Procurement Magazine December 2023 by procurementmag

December 2023 | procurementmag.com

Demystifying technologies in procurement

VODAFONE’S NINIAN WILSON Procurement’s journey from back-office to key enabler

IVALUA’S ALEX SARIC Understanding procurement tech UNILEVER Willem Uijen’s commitment to sustainable sales growth

LEAN PROCUREMENT GEP and the vital factors of success

A PROCUREMENT PATHWAY

TO NET ZERO Mars CPO Barry Parkin explains the role of procurement in the Mars Inc Net-Zero Roadmap

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The Procurement Team CHIEF CONTENT OFFICER

SCOTT BIRCH

MANAGING EDITOR

NEIL PERRY EDITOR

GEORGIA WILSON CHIEF DESIGN OFFICER

FEATURE DESIGNERS

JULIA WAINWRIGHT VICTORIA CASEY EMMA WALLER LEAD DESIGNER

JULIA WAINWRIGHT ADVERT DESIGNERS

HEAD OF DESIGN

DANILO CARDOSO CALLUM HOOD ADRIAN SERBAN

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MATT JOHNSON

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JANE ARNETA MARIA GONZALEZ YEVHENIIA SUBBOTINA KENDRA LAU

LEWIS HAMMOND MANAGING DIRECTOR CEO

GLEN WHITE

FOREWORD

Procurement is at the heart of a successful, progressive business During the pandemic, procurement and supply chain professionals became part of international news conversation, but now they are here to stay

“The business world would never be the same again”

For too long, the procurement function within a business was seen as a back office function, without ever consistently being perceived as an area of the organisation that was critical to wider strategic success. Once the pandemic and lock-downs fast-tracked the skills and professionalism of the function to international headlines, the business world would never be the same again. Our cover story this month encapsulates just how the importance of procurement is genuinely becoming part of the strategic planning of every progressive business. Barry Parkin, the Chief Procurement and Sustainability Officer at Mars Inc explains how vital procurement is to Mars’ net-zero efforts, and I hope you agree is a fascinating insight into how a global leader is leveraging their supply operation to make a real difference to the planet. Enjoy the issue.

NEIL PERRY PROCUREMENT MAGAZINE IS PUBLISHED BY

neil.perry@bizclikmedia.com

procurementmag.com

CONTENTS UP FRONT 012 BIG PICTURE Procurement leaders gather in London

014 THE PROCUREMENT INTERVIEW Chief Procurement Officer Willem Uijen

012 014

022 LIFETIME OF ACHIEVEMENT

Vodafone Procurement Chief Ninian Wilson on the evolution of procurement

026 PEOPLE MOVES

014

DEMYSTIFYING TECHNOLOGIES IN PROCUREMENT

022

028

DECEMBER 2023

050

FEATURES 028 TOP 10

Demystifying technologies in procurement

040 PROCUREMENT STRATEGY

How to achieve lean procurement

050 SAP

Sophia Mendelsohn & Gunther Rothermel discuss sustainability at SAP

068 DIGITAL PROCUREMENT

040 068

Digital revolution is reshaping the future of procurement

078 EXNESS

Building a best-in-class procurement process

078 procurementmag.com

In Association with:

CPO s THE TOP 100

OUT NOW

Championing CPOs from global organisations, celebrate those who elevate the industry day in, day out.

Read now

DECEMBER 2023 FEATURES 94 TECHNOLOGY

Understanding technology in procurement

102 HALMA

Dedicated to a safer, cleaner, healthier future

116 SUSTAINABILITY

Mars on a procurement pathway to net-zero

102

116 94

procurementmag.com

BIG PICTURE

Amazon Business Report suggests increasing budgets in 2024 The Amazon Business State of Procurement Report shows that more than half (53%) of respondents expect their budgets to increase in 2024. Following a year of focusing on reducing costs, procurement leaders are now planning to use the funds they saved to invest in approaches to optimise their procurement processes and allow them to operate more strategically, with the efficiency and complexity of procurement listed as the top challenge they are currently facing. Among respondents, 98% said they were planning investments in analytics and insights tools, automation, and artificial intelligence over the next few years.

procurementmag.com

THE PROCUREMENT INTERVIEW

UNILEVER’S COMMIT TO COMPANY GROW AND SUSTAINABLE L Chief Procurement Officer Willem Uijen on his career path and how procurement creates both growth for the company and sustainability opportunities WRITTEN BY: NEIL PERRY IMAGES: UNILEVER

December 2023

TMENT WTH LIVING

Willem Uijen, Chief Procurement Officer at Unliver gives a keynote speech at UPWP event procurementmag.com

THE PROCUREMENT INTERVIEW

“ Our partners are aligned with our purpose to make sustainable living commonplace”

illem Uijen was named as Unilever’s Chief Procurement Officer in September 2022 after a career at the company spanning over 24 years. He first joined the business in 1999 as a trainee engineer in the Netherlands, and since then has worked in many parts of the world and across numerous supply chain disciplines.

CAREER AND LEADERSHIP What do you find most rewarding about your job? We buy materials and services from over 52,000 suppliers and the work we do with these partners really makes an impact on our business today and tomorrow. Our partners are aligned with our purpose to make sustainable living commonplace. But they also realise it’s difficult to achieve. So, it’s rewarding to see that, by working together, we can come up with truly new ways of doing business. 16

December 2023

How would you describe your leadership style? I believe that by empowering people – so they are able to work on things they’re interested in and passionate about – you get amazing results. There has to be a strategy, but then I trust my team to get the job done in the best possible way. Over the years, I have changed my leadership style and I think it’s that ability to adapt to different environments that’s helped me build high-functioning teams.

STRATEGY, INNOVATION AND GROWTH How does procurement generate value and growth for Unilever? First and foremost, we make sure we buy at the right cost, so we have the funds available to invest behind our brands. This ‘competitive buying’ is a fundamental. In addition, we work on the innovation needed to make our sustainability commitments a reality, and many of those commitments need to be delivered through our partners.

WILLEM UIJEN TITLE: CHIEF PROCUREMENT OFFICER COMPANY: UNILEVER INDUSTRY: CONSUMER GOODS LOCATION: LONDON, UK Willem Uijen was appointed Chief Procurement Officer at Unilever in 2022 after more than two decades at the company in a variety of roles. He is responsible for the procurement of all goods and services globally, supporting the creation of 400 brands sold in over 190 countries.

THE PROCUREMENT INTERVIEW

Unilever Partner with Purpose (UPWP) Global Summit 2023 WATCH NOW

68%

Reduction in GHG emissios from energy and refigerant use in Unilver operations since 2015

667mn

People reached through brand purpose health and wellbeing programmes

€818mn

Spent with diverse businesses owned by under-represented groups

25mn

Customer orders processed annually

If you think of net zero, for example, only around 2% of our total greenhouse gas emissions come from our own operations – the majority sits in the production of the materials we buy. It would be impossible to achieve our commitment on using recycled plastic without our suppliers. Then there’s living wage – I’m very proud we’ve achieved that within our own operations, which is a great inspiration for our partners to drive progress in their operations as well. On top of that, our supplier partners have great ideas for how to make our products better and how to bring those innovations to the market.

Unliver’s headquarters in London, UK

Finally, with the impact of climate change, geopolitical tension and high inflation, we need to build resilience into the supply of our materials and services, to minimise the effect on our business. We work on this every single day. How important is sustainability when it comes to procurement decisions? Sustainability – in terms of people and planet – is integral to the decisions we make on who we work with and what we buy. Let’s say we find that a partner isn’t complying with our policies – and the standards we expect – we will

first work with them to try and find a solution. But if we can’t, we will end the relationship and find a better, as well as competitive, partner to work with. Another element is about innovating to improve our value chain. For example, our commitment to be net zero by 2039 requires innovation between us and our partners. We need to find new ways of sourcing and alternative materials to achieve that objective. What is Unilever’s ‘Partner with Purpose’ strategy? The way we partner allows us to procurementmag.com

THE PROCUREMENT INTERVIEW

continually respond to emerging consumer trends. It’s about encouraging responsible and transparent innovation to deliver on our ambitious sustainability commitments and generate mutual growth. We’re continually expanding the programme with new partners and increasing its scope with existing partners. Last month, for example, we signed the Partnership Growth Charter with PTPN – a key partner in Indonesia for ensuring we have deforestationfree palm oil and palm kernel oil. The charter will help us drive value, resilience and innovation, beginning with ten projects in the pipeline that will unlock competitiveness and drive mutual growth sustainably and at scale. 20

December 2023

LOOKING TO THE FUTURE What are your priorities as you look ahead? Fundamentally, to help our business groups to deliver on each of their strategies, we need to buy very competitively and thereby provide the funds to continuously invest behind our brands. We’re also looking to intervene in the wider value chain, for our own benefit. For example, we’re investing in facilities for plastic recycling. Earlier this year, we made a large investment in Circular Services, a waste collection company in the US. This gives us access to the quantity and quality of recycled plastics we need, at the right cost. These kinds of investments – essentially creating whole new

The Unilev

WHAT IS THE UNILEVER PARTNER WITH PURPOSE PROGRAMME? Some of Unliver’s brands are globally recognised

Build a high growth portfolio ac Unilever’s Partner with Purpose (UPWP) programme launched in 2020 and aims to take

value chains – are a true competitive advantage for Unilever. What challenges will the company face and how will you overcome them? The key challenges will be around climate change and social cohesion. These are threats to society and therefore also to our business. We’re doing a lot of work in regenerative agriculture. This will help us both reduce greenhouse gas emissions and ensure that our sourcing becomes ever more resilient. These are big changes that need to be made to tick all the boxes – sustainability, quality, cost, social aspects – coming together into one transformative system.

purpose-led partnerships to a whole new level

Beauty & Wellbeing

to fuel(including industry-leading protect Personal C Prestigeinnovations, Beauty and Health & Wellbeing) and regenerate nature and make sustainable

living commonplace. UPWP is an evolution in the way Unilever

partners andwith allowsour them to continuallypowered b Win brands, respond to new and emerging consumer trends. They are getting even closer to

Win with differentiated science by encouraging more responsible and and technology

their partners through this programme Improve the h

of the plan

transparent innovation to deliver on their ambitious commitments and generate mutual

growth together. Accelerate in key growth marke The UPWP programme is designed to

deliver against Unilever’s three Compass beliefs: Brands with purpose grow, People

USA, India and

Leverage eme

with purpose thrive and Companies with market stre China purpose last.

Lead in the channels of the procurementmag.com 21 futu

LIFETIME OF ACHIEVEMENT

FROM BACK OFFICE FUNCTION TO

KEY ENABLER Vodafone Procurement Chief Ninian Wilson on the evolution of procurement WRITTEN BY: NEIL PERRY

ince beginning his career at British Gas in 1990 straight from university, Ninian Wilson has seen first hand how procurement has evolved from the back office to the forefront of a business. He began in the supplies and transport function at British Gas before stepping into his first senior management role at Transco in 1995. This ultimately led him to Cable & Wireless in 2000 before progressing into his first Chief Procurement Officer role at the age of just 34. “I learned a lot in the Cable & Wireless role,” he says. “It was my introduction not only to telecoms, but also to international procurement.”

December 2023

His final stop before reaching Vodafone was at Royal Mail where he was Procurement Director and then Operations Director, where he managed the largest workforce in the UK and had full accountability for the delivery of Royal Mail’s transformation programme. This was also the location for what he considers one of the largest challenges of his varied career, where as Operations Director he was tasked with re-establishing the quality of service standards for their customers. At Royal Mail, Ninian Wilson says he had 158,000 people working with him or for him. “I learned a lot about what it takes to work with a huge workforce,”

“ It was my introduction not only to telecoms, but also to international procurement”

NINIAN WILSON TITLE: GLOBAL SUPPLY CHAIN DIRECTOR & CEO VODAFONE PROCUREMENT CO COMPANY: VODAFONE INDUSTRY: TELECOMMUNICATIONS Ninian Wilson has been a leader of Vodafone’s procurement operation since 2016, and is responsible for 1,100 supply chain staff delivering a world class procurement service across €22bn of managed expenditure. His career has included British Gas, Cable & Wireless and Royal Mail.

LIFETIME OF ACHIEVEMENT

WATCH NOW

he said “It showed me the pros of my management style, but also the limitations. “I like to be on first-name terms with everyone, though obviously, it’s difficult to remember everybody’s name. But you meet some wonderful people from very diverse backgrounds, and I think you bring all that knowledge and those experiences with you when you take on a role like mine at a multinational company like Vodafone.” His Vodafone career began in 2009 and then he became CEO of their Procurement Company in 2016. This post has been the location of his proudest achievement so far in his career, with the opening of their joint innovation centre with the Luxembourg Government and the chance to interact with the innovative scale-up companies that work there. With over three decades of experience, he is consistent in the simple advice he 24

December 2023

gives procurement professionals earlier in their careers. “Always be yourself,” he says, “and never try to be someone you are not and be super professional in everything you do.” Through those years of industry expertise, he reflects on the journey that procurement has been on in that time. “There has been an amazing change from a back office function to a key enabler of the business and a role in managing and orchestrating the supplier ecosystem” he adds. He also believes it is an inspiring time to be part of the sector, and much of that is through embracing the technological opportunities presented to us. “The future is digital and in procurement we have the opportunity to both lead and help our own organisations digitise. It is a really exciting time to be in procurement.”

LIFETIME OF ACHIEVEMENT

“ The future is digital and in procurement we have the opportunity to both lead and help our own organisations digitise” procurementmag.com

PEOPLE MOVES

INCOMING EXECUTIVES SHAPING PROCUREMENT STRATEGY Procurement Magazine highlights some of the newly appointed executives shaping procurement technology and strategy

LEAGH TURNER JOB FROM: C O-CEO, CERIDIAN JOB TO: C EO, COUPA Coupa have announced Leagh Turner as their new CEO. She brings more than 20 years experience in technology and proven success in leading performance, innovation, and growth. Turner also joins Coupa’s Board of Directors. She most recently served as co-CEO at Ceridian, a global leader in human capital management technology, and has held senior leadership roles at SAP and Oracle. She’s been recognized by the Women’s Executive Network as one of Canada’s 100 Most Powerful Women. In her time at Ceridian, Turner helped to double the company’s revenue and significantly expand its global customer base.

“I’m honored to lead this company, and to evolve and scale how we deliver real value to our community that helps them grow and succeed” 26

December 2023

WILLIAM MERTZ

BONNIE MITCHELL

JOB FROM: PRESIDENT, ENTERPRISE SUPPLY CHAIN, CACI

JOB FROM: F ORM3

JOB TO: SENIOR VICE PRESIDENT AND CHIEF PROCUREMENT OFFICER, PERATON Peraton has announced the appointment of William “Bill” Mertz as senior vice president and chief procurement officer. Mertz will have executive responsibility for all aspects of the company’s procurement organization, including business systems compliance, strategic sourcing, positive cash flow management, and subcontractor management. He will also oversee the execution of Peraton’s procurement strategy that is designed to drive better efficiencies and reduce complexity for the company, its partners, and its customers.

QUENTIN ROACH JOB FROM: SENIOR VICE PRESIDENT, GLOBAL SUPPLY CHAIN & CHIEF PROCUREMENT OFFICER, MONDELĒZ INTERNATIONAL JOB TO: SENIOR VICE PRESIDENT AND CHIEF PROCUREMENT OFFICER, ESTÉE LAUDER COMPANIES The beauty giant has named Quentin Roach as Senior Vice President and Chief Procurement Officer. He will join the company’s Global Supply Chain Leadership Team from Mondelez International. Previously, Quentin held supply chain and procurement leadership roles at Merck & Co., Bristol Myers Squibb, Bausch + Lomb, and General Motors.”

JOB TO: C HIEF FINANCIAL OFFICER, PROACTIS Source-to-Pay software solution provider Proactis has announced the appointment of Bonnie Mitchell as Chief Financial Officer (CFO) to its experienced leadership team. Bonnie joins Proactis from Form3 and will sit on the board of directors, bringing over 15 years of experience across finance within practice and industry, consumer brands and technology companies to drive Proactis’ financial growth and success in the coming years.

ANDREW SPENCER JOB FROM: S KANSKA JOB TO: SUPPLY CHAIN AND PROCUREMENT DIRECTOR, GALLIFORD TRY Construction firm Galliford Try has named Andrew Spencer to the new role of supply chain and procurement director. Spencer joins from Skanska, and has more than 25 years of experience in the sector. He will become the functional head of supply chain and procurement professionals across the business.

procurementmag.com

TOP 10

DEMYSTIFYING TECHNOLOGIES IN PROCUREMENT Procurement Magazine ends 2023 by taking a look at some of the leading technologies that are demystifying the procurement industry WRITTEN BY: GEORGIA WILSON

December 2023

espite global spend on digital adoption expected to reach US$2.4tn in 2024, 84% of digital transformation projects still continue to fail. According to the IDC this can be attributed to 47% of organisations lacking the digital skills to be successful in their efforts. In spite of this, 60% of business leaders believe digital transformation will be a critical growth driver, with those that do priorities digital transformation reporting to be 26% more profitable. As such, “digital transformation is strongly anchored in procurement departments’ agendas,” says PwC, with 51% of CPOs ranking digital transformation among their top three priorities. In this Top 10, we take a look at some of the technologies that are demystifying the procurement industry. procurementmag.com

TOP 10

WATCH NOW

Cybersecurity solutions

While the benefits of technology adoption in procurement is clear, digitalisation of operations doesn’t come without risks, in particular the introduction of cyberthreats and data breaches. Currently it is estimated that 2023 will face 33 billion account breaches, with 800,000 cyber attacks recorded in total. On average, there is a hacker attack every 39 seconds. With this in mind it is vital for procurement functions to enhance their security measures and benefit from the protection such solutions provide, including data protection and management, reputation preservation, enhanced productivity, regulation compliance, improve cyber posture, trust and credibility, and streamlines access control.

Supplier management tools Whether a large or small organisation, all rely on their suppliers to operate. As such supplier management tools can greatly help in successful management of suppliers and create strong professional relationships. Key benefits of supplier management tools include improved communication, access to real-time data, enhanced supply chain visibility, increased efficiency and productivity, reduced costs, and improved supplier performance.

WATCH NOW

December 2023

WATCH NOW

Augmented reality (AR)

Revolutionising procurement workflows by providing innovative solutions to streamline and enhance the entire process, augmented reality (AR) is transforming traditional practices to become more efficient and effective. Other benefits include real time visibility and the elimination of manual research, remote collaboration and communication, enhanced supplier management, instant access to critical data, and increased transparency.

Blockchain

Expected to be worth US$1.43tn by 2030, blockchain technology could boost the global GDP by US$1.76tn. Top sectors driving the adoption of blockchain are finance, healthcare, agriculture, and manufacturing, but how can these sectors’ procurement function benefit from this technology? Key benefits of blockchain in procurement include increased transparency, smart contracts, and reduced costs.

WATCH NOW

procurementmag.com

TOP 10

WATCH NOW

Of organisation with more than 1,000 employees, 94% have adopted cloud technology in a large proportion of their workloads. As technology advances, more organisations are exploring the use of multi-cloud or hybrid cloud approaches rather than simply using traditional public or private cloud. As such it is clear to see that cloud is a vital tool within the day to day function of an organisation. Ways in which procurement sepcifically can benefit include cost efficiency, end-toend integration, easy collaboration, user friendly, and great visibility.

By 2030, it is estimated that IoT will unlock between US$5.5tn and US$12.6bn in value globally. Turning to the application of IoT in procurement help professional in the function to navigate its complexities. Benefits of IoT for the function include enhanced visibility and collaboration, the ability to track materials, inventory management, compliance and auditing, and improved decision-making.

Cloud

IoT

WATCH NOW

procurementmag.com

TOP 10

WATCH NOW

Sustainable procurement technology Battling the challenges of integrating sustainability and ESG into procurement processes and decision-making, while continuing to meet stakeholder requirements, procurement functions are looking to organisations that are developing platforms and processes to ensure they are successful. Such platforms and processes can help organisations to better source materials, drive ciruclarity within their operations as well as trace their carbon emissions. Ultimately these technologies drive greater transparency within the function and the wider supply chain.

Big data analytics Helping procurement professionals make strategic decisions, big data analytics is the analysis and use of information that is of extreme size and complexity. “At one midsize manufacturing company with approximately US$2bn in annual revenue, for example, procurement had data on more than 20,000 transactions for a single category,” explains McKinsey. With the procurement function generating vast amounts of data, big data analytics can benefit procurement functions when it comes to risk management, predictions, compliance, and collaboration.

WATCH NOW

December 2023

Machine learning Reshaping the traditional practices of procurement, machine learning – similarly to AI – offers unprecedented levels of efficiency and strategic advantage for those implementing the technology. Providing exceptional analytics capabilities, machine learning helps to automate the mundane, time consuming, and repetitive tasks for procurement functions. As such professionals benefit from gaining back time to focus their expertise on more strategic tasks that drive greater profitability. Core areas in which machine learning can be best applied include spend analysis, sourcing, risk mitigation, and contract management.

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Generative AI According to PwC, AI is predicted to contribute US$15tn to the global economy by 2030. The transformative potential of the technology, specifically Generative AI and its ability to quickly analyse complex business activities and predict future market developments. Key ways in which Generative AI will benefit the procurement industry include increased efficiency, productivity improvement, in-depth market analysis, risk mitigation, spend reduction, sustainability and compliance. “Generative AI presents a once-ina-decade opportunity to transform procurement,” says Bain & Company. “We see generative AI disrupting all aspects of a procurement organisation, from strategy to operations.” procurementmag.com

PROCUREMENT STRATEGY

HOW TO ACHIEVE LEAN PROCUREMENT Minimising waste and promoting efficiency are key targets for any sourcing operation, so how do you achieve the goal of lean procurement? WRITTEN BY: NEIL PERRY

he term ‘lean’ was originally used within the manufacturing industry, but has since gone on to represent principles of streamlining and improving the entire procurement chain from initial sourcing to final delivery. The key factors for success Krish Vengat N is Vice President, Consulting at GEP’s automotive and industrial manufacturing practices, and advises leading companies on procurement strategy and performance transformation. He believes there are key factors that have to be in place for a successful lean procurement strategy, that are tied to efficiency enhancement, cost reduction and operations streamlining. “First and foremost, the strategy should have clearly defined and measurable 40

Dectember 2023

objectives aligned with overall business goals,” says Vengat. “Encouraging crossfunctional coll1211aboration ensures a comprehensive approach that spans the entire supply chain and procurement processes.” Alongside this, he says the integration of technology is critical in creating “a smart and robust system”, including e-procurement tools, supplier portals, to allow for valuable improvements in efficiency and automation that can’t always be achieved through more manual processes. When this is put in place, Vengat says it can work alongside a culture of continuous improvement, through standardised processes, optimising inventory, and having robust risk management strategies to minimise potential disruptions.

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PROCUREMENT STRATEGY

“Proactive cost-saving initiatives, focusing on negotiation and strategic sourcing, are vital, as is building flexibility and agility into procurement processes to navigate dynamic market conditions,” he says. “By integrating these factors, organisations can create a resilient, efficient and value-driven procurement function aligned with broader business objectives.” Barriers to a lean procurement strategy Although it can deliver many competitive advantages, a lean procurement strategy can be difficult to achieve? From his years of experience in advising businesses Vengat N says a number of common problems typically beset lean procurement initiatives. One is resistance to change within an organisation. Often this stems from a fear of moving away from established processes or heritage systems – something that is incompatible with more progressive ways of working. Big tech-change projects require significant buy-in from all stakeholders at all levels if they are to be seen through to conclusion.

Krish Vengat N. TITLE: VICE PRESIDENT, CONSULTING COMPANY: GEP INDUSTRY: SOFTWARE INDUSTRY: NEW YORK, USA A seasoned procurement and supply chain leader with a proven track record of delivering company goals for over 15 years. He has delivered a broad range of strategic and operational insights to drive growth across many Fortune 2000 companies in the automotive and assembly CPG and industrial manufacturing space. procurementmag.com

PROCUREMENT STRATEGY

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“Legacy systems and incompatible technology can impede the adoption of lean practices, exacerbated by integration challenges with existing enterprise resource planning (ERP) systems,” Vengat explains. Existing weaknesses in procurement and supply chain management can also be exposed, he warns. The complex nature of global supply chains can manifest itself

“ The strategy should have clearly defined and measurable objectives aligned with overall business goals” KRISH VENGAT N. VICE PRESIDENT, CONSULTING GEP

Dectember 2023

in poor-quality data and a lack of tech standardisation, both of which hinder efficient and consistent decision making. He says that there are also challenges relating to: • Supplier relationships • Short-term cost pressures • Regulatory compliance • Ineffective performance measurement • Cultural barriers • Budget constraints • Risk aversion “These further complicate the lean procurement journey,” Vengat adds. “Successfully overcoming these demands a strategic and holistic approach that encompasses effective change management, technological investments, a culture of continuous improvement and alignment with overall business goals.”

procurementmag.com

PROCUREMENT STRATEGY

How technology can help achieve lean procurement Vengat describes technology as a “transformative force” in the pursuit of a lean procurement strategy. He adds: ”Proper implementation can help address obstacles and lay the foundations for success. This can be through proper use of data analytics, which can provide critical insights from large datasets into trends for better operational efficiency and planning. “With more procurement technology implementing artificial intelligence and machine learning, there are already opportunities to find a competitive advantage. Vengat continues: “AI and ML employ advanced algorithms to analyse historical data, predict demand patterns, optimise inventory management and enhance decision-making, bringing automation and efficiency to procurement processes.” Despite the challenges, at least there are low-code or no-code platforms available

“ Organisations can create a resilient, efficient and valuedriven procurement function aligned with broader business objectives” KRISH VENGAT N. VICE PRESIDENT, CONSULTING GEP

Dectember 2023

that allow greater customisation without coding. These are also collaborative platforms, designed to improve coordination and communication, and offer predictive analytics to identify potential risks in a supply chain. Vengat also identifies the growing value of cloud-based procurement solutions. “They offer flexibility, scalability and real-time collaboration,” he says. “These platforms enhance procurement agility, accessibility and efficiency by providing a centralised and accessible digital environment for procurement activities.” “Technology acts as an enabler for lean procurement by streamlining processes, enhancing collaboration, providing realtime insights and supporting data-driven decision-making. Organisations embracing innovative technologies can gain a competitive edge in achieving efficiency, reducing waste and optimising their procurement functions,” he continues. How to implement the strategy For a company looking to establish a lean procurement strategy, there has to be careful planning, commitment and collaboration across the business. This involves technological, cultural and leadership considerations to give it a realistic chance of a successful outcome. This begins with all teams understanding the core lean principles, such as waste reduction, optimising processes and finding opportunities to continuously improve and reflect on performance. Vengat believes the key to success lies with leadership and cultural change. “Securing top leadership commitment to drive cultural change and set the tone

The production line of the 4th-generation of the Toyota Yaris CREDIT: TOYOTA

What is the Toyota Production System? A world-famous example of a lean process is the Toyota Production System. It is a strategy based on the philosophy of achieving the complete elimination of all waste in pursuit of the most efficient methods. Toyota Motor Corporation’s vehicle production system is a way of making things that is sometimes referred to as a “lean manufacturing system,” or a “Just-in-Time (JIT) system.” This production control system was established

based on many years of continuous improvements, with the objective of making the vehicles ordered by customers in the quickest and most efficient way, in order to deliver the vehicles as swiftly as possible. The Toyota Production System (TPS) was established based on two concepts: “jidoka” (which can be loosely translated as “automation with a human touch”), as when a problem occurs, the equipment stops immediately, preventing

defective products from being produced; and the “Just-in-Time” concept, in which each process produces only what is needed for the next process in a continuous flow. The Toyota spirit of monozukuri (making things) is today referred to as the “Toyota Way.” It has been adopted not only by companies in Japan and within the automotive industry, but in production activities worldwide, and continues to evolve globally. procurementmag.com

PROCUREMENT STRATEGY

Technology: The gateway to lean procurement DATA ANALYTICS

Data analytics involves extracting meaningful insights from large datasets, guiding informed decision-making, optimising processes and identifying trends for enhanced operational efficiency and strategic planning.

ARTIFICIAL INTELLIGENCE AND MACHINE LEARNING

AI and ML employ advanced algorithms to analyse historical data, predict demand patterns, optimise inventory management and enhance decision-making, bringing automation and efficiency to procurement processes.

LOW-CODE/NO-CODE PLATFORMS

Low-code/No-code platforms empower users to create applications without traditional coding, enabling the development of customised procurement solutions, fostering agility and reducing reliance on IT departments for system modifications.

CLOUD-BASED PROCUREMENT SOLUTIONS

Cloud-based procurement solutions offer flexibility, scalability and real-time collaboration. These platforms enhance procurement agility, accessibility and efficiency by providing a centralised and accessible digital environment for procurement activities.

COLLABORATIVE PLATFORMS

Collaborative platforms facilitate effective communication and coordination among procurement teams and stakeholders. These tools promote teamwork, information sharing and visibility into project statuses, fostering a collaborative procurement environment.

PREDICTIVE ANALYTICS FOR RISK MANAGEMENT Predictive analytics leverage historical and real-time data to identify potential risks in the supply chain. By foreseeing challenges, organisations can implement proactive risk mitigation strategies and ensure supply chain resilience and continuity. 48

Dectember 2023

for the organisation’s lean adoption,” he says, adding:“You also need to ensure collaboration with cross-functional teams to understand diverse needs and challenges recognizing procurement within the broader organisational context.” Alongside this,, he says there must also be clarity in objectives, and a focus on continuous improvement. This, he stresses, involves “clearly articulating objectives, guiding the implementation of lean practices, whether that may be reducing lead times, minimising inventory or enhancing supplier relationships”. This, he says, is reinforced by “a continuous improvement culture”, designed to encourage regular reviews of performance, as well as feedback and

learning from successes and failures. Vengat says such an approach needs to be adopted both inside a business and externally, in collaboration with suppliers. “Collaborate transparently with suppliers,” says Vengat. “Sharing forecasts and working jointly to identify areas for improvement is critical.” His final advice is to maintain adaptability throughout the project. “Always be open to change,” he advises. “Dynamic business environments demand flexibility of procurement. He adds:“By adhering to these guidelines, organisations can successfully implement lean procurement, driving efficiency, reducing costs and fortifying overall supply chain resilience.” procurementmag.com

LE ADING THE WAY ON ENTERPRISE SUSTAINABILIT Y MANAGEMENT AD FEATURE WRITTEN BY: HELEN ADAMS PRODUCED BY: JONATHAN MOORE

December 2023

procurementmag.com

SAP

Sophia Mendelsohn & Gunther Rothermel discuss sustainability at SAP, being Co-General Managers and why they are excited to be in sustainability today

AP was founded in 1972 when computers filled an entire room and were connected to monochrome CRT displays. This group of early technology pioneers went on to become the global leader in enterprise resource planning (ERP) software. SAP built and installed solutions that help run critical business functions from finance to supply chain to human resources. Ninety-nine of the 100 largest companies run SAP solutions, also 97 of the greenest companies. The company’s reach into global business is impressive – SAP customers account for US$46tn, or 87% of all global commerce. SAP’s mission now is to embed sustainability into the core business of its customers. Using its formidable scale and reach, SAP connects sustainability data with other cloud-based corporate data so that companies have a more complete, accurate and actionable understanding of their sustainability performance. By bringing sustainability into finance, procurement and business networks, the aim is to make sustainable business the standard operating procedure. While SAP has offered sustainability management solutions for many years, only a few years ago did it make the strategic move to develop a portfolio of specialised,

December 2023

Gunther Rothermel is Chief Product Officer for SAP Sustainability. He’s been with the company for 25 years leading development teams. Sophia Mendelsohn is Chief Sustainability and Commercial Officer for SAP Sustainability and has focused on advancing sustainable business for 20 years.

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SAP

cloud-based software solutions to help customers tackle difficult sustainability challenges at industrial scale. These solutions cover a number of areas, including climate action, circular economy, social sustainability, as well as holistic steering – the evaluation of corporate impacts on society and wider economy – and reporting. Under a co-general management structure, a team was formed within SAP to build and help customers adopt the new solutions. Together, Rothermel and Mendelsohn are Co-General Managers for Sustainability at SAP. Rothermel spent most of his career in SAP. “I work more on the technology platform side of the house,” he says. Alongside his personal interest in the topic, Rothermel realised that there was a massive data challenge in corporate sustainability and this is why he began solving problems in this area. Meanwhile, Mendelsohn cut her sustainability teeth in China. “That’s where I really became committed to the idea of marrying up free-market solutions with sustainable outcomes,” she says. “I’m often called an OG in corporate sustainability. Before, we called it EHS and then CSR, then sustainability and then ESG. Now, we are moving towards business integration.” A co-general manager structure makes sense for SAP and sustainability solutions, Mendelsohn adds: “I think what Gunther and I combine very well at SAP is my understanding of the market need with his understanding of sustainability data and integrating it with other corporate data.” This is exactly where SAP combines ambition with reality. 54

December 2023

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ESG data management foundation “We cover a broad range of sustainability challenges for our customers,” he says. “A lot of things are coming fast. It’s an exciting time because there’s a lot of new ways we are applying advanced technology to sustainability management while at the same time there’s a lot of regulatory changes happening.” One major challenge, however, is to find solutions for the problems at hand, while some of the standards and industry regulations are not there yet, he said. For Mendelsohn, SAP’s ESG data management strategy and solutions, like the SAP Sustainability Control Tower, is about creating the best data foundation so companies can level up to holistic, enterprise-wide sustainability management. “One thing Gunther has taught me at SAP is that there is still a huge amount of uncertainty with sustainability data,” procurementmag.com

SAP

GUNTHER ROTHERMEL TITLE: C HIEF PRODUCT OFFICER AND CO-GENERAL MANAGER INDUSTRY: S OFTWARE DEVELOPMENT LOCATION: GERMANY Gunther Rothermel helps businesses on their transformation journey with a new set of sustainability related capabilities offered by SAP. As Chief Product Officer and Co-General Manager for SAP Sustainability, Gunther and his team deliver product innovations on sustainability addressing four dimensions: holistic steering & reporting, climate action, circular economy, and social responsibility. A seasoned leader with a future oriented, strategic mindset, Gunther has an impressive track record in product development and delivering cloud services. Principles like agile development, design-led innovation, DevOps and cloud engineering are essential parts of Gunther’s leadership approach. Gunther was key in defining and delivering SAP’s platform technology and the overall integration and orchestration portfolio of SAP.

“ BECAUSE MORE THAN 80% OF CARBON EMISSIONS ARE SCOPE 3 EMISSIONS LOCKED AWAY IN YOUR SUPPLY CHAIN, YOU FUNDAMENTALLY NEED TO GET ACCESS AND AGGREGATE THIS DATA” GUNTHER ROTHERMEL

CHIEF PRODUCT OFFICER AND CO-GENERAL MANAGER, SAP SUSTAINABILITY

says Mendelsohn. “With so much of the regulation and ambition oriented around reporting and transparency, our challenge is to make reporting easier so they can focus on transitioning their business activities to be more sustainable.” Data is core to the overall ESG foundation, she adds. The data has to be accessible, accurate and stable to be effectively integrated with other corporate data and used for strategic planning or in-the-moment operational decisions. “What the sustainability stack at SAP does is go from data aggregation to data analytics,” she says. “The ability to connect the data, see it and use it from procurementmag.com

“ WE ARE NOT ONLY USING THE STRONG CAPABILITIES THAT WE HAVE IN-HOUSE IN SAP, BUT WE ARE ALSO INCORPORATING AND USING THE VERY SPECIALISED CAPABILITIES FROM DIFFERENT PARTNERS” GUNTHER ROTHERMEL

CHIEF PRODUCT OFFICER AND CO-GENERAL MANAGER, SAP SUSTAINABILITY

the boardroom to the shop floor, is what can help people make more informed, more sustainable business decisions.” Tackling Scope 3 emissions across supply chains When it comes to climate action and accounting for carbon emissions, SAP wants to help companies move past estimates and error-prone spreadsheets to effectively calculate overall corporate carbon footprints, and then move to calculating footprints at the individual product level. Because SAP helps companies run their global supply chains, SAP is ready to get down to the data details when it comes to Scope 3 accounting. Upstream and downstream carbon emissions transparency, however, remains a challenge for companies

SAP

across industries. One of SAP’s key approaches is to enable companies to share accurate emissions data along the supply chain, instead of everyone making oftenincorrect assumptions and calculations. Enterprises need an accounting system for their emissions data that is as auditable, transparent and reliable as their financial data. The current accounting system for supply chain emissions is severely flawed as it relies on data that often lacks access, accuracy, granularity and comparability, Rothermel added. SAP’s transactional carbon accounting capabilities focus on recording, reporting and acting on carbon emission data and ultimately syncing the emissions data with financial data leading to a “green ledger”. “We envision carbon to be accounted for in a green ledger, just like your financials are

maintained in a financial ledger,” he says. “But companies still have a big challenge to deliver data of a quality worthy of a green ledger. “There are two key parts to SAP’s greenhouse gas protocol coverage across all scopes,” he says. The first is SAP Sustainability Footprint Management which is a solution that increases accessibility by pulling data from many sources, and then uses the data as a basis for footprint calculations. “Because more than 80% of carbon emissions are Scope 3 emissions locked away in your supply chain, you fundamentally need to get access and aggregate this data,” he adds. “If we don’t, we will continue to work with averages instead of actuals.” Gathering and calculating emissions data more accurately is one thing, but companies procurementmag.com

SAP

happen in the cloud,” she says. “It’s going to happen with AI with the amount of data we’ll have to synthesise. We’re talking about envisioning a supply chain that shares sustainability related information more openly and fluidly than they share financial information. “There’s a gap between where the regulations are envisioning what’s possible and where we see technology delivering.” Moving to a circular economy The co-GMs both made the point that we can only deal with about half of global emissions by moving to renewable energy. We have to tackle the other half by designing out waste, keeping materials in use longer, and adopting regenerative practices across all areas of production. One hundred billion tonnes of materials are used each year in our current “linear” economy. Just 7.2% is reused or recycled. The SAP team wants to change this and aims to help need to move the data from one supplier to another. “We want to rely on real data that customers can share,” says Rothermel. “This is why we cover carbon sharing capabilities in our SAP Sustainability Data Exchange solution, for example, that uses standards and protocols established by the World Business Council for Sustainable Development’s PACT programme, the Pathfinder framework, and other standards over time.” Mendelsohn sees the need for companies to move to the cloud to accelerate how they can take advantage of next-generation carbon accounting. “The reality is that the energy transition and the materials transition are going to 60

December 2023

“ THERE’S A GAP BETWEEN WHERE THE REGULATIONS ARE ENVISIONING WHAT’S POSSIBLE AND WHERE WE SEE TECHNOLOGY DELIVERING” SOPHIA MENDELSOHN

CHIEF SUSTAINABILITY AND COMMERCIAL OFFICER, SAP SUSTAINABILITY

SOPHIA MENDELSOHN TITLE: C HIEF SUSTAINABILITY AND COMMERCIAL OFFICER FOR SAP SUSTAINABILITY INDUSTRY: S OFTWARE DEVELOPMENT LOCATION: UNITED STATES As Chief Sustainability and Commercial Officer and co-GM for SAP Sustainability, Sophia and her team oversee SAP’s corporate sustainability and bring sustainability to market for customers. Sophia’s long-standing area of focus is in guiding organisations on how to balance immediate financial goals with sustainability and ESG governance for long-term business viability. She has deep expertise in sustainability and specialises in executive stakeholder engagement. She designed and taught the first ESG at Harvard Extension School, is a recognised public voice on ESG, and was chosen as one of the top 10 sustainability leaders of the year. Sophia has a master of science in sustainable management from Columbia University.

procurementmag.com supplychaindigital.com 61 61

companies build a more circular economy using the SAP Responsible Design and Production software. Rothermel built this cloud-based solution based on SAP’s Business Technology Platform, its flexible development and customisation platform. The solution helps companies react to quickly changing plastics taxes, for example, and adapt product packaging specifications to respond to new Extended Producer Responsibility policies. Ensuring social sustainability SAP’s social sustainability software and ESG packages are an important part of its offering, which SAP has been investing into for years and covers more operational aspects of sustainability. 62

December 2023

“Customers use this for the operational compliance on a plant level for emissions management and waste management related topics, but it also has a strong health and safety component,” explains Rothermel. “It covers incident management, because SAP operates in many industries that are also very regulated.” Mendelsohn emphasises that sustainability can’t all be about carbon emissions. “Fundamentally, we still talk too much about carbon and climate as an environmental problem, as if this is something separate than social. At SAP, we have the ability to measure the social elements. What I want to emphasise is that when we talk about treating carbon

SAP

like money or the importance of accurate carbon data, we see it as a social issue for communities, for our customers and for our own employees.” “We support other important metrics, such as women in management positions, D&I related components and human rights,” adds Rothermel. Collaborating for Impact SAP is also supported by a global network of partner companies helping to customise and install SAP solutions. It’s a big ecosystem. Partners are an intrinsic part of SAPs strategy and how they go to market and build solutions. “Our partners play several important roles,” says Rothermel. “They help us to

bring the software to our clients. They help us implement the software and of course they also advise our customers on their strategic transformation journey. “We are not only using the strong capabilities that we have in-house in SAP, but we are also incorporating and using the very specialised capabilities from different partners. They co-innovate with us because we believe nobody can solve these tough issues of sustainability alone.” SAP will continue on its mission to embed sustainability across the businesses it works with and Rothermel and Mendelsohn will lead the sustainability team together. Over the next year, there’s a lot in store for the company. procurementmag.com

SAP

“ WHAT THE SUSTAINABILITY STACK AT SAP DOES IS GO FROM DATA AGGREGATION TO DATA ANALYTICS. THE ABILITY TO CONNECT THE DATA, SEE IT AND USE IT, FROM THE BOARDROOM TO THE SHOP FLOOR” SOPHIA MENDELSOHN

CHIEF SUSTAINABILITY AND COMMERCIAL OFFICER, SAP SUSTAINABILITY

“Big sustainability transformations are really just beginning. It’s what I am here for and why I get up in the morning,” Rothermel added. “I want to help customers solve problems with the help of good software in the sustainability space.” “It’s a very important year for us at SAP, but also for the whole industry and for sustainability,” says Mendelsohn. “I’m looking forward to 2024 when we deliver new capabilities and help customers really take advantage of technology and data and speed up their transitions. It’s going to be a year of new proof points and ultimately positive impact. That’s what I am looking forward to.”

December 2023

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DIGITAL REVOLUTION IS RESHAPING THE FUTURE OF PROCUREMENT

Procurement technology has moved on from automating repetitive tasks, to solutions that ‘mesh’ with humans to great strategic effect WRITTEN BY: NEIL PERRY

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December 2023

DIGITAL PROCUREMENT

eing so process-led, one area of the supply chain that lends itself to digitalisation more than most is procurement. The pandemic has made this even more so. The need to mitigate against disruption and the drive towards sustainability have made procurement more strategic in nature. This has led organisations to automate process-heavy work such as contracts renewals and invoice processing, to allow procurement people to focus on strategic tasks around supplier relations and ESG compliance – important work that itself requires technology for it to be executed effectively. PwC’s 2022 Digital Procurement Survey shows that nearly all chief procurement officers (CPOs) understand the power of digitisation, seeing digital transformation as second only to supplier collaboration as the most important procurement strategy. The survey shows that 77% of companies are already equipped with source-topay digital solutions, suggesting that the digitalisation of processes is no longer a nice-to-have, but an operational necessity. Leaders such as Jim Kilpatrick, Global Supply Chain & Network Operations Leader for Deloitte, certainly believe this to be true. “It’s going to be increasingly difficult for organisations to remain competitive and agile if they continue to work in a nondigital model,” says Kilpatrick. “AI can sort through procurementmag.com

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DIGITAL PROCUREMENT

those paper invoices. It can identify problems and automatically resolve them with no humans involved.” Kilpatrick was speaking to Harvard Business Review, as part of its paper called Digital Optimization Paves the Way to Strategic Supplier Management, which explores the supplier management challenges facing organisations, and the benefits of adopting the right technologies. It was sponsored by Amazon Business, which offers solutions that not only manage bulk purchasing and approval workflows, but also generate data that provides actionable insights. The rise of Amazon Business in this area is a sure marker that procurement is becoming more heavily invested than ever in digital processes. The need for procurement to be more strategic has forced the hand of many organisations on digital transformation.

Jim Kilpatrick TITLE: GLOBAL SUPPLY CHAIN & NETWORK OPERATIONS LEADER COMPANY: DELOITTE INDUSTRY: PROFESSIONAL SERVICES Kilpatrick is a Partner with Deloitte, and based in Toronto, Canada. In his 30-plus year consulting career with Deloitte, he has worked with many leading Canadian and Global organisations, significantly improving their business performance and competitiveness. procurementmag.com

“ The digital workforce is now a blend of human and machine resources meshed together” MATTHEW ROSE,

PROCUREMENT TRANSFORMATION PRACTICE LEAD & PARTNER, KPMG

Matthew Rose TITLE: PROCUREMENT TRANSFORMATION PRACTICE LEAD & PARTNER COMPANY: KPMG UK INDUSTRY: PROFESSIONAL SERVICES Rose leads KPMG’s Procurement Advisory Team in the UK. He has 20 years’ experience in transforming procurement, “building world-class capability and unlocking hundreds of millions of pounds in value for my clients”.

Matthew Rose, Procurement Transformation Practice Lead and Partner at KPMG UK, says that in the early days of this trend, technology enabled organisations “to run leaner headcounts and focus the available talent on higher-value tasks”. He cites as an example the use of machine learning (ML) to automate the purchase-topay process. “The first wave of machines focused on repeatable high-volume tasks and lent heavily on robotic process automation and simple bots,” says Rose. But he says that now, automation and AI is increasingly being used for higher value-added tasks. “This is illustrated by the explosion of available solutions on the market,” he points out. “Collaboration, supply market research, sourcing and data analytics have all been targeted by new wave intelligence-enabling procurement technology.”

DIGITAL PROCUREMENT

‘Mindset failure’ biggest digital transformation problem

Doing more with less Rose stresses that, rather than replacing humans in these roles, technology increasingly is “seeking to augment human capability” by enabling procurement resources “to do more with less, or to uncover insights that would not readily be available to humans”. According to Rose, the digital workforce is now a blend of human and machine resources meshed together in “a mutually dependent process”. He adds that, as with finding the right procurement staff, the challenge is “often uncovering the right technology to join the digital workforce”. Because of this challenge, KPMG surveyed hundreds of technology providers, the aim being to identify the top tech for automating and augmenting procurement functions. KPMG used its insights to help clients plan ahead so that they deploy the right

Most digital implementations have a success rate of about 30-40%, points out noted procurement advisor David Loseby, who also has a doctorate in behavioural science. Loseby says the failure rate is so eyewateringly high because of a “mindset failure” on the part of organisations. He says: “Digital transformations are not technology-change projects, but people-change projects. If you don’t involve the people that are going to be impacted, and suddenly impose it upon them, guess what? You get lots of rejection.” For Loseby, re-skilling employees and clearly demarcating their changing roles is an inviolable step in any technology change project. He warns: “You’re pulling them into the fear of the unknown. You’ve got to balance the equation by making sure there’s something in the change process for them. Don’t leave me fearing I might be shunted somewhere else at the end of it all.” procurementmag.com

DIGITAL PROCUREMENT

Digital Procurement WATCH NOW

platform for a successful digital workforce. “For example,” says Rose, “one of our global retail clients had a high volume of low-value purchases. Those purchases in the tail spend offered little payback on time invested by procurement team members. “The retailer chose to deploy automated intelligent negotiation technology to rapidly engage with vendors, negotiate terms and place orders. “The technology enabled the retailer to address third party spend that wasn’t being touched by procurement and unlock millions in untapped savings.” Rose cites another example – that of a client in the oil and gas sector, whose procurement team KPMG helped deploy advanced AI-based decision-making tools. “The solution helped it prioritise procurement projects and allocate 76

December 2023

resources effectively,” Rose says. “It also helped it determine where existing supply solutions might exist, and to prioritise this in the work stack, thus delivering high singledigit improvements in efficiency.” The good news, says Rose, is that technology has the capability to deliver a welter of such opportunities for procurement, “be this driving more innovation from the supply base, orchestrating ESG in the supply chain or reducing risk back to source”. He adds: “Whatever form that value takes, procurement will need to harness digitalisation and be a catalyst for change. It will also need to continuously learn, innovate and transform.” THis, he says, has “fundamental implications” for the skills required in the future digital procurement workforce.

“ It’ll be increasingly difficult for organisations to be competitive if they remain non-digital” JIM KILPATRICK,

GLOBAL SUPPLY CHAIN & NETWORK OPERATIONS LEADER, DELOITTE procurementmag.com

EXNESS: BUILDING A BEST - IN - CLASS PROCUREMENT PROCESS WRITTEN BY: MARCUS LAW & SEAN ASHCROFT PRODUCED BY: STUART IRVING

December 2023

procurementmag.com

EXNESS

December 2023

Daniyar Zhantilessov, Global Head of Procurement at Exness, delves into building a world-class procurement team, the role of mentorship, and digitalisation

xness is an international, award-winning multi-asset broker founded in 2008. With a deep understanding of traders’ needs, the company provides accessible, stable, and reliable brokerage services through the use of modern trading and investment technologies. Heading up its procurement function is Daniyar Zhantilessov, who with over 12 years of experience across diverse roles in various markets, has acquired strong knowledge in the procurement field. “My career journey so far has led me to my current position as Global Head of Procurement at Exness,” says Zhantilessov, who has a finance degree and is a member of the Chartered Institute of Procurement and Supply Chain Management (CIPS). “When I joined Exness at the beginning of 2020, I started as a Procurement Manager and built the procurement process in the company from scratch. This earned me numerous promotions over the years, until I became the head of the department. “Within my role, I have enhanced procurement productivity, devised effective sourcing strategies, and implemented bestin-class procurement processes. I am also responsible for vendor risk management, due diligence, and process optimisation.” The road to procurement Zhantilessov’s career started at a juncture where he had to choose between a role as a financial analyst or a procurement specialist

in the banking industry. As he explains, he chose the latter. “I like to connect and interact with people, so I felt it was a more fitting career. Despite excellent knowledge of finance, which also enables me to do my current job best, I prefer working with people instead of numbers. “The procurement sphere has allowed me to maximise my skills and use them properly,” Zhantilessov adds. “It is an integrated part of my life and approach at large, to constantly compare and select the best value things price/quality wise.” This approach even applies to things like family holidays. “I am the one investigating everything about our destination,” Zhantilessov laughs, “from the best sights to the best restaurants, a full comparison of accommodation options, constantly checking reviews online and asking friends and acquaintances what their own experience was.” All of this shows how seriously Zhantilessov takes the procurement world. “Procurement is my passion and part of my life,” he says. “Our job allows us to meet many different people and build strong relationships and networks worldwide. From my point of view, it is one of the best fields to realise your negotiation and communication skills and make significant cost savings for the organisation. “We have a definition of five rights in procurement: right price, right quality, right time, right place and right quantity. This is my approach in my professional and personal life too.” procurementmag.com

EXNESS

Building Exness’ procurement function Having worked for global giants like Philip Morris, Huawei, and HomeCredit Bank, upon joining Exness at the beginning of 2020 Zhantilessov was tasked with building its procurement process from the ground up. The absence of any existing procurement framework was, in his words, “one of the reasons I accepted an offer from Exness, as it gave me this great opportunity and freedom to build a best-in-class procurement process from scratch.” Today, he describes the process as one of his proudest professional experiences. “I treat every professional challenge as an opportunity,” Zhantilessov says. “We started by creating a new procurement policy, and after that, it was a change management with all key internal stakeholders. I gradually built a base and using that base, we created and implemented a new procurement service desk and vendor on-boarding process in our ERP system, synchronised with relevant departments.” Along with the procurement procedure, Zhantilessov also built a new multinational procurement team, based in two core offices: Cyprus and Malaysia. The Exness procurement team is a multinational team based in two core offices: Cyprus and Malaysia. Collectively, the team members speak eight languages. With varying backgrounds from industries such as IT and telecom, professional services, construction, consulting, security, HR, admin, and travel, the team boasts vast expertise in multiple procurement fields. The team comprises: Senior Procurement Specialists Anastasia Koroleva and Yiannis Vassiliou; Procurement Specialists 82

December 2023

“ One of the reasons I accepted an offer from Exness was the great opportunity and freedom to build a best-in-class procurement process from scratch” DANIYAR ZHANTILESSOV HEAD OF PROCUREMENT, EXNESS

Nicholas Tan and Angelina Vryonidou; and Procurement Officers, Chee Hong Tham and Angelina Papachristoforou. It is important to speak English, Chinese, Russian, Greek, and Malay with our vendors and partners. Understanding them better removes the culture wall and also builds a strong relationship with our strategic and important vendors.” Today, Exness’ procurement team looks like an international family, speaking many languages, supporting each other and demanding high-quality standards. “We have various experience in different fields like IT and telecom, professional services, construction, consulting, security, HR and admin and Travel,” Zhantilessov describes. “One of the most significant advantages of our team is that operating globally helps us to improve our hard and soft skills, achieve significant cost savings

Daniyar Zhantilessov TITLE: HEAD OF PROCUREMENT COMPANY: EXNESS LOCATION: CYPRUS Daniyar Zhantilessov is an expert in the field of Procurement, with 12+ years of experience, acquired through diverse roles across various markets and working in global companies like Philip Morris, Huawei Technologies, HomeCredit Bank and international telecom companies Telia Group and RETN, in addition to the Kazakhstan national airline carrier, Air Astana. Currently, he is Head of Procurement at Exness, which is the largest retail market maker in the world. Daniyar holds a degree in Finance from Almaty Management University, powered by Arizona State University (accredited by AMBA, UK and Business Graduates Association), and is a member of the Chartered Institute of Procurement and Supply Chain Management (CIPS, HQ in the UK).

EXNESS

for the company, and make sure that we are cooperating with the best third party providers to be able to provide the best possible service for our customers.” The benefits of digitisation to Exness’ procurement function In an increasingly digital world, Zhantilessov has embraced technological innovation in the procurement sector. He highlights that digital procurement is about “opting for digital technologies to improve the procurement function of the business”. The benefits of this transformation, according to Zhantilessov, range from improved efficiency and transparency to significant cost savings, and even enhanced work culture. 84

December 2023

“ The rebuilding of procurement has allowed us to implement vendor risk management that has helped us mitigate risk in many fields” DANIYAR ZHANTILESSOV HEAD OF PROCUREMENT, EXNESS

“In simple words, digital procurement can be defined as an act of incorporating business tasks with the latest technological advances,” he adds. “Automation, for example, helps save a substantial amount of money for a company.” With the comprehensive revamping of Exness’s procurement function, the company has also enhanced its vendor risk management. “The rebuilding of the procurement function and ongoing digital transformation has allowed us to implement vendor risk management that helped us mitigate our risks in many fields,” Zhantilessov explains. “Vendor management in an organisation increases visibility, which helps identify

hidden costs. Strong vendor relationships also enable buyers to negotiate better rates through discounts and incentives that increase profit margins. “A vendor risk management program reduces the frequency and severity of data breaches, data leaks and cyber attacks involving third and fourth parties, protecting sensitive data and intellectual property, and ensuring business continuity.” The Exness Mentor Programme: Driving collaboration The Exness Mentorship Programme is an internal programme through which employees who meet a certain set of criteria, are given the unique opportunity procurementmag.com

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“ The Exness Mentorship Program exemplifies the company’s commitment to fostering leadership and facilitating knowledge transfer” DANIYAR ZHANTILESSOV HEAD OF PROCUREMENT, EXNESS

to be personally mentored by key members of management. As Zhantilessov explains, the mentorship programme at Exness exemplifies the company’s commitment to fostering leadership and facilitating knowledge transfer.

“The purpose of this programme is to create opportunities for closer collaboration between people on different job levels and with different job responsibilities, to help participants identify and achieve professional growth goals that support business objectives, and to generally build a mentorship community of Exness leaders who can impart their knowledge, skills and abilities to help other employees who may drive the success of the business in the future.” Zhantilessov credits Elena Krutova, Exness’ Chief Administrative Officer, as a mentor within the programme who “always pushes you to grow further and reach your full potential.” “I couldn’t have been luckier to have one of the best experts in management to take on my personal journey,” he says. procurementmag.com

EXNESS

Exness: Building a best-in-class procurement process WATCH NOW

“Elena brings a wealth of knowledge and experience to the company and has to me personally. She is a mentor who always pushes you to grow further and reach your full potential, and I am delighted to have had her constant support and to have such an inspiring manager in my corner.” Zhantilessov’s journey has also been influenced by the company’s Chief Finance Officer, Alexis Alichanidis, who as his direct manager contributed 88

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significantly to his development. “I am grateful for his ongoing support and the fact that he gave me the freedom to show my potential and realise my ideas into fruition. Alexis is a strong manager who not only pushes for achievements within the company but also ensures there is space for individual professional growth. He is the true definition of ‘the difference between a boss and a leader’.”

Importance of partnerships: Exellyn Exness considers partnerships like the one with Exellyn pivotal for the growth and operational efficiency of the company. An expert in centralised procurement and IT infrastructure standardisation solutions, Exellyn helps its multinational clients manage their global IT infrastructure easily and securely by providing global solutions for their offices worldwide.

“Standardisation in IT infrastructure is an essential condition to solve today’s challenges of manageability, stability and security,” comments Zhantilessov. A Dell Technologies Titanium partner, Exellyn is focused on providing hardware deployment, professional services and IT infrastructure management on a global scale. “More than a decade into our journey of redefining global IT fulfillment, they are now a highly-respected partner for their procurementmag.com

EXNESS

“We will continue improving our procureto-pay process to make our internal procedures more efficient and implement a new vendor portal next year” DANIYAR ZHANTILESSOV HEAD OF PROCUREMENT, EXNESS

multinational clients,” Zhantilessov adds. “At Exness, Exellyn is one of our strategic partners and has delivered many projects related to Dell products.” Ambitious future plans for Exness’ procurement process Looking ahead, Zhantilessov has ambitious plans for Exness’ procurement function. “We will continue improving our procure-topay process to make our internal procedures more efficient. We will also implement a new vendor portal next year, which will help us automate bidding processes,” he explains. Zhantilessov also describes two ambitious plans related to its new procurement community in Cyprus and the global vendor marketplace that Exness copartners can use. “As a part of the CIPS, I would like to build a procurement community in Cyprus and promote sustainable and ethical procurement on the island. It is a long-term goal that will take more than one year and can benefit the industry. “Regarding the vendor B2B marketplace, we can consider the benefits of better prices, improved quality levels, multi-vendor inventory management, efficient logistics, and better customer service.”

December 2023

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TECH & AI

December 2023

UNDERSTANDING TECHNOLOGY IN PROCUREMENT With an acceleration of progress in procurement tech it is crucial sourcing leaders stay on top of advancements. But what role does industry play in offering clarity? WRITTEN BY: NIEL PERRY

“ If organisations aren’t able to reap the benefits of emerging technologies, they stand to fall behind their competitors,”

warns Alex Saric, Smart Procurement Expert at Ivalua. “They won’t be able to leverage the same supply chain insights and make informed decisions.” This is a simple warning for procurement leaders seeking competitive advantage over competitors, whatever the industry. The rapid advancement in procurement technology mean it’s important to cut through the hype-cycle of product offerings, and understand how solutions can enhance sourcing strategy.

Rapid progress in procurement technology Saric says procurement tech is having a significant impact, both on product development and also the relationships suppliers have with companies. “Bestin-class chief procurement officers place technology at the core of their strategy to mitigate the impact of supply chain risks like shortages,” says Saric. He adds: “They use it also to identify opportunities to collaborate with suppliers on innovative new products, and also to procurementmag.com

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TECH

ensure suppliers are supporting strategic business goals like sustainability. “Tech is vital in defining and driving forward industries. In recent years especially, procurement departments have made it the foundation of their operations. Think about the impact Tesla has had in the automotive sector.” And with Generative AI turbo-charging tech development there is a growing division between the tech pioneers and the laggards.. Research shows procurement leaders say fewer than half (47%) of procurement and supplier management processes have been digitised,” Plus, organisations are wasting more than a fifth (22%) of their time dealing with manual or paper-based procurement processes – and onlyhalf (50%) of procurement leaders recognise that the rate of digitisation in procurement is too slow.

Alex Saric TITLE: CHIEF MARKETING OFFICER & SMART PROCUREMENT EXPERT COMPANY: IVALUA INDUSTRY: SOFTWARE LOCATION: NEW JERSEY, USA Alex Saric is a B2B software executive with proven success building and growing solutions globally, creating new markets and driving transformational change. He joined Ivalua in 2017 after more than a decade at SAP Ariba.

“If organisations aren’t able to reap the benefits of emerging technologies, they stand to fall behind their competitors” ALEX SARIC

CHIEF MARKETING OFFICER & SMART PROCUREMENT EXPERT IVALUA

Selecting the right procurement tools Saric urges procurement executives to show leadership, by demystifying the myriad digital tools and solutions. Clear communication – – in the shape of a clear digital roadmap – is key, he says Sarci says: “Given the breadth of today’s technology landscape and rapid innovation there is a real danger organisations select solutions that either don’t deliver as promised or fail to adapt to changing requirements. “Leaders must develop a clear digital roadmap and select technology that builds the necessary foundation to support today’s requirements with the flexibility to expand for tomorrows.” Taking such an approach is the route to understanding precisely what thea given solution needs to provide. A roadmap approach can also help organisations map their digital maturity level, which helps them identify compatible solutions that can resolve priority problems. This in turn provides a solid foundation from which to scale and adapt solutions as business needs change over time. procurementmag.com

TECH & AI

“AI hype will likely peak in 2024, but unlike with past technologies, it will be broadly adopted and deliver significant value” ALEX SARIC

CHIEF MARKETING OFFICER & SMART PROCUREMENT EXPERT IVALUA

Is Gen-AI worth the hype? With the current hype-cycle over AI showing little sign of fading, Saric believes Gen AI will become a standard tool. “AI hype will likely peak in 2024, but unlike with past technologies, it will be broadly adopted and deliver significant value,” he says. However, Saric warns Gen Ai is no silverbullet for all procurement challenges, and that sourcing professionals must learn how to get the best out of the technology. “Expectations might be sky-high but procurement leaders must accept Gen AI solutions are like any other tool; they are only as good as the person using them and the quality of data fed to them. “Leaders will reap the benefits, while laggards will

be disappointed, as they fail to adjust how they work to leverage the capabilities of this innovative technology. “Organisations should adopt flexible and extensible AI solutions that have prebuilt applications and can scale to support new use cases and allow users to address the challenges that matter most to their procurement teams,” adds Saric. Quality data key to procurement tech Saric’s point about quality data is key here. It is data that defines the parameters and extent of AI success. “Failing to build a solid data foundation means businesses will be unable to harness AI,” Saric says. “Poor-quality data will not only limit the insight produced by AI but also procurementmag.com

TECH & AI

WATCH NOW

“ Leaders must develop a clear digital roadmap and select technology that builds the necessary foundation to support today’s requirements with the flexibility to expand for tomorrows” ALEX SARIC

CHIEF MARKETING OFFICER & SMART PROCUREMENT EXPERT IVALUA

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undermine output accuracy and reliability.” Achieving that level of transparency and clarity, he points out, is helped by technology, but it is down to the business to make it work. “Businesses must take a smarter approach to procurement,” says Saric. “They need to Implement tech that provides visibility across the supply chain, as it is this that provides the reliable data needed to inform decision-making. “Organisations must establish a single data source for spend and suppliers, making quality data easily accessible to users. ”This will help reduce the risk of ‘garbage in, garbage out’ and ensure organisations are on track to make the most of any emerging technologies.”

Half of procurement and supplier management processes yet to be digitised Research from Ivalua has found more than half of procurement and supplier management processes have yet to be digitised. The Sapio Research study was of 850 procurement leaders around the world.

50% of procurement leaders think the rate of digitisation within procurement is too slow

47% say existing procurement systems are not flexible enough to keep up with constant change and deal with market and economic uncertainty

53% of procurement and supplier

management processes have yet to be digitised procurementmag.com

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HALMA: DEDICATED TO A SAFER, CLEANER, HEALTHIER FUTURE WRITTEN BY: GEORGIA WILSON PRODUCED BY: GLEN WHITE

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Halma, a provider of innovative products and services offering life-saving technology, holds sustainability at its core, driving growth and positive change

or half a century, Halma has been a provider of innovative products and services offering life-saving solutions to some of the key problems faced in the world today. Driven by its purpose to ‘grow a safer, cleaner, healthier future for everyone, everyday’, Halma’s group of 45 companies operates across three core market areas: safety, environment, and health. “We have been a purpose-led business for 50 years. It powers every decision we make, from choosing our markets to finding the right talent. It attracts people who want to solve the same problems as we do, and keeps us focused on the things that matter to our business,” explains Halma. Halma’s sustainability growth model A core principle for Halma is sustainable action. The group operates a Sustainable Growth Model acquiring small to mediumsized companies that align with its overall purpose driving long-term growth. Actively managing its portfolio of companies through investment and acquisitions, Halma seeks new opportunities to grow through mergers and disposals where market conditions change. With this approach, Halma’s strengths are resilience, diversity, growth and earnings, while maintaining a conservative capital structure and delivering high returns.

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How our companies grow Our companies look at growth opportunities that are aligned with our purpose across three dimensions of Core, Convergence and Edge.

Core focuses on growing through new product development, including digital offerings and products and solutions addressing sustainability opportunities, and international expansion, and through acquisitions aligned to our purpose.

Growing a safer, cleaner, healthier future for everyone, every day

“ Our purpose is to grow a safer, cleaner, healthier future for everyone, every day, by making innovative technologies that help solve global challenges” CONSTANCE BAROUDEL

DIVISIONAL CHIEF EXECUTIVE OF THE MEDICAL & ENVIRONMENTAL SECTOR FOR HALMA PLC

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Edge focuses on developing and investing in disruptive new business models and solutions, which have the potential to scale exponentially.

Convergence enables us to go faster by combining existing Halma technologies and capabilities in new ways, and by partnering with others who want to solve the same problems as we do.

“We continually invest in our business and our people to maintain strong positions in our markets. The highly cashgenerative nature of our companies allows us to fund this investment, both to support organic growth and drive growth through acquisitions,” says Halma. “Talent, innovation, technology and sustainability are core elements of our growth strategy. This includes investment in developing our people, our products and services (including through research and development), our intellectual property, and our knowledge of the markets we serve.” Water for Life Launched in partnership with WaterAid in 2020, Water for Life raises awareness of the

Water for Life WATCH NOW

daily challenges millions face in accessing clean and safe water. In particular, the campaign focuses on a network of villages in northern India where the groundwater is contaminated with arsenic. “Water is the most critical resource on the planet, yet millions worldwide still don’t have access to clean water close to home [...] The partnership will highlight the global issue of access to safe water by providing 8,000 people in India with clean drinking water,” explains Halma. “The increasing role of technology to support sustainability is something that Halma believes in, and sees increasing demand for, in the long term. If we are to live up to our goal of making the world a safer, cleaner, healthier place there seems no

better time to bring our life-saving technology to a global challenge,” says WaterAid. Within its group, Halma has six water companies – HWM, Palintest, Sensorex, Minicam, Hydreka and UV Group - they all focus on solving different parts of the global water challenge. Constance Baroudel, Divisional Chief Executive of the Medical & Environmental Sector for Halma plc, says: “Our purpose is to grow a safer, cleaner, healthier future for everyone, every day by making innovative technologies that help solve global challenges. Having access to clean, safe drinking water and basic sanitation is central to living a healthier life, and the current global pandemic has only served to demonstrate its importance. procurementmag.com

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“ Talent, innovation, technology and sustainability are core elements of our growth strategy” HALMA

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“We look forward to drawing on our technological expertise, as well as the passion of our employees, in supporting WaterAid to provide the communities of Bhagalpur and Buxar with a clean water supply, which is a basic and essential everyday requirement for children to grow up healthy and families to earn a living.” Scope 3, supply chain and procurement “Sustainability has always been at the core of our growth strategy. We acquire and grow businesses in safety, environmental and healthcare markets that solve real problems

As part of Water for Life, Palintest – a water testing technology specialist – has donated portable testing kits and over 18,000 arsenic tests to the campaign. Halma has raised over £400,000 to support the building of new water infrastructure and provide training for local volunteers. Through its partnership with WaterAid, Halma has transformed the lives of over 10,000 people. In addition to providing access to safe, clean water, the campaign has trained 1,800 community volunteers and installed new water filter systems in 70 schools and healthcare facilities.

With this in mind, Halma has a three-pillar approach to its sustainability: 1. Driving growth in sustainability 2. Supporting its people 3. Protecting the environment “For our companies, our three sustainability pillars together translate into a challenge to ‘do more good’ and ‘do less harm’,” says Halma.

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in the world – enabling our customers to provide safer environments, protect life-critical resources, and deliver better healthcare,” explains Halma.

Research is forecasting the global logistics market to be worth around US$12tn in 2023, almost triple its 2018 value. Each loading dock accident is estimated to cost US$189,000 and for every accident, there are 600 near misses.

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A more sustainable PCB Our focus is on creating value for our customers and taking responsibility throughout our value chain. This approach helps us to identify opportunities to drive positive change and minimize negative impact. Since 2014 we have used the ISO 26000 standard to identify the issues that are most important and the improvements we can achieve.

Together with our suppliers and customers we want to create a more sustainable industry. We believe that strong relationships and transparency are key to achieving this. Let´s meet and see what we can do together! Contact us

Call us on +44 1380 736 140 or visit us at www.ncabgroup.com or Unit 1-3, Hopton Industrial Estate, London Road, Devizes, SN10 2EU, UK ISO 26000 provides guidance on how businesses and organizations practice social responsibility to improve their impacts on their workers, their natural environments and their communities.

HALMA

“ The increasing role of technology to support sustainability is something that Halma believes in, and sees increasing demand for, in the long term” HALMA

When it comes to protecting the environment, Halma drives its focus towards sustainable product design and reducing emissions. “The majority of our environmental footprint arises within our wider value chain and is often embedded in the design of our products and services,” notes Halma. “We are also committed to reducing our own emissions while supporting our companies to pursue climate-related opportunities.” Looking closer at Halma’s Scope 3 emissions in particular, the group has spent the last year – 2023 – completing a full estimate of its Scope 3 baseline, and begun the process of setting appropriate short and long-term targets. procurementmag.com

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Fortress: helping customers reduce their carbon footprint WATCH NOW

“ Research is forecasting the global logistics market to be worth around US$12tn in 2023, almost triple its 2018 value” HALMA

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Key focus areas for the group include: • Integration of sustainability into procurement and supplier engagement systems • Use of Halma’s group-wide EcoVadis tool to engage suppliers • Efficiency of transport and logistics including refighting choices • Integration of sustainable design into NPD • Development of life cycle analysis (LCA) capability and understanding • Business travel protocols Helping customers reduce their carbon footprint Outside of its own operations, Halma has been looking at ways in which it can also

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help its customers reduce their supply chain emissions (Scope 3). With a large portion of environmental impact coming from the manufacturing and shipping of products to customers globally, Fortress – a Halma company – has been working on finding a more sustainable material for its products while maintaining their robust quality. Knowing that changing the material – from zinc – to a more sustainable metal could have a significant impact. As such the company moved to a recycled material that is lighter to ship resulting in significant carbon savings.

“The team began designing a new casing for their flagship Amgard product range using recycled aluminium. It is a lighter metal that, crucially, is 100% recyclable forever. After rigorous testing to ensure it met Fortress’s high safety standards, they have designed a new aluminium casing that is 90% lighter than the original and just as durable,” explains Halma. Keeping workers and drivers safe in global logistics In the wake of COVID-19, the shift to digital business models has rapidly expanded the ecommerce and global logistics industries. procurementmag.com

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“Research is forecasting the global logistics market to be worth around US$12tn in 2023, almost triple its 2018 value. This rate of growth has put additional pressure on the transportation and warehousing industry to move goods quickly, safely, and efficiently,” explains Halma. “The most recent statistics reported 819 deaths and 270,000 injuries occurring in the USA in one year. Of these, more than 25% of accidents happened at loading docks, with accidental drive-aways accounting for around a quarter of these accidents. Each accident is estimated to cost US$189,000 and for every accident, there are 600 near misses.” With most accidents caused as a result of misunderstanding or miscommunication, SPS – a Halma company – has designed an innovative solution using technological advancements to remove the need for verbal communication when it comes to loading updates. As such this solution prevents accidental drive-aways by locking the delivery vehicle to the loading bay door for safe loading and unloading. “Initially developed in response to a customer request, the Salvo Loading Dock Safety System is now installed at tens of thousands of loading bays globally. Once implemented, customers report no accidental drive-offs, keeping workers and drivers safe and ensuring compliance with all Health and safety regulations,” explains Halma.

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MARS ON A PROCUREMENT PATHWAY TO NET-ZERO

Mars sources renewable electricity for 100% of its UK manufacturing operations from Eneco UK’s Moy Wind Farm in the Scottish Highlands

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SUSTAINABILITY

As Mars Inc. publishes its groundbreaking Net Zero Roadmap, how will procurement help drive the company to cut carbon in half by 2030? WRITTEN BY: NEIL PERRY

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ars has published its opensource action plan to accelerate the drive towards achieving Net Zero emissions, including a new target to cut carbon in half by 2030 across its full value chain. The strategy also involves investing US$1bn over the next three years alone to drive climate action The strategy incorporates an understanding of how supplier engagement, supply chain and procurement impacts their environmental footprint, as 80% of it comes from their inputs such as raw materials, packaging and logistics. 118

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“The carbon footprint of our entire supply chain from farming through to the end of life of our packaging and everything in between is the same as that of a small country – Finland has almost exactly the same footprint,” explains Barry Parkin the Chief Procurement and Sustainability Officer at Mars Inc. “When we look at where our footprint was ten years ago, 70% or more of it is embedded in the goods or services we buy. So, procurement is therefore absolutely critical.”

Barry Parkin, Chief Procurement and Sustainability Officer, Mars Inc. procurementmag.com

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This means the role of procurement, supply chain, and supplier engagement is integral to the company reaching their ambitious sustainability targets, and Parkin is acutely aware that means it is essential for them to do things differently. “Our job is to re-imagine and re-design supply chains so that they have a dramatically lower carbon footprint,” he says. “To put it another way, unless we change what we buy, or where we buy it or how we buy it we are not going to really change our carbon footprint. ” Their roadmap involves removing approximately 15 million metric tons by 2030 and then another 15 million metric tons by 2050 when they reach net zero. Since 2015 Mars have already reduced emissions by 8%, whilst growing the

Barry Parkin TITLE: CHIEF PROCUREMENT AND SUSTAINABILITY OFFICER COMPANY: MARS INC INDUSTRY: CONSUMER PRODUCTS LOCATION: MCLEAN VA, USA Barry Parkin is Chief Procurement and Sustainability Officer at Mars, and is also Chairman of the World Cocoa Foundation. He has enjoyed a 30 year career at Mars in a diverse set of roles across commercial, engineering, business development, supply chain, HR and sourcing.

“Our job is to re-imagine and re-design supply chains so that they have a dramatically lower carbon footprint” BARRY PARKIN

CHIEF PROCUREMENT AND SUSTAINABILITY OFFICER MARS INC

business by 60%, showing that it is possible to decouple emissions from growth and success of a business. Supplier relationships As for any major organisation trying to address their sustainability strategy, it is impossible for Mars to make significant progress with their carbon footprint without the help and buy-in from their enormous supply networks. “As a global company, we rely on suppliers across our value chain as essential partners in our journey to reach net zero,” says Parkin. “Like most companies, addressing our Scope 3 emissions is challenging because of their indirect nature and our lack of direct control or visibility. Only by working with our Tier 1 suppliers can we make progress with them on their own emissions and on their upstream emissions with our Tier 2 suppliers and beyond.” Mars was a founding member of the Supplier Leadership on Climate Transition coalition, that is a dedicated body for instigating climate action through industrywide supply chains. This allows companies procurementmag.com

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SUSTAINABILITY

like Mars to use their scale and influence to guide, mentor and train suppliers with emissions strategies and also celebrate their best practice. This reflects the collaborative approach Mars is trying to adopt with all their stakeholders to reach their climate targets. “Suppliers that demonstrate substantial progress in reducing their environmental footprint are recognised and rewarded with additional business,” explains Parkin. “This metrics-driven strategy ensures that our suppliers have a significant role in our journey towards sustainability, aligning their efforts with our commitment to addressing the climate crisis.” To achieve this relationship, Mars sets clear expectations for suppliers regarding emissions reduction, renewable energy adoption, and sustainable sourcing. They then incorporate those climate performance metrics into some of their biggest supplier’s evaluation criteria.

Recipe optimisation For one of the global leaders in food products, pet supplies and confectionery, they are also able to leverage product design and ingredients into their net-zero strategy. Mars describes that as ‘optimising recipes’ and procurement is again integral in making that aspect of the plan a success. “Our procurement team actively collaborates with suppliers to identify and source new ingredients in a way which lowers emissions and advances our sustainability goals,” says Parkin. “This collaborative approach helps improve our supply chain sustainability performance, including the procurement of ingredients that have a reduced carbon footprint.” This approach of working closely with the suppliers who provide the ingredients, allows Mars to enhance their product offerings while at the same time finding new ways to reduce the emissions associated with the recipes. procurementmag.com

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WATCH NOW

Buying-in to the road map Parkin is praising the positive reaction from their suppliers to the Net Zero Roadmap, but that is also because many of those partners have been on a sustainability journey with the company for a number of years, since setting out their first scope 3 targets for their full value chain back in 2017. “Suppliers have expressed their appreciation for the transparency and specificity of our roadmap,” explains Parkin. “It has enabled them to better understand our expectations and how their contributions fit into the broader picture of achieving net zero emissions. The roadmap’s emphasis on collaboration and collective responsibility has resonated with our suppliers, fostering a spirit of partnership in our shared journey towards sustainability.” The partnership allows procurement partners to take proactive steps in their organisations and strategies to address their emissions, and be part of a collective 124

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responsibility to finding both a sustainable future and a productive business relationship. Aside from the influence such an ambitious net-zero strategy has on the culture and direction of a company like Mars Inc, it also creates a larger impression on other companies in their business ecosystem as other brands and businesses look to follow their lead. Barry Parkin is aware of the value of that influence, and how their procurement and supply chain can help lead others to greater sustainable achievements. “Global companies like Mars play an important role in shaping sustainability standards and advancing climate action at scale,” he explains. “Our influence extends across the globe, allowing us to inspire change on a wider scale. When companies set high sustainability standards, it encourages others in their industries to follow suit.”

Mars: Net Zero by 2050 Transitioning to 100% renewable energy By changing how they power their factories, offices and veterinary hospitals, addressing energy used by farmers, how they source ingredients and even the energy used by customers and by consumers and pet owners at home. Redesigning supply chains to stop deforestation By enhancing transparency and traceability of key ingredients such as cocoa, soy, and beef. Scaling up initiatives in climate-smart agriculture By working with farmers on regenerative agriculture, optimising sourcing, and switching to renewables.

Optimising recipes Developing new lower GHG-footprint ingredients for snacks and humanfood dishes, as well as alternative proteins for pet food. Improving and optimising logistics Redesigning networks, the type of transport they rely on and the energy sources used, like electrification of vehicles or potential green hydrogen. Embedding climate action in the business Embedding climate reductions into their governance and business planning, including it as a shareholder objective, in variable remuneration plans of senior executives, in investment planning processes, and in merger and acquisition strategies. procurementmag.com

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He adds: “Companies like Mars have the resources, expertise, and innovation capabilities needed to pioneer sustainable practices and technologies. “We can invest significantly in research and development, pilot groundbreaking initiatives, and implement sustainable solutions beyond the reach of smaller organisations. This proactive approach not only benefits the environment but also builds a positive reputation with environmentally conscious consumers and attracts like-minded partners.” If a globally recognised brand like Mars can leverage their sprawling supply and procurement network for better environmental outcomes, it can only help to bring others on the same journey. “This ripple effect fosters industrywide transformation, promoting a more sustainable future,” finishes Parkin. “If a business such as Mars can halve it’s footprint by 2030, that matters.”

The Five Fundamental Elements of Net Zero 1 Include all emissions across the value chain 2 Prioritise performance over promises 3 Mark progress with milestones 4 Remember that some decisions today reverberate tomorrow 5 Cover what you can’t cut with high quality carbon removal credits

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Mars Solar Panels & Wind Turbines

Global companies like Mars play an important role in shaping sustainability standards and advancing climate action at scale BARRY PARKIN

CHIEF PROCUREMENT AND SUSTAINABILITY OFFICER MARS INC

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