SUPPLY CHAIN TRANSFORMATION: People, processes and systems
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BEST PRACTICE PROCUREMENT IS DRIVING GROWTH AT CUSHMAN & WAKEFIELD
Cushman & Wakefield, following a major merger, is reimagining its global business to reflect the depth and reach of its property management portfolio, and supply chain transformation has been crucial to this process
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he built environment is a great metaphor for globalisation. It’s getting axiomatic to say that the great cities of the world are becoming more alike, and that if you were to be dumped at random in any one of them the buildings alone would not be a sufficient clue to where you were. Populations are migrating to these environments because this is where the industry, commerce and housing is all concentrated and as a result, cities are getting larger, sometimes exponentially as populations explode. Global businesses have one thing in common – they need premises, offices, factories or shops. Another thing is that, totally dependent as they are on getting the working environment right, securing and maintaining and managing those premises is very unlikely to be their core business. They universally resort to the services of a specialist to source, negotiate and eventually manage their premises, whether these are rented, leased or owned. It was in 1917 that J Clydesdale Cushman and Bernard Wakefield went into the real estate business together in New York. A measure of its success
is the number of times it has been acquired by larger groups – most recently in 2015 merging with another long-established global real estate services provider DTZ, backed by the private-equity giant TPG to create a company in contention to become the world’s largest company in its space. The strength of the Cushman & Wakefield brand is recognised in its adoption as the name of the new entity, which has an annual turnover of more than $6bn and some 45,000 employees. The year following the merger, 2016, saw the company transact over $191bn in deals and today it has a total of around 4.3bn sq ft of commercial property under management. Cushman & Wakefield’s clients include many if not most of the biggest global businesses, including the likes of Unilever, Nokia, Lego, Coca-Cola, Nomura, Zurich Insurance, Rolls-Royce or Shell Oil (for whom Cushman & Wakefield negotiated the largest office space lease in the world in 2011). It’s also a truism to state that companies like
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this would not place a businesscritical asset in the hands of a firm they did not trust implicitly. Transformation fundamentals The firm has a global policy, delivered through offices in 70 countries divided into major regions. Each of these offers nine core services in 21 sectors from airports to technology. Clearly the importance of each of these sectors will vary depending on the region, but all of them are well represented in the Asia/Pacific (APAC) business, which covers the burgeoning aspirations of India and Vietnam as well as the mature markets of Singapore and Australia and New Zealand (ANZ). The merger with DTZ presented an attractive opportunity to Stuart Smith, a procurement professional with more than 15 years’ experience in property supply chain leadership, when he was appointed to the job of Chief Procurement Officer (CPO) APAC, based at Cushman & Wakefield’s Brisbane office. His role is to lead ANZ in procurement capability development as well as integrating APAC opportunities
Stuart Smith Chief Procurement Officer – APAC
Stuart Smith is an executive manager and project director offering proven success realising strategically important mandates for multibilliondollar businesses. He leverages a diverse, international career history that spans procurement, property and facilities management, organisationwide transformation and large-scale program management to establish and implement effective operating models for future state success.
as part of the company’s unified regional programme of procurement initiatives and maturing category strategies. It was a huge opportunity to overlook a very large regional spend. “I was also very interested in the ownership structure,” Smith says. “Being owned by a private equity firm meant that the whole organisation, not just w w. c u s h m a n w a k e f i e l d . c o m . a u /e n - g b
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procurement, was going through a transformation and a culture change. I could see that procurement would be a big part of that: I was keen to see how I could contribute to that journey.” The procurement function manages up to 70% of Cushman & Wakefield’s revenue. The company’s brand reputation and relationships depend on the processes and partnerships it manages. “We see our vendors as strategic partners to our own success,” says Smith, as he introduces the transformation he is leading, with enthusiastic support from the APAC leadership and in line
with global strategic goals. “This is about more than saving money. It is about trying to line up functionality with company strategy, as an integral part of our clients’ success. If we don’t manage our vendors well and help them understand what we are trying to achieve then the outcome is going to be detrimental to us. Seamlessness of expectations, transferred up and down the supply chain, is where I want procurement to go.” Leveraging people, processes and systems, aligned
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Cushman & Wakefield Australia: Be What’s Nextv
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with Cushman & Wakefield corporate policy, is the way to achieve this, he says. Digitising core processes Technology is the backbone of efficiency in our times. While outputs and IP remain in the hands of the teams, technology is what drives the process. Cushman & Wakefield’s global intranet is a powerful platform that carries all of the templates, vendor registration and compliance documents and other tools that help to automate processes that used to happen manually. Smith obtained permission to replicate that portal in the Australia network: “I wanted to find an effective means of
communication to save our team being disrupted by phone calls and emails on a regular basis with the same question. “The team is now able to focus on the delivery of new outputs and the development of new tools and products and commercial outcomes. I want them to be focused on developing vendor relationships on refining our panel agreements. To do that we need to give our category leads bandwidth. The accounts teams can deliver client expectations in the field while
STUART SMITH’S TOP TIPS FOR TRANSFORMATION 1. Discovery and preparation Don’t rush, particularly if you joined an organisation looking for a ‘transformation’. What does the transformation mean to the various staff, team, vendors, executive and other stakeholders. Most likely everyone will refer to outputs or KPIs of the function. These are consequences of transformation, therefore your role must be to identify gaps and address opportunities in the fundamental governances and foundation operating model, that will in-turn result in those desired consequences. If you approach a Transformation transfixed on savings or speed to delivery or client relationship scores, then you will likely have short term achievement but with volatile results, and inability to sustain the change. 2. Balanced and rounded Your transformation Journey, will comprise many initiatives, each one chipping away at the enormity of the project, and providing manageable pieces for each person to Innovate, own and deliver. Most will be inter-related to other initiatives, and so coordination across initiatives by a formal program is critical. When identifying the initiatives, you need to ensure you have captured capability pillars of people, process and systems to have a rounded and holistic transformation journey. 3. People - innovation, ownership and delivery You might be the lead of the transformation Journey, but its success rests in both the people actioning initiatives, and people accepting the change. You will need to achieve both actioning and accepting the journey, by entrusting and empowering the team to be their own drivers of the journey. You must inspire them to innovate. You must encourage them to be brave to own their initiatives of the journey. You must hold to account the delivery to the standards upon which the next/future initiatives are able to rely on for their own success. 4. Simplified objectives, with manageable pieces The objective of your transformation Journey needs to be framed in a way which is universally understood and believed, not just by expertise in your function, but by the entire stakeholder group to the journey and its outcomes. The idea being to agree the objective, but quickly be able to articulate the journey by a series of initiatives that manage the improvements needed in each pillar (people, process, systems), and have a manageable timeframe to each initiative’s completion. 5. Don’t forget BAU All too often the journey is more enticing than business-as-usual (BAU). It’s exciting, innovation, the buzz topic… but BAU cannot suffer. The journey needs to result in an improvement, but not on the basis of losing further ground on BAU performance.
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our category strategy teams manage The journey the whole client/vendor relationship. When Smith came in to lead APAC The technology advantage was key in 2017, he found a procurement to the separation of roles, allowing team with a strong desire to be at our people to work more creatively.” the centre of the change process Spend cube analysis is another but without a clear idea of the corporate goals. “My role was to key enabling technology. This brings bridge the gap by directing people visibility to complex client requirements towards the objective, articulating and expectations, allowing effective that objective to contract life cycle management and the business and integration with the J D the team, and Edwards ERP platform. then breaking There’s plenty of data that journey down available fed back from Year founded into manageable financial and operational phases.” Policies communication in and procedure the field, but many for APAC were, systems still sit in however, decided in isolation, Smith feels: conjunction with the global teams analytics draw these and the executive leaders of the together. He gives a simple example: business worldwide. Smith’s “It’s nearly impossible to compare, leadership role included making when asked, our rate per square metre sure that his team had ownership against a benchmark figure without of the journey, were clear about linking commercial with operational the objectives and that each of performance. No current system does the three pillars, tools, policies that but without that link you can’t and procedures advanced hand benchmark reliably.” Linking scopes of in hand, at the same pace. work with commercial outcomes is an The ‘bite-sized’ approach as yet uncracked nut but he has it in his proved effective, for example when sights.
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THE CUSHMAN & WAKEFIELD ADVANTAGE:
• Consistent delivery across multi-market client portfolios • Timely delivery of value conclusions • Compliance with financial regulatory requirements • Valuations based on access to constantly updated market data
considering procedures: “We took our large procedures document and broke it down into a user-friendly form both for ourselves and for our stakeholders.” Getting the technology in place to support these changes is a work in progress, though advances have been made. A whole new system whereby vendors manage their improvement and compliance via Rapid Global, an Adelaide-based partner, is in place. Compliance monitoring had been a big issue, with some vendors, particularity those used less frequently, not keeping the necessary registrations and licences up to date. “We are looking at new tools to take
up the next evolution of Rapid Global and have reinvigorated our internal compliance committee,” Smith says. The results so far have seen compliance performance improve by 35% over the last six months alone. Another positive outcome was reducing the entire APAC vendor base by 25% by removing those suppliers whose compliance levels had been identified as wanting, and with whom the company was spending small amounts of money. The creation of panels made up of vendors with whom Cushman & Wakefield has a strategic relationship in each of w w. c u s h m a n w a k e f i e l d . c o m . a u /e n - g b
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its 21 categories has driven further value. Cleaning, for example, is one of the largest categories. “We have around 230 cleaning organisations: our strategic category for cleaning now has no more than 15. Our panel agreements and more than just commercial contracts – they focus more on driving value, for us as well as for the clients.” Standardised service level agreements (SLAs) and KPIs, focused purely on operations, ensure standardised scopes of work. Vendors have access through the intranet to all the templates and standards they need. This helps ensure that no service parameters are missed, and as a consequence the clients are secure in the knowledge that Cushman & Wakefield has their interests at heart. This drives competitiveness. “Many of our competitors don’t have that fully integrated supply chain procurement model,” explains Smith. “They are just expediting the requirements of the client to the vendor and back again with no real sophistication in defining the scope of works.” Vendors are empowered to suggest improvements, and clients are able to manage their own expectations, w w. c u s h m a n w a k e f i e l d . c o m . a u /e n - g b
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he adds. “Some of our clients are large enough to have dedicated procurement resources, and at larger clients we have embedded Cushman & Wakefield procurement specialists and managers. But we have an obligation to ensure that our strategy works for largest through to the smallest clients. As the client accounts get smaller the need for an individual dedicated resource reduces, so we have a floating team who handle multiple accounts.” Local sourcing to large clients ‘Think global and act local’ is nowhere more important a mantra than in APAC. It’s a critical part of Cushman & Wakefield strategy to support indigenous businesses. At the end of 2017 the company launched its Reconciliation Action Plan (RAP). This pledged to provide employment and training opportunities, build community awareness, and facilitate collaboration with Aboriginal and Torres Strait Islander Australians. Since 2015, Cushman & Wakefield, in partnership with its clients, has spent approximately $25mn with
“MY ROLE WAS TO BRIDGE THE GAP BY DIRECTING PEOPLE TOWARDS THE OBJECTIVE, ARTICULATING THAT OBJECTIVE TO THE BUSINESS AND THE TEAM, AND THEN BREAKING THAT JOURNEY DOWN INTO MANAGEABLE PHASES” 19 – Stuart Smith, Chief Procurement Officer – APAC
indigenous businesses across its supply chain, and now Smith is determined to go deeper. In 2017 he made a presentation at the annual conference of Supply Nation, Australia’s leading diversity organisation, exploring how indigenous businesses might evolve and what they should w w. c u s h m a n w a k e f i e l d . c o m . a u /e n - g b
consider in their tendering processes. larger industry representative “Our indigenous procurement policy is bodies to bridge the gap.” a supply chain promise to indigenous Smith started by dropping communities nationwide,” he says. some big names. In the APAC At least four of the 15 organisations region they don’t come much we mentioned earlier in Cushman & bigger than the Anglo-Australian Wakefield’s cleaning category panel mining corporation BHP Billiton. are certified by Supply Nation as bona Cushman & Wakefield has just fide indigenous-owned enterprises. signed up BHP as Companies such as a client, but what is ARA Property Services, different about that is founded in 1994, sit the regional operating alongside equally model of this client, Number of well-established which before the employees at cleaning firms as merger might have GJK Facilities on this been difficult to panel. His aim is to accommodate. “We achieve an equivalent have a procurement level of representation manager in Australia who is on each of the category panels. liaising our APAC sister companies Firms that are too small to make the in development of the BHP panels on their own can still participate programme of procurement through ‘aggregators’ like Supply initiatives to achieve contracting Nation itself or Fresh Start. “We have model they want,” Smith explains. separate indigenous panels,” Smith “The challenge is to deliver says. “They are not category specific, commercial benefit and but where a client wants to use an consistent performance, not indigenous organisation for which we just across Australia but across can’t quite see a place in a procurement the Asia Pacific region. Having category panel, we are willing to an integrated APAC model is engage with Supply Nation and those a fundamental benefit of our
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“I WANT TO START BUILDING STRONGER RELATIONSHIPS BETWEEN THE SENIOR LEADERSHIP TEAMS ACROSS THE REGION” – Stuart Smith, Chief Procurement Officer – APAC
transformation journey. We are no longer talking of countries as silos, but engaging with a large client to leverage our categories and operating model.” The BHP deal is setting a benchmark, he adds. From this year on, more clients will be coming on board to take advantage of Cushman & Wakefield’s APAC operating model, delivering consistent services, tools, vendor strategies and category strategies. In this encouraging environment Smith is confident that his teams will be able to achieve further savings in the supply chain over and above the 67% they managed last year. Indigenous engagement will double.
The vendor tail will be reduced by a further 30% by increasing the number of strategic relationships. Compliance levels among the 220 panel vendors is due to grow by 65%, and Smith believes this will be exceeded. “These are the key targets for ANZ and more broadly. We have a very good team in ANZ and an excellent relationship with the country procurement leads. I want to start building stronger relationships between the senior leadership teams across the region and drive consistent scopes of work, consistent SLAs and KPIs.”
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Level 11 123 Eagle Street Brisbane,, Australia , QLD4000 Tel. +61 7 3852 2280 www.cushmanwakefield.com.au/en-gb