bution. For the first time in a number of

struggled to perform against savings.

years we exceeded our savings targets.

“The way we moved things forward last

So that said to me it was the right

year was very, very people driven. One

approach.”

Target, One Team is a new initiative

“Hopefully the team is more engaged

that has helped procurement at ENGIE

in that method of working and feeling that

to fully harness its new agility. It was us

they’re contributing their talents more

trying to break away from people feel-

effectively and more appropriately. But

ing constrained and restricted by a huge

it takes a lot of maturity to do that. Other

individual savings target. We broke that

stakeholders potentially can feel that

there isn’t the same level of accounta-

co-create together. There are also chal-

bility perhaps. We’ve been quite effec-

lenges in terms of what we’re doing with

tive in working through that, but it has

our people; how we’re retaining them,

been a challenge. People centrally didn’t

while mapping their skills for a changing

have an individual savings target, but we

marketplace in zero carbon. For procure-

delivered that collectively through initi-

ment professionals, this is a different set

atives, so people understood what we

of metrics in terms of how we’re look-

were going after, plus they didn’t neces-

ing at success. It’s put particular focus

sarily feel the personal burden of having

on what we’re doing within responsible

a number over their heads. I think that

procurement and innovation. We currently

drove a different mindset and culture and

have a £4m innovation fund in the UK

ultimately, we’ve been better for it. I think

where we’re actively looking to invest in

it’s demonstrating to the business that

organisations to drive new solutions. And

we’re more than just a savings depart-

that’s something that’s very, very new for

ment. There’s a lot of intellect within that

us. It’s also created changes in terms of

team, a lot of ability to add far greater

our overarching systems and processes.”

value to commercial, to finance, to oper-

Project Mercury is a completely new

ations. We’re definitely on that journey to

ERP system that ENGIE is developing

emphasise that.”

jointly with Capgemini, partners in that

It is hard to escape sustainability, no

space. Project Mercury will effectively

matter the sector, and for an energy

change the way that ENGIE does busi-

company it pretty much drives every

ness. “Mercury will help us become a

aspect of ENGIE’s focus going forward.

truly data-driven business with data driv-

The past six to nine months has seen the

ing the right decisions for the business

company position itself at the forefront of

and more robust procurement decisions

leading the zero-carbon transition, creat-

based on science.”

ing some new challenges for procure-

Jonathan Strelitz, Head of Category

ment. “It creates challenges in terms

Management is also looking forward to

of the types of suppliers and subcon-

the benefits of Project Mercury. “We’re

tractors we should be working with,”

about to embark on a £17 million trans-

Sims explains. “It also affects how we

formation program by bringing our five

engage with them and what solutions we

ERP systems to one. This is a fantastic w w w . c p o s t r a t e g y. c o m

51

opportunity for us. We are now leading the P2P work stream and embedding that within Jonathan’s strategy. So, it becomes almost like the DNA of the strategy in terms of how we move that forward. It then allows us to embrace that within the whole team, so everybody has an understanding of that program.”

With procurement evolving so much outside of ENGIE, and within, how does Sims remain at the forefront of what’s going on in this transformational space?

“Our partnerships with a number of organisations have really helped that,” he enthuses. “Externally, we’ve got a strategic partnership with EcoVadis and they’re really supporting our Responsible Business Development Initiative within the UK, which is where we’re forming a strategic alliance with more than a thousand organisations to build a community investment fund, where we’re going to invest in the communities we serve.

Our ongoing relationship with EcoVadis is fundamental. Our Mercury Change Program will be really, really pivotal this year to start to change the way that we buy and enable us to make better decisions.”

Sims has also taken on the Solutions Director role for the P2P aspects of Mercury. “Having procurement 52

ENGIE UK & IRELAND

Jonathan Sims CPO, ENGIE UK & Ireland Jonathan Sims has more than 20 years’ experience working in the UK Construction, Engineering, Facilities Services and Energy Sector. Jonathan spent 10 years working in commercial property development as a development surveyor, before joining the Shepherd Group Ltd in a variety of business development and strategic business projects roles. Jonathan has held senior procurement leadership roles for a number of major UK construction companies including Kier PLC and Morgan Sindall PLC, before taking on a leadership role at NG Bailey Ltd, the largest privately owned construction and engineering organisation in Europe. Currently, Jonathan is the CPO and Solution Director at ENGIE UK&I, which has a turnover of c£3.6bn and employs 17,000 staff across its energy, regeneration and facilities portfolios, with an annual spend of goods and services of c£1bn.

Jonathan is passionate about developing procurement teams, talent and culture and is currently in the final stages of his PhD. Jonathan has strong associations with academia, and has been an external advising practitioner at Nottingham Business School since 2013, supporting the MSc programmes, with a particular focus on international business. Jonathan has also been a guest lecturer on the Durham MBA programme for a number of years. Jonathan is also a non-executive director of a major multi academy schools trust in the UK. Jonathan lives in Nottingham with his wife, two children and French bulldog

53

“I think it’s probably one of the strongest procurement teams I’ve ever worked with. We’ve got people being seconded into the business units and I think that’s really starting to create a positive message” — J O N AT H A N S I M S C P O, E N G I E U K & I R E L A N D

stakeholders really embedded in that

the way that the team present themselves;

process, positions procurement differ-

they’re enthused, they’re engaged,

ently within the organisation and enables

they’re all very ambitious and they can

us to really shape that process rather

see where they’re going within ENGIE. I

than it happening to us. Sometimes we

think it’s probably one of the strongest

inherit some systems and processes that

procurement teams I’ve ever worked with.

we wouldn’t necessarily have created in

We’ve got people being seconded into

those ways.”

There is a lot of transformation taking place within procurement at ENGIE and so how does Sims gauge his departmental success? “The level we came from at the start of last year was fairly low compared to other central services teams within ENGIE, in terms of engagement. We were about 16% less than other central services teams and we made a huge step forward in that engagement score last year. So, this is something that happens every single year, which is very, very important for the wider business. We made a 16% improvement in one year, which was a huge step. And I think you can see that in 54

ENGIE UK & IRELAND

international business units and I think that’s really starting to create a positive message. Plus, we over-delivered on our group savings target last year, which again shows that we’re backing that up with business results. The procurement team are now involved in cross-functional initiatives, working with business and innovation teams while being identified as stakeholders that can add a lot of additional value. For me, it’s about having that desire to continually keep moving the function forward. We’re always looking for that next iteration in how we improve.

We’ve had recognition at group level, from a supply chain perspective, for best practice being deployed in other business units through relationships we’ve developed and nurtured in the UK, and that gives me a warm feeling.

We’re really making a positive change.” w w w . c p o s t r a t e g y. c o m

55

ONE TEAM, ONE GOAL Jonathan Strelitz, Head of Procurement Energy Solutions, ENGIE “Procurement really was seen as the compliance police and the savings function. And I think for me, with the experience that I’ve had and with the people that we now have within the team, it’s trying to allow us to show the business, we’re more than just about saving money and stopping people from ordering goods and services. I think it’s more about trying to look at the end-to-end process and the strategy we have where

Sustainable and innovative building service solutions With 16 regional offices throughout the UK, Lorne Stewart Group are leaders in mechanical and electrical engineering services, Design for Modular Assembly (DfMA) and post construction facilities services.

By having a clear understanding of our customers, their drivers, and working in collaboration with them, we ensure that we offer the right, bespoke solution every time!

Through our high-level, ongoing strategic partnership with Engie, we are delivering excellence through innovative and sustainable

engineering solutions. For example 80% of the St James Energy Centre in Edinburgh has been manufactured by our in-house prefabrication facility.

Our DfMA strategies optimise building services designs to achieve the most sustainable and efficient solution.

This allows our customers to exceed sustainability targets as Lorne Stewart minimise site waste and improve site safety, while delivering a quality product.

Lorne Stewart Group & Engie – Working together for the right solution

Lorne Stewart Group – Celebrating our continued success in delivering excellence through our People, Processes and Performance.

www.lornestewartgroup.com

Contact Paul Briars CEO, Lorne Stewart Engineering paul.briars@lornestewart.co.uk

07967 165 699

savings is just really one lever of what we

having a long-term strategy, we need the

try to bring here at ENGIE in the UK.

right people in the right places at the right

I think the importance of having the right

levels. And then it’s incumbent on us as

people within the team, is that they create

the senior managers to try and develop

their own networks. So, within that they’re

and train these people so they can be

not then reliant on the management or

successful. Not just in terms of generating

the whole team in driving our strategy

savings, but generating overall value for

through. It means that there are CPO

the business.”

interfaces at the senior level. Then, there’s the next layer down and below that. So it enables us to try and communicate the

Charlie Roberts, Hard Services Category Manager, ENGIE

right messages in terms of what we are

“We have a good mix of services and

doing in making a compelling argument

solutions and projects, which means we

of why we want people to go and spend

have to keep a fairly open mind and have

their money in certain areas or use certain

a holistic approach rather than being

suppliers within our supply chain.

a purely CapEx driven strategy. That’s

For me, if we are to be serious around

helped us mould a very diverse range of w w w . c p o s t r a t e g y. c o m

57

skill sets and a growing number of more youthful category category members growing from an apprenticeship position to lead buyer. I think we’ve got one or two who are knocking on the door for category manager in the next few months. So, it’s definitely moved to a much better place than it was where I think we had a very siloed approach, poorly integrated team from the top down prior to Jonathan’s appointment. We struggled to build the general morale that we needed to then go out to the wider business. That’s changed completely now we’ve opened the doors and we’ve kept those doors open with the wider business who actually see us as generating real value.”

Lisa Boumaza, Category Lead Buyer, ENGIE “It’s a really nice place to work and I can

in developing us. They’ve built up this

really see the difference from when I

competency assessment tool to map our

started in 2017 where I was in an opera-

profile against our current role, but also

tional procurement role. Now, we’re look-

where we want to be in the next three

ing at category management, which is a

years, building a development plan for

bit more strategic. We look at spend on

each individual so they can get where

a national scale working with the Group

they want.

and we have a team where we really get

When I began working for ENGIE in

on well altogether with great leadership

2017, we were in a much different place;

within the team. We know where we’re

it was all very operationally, almost

going and our managers are interested

commercially, driven, with no early

58

ENGIE UK & IRELAND

category management has really helped in giving us a path in terms of what we prioritise for the business, and locating the higher value categories of spend where we could drive better performance and savings.”

George Mangham, Procurement Manager, ENGIE “My apprenticeship scheme was brand new to Engie when I started. It was a two-year apprenticeship scheme with three rotations. I’ve done a rotation in operational procurement, so I understand that side. I also did a placement in the bids and mobilisation procurement and so I understand the initial forefront where we mobilised contracts and bid for them with our potential clients. I am also familiar with the category management side as well. I’ve had quite a rounded experiprocurement involvement. So, it was

ence in two years of the apprenticeship

always too late to build any proper strat-

scheme. I’ve had a lot of opportunities

egy. It was all very reactive. And now we

in there and the mentors I’ve had are

have a much different approach, which

fantastic. The scheme’s been fantastic.”

is building three-year category plans.

We engage with the business to get sign off and work closely with operations

Vincent Tissendie, Category Manager, ENGIE

to implement their strategies, making

“For a long time, we were seen as

sure that it’s good from a technical

people who only looked after cost

and commercial and legal level. So, it’s

prediction and spend, which is not the

very different to where we were. I think

exact purpose of a procurement function. w w w . c p o s t r a t e g y. c o m

59

“ The past six to nine months has seen the company position itself at the forefront of leading the zerocarbon transition, creating some new challenges for procurement” — J O N AT H A N S I M S C P O, E N G I E U K & I R E L A N D 60

ENGIE UK & IRELAND

other, because we have some cross-functional, cross-category project where we’ll work together and plan in advance to deliver at the right time. We are working in an industry where things happen very quickly, so when we meet for a project, we’ll mobilise and when the contract is mobilised, we need to ensure delivery.

So, things need to be ready. It’s not when the contract goes live that we need to think about how we can add value to this contract. We need to be ready before to engage with our key stakeholders and make sure that we can deliver on time.

We look at the full spectrum of the value chain, and not work only around savings.

We look after innovation, sustainability, zero carbon emission, processes, digitalisation, technology. That’s what allows us to deliver bigger, better and faster, to be honest, because if we do not take these into account, we will be basic procurement people without any category plan or structure. And I think that’s what will take We tend to cover the full spectrum of the

us through to the next level as procure-

value chain and deliver across all aspects

ment individual and as a function too.”

of it. Yes, of course, it’s savings, but it’s also innovation processes, sustainability, zero carbon emission processes. So, yeah, that makes us much more interesting for the business.

I love the way we engage with each w w w . c p o s t r a t e g y. c o m

61

RISK ASSESSM MADE EASY WRI T T EN BY

63

S รถr en P e t s c h

MENTS

An exploration as to how risk assessments can be made easier, create more value and become integral to the vendor sourcing process

LISTEN TO THIS PODCAST ON THE DIGITAL INSIGHT’S OUTPUT CHANNELS

64

SÖREN PE T SCH FORMER VP OF PROCUREMENT AT ALLIANCE DATA CARD SERVICES

R

isk assessments can be an arduous task for everyone involved. Procurement and

compliance teams view this process as ‘mission-critical’ while internal stakeholders view it as ‘lots of paperwork’.

In fact, it is one of reasons why internal stakeholders hesitate to engage because outcomes can take time and be uncertain. Even after a risk assessment is complete and the contract is executed, three certainties still remain; no one can anticipate all risks, no company can or is protected against all risks and a given contract is unlikely to have anticipated the risks exactly as they materialize In short, there is a lot of work being done with little appreciable benefits – at least, that’s what it looks like. Still,

pain?

In my experience, the solution to

regulators require financial institutions

align these conflicting interests is to

to assess risks extensively and compa-

integrate risk assessments into the

nies do it as a best practice. So, how

procurement process. Procurement

can risk assessments be more integral

teams need to stop looking at the

to the vendor sourcing process while

risk assessment process as one work

also be more value-add – without the

effort being completed as one of the

65

RISK ASSESSMENTS MADE EASY

assessment on the vendor itself during the selection process.

By splitting the risk process into the engagement risk assessment (ERA) and the vendor risk assessment (VeRA) phases, it becomes integrated into the entire procurement process and creates many benefits. These benefits range from better clarity as to what is being sourced to measurable efficiencies in the contracting process and significant leverage during negotiations. But before touting them further, I will outline the ERA / VeRA process in more detail.

For purposes of illustration, I will assume the purchase of digital marketing services. An integrated marketing services agreement presents different risks and legal terms than a data purchase agreement.

Engagement Risk Assessment (ERA): What it is and when to complete it? final steps in on-boarding a vendor.

Once a procurement professional starts

Specifically, I propose to break the risk

working with the internal stakeholders

assessment process into two stages at

on a new engagement, they need to

which to discover and assess various

gain clarity as to what is being sourced.

risks discreetly by performing a risk

Discovery is key here. Not only does the

assessment on the engagement itself

procurement professional need to under-

before the launch of any bid process

stand the what, why, who, and when

like an RFx and Completing the risk

but also the intentions and definition of w w w . c p o s t r a t e g y. c o m

66

success.

Key discoveries require an under-

requirements in the RFx, several risk assessments can be conducted at this

standing around the setup (systems

stage. Specifically, the ERA should

integrations, work product, KPIs),

include a financial viability assessment

responsibilities ( data sharing, timing of

on all vendors (likely via an external

deliverables etc.), and security (encryp-

data provider like DnBi or Tealbook), a

tion standards, data hosting, data sepa-

strategic risk assessment, and (if appli-

ration etc.). Key internal stakeholders

cable) a country risk assessment.

to be engaged are InfoSec (for data

By defining these initial discover-

security and hosting requirements),

ies (which guide the intended service

Legal (for contractual guidelines or

setup) and integrating them with the

language), the internal business part-

ERA, the risk-integrated bid event (RFx

ners (for engagement specifics), and

+ ERA) accomplishes market research

others as applicable. All of these stake-

that benchmarks the viability of

holders should be able to provide

proposed setup to what suppliers actu-

guidelines (“nice-to-haves”), guard-

ally can do (i.e., the RFx provides some

rails (“cannot-do’s”), and requirements

truly useful insights beyond costing).

(“must-haves”).

By understanding these key questions, contractual requirements and related risk requirements are becoming clear. This up-front intentionality may be more work at this stage but will save hours and likely weeks on the backend. Also, in many cases these guidelines will only need editing or validation in the future. None of these discoveries are specific to the supplier but apply to the engagement and to any and all providers.

In addition to including applicable guidelines, guardrails, and 67

RISK ASSESSMENTS MADE EASY

It also provides greater clarity around

the contracting hurdles because key terms and conditions (T&Cs) are broken out without requiring attorneys redlining an entire agreement. Specifically, the company may request certain terms (such as limitations of liabilities, cyber insurance, data ownership, intellectual property rights, work product definition, and others) to discover what vendors are willing to give.

Lastly, it provides leverage in the upcoming negotiations since the selection process includes not just pricing but also other inputs impacting total costs of ownership or retained risks.

Vendor Risk Assessment (VeRA): What it is and when to complete it?

After the conclusion of the risk-integrated bid event, the company’s cross-functional team needs to select a front runner as the partner of choice. Now Procurement initiates the contracting and negotiation process inclusive of conducting a VeRA. w w w . c p o s t r a t e g y. c o m

68

The VeRA consists of two aspects.

First, there is the backend validation of ERA’s guidelines, guardrails, and requirements or outline of gaps of the same. This step is critical as it offers the opportunity for creating a feedback loop, which creates a learning process.

Then, there is the risk assessment specific to the vendor selected.

There is quite a comprehensive list of risks that need to be assessed as part of the VeRA. These include, financial risks including credit risk, operational risk such as loss resulting from inadequate or failed internal processes, people, and systems or from external events, compliance risk form a violations of regulations or noncompliance with internal policies, transaction risk (problems with the service or product delivery) and finally reputational risk such as negative public opinion.

In addition to the aforementioned, the ERA will have already assessed the strategic risk (including adverse business decisions or the failure to implement appropriate business decisions) and even country risk (accounting for different legal, political, and geopolitical variances).

At any given time, these risk assessments that are performed as part of 69

RISK ASSESSMENTS MADE EASY

the VeRA will vary by a given company’s risk appetite, industry-specific regulations, and criticality of a given engagement.

The Procurement professional should run the VeRA in parallel to the contract negotiations. This negotiation process should be significantly easier because there should be ewer surprises or late uncovering of “deal breakers” or discomforting trade-offs, better leverage and understanding due to market insights from participants’ replies to the the RFx questions, greater clarity as to the intent of the engagement and desired setup due to guidelines, guardrails, and requirements and an incoming understanding as to the contract hurtles resultant from the risk-integrated bid event.

Although no company can protect against all risks, procurement can more proactively discover known risks early and clarify engagements-specific requirements upfront. This intentionally risk-integrated procurement process can drive more expedited contract negotiations as there will be fewer surprises to address by both parties – and that is truly a win-win.

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

70

Five speakers at Digital Procurement World 2020 CPOstrategy takes a look at five of the many influential speakers that will be in Amsterdam this September at Digital Procurement World 2020

WRI T T EN BY

71

D al e Bent on

72

Dr Elouise Epstein VP, A.T. Kearney A procurement and supply chain digital futurist with a keen focus on how to apply digital to solve actual business problems, Dr Elouise Epstein has over 20 years of experience in the digital procurement sphere. In her own words, she seeks to disrupt subpar technology adoption and build future strategies through advanced partnerships with startups and emerging technology solution providers.

73

F I V E S P E A K E R S AT D I G I TA L P R O C U R E M E N T W O R L D 2 0 2 0

2 Geraint John

Research Vice President at Gartner

An experienced researcher, content creator, presenter and adviser to leading companies with over 19 years

experience as a research specialist with responsibility for sourcing, supplier management, supply chain risk management and globalization.

As Research Vice President at Gartner and SCM World, a Gartner-owned cross-industry learning community

powered by the world’s most influential supply chain practitioners, help organisations share best practice

insights so they can drive competitive advantage and business growth through supply chain innovation.

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

74

3 Simon Geale

SVP Client Solutions at Proxima

Responsible for Products and Solutions at Proxima,

Simon is an experienced technology professional that works closely with organisations to break down and

solve complex organisational challenges and calibrates the solutions to solve them. Geale is a regular author, speaker and commentator on all things procurement, a keen digital and transformation enthusiast, a realist

interested in helping Proxima’s customers solve their problems and accelerate performance and personal

growth. In his own words, he manages the best team in procurement.

75

F I V E S P E A K E R S AT D I G I TA L P R O C U R E M E N T W O R L D 2 0 2 0

Matthias Gutzman Founder of Digital Procurement World

“There is no conference like Digital Procurement World in the industry” A seasoned procurement professional, with over 10 years at Procurement Leaders, Gutzman was looking for a procurement conference to showcase a startup he used to work for. Realising he couldn’t quite find one that checked all the boxes, he decided to build his own with Digital Procurement World, which successfully held its first event in 2019.

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

76

Kevin Frechette Co-Founder & CEO of Fairmarkit Kevin is the co-founder and CEO of Fairmarkit. It’s SaaS platform enables companies to achieve increased savings on their tail spend purchases by delivering a highly functional product to mitigate risks, reduce costs and drive business value. Fairmarkit uses machine learning to simplify tail spend processes and bring the final 20% of unmanaged spend under control.

77

F I V E S P E A K E R S AT D I G I TA L P R O C U R E M E N T W O R L D 2 0 2 0

Join us at #DPWconf

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

78

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!

FIND OUT MORE