Procurement Magazine - July 2021 by procurementmag

July 2021 | procurementmag.com

The Sustainable Procurement Pledge, Uniting Our Powers S2P 101: Understanding the Procurement Process

Sustainable Procurement Consulting Companies

CLM: Democratising Procurement and Making for Better SX

DAVID LOSEBY Leadership in Procurement, From Cost to Value

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The Procurement Team EDITOR-IN-CHIEF

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FOREWORD

The Heat is On Whether it’s from new government regulations, potential employees, or your customers, the world is asking for corporate accountability, and they aren’t buying the colour washing that’s been going on.

34% of 1,000 consumers surveyed had trust in the brands they used 40% of environmental claims were found to be false or misleading

A study by OOH media platforms Clear Channel and JCDecaux showed that 61% of consumers value transparency, and only 34% of 1,000 consumers surveyed had trust in the brands they used, despite the fact that 81% said that trust is a deciding factor in purchase decisions. And who can blame them for lack of trust? Another study by the International Consumer Protection Enforcement Network (ICPEN), which analysed almost 500 websites promoting online products and services across various sectors, including clothes, cosmetics, and food, found that 40% of environmental claims were false or misleading. Customers are looking for real data and authentic communication on action. And it’s time for Procurement leaders to lead the charge in giving it to them. May we help in showing you the way...

LAURA V. GARCIA

laura.garcia@bizclikmedia.com

PROCUREMENT MAGAZINE IS PUBLISHED BY

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CONTENTS

Our Regular Upfront Section: 08 Big Picture 10 The Brief 12 Global News 14 People Moves 16 Timeline: The US Steel and Aluminium Trade War 18 Legend: Taiichi Ohno 20 Five Mins With: Beth Morgan

Procurement Strategy Leadership in Procurement, From Cost to Value

Vodafone

Shaping the Future of Procurement

50 bp

Optimising bp's Workflows with Digital Transformation

72 62

Salzgitter Machinenbau Taking the Load in Global Supply Chains

Digital Procurement

CLM: Democratising Procurement and Making for Better SX

KeolisAmey Docklands Partners in Passenger Safety

Technology

S2P 101: Understanding the Procurement Process

114

Marks & Spencer

Achieving Procurement Excellence

106

126

The Sustainable Procurement Pledge, Uniting Our Powers

Sustainable Procurement Consulting Companies

Sustainability

Top 10

BIG PICTURE

America’s 25% trade tariff USA

In response to what’s been referred to as the ‘Google tax’— EU’s decision to apply taxes to digital services and e-commerce giants such as Facebook, Amazon, and Google — the US announced and suspended a 25% trade tariff on goods from three European countries, as well as the United Kingdom, Turkey and India. The measure was suspended to allow for international negotiations to proceed.

July 2021

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THE BRIEF "WE WANTED TO KNOCK DOWN ALL OF THE REASONS WHY AN INDIVIDUAL PROFESSIONALLY CAN'T START TO EMBED SUSTAINABILITY AND RESPONSIBILITY INTO PROCUREMENT'S WAYS OF WORKING” Oliver Hurrey, Chair of The SPP

“When you look historically at why diverse businesses have been excluded from RFPs and processes by which we choose suppliers, you realise that in many ways, there are systems of inequality in place” Bernadette Bulacan,

Vice President and Lead Global Evangelist, Icertis

“IT’S THE SOCIAL CONTRACT THAT WE ENABLE BETWEEN PEOPLE AND BUSINESSES THAT MAKES THINGS HAPPEN”

BY THE NUMBERS

From Clear Channel and JCDecaux’s The Moment For Trust research, involving 1000 UK consumers The top 3 brand qualities to build trust:

72%

76%

Value for price

Product quality

61%

Transparency

EDITOR'S CHOICE M&S, THE IMPORTANCE OF PEOPLE “We’re a brand with a lot of heritage and a lot of legacy. Culture—and how we look after our people—is important” Andrew Newnham, Director of Group Procurement at Marks & Spencer READ MORE

FEELING THE LOVE “With my suppliers, we must learn from one another, bounce ideas between one another and grow together; it is almost love” Natalia Pickett, Head of Procurement, KeolisAmey Docklands READ MORE

David Loseby,

STRATEGIC ALLIANCES “Shrinking core expanding periphery - this is how my MBA professor Ranjay Gulati described strategic alliances, and I think it is true today" Rainer Veith, CFO at Salzgitter Maschinenbau AG (SMAG)

Managing Director at Barkers Commercial Consultancy

July 2021

Is Sustainability, the New Black? Clothing labels now offer an opportunity for organisations to share their sustainability efforts and educate consumers on the provenance, and the impacts, of their wares. It’s a selling opportunity that hits woke consumers right in the heart and loosens up the purse strings. Having learned to be cautious of greenwashing, consumers are now looking for data to drive their purchases. Consumer touchpoints like carbon labels and digital passports provide them with just that. But what exactly is a carbon label you ask? A carbon label, notes the carbon footprint of a product and acts as a signal to consumers that a company is working to reduce its carbon footprint. Wait, so, what’s the dealio with digital passports then? EON’s Product Cloud Platform, hosted by Microsoft Azure, powers ‘digital passports’ providing greater transparency, traceability and circularity in the clothing industry to empower and inspire sustainably responsible consumer choices. Powered by a QR code and cloud-hosted digital twin, the digital passports bring to life each garment’s unique journey from the product’s origin through to its purchase, transportation and aftercare and offer customers access to product-level impact reporting in a more interactive way.

 COSTCO Costco has a long record of profitable growth, which continued during the pandemic, and is now the second-largest retailer in the world, second to Walmart, and opens 10-15 new warehouse stores in the US each year.  WARNERMEDIA + DISCOVERY Looking to compete with media giants Netflix and Disney, AT&T announced a deal to merge WarnerMedia with Discovery Inc.  AMAZON Amazon’s Black employees are claiming the company’s HR department is failing them. Five different lawsuits have been filed in recent months by both former and current Amazon employees, detailing shocking allegations of racial discrimination.  COCA-COLA While speaking at a press conference, Cristiano Ronaldo removes CocaCola bottles from view saying people should “drink water” instead. By the end of the press conference, the company’s market value had dropped US$4bn.

W A Y U P JUL 21

W A Y D O W N

procurementmag.com

GLOBAL NEWS 1

CANADA

Canada lunches The Responsible Plastic use Coalition A new plastics coalition has been launched in Canada. The Responsible Plastic Use Coalition (RPUC) is a group of plastic industry leaders and large manufacturers looking to pursue legal action against the federal government in response to the Canadian Government’s designation of plastic as toxic under the Canadian Environmental Protection Act (CEPA).

UNITED STATES

The White House Launches Supply Chain Task Force In its first 100 days, the Biden-Harris administration is taking measures to support semiconductor, battery, and mineral supply chains. The Biden Administration has released its 100-day supply chain assessment for semiconductor manufacturing and advanced packaging, large-capacity batteries, critical minerals and materials, and pharmaceuticals.

July 2021

NETHERLANDS

Shell Ordered to Cut Supply Chain Emissions by 45% In a landmark court ruling, Judge Larisa Alwin ordered Royal Dutch Shell to take responsibility for its CO2 emissions throughout its supply chain.The Netherlands court ruled in favour of seven environmental groups, including Greenpeace and Friends of the Earth, who filed legal action against Shell on behalf of 17,000 Dutch citizens.

GERMANY

MALAYSIA

Goodyear Faces Labour Practices Lawsuit in Malaysia Foreign workers from Nepal, Myanmar, and India claim that Goodyear confiscated passports, reduced salaries, and required excessive work hours. Goodyear’s Malaysia tyre plant owes workers approximately US$1.21mn in unpaid wages.

Germany Adopts Revolutionary Supply Chain Human Rights Laws On June 11th, 2021, after months of negotiation, the German Parliament ushered in new supply chain legislation that holds German multinational corporations legally responsible for human rights and environmental abuses across global supply chains.

procurementmag.com

PEOPLE MOVES SARAH CLARKE

“ I’m extremely excited to join Vizibl. I believe it is ahead of its time in delivering a robust strategic Supplier Collaboration & Innovation solution, FROM: TSA SOLUTIONS unrivalled in the market, which TO: VIZIBL can address the business, societal, and economic challenges that WAS: DIRECTOR, GLOBAL MARKETING procurement professionals are facing. NOW: CHIEF MARKETING OFFICER I’m looking forward to working with the entire Vizibl team to continue Clarke will be responsible for overseeing delivering tangible business value to the procurement community” the strategy, planning, and execution of Vizibl's marketing initiatives in order to deliver on key business objectives and comes armed with over 15 years of experience in the marketing and procurement sectors. Clarke has previously served as Field Marketing Director for Northern Europe, Middle East, North Africa, and the Asia Pacific at BravoSolution. In her role she was responsible for establishing the strategic direction of marketing across these regions and target markets and in close alignment with BravoSolution’s broader business strategy. Over her 12-year tenure Clarke’s work was instrumental in growing the company from €10 million to €100million in annual revenue. Prior to joining Vizibl, Sarah was Director for Global Marketing at TSA Solutions, based in Singapore. 14

July 2021

CLINT GRIMES FROM: WARNERMEDIA TO: CAPITAL ONE WAS: VICE PRESIDENT OF GLOBAL SOURCING NOW: SVP/CHIEF PROCUREMENT OFFICER After almost 12 years spent at WarnerMedia in the roles of Executive Director Global Sourcing and Supplier Diversity and Vice President Of Global Sourcing, Clint Grimes has moved on to Capital One as their Senior Vice President/ Chief Procurement Officer. Previous to WarnerMedia, Grimes spent time as a Manager at AT Kearney, Director at ICG Commerce and Ahold USA.

VERONICA JONES FROM: GOOGLE TO: GILEAD SCIENCES WAS: PROCUREMENT, HEAD OF REGIONS & CLOUD PROCUREMENT NOW: CHIEF PROCUREMENT OFFICER Gilead Sciences has a fresh new face as their Chief Procurement Officer. Veronica Jones comes to them from Google where she was Head of Regions & Cloud Procurement. Prior to Google, Jones enjoyed stints as Vice President of Genentech Site Services, Vice President of Procurement at Roche as well as Senior Director of Global G&A Procurement at Genentech. procurementmag.com

TIMELINE

THE US STEEL AND ALUMINIUM TRADE WAR In 2018, former President Donald Trump started multiple trade wars, including various battles with China and other American allies. For each battle, Trump used a particular US legal rationale, such as calling foreign imports a national security threat. He would then impose tariffs and/or quotas on imports. Now, President Joseph R. Biden Jr. must determine whether to keep US tariffs and other trade barriers in place or adjust policies.The timeline below tracks the most recent developments of the steel and aluminium trade war.

24.01

2020

Trump Broadens Tariffs

Canada Retaliate after Trump Reimposes Tariffs on Certain Canadian Aluminium

To assist industries suffering from his previous tariffs, Trump imposes new tariffs on almost $450 million of steel and aluminium products. The tariffs mostly impact imports from allies such as the European Union, Taiwan, Japan, and China.

06.08

July 2021

Trump announces the return of 10% tariffs on primary aluminium products from Canada, effective August 16, 2020. The Canadian government plans dollar-for-dollar retaliation on US exports to Canada containing aluminium.

15.09

01.02

06.05

2020

2021

Trump Ends Duties on Canadian Aluminium but Wants Export Quotas

Biden Reinstates Duties on Aluminium from the UAE

US and EU to Discuss Excess Steel and Aluminium Capacity

On January 19, the day before he left office, Trump’s administration lifts the Section 232 tariffs on aluminium from the United Arab Emirates. Reversing course, on February 1, the Biden administration announces the 10% duties will continue to apply to the UAE.

To mitigate the threats of global excess capacity, the EU announces it will temporarily suspend a scheduled round of retaliatory tariffs on US exports. The parties agree to discuss how to address shared concerns.

Retroactive to September 1, 2020, the US resumes tarifffree treatment of non-alloyed, unwrought aluminium from Canada, with the stipulation that Canada restrict exports of those products. Canada cancels its planned retaliation. However, it denies it agreed to export quotas.

procurementmag.com

LEGEND

Taiichi Ohno, Founding Father of the Toyota Production System As supply chain seems to quickly be veering from JIT (Just-in-Time) to JIC (Just-in-Case), we thought it a good time to honour the founding father of the Toyota Production System (TPS), the inspiration for Lean manufacturing, and pay homage to some of his principles.

aiichi Ohno (1912 – 1990) was a graduate of the Nagoya Technical High School in Japan. In 1932, after graduation, Taiichi Ohno joined the Toyoda family's Toyoda Spinning and Weaving works which later sold to a British company named the Platt Brothers. After selling the business, the Toyoda family invested the money in the manufacturing of motor cars, Toyota. Ohno started at the Toyota motor company in 1943 where he worked as a shop-floor supervisor in the engine manufacturing shop. Gradually, he rose through the ranks to become an executive. Under pressure from competing American automakers Taiichi Ohno knew the company had to find better, more efficient ways of working and looked to eradicate inefficiencies and eliminate waste within the companies production processes, thus creating the core of TPS. “All we are doing is looking at the time line, from the moment the customer

July 2021

gives us an order to the point when we collect the cash. And we are reducing the time line by reducing the non-value adding wastes.

Did you know? Toyota Motor Corporation was founded in 1937 by a man called Kiichiro Toyoda, and it was named after him. The reason why it is called "Toyota" and not "Toyoda" is that people thought it sounded better and it also meant that the name could be written in Japanese with eight strokes of the pen. In Japan, since the olden days, people have thought that the number eight was lucky and meant that things would go well in the future. So the name "Toyota" was chosen in the hope that not only the company but also Japan would prosper.

“The more inventory a company has, the less likely they will have what they need”

leansixsigmabelgium© procurementmag.com

FIVE MINS WITH...

BETH MORGAN

Q. WHAT’S YOUR FAVOURITE PIECE OF ADVICE FOR MEN IN PROCUREMENT AND SUPPLY CHAIN?

» Be a better ally. Creating inclusive

BETH MORGAN IS THE FOUNDER & CEO AT BOOM!, A GLOBAL COMMUNITY WITH A VISION TO EMPOWER WOMEN IN SUPPLY CHAIN FOR THE BENEFIT OF ALL. THEIR MEMBERS REPRESENT ALL SUPPLY CHAIN AND PROCUREMENT FUNCTIONS AND SPAN MULTIPLE INDUSTRIES ACROSS 42 COUNTRIES, BRINGING A RICH DIVERSITY OF EXPERIENCE, THINKING AND AMBITION. Q. WHAT’S YOUR FAVOURITE PIECE OF ADVICE FOR WOMEN IN PROCUREMENT AND SUPPLY CHAIN?

» Acknowledge where your strengths

lie so you can put them to work in a focused and purposeful way. You will be more likely to seek out opportunity, and letting other people know means that opportunity will also come knocking on your door. When I interviewed Maria Pia De Caro from Unilever for our ‘Be Inspired’ series for the boom! community, she summed this up brilliantly by suggesting you ask yourself, “what makes you extraordinary?” A simple but incredibly powerful and revealing question. 20

July 2021

workplaces where everyone can thrive comes down to all of us – men and women. Although we all have to do our bit to help create positive, effective cultures, practices and behaviours, male leaders have a particularly important role to play here in setting the agenda for gender diversity, enabling practical change and establishing accountability.

Q. WHAT INSPIRES YOU OR GIVES YOU HOPE FOR THE FUTURE OF WOMEN?

» Seeing action that influences

change. The results of the latest Gartner Women in Supply Chain survey shows that 73% of responding supply chain organisations have a diversity, equity and inclusion goal related to attracting, developing, retaining and advancing women. That’s an unprecedented number. We see this in action through what we’re learning within the boom! community, and it’s great to be able to share best practices and collectively learn from what’s happening across the profession..

“ACKNOWLEDGE WHERE YOUR STRENGTHS LIE SO YOU CAN PUT THEM TO WORK IN A FOCUSED AND PURPOSEFUL WAY”

Q. WHAT’S YOUR PERSONAL MANTRA?

» For me, it’s all about never-

ending self-improvement. To stand still and let the grass grow under my feet is something I never want to do. I’m constantly seeking out new opportunities to learn, both in my personal and professional life. Sometimes that’s taken me way out of my comfort zone and hasn’t always been easy, but every situation presents a learning opportunity.

Q. HOW DO YOU ENSURE YOU MAINTAIN A BALANCED, HEALTHY LIFE?

» If we’ve all shared something this

year, particularly in supply chain, it’s been the challenge of managing a healthy work-life balance – how to successfully achieve that has certainly been an ongoing topic of conversation in the boom! community. The most powerful hack for me is to draw clear boundaries – and stick to them. Yes, we need to get the job done, but it’s so important to make time to decompress and recharge. As managers and leaders, it’s particularly critical that we model this for our teams.

73%

of responding supply chain organisations have a diversity, equity and inclusion goal related to attracting, developing, retaining and advancing women. procurementmag.com

Top 100 Leaders in Supply Chain September 2021 To be announced at the Procurement & SupplyChain LIVE Event NOMINATE NOW

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July 2021

VODAFONE PROCUREMENT COMPANY

SHAPING THE FUTURE OF

PROCUREMENT WRITTEN BY: RHYS THOMAS

PRODUCED BY: GLEN WHITE

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VODAFONE PROCUREMENT COMPANY

Reinhard Plaza-Bartsch, Global Head of SCM Development, Operations & Digital

July 2021

VODAFONE PROCUREMENT COMPANY

Reinhard Plaza-Bartsch, Global Head of SCM Digital & Operations, Vodafone on empowering procurement through digital transformation

efining the efficacy of a digital transformation in procurement seems straightforward on the surface. You can consider the facts by measuring efficiency and productivity metrics or tally up the black ink on quarterly financial results. But the full story is written in the detail. In making areas of user experience and ESG commitments tangible, reportable and manageable. As Global Head of SCM Digital & Operations at Vodafone, Reinhard PlazaBartsch is driving the telecoms giant’s supply chain digital transformation journey. His vision is that digital will transform the way we work, fostering a culture of innovation and driving more sustainable value creation. It will empower individuals to do more, through outstanding user experience, boost productivity and reshape how we collaborate across organisations. “Digitalisation will unlock exponential value for our business,” he says. “As a function, we want to push the boundaries of what can be achieved through technology and innovation. Having a vision and lining up a clear roadmap of new capabilities interlocked with the business is an essential part of the journey. “You need to start from the basics - typically opportunities that will free up capacity of commercial teams so that they can devote more time to more value-adding activities. However, you need to shift gears quickly, go beyond simple automation, and equip teams with new digital solutions that go beyond bridging process gaps and providing data businesschief.eu

VODAFONE PROCUREMENT COMPANY

Title of the video

insights to enable business foresight. In other words, enabling fully end-to-end connected solutions that provide transparency about what is happening in their area of spend. Extending the reach to identify external factors that will influence the business and leveraging artificial intelligence to advise and recommend the best course of action to minimise risks and maximise the value for the organisation.” Plaza-Bartsch joined Vodafone 14 years ago in the nascent era of digitalisation, when centralization and standardization were the buzz words of the hour. That initial unification process took some years to accomplish but resulted in “a data foundation for the supply chain organisation” that has been instrumental in accelerating the digital transformation over the past five years. “The degree of insights that we can get from the data that we've created over those years is tremendous,” says Plaza-Bartsch. “We can see how our operations perform in realtime, identify patterns and behaviors in our business and take laser sharp actions to drive performance. We can see how our users are 28

July 2021

“ Digitalisation needs to be very much linked to the actual expected business outcome” REINHARD PLAZA-BARTSCH

GLOBAL HEAD OF SCM DEVELOPMENT, OPERATIONS & DIGITAL, VODAFONE

leveraging certain datasets, what is becoming more relevant to them and how they are unlocking value for the business. Beyond our operations, we are helping our suppliers and partners improve their performance through our insights and the actions we have taken. “We are now also using some predictive models to proactively manage and mitigate risks, although this is an area where there is still a big opportunity to scale further. Getting access to data has been one step in our journey; this has now moved towards

VODAFONE PROCUREMENT COMPANY

turning data into business insights that are meaningful and relevant. This has enabled us to achieve world-class performance and drive consistency across all categories and regions. “What’s great in our function is that no matter where you are in the business, you will have access to the same information, same dashboards and analytics, and enjoy the same and unique user experience across our processes.” While business insights are a great asset to give you a view of what is happening, we are already leading into applications that provide business foresight. We want to take a more proactive and long-term perspective to potential risks and issues that may impact our supply chain. This can range from simple business trends being contextualised for category teams, to more advanced risk modelling solutions that enable our business to take data-driven decisions on more complex scenarios. The next step in the journey is to make data actionable, and where possible autonomous. You can think about this being a “companion or assistant” for a category manager, PlazaBartsch says, which equips them with the information they need to make decisions based on empirical evidence, rather than relying on heuristics or decontextualised data. “Going a step further, we intend to leverage artificial intelligence to autonomously identify

REINHARD PLAZA-BARTSCH TITLE: GLOBAL HEAD OF SCM DEVELOPMENT, OPERATIONS & DIGITAL INDUSTRY: TELECOMMUNICATIONS LOCATION: LUXEMBOURG Reinhard is currently the Head of Digital Supply Chain & Operations at Vodafone. He is spearheading the digital transformation of Vodafone’s supply chain by accelerating innovation and adoption of new technologies, driving operational excellent performance and unlocking new sources of value for the function. His career spans across a number of different industries with roles ranging from managing large scale logistics operations to leading complex transformation programmes along the supply chain. At Vodafone, Reinhard has been pivotal in the establishment and operation of the Vodafone Procurement Company and the transformation of the global supply chain (which now oversees Vodafone’s 25bn€ global spend). He has successfully delivered major transformation programmes that have delivered multimillion Euro in benefits for Vodafone and have also gained external recognition Reinhard is passionate about the role that

1982

Company founded

€44bn+

Revenue in the 12 months to 31 March, 2021

EXECUTIVE BIO

technology can play in shaping the future of procurement, and is actively engaged in customer advisory boards for a number of procurement technology solution providers.

Vodafone in partnership with Block Gemini Has created a commercial contract management (CCM) platform based on blockchain Since 2016 when Chris Fernandez founded Dubai-based Block Gemini, it has been meeting a growing demand for blockchain implementations particularly in the supply chain and fintech space. “The fact that we are now working with a company like Vodafone on a truly innovative blockchain project is testament to what we’ve been able to achieve in such a short span of time,” he says. Any industry that deals with transactional ecosystems that are tracked and monitored digitally can be greatly improved through the use of blockchain technology. “The project we’re currently deploying for Vodafone, using blockchain and smart contracts to manage complex contractual agreements with their suppliers, is an example of the value that blockchain can create. Of course, managing procurement contracts is not specific to the telecoms industry, but there are many other areas specific to the telecoms industry that can benefit from the use of blockchain.”

Over the last two years the collaborative relationship between Block Gemini and Vodafone has grown steadily. “From consulting and advisory services, to design and development, every aspect of the project has been managed and delivered by our dedicated in-house team - I believe this has been the strongest driver for our continuing partnership with Vodafone on this project. I see Block Gemini bringing a great deal of value to the future growth and expansion of this solution across Vodafone’s internal procurement systems.” Blockchain has the power to transform the global telecoms ecosystem, Chris Fernandez concludes: “Take the example of fixed-line leasing services - huge amounts of bandwidth are bought and sold across millions of customers worldwide. “These transactions need to be negotiated and settled discretely between many telecoms service providers, and that’s a very resource-intensive process. With blockchain, the entire manual settlement could be replaced by a smart contract settled instantaneously!”

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VODAFONE PROCUREMENT COMPANY

“ Supply chain is a key contributor to Vodafone’s purpose agenda” REINHARD PLAZA-BARTSCH

GLOBAL HEAD OF SCM DEVELOPMENT, OPERATIONS & DIGITAL, VODAFONE

July 2021

VODAFONE PROCUREMENT COMPANY

patterns and prompt action, and eventually… enable our systems to autonomously take decisions,” he adds. While all the new tech is great, securing a consistent and outstanding user experience is a cornerstone to any successful digital transformation. “You need to keep a close focus on user experience to drive adoption,” says Plaza-Bartsch. Enhancing user experience has been a long objective of Vodafone’s supply chain digital transformation. As far back as 2017 the company began measuring user experience across all its procurement processes and systems. Using a net promoter score - a simple but effective questionnaire, that is automatically triggered when people interact with the digital solutions, asking users to gauge how likely they would be to recommend the SCM solutions - the results were underwhelming. On a scale from -100 (everyone hates the system) to +100 (everyone loves the system) the score came back at -37. “Naturally what this told us was we needed to do something, and so we did,” Plaza-Bartsch says. “While we couldn’t find any company trending on the positive side of user experience with procurement systems, we are strong believers that improving user experience helps our organisation to become leaner and more agile. It also helps us drive operational excellence and attract talent. People want to work with companies that have great tech, where they can unlock their potential and businesschief.eu

Ready to crush business complexity? No more extra steps, painful processes, and frustrated team members. Pega’s intelligent automation helps you work smarter today while getting ready for tomorrow. And our low-code platform helps everyone evolve and build faster, together.

Pega & Vodafone: Procurement’s Digital Transformation Pega and Vodafone are partnering up to build futureready procurement processes. With 6,000 global employees across North America, Europe, Latin America, and AsiaPacific, Pega has joined forces with Vodafone, a leading British technology communications company. We recently spoke to Joaquin Reixa, Pega’s Vice President & Managing Director, EMEA, to see what this partnership will hold. ‘This is a joint digital journey’, he told us. ‘To accelerate Vodafone’s digital transformation, Pega is focused on leveraging our unique and complementary technology and skill sets’.

Why Collaborate? Both Vodafone and Pega bring unique strengths to this new partnership: Pega will provide the digital foundation; Vodafone will provide the procurement expertise. With

Pega’s simple yet sophisticated architecture, Vodafone Procurement Company (VPC) can rapidly build, deploy, and automate global operations to scale. In addition, Pega’s solutions are perfect for complex supply chains. With Vodafone experts manning the controls, Pega will help create a streamlined, intelligence-driven supply chain engine. As Reixa explained: ‘You want to have a global common process, but couple it with the flavour of the local country and culture’. Overall, Pega and Vodafone’s partnership will drive agility, optimise supply chains, offer customers a personalised experience, and accelerate Vodafone’s operations. Reixa summed it up: ‘In these moments of chaos, companies must speed up their digital transformation. If you’re not prepared, you stand the risk of irrelevance. This is the time to pursue change’.

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actually maximise their contribution to the organisation, rather than being consumed by administrative activities.” Today that score sits 117 points higher at positive 84. “User experience is and will always be something to chase, PlazaBartsch admits. “This is basically because our expectations as individuals continuously evolve. We are all exposed to great user experience in everyday applications we have in our private lives, so naturally our expectations will not be different at work.” The improvement achieved in user experience represents a complete turnaround in the course of just three years. That development will continue as Vodafone continuously influences the innovation roadmap of its partners, but also through a new approach to partnerships which is taking shape through the development of new 36

July 2021

“ Customer experience will continue to be an uncompromised priority, combined with an obsession for speed and simplicity across all our user journeys” REINHARD PLAZA-BARTSCH

GLOBAL HEAD OF SCM DEVELOPMENT, OPERATIONS & DIGITAL, VODAFONE

SCM systems. Instead of buying ready-made solutions, Vodafone is driving innovation by teaming up with a number of partners to develop new capabilities, including software firms outside the traditional sphere of procurement software solutions. One good example of this drive for innovation is Vodafone’s vision of autonomous journeys across the whole supply chain.

“This is a very ambitious project we are doing with Pegasystems. Today we call it Autonomous Procurement, however, we expect it to quickly expand beyond procurement to a truly integrated and automated supply chain ecosystem” PlazaBartsch says. “We’ve worked hand-in-hand with our category teams to shape the user journeys in the procurement space as a start,

and on this basis we are beginning to add on the capabilities that make buying simpler and faster for the business, while also creating competitive tensions. Our ambition is that this becomes a fully autonomous, end-toend solution, where everything from supplier selection, to contracting and risk management happens automatically, all on the platform. We are moving here clearly from a digital-first to a digital-only mindset. “We are very proud to have launched our MVP (minimum variable product). This is truly agile development where we are getting to see how the product shapes every other week” Plaza -Bartsch adds. “The platform is still in its early stages and needs greater human oversight to function properly than when it is complete, but having an MVP up and running has been an important step in solidifying Vodafone’s leadership position. businesschief.eu

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SIRIONLABS, EMPOWERING TRUE COLLABORATION AND PARTNERSHIP Ajay Agrawal, CEO & Co-Founder of SirionLabs, discusses their fruitful partnership with Vodafone and how CLM enables smarter contracting enterprise-wide. Ajay Agrawal, CEO & Co-Founder of SirionLabs, shares how the alignment of values and the power of CLM have made for an effective partnership with Vodafone. “We believe in the power of cost savings and superior customer experience, and therein lies the synergy between our organisations. What started out as a post-signature value realisation exercise back in 2016 has since grown into a full suite CLM solution encompassing customised pre-signature features to cater to local markets spread over more than 40 countries. Nothing gives me greater happiness than a customer who has been able to gain increased visibility and get a tighter grip over their contracts.” “Vodafone has today around 2000 strategic supplier contracts managed through SirionLabs, which oversee a spend of close to 6 billion euros annually. Through our initial discussions, we saw great potential in addressing Vodafone’s commercial engagements, tracking and realising value at scale through a myriad of systems that were retrofitted to suit existing infrastructure.” “Our four-way automated invoice matching solution has contributed to Vodafone’s bottom line, enabling them to save hundreds of millions of dollars. It has also reduced the friction in their supplier landscape,

ranging from missed commitments or complaints to disputes or disagreements. Automation also reaps many benefits and has enabled Vodafone to cut costs in contract management and supplier governance by more than 60%, reducing manual effort by almost 50% and generating further savings through reduced headcount cost. Post signature activities have also become smoother and a lot more efficient, with one enterprise contract repository across all suppliers and managing them according to their footprint.” By leveraging AI and extracting valuable data, SirionLabs’ CLM solution empowers collaboration and continued cooperation and partnership long after contracts have been signed. Agrawal explains, “Collaboration is essential to any partnership. That is really the heart and soul of any SirionLabs project. Unlike many conventional contract management systems that create, store, and maybe extract information from contracts, SirionLabs is unique because it allows both contracting parties to have continued access to the system, even after the contract is signed, while giving a single, consolidated view of data, further enhanced by rich dashboards and insights which help make quick business decisions. The purpose of that continued access is true collaboration across multiple business functions.”

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KEY PARTNER: BLOCKGEMINI

“We have big ambitions around our autonomous procurement journey, and we are keen to push the envelope further” REINHARD PLAZA-BARTSCH

GLOBAL HEAD OF SCM DEVELOPMENT, OPERATIONS & DIGITAL, VODAFONE

July 2021

“We exchange a lot of pricing information with partners and suppliers, and we wanted a solution to manage that activity in a much more seamless manner,” says Reinhard Plaza-Bartsch. “So we decided to work with BlockGemini, a late-stage startup partner and Tomorrow Street portfolio company, which is not part of the traditional procurement tech space, because we had a vision of what we wanted, and it was clear that it wasn't available in the market. “The partnership is about commonly investing from both ends to develop this solution and eventually productise it. It is already live within our ecosystem across 11 markets, with around 30 different partners operating on the platform, and we are now aiming to scale this rapidly towards the end of our financial year across all our supplier base. It has been successful so far, enabling us to track price fluctuation and identify areas of opportunity for reviewing price on an on-going basis.”

VODAFONE PROCUREMENT COMPANY

“When we set our vision, we initially went to market to find an off-the-shelf solution that will meet our objectives. We invited 30-plus different partners and came to realize that the landscape wasn't ready. That gave us an indication that this is an area where we should invest more time and develop something to maintain our leadership position for the future. We believe such a solution will be relevant not just for Vodafone, but also for our partners.” Alongside evolving the core functions of its procurement division, Vodafone is also leveraging its digital transformation to encompass environmental, social and corporate governance (ESG) objectives. PlazaBartsch says: “Supply chain is a key contributor to Vodafone’s purpose agenda. This is by embedding planet and society objectives across everything we do, from how we make decisions (policies) and how we run our business (processes and systems), enabling us to influence and align our more than 10,000 global suppliers around common objectives.” Sustainability, diversity and inclusion have become core concerns for the private sector, but many businesses continue to grapple with exactly how to quantify them, and how to link them to business objectives. At Vodafone, Plaza-Bartsch’s approach is to make them tangible and transparent so that they can be managed. “For example, we have embedded purpose commitments in our sourcing process,” he says. “When evaluating suppliers for new work, 20% of our scoring criteria will account for their commitments to diversity, inclusion and the environment. Enabling this through our systems has been key to secure a consistent implementation across our spend.” Likewise, to support a reduction of carbon emissions objectives, Vodafone is leveraging big data to access and create full transparency of its CO2 footprint. "For us the use of

technology is essential to understand and predict CO2 emissions growth through our supply chain” Plaza-Bartsch says. “By creating this visibility, we can be more targeted when selecting areas of opportunity to actively drive a reduction in emissions on a year-by-year basis by working with our partners on greener technologies and solutions. “It’s the same for ESG. We expect that the demand for information and transparency across our supply chain will continue to rise. We will see larger and more connected ecosystems that will contribute richer information to enable business foresight at scale. “Innovation has become the new normal across our digital transformation journey and our culture. Customer experience will continue to be an uncompromised priority, combined with an obsession for speed and simplicity across all our user journeys. This will enable us to scale commercial and operational value to Vodafone, and beyond that, enable lasting and impactful improvement to society and our planet.”

businesschief.eu

PROCUREMENT STRATEGY

July 2021

PROCUREMENT STRATEGY

LEADERSHIP IN PROCUREMENT, FROM COST TO VALUE WRITTEN BY: LAURA V. GARCIA

We speak to David Loseby, Managing Director at Barkers Commercial Consultancy, on how procurement leaders can transition from the drive for cost to value

lthough it seems like it took them a little too long to get there, many organisations have finally started to realise the value of procurement in helping a company reach organisational objectives, unearth competitive advantage and drive ESG initiatives, all of which intertwine. Procurement leaders are now an essential part of the new troika, partnering with CEOs and CFOs in designing new, more resilient business models. However, in order to drive real impact and realise commitments, procurement leaders will need to transform how they lead. A company’s procurement resources are often expended, focusing on ensuring that the right materials arrive at the right time, at the right quality and at the best possible price. Transitioning procurement teams from reactionary, transactional procurement to proactively affecting longterm change and delivering impact through strategic procurement requires long-term procurementmag.com

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PROCUREMENT STRATEGY

An Introduction to Barkers Commercial Consultancy

“It’s the social contract that we enable between people and businesses that makes things happen” DAVID LOSEBY

MANAGING DIRECTOR , BARKERS COMMERCIAL CONSULTANCY

vision and divergence from traditional approaches to leadership. I sat down with the always gracious David Loseby, MCIOB Chartered, FAPM, FCMI, FCIPS Chartered, MIoD, FRSA to discuss. The last time I spoke to Loseby, he held the role of Group CPO at Rolls Royce. This time he was just starting to warm up his seat in his new position as Managing Director at Barkers Commercial services. Barkers is an ethical procurement consultancy that supports clients with their social responsibility aims. Loseby himself holds a deep passion for embedding theoretical-based best practice into real-

world scenarios. I couldn’t think of a person more uniquely suited to help us mind the gaps and define how influential leaders can be an impetus for change. Dynamic leadership: getting with the times Dynamic times require dynamic leadership. We’ve all heard of the importance of active listening skills. Loseby identifies the gap in skill requirements in the industry and the criticalness that soft skills play in building dynamic and adaptive leadership. “The agenda from the stakeholders will not remain static. Going forward, we need to make sure that we recognise this and that we procurementmag.com

“ Removing the friction from contracts or solutions increases their likelihood of adoption. So, for me, that is fundamentally the difference between driving cost vs value” DAVID LOSEBY

MANAGING DIRECTOR , BARKERS COMMERCIAL CONSULTANCY

July 2021

constantly sense, check and validate as we go through our journey. Given all the moving parts and business dynamics as you navigate through supply chain disruption or mine for risks, priorities will change. And therefore, we cannot assume that the priorities that we fix at the beginning of a program or a project are going to remain fixed.” Loseby says that it’s important to leverage soft skills when managing stakeholder expectations and setting courses of action. “People skills, engagement, understanding, and assuming active listening and effective

PROCUREMENT STRATEGY

communication are all hugely important. But oddly enough, you look at most of the academic and professional qualifications and routes to becoming a recognised professional, and they’re not there. So, therefore, as leaders, we must identify this gap that exists and then set about addressing it. The harsh reality is we must build this capability in organisations so that practitioners can maximise the delivering of value-adding outcomes.” “Just as in life, things will be thrown at you. And therefore, we need to be agile

and flexible enough to adapt. It’s important to listen to those around you and pay attention to what may, or has, changed and look at how you can mitigate, modify, or adjust your approach and redirect your course. And that course correction is hugely important when we're delivering commercial solutions. There’s no point in carrying on a course of direction that you agreed to twelve months ago. It’s hugely frustrating, and it disengages stakeholders because it shows you've not listened. You may have heard it, but you've not listened.” procurementmag.com

“ The harsh reality is we must build this capability in organisations so that practitioners can maximise the delivering of valueadding outcomes” DAVID LOSEBY

MANAGING DIRECTOR , BARKERS COMMERCIAL CONSULTANCY

The Pursuit of Lowest Cost “One of the things that academic researchers have amplified recently is the fact that the pursuit of absolute lowest cost has driven us to monopoly supply situations and very complex supply chains. The reality is that in the quest to drive out cost and reach the Nirvana of the lowest cost, we've inadvertently sleepwalked into increased risk and more fragile supply chains.” However, there’s a high price to pay for identifying potential suppliers and awarding business based on price alone. Loseby remembers an old procurement acronym, AQSCIR, which he believes procurement professionals should still live by. A- Assurance of supply Q- Quality S- Service C- Cost I- Innovation R- Regulatory compliance 48

July 2021

“As far as I'm concerned,” he says, “Unless you can sufficiently satisfy all of those six factors, you're not delivering the right solution. You're not delivering value. And it’s imperative that you get that balance right. You can’t have the best price without assurance of supply, for example. Loseby says procurement leaders show their value through their ability to focus on all six of the attributes. Sharing an example from Rolls Royce, he digs into the varying factors at play when evaluating suppliers and developing solutions. “We started to talk about the value that we delivered in terms of decreasing the number of peoplehours that we needed to invest in a particular process or activity, higher levels of quality and assurance, or dual supply. It was a wide variety of considerations that combined allowed us to bring a higher quality solution to the table, sometimes even including looking at entirely different ways of delivering either goods or services.

PROCUREMENT STRATEGY

A weighted discussion involving areas of risk as well as potential opportunities safeguards a company’s continuity of business. Putting talk of cost on hold opens the door for procurement to hold more value-add discussions. The cost of disruption far outweighs savings while putting your companies service levels and reputation on the line. “Putting the entire business at risk for comparatively small savings is not a good value equation,” he says. “By engaging with stakeholders in terms of the value agenda, they recognise that you’re making it easier for them to do what they do. Removing the friction from contracts or solutions increases their likelihood of adoption. So, for me, that is fundamentally the difference between driving cost vs value.”

that we spend pushing and instead consider helping as a well-spent investment of our time and It will be a more enjoyable journey. And you will build the loyalty and the support of the SME’s and other organisations along the way.” “Collaboration is one of the greatest ways of delivering competitive advantage. The way in which we conduct business is hugely important. It’s the social contract that we enable between people and businesses that makes things happen. If you want to create suppliers of choice, that's the way of doing it.”

From Vendor Management to Collaborative Partnerships Loseby believes that the old approach of setting requirements and demanding suppliers comply is faulty by design. He suggests companies would extract better outcomes from taking a proactive approach to corporate education and mentoring and working more collaboratively. When it comes to driving initiatives such as sustainability and diversity, “For many organisations, particularly the SMEs, you are essentially asking them to produce a subject matter expert that has not only the knowledge but the ability to implement new ways of working. It's an unreasonable ask. It just adds another tranche of work somebody has to do amongst their day job. And the reality is that's unreasonable.” “We have to change the approach to one of enabling, supporting and educating. It’s a very different vocabulary, but I firmly believe that if we redirect all the negative energy procurementmag.com

Optimising bp's workflows with digital transformation WRITTEN BY: MELISSA KHAN PRODUCED BY: THOMAS LIVERMORE

July 2021

procurementmag.com

The energy company’s transformation leaders shed light on harnessing the power of digital for business performance and meeting their sustainability goal

p has set out a new strategy to transform from an International Oil Company to an Integrated Energy Company focused on delivering solutions for customers. This is a major, necessary step in support of the company’s purpose to reimagine energy for people and the planet, and its ambition to become a net zero company by 2050 or sooner and help the world get to net zero. After more than a century defined by oil and gas, bp set out a strategy to become a very different energy company in the next decade. So what does it take for an organisation with a rich heritage to remain ahead of the game today? One of the answers is digital transformation. Nick Wright, bp’s global director of digital and innovation sourcing is a strong advocate of transformation for efficiency. He says the focus for his area of the organisation is sourcing complex or innovative technology deals in support of bp’s strategy. Nick states: “Transformation isn’t just a change in process, for an organisation like bp that has years of legacy systems behind it, it becomes more of a mindset shift. There is a sense of reimagined purpose, given our ntentions to move from traditional oil and gas to clean energy, and to fulfill that purpose, it is important to transform and lead through innovation.”

July 2021

procurementmag.com

Vipin Radhakirshnan , bp’s vice president for digital solutions & transformation, adds: “[This is] a common theme for the entire industry, but bp in particular believes digital transformation efforts are underpinned by the organisation's need and want to reinvent itself.” He further adds that the organisation functions on a ‘transformation as usual’ principle which is essential to keep pace with the everevolving technology landscape and user demands. Vipin is responsible for the full scale of work from transformation strategy to execution. In his role, Vipin oversees the adaptation of digital solutions for finance, customer and procurement processes, which includes key areas like data, insights and analytics, business process management, intelligent automation and enabling solutions. 54

July 2021

“ A common theme for the entire industry, but bp in particular is that the efforts put in towards digital transformation are underpinned by the organisation's need and want to reinvent itself” VIPIN RADHAKRISHNAN

VICE PRESIDENT GLOBAL TRANSFORMATION & DIGITAL SOLUTIONS AT bp

VIPIN RADHAKRISHNAN TITLE: VICE PRESIDENT GLOBAL TRANSFORMATION & DIGITAL SOLUTIONS INDUSTRY: OIL & ENERGY LOCATION: UNITED KINGDOM

EXECUTIVE BIO

This holistic approach to transformation helps different areas of the business in understanding the full scope of the problem and building an infrastructure to solve it. Vipin adds “It is really a combination of enablers that are unique because you have everything from data, process automation and technology solutions enabling transformation strategy and delivery.” The other key factor when it comes to transformation at bp is the approach. According to Vipin, it is a good blend of a top-down and bottom-up approach. “A bottom-up approach simply means tapping into the pain points of the business to get an idea of the problems faced and how they can be transformed,” explains Vipin. “On the other hand, a topdown approach would mean setting

Over the last two decades Vipin Radhakrishnan has lead global roles across the Oil & Energy, CPG and Telecom industries with companies like bp, Diageo and Vodafone focusing on Business Strategy, Digital Transformation, Data Analytics & Enterprise Operations. In his current position as Vice President of Global Transformation and Digital Solutions at bp, he is responsible for business transformation covering transformation strategy, global process ownership and agile delivery of the transformation roadmaps. His business and technology background gives him an edge to align the right digital solutions with the business needs, maximising value to his stakeholders and customers.

bp "pushes boundaries" of procurement with Fairmarkit bp wanted to free up procurement resources to concentrate on value-added procurement activity as well as ensure they were managing their spend and budgets efficiently. To do this, the company wanted to both automate as much of their process as possible and monitor procurement data in real time to identify efficiencies.

The Challenge Procurement at bp is an incredibly large operation. The company’s supply chain spans the globe, incorporating functions as varied as drilling for oil, to constructing wind turbines, to operating retail storefronts. In this environment, the procurement team needs to manage spend ranging from billion-dollar specialist equipment to the receipt rolls in cash registers.

Competitively source every purchase. Automation makes it simpler. Data makes it smarter. Fairmarkit is the intelligent sourcing platform that makes it possible.

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“Sourcing and contract negotiations can be quite a manual process,” says Nicholas Wright, Director, Digital and Innovation at bp who is responsible for the way in which bp approaches the market in the digital and innovation space. “It requires careful attention at every step of the process—from capturing and sending the requirements out to suppliers to have them bid on particular requirements or scope, to the selection of a final vendor and the activities required to on-board them. It's an incredibly time- and resource-intensive process.”

bp not only wanted to free up resources to concentrate on value-added procurement activity, they also wanted to ensure they were making the best use of the digital tools avalaible within the marketplace. To do this, bp wanted to be able to both automate as much of the process as possible, as well as monitor and analyze their procurement data at a granular level.

The solution Wright says Fairmarkit is delivering “a great outcome.” He says the platform automates what used to be a manual process to help bp do things faster, with less people. But for Wright, Fairmarkit’s proposition has served another benefit. “It has pushed the boundaries,” he says. “At bp, it was one of our first significant digital platforms, and it is disrupting the way that we work within procurement; it’s actually made people stand up and realize that we can do things differently. As a team and a company, we’re inspired to go out and look for the next Fairmarkit, whatever that may be, and be more aware and open to disrupting other manual processes.”

The result By working with Fairmarkit to automate processes, bp’s procurement team was able to deliver the same scope automatically that was previously done manually. “We can now do more with less,” says Wright. “Automation and the capture of data makes our platform infinitely smarter than any one person. We are now using real time data to make accurate decisions—more than one single brain can comprehend.” bp procurement team members are also using data collected from previous transactions to make smarter decisions. “For instance, if we’re paying for a certain products and services, we can now see how much other organizations pay for those products and services and evaluate whether we’re getting a competitive price,” says Wright. “To be able to do that in real time—on every single transaction—is a level of transparency that is extremely value-additive. We’re using price history to inform the future.”

NICK WRIGHT TITLE: DIRECTOR, DIGITAL & INNOVATION SOURCING INDUSTRY: OIL & ENERGY LOCATION: UNITED KINGDOM I am an expert in commercialisation, super energised by finding new ways to do things, recognising that tried and tested methods are not always right as our business evolves to its low carbon future. As a leader, I seek to build real depth and breadth of knowledge within my team to support the increasingly complex commercial requirements of our stakeholders. I also strive to create a safe environment which encourages experimentation and innovation within my team and across my relationships. I bring 15 years’ experience and am recognised as an expert both internally and within the marketplace.

EXECUTIVE BIO

broader business transformation goals and outcomes and looking at processes end-toend so that teams don’t just get stuck at the problem-solving level, but instead get a head start on innovating the business of the future.” Speaking of some of the drivers that led to transformation at bp, a need-based purpose is prevalent. The organisation strives to meet customer needs - both B2B and B2C, attune to the needs of the emerging market while serving bp’s internal ambition of reinventing themselves and finally, adapt to the needs of the customer landscape that is progressively changing. As procurement is a large and collaborationoriented business enabler at bp, their strategy has understandably been driven by transformation.

“ We used to be supplyled, meaning we had a commodity and we would release that to the market and that's our bread and butter. But as we reinvented ourselves and created a more digital organisation, we became demand-led” NICK WRIGHT

DIRECTOR, DIGITAL & INNOVATION SOURCING AT bp

Procurement workflows can be quite cumbersome and require a colossal amount of historical and comparative data that is traditionally manually studied to govern processes. This explains why digital transformation has been crucial to decision-making, where both real-time analytics and historical data is available at hand, thereby reducing the need for manual synthesising of information. bp is in the process of evaluating all our existing procurement vendor engagements as part of a wider procurement transformation initiative. A good example of an improved workflow is the contract negotiation process. Traditionally, procurement officers would spend weeks if not months reviewing documents, negotiating contracts and running tenders, however with the collaboration from digitally native vendors, bp has essentially taken work out of the system and negotiated better deals over time. “The value of working with new suppliers is that it takes work out of the system by delivering a scope that was previously resource intensive, using realtime data to make accurate decisions. Essentially, we’re using our history to determine our future,” adds Nick. To support bp’s customer-centric approach, bp’s procurement and sourcing teams are pivoting to reflect the company’s strategy. This can mean partnering with suppliers to co-develop products to meet new business challenges. With sustainability as a long-term goal, within 10 years, bp aims to have increased its annual low carbon investment 10-fold to around $5 billion a year, building out an integrated portfolio of low carbon technologies, whilst over the same period, bp’s oil and gas production is expected to procurementmag.com

“ It is really a combination of enablers that are quite unique because you have everything from data, process automation and technology solutions enabling transformation strategy and delivery” VIPIN RADHAKRISHNAN

VICE PRESIDENT GLOBAL TRANSFORMATION & DIGITAL SOLUTIONS AT bp

July 2021

reduce by at least one million barrels of oil equivalent a day, or 40%, from 2019 levels. Its remaining hydrocarbon portfolio is expected to be more cost and carbon resilient. These are ambitious goals, and to be able to achieve them while keeping everybody’s best interests at heart, the organisation needs to adopt an agile mindset. Long-term goals aside, bp employees are working at constantly reinventing processes and focusing on incremental gains. Coupled with this agile mindset is the need to have a digital outlook – listening to the voice of the customer and improving along the way. And lastly, having a growth mindset both internally and externally, allowing the organisation as well as its partners to grow beyond factors such as cost and time. To this, Nick adds “We used to be supplyled, meaning we had a commodity and we would release that to the market and that's our bread and butter. But as we reinvented ourselves and created a more digital organisation, we became demand-led, listening to the needs of our customers, regions, cities and the wider society.” Nick’s leadership style is also a testament of his commitment to growth, and he nurtures a culture of incremental learning within his department. Nick’s teams are encouraged to learn from experimentation and celebrate their failures, rather than slowly applying tried and tested measures. He believes in providing continuous cycles of feedback and that a minimal viable product that's imperfect is the way to achieve growth and foster innovation.

procurementmag.com

DIGITAL PROCUREMENT

CLM: DEMOCRATISING PROCUREMENT AND MAKING FOR BETTER SX 62

July 2021

DIGITAL PROCUREMENT

With the help of Agiloft and Icertis, we take a look at the unrealised value of CLM and how the visibility of data can make for a better SX and generate competitive advantage

WRITTEN BY: LAURA V. GARCIA

Andy Wishart CPO, Agiloftt

Bernadette Bulacan Vice President and Lead Global Evangelist, Icertis

ontracts define the rules of engagement within a business agreement, defining who does what, at what price, over a specified time. Equally as important, especially in today’s environment, contracts determine who is responsible for what and the repercussions to be faced if things go wrong. Contracts are gold mines of opportunity, holding business-critical intelligence that continues to be underutilised and undervalued, more often than not stuffed into a filing cabinet only to be dug out when trouble is afoot. As CLM software providers begin to widen their lens, encapsulating more of the bidding and supplier selection process, further value emerges. The procurement process can often be nebulous or even abstruse, frustrating stakeholders and hindering outcomes. CLM’s burgeoning powers simplify and democratise processes, making for a good look that levels up procurement, and makes for not only a better Supplier Experience (SX) but better stakeholder experience while enhancing your brand. I sat down with Andy Wishart, CPO of Agiloft and Bernadette Bulacan, Vice President and Lead Global Evangelist at Icertis, to take a look at the softer side of CLM. procurementmag.com

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CLM, the secret to better SX Let’s be honest, RFX’s have a bad rap, and I would say deservedly so. But the old saying still rings true. Make it easy for people to do business with you, and they will. I know it may be hard to believe, but salespeople are people too. When deciding where to expend their efforts and sharpen their pencils, suppliers look to the opportunities they’re most likely to be successful in achieving. Overly cumbersome and bureaucratic bidding processes and opaque or vague selection criteria are likely to impede the process, hinder the outcomes and potentially damage your reputation and deter potential bidders. Democratising procurement by setting a formal, visible and collaborative bidding, selection and contract management process removes the friction and makes not only for a better SX but a better stakeholder experience. Wishart explains, “Defining requirements and establishing clear parameters of what success looks like for that contract helps

to democratise the contracting process, and having both internal and external stakeholders involved in that process in a collaborative way moves away from this view of contracts being this black box or magic art that only a few professionals really know how to work. I think democratising the process has some additional benefits across the enterprise that moves viewing contracts as a sort of defensive shield to actually be an encapsulation of how the relationship should work.” “We recently launched an add-on module to our CLM solution that supports sourcing and supplier information management. Part of this solution provides a portal for the suppliers to come in and not just view the contracts as a PDF but to see the data on those contracts as well. They can look at the information they have agreed to regarding how they're performing against that contract. “So it creates this greater transparency around the contractual relationships. And I think that's important because, before digital technologies like CLM, which encode procurementmag.com

DIGITAL PROCUREMENT

the relationship between the two parties, it was often the case that the two parties would wait until there was a default or a broken promise that forced them to look at the contract. Now we're able to monitor performance and make adjustments before you get to that point, and transparency is a really important part of that.” Equal Access and Opportunity for All Advanced digital contracting allows procurement leaders to level up their game and take a more holistic approach to procurement, mitigating risks and ensure the capturing of negotiated cost savings. All while setting the stage for supplier relationship management fair and equal access to opportunities to allow for diverse and inclusive procurement practices. Cumbersome processes hinder SMEs and minority businesses from being able to participate in the bid process. Removing the barriers with streamlined digital processes widens the pool of potential suppliers and makes for a more competitive and inclusive landscape. Bulacan, a passionate advocate for Diversity, Equity, and Inclusion (DEI), shares her thoughts. “It is not just looking at contracts or the playbook or what’s maintained within the four corners of a contract. It is about how we start those relationships and how we interact with those suppliers before that relationship becomes a contract. You have to look at it as a full life cycle, and that’s where technology comes into play. “That's why more companies are adding and integrating processes to manage suppliers and information into their contract platforms. How you manage relationships throughout the life cycle of the agreement, including the data and the metrics that 66

July 2021

you're pulling about supplier performance, is especially important when you're looking to diversify your supplier base and democratise the supplier onboarding process. “You want to be able to measure the success of these diversity programs and suppliers. You want to be able to measure where there are improvements to be had, and you get those insights from the data that you can pull out of these CLM systems that contain robust supplier and vendor information. Bulacan asks companies to consider

their historical processes and the impact it has had on supply chains. “When you look historically at why diverse businesses have been excluded from RFPs and processes by which we choose suppliers, you realise that in many ways, there are systems of inequality in place. You have to have a particular sophistication and maturity--and that sophistication comes from past vendor experience. And unfortunately, minorityowned businesses haven’t been part of those systems, and they aren’t considered

“ When you look historically at why diverse businesses have been excluded from RFPs and processes by which we choose suppliers, you realise that in many ways, there are systems of inequality in place” BERNADETTE BULACAN

VICE PRESIDENT AND LEAD GLOBAL EVANGELIST, ICERTIS procurementmag.com

DIGITAL PROCUREMENT

because they haven’t had access to these experiences. So we are just replicating the same outcomes and not diversifying. According to Bulacan, in order to meet the end goal of democratising a supply chain or procurement process, you must first look to remove artificial barriers and simplify. “Companies need to identify these barriers and determine why they are in existence and whether they unintentionally block the inclusion and retention of diverse suppliers. Do you have objective data that truly supports a supplier’s ability to perform under the agreement? If so, make your decisions based on that data and remove those other artificial barriers. This will make room for equal access to opportunity. It’s something for companies to think about.” As an example, Bulacan points to some of the complex, burdensome processes that contracting might represent. “For instance, the contracting process can often be incredibly onerous, especially if you're 68

July 2021

DIGITAL PROCUREMENT

“Defining requirements and establishing clear parameters of what success looks like for that contract helps to democratise the contracting process” ANDY WISHART CPO, AGILOFT

contracting with the big behemoth, global organisations. In order for a diverse supplier program to be successful, not only must they look at “who” they are contracting with, but they must also look at “how” they contract. Initiating these programs can be a catalyst to look internally at business processes to make them more agile and more efficient. “It isn’t about lowering quality standards or increasing risk in the name of “diversity”, there are things that we can do within the contracting process to maintain the same

quality, meet our business objectives and bring these diverse businesses and suppliers into the fold and make them successful. “The good news is that these are improvements of simplification and efficiency will have benefit across the entire supply chain, regardless of the type of supplier, diverse or otherwise, that you have a relationship with. Companies should embrace the opportunity to prioritise, take a look at the contracting data, and determine whether you are creating artificial barriers procurementmag.com

in that onboarding process or within the contracting process. The Heart-Led Consumer As we said, CLM doesn’t just make for a better supplier experience. Bulacan points out there are two other major stakeholders that you stand to win the hearts of. “There are two other stakeholders that come to mind when I think about this new way of approaching procurement and supply chain. First, let’s talk about the end consumer. If I look at Gen Z and Millennials, they are making buying choices through a lens of social impact and will drive their spend to companies that align to those shared values. “I was just recently speaking to an executive who observed that this generation doesn’t just “give at the end of the year”, they give every day based on their buying choices. For instance, they've bought this watch knowing the company has ethically and sustainably sourced the materials to 70

July 2021

create it, or they buy these pair of socks because they know that the business will provide a pair of socks to the homeless in return. This generation has a different mindset about how people give and support communities and make a social impact. They're willing to pay premiums to meet those social impact goals, whether it is to support women-owned businesses, blackowned businesses, businesses with LGBTQ+ or veterans. “I think this changing consumer sentiment is one that procurement and supply chain needs to be able to meet. And so organisations need to be able to show performance and alignment through data, and they can capture and mine that data through technologies like CLM. The Talent War In order to remain competitive, businesses must concern themselves with attracting and retaining top talent. “There’s a war for top talent across industries, and it’s

DIGITAL PROCUREMENT

“I think this changing consumer sentiment is one that procurement and supply chain needs to be able to meet” BERNADETTE BULACAN

VICE PRESIDENT AND LEAD GLOBAL EVANGELIST, ICERTIS

apparent that employees want to work for companies that mirror their social values,” says Bulacan. “In interview loops for employment, employee candidates are asking: ‘What’s commitment to diversity?’ And it can’t just be verbiage on the front page of your careers page, but asking for demonstrable, quantifiable ways that you're meeting that commitment. Companies have to be prepared for a more sophisticated consumer and employee, and they want to see it in more than just words on a webpage or performative ways. They want to see data. Having contractual commitments and auditable trails through contracting and technology helps you to do that.” Bulacan points out that consumers today not only have the data available to them to make informed buying decisions, but they also have the powers to broadcast and share information – both good and bad-quickly and to a large group of people. Those who consider themselves champions of the planet and all of its people stand at the ready, willing to leverage the powers of social media to shine a light on those they consider to be falling short of expectations. The Next Frontier: Performance Management Before we wrap up, Wishart takes a look at the next frontier of CLM, where data can

be leveraged for proactive performance and contract management. “As we look forward to the future and our vision for elevated contracts within the enterprise, one of the things that we're working on right now is capturing those obligations within a contract and codifying them as tasks. For instance, we can determine what the termination terms are and what the renewal rights or obligations are. We can codify that and monitor it. “Another more advanced example is a software service agreement. If you're procuring an enterprise software and the supplier commits to a service level agreement, and if that service level is not met, that may trigger the payment of credit for that service. We believe it's feasible for us to encapsulate that as code, attach it to the contract, have the CLM system connect to the monitoring system, and determine its service level. And if the service level drops, automatically notifying that payment needs to be made and ensuring that both parties are aware of the trigger of that credit. “It becomes that sort of performance management whether that's supplier performance over a set of contracts or contract performance in an individual contract, I think that’s the next frontier in execution and automation of contracts.” procurementmag.com

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TAKING THE LOAD IN GLOBAL SUPPLY CHAINS WRITTEN BY: JANET BRICE PRODUCED BY: THOMAS LIVERMORE

procurementmag.com

Bespoke load handling equipment from SMAG is the one-stop-supplier for the world’s top 10 ports and in construction

einer Grabs “is a brand name in every harbour on the planet,” according to Rainer Veith, the CFO of Salzgitter Maschinenbau AG (SMAG), as he explains how the acquisition and the development of the grabs product range resulted in SMAG becoming an international brand. PEINER SMAG Lifting Technologies (PSLT) is a subsidiary of SMAG, the worldwide leading manufacturer of grabs and lifting equipment that are critical to the flow of global supply chains. SMAG is renowned for its problem-solving skills, bespoke products and close relationship with the customer, which are cited by Veith as three reasons for its global success in load handling equipment, process engineering and special machine construction. “The secret of our success is that SMAG evolves with the times and re-invents itself - resilience is in our DNA,” said Veith, who joined the German-based company just after its centenary celebrations in 2019. “We now have a brand name that is known across the globe.” Today, through its subsidiaries, SMAG is the world market leader in the manufacture of grabs used in global transport, waste management and agriculture. Other divisions include process engineering, special vehicles and mobile antenna masts. The group, which employs 2,000 people, has dedicated manufacturing facilities in Germany, China and India, 27 locations 74

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worldwide and a reported sales volume of €300 million. SMAG uses its expertise in metal and heavy steel construction in combination with hydraulics and electrical engineering. The three pillars of the business include: • Load handling equipment - includes grabs and spreaders • Process technology - system solutions are used for the industrial extraction of sugar • Special mechanical engineers - mobile drilling, mobile mining machines and mobile antenna masts Veith points out that process engineering in the sugar industry is another component of SMAG’s growing portfolio. “In 2018, SMAG acquired 94 per cent of the BMA, the wellknown market leader in process engineering when it comes to sugar refineries. They have double-digit million Euro projects around the world and are definitely an asset for the entire group.”

“ You will see the giant P (for PEINER AG) in every harbour on the planet” RAINER VEITH

CFO AT SALZGITTER MASCHINENBAU AG (SMAG)

SALZGITTER MACHINENBAU AG

Rainer Veith, CFO at Salzgitter Maschinenbau AG (SMAG) procurementmag.com

SALZGITTER MACHINENBAU AG

SMAG | The Key to Future Success - Dynamic, Modern & Diverse Operations

“ The secret of our success is that SMAG evolves with the times and re-invents itself - resilience is in our DNA” RAINER VEITH

CFO AT SALZGITTER MASCHINENBAU AG (SMAG)

July 2021

Pronounced problem-solving According to Veith, SMAG’s role in the market is based on the company’s pronounced problem-solving skills, superior, standard-setting products, high global sales power and global service. “We are close to the customers because we do not have serial production or that many standardised products, as we focus on bespoke vehicles, grabs and refineries. So, we must be close to the customer, we must listen, and we do listen to the customer and to their needs as this is absolutely key,” said Veith. “We have the whole range of grabs from the very small to the biggest ones, but most of our competitors have focused on one niche type of grab. By offering this complexity of grabs, we jeopardise a little bit on our economies of scale, but we must stay close to the customer and listen to their needs in order to be a one-stop supplier to them.”

SALZGITTER MACHINENBAU AG

RAINER VEITH TITLE: CHIEF FINANCIAL OFFICER COMPANY: SALZGITTER MACHINENBAU AG (SMAG)

EXECUTIVE BIO

Grabs and spreaders One of the major milestones for the group came in 1986 when it acquired the grab technology division of PEINER AG. Its range of products includes bulk cargo and container handling as well as special hoists. Key areas of action are ports, ships, manufacturers of cranes and construction machinery, steel mills, waste-to-energy plants and recycling/ scrap handling industries. Based on the proven PEINER product design, PSLT's factories in Salzgitter (Germany, Headquarters), Shanghai (China) and Chennai (India) develop and manufacture lifting equipment for any cargo handling application. Six years ago, PSLT added spreaders for container handling to its portfolio, which are used in ports and terminals worldwide. The new subsidiary RAM SMAG Lifting Technologies Pte Ltd, headquartered in

Rainer Veith trained as a banker. In 1996, he graduated from the University of Paderborn with a degree in business administration. He later completed a degree at WHU / Kellogg with an MBA. Veith began his professional career as a trainee at Robert Bosch GmbH in the USA, Germany, France and Italy. Veith took on management tasks for E.ON and Uniper. He then worked as General Director and CFO for the Bilfinger Group in Lyon, France. Veith was appointed to the SMAG management board in 2019 and is responsible for finance, controlling, human resources, procurement and IT.

procurementmag.com

SALZGITTER MACHINENBAU AG

“ Shrinking core expanding periphery - this is how my MBA professor Ranjay Gulati described strategic alliances, and I think it is true today” RAINER VEITH

open-systems.com

CFO AT SALZGITTER MASCHINENBAU AG (SMAG)

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July 2021

SALZGITTER MACHINENBAU AG

Singapore, manufactures the products under the brand RAM Spreaders in Changshu (China). “We are the industry leading grab manufacturer,” said Veith. “Some of the grabs can be up to 30 - 45 cubic meters in volume, and one grab can weigh up to 18-22 tonnes - so this really is a dream for big kids captured in adult bodies - they are the coolest products,” said Veith. The group's customers include shipping companies, port companies, port crane, mobile crane and construction machinery manufacturers, as well as manufacturers of special vehicles, European defence forces, mining and drilling companies and sugar factories.

STRATEGIC ACQUISITIONS Acquiring the grabs product range from PEINER AG helped SMAG expand into an international brand. SMAG also acquired BMA in 2018, a market leader for the process engineering of sugar refineries. In 2015 NSL in Singapore and Salzgitter Maschinenbau AG merged their spreader and grabs divisions as part of a joint venture under the leadership of PEINER SMAG Lifting Technologies GmbH (PSLT). This is one of the world's leading manufacturers of grabs for handling bulk goods and for board cranes. This merger resulted in the world's largest group of companies for load handling equipment in the field of bulk goods and container handling. The partnership enables the group to exploit even greater market potential in addition to the port equipment sector.

A century of engineering excellence Salzgitter Maschinenbau AG dates back to 1919 when Anton Raky, engineer and pioneer of modern drilling technology and oil production, founded the Anton Raky company, deep drilling in Salzgitter. The foundation stone for SMAG was laid in 1937 when the Salzgitter Group took over the factory for the construction of drilling machines. In 1986 the company acquired the gripper product range from PEINER AG and, over the years, expanded it into an international brand. Jürgen Bialek who has been with PSLT for 51 years and was pivotal in building up the successful grabs business not only in Salzgitter but in the Asian companies as well said during the 100th anniversary: “...50 years of Peiner grabs – they are like a part of my family.” Modern procurement Commenting on the subject of procurement within SMAG, Veith said: “Procurement is for me a leading edge when it comes to value creation. It would be utterly wrong to see only the transactional procurementmag.com

SALZGITTER MACHINENBAU AG

FUTURE STRATEGY SMAG wants to expand its position in the market as the world's leading provider of grabs and spreaders for efficient freight handling. It is relying on the growth market of maritime freight traffic. For this, SMAG can fall back on many years of experience in metal and heavy steel construction and on independent competencies in construction, production and assembly. The local presence in the large volume markets (China, India) is being expanded. In addition, SMAG is focusing on expanding its presence in the global mining technology market with a focus on drilling technology underground and above ground, as well as building special vehicles for mining and process industries, such as steelworks. SMAG’s corporate strategy is geared towards sustainable and profit-oriented growth.

part of procurement, but my staff has to challenge traditional views and tendering practises and constantly look for better sourcing options. Do not underestimate indirect procurement but see it as the best chance for savings. For example, SMAG: Purchasing volume per annum in Germany approximately €100m, of which indirectly €20 million, of which 10 per cent saving equals €2 million, which would be equivalent to a reduction of 30 FTEs. “For me, the core elements of value creation are sales, procurement and production. Other departments are all important, but if one of the three core elements fail, every company is at risk of insolvency in the medium term. 80

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“Procurement successes are easier and less painful than staff changes, and for new technologies, procurement is a driver of innovation. “Leadership by CFO facilitates independence, but is not absolutely necessary; it can be any C-Level person who is seriously backing procurement,” he said. Competitive edge Veith cited the group’s competitive advantage as having a strong infrastructure with a production network in several countries, plus it is built on a long tradition of being able to evolve with the times and re-invent itself, “which is crucial in today’s climate”.

SALZGITTER MACHINENBAU AG

“We have a great production network with facilities in separate countries from our headquarters here in Salzgitter and our process engineering in Braunschweig (Brunswick) Lower Saxony. We also have production facilities for grabs in Chennai, India, and the production facility for spreaders is in the greater area of Shanghai, China, with headquarters in Singapore. “We are a very global network. As a middle-sized German company with a sales volume turnover of €300 million, we can leverage this production network and the sourcing possibilities that [go] along with that. Also, to have a construction base with very skilled engineers in India, and also here with our traditional construction in Germany,

is a great asset, which few middle-sized German companies actually have.” Commenting on how SMAG continued to operate during the pandemic, Veith, who started with the company in November 2019, said he was fortunate enough to travel to India and Singapore to see the facilities before restrictions were in place. “We switched to Zoom or Team meetings and adapted our facilities for increased health and safety, but apart from that, our supply chain has been very stable. We see transportation costs going up, but overall, we have not had any shutdowns due to lack of supplies, which [proves] our business model works and that our supply chains are very stable. procurementmag.com

SALZGITTER MACHINENBAU AG

“ Some of our most important customers are the leading OEMs in the crane industry” RAINER VEITH

CFO AT SALZGITTER MASCHINENBAU AG (SMAG)

“In India, Russia and America, our industry was deemed as system-relevant, so we came out of shutdown early, and our affiliates quickly caught up to reach and exceed budgeted revenue levels. Overall, our sales did not suffer any consequences from the pandemic. We have been fairly unharmed and remained robust throughout the crisis, which is good news.” Evolving ecosystems “Shrinking core expanding periphery - this 82

July 2021

is how my MBA professor Ranjay Gulati described strategic alliances, and I think it is true today,” said Veith. “This allows the company to focus on the core tasks and look outside of the periphery for help with R&D or innovations they do not have the capacity for such as digitalisation, robotics or Artificial Intelligence (AI). “We do not have the in-house capabilities to develop AI, and we would not, but it does make sense that we invest. We need to partner with suppliers [and] companies

SALZGITTER MACHINENBAU AG

QUICK FIRE QUESTIONS How are you using AI or machine learning or big data, and what possibilities do they bring to the future of SMAG? “We are doing this already, especially at BMA, in process engineering. We plan to ramp up our efforts in coordination with our customers, and we'll pick up speed in the near future.” What plans do you have for the future - will you be opening in a new country, or are there new acquisitions in the pipeline?

“I think that the group has evolved quickly with its mergers and acquisitions over the past five years. It’s now time to consolidate, to improve our efficiencies and continue to grow organically.” SMAG has been operating for more than 100 years - how would you sum up the secret of your success? “During the past century, we have evolved with the times and have re-invented ourselves - resilience is in our DNA.”

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LIFE OUTSIDE THE OFFICE WITH RAINER VEITH, CFO AT SMAG: What did you enjoy about life in Worcestershire, UK? A more relaxing way of life in the shadow of the Malvern Hills and living by the River Severn in the UK. What country do you want to visit? Paris, France to play in the European Senior Golf Championships. What is your favourite cuisine? French What is your most precious possession? My family Favourite movie? Pirates of the Caribbean What advice would you give to a young Rainer Veith? Do what you love most and then work hard for it.

“ Our larger grabs can have up to 30-45 cubic meters in volume, and one of those grabs weighs 18-22 tons - so this really is a dream for big kids captured in adult bodies - they are the coolest products” RAINER VEITH

CFO AT SALZGITTER MASCHINENBAU AG (SMAG)

July 2021

SALZGITTER MACHINENBAU AG

€300 million

Group Sales Volume

2,000 Number of Employees

Locations Worldwide

1919

Year Founded

who have that intelligence and knowledge. We need to develop our ecosystem even further to get ready for the challenges of the next decade.” Veith cited the importance of their “seamless” partnership with Open Systems and comments on how ecosystems today help a company. “Open Systems is a crucial partner for SMAG as we use them for data exchange with our Asian affiliates. It works really well, and it's vital for us to work together on the exchange of information about production and

developments in the market. It’s very important for us that the process is seamless and easy, and this is what Open Systems provides for us. “In order to be successful in the future, we have to be a bit more modern, younger, dynamic and more diverse. We have to drive lean management and operational excellence. This is definitely something that is already underway and will be the key for future success, said Veith.

procurementmag.com

S2P 101: UNDERSTANDING THE PROCUREMENT PROCESS Speaking to HFS Research’s Saurabh Gupta, we break down the S2P process, discussing solutions, best practices and the next 12-18 months WRITTEN BY: GEORGIA WILSON 86

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TECHNOLOGY

ell versed in the world of procurement and sourcing, Saurabh Gupta, President of Research and Business Operations at HFS Research, has deep roots in the industry of more than 20 years in multiple verticals, including consulting, service provider and research. Currently, as President of Research and Business Operations at HFS Research, Gupta leads the overall research and advisory services at the company. “I used to be a consultant for sourcing advisory looking at outsourcing and third-party vendors. I’ve also been a provider of these services, as well as a client. Now though, I am an analyst

writing about everyone else, which is a lot of fun.” Understanding Source to Pay (S2P) When it comes to Source to Pay (S2P), Gupta explains that this term can be divided into two subparts, “one is Sourced to Contract (S2C), and the other is Procure to Pay (P2P).” Keeping it simple, Gupta uses the example of procuring laptops for employees to explain how these two subparts (S2C and P2P) link together to form the entire process (S2P). “So let's say in your organisation every employee needs a laptop. So think of how that would be done. The first part - S2C - is somebody in your organisation procurementmag.com

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TECHNOLOGY

“ Without data, it is going to be hard to make decisions, so having holistic visibility into your spend data is important” SAURABH GUPTA

PRESIDENT OF RESEARCH AND BUSINESS OPERATIONS, HFS RESEARCH

will look at what the requirements are for a laptop to do a certain job; it needs to have XYZ kind of specifications. Then some form of spend analysis will be conducted to determine how many laptops could be required, as well as category management to understand the difference between the different providers - who’s good, who’s bad, cost etc. Then a request for proposal (RFP) will be launched for the various potential vendors selected. After the final selection, the organisation will end up with a contract

for that vendor. So far, the organisation has not bought anything. They have simply settled with the contract of, ‘this is my preferred vendor to provide me with these sorts of goods’. That is the S2C process.” “So the second part - P2P - follows S2C, so if someone in the organisation says ‘hey, I need a laptop’ the organisation will have some sort of catalogue of vendors already contracted which you can ‘buy now’ from. Now sometimes your organisation will need to create a purchase order for that. You will send the purchase order to the vendor, they ship the materials to you, you receive them alongside an invoice, and then you pay the invoice. So that is the P2P process.” “This is a very simple description of S2P. The laptop is a very, very simple category, but imagine this can become procurementmag.com

TECHNOLOGY

“ For a very long time, S2P has been a very basic process, in a way, it has been one of the most embedded processes of all time” SAURABH GUPTA

PRESIDENT OF RESEARCH AND BUSINESS OPERATIONS, HFS RESEARCH

July 2021

very complicated if you start to think about marketing services or purchasing raw materials. S2P basically involves everything under the sun that an organisation needs to purchase in order to run its business.” When Should a S2C solution be used, compared to a P2P solution? Discussing the difference between solutions for S2C and solutions for P2P, Gupta explains that “organisations need both. P2P is a little more transactional in nature. So it's just following the rules and following the steps A to B to C. A lot of the P2P process can be automated; you only need to handle the exceptions. So P2P

TECHNOLOGY

is sort of a low hanging fruit in terms of automating it. “Whereas S2C can do with a lot of systems. These things are pretty complicated, and you need to have systems in place to provide some method to the madness and also provide some intelligence to your sourcing professionals on what are the best prices, what are the best ways, and what are the best geographies. So I think there is a huge amount of technology required for the entire S2P process, but the attributes of the processes are very different. P2P is transactional, and the upstream S2C is very subjective, very judgmental in nature.”

Five Best Practices for Success Now that we understand that entire S2P process, Gupta walks us through the five best practices for success. “First, you need to understand your organisation's data. Having data is a very important aspect of the whole process. Without data, it is going to be hard to make decisions, so having holistic visibility into your spend data is important. Second, is talent. Getting the right people is very important, especially in sourcing and category management. Finding expertise is hard and is often a skill set that is developed over time, so this is something that needs to be decided whether it can be found in-house or outsourced. “I also think the processes are very important because we can often create hugely complicated and cumbersome processes, and I think simplifying the processes first before implementing any S2P solution is very important. You can throw as much money at technology, but if your processes are bad, then it's garbage in garbage out. I would also say technology, not just basic platforms, but leveraging emerging technologies like robotic process automation, machine learning, prescriptive and predictive analytics - I call those the AAA trifecta of automation, analytics, and AI - leveraging these emerging technologies is important. Last but not least is change management, I think it's very important. You can invest as much as you want in emerging technologies, but if your people are not adopting them, then what's the point? So I think how you drive change in cultures and behaviours of using some of these investments is important. So for me, it boils down to these five things in my mind: people, process, technology, data, and change.” procurementmag.com

“ You can invest as much as you want in emerging technologies, but if your people are not adopting them, then what's the point? SAURABH GUPTA

PRESIDENT OF RESEARCH AND BUSINESS OPERATIONS, HFS RESEARCH

Looking to the Future… Reflecting on the history of S2P, Gupta explains that “for a very long time, S2P has been a very basic process, everybody had to buy goods and services to do their businesses. So in a way, it has been one of the most embedded processes of all time. What we started to see in the late 1990s was a lot of centralisation of S2P instead of every geography and every business unit doing their own thing. We also started to see more and more technology interventions - SAP and then SAP Ariba and those kinds of tools started to come up to help the entire process. 92

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“Then in the early two-thousands, we started to see a huge advent in offshoring, which was largely driven by labour arbitrage, but essentially finding the same skills at a lower price, especially the P2P downstream transactional activities. After I would say 2005 to 2010, we started to see a lot of process improvements, Lean, Six Sigma, those kinds of things entering the industry.” However, in the last ten years, Gupta highlights digital’s domination of the industry. “It has been about how you use digital technologies from intelligent

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document capturing to the AAA trifecta into the solutions.” “I think where we are headed now is to make S2P more intelligent, having almost a human plus machine kind of a model wherein humans do the hard stuff, leveraging machines to do the mundane stuff. I think that's where the industry is headed. It's been a very long, drawnout journey, but with these emerging technologies, I think P2P can become pretty much invisible and should run autonomously. As a result, the focus should be on the upstream sourcing

process, and I think more and more intelligent solutions will emerge, releasing this human plus machine paradigm. “S2P is also converging more and more with the broader supply chain, so I think we will start to see more conversations around end-to-end supply chain optimisation happening. And I think the more organisations start to look at S2P through the supply chain lens, there will be more value that hasn’t been unearthed yet, and more of an overlap with these supply chain, sourcing and procurement solutions.” procurementmag.com

KEOLISAMEY DOCKLANDS

Partners in

Passenger Safety

WRITTEN BY: RHYS THOMAS PRODUCED BY: GLEN WHITE

July 2021

KEOLISAMEY DOCKLANDS

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KEOLISAMEY DOCKLANDS

July 2021

KEOLISAMEY DOCKLANDS

Natalia Pickett, Head of Procurement, KeolisAmey Docklands, sheds light on the vital role procurement plays in more than 117 million annual rail passenger journeys

117 million Passengers use the DLR each year

ondon’s Docklands Light Railway, known as the DLR in local shorthand, is the UK’s busiest light railway network and one of the vital transport arteries for business and leisure in the sprawling British capital. It is operated by French transport specialist Keolis and British infrastructure engineering firm Amey, under the joint venture KeolisAmey Docklands. The service is responsible for the comfort and safety of more than 117 million passengers each year, giving the transport network an enormous impact on the economy, and the day-to-day lives of Londoners and tourists alike. Cutting through the city’s financial hub in Canary Wharf, the line also feeds into convention centres and cultural hotspots, as well as residential areas and retail destinations. Though the pandemic has significantly reduced the number of passengers over the past 18 months, it is a responsibility that Natalia Pickett, Head of Procurement at KeolisAmey Docklands, takes incredibly seriously. “Safety is a word I say a million times a day, because whichever solutions we implement, services we buy or technology we deploy, the safety of our passengers, staff and transport crew is the most important factor always,” she says. Pickett’s procurement division is responsible for sourcing and implementing everything from vital services and back office supplies, to to spare parts for maintaining rolling stock. When someone once asked Pickett’s husband what his wife does for a procurementmag.com

KEOLISAMEY DOCKLANDS

Title of the video

“ Safety is a word I say a million times a day, because whichever solutions we implement, services we buy or technology we deploy, the safety of our passengers, staff and transport crew is the most important factor” NATALIA PICKETT

HEAD OF PROCUREMENT, KEOLISAMEY DOCKLANDS

July 2021

living, he joked that she is a “professional shopper, at an industrial scale”. To some extent, she says this is true: “If you imagine your thought process at the DIY shop when you’re redecorating the bathroom, there are parallels to the considerations in my professional life: whether the product is good quality, safe, value for money. But there is much more to it than that." Pickett describes herself as part matchmaker, part problem solver - the key to both being partnerships. “Those are really the core of my work, and I’m pleased to say that the team and I are very good at it. Procurement is not only about saving money. That is fundamentally not true; savings will be the natural outcome of procurement processes,” she says. “Partnership is another of those words I repeat a lot, because it is very important to me. With my suppliers, we must learn from one another, bounce ideas between one another and grow together; it is almost love,”

KEOLISAMEY DOCKLANDS

NATALIA PICKETT TITLE: HEAD OF PROCUREMENT LOCATION: LONDON DOCKLANDS, UK

EXECUTIVE BIO

she jokes. “We need to reach the stage of the relationship where we can talk about the good things, the bad things - it doesn’t matter to me. As long as we’re talking then we can find a solution, which is what procurement is really all about.” Pickett and her team operate in a unique procurement environment. Unlike malleable sectors such as IT, procurement in the rail and wider transport industry runs at a more cautious, measured pace. Safety concerns mean Pickett is unable to “simply change a nut here and a bolt there because it is cheaper”, but these stringent regulations do crystallise a fundamental level of quality adherence not often present in more agile sectors. All suppliers in the rail industry can be found on the Rail Industry Supply Qualification System, a sector-specific database which holds all their insurances, certifications, licenses and financial information. “It makes my job quicker,”

Natalia Pickett is an experienced procurement and sourcing professional with more than 25 years’ experience. In her current role she is responsible for developing and implementing commercial strategy and contracting models to support a variety of rail network contracts, including DLR, Wales and Borders Rail, and Metrolink. Pickett has worked in senior procurement roles at Network Rail, Regus and Shell, and earned a masters in Math, Physics and Computer Science from Moscow Railway University, and latterly an MBA in management from the Open University.

procurementmag.com

KEOLISAMEY DOCKLANDS

“ With my suppliers, we must learn from one another, bounce ideas between one another and grow together; it is almost love” NATALIA PICKETT

HEAD OF PROCUREMENT, KEOLISAMEY DOCKLANDS

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KEOLISAMEY DOCKLANDS

Pickett says. “And it also makes suppliers’ Services play an equally important role lives easier because they don't need to in keeping passengers and staff safe and answer all those same questions again comfortable. That comes with its own The DLR for me.” set of challenges, particularly as the size has a Pickett’s teams also leverage a of KeolisAmey Docklands belies its suite of other digital procurement impact. “We operate a large service, departures tools, though she admits she may be but our actual company is only around record considered “a little old fashioned” in 860 employees, which is nothing her approach to digital transformation. “I compared to the biggest networks. We can don’t like to use lots of different computer be limited in finding suppliers that want to systems and pieces of software,” she says. work at that scale,” she says. “I find that the more systems you use, the After around a year of negotiations more noise you have to deal with. But we do to secure a quality occupational health use Microsoft Dynamics and IBM Maximo, provider, Pickett encountered Medigold which is a very robust asset management Health. “They were different. They were ERP system and very important to our keen to work with us, but beyond the usual procurement analysis. Using this system services, it was apparent that they care about I can instantly know what a good is, how our staff as much as we do. They offered we bought it, what we spent and use the insight into how to reduce blood pressure, information to review our categories. From how best to approach dietary requirements. a digital perspective, they are enough for us.” When we inevitably have staff off sick, they Not all Pickett’s procurement efforts help us bring people back to work as swiftly are dedicated to steel, tracks and carriages. as possible, because while we are paying

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KEOLISAMEY DOCKLANDS

GOAL SYSTEMS One of the key reasons for the success of KeolisAmey Docklands in achieving operational excellence has been its choice of its technology partners! Among those suppliers, Goal Systems stands out by providing the latest technology for optimising the planning of material, technical and human resources. The partnership has grown steadily over the last few years as KeolisAmey Docklands have entrusted more key operations and tasks to Goal Systems. Goal has adapted their approach to suit the UK market and introduced robust, standardised and automated solutions which are driving a more efficient and more profitable operation with high levels of internal and external customer satisfaction.

“ I think in 2022, we will be back to business as usual. It will be a time to achieve efficiencies” NATALIA PICKETT

HEAD OF PROCUREMENT, KEOLISAMEY DOCKLANDS

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them on leave, we need to cover their job, meaning we are paying twice. But this is not about simply pushing people back to the track, it’s about caring for our staff while minimising spend, and Medigold are a great partner for that.” Another example of this close collaboration is Xrail, a rail services supplier which provides trackside cabling to KeolisAmey Docklands. Xrail was discovered through the Rail Industry Supply Qualification System, though none

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of Pickett’s team had heard of their work previously. “But we followed procedure - as is our mantra - and invited them for a presentation,” she says. “And then the magic happened. This sounds like such a matter of fact, one-dimensional job on the surface but they are so passionate, so innovative, and we all thought: ‘wow’. We awarded them the contract, and they have been fantastic.” Pickett’s decision to offer Xrail the contract was further vindicated some months later.

While sleeping rough at an organised event to raise money for The Railway Children Charity, she encountered Monica Barbosa, Xrail Group’s Director of Business Development and Communications. “It was an accidental meeting, but we got to talking and realised we are cut from the same cloth,” Pickett says. “It was an interesting experience and great to know we’re passionate about the same values. This is what I mean when I talk about the importance of partnerships that go beyond saving money.” procurementmag.com

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“ When the new franchise started on 1 April this year, nobody noticed. The suppliers delivered on time, the network didn’t stop, and that was our real achievement” NATALIA PICKETT

HEAD OF PROCUREMENT, KEOLISAMEY DOCKLANDS

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KEOLISAMEY DOCKLANDS

2014

Year Founded

Transport Industry

Pickett’s partnerships extend beyond London. The joint venture between Keolis and Amey expanded in 2017, landing the contract for the Manchester Metrolink, a light rail network that is the largest of its kind in the UK. Procurement played a central role in the project, but it was largely invisible and that was by design. “We began by providing numbers and what we can achieve with suppliers, but procurement’s real role in the launch of this service was in the realisation. Our job was to ensure that day one looked no different to the previous day. So when the new franchise started on 1 April this year, nobody noticed. The suppliers delivered on time, the network didn’t stop, and that was our real achievement. The purpose of my role is to make sure that everything works and I’m not noticeable. It’s similar to HR: why should anyone notice if everything runs nice and smooth? So well done to us.” When KeolisAmey Docklands was awarded the ISO 55001 asset management certificate, “we were very proud of it”, Pickett says. “And I'm particularly proud of the fact that to get this certificate, we as a procurement function didn't need to do anything extra.” Pickett hopes to remain quietly exceeding expectations and out of the limelight in the coming year, when commuters begin returning to work and cities reopen to tourists. “I think in 2022, we will be back to business as usual. And I will do all my standard efficiencies projects, and we have taken over maintenance of the Lewisham extension - seven stations in south London. It will be a time to achieve efficiencies. Nothing is certain, but this is the plan.”

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THE SUSTAINABLE PROCUREMENT PLEDGE,

UNITING OUR POWERS WRITTEN BY: LAURA V. GARCIA

The Sustainable Procurement Pledge aims to unite the efforts and remove the friction for procurement leaders looking to drive sustainable supply chains

The Pledge Standing up for people and our planet. I fully understand the criticality of climate change and the need for me to become active. I pledge to do my best to stop exploitation of nature and human beings, environmental pollution, rising inequality and injustice. I will act against modern slavery, human trafficking, child labour, corruption and bribery while upholding business ethics and law-abiding behaviour. Together we will change the world. I am convinced that all of us involved in Procurement can make a difference by joining forces to accelerate the creation of a just and low-carbon emissions world by contributing to the UN Sustainable Development Goals. I will team up with my procurement colleagues, my procurement networks, academics, NGOs and government bodies to exchange on and advance responsible business behaviour. Starting with myself. I commit myself to lead by example and include sustainability as part of my overall 106

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mindful vision and values. I will integrate sustainability aspects into my everyday procurement decision-making criteria and work with my colleagues and suppliers to drive lasting improvements. Sharing my knowledge and listening to others. I will actively share my sustainability knowledge while keeping confidentiality obligations and antitrust rules in mind and always collaborate with all involved stakeholders on our shared mission. I will remain open to the advice and proposals of my peers. Leaving the right legacy. I pledge to raise concerns in case of inappropriate business behaviour or when I observe unsustainable practices. I fully respect the principles of the UN Global Compact and other international standards and agreements. I am determined to ensure that procurement leaves the legacy of protecting a sustainable planet for us and future generations.

SUSTAINABILITY

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“It’s awe-inspiring to wake up and know that there are so many others out there like me who want to design and build a better world, and are using supply chains to make it happen”, Sheri R. Hinish, The Supply Chain Queen, SPP Ambassador “The Sustainable Procurement Pledge has been playing a fundamental role in driving conversation over the past year and has provided thought leadership in a domain which is developing and changing at a rapid pace. “Whilst no one company or individual has all the answers, as a community we’ve already seen over 5000 people collaborating, sharing insights, wisdom, pragmatism and most importantly, case studies. These case studies and examples of projects that have gone well (or not) provide a huge advantage to those who need to figure out how to improve the status of sustainability in procurement teams,”- Seb Butt, SPP Ambassador and European General Manager, Craft.co

Tasked with the job of procuring goods and services, procurement professionals hold a unique power to change the world. However, as the brilliant Spiderman once said, with great power comes great responsibility. SPP is taking that responsibility to heart. The Sustainable Procurement Pledge aims to unite the efforts of procurement leaders in reaching The 2030 Sustainable Development Goals (SDG). By establishing frameworks and best practices, SPP looks to remove the friction between procurement professionals and more sustainable supply chains. This is the opposite of greenwashing. It's grassroots, guerrilla warfare against climate change. And I'm there for it, literally having

Oliver Hurrey, Chair of The SPP

“ It's very much about helping individuals collectively” OLIVER HURREY, CHAIR, THE SPP

attended their last Zoom meeting. I then set up a call with the Chair of The SPP, Oliver Hurrey to find out how they got here and where exactly they think they're going. When I jump on the call, at first, all I see is his picture, and then suddenly, it looks like he's filming an HGTV reality show. He's standing out front of his house, which seems to be going through some major renovations. Over the noise, Oliver filled me in. "A little over a year and a half ago, during the time of climate strikes, Thomas Udesen, CPO at Bayer and Bertrand Conquéret, [President of Henkel's Global Supply Chain B.V. and Global CPO of Henkel AG & Co. KGaA.] got together and felt that they, and procurement as a whole, could do more to help beat the sustainability and procurementmag.com

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SUSTAINABILITY

The Sustainable Procurement Pledge

" We wanted to knock down all of the reasons why an individual professionally can't start to embed sustainability and responsibility into procurement's ways of working” OLIVER HURREY, CHAIR, THE SPP

responsibility crisis. They felt that there was a need to encourage, empower and enable procurement professionals to elevate their work in sustainability and add more value to their business, all of these good things that humans could and should be doing while doing more for the people on the planet as well. Oliver then joined Thomas and Bertrand in their mission, leveraging his 16 years spent building, running and advising collaborative initiatives in sustainability to help bring the 110

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concept of The Sustainable Procurement Pledge to fruition." It's an opportunity for procurement professionals to make a personal and professional pledge to embedding sustainability and responsibility into their procurement practices. We also try and help them remove all the excuses as to why they can't achieve that pledge. My boss won't let me. I don't know what tools to use. What is a circular economy? "We wanted to knock down all of the reasons why an individual professionally can't start to embed sustainability and responsibility into procurement's ways of working. That was the principle. We started with a group of Thomas and Bertrand's CPO friends. There were about 20 of us on a call. The eighth meeting held on May 11th had nearly 1500 people in attendance. Fast forward 18 months or so to today, and we've had a pro bono group of volunteers that have been meeting

SUSTAINABILITY

every Wednesday night with Thomas and Bertrand, and effective this month, we are now a formal global non-profit organisation. "It's accelerated rapidly. In addition to the approximately 1500 that are now turning up to the Zoom meetings, we have developed an online community of about 4,000 professionals. We also now have our own website. And since we are officially a not-for-profit, we're looking to raise funds." SPP's goal is to recruit one

million procurement professionals as ambassadors by 2030. "Ultimately, it's about getting people together across the value chain in procurement to make sure that everyone is singing from the same hymn sheet about how to make it easier to embed sustainability and responsibility into procurement." The eighth SPP Ambassadors meeting challenge was defining metrics for sustainable procurement. Lewis Howard, procurementmag.com

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“ Ultimately, it's about getting people together across the value chain in procurement to make sure that everyone is singing from the same hymn sheet about how to make it easier to embed sustainability and responsibility into procurement” OLIVER HURREY, CHAIR, THE SPP

Transformation Director at GSK, Alexandra Tarmo, Head of Partnerships & Social Procurement at Unilever and Sonia Prey of the SPP team, but formerly of Liberty Global Director of Procurement Excellence, were there sharing their insights on how teams can use metrics to drive sustainability and responsibility. During the meeting, everyone broke off into groups, which is when I skidded away, afraid I would have to answer for something. And so I ask Oliver about the groups (stick with him, he gets there). 112

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"I have a Google doc of about 187 different sustainable procurement initiatives that exist in the world right now. It's an extraordinary number, across industries and across issues. The key difference of what we're doing here is empowering all of those initiatives, but not by helping companies or organisations as such. We're helping the procurement professionals. It's very much about helping individuals collectively. "They need to be able to understand what best practice might be, but also to feel part of the community, part of a movement. It's

SUSTAINABILITY

essentially a peer group. You're far more likely to embed something you've heard from a peer rather than someone with an agenda. That's the principle. "So we break out over 500 people into groups of five and allow people to meet each other, understand what their challenges are and bounce off each other. We try to create opportunities for those unusual collaborations and get people from all over the world. Almost 150 different countries were in the last meeting, which is extraordinary."

"Ultimately, we're a not for profit. So we are absolutely guided by the individuals. Our model is to gain grant funding. So we don't lean one particular way or another. We are driven by what the professionals want us to do. And I think that's important and unique." If you haven't yet taken The SPP Pledge, perhaps it's time you do so. The next meeting is scheduled to be held on July 7th and will be tackling the challenge of circular thinking. Now an official non-profit, SPP is looking for funding. If you've got the coin, and a heart, give them a call. procurementmag.com

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MARKS & SPENCER:

ACHIEVING PROCUREMENT EXCELLENCE WRITTEN BY: ELISE LEISE 114

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PRODUCED BY: GLEN WHITE

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Andrew Newnham

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POST-PANDEMIC, BRITISH RETAILER MARKS & SPENCER PURSUES NEW PROCUREMENT STRATEGIES AND SUPPLIER PARTNERSHIPS TO EMERGE STRONGER THAN EVER

ne year after the UK first locked as an exciting time: “We made a real down, COVID-19 has accelerated difference to the business.” procurement transformation. A year later, M&S emerged from the Non-essential retail has pandemic stronger than ever. Certain re-opened—but according to British procurement practices, however, have multinational Marks & Spencer (M&S), the shifted—especially those revolving around most important shift has been in mindset. risk management. “It doesn’t mean you can’t “[Before the pandemic], we had tried to have risks,'' Newnham said. “You should have change the hearts and minds of the team”, risks. But companies also need knowledge, said Andrew Newnham, Director of Group transparency, and understanding.” Procurement at Marks & Spencer. “[But it was When Newnham joined M&S, risk difficult] to make our people think differently mitigation was one of the pillars he about the role of procurement.” implemented in his new procurement If nothing else, the pandemic forced even strategy. When the pandemic hit, risk successful retailers to think outside the box. suddenly took centre stage. “Marks & At one point in 2020, M&S’s clothing and Spencer talked about decision-making”, he home sales dropped to 15% of what they said. “Suddenly, we were at the forefront of had been prior to the pandemic. “At one asking: ‘What’s the risk in our supply chain?’” point just before the first lockdown point, Immediately, the company took steps to our CEO, Steve Rowe, came through the understand its supplier base, work with office and said, ‘Go home now’,” Newnham individual suppliers, and keep its operations said. “The pandemic was moving. “How do we a kickstart to an entirely start making risk-based “ONE OF THE MAJOR new way of working.” decisions on a data-led ACHIEVEMENTS Throughout 2020, basis rather than what Marks & Spencer we think we know?” OF 2020 WAS WITH gathered information — Newnham asked. HEARTS AND MINDS about the strength of its “Do we understand GETTING PEOPLE TO data and processes, its which suppliers have agility, and its supplier no cash problems, BELIEVE WE NEEDED knowledge. “We were which suppliers are TO CHANGE” empowered to make too reliant on M&S, decisions”, Newnham and which suppliers ANDREW NEWNHAM said. He recalled telling have untenable DIRECTOR OF GROUP his team that they’d look financial and legal PROCUREMENT AT MARKS & SPENCER back on the moment risks going forward?” procurementmag.com

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When Marks & To mitigate future “WE’RE A BRAND WITH Spencer initially shut operational risks, M&S A LOT OF HERITAGE down, the company had Procurement spent tried to review contracts significant time putting AND A LOT OF and, in line with many a new risk framework in LEGACY. CULTURE— retailers, mitigate place. Yet, the company AND HOW WE LOOK supplier costs. But decided not to spend Newnham and his team AFTER OUR PEOPLE— large sums of money to members discovered buy pre-made solutions. IS IMPORTANT” that they didn’t have “If you do that, the clear immediate data to team doesn’t own the ANDREW NEWNHAM know which contracts problem”, Newnham DIRECTOR OF GROUP could end easily and told us. “We made a PROCUREMENT AT which couldn’t. This led conscious decision to MARKS & SPENCER to more revelations. use tools that [our team “Before COVID, we’d talked about supply members] could use… that had accessible chain risks, but not necessarily operational information and data. They needed to risk”, Newnham said. “Certain suppliers have a stake in the solution.” could shut down a store. So what plan One of the biggest motivators for did we have in place to ensure that didn’t Procurement at Marks & Spencer, after happen?” all, is the direct link between what they 118

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MARKS & SPENCER

ANDREW NEWNHAM TITLE: DIRECTOR OF GROUP PROCUREMENT COMPANY: MARKS & SPENCER INDUSTRY: RETAIL PROCUREMENT

1884

The year Marks & Spencer was founded in Leeds by Michael Marks and Thomas Spencer

£9.0bn Group revenue in 2021

EXECUTIVE BIO

accomplish and the success of the company. “M&S is a great place to work if you want to work somewhere where you can deliver, make changes, and be empowered”, Newnham said. “This team understood what we were trying to do. One of the major achievements [of 2020] was with hearts and minds—getting the team to believe we needed to change.”

Andrew Newnham is Head of Group Procurement at British retailer Marks & Spencer, where he has delivered £500mn worth of business savings in three years, implemented a new thirdparty supplier risk framework, and led company-wide efficiency programmes. Prior to his role with M&S, Newnham negotiated and implemented several large-scale outsourcing contracts at Vodafone, UBS, and ITV. After he graduated from the University of Sussex with a First Class Honors economics degree, he worked at BT and British Airways before taking a role as Vodafone’s Senior Commercial Manager.

MARKS & SPENCER

Marks and Spencer’s Procurement Transformation

“ALL PROCUREMENT TEAMS, I BELIEVE, NEED TO GET CLOSER AND CLOSER TO THE BUSINESS. EVERYTHING YOU DO, AS A PROCUREMENT TEAM, SHOULD BE ABOUT INFLUENCING AND MAKING YOUR PART OF THE BUSINESS MORE SUCCESSFUL” ANDREW NEWNHAM DIRECTOR OF GROUP PROCUREMENT AT MARKS & SPENCER

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The corporate headquaters are located in London, UK

CEO

Steve Rowe was appointed CEO in April 2016

78,000+ Number of employees

1,519

Number of retail stores globally

International markets

50.5%

Percentage of UK Clothing & Home sales online

13.5m

Online traffic (visits per week)

M&S have factories in 45 territories globally

1,379 Number of factories globally

953,129 Number of factory workers globally

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“ ONCE WE’VE GOT THE DATA, HOW DO WE MAKE DIFFERENT DECISIONS? HOW DO WE LOOK AT OUR SUPPLIER RESILIENCE AND EITHER HELP THEM TO CHANGE THE WAY THEY OPERATE OR SWITCH TO ALTERNATIVE SUPPLY SOURCES?” ANDREW NEWNHAM DIRECTOR OF GROUP PROCUREMENT AT MARKS & SPENCER

Throughout its decades of supply chain and procurement operations, Marks & Spencer has focused on building an inclusive, tightly-knit culture. As a result, when the UK lockdown started, many thirdparty suppliers stepped up to help M&S through its most difficult months. Said Newnham: “They were part of the solution.” From here on out, the company intends to find not just tier-one partners but the right partners. “Sometimes the tier-two vendors are more flexible”, Newnham said. “It’s important that our suppliers share our values and are prepared to buy into our values.” How important is this cultural fit at Marks & Spencer? “Almost a defining thing”, Newnham said. “We’re a brand with a lot of heritage and a lot of legacy. Culture—and how we look after our people—is important.” But successful partnerships take two to tango—and Marks & Spencer is determined to hold up its end of the bargain. Moving forward, the company aims to strengthen its supplier relationships by lending its expertise. “This isn’t just the right thing to do”, Newnham said. “We’re going to try to change things.” He pointed out that now, ESG supply chain measures affect how consumers buy and shop. “Our customers are diverse”, he said. “Our customers want 122

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“ NOW WE’RE ABOUT AGILITY. WE’RE ABOUT MAKING DECISIONS. WE’RE ABOUT BEING EMPOWERED. WE’RE ABOUT EFFECTING CHANGE” ANDREW NEWNHAM DIRECTOR OF GROUP PROCUREMENT AT MARKS & SPENCER

sustainability. As a procurement team, it’s up to us to understand those concerns and help our third-party providers understand and deliver our values.” While Marks & Spencer has historically focused on RFPs (requests for proposals) to close good deals, Newnham argued that the company should also be commercial advisors. “We’ll start with what we’re trying to achieve”, Newnham said. “Then we’ll work back from that. [We can decide] whether an RFP is the right route to 124

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take, or whether we take a more direct approach with a key partner.” First, the company covers the basics. “You’ve got to understand the business objectives; you’ve got to handle the sourcing process”, Newnham said. “If you don’t negotiate a good deal, run a good competitive process, and reduce risk by getting the right contract in place with a good indemnity clause, you’re not really in procurement.” Certainly, Marks & Spencer is excellent at focusing on key business outcomes. While the company has a distinguished history, it doesn’t shy away from keeping up with the times. “If you’re not involved

MARKS & SPENCER

in the commercial discussions all the way through the lifetime of the contract”, Newnham said, “how can you be expected to understand the service and do a great deal going forward?” Still, to Newnham, procurement excellence is all about strategy. “Once we’ve got the data, how do we make different decisions?” he asked. “How do we look at our supplier resilience and either help them to change the way they operate or switch to alternative supply sources?” Compared to other retailers, this mindset sets Marks & Spencer apart. “You need to build a strong foundation and become

business partners”, Newnham said. “You need to be known as a good negotiator. You need to be known as understanding the market.” All in all, Newnham believes the pandemic has made Marks & Spencer stronger. “Our procurement organisation is an unstoppable force”, he said. “You can’t let perfect be the enemy of the good. During COVID, the team had to drive operations forward. “Better to achieve our targets on time rather than reach an absolutely perfect bar”, he said. “We reach 80% perfect, and then we can ask: ‘How can we do things better?’” As for the evolving role of procurement, Newnham is thrilled that his team’s recent work is helping Marks & Spencer adapt: “Nothing’s too small. You’d be surprised— deliver a lot of 1% changes and you make a real difference, it’s the British Cycling Marginal Gains rule.” Going forward, the foundations of the company’s procurement strategy will be much more solid. After a transformative year, the company has stress-tested its systems, evaluated which ones work, and targeted those that it needs to improve. Newnham explained: “We learned what we were good at.” In some sense of the word, COVID19 helped Marks & Spencer change its perspective on what it meant to be in procurement. Currently, the company is re-envisioning its role in the global supply chain as well as its core strategies. “Now we’re about agility”, Newnham concluded. “We’re about making decisions. We’re about being empowered. We’re about effecting change.”

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TOP 10

SUSTAINABLE PROCUREMENT CONSULTING COMPANIES

WRITTEN BY: ELISE LEISE

Sustainable procurement is a hot topic in today’s purchasing and supply chain management. But even companies seriously intent on developing sustainable KPIs in accordance with the United Nations’ Sustainable Development Goals can benefit from expert consulting. 126

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TOP 10

s supply chain impacts account for more than 80% of greenhouse gas emissions, along with cost cutting, and building more resilient and innovative supply chains, CPOs are now increasingly being tasked with sustainability initiatives and the need to ensure ethical, and sustainable procurement. But, in fact, sustainable procurement—when addressed effectively—can reduce costs, cut waste, and bolster a company’s reputation for environmental

responsibility. Yet to do so, executives must identify current sustainability gaps and target areas to improve. Since a comprehensive review process is often difficult to allocate time and resources toward, and no real framework currently exists, many companies prefer to work with international procurement experts. For 2021 to be the year your company takes on sustainable procurement, we’ve culled the top sustainable procurement consulting firms.

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TOP 10

Procura Consulting Specialists in procurement cost reduction, Procura Consulting offers a Sustainable Procurement Impact Assessment to identify spend categories with the greatest opportunity and risk. In addition, they tailor recommendations to a company’s sustainability objectives. According to Managing Partner Richard McIntosh, “investment funds with environmental, social, and governance criteria (ESG) have outperformed the broader market during the pandemic. Procurement excellence [in coming years] will not just be the driver for profitability but also for environmental and sustainability management.'

“Investment funds with environmental, social, and governance criteria (ESG) have outperformed the broader market during the pandemic” 128

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09 BSR

BSR works with 250+ companies, government agencies, and civil partners to develop ambitious business strategies. Their Procurement Leadership Group helps clients incorporate sustainability criteria into their procurement practices, targeting SDG Goals 8 (Decent Work and Economic Growth) and 12 (Responsible Consumption and Production). In addition, their Sustainable Futures Lab helps companies identify emerging issues early to develop more resilient and sustainable supply chains. Its clients include HewlettPackard, IKEA, NIKE, and Unilever.

TOP 10

08 Sphera

Sphera, in addition to providing ESG performance and risk management software, data, and consulting services, supports 46 languages, employs 100+ sustainability experts, and has handled 66,000+ compliance actions. They focus on EHS&S (Environment, Health, Safety, and Sustainability). ‘Because of Sphera’s Corporate Sustainability Software’, said Jonny Natelberg, Executive VP of Lekkerland AG & Co, ‘we were able to generate an action plan targeting 20% emissions reduction savings in five years’.

Barkers Commercial Services In 2021, Barkers Commercial Services won the SME Leadership Award at the National Social Value Awards. With 6,450 assessments and 890+ projects delivered to clients, the company focuses on improving supplier performance and offering companies greater control over cost, quality, and timescale. The company has created US$2,000,000 in social value but doesn’t sacrifice cost savings. After partnering with Barkers Commercial Services, one client achieved £20m in savings in 12 months. procurementmag.com

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TOP 10

Reeve Consulting

06 Efficio

The world’s largest strategic procurement consulting firm, Efficio operates from 10 offices in Europe, North America, and the Middle East to initiate sustainable procurement practices. In 2017, CIPS shortlisted the company for its Supply Management Awards; in 2019, Spend Matters featured the company in their ‘50 Providers to Know’ rundown. Efficio’s latest update is eFlow, a procurement technology platform that automates data insights and builds strong supplier relationships. Since launching, the company has analysed US$21bn in spend data and successfully completed 982 projects.

Reeve Consulting advises companies at any stage of sustainable procurement. ‘Although [we are] only at the beginning of our green procurement journey’, said Susan Atkinson, Climate Change Secretariat of the Government of New Brunswick, ‘Reeve Consulting provided us with wellthought-out deliverables that go above and beyond what was requested’. Reeve played a key role in ESG reporting programs for the 2010 and 2014 Paralympic and Olympic Games, the 2015 Canada Winter Games, and the 2018 Special Olympics USA Games.

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04 Deloitte

Deloitte is already looking to the future. ‘With COVID-19 vaccines being deployed,’ the company noted, ‘there’s the potential for there to be winners and losers in procurement based on which enterprises move quickly to bring together agility, efficiency, resilience, and strategy’. The firm operates in 102 cities around the world and consults nearly 90% of the world’s Fortune 500 companies. By 2025, they aim to ensure that suppliers are outperforming ethical standards of compliance.

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McKinsey & Company McKinsey & Company is setting science-backed targets. Since 2018, the company has offset 100% of its greenhouse gas (GHG) emissions. They believe that sophisticated procurement practices can help companies minimise their environmental impact and control costs. In almost 100 global offices, Green Teams drive environmental initiatives. Currently, the company works with over 50 of the world’s largest airlines and hotel groups to help reduce their carbon footprint.

TOP 10

Bain & Company

Bain & Company prides itself on helping companies develop sourcing strategies for a sustainable future. Operating across 61 offices in 38 countries, the firm has completed 1000+ procurement projects, reducing purchasing costs by 8-12%. Its leadership recently signed off on the Business Ambition for 1.5˚C commitment letter, part of the Science-Based Targets Initiative. And by 2030, they intend to achieve net-zero carbon emissions. Of Bain & Co’s partners and managers, 330+ possess considerable sustainability expertise—which might be why they approach sustainability from such a realistic perspective. ‘Only 4% of companies achieve their sustainability goals’, Bain & Co reports. But they promise that their clients can organise for success. ‘The normal rules of business’, they add, ‘don’t stop when it comes to sustainability and corporate responsibility. Pragmatic solutions still matter’.

“ Only 4% of companies achieve their sustainability goals” procurementmag.com

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TOP 10

Boston Consulting Group Boston Consulting Group recently pledged to reach net-zero climate impact by 2030, a major step in their commitment to ESG. With 22,000 employees, US$8.6bn in annual revenue, and 450+ international social impact projects, the company has completed more than 930 procurement projects across the world in the past five years. For clients who also wish to take ambitious ESG action, BCG helps integrate sustainability into key KPIs and operating models. At one European automotive Original Equipment Manufacturer (OEM), they reduced scope 3 emissions as per the Paris Agreement and helped set intermediate and long-term CO2 objectives. What’s more, BCG holds itself to equally high environmental standards. The company has pledged to put US$400mn toward climate action in the next decade and reduce business travel emissions by 30% by 2025.

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