CPOstrategy magazine – Issue 18 by B2e Media

I s s ue 1 8 â&#x20AC;˘ w w w.c p o st rate g y.co m

Protect and regenerate: An exclusive Q&A with Dave Ingram, Chief Procurement Officer at Unilever

Procurement, transformation and communication Five Things we learned from the Supply Chain Digital Readiness in Retail report

Procurement prowess in the Ukraine telco space Oksana Glavachek explores how procurement allows VF Ukraine to be ready for the rapid evolution of the telco sector...

Bringing people together for a better world through procurement

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Welcome to issue 18 of CPOstrategy Gracing our front cover is Oksana Glavachek, Chief P ro c u re m e n t & Ad m i n i st rat i ve O ff i c e r at V F U k ra i n e. In our exclusive feature, Glavachek details how the rapidly evolving telco industry and the market demands in Ukraine h a v e c re at e d g re at c h a l l e n g e s fo r c o m p a n i e s a n d t h e i r procurement functions and even greater opportunities. “The Telco industry is one of the most investment-hungry industries in the world,” she explains. “To establish a Telco Company you have to make a huge investment in setting up a network first of all and then you must make significant annual investments in the expansion and maintenance of that network due to continuous technology development and tougher market competition.” Elsewhere, Jan Clysner, VP of Procurement and Sustainability, explores how procurement and sustainability go hand in hand as the company looks to create a better world. “One is connected with the other. It’s not that procurement is a different animal from sustainability. They’re very closely connected and going forward, I see the connection growing further and getting closer and closer” We also look at how we define strategic procurement with Jeremy Bowley of Insider Pro, Dave Ingram, CPO for Unilever, discusses how the company is putting its money where its mouth is and making real, lasting sustainable change through procurement and we look at five key learnings from WMG at The University of Warwick and Blue Yonder’s the Supply Chain Digital Readiness in Retail report

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EDITOR Dale Benton

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CONTRIBUTING EDITOR Nell Walker Kevin Davies

GRAPHIC DESIGNER Dhruti Vithani

CREATIVE LEAD Mitchell Park

VP GLOBAL FINTECH & INSURTECH Alex Page

VP TECHNOLOGY Andy Lloyd Craig Daniels

VP PROCUREMENT Heykel Ouni Greg Churchill Richard Deane

PRESIDENT & CEO Enjoy the issue!

Dale Benton, Editor content@b2e-media.com

Kiron Chavda

Contents

Budweiser APAC

Vodafone Ukraine

Exclusive Q&A: Dave Ingram

Five things we learned from the Supply Chain Digital Readiness in Retail report

What is strategic procurement?

58 Telkom

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

VF Ukraine: Procurement prowess in the Ukraine Telco space Oksana Glavachek explores how procurement allows VF Ukraine to be ready for the rapid evolution of the telco sector... WRI T T EN BY PRODUCED BY

D al e Bent on Hey kel Ouni

VODAFONE UKRAINE

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

he evolution of procurement is not a novel concept, with businesses the world over investing

in their procurement functions to take them away from being a support function while transforming into a key cog within business strategy. The unique nature ofthis procurement evolution does not come from the fact that we know it is happening, it comes from the how and, most interestingly, it comes from the why. Why is procurement shifting and evolving and how does it change from industry to industry? Oksana Glavachek, Chief Procurement and Administrative Officer at Vodafone Ukraine, details how the rapidly evolving telco industry and the market demands in Ukraine have created great challenges for companies and their procurement functions and even greater opportunities. “The Telco industry is one of the most

tance to invest in a 3G spectrum distri-

investment-hungry industries in the world,”

bution. This reliance, she knows, left

she explains. “To establish a Telco Com-

Ukraine staying with 2G ‘rather long’ and

pany you have to make a huge investment

in 2015 Ukraine launched 3G.“The whole

in setting up a network first of all and

world had already reached the mature

then you must make significant annual

LTE level so we were a little behind,”

investments in the expansion and mainte-

she adds. “But since then things have

nance of that network due to continuous

changed and Ukraine started to make up

technology development and tougher

for the lost. In 2017, we deployed LTE in

market competition.”

1800mhz, 2600mhz in 2018, and 900mhz

Glavachek points to Ukraine’s reliance

spectrums in 2020. Such rapid growth

on a 2G cellular network thanks to a reluc-

required significant investment from the

VODAFONE UKRAINE

company and brought particular chal-

development in the communication and

lenges to procurement.”

IT world. The largest share of any spend

With rapid growth in demand, and as

in the telco space is in the network build-

the second largest mobile operator in

ing and so attention turns to the supplier

Ukraine, VF Ukraine needed a procure-

market. “The market for RAN, Core and

ment function that was both robust and

Transmission is dominated by a few of the

agile enough to cater to the ever-grow-

world’s biggest vendors and this makes it

ing business needs. Glavachek highlights

difficult to negotiate,” explains Glavachek.

that procurement in the telco industry

“RAN, the main part of a network, has only

is defined by two principal factors: the

four vendors that have divided the world

investments made in building up a net-

market and each of them possesses signi-

work and the speed of technology

ficant market share worldwide.” w w w . c p o s t r a t e g y. c o m

ZTE Corporation is a global leader in telecommunications and information technology. Founded in 1985 and listed on both the Hong Kong and Shenzhen Stock Exchanges, the company has been committed to providing integrated end-to-end innovations to deliver excellence and value to consumers, carriers, businesses and government and enterprise network customers from over 160 countries around the world to enable increased connectivity and productivity.

“As you can imagine this creates an

became increasingly digitally enabled

additional obstacle for procurement in

through the internet and smartphones,

Telco. After a vendor acquires his market

the telco industry witnessed genera-

share in one or multiple segments they

tional shifts of mobile networks. Each

practically become a Single Source Sup-

shift meant that the assets forming the

plier. The competition becomes impos-

networks were completely renewed in

sible, price negotiations with the vendor

a way that felt like a new set of require-

prove increasingly tough and procure-

ments and demands. For the procurement

ment requires the utmost measures to

functions, the challenges continued to

keep a relevant price.”

be magnified. “We could not allow procu-

The other key principle, the speed of technology growth in communication and IT, is a challenge faced by many, but

rement to relax,” she explains. “It forces procurement to think and act ahead.” The need to think ahead and be ready

it's one that the telco market in particu-

for the future is something that Glavachek

lar feels the biggest impact. As the world

feels VF Ukraine has something of an w w w . c p o s t r a t e g y. c o m

advantage on, given the country’s late

In order to enable this greater collaboration,

adoption of some of the latest technologies.

procurement needs to be more than just

“We are lagging behind other countries

purchasing or tenders running function

in launching new technologies but it ena-

and Glavachek recognises this. She high-

bles us to leverage the global experience

lights that procurement represents the

of Vodafone right here in Ukraine. There

whole end-to-end supply chain manage-

are strict requirements as to the speed

ment, consisting of logistics, contract man-

of new technologies when launched, and

agement, stock management and analyt-

even now when we have not been fully

ics and performance management. This

informed of the selected 5G spectrum

represents that shift away from being a

procurement is already starting the

simple support function and this is further

tenders in order to provide competitive

exemplified through the absorption of

advantage for business.”

administration, allowing for more agility

During her time with the company, Glavachek has worked hard with her teams to elevate procurement at VF Ukraine, change the perception of procurement and even make the company’s own function rival that of other major telco functions. Achieving this position is easier said than done, but Glavachek can be proud of what she has been able to achieve for both the business and the function itself. For her, it starts with procurement being at the very top. “It is important for procurement to be a part of the board because it provides the CPO a chance to see the company strategy and look at global company targets,” she says. “It also allows the CPO to better understand the synergy of functions that helps achieve those global targets collaboratively.” 12

VODAFONE UKRAINE

“ The Telco industry is one of the most investment-hungry industries in the world” — O K S A N A G L AVA C H E K , C H I E F P R O C U R E M E N T A N D A D M I N I S T R AT I V E O F F I C E R AT V O D A F O N E U K R A I N E

and cost effectiveness across the organisation. In the procurement and supply chain ecosystem, the strength of your partnerships with suppliers and vendors is crucial. As Glavachek has highlighted already, in the world of telco those partnerships require more nuanced and work in order to find the right solution at the right price that provides the right outcome that works for all involved. Supplier relationships are not easy, but Glavachek and VF Ukraine understand that a continuous dialogue with the vendors proves crucial in succeeding. “Procurement should always be open and hungry for knowledge. Procurement should learn how to listen because if we are ready to listen then vendors will tell us about new insights and future innovations,” she says. “The basic procurement principles, combined with the readiness to learn and evolve prove absolutely key in building successful long term relations with suppliers.” w w w . c p o s t r a t e g y. c o m

“ The basic procurement principles, combined with the readiness to learn and evolve prove absolutely key in building successful long term relations with suppliers” — O K S A N A G L AVA C H E K , C H I E F P R O C U R E M E N T A N D A D M I N I S T R AT I V E O F F I C E R AT V O D A F O N E U K R A I N E

VODAFONE UKRAINE

Elsewhere across the company, Glavachek points to the impending implementation of 5G and how the company will continue to leverage that global Vodafone experience to ensure it continues to ride this wave of growth successfully. That commitment to learning and evolving has and will continue to be the key to succeeding for VF Ukraine as the telco market’s rapid growth shows no signs of slowing. Over the next 12 months, Glavachek will look to continue on a journey of consolidation and digitalisation across the procurement process in order for the business to become more efficient and agile. “If I’m not mistaken, the Dalai Lama once said ‘Sit as comfortably as you can for long, your leg will inevitably numb. You need to reposition yourself’” she says. “So in my opinion, the capability to change is vital to achieving success for the company.”

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

Budweiser APAC: bringing people together for a better world through procurement Jan Clysner, VP of Procurement and Sustainability, explores how procurement and sustainability go hand in hand as the company looks to create a better world

WRI T T EN BY PRODUCED BY

D al e Bent o n Gr eg Chu r c h ill

hat does sustainability mean to a business? What role can and should procurement play

in defining it and acting upon sustainable initiatives? As we talk of the procurement speak mostly around technology and a business-wide recognition that procurement is more than the back-office function of yesteryear. But where does sustainability come into the equation? For Budweiser APAC, which is part of AB InBev, operating as the largest and a fast growing beer company in Asia Pacific the brewing, importing, marketing, distributing and selling of more than 50 beer brands is achieved through a supply chain and procurement ecosystem that has sustainability embedded

actors to enable the change we want to

deeply throughout. “All of our procure-

bring to drive our sustainability agenda. ”

ment activities revolve around cost, supply

AB InBev has been a global steward for

security, quality, innovation and creating

sustainable action for many years and

efficiencies,” explains Jan Clysner, VP of

recognises its leading position to leave the

Procurement and Sustainability. “Running

world a better place for future generations

right alongside that is our sustainability

and in 2018 the company launched its most

agenda, which we try to embed as much

ambitious sustainability 2025 goals yet.

as possible in our procurement strategies

These goals include; Smart Agriculture

and our business going forward. One is

(100% of direct farmers will be skilled,

connected with the other. It's not that pro-

connected and financially-empowered),

curement is a different animal from sustain-

Water Stewardship (100% of communities

ability. They're very closely connected

in high stress areas will have measurably

and going forward, I see the connec-

improved water availability and quality),

tion growing further and getting closer

Circular Packaging (100% of products

and closer. Indeed our suppliers are key

will be in packaging that is returnable or

BUDWEISER APAC

made from majority recycled content)

“Ultimately, in order to achieve our

and Climate Action (100% of purchased

goals as a business, we need the right

electricity will be from renewable

suppliers who will allow us to grow.”

sources; and a 25% reduction in CO2 emissions across value chain).

Looking at the APAC market, Clysner highlights that a large proportion of

For Clysner and Budweiser APAC,

suppliers had to be developed from

procurement is key to achieving these

a supply security, quality and innovation

goals. “At the end of the day, we produce

perspective. This is where procurement’s

and we sell beer. It's as simple as that,

much more integrated role within the

and we're supporting the process,” he

business comes to the fore as he recog-

says. “But it has been much more than

nises that it is about how procurement

just supporting. We are truly part of the

can support that it’s brands, both producing

business, being part of the discussions,

and selling them, are doing the right things.

the decision-making and the strategy

“The brand is the face towards consum-

including sustainability to ensure we still

ers. It’s about doing the right things with

produce and sell beer 100+ years from now.

our brands, also from an environmental w w w. c p o s t r a t e g y. c o m

w w w. s h a n y i n g p a p e r.c o m

â&#x20AC;&#x153;A global leading provider of integrated green package solutionsâ&#x20AC;?

As a listed company (stock code: 600 567), Shanying International Holdings Co., Ltd. (Shanying International) is an international enterprise integrating industrial internet, comprehensive utilization of green resources, production of industrial and special-purpose paper and package product customization. Our industrial layout covers China, the US, the UK, Sweden, Norway, the Netherlands, Japan and Australia, with one industrial internet platform, 10 manufacturing enterprises of industrial and special-purpose paper, 30 enterprises of package product customization and 20 international and domestic trading enterprises of renewable resources at home and abroad. In 2020, we ranked 395th amongst the Top 500 Enterprises of China selected by Fortune. Shanying International is an environmentally friendly enterprise and we assume our social responsibility in areas such as carbon emission reduction, environmental protection and sustainable development, pursuing ecological benefits for the industry, the natural world and the wider society. We realize an efficient utilization of new energy with storage sheds for raw materials of photovoltaic power generation projects. Our self-built thermal power plants not only satisfy our own needs in production, but also provide clean energy to surrounding enterprises to realize an effective utilization of resources and each year we recycle 4.50 million tons of regenerated fiber and protect 200,000 hectares of forestry. Taking scientific and technological innovation as our core driving force, we promote the construction of intelligent factories by blending digital, network and intelligent technologies into each and every process of our intelligent, environment-friendly, flexible and sustainable manufacturing. In 2006, the Packaging Business Division of Shanying International became a strategic

supplier of cartons for Budweiser Asia-Pacific. Affiliated to the Packaging Business Division of Shanying International, Xiangheng Package owns a top-notch Package Printing Engineering R&D Center, a CNAS-certified professional laboratory, and 30 wholly owned subsidiaries specialized in the production of paperboard and carton in different provinces and municipalities of China. Depending on our full industrial chain advantages, our package production capacity has reached 2 billion ă&#x17D;Ą/year and our products are widely applied in different industries such as household appliances, electronics, food and beverage, chemicals, medicine, garments, shoes and hats, hardware and auto parts. Our clients include Budweiser, Danone, Wal-Mart, Home Depot, Target, Dell, BOE, Foxconn, Philips, UPS, SC Johnson Wax, Kao and Haier. Shanying International has cooperated with Budweiser for nearly 15 years and today we provide the dozens of Budweiser breweries in China with cartons of around 120 million ă&#x17D;Ą each year. We have established a firm relationship of interaction and mutual trust with Budweiser and in new forms of business with sustainable development, we provide them with integrated package solutions, covering creative package design, structural optimization design, package business consulting, package printing technology training, production & manufacture, value-added service of customer experience, order distribution system design, and carton production process improvement. In the future, we will provide Budweiser with green package design schemes of individuality, a light weight, reusability, recyclability, renewability and degradability (3R1D), in accordance with our independently developed guides to the transport packaging design of various products and based on such big data platforms as the Buffer Coefficient and Energy Absorption Database.

point of view and bring purpose to our

lost in translation. “Doing the right thing

brands with our sustainability agenda,”

sounds so easy on paper and indeed it

he says. “We have a responsibility as a big

can be,” he says. “It's about recognising

entity, we use resources and we want to

your responsibility between the brack-

use them in the most efficient way, and

ets and looking at the levels within your

at the same time have a positive impact

value chain and implementing the right

on our society and environment.”

techniques in order to deliver on the

This idea of moving beyond simply doing the right thing \ and into a position

promise of real sustainable change.” The challenge of working towards

of having a positive impact is something

sustainability targets is that these targets

that is extremely close to the heart for

and the very definition of sustainability is

Clysner, and with a consumer base that

fluid, as it shifts for each and every part of

is becoming increasingly switched on

the procurement and supply value chain.

to the environmental responsibilities of

Budweiser APAC works with companies

businesses, the ‘right thing’ can easily be

in paper and cardboard, glass, agriculture

Established in 1987, Huaxing Glass has grown to a world-class integrated company with 15 manufacturing locations, 40 furnaces, 202 production lines as well as global famous customers, offering a comprehensive range of custom glass bottles service with various colors and shapes ranging from Extra Flint, Flint, Clear, Amber, Emerald Green and Printing glass bottles to complete Glass Design, Manufacture and Service. For customer services or to find out more about your business opportunities, please contact Jasmine Lim (E linyan@hxbl.com). BUDWEISER APAC T 0086 139 2314 5263 (Mr. Chen Wei) | E linyan@hxbl.com (Jasmine )

“ Sustainability is in our hands. It’s up to us to manage and focus on because we have the knowledge or we know whom to work with to get it done” — J A N C LY S N E R , V P P R O C U R E M E N T A N D S U S TA I N A B I L I T Y, B U D W E I S E R A PA C

- all very different raw materials with their

feet. All of them are driven by the same

own process in place. Their individual

vision and this huge network with vary-

understanding of and capabilities around

ing degrees of maturity on this journey

sustainability is different. Clysner adds;

is something that Clysner can tap into

“That's where we aligned all our four key

in order to identify and apply best prac-

goals. Smart Agriculture, which is water

tices in his own region. This comes down

and elements which are key ingredients

to the way in which the business is struc-

for our products. Our products are our

tured. Sustainability in procurement is not

beers, which is packaging and circle of

spoken of or handled as an independent

packaging. One way or the other, you need

category, instead Clysner has people in his

a packaging material, carry it, to bring it

team that are procurement and sustaina-

to your consumers, and of course, there’s

bility focused that have either a regional

our carbon footprint. Our carbon footprint

or countrywide responsibility. These

stretches right from the farmers, all the

procurement people, no matter here they

way up to and including the refrigeration

are situated in the world, have a coun-

required to deliver it cold to our consumer.

terpart that they can communicate with.

“The targets are close to our core business,

“There is a lot of global interaction within

and there we can truly make a difference now,

procurement for many reasons. Category

and start making a difference going forward.”

managers discuss global sourcing and

As a global entity, AB InBev has businesses

supply strategies and they also interact to

the world over. Some of these businesses

learn and share best practices. That's how

are further along this sustainability journey

we treat sustainability as well,” he says.

than others, some are just finding their

“Of course it varies to a certain extent, w w w. c p o s t r a t e g y. c o m

but ultimately we have a fairly flat structure where every counterpart in my organization knows who to go to, whether it’s day-to-day if it's very integrated or less rigid or on a monthly basis if it's about best practice sharing. That's where our global colleagues are very important for us. They can help us to get extremely quick visibility on good examples that are happening across the world, disseminate knowledge and bring them to Asia, or at least give the visibility where we can then see it would make sense to apply something similar or help us with the implementation.” This flat structure that Clysner points to proves crucial in not only establishing, but truly fostering a culture within procurement and the broader business. This culture is defined by our 10 key principles that sit at the very core of the business: “These principles are not just something that we pin up on the wall and say this is our company culture. We live and breathe them each and every day. It's about ownership and leading by example,” he says. “We try to give people clear targets. People are, obviously, motivated to deliver on their targets, so we have to make sure that our people have the right targets. If people have the right targets, the right mindset and the right ownership then the right things are happening.” Procurement is a relationship based environment and people are crucial to striking and fostering the right relationships with key suppliers so that when it comes to driving growth, change and in this instance sustainable responsibility, these relationships are formed around trust and mutual respect. Budweiser APAC of course has a huge supplier footprint from farmers to manufacturers and distributors and each relationship has its own nuances and complexities. It's important for Clysner to highlight this and stress 30

BUDWEISER APAC

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

that there is no ‘one size fits all’ approach

the right moments to them,” he says.

to any of them. He points to the relation-

“For those individuals, it's much more

ship with the farmers as an example.

focused on cooperation with these farm-

“With farmers it's a very particular

ers, and making sure that we can provide

working relationship, because it's not

support to them. You never know with the

your traditional negotiation like we do

harvest. There's not a single year which is

with some of our big suppliers. In India

the same as the previous, but you can do

we've got teams that are 100% focused

things to maximize the harvest. Because

on those farmers. We give them targets

if you maximize the harvest, it's good for

such as they have to make sure that the

us and it's good for the farmer because it's

barley we get is best for the quality that

good for his income. That is a completely

we need, but we also give them targets to

different cooperation and management

make sure that they provide the neces-

of your suppliers, in this case, the farmers,

sary amount of training and support to

than if you are talking to a glass manu-

those farmers and that they reach out at

facturer who delivers you thousands and

BUDWEISER APAC

thousands of bottles on a yearly basis.” Ultimately, the one commonality through-

capabilities the suppliers have, we work with them to get them to the

out the supplier relationships (however

level that we want and need them to be

big or small) for Clysner is striking the

in order to drive sustainable change.”

right balance between innovation, qual-

The relationships are measured on key

ity, cost and the ability to deliver it on

goals and metrics, for sure, but they're

a timely basis. Sustainability, as mentioned

built and fostered on key conversations.

above, is not a separate part of this; it goes

These conversations need to be open

hand-in-hand with it. We do operate and

and transparent when dealing with costs

we do cooperate in sustainability, slash,

and efficiencies and even more so when

innovation as well. Again looking at farmers

dealing with sustainability. Clysner and his

as but one example, Clysner notes that

team strive to be as direct as possible with

Budweiser APAC is there to help them

suppliers because he firmly believes that

because if they do well, it immediately

it allows Budweiser APAC to better manage

impacts Budweiser APAC and drives the

risk and to act fast when things go wrong.

sustainability conversation forward. “Depending on the supplier, sustainability

“Whatever the plan is, we can debate for days and months on it but the only thing

is right there at the heart of it,” he says. Is

we know is that it never is fully executed

it through water? Is it through electricity?

as per plan,” he says. “The whole chain is

Is it through the use of recycled content

too complex. Sometimes it's the weather,

in packaging material? These are all a part

sometimes it's a machine but things do

of the decision process. Then, of course,

go wrong, and communication is key.

depending on the country and what

“This is good for suppliers because

“ Ultimately, in order to achieve our goals as a business, we need the right suppliers who will allow us to grow” —

J A N C LY S N E R , V P P R O C U R E M E N T A N D S U S TA I N A B I L I T Y, B U D W E I S E R A PA C

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

BUDWEISER APAC

“ It’s up to us to decide on the road which we want to follow. The journey is not over yet. It’s a never-ending test for all of us, including our suppliers, to see how successful we can be” — J A N C LY S N E R , V P P R O C U R E M E N T A N D S U S TA I N A B I L I T Y, B U D W E I S E R A PA C

they can show what they're capable of and their agility. That's where sustainability becomes an additional tool in your communication with the supplier. You can look at it as a burden, as the problem, something else that you need to work on, or you can look at it as another facilitator in your discussion. It's an engaging discussion that most of the suppliers want to participate in. I think that's how to approach it and how you bring people along on the journey successfully.” One thing that caused significant disruption is the COVID19 pandemic. AB InBev and Budweiser APAC have not been immune to the challenges faced as a result of the pandemic, but by having these conversations with the suppliers, the company has been able to collaboratively mitigate the challenges as best as possible. “Our first priority was the safety of our own people first. Then we started working with our suppliers to see if we could support them on a case-by-case basis,” he says. “Sometimes it's by giving them orders early, sometimes it's through payments or giving them visibility on what we know is going to happen earlier than we probably would do but it was about asking; How can we help you? w w w. c p o s t r a t e g y. c o m

Jan Clysner VP Procurement and Sustainability Budweiser APAC

BUDWEISER APAC

Because we need you going forward.” In spite of the COVID19 pandemic,

for all of us, including our suppliers, to see how successful we can be. During

the future looks incredibly bright for

those moments, you really see who

procurement and indeed sustainability

are the ones that you can count on.

at Budweiser APAC. With solid founda-

“In the end, it doesn't matter what kind

tions in place, Clysner can look to the

of contract I have with a supplier; if we

future with a certain degree of opti-

cooperate badly, if our communication

mism as 2025 comes closer and closer.

among the two of us is poor, it will be

“Sustainability is in our hands. It's up to

tough in a normal situation. And it's prob-

us to manage and focus on because we

ably going to become impossible during

have the knowledge or we know whom

such a crisis like COVID, so communi-

to work with to get it done,” he says.

cation and cooperation are even more

“It’s up to us to decide on the road

important. I do believe that we have some

which we want to follow. The journey

very good and solid suppliers that we can

is not over yet. It's a never-ending test

continue to drive real change with.”

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

P R O T E C T A N D R E G E N E R AT E :

An exclusive Q&A with Dave Ingram, Chief Procurement Officer at Unilever We sat down with Dave Ingram, CPO for Unilever, to discuss how the company is putting its money where its mouth is and making real, lasting sustainable change through procurement...

WRI T T EN BY

A n d r e w Wo o d s

U N I L E V E R : E XC LU S I V E Q & A W I T H DAV E I N G R A M

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

Being a chief procurement officer is quite a demanding job at any enterprise, but it sounds like the scale of what you’re dealing with at Unilever must be enormous? It’s a company I’ve been in for quite a long time now. It doesn’t feel like a large company, though I know that it is and I know that the impact is. But I’ve been fortunate enough to work in most of the geographies, Latin America. I spent quite a bit of time in China, and now based in Singapore.

Sustainability is a word that’s been cropping up more and more in recent years in boardroom discussions, in CPO level and above and below and each side. Is this something that’s dominating Unilever’s thoughts at the moment? It’s actually been at the center of our strategy since the inception of Unilever.

a new set of what we believe are really

Since when Lord Lever started creating

bold commitments to fight climate change

Sunlight soap, doing good for the commu-

and protect and regenerate nature.

nities around our facilities has been at the center of that and that continues now.

You mentioned the announcement,

10 years ago we launched The Unilever

talk to me a little about the actual

Stable Living Program, which at the

action points of what Unilever is

time was groundbreaking, and for those

going to be addressing with regards

inside the business, extremely stretch-

to this sustainable program.

ing. Only recently we have announced

We’ve announced three goals. The first is

U N I L E V E R : E XC L U S I V E Q & A W I T H DAV E I N G R A M

to achieve net zero emissions from all of

what we previously committed, and weâ&#x20AC;&#x2122;ll

our products by 2039. We also, as part of

be using substantial new technology

that, have an ambition to make sure that

approaches to tracking and tracing and

we communicate the carbon footprint of

monitoring our supply chain to ensure

every product that we sell. So that as a

deforestation. And third is to step up our

consumer, you can pick up a product and

direct efforts in terms of water preserva-

know your exact carbon commitment by

tion, which is really about implementing a

using and buying our products. Second

water stewardship program in 100 loca-

goal is to have a deforestation free supply

tions by 2030. This is an extension of work

chain by 2023. This is going well above

that we were doing in India. w w w. c p o s t r a t e g y. c o m

U N I L E V E R : E XC LU S I V E Q & A W I T H DAV E I N G R A M

Being a chief procurement officer, you

ability that a bit easier. Because there’s a

are in an interesting position, aren’t

great interconnection through the comp-

you? Because you are fundamental

any. And again, I mentioned earlier, the

to what Unilever is procuring and then

sustainable living plan that we launched

where it’s procuring from, in terms

10 years ago, just concluding that particu-

of transparency in the supply chain.

lar program this year actually. And when

Yeah. I’m partially humbled sometimes

it was launched, I remember 10 years ago

to know the scale, and because of that,

being in the company and we were shoc-

the impact we can make. We have an

ked at how stretching the targets were.

agricultural footprint of more than three

In some cases, I had no idea how we

million hectares. Our carbon footprint

were going to achieve them. But collec-

from the supply base is about a quar-

tively across the business, across supply

ter of our total carbon footprint. And we

chain, R&D, marketing, commercial, bec-

have a social footprint of well more than

ause of the great alignment and single

a million people around the world. The

vision that was put out at that point, it was

scale is large, but it also gives an oppor-

actually made easier by that internal inte-

tunity for making a very large impact.

gration. It was also made easier by the fact that consumers are increasingly asking

There must be, as you mentioned,

for that visibility, and increasingly yield the

an advantage to size in terms of how

sustainable practices behind what they’re

much change you can make. What

buying. And it was also helped, I think, by

are the challenges that an enter-

a supply partner base that we have, many

prise of Unilever’s size faces when

of whom have got similar values and simi-

facing something like sustainability?

lar commitments to their own chains.

I think the fortunate position that we

Therefore, there was a good integration of

have a business that is centered and

belief systems towards that agenda, albeit

with a strategy around a sustainble busi-

that the targets were extremely stretched.

ness. So from the board right through the company, we have a common purpose

Having been at Unilever for a while,

about making sustainable living common-

you must have seen firsthand how the

place, which makes the job of sustain-

procurement strategy and sourcing

ability and procurement around sustain-

strategies have changed. So how w w w. c p o s t r a t e g y. c o m

the new announcement by Unilever

work within Unilever. On deforestation,

will affect you on a day to day basis.

how wesupply and where we supply from

Because of that footprint I mentioned

are becoming increasingly important.

earlier, we’re at the center of each of these

And the visibility, transparency and trace-

three commitments. So let me start with

ability of sourcing from known origins is

the zero emissions by 2039. As I said, a

becoming increasingly demanded by

quarter of our emissions base is with our

consumers. Therefore we’re going to be

supply partners. So we are working very

using new and emerging technologies such

closely with those partners to achieve

as satellite monitoring, geolocation tracking,

science based targets of reduction. We’ll

which are all going to help us ultimately

do that in a prioritized basis with our larg-

know the farmer and the field that we’re

est impact suppliers first, but we actually

sourcing from. That’s a very stretching

want to make that movement a viral move-

ambition for the scale and complexity of

ment across all of our procurement base.

some of the supply chains that we are

So that people are aware as a supplier

operating. But it’s really fundamental

of their own impact and of themselves

to giving consumers transparency and

setting their own targets for reduction.

traceability, and ensuring that we take

And we will increasingly prioritize suppli-

accountability and have knowledge of our

ers who have got that same ambition and

commitments with respect to deforesta-

are working towards those targets. And

tion. As part of that, we are going to intro-

secondly, the brands we communicated

duce a new pioneering regenerative agricul-

last week are going to invest a billion euros

tural code that we want to apply across our

over the next 10 years. And we’re going

supply base.

to be doing that in areas of land restora-

And this is looking at not just making

tion, reforestation, sequestration technol-

sure we don’t do bad, but ensuring that

ogies, and wildlife and water programs.

good is done in terms of agricultural

And we in procurement are at the center

systems. Particularly around biodiversity

of ensuring that those programs land

and restoring soil health, and preserving

with our suppliers. We have a specific

water access and conservation. So each

team within the procurement team who

of those actions are really going to be

are specialists in this area, and are really

pivotal to not just the sustainability group

the center point of this expertise of

within procurement, but actually every

U N I L E V E R : E XC LU S I V E Q & A W I T H DAV E I N G R A M

buyer who’s buying in these areas. They

are looking at this high tracking technol-

have to each become many sustainabil-

ogy. We’re meshing those companies

ity experts across climate and land use.

together in an ecosystem of approach that ultimately gives us monitoring by a

Are you also working with tech comp-

satellite, traceability through geoloca-

anies or partners or consultants to

tion tracking, ultimately helping us hold

work with you on these projects?

deforestation by knowing exactly where

We’re really excited to be working with

things come from. In parallel to those

both very large scale companies like

programs, we’re also working with Earth

Google and the Scott Lab, and also more

Equalizer, Aidenvironment and Global

nascent developing companies who

Forest Watch platforms to investigate

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

how peat and forest burning areas are affecting lands, and ensuring that we have satellite imagery of that. So the mapping technology in combination with the geolocation and tracing technology and the Blockchain technology will ultimately give us full visibility. Almost a digital twin of agricultural systems and movement, and that’s really what our ran down ambition is.

These are interesting times to do something like this, during a global pandemic. Yeah. It makes it more challenging, but it probably makes it even more important. Understanding sources of origin, understanding the effects on our supply base is really important, digital mapping of a source. And I can realize that that can come across as a technology only based approach. But what it actually allows us to do is to know the farmer. I was, a couple of months before COVID

very keen to work with an increased

lockdown, lucky enough to meet our

number of direct relationships

farmers in Indonesia who were work-

with these stewards, small holder

ing directly in coconut, sugar, palm.

farmers and farmers.

And seeing how they’re operating, these people are really the stewards of the land.

In recent years, procurement has

Therefore, the technology allows us to

been through its own kind of revo-

really have a direct relationship with,

lution in terms of becoming a much

rather than through multiple traders

more strategic role within enterprises.

where we lose that visibility. So we’re

This really underlines that doesn’t it?

U N I L E V E R : E XC LU S I V E Q & A W I T H DAV E I N G R A M

of our business. From agricultural systems, right through packaging systems and business services systems. And these partnerships are really critical for us going forward. And they’re going to be critical in terms of helping us in our journey towards zero emissions, towards deforestation and working with communities also.

We talked a little bit earlier about the kind of important partnerships, are those kind of key partnerships going to be absolutely integral going back to Unilever changing its procurement strategy? They are without doubt. And these partnerships are evolving and broadening from a typical, you’re a partner because you’re quite a large base of spend, into you are a partner because you’re a fundamental part of development that’s helping towards our purpose. So some of the partnerships Yes, I think so. It’s evolved from a cost

we have and the examples I was giving

management function in many companies

around technology, very small companies

into a large strategic driver, a driver that

that are absolutely critical we believe,

in our language within procurement with

to long-term track and trace technology.

purpose. And you’d say Unilever spans

And therefore building strong partner-

from obviously buying better, but also into

ships with them is really important. And

buying more responsibly and growing

part of that partnership is making it simpler

through partnerships. So those are our

to operate with a company like us. So I

three big levers of influence and obviously

realized that we can seem very complex

partnerships, it becomes the full elements

organizationally, our scale is large. So part w w w. c p o s t r a t e g y. c o m

of the job in partnerships is to ease entry

sure that the land is not deforested. That

of new and nascent companies into our

we’re using healthy systems of agriculture,

chain, helping them operate through our

regenerative systems about agriculture.

chain, and therefore allowing them and us

That these people are paid in the proper

to make a greater impact within the organ-

manner, and they’re not exploited. Women

ization for the planet and the environment.

in these communities are properly included with proper equity in agriculture systems

What would you say are elements

are really, really exciting changes that are

of the new sustainable practice that

going to make a difference for the long-term

excite you the most?

of their business and ultimately our busi-

Without question, it’s the opportunity to

ness. So those two aspects, the social inclu-

use technology. Whether this is Cameron

sion we can drive for this agenda and

temperature monitoring systems and

the technology unlock that allows us to

fields, or whether it’s a track and trace and

have access to those people, I think are

blockchain, back to farmers and allow-

two really exciting elements for me.

ing visibility and economic visibility for

I always feel we like, as a company, to set

the farmers through the chain. Through

extremely stretching goals for ourselves.

to mapping of land systems, land uses,

We’re quite a humble company, and we’re

animal systems, biodiverse systems. And

a company that needs partnerships, needs

ensuring that no product is coming into

assistance and wants to make a difference

our chain from those depleted resources

broader than our own chain. And therefore,

or converted resources. So the technology

looking for wider peer companies to be

opportunity here I think is enormous and

involved with us, to help us in this program,

that’s very exciting, but that link then to the

working with NGOs, working with govern-

social aspect of really connecting more

ments. We feel it’s really important to us to

directly with more of our farmers and

make a broader impact than just what is in

smallholders. I came a long time ago from

our chain. It is a call to action for all and a

a farming background through grandpar-

call for inclusion in all, to be involved in this

ents, and I really have a passion for ensur-

agenda. There’s many great companies

ing that we include these people. They are

you’re seeing enhancing similar stretch-

the stewards of the land and the people

ing targets, and I think we’ll make a bigger

that are most directly in control of making

difference by doing more of this together.

U N I L E V E R : E XC LU S I V E Q & A W I T H DAV E I N G R A M

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

What is strategic Procurement? Jeremy Bowley of Insider Pro looks to explore if there is any truth to the notion that procurement has an image problem, what strategic procurement actually means and how that's changing thanks to the COVID-19 pandemic

WRI T T EN BY

D al e Bent o n

W H AT I S ST R AT E G I C P R O C U R E M E N T ?

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

they’d probably say no. But what those

Jeremy Bowley Insider Pro

professions offer is the ability to influence and to have impact and I think what we’re starting to see, and it’s been a long journey of 20/30 years probably, is procurement

Jeremy Bowley of Insider Pro looks to

is starting to get its mind around how it deliv-

explore if there is any truth to the notion

ers impact. But there are still though those

that procurement has an image prob-

of us, even in the profession, who would

lem, what strategic procurement actu-

describe it as going shopping for a living.

ally means and how that’s changing

I think one of the reasons that we really strug-

t h a n ks t o t h e C OV I D -1 9 p a n d e m i c .

gle as a profession is we’ve not got very good at describing the impact that we can

So, who is Jeremy Bowley?

have to other people, then that feeds thro-

I’ve been in procurement for 20 years,

ugh to our ability to attract talent, our ability

scarily. I started out like most people did

to influence the organization and our ability

in buying within a graduate scheme

to make a big difference at a strategic level.

role in a water company. I’ll leap forward to today, now I run a boutique procurement consultancy [Insider Pro] and we specialize in what we call enterprise value creation.

What’s your view on how procurement is becoming a different beast for businesses? We definitely have an image problem. It is distinctly uncool. If you go to a graduate fair at university, people will gravitate towards sales, marketing, HR and to a degree accountancy, which in itself is not the most exciting thing. If I say to people do you want to add up for a living and do spreadsheets? I think 52

W H AT I S ST R AT E G I C P R O C U R E M E N T ?

As a procurement professional, if you were to speak to me and I was a graduate asking why I should care about procurement more than any other business area, what would be your quickfire way of, at least introducing to me, the true value and the importance and even the significance and enjoyment of procurement?

my business? What procurement allows

For me, procurement is all about coordinat-

directors, COOs, all those sorts of people,

ing collaboration between organizations

of your supply chain. And then your job is

and that’s way more challenging and excit-

to coordinate those, to deliver value for

ing than just doing it within a business. So

your company.

you to do, this is the exciting bit, it allows you to go and say, “Okay, I want to try and help a much broader group of people collaborate and drive value.” In a junior role in procurement, you’re going to get to speak to and interface with managing directors, sales directors, operations,

if you go into a business and go into a normal

To use Steve Jobsism, make a dent in

functional role, generally speaking, most of

the universe. I can’t think of another func-

your effort is going to be around how do

tion that offers that at such an early level.

I coordinate the efforts of the people within

Of course the rub being we don’t really talk

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

W H AT I S ST R AT E G I C P R O C U R E M E N T ?

about it like that, and we don’t really tell anybody about that so we underplay our ability to have an enormous impact. That’s probably why we’ve got a bit of an image problem. I don’t think we back ourselves enough. I do, I struggle to find another function which has that enormous impact, particularly at a sort of entry level.

What do you think is key to changing that conversation? It’s about being able to demonstrate the impact that we have and being honest with the business about it. There’s an authenticity that sits behind this. I think it comes back to what is our role and therefore, how do we articulate it? Our role is to look into the organization and say what the organization needs and help resolve some of the conflicts, because different people in the business will want different stuff, depending on which function they’re within. It’s then about looking outward into the world and saying, “Okay, how do we best satisfy that need?” If we start to talk about it in those terms, it becomes a strategic conversation. What that means though, is that we need to take ourselves away from the stuff that’s safe and comfortable. I hear people talk about strategic procurement and it is the least strategic thing you’ve ever heard. What w w w. c p o s t r a t e g y. c o m

to make a real difference to the business

How much of it has to be that meeting in the middle, if that makes sense?

model. So for example, if you were to say,

You’ve got to have people who are open

“Through my supply chain strategy, I’m

to the conversation. So you’ve definitely

able to build such strong relationships with

got to be in a business that’s functional,

my suppliers, but that represents a massive

that’s working. If you’re in a completely

barrier to our competitors, getting their

dysfunctional business where there’s just

hands around that supply chain or repli-

no conversation, of course it’s going to be

cating that supply chain and therefore that

pretty much impossible. But what I’d say

delivers X or Y in our business proposition,”

is that’s not most organizations. Most organ-

That’s strategic. We’ve got to spend the

izations are by virtue of the fact that

time talking about that, because until we

they’re trading and being profitable and

do, we are going to be a back office func-

throwing off cash, then they’re going to

tion and probably rightly so.

work. They’re going to have their problems,

we’re looking for is opportunities for us

W H AT I S ST R AT E G I C P R O C U R E M E N T ?

“ Let’s be clear, sending out a tender or following a seven step sourcing process, that’s not strategic. It’s not moving the organization fundamentally forward. It might be doing a good job, which is very valuable and needs to be done, but it’s not strategic” —

J e r e m y B o w l e y, I n s i d e r P r o

but they’re going to be open to anything

create. So by definition, you become part

that delivers real value.

of the solution. And if you turn up to any

So if you can demonstrate that through

CFO CEO and say, “Hey, look, I think I can

how you orchestrate supply chain, you can

make the organization’s share price go up

grow sales, you can improve consistency,

by 10%.” And if you can do that credibly,

you can reduce risk, you can increase cash

you will get traction. There’s absolutely no

flow, you can improve profitability, you can

question about it. The trick is of course, to

take away some of the barriers that stop

do that credibly and have something that

the organization growing. Then it is not

really does make a difference.

a difficult conversation to get people to come across the bridge towards you, because ultimately the C-suite is motivated by, and certainly in our world, but I think this is true of all organizations, by the value that it can w w w. c p o s t r a t e g y. c o m

What does it mean for, not just the procurement guy, but obviously the wider business, to have a seat at the table?

add strategic value? Finance, how does

“Procurement deserves a seat at the table is

of adding proper strategic value, then

something I hear a lot. My response to that

I don’t deserve that seat at the table. And

is always pretty much the same. And I say,

let’s be clear, sending out a tender or follow-

“Well, does it deserve it?” So if procure-

ing a seven step sourcing process, that’s

ment is adding strategic value, it deserves

not strategic. It’s not moving the organ-

that seat at the table. If procurement isn’t

ization fundamentally forward. It might be

doing that and it’s just doing tactical work,

doing a good job, which is very valuable and

delivering slightly better prices or manag-

needs to be done, but it’s not strategic. And

ing day-to-day supplier relationships, but

unless you are genuinely adding value to

not really elevating them and creating extra

the enterprise at a fundamental level, then

value for the customer or creating barri-

we definitely do not deserve that seat. We

ers to entry for the competition or lock-

need to work hard for that.

that add strategic value? Marketing, how does that add strategic value? And if I can’t respond to that with a clear demonstration

ing in value at an enterprise level, it doesn’t deserve a seat to the table. I’m sad to say that that’s probably true in 8 out of 10 companies where procurement isn’t something that they potentially need to be good at, or can be good at, because of the nature of the way that they manage themselves. It frustrates me intensely because it just

As the conversations have moved forward and now procurement has been given a chance to show off and say, “Look what more we can do than just save money,” at the end of the day, you still have to save money. So how is that balancing act unfolding and how difficult is it? The sort of classic adding savings and basic

sounds like we’re moaning. It’s almost as if

EBITDA through things costing less, that’s

to say, “Oh, I deserve a seat at the table.”

the day job. That’s not strategic. What we’re

Well, go and earn it. Because if I’m look-

well-placed now to uplift other parts of the

ing around that board table as a CEO, I’m

organization because what’s quite exciting

looking at each of those people, each

is, as the world changes and there are more

of those posts, each of those functional

small organizations and innovation, we’ve

roles, and I’m saying sales, how does that

got more of an opportunity to bring those

W H AT I S ST R AT E G I C P R O C U R E M E N T ?

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

things into play. So you’ve got to do both. I always think the challenge with procure-

by factories shutting down, by borders closing.Those things would have probably

ment is to, yes, deliver the basics, but then

happened anyway, they just wouldn’t have

to start thinking in system terms. It’s shifting

happened all at the same time and it would

our thinking away from tactical and almost

have been slightly less stressful, I guess.

a tick box exercise of, “We’ve done a tender

But those weaknesses would have played

and they’ve passed all of our tests and I’ve

out in the supply chain over time anyway.

read their accounts, I’ve done all the basic

And all COVID did was just make that

stuff.” We need to shift into systems think-

happen quickly and all at once. COVIDt,

ing now, and how do we manage the eco-

and it’s a blunt instrument, will shake out the

system of potential that is out there, which

companies that weren’t going to make it.

is huge and changing? That is an exciting piece that we’ve got to get our minds around.

All of a sudden we’ve realized that some of the suppliers, who we thought were in

It depends on your organization’s appetite and the need to be good at procurement. Not all organizations need to be good at procurement. It depends on your appetite to go and do more. The best news is that there is more opportunity out there now than there has ever been.

What has the general impact been of COVID on that procurement conversation? In lots of ways, I like to think about COVID as being an accelerant. So COVID really has probably accelerated or amplified all the things that were probably going to happen anyway. The suppliers in which we took too much risk as a profession and we let stocks run too thin, got caught out by COVID, by the logistical challenges, 60

W H AT I S ST R AT E G I C P R O C U R E M E N T ?

“ The setting of arbitrary targets, which our industry is absolutely awash with is well-intentioned, but entirely counterproductive the vast majority of the time” —

J e r e m y B o w l e y, I n s i d e r P r o

good shape, were not in good shape and actually our risks were much bigger than we thought they were, so there’s a big re-evaluation. And in the sort of rebuild, I guess, we’ve now got a real chance to shape things, which is actually really exciting.

Looking at Insider Pro then, why do we need a business like Insider Pro in procurement? We help businesses build their enterprise value. We help organizations look internally and say, “What do we actually need in order to grow?” and we help them look back out to the supply chain and say, “Okay, what’s the best way of doing that?” We sort of sit in a space between procurement and operations in many respects. A lot of the work we do is really helping the larger group of stakeholders, both internally and externally collaborate for more value. That’s the bit that’s super exciting because we have in excess of 50,000 people in our suppliers and supply chain. Imagine leveraging 50,000 people’s brain power. That’s w w w. c p o s t r a t e g y. c o m

what’s exciting. That’s what we do and what’s quite exciting is, you are sitting on a huge amount of opportunity if your eyes are open to it.

When we talk about bringing outside people in or outside consultants in, there’s often teething problems and even reluctance to engage a third party . How do you mitigate this and work collaboratively? There is no one way to do things, there’s more than one way to get there and you’ve got to find the way that’s right for the organization. You hear an awful lot about best practice and I’ve even written about best practice myself and I sort of hate that. In our minds, there’s absolutely no best practice whatsoever. What there is, is some things that work and some really good ideas and what you’ve got to find is the organization’s next practice. We understand how we better service the things that that organization needs next, rather than some mythical idea of what’s best.

W H AT I S ST R AT E G I C P R O C U R E M E N T ?

In light of COVID, a lot of people are looking inwards and examining where they may be thinking that while things have been going well, things could still be better. What would be the one permanent change you could make if you were given the power to do so? Back in the 1970s, there was an economist called Goodhart, who gave rise to something called Goodhartâ&#x20AC;&#x2122;s Law. It basically says that as soon as you measure a target, it ceases to be a good measure, because essentially people start to game the system. So the one thing Iâ&#x20AC;&#x2122;d like to see the end of is things like savings targets or improvement targets or KPI improvement. It just drives me to distraction because all it does is force us to change the definitions of what success looks like. The setting of arbitrary targets, which our industry is absolutely awash with is well-intentioned, but entirely counterproductive the vast majority of the time. w w w. c p o s t r a t e g y. c o m

Telkom: Procurement transformation and communication Ben Van Zyl, Chief Procurement and Contracts Officer, discusses a significant procurement journey for Telkom, and how the internal stakeholder sits at the very heart of it...

WRI T T EN BY PRODUCED BY

D al e Bent on Hey kel Ouni

he challenge in any procure-

designed to sign the invoices and in some

ment transformation is one of

cases, police spending. But the reality is

enacting true, tangible change.

that change is necessary and procurement

As many organisations seek to realign their procurement and supply chain functions, to

has transformed significantly. Take Ben Van Zyl for example, Chief Procur-

make them more strategic and key drivers

ement and Contracts Officer of OpenServe

of growth, the journey thatâ&#x20AC;&#x2122;s required is one

and Telkom. Van Zyl, who has built a 20-year

defined by constant change and increasing

career in strategic sourcing, procurement

pressure to deliver. This is in part, thanks to

and supply chain management for leading

often antiquated views that see it as merely

financial and telecommunications organ-

a cost centre and a back-office function

isations around the world, was tasked

TELKOM GROUP

with lending his expertise to deliver a true

getting the language right. You do not say

procurement transformation for Telkom.

that you’re going to come in and implement

One thing that he acknowledges as a com-

new control because honestly, what really

mon concern for procurement profession-

scares people is the idea that you are here

als in his position is communicating

to police a policy and put in new processes

the true value of procurement to an organ-

that’s going to delay them.”

isation. “I think when you listen to the busi-

“That’s how you create resistance bec-

ness, you can really translate what their

ause they have objectives and in their

vision and strategy for their business is

performance plan, there isn’t a dependency

and approach it in a way that will enable

on procurement. Whatever I bring forward

them to realize that,” he says. “It’s about

has to have a client focus in mind to talk to how we are going to enable them.” Van Zyl beams that he has been blessed to be in a business made up of people and a board that understands the critical role procurement plays and welcomes the changes he has recommended. Van Zyl had already worked with Open Serve for a number of years but was tasked with a specific goal for Telkom; to “fix” procurement and supply chain issues that had arisen within the business. The bottom line for procurement first and foremost is one that focuses on the bottom line and to streamline and tighten up a number of performance issues around cost reduction. But, as is a common question raised by many procurement professionals, why stop there? Van Zyl very quickly came on board and resolved a number of issues presented by previous failed implementations and misfires or in his own words he “steadied w w w. c p o s t r a t e g y. c o m

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the ship” but even he acknowledges that

policy and then at the same time fixing the

really, it was only the beginning for procure-

big pain points like the very cumbersome

ment. “We were under pressure from a

supplier onboarding process that was in

cost perspective,” he says. “I was asked

place,” says Van Zyl.

to come in and steady the ship but also to

“Alongside this was a focus on identifying

try and take our procurement and supply

any big opportunities from a cost savings

chain environment to the next level.”

perspective and the key deals that the busi-

Defining that next level was crucial in

ness required to enable them with their

order to make lasting and meaningful

business objectives and the business

change for the business going forward

strategy and realizing that.It was a chal-

and so the first steps were to look inward

lenge but I think listening to the stakehold-

and engage with stakeholders in order to

ers and sharing with them to say this is where

identify the real pain points that the busi-

we are, here are the things that are critical

ness had and outline the “building blocks”

and this is going to my approach and my

that would enable that change. Running

timeline - which they approved - was key to

parallel alongside this initial assessment

getting things started.”

was a dedicated maturity assessment that allowed Van Zyl to paint a clear picture as to the challenges that procurement and supply chain as well as the wider business faced and how the two went hand in hand. This, he notes, allowed the business to expose the gaps and design a plan to achieve key objectives and targets. On top of this there was an audit coupled with the pain points raised by suppliers enabled a prioritizing of required actions moving forward. “My initial focus was on getting the basic building blocks in place like a center of excellence, operating model, a new procurement governance framework and 70

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“ This model also allows for improved knowledge management so that you can create step changes in the skills of the team” — B E N VA N Z Y L , C H I E F P R O C U R E M E N T A N D C O N T R ACTS O F F I C E R

One of those building blocks, a center of excellence, was the key to all of this. Successfully establish and implement this at the very heart of this journey and the road ahead will look that little bit easier. But what is meant by a center of excellence? Well, a core team of procurement experts that play a holistic procurement role within the organization that can drive scale and repeatability and best practice. Van Zyl highlights an example of this in action where the business has multiple ERP systems and processes which this team of experts can take on the responsibility for and advise on the implementation and the use of new technology. “They can also provide knowledge base services across the different procurement processes, platforms and standards designed to drive that scale and focus on delivering that value added performance throughout the procurement organization to enable the growth strategy,” he says. “This model also allows for improved knowledge management so that you can create step changes in the skills of the team.” This is of particular interest to Van Zyl as there is a notable shortage of sourcing talent and so w w w. c p o s t r a t e g y. c o m

Deliver the extraordinary

Plan now for 5G, says Nokia Communications service providers must ensure that they have the right foundations, or transport in place to take full advantage of 5G. This is the view of Mark Baptiste, director of the IP and optical business for Africa at Nokia. “There are so many moving parts at the moment,” he says. “You have your transport or the mechanism to carry your traffic which includes Optic’s, IP and Microwave on the one side, but then we have things like virtualisation, public and private cloud, automation, software-defined networking (SDN) and security that are also fundamental to the network operations. That is why it is not only critical to get the transport right at the outset, but also to build it so that it can deliver today, while also catering for the requirements of the future.” The CSPs have massive investments that they have made over the past 20 years, and this is not something they can just switch off. Baptiste believes this is where transport becomes so important. “From a transport perspective, we do not distinguish between the existing and the future. What we are saying is that we must build networks that can operate securely, handle massive scale, and provide seriously high performance,” he says. “The biggest challenge for CSPs is balancing the present while investing in the future. We all know that 2G and 3G will be around in Africa for a long time. For operators in Africa, it is about striking that balance between keeping existing customers happy, while looking at the business case for 5G, because everyone wants to be the first to make it a reality.” Baptiste says the most important thing for CSPs right now is to get a strategic blueprint in place that determines how they evolve their network from where they are today, to cater for the requirements of 5G and their network evolution. “Here Nokia is strategically positioned to work with CSPs to build this end-to-end architecture where we would look at each of these elements, firstly holistically, and

then we would strip them down in isolation to determine how we build each of these elements to meet their specific requirements. Then we would put it all together again in terms of a blueprint that provides the CSP with the Future X solutions Nokia always talks about.” Nokia has recently revolutionised data centre networking by launching our new Data Centre switching fabric. Our DC Fabric provides generational steps in data centre networking; new operating system, tools and gives cloud builders unprecedented ability to adapt, automate and scale keeping up with the increasing demands from 5G. “Nokia’s DC Fabric also redefines openness, application development flexibility, robustness and operational tools for rapidly building and confidently operating data centre networks at scale. This puts Nokia in a unique position completing our end-to-end portfolio for 5G,” he says. Baptiste concludes that CSPs must focus on getting the basics building blocks of their transport platforms right early on. “If you have an under dimensioned transport platform, it does not matter what you build, it will have a serious impact on your ability to deliver at scale on the rapidly evolving requirements of networking. So, the key thing is to build that transport platform that can address security, massive scale, high performance and gives you all the automation and end-to-end requirements that you need. Nokia is proud to be a partner of Telkom in South Africa and, together, we look forward to building next generation transport networks, which are the bedrock for enabling digital services for consumers, enterprises and the public sector in South Africa.”

Mark Baptiste

knowledge management is critical. Talent comes and goes and the people within the business, critical procurement experts, may leave and leave an organisation with key information within the hard drive. “Then you end up having to redo and relearn the same things that that individual learned when he was there and you have to do everything from scratch,” adds Van Zyl. “Again, what’s critical for us as well in the center of excellence model, is that it helps us with improving our knowledge management along with everything else.” When discussing procurement transformation, it’s not long before we fall victim to subscribing to the notions of trendy buzzwords that professionals like (and dislike) to hear. Flexibility and agility are two of the biggest and oft used words, but why? What do they mean to a business? “I’ll be honest. These were not words that’s normally associated with procurement for Telkom,” Van Zyl boldly states. “It used to be an organization with structured and strict procurement processes and gateways, so those words were not normally associated with the whole procurement process environment.” There is sound reasoning for this. Telkom has a number of unique and different business units within its portfolio. These include but are not limited to: a fixed line business and mobile business, a mast and tower, a property business, a commerce platform business with some financial services and an IT outsource business. Each unit has its own strategy, size and cost plans. For Van Zyl and procurement, it was vital to acknowledge that one-size-fits-all process was out of the question. “A standard recognized procurement process with no flexibility that is unable to respond to the individual 74

TELKOM GROUP

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

business unit will become unnecessarily

that this is a process that ultimately will never

controlling and restrictive. It would create

be ‘perfect’. Improvements have been made

a direct negative impact on the individ-

but this is an ever evolving journey and so

ual business units that would struggle to

he and his team will continue to acknowl-

achieve and maintain a competitive advan-

edge any emerging gaps in order to be able

tage in the open market,” he says. “We

to adapt fast.

really had to consider that in our devel-

Procurement is a numbers game. It always

opment of the new procurement govern-

has been. The numbers and indeed the succ-

ance framework policy and processes,

esses count now more than ever when

as well as the selection of our digital tools

undergoing significant transformation.

that we would like to implement. It allows

Van Zyl can already point to the address-

us to be more flexible and more holistic

ing of the control environment through

in our approach to shorten that timeline

the design and implementation of a new

for either the contracting process or that

procurement policy, governance frame-

transaction.”

work and processes that enables the busi-

Easier said than done and Van Zyl admits

TELKOM GROUP

ness to move faster and provide flexibility.

Elsewhere, by building a spend queue

ultimately, the key stakeholders for procu-

system it allowed for a far greater under-

rement. Van Zyl has implemented a supply

standing of spend and analysis by creating

chain financing platform to free up cash

dashboards for performance, cashflow

flow and reduce working capital. A very

views, and savings reports in order to track

important focus for the group CEO and

real savings. “It sounds like basic stuff,”

CFO, this changed the payment terms for

says Van Zyl. “But we had some contra-

suppliers from 30 to 90 days, the indus-

dicting views on the spend. Depending on

try standard for telco companies in South

whether you look from a supplier perspec-

Africa. “By implementing the supply chain

tive or contracts perspective or business

financing platform it allows the suppliers

perspective you could get different num-

and even the small supplier to immediately

bers so we had to fix that so that. Now,

trade their invoice at a low interest rate

there’s only one version of the truth that

where they could immediately get the cash

can allow you consistency to make the

injection,” he says. “That was also very

right decision as well as track deliverables.”

helpful during this COVID period and a great

But what of the successes in the eyes of the CFO and in turn the CEO? These are,

achievement in terms of our year-end result.” Success is one thing, but failure is

“ The procurement function is able to develop and create innovative business models and become a valuable strategic business partner” — B E N VA N Z Y L , C H I E F P R O C U R E M E N T A N D C O N T R ACTS O F F I C E R

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

another and admitting that things haven’t

human factor too. Dramatic change brings

gone according to plan is often the place

tremendous resistance and it requires

where real change is found. Van Zyl recog-

ongoing change management to ensure

nizes this as an incredibly important part

that success.”

of any journey. “It’s a journey and there’s

Technology and process digitalization

always room for improvement,” he says.

play a real key role in the procurement

“It’s critical to continuously review and

transformation journey. Established and

evaluate the new processes and tools that

emerging technologies enable businesses

you implement. We will implement new

like Telkom to become far smarter and

processes and tools, which should bring

more scalable.For Van Zyl and procure-

significant efficiencies but let’s create check-

ment, digital innovation will enable a move

points and evaluate and make improvements

away from a repetitive manual task envi-

where necessary. The procurement or the

ronment to a mix of more analytical and

process we’re engineering may succeed

creative thinking roles that’s focused

due to acceptance of the solution, but the

on driving a competitive advantage and

TELKOM GROUP

strategic value. “The procurement function

tools one can be forgiven for forgetting that

is able to develop and create innovative

they are worthless without the right people

business models and become a valuable

striking the right relationships. “The people

strategic business partner,” he says. “We

in your team are the biggest asset that you

become a partner backed by real time

can ever have,” he says. “If you don’t have

access to data and market trends to

experienced, reliable, strategic sourcing

advise and support strategic decision making

professionals, and not even only strategic

in the business, but also significantly

sourcing, really in every corner of the value

improve on timeline for contracting and

chain, whether it’s somebody that focuses

transacting and approvals. That’s what

on analytics that can drive the insight for

digital procurement means to us.”

you, or whether the person actually needs

Procurement and supply chain is a people and relationship oriented function. This is nothing new, but as we discuss transformation through processes and digital

to look at your procurement operations environment, you rely so much on them.” With the right people, the right process and ongoing discussions with the suppliers,

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

TELKOM GROUP

the relationships between both Telkom and said suppliers can evolve and take on new and more fruitful forms. Through a contract and supplier relationship management program that allows Telkom to navigate geopolitical tensions and restructuring of the global trade dynamic. As well as individual supply management account plans based on the supplier risk segmentation and joint balance performance scorecards, Telkom can continuously assess performance across multiple factors. Van Zyl points to substantial improvement of raw supply performance and noteworthy reductions in contract value leakage. “It also opened the communication between us, the suppliers and the internal business partners, because everybody is now seeing that value,” he says. “We’re also doing an annual supplier survey, to really understand their experience in dealing with us. So we’re looking at the entire process from onboarding, the RFP process, the engagement with the procurement team, transaction right through to the payment process. That helps us identify and address the pain points and to make the interactions with Telkom as seamless as possible.”This model truly enables Telkom to continue to improve the supplier experience because, as Van Zyl notes, Telkom wants to be viewed as the customer of choice, and thereby gaining access to the best offers from the best suppliers in the market. In early 2020, the world stood still as the COVID-19 pandemic swept the globe. Even now, the ramifications are still being felt, but through adversity comes opportunity and Van Zyl, along with many procurement professionals, this crisis has highlighted the call for a new approach where agility and change are not only essential but unavoidable. Telkom were able to identify concentrated risk with certain w w w. c p o s t r a t e g y. c o m

key suppliers, and where there are single

doing these past few years, Telkom was

points of failure on critical supply material

able to thrive.

or equipment. In acting fast, Telkom were

“We were quite fortunate in that, thanks

able to put alternative sources in place

to what we had in place, the disruption to

where viable. Thanks to business continu-

our business was actually not that signific�

ity plans in play for its strategic suppliers

cant,” he says. “Our analytical capability and

and the suppliers where there’s significant

the role of analytics will play a more impor-

risk, and the work that Van Zyl has been

tant role, as a more detailed understanding

TELKOM GROUP

of our suppliers and the supply networks

the road ahead? Many can and have spec-

allowed us to make sound decisions based

ulated that we will see a new world of

on a comprehensive understanding of the

procurement and supply chain thanks to

current potential future supply sources,

a rethinking of what is truly effective

and developing trends, all supported by

and strategic in light of COVID-19. For Van

detailed cost and risk analysis.

Zyl and Telkom, the road ahead remains

Given the tumultuous path that 2020 has put many on, how much has that changed

one of continued strategization. Cash flow will continue to be managed, cost w w w. c p o s t r a t e g y. c o m

reductions and further seamlessness in the process remain the core targets and further implementation and development of the analytics and automation of reporting and insight developing too. But what will be key for Van Zyl in order to succeed? “If you always look for that opportunity to provide more value to the business, then you’ll earn your seat at the table,” he says, acknowledging this oft used expression. “It doesn’t take away that you need to be competent, and you need to execute well. But unless you have a seat around the table, you don’t even get the opportunity to deliver value, and you remain a support function to a support function. Seek that opportunity to provide value to the business, have a blind focus and you can do your job and deliver value.”

TELKOM GROUP

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

Five Things we learned from the Supply Chain Digital Readiness in Retail report

Earlier this year, WMG at The University of Warwick and Blue Yonder partnered to assess the digital readiness of retail supply chains. Benchmarked on a four-level scale, more than 100 respondents globally contributed to the final results. Here we take a look at some of the key findings.

WRI T T EN BY

D al e B e n t o n

S U P P LY C H A I N D I G I TA L R E A D I N E S S I N R E TA I L R E P O R T

Majority of retailers are at an early stage LEVEL TWO PREDICT VE

Analytical Periodic process VISIBLE

LEVEL ONE

Manual Infrequent process

Internal Perspective R E AC T I V E 88

S U P P LY C H A I N D I G I TA L R E A D I N E S S I N R E TA I L R E P O R T

LEVEL FOUR

Machine-learning Real-time process PRESCRIPTIVE

V I S I B I L I T Y A U TO M AT I O N

A U TO N O M O U S

Advanced Continual process LEVEL THREE

The report outlines what it describes as the the four stages of an autonomous supply chain; VISIBLE (Manual infrequent process) PREDICTIVE (Analytical periodic process) PRESCRIPTIVE (Advanced continual process) and AUTONOMOUS (Machinelearning real-time process). Retailers, broadly speaking, are at the early stage of their digital supply chain journey. only 15% of respondents have reached Level 3 (PRESCRIPTIVE) or above. That being said, there is a sense of urgency among retailers to accelerate their business models with over half ambitious to achieve a prescriptive or autonomous supply chain in the medium term.

Ecosystem Perspective PREDICT AND PESCRIBE 89

Demand and Replenishment Retailers are not able to react to changes in demand in real-time, the report reveals. To put that in numbers, only 8% of retailers are refreshing demand planning processes on a real-time basis. Look a little further and 22& of respondents are currently using spreadsheets for this process but 74% have expressed the desire to switch to prescriptive or autonomous technology incorporating machine learning within the next five years. 49% of retailers have basic demand processes with only 11% able to accurately sense and shape demand. The approach extends into replenishment, with 44% looking to develop a digital twin to manage inventory with optimizations based on demand, cost and business strategy.

S U P P LY C H A I N D I G I TA L R E A D I N E S S I N R E TA I L R E P O R T

% Current % Ambition Demand Planning & Forecasting

38 32

22 17 10 LEVEL 1

8 LEVEL 2

LEVEL 3

LEVEL 4

% Current % Ambition Replenishment Planning

45 36 27

25 12

LEVEL 1

17 12

LEVEL 2

LEVEL 3

LEVEL 4 91

Warehousing and Transportat on

% Current % Ambition Warehouse Management

45 34

18 10 LEVEL 1 92

10 LEVEL 2

LEVEL 3

S U P P LY C H A I N D I G I TA L R E A D I N E S S I N R E TA I L R E P O R T

LEVEL 4

Only 10% of retailers operate fully automated warehouses. 40% of them have expressed an aspiration to operate one over the next five years. Increasing labor issues during the pandemic have undoubtedly highlighted this issue. There is recognition that transport planning is currently too manual and simplistic with cost savings and efficiency improvements to be made. Overall there is a lack of integration between logistics and planning.

% Current % Ambition Transportation Planning & Operations

43 33

20 10 LEVEL 1

10 LEVEL 2

LEVEL 3

LEVEL 4 93

Network Network Design was a dimension where the respondents were looking for a level 3 or 4 outcome to create agile end-to-end business optimization. The report shows that retailers are aspirational for structural change rather than continuing to tweak dated models more appropriate to simpler times.

% Current % Ambition Network Design

44 34 28

27 21

25 11

10 LEVEL 1 94

LEVEL 2

LEVEL 3

S U P P LY C H A I N D I G I TA L R E A D I N E S S I N R E TA I L R E P O R T

LEVEL 4

The AI Automation Opportunity Incumbent processes have often evolved to fit the available technology, departmental or functional needs and required reporting cadence. These are level 1 and 2 processes. The true nature of demand, however, is determined in real time by an interrelated set of factors. When capitalising on the digital opportunity, it is important to remember that Machine Learning can recognise digital signatures in big data to enable a paradigm shift in demand sensing, prediction and planning. Cloud models enable automation and on-demand scaling to help reveal demand with greater precision to maximise profit and reduce waste.

EXCLUSIVE How prepared is the retail sector to fully embrace a digital supply chain? Listen to an exclusive episode of The Digital Insight with Wayne Snyder, Vice President, Retail Industry Strategy for EMEA, at Blue Yonder and Janet Godsell, Professor of Operations and Supply Chain Strategy at University of Warwick 95

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