— a procurement transformation journey
DE C E MB E R 2 0 18
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A $20BN SUPPLY CHAIN REVOLUTION Michael Gustafson discusses the company’s innovative procurement strategy
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WELCOME
W
elcome to the December edition of Supply Chain Digital.
Our cover star this month is Petro Rabigh. We speak exclusively with Michael Gustafson, General Manager of Material, Procurement and Contracts, as the company undergoes a major supply chain transformation in line with Saudi Vision 2030. The company has almost completed The Petro Rabigh Phase II expansion project, which provides the company with an even more diversified product slate. With a cost of around $9.4bn, the procurement strategy outlines a new era for the Kingdom. “People think of procurement as being some sleepy, back office support group – but it’s not,” says Gustafson. “You’re actually on the front line and if this spare part, chemical additive, or catalyst doesn’t arrive on time, you could shut down a facility.”
Elsewhere in the magazine we look at ‘Procurement with Purpose’ and how SAP Ariba is perfectly positioned to guide companies through a sustainable procurement transformation. “‘Purpose’ is no longer something that’s nice to have; it’s become a must-have strategic imperative that 05 is high on every organisation’s agenda if they want to be perceived as relevant, admired and innovative,” the company advises. Don’t forget to look at our list of top 10 supply chain apps, as well as our company profiles on Emaar, The Economic City; Ross Video; Brown Forman and more. Enjoy the issue! Dale Benton. dale.benton@bizclikmedia.com
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CONTENTS
54 12
“ Procurement with purpose” how SAP Ariba Petro Rabigh
Transforming supply chain strategies at Petro Rabigh
46
guides supply chain and procurement transformation
Supply chain apps 64
70
EVENTS & ASSOCIATIONS
IN THE DIGITAL TRANSFORMATION OF PROCUREMENT, HUMANS REMAIN FRONT AND CENTRE w w w.suppl yc ha i ndi gi ta l. com
CONTENTS
82
Customer centricity is key to Ross Video’s performance transformation 08
Brown-Forman
Embarks on a digital transformation driven by data analytics
104 DECEMBER 2018
122 Emaar, The Economic City: building a city of the future 09
PROCUREMENT TRANSFORMATION JOURNEY OF ANSALDO STS
142
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We see something. Amid the streams of ones and zeros, we see a world where oceans of data yield sparks of insight and unending questions are being answered. A world where every space is intelligent and each connection is seamless. Where cutting-edge computing has the power to carry mankind to new planets, and faster data analysis accelerates the race for a cure. Where solutions come before problems arise and physicists have the power to map the universe’s origins. We see a world where Everything Computes, and what’s next is extraordinary. ©Copyright 2017 Hewlett Packard Enterprise Development LP.
See it all at hpe.com
12
DECEMBER 2018
MIDDLE EAST
Transforming supply chain strategies at Petro Rabigh WRIT TEN BY
SE AN GA LE A-PACE PRODUCED BY
HE Y K EL OUNI
13
PETRO RABIGH
Michael Gustafson, General Manager of Material, Procurement and Contracts discusses the procurement methods that Petro Rabigh is utilising through significant change in Saudi Arabia
14
I
n a country driven by change amidst the incoming Saudi Vision 2030, companies in Saudi Arabia have an obligation to
adapt to and embrace the latest trends in order to thrive in a competitive petrochemical industry. With ambitions of becoming one of the most profitable refinery and petrochemical plants in the world, Petro Rabigh knows first-hand just how vital the next few years are to the future of Saudi Arabian businesses. Originally formed in 2005 as part of a joint venture between Saudi Aramco and Sumitomo Chemical, Petro Rabigh produces 18.4mn tons per annum (mtpa) of petroleum-based products and 2.4mtpa of ethylene and propylene-based derivatives. With the plant’s Phase I and recently launched Phase II together valued in the region of $20bn, Michael Gustafson, General Manager of Material, Procurement and Contracts, believes that these DECEMBER 2018
MIDDLE EAST
“ We have two incredible foundation partners in Saudi Aramco and Sumitomo Chemical; a terrific partnership with aligned goals that have brought the strengths and diversity of two great organisations into this project” — Michael Gustafson General Manager of Material, Procurement and Contracts
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15
PETRO RABIGH
foundation partners laid the ground
MAINTAINING PROCUREMENT STRATEGIES
work for the company’s success.
As a way of affirming Petro Rabigh’s
“We have two incredible foundation
16
commitment to the Saudi Vision, the
partners in Saudi Aramco and Sumi-
company has confirmed the imminent
tomo Chemical; a terrific partnership
arrival of The Petro Rabigh Phase II
with aligned goals that have brought
expansion project, which provides an
the strengths and diversity of two
even more diversified product slate
great organisations into this project,”
with the implementation of a number
says Gustafson. “Both companies
of new high added value petrochemical
possess a deep set of technical and
products. The project is set to cost
commercial experiences and world
approximately $9.4bn with capital
class product mix that continues to
project debt funding. Gustafson
improve with expansions to capitalize
outlines the procurement strategy his
on the strategically placed location
company is utilising in this exciting
and resources.”
new era for the Kingdom.
DECEMBER 2018
MIDDLE EAST
“ People think of procurement as being some sleepy, back office support group – but it’s not. You’re actually on the front line and if this spare part, chemical additive, or catalyst doesn’t arrive on time, you could shut down a facility” — Michael Gustafson General Manager of Material, Procurement and Contracts
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17
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“We’ve almost finished Phase II to
under the same roof. Gustafson
expand our business. It’s like you’re
maintains its current procurement
running on a treadmill and the speed
strategy is to enhance its existing
is set at a six-minute mile but you’re
arrangements.
used to running an eight-minute mile,”
“In general, the majority of our
he explains. “People think of procure-
strategy is to push our agreements
ment as being some sleepy, back
and expand into MRO and chemical
office support group. But, it’s not.
agreements,” he explains. “This is
You’re actually on the front line and if
opposed to the ongoing spot buying
this spare part, chemical additive, or
that takes place, which decreases the
catalyst doesn’t arrive on time, you
time it takes to turnaround, as well as
could shut down a facility.”
the cycle time.”
Procurement is certainly an area
In a bid to handle its supply chain
that Petro Rabigh prioritises. The
items more effectively, Petro Rabigh
firm has three different departments
has made the decision to split into
operating in that area of its organisa-
two separate groups.
tion; with contracting, material handling and procurement all housed
“The group here in Saudi Arabia handles all the inbound supply items
E X E C U T I V E P R OF IL E
Michael Gustafson Having joined Petro Rabigh in 2017, Michael has used his 25+ years of experience and knowledge from working in commercial and business development, acquisitions, divestiture and supply chain management to develop the supply chain infrastructure for the $20bn Refinery & Petrochemical business in Saudi Arabia. Michael has outlined his intention for Petro Rabigh to embrace the incoming Saudi Vision 2030 and is responsible for driving the company’s procurement strategy.
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19
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MIDDLE EAST
CLICK TO WATCH : PETRO RABIGH ENRICHING LIFE 21
and we have a separate organisation that is responsible for the finished goods and products. It’s primarily more of a marketing and sales function,” explains Gustafson. “Alongside that, there’s the production planning which coordinates what the needs of the refinery and petrochemical business are, as well as the requirements of our customers. I believe it’s very much a collaborative effort to enable the supply chain to get going.” With the company investing almost $400mn annually on its supply chain
“ The group here in Saudi Arabia handles all the inbound supply items and we have a separate organisation that is responsible for the finished goods and products. It’s primarily more of a marketing and sales function” — Michael Gustafson General Manager of Material, Procurement and Contracts
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23
activities, Gustafson is well aware
EMBRACING SAUDI VISION 2030
just how big Petro Rabigh’s supply
In a bid to reduce Saudi Arabia’s
chain is. “The magnitude of it is that
reliance on oil and diversify its economy,
it spans to over 2,000 suppliers
Crown Prince Mohammad bin Salman
worldwide that are split evenly
announced plans in 2016 to launch
between America, Asia and Europe,”
Saudi Vision 2030. With around 80
says Gustafson. “Of those, we have
projects expected to be completed in
around 1,200 really active, highly
Saudi Arabia by 2030, Gustafson
consumable suppliers. They deal
believes it’s an interesting time to be
with everything from highly danger-
involved in such a historic process.
ous explosive and chemical addi-
“These are exciting times for Saudi
tives, all the way to papers and pens.
Arabia. When I tell my friends about it
We cover the full spectrum.”
back home in America, I feel like I’ve w w w.suppl yc ha i ndi gi ta l. com
C OMPA N Y FA C T S
24
Rabigh Refining & Petrochemical Co. (Petro Rabigh) was founded in 2005 by the Red Sea in the Kingdom of Saudi Arabia as a joint venture between Saudi Aramco and Sumitomo Chemical from Japan. The original 10-billion dollar Phase I of the plant is the world’s largest single-phase integrated refining and petrochemicals complex, making the company one of the Kingdom’s largest producers of polypropylene, polyethylene and mono ethylene glycol, and the sole producer of propylene oxide in the Middle East. The Phase II expansion, which came into full operation in early 2018, diversifies the product slate with new high value-added petrochemicals aimed at making the Kingdom’s downstream industry more competitive and affording potential investors the opportunity to manufacture new products and create new jobs and skills.
DECEMBER 2018
MIDDLE EAST
25
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Axens is a leading global
OIL REFINING
provider of technologies, catalysts, adsorbents, services and equipment.
PETROCHEMICALS
Axens solutions are used at major industrial plants around the world.
RENEWABLES & ALTERNATIVES WATER
SUCCEED TOGETHER
GASES
axens.net/blog
MIDDLE EAST
“ These are exciting times for Saudi Arabia. When I tell my friends about it back home in America, I feel like I’ve got a front row seat; it’s a major transformation in the Kingdom and these are fabulously exciting times. There are things going on in Saudi Arabia that are truly historical” — Michael Gustafson General Manager of Material, Procurement and Contracts
27
got a front row seat,” explains Gustafson. “It’s a major transformation in the Kingdom and these are fabulously exciting times. There are things going on in Saudi Arabia that are truly historical.” Petro Rabigh has responded to Vision 2030 by embracing all 24 areas highlighted in the vision to provide a thriving economy, a vibrant society and an ambitious nation for the Kingdom of Saudi Arabia. In order to meet these requirements, Petro Rabigh has rolled out a number of initiatives such as plans to increase women’s participation in the w w w.suppl yc ha i ndi gi ta l. com
PETRO RABIGH
to logistics and building relationships
FORMING KEY STRATEGIC PARTNERSHIPS
for additional direct foreign invest-
Establishing and maintaining key
ments. However, Gustafson insists
partnerships are vital to any success-
Petro Rabigh isn’t finished yet.
ful business. Over the last five years,
workplace, supporting improvements
“We could and will do more in the
Petro Rabigh has collaborated with
area of women participating in the
Germany-based logistics firm, DHL,
workplace; I just hired the first female
to provide all of its inbound logistics
secretary at Petro Rabigh and she’s
activities, in addition to operating its
doing a great job,” says Gustafson.
warehouses. However, having consult-
“We also have several women within
ed their Key Performance Indicators
the supply chain organisation and we
(KPIs), Petro Rabigh recently split the
intend to hire more in the future.”
contract with Kuehne & Nagel to
28
DECEMBER 2018
MIDDLE EAST
handle all of the company’s interna-
hip. DHL and Kuehne & Nagel are
tional forwarding activities.
two world class organisations and
“We’re very excited with this joint effort between the two
they’ve done a great job.” Gustafson affirms how much
companies. It will enable us to draw
Petro Rabigh relies on the consist-
on the strengths of each company
ent performance of its suppliers.
to ensure a smooth supply chain
“The notable suppliers that have
process,” says Gustafson. “They
been consistently reliable for our
are our two primary partners that
business include the likes of CS
we’ve got on the logistics side and
Japan, Gold Wing, Axens, Eable-
they’re absolutely essential to us.
Burgmann and SPIG. We’re highly
Our partners have to over-commu-
dependent on the performance of
nicate and be joined with us at the
these five outstanding suppliers/ 29
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Range of products and services
Mechanical seals for pumps
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Seal supply systems
Magnetic couplings
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Compression packings, Gaskets
Expansion joints
Special products
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MIDDLE EAST
vendors in particular, as well as to
investment opportunities to local
the other 1,200 active suppliers in
and foreign investors in conversion
our network.”
industries. Gustafson believes it’s
The introduction of Petro Rabigh’s
an ideal investment opportunity.
collaboration with Rabigh PlusTech
“This large scale, secure complex
Park saw it become the first private
also houses the Sumitomo Chemical-
industrial estate for conversion
run Rabigh Plastic Technical Centre
industries in Saudi Arabia. Located on
that provides tenants with technical
a site adjacent to the Petro Rabigh
support and training in plastic
refinery, it provides a place to convert
processing technology, warehousing,
petrochemical products into down-
plug and use utilities and feedstock
stream products and offer substantial
supply agreement opportunities for
31
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33
sustainable, competitive prices,” says Gustafson. “Rabigh PlusTech Park provides for 37 investors, including nine manufacturing companies that have started production, eight that are under construction and over 30 under negotiations.”
SUSTAINING A SUCCESSFUL FUTURE Petro Rabigh has begun to explore options to fully automate its warehouse operations and review the way they receive, monitor and move spare parts
“ Rabigh PlusTech Park provides for 37 investors, including nine manufacturing companies that have started production, eight that are under construction and over 30 under negotiations” — Michael Gustafson General Manager of Material, Procurement and Contracts
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MIDDLE EAST
$10bn Approximate revenue
2005
Year founded
3,600 Approximate number of employees
35
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How have we maintained top sales in the logistics equipment field since our founding in 1972? Chiba Sogyo has continued to support the distribution which is the core of our economic activities. Ever since our founding, we have constantly led the logistics equipment industry. “How can we satisfy customer needs to the greatest possible extent?” – To achieve this goal, we have accumulated knowledge and expertise, and then steadily incorporated this wisdom into our services. CS JAPAN CO., LTD 2-2-18 Tmasakinsi, Ichihara City, Chiba, Japan 2900044 Tel: +81-436-23-0511 Fax: +81-436-23-1611 www.csjapan.net kawarai@csjapan.net
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37
around. This ability to consistently adapt to change is something Gustafson places a lot of importance on. “In the area of supply chain, I believe we still have work to do in digital transformation,” explains Gustafson. “However, in other areas of the company there has been much more progress made, especially in operations.” “When things start to change, you’ve got to be able to adapt very quickly. Whether it’s changing your grades or
“ When things start to change, you’ve got to be able to adapt very quickly, whether it’s changing your grades or the type of product mix that you can develop” — Michael Gustafson General Manager of Material, Procurement and Contracts
the type of product mix that you can w w w.suppl yc ha i ndi gi ta l. com
PETRO RABIGH
Our Website Contact us DECEMBER 2018
MIDDLE EAST
39
develop. You’ve got to stay ahead. We’ve got a lot of big changes going on at
ongoing operations,” says Gustafson. “Our processes and practices must
the moment with climate change and
change and this will be enabled through
environmental conditions. And if we
the finalisation of the ARIBA implemen-
don’t change, then it’s going to hurt us.”
tation, integration with SAP and further
As far as the future is concerned at
digitalisation of the processes.”
Petro Rabigh, the company has lofty
“This is crucial for us to handle the
ambitions of becoming the best in class
increase in volume due to the expand-
in the Gulf Cooperation Council (GCC)
ed capacity of the operation. We must
within the next 18 months. “We have to
reduce the number of touches on work
deliver on the business expectations in
orders from procurement to pay with
two areas: 99% availability and on-time
seamless vendor integration through
delivery of materials to support the
the process.” w w w.suppl yc ha i ndi gi ta l. com
Tel +966 13 341 0515 | Fax +966 13 341 1052 | E-mail info@goldenwing.com.sa | www.goldenwing.com.sa
Golden Wing has been providing industrial solutions for the petrochemical bulk material and wrapping industry in Saudi Arabia for almost 40 years. The portfolio comprises the installation of total systems for filling, palletizing and wrapping as well as conveyor technology. From its history as an equipment supplier, Golden Wing grew into an EPC contractor. Bagging Machines Filling Machines Net/Gross Weighing Palletizing
Golden Wing glances back at the installation of well over 180 facilities in the Middle East and implements new technologies as a partner to the major industries. These include, for example, palletless stretch hood wrapping technology, in which the film itself is a shipping unit, transport security and weather protection - pallet logistics are dispensed with. A new dimension in system cost-effectiveness is opened up: with 60% savings in wrapping overheads and cost savings in the millions.
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MIDDLE EAST
41
Petro Rabigh also plan to begin to take steps to become a world-class service minded organisation that will enable the firm to provide exceptional customer service that goes beyond expectations.” “This can happen when we break down silos, over communicate to customers and provide proactive service levels with their absolute best interest in mind,” explains Gustafson. “We will do this through cross development opportunities with operations, by co-locating people closer to the customers they
“ Our processes and practices must change and this will be enabled through the finalisation of the ARIBA implementation, integration with SAP and further digitalisation of the processes” — Michael Gustafson General Manager of Material, Procurement and Contracts
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PETRO RABIGH
serve and rewarding people for delivering on their commitments.” Petro Rabigh also plans to increase its employee development, training and planning to ensure everyone successfully obtains their Certified Supply Chain Professional certification as well targeting an 85% or higher Saudization level and a 40% rise in the hiring of women. In addition, the firm expects to make a more deliberate effort in its supply relations and strategic sourcing. 42
“We will be conducting a major supplier recognition conference soon in order to build deeper, strategic relationships with key suppliers and vendors,” says Gustafson. “This will take time, but the idea is to personally visit our key suppliers for them to understand the direction we’re going, how they can optimally support and ways we can further collaborate together to meet the Saudi Vision 2030 plans.” With major changes incoming at Petro Rabigh and in Saudi Arabia itself ahead, Gustafson remains determined that the future is bright for the company in the next 18 months and beyond. DECEMBER 2018
MIDDLE EAST
“ The vision for the future is to continue to make the Material, Contracting and Procurement organisation a great place to work” — Michael Gustafson General Manager of Material, Procurement and Contracts
“The vision for the future is to continue to make the Material, Contracting and Procurement organisation a great place to work. We also envision becoming a leader in driving collaborative value through matrixed processes, creativity commercial acumen and focused commitment to the priorities that will make Petro Rabigh the most valuable company in the region.”
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43
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C P O C S C O S T R AT E G Y
46
IN THE DIGITAL TRANSFORMATION OF PROCUREMENT, HUMANS REMAIN FRONT AND CENTRE WRITTEN BY
DECEMBER 2018
OLIVIA MINNOCK
47
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C P O C S C O S T R AT E G Y
ANALYTICS AND CLOUD COMPUTING WILL FORM A KEY PART OF THE PROCUREMENT FUNCTION OF THE FUTURE, SAYS RICHARD POWELL FCIPS – BUT IT’S RELATIONSHIP BUILDING THAT REALLY MAKES THE DIFFERENCE
“
Tactical and reactive” is how Richard Powell, FCIPS would describe the procurement function when he began his career 25 years ago, then working in the manufacturing industry. “My role was mainly to respond to demand from the factory,” he recalls. “When I started to reduce the cost of the materials I would buy, the
48
business suddenly started to take notice.” As the economy has shifted – particularly in the UK – away from manufacturing and into the services sector, with business functions increasingly outsourced, Powell has noticed a shift in the scale of buying and the emphasis on supplier relationship management in order to maintain value for an organisation, as well as bringing innovation and competitive advantage, has grown. “Over that time as well, procurement has professionalised significantly both professionally and academically,” Powell adds. Far from an administrative and reactive back-office function nowadays, what then does Powell feel are the main skills for today’s procurement professionals? “The critical skill is relationships skills – it’s core for procurement DECEMBER 2018
“ It’s core for procurement professionals to understand the goals and objectives of the business and match up with the capabilities of the market” — Richard Powell, FCIPS, Procurement Consultant
professionals to understand the goals and objectives of the business and match up with the capabilities of the market.” This relationship building between three key elements – the internal stakeholder or client; the supplier; and the procurement function – requires the following element, according to Powell: “listening, bringing objectivity, listening, finding solutions, listening, using your imagination and, of course, a bit more listening”. With the function becoming increasingly professionalised, a mix of qualifications, soft skills and a genuine interest are all vital elements in making procurement work. “Mostly I’m looking for strong commercial acumen – I’m looking for that spark in people’s eyes. I want to see that ability and the hunger to go and deliver a deal,” says Powell. “In terms of w w w.suppl yc ha i ndi gi ta l. com
49
C P O C S C O S T R AT E G Y
qualifications, I always look for the
experience at work should be no
CIPS qualifications. Furthermore,
different. “The challenge for procure-
I always look for the examination
ment is to enable such an experience
route to ensure that the individual
as much as possible, while also enab-
has attained a particular level – that
ling key strategic relationships. It’s not
they’ve had to do a certain core set of
easy,” qualifies Powell.
examinations including the legal exams”. All functions within modern business
carry the caveat in the minds of many
have been transformed by technology
that soon automation will replace the
over the past few years, and proc-
human element – but professionals,
urement is no different. “Nowadays,
Powell among them, argue this is
there are tools available to do much of the procurement activity. It started out with linking the supplier database to the 50
Indeed, eprocurement and the like
procure to pay activity. This has emerged in some more sophisticated procurement functions as a full guided procurement, which enables the business to buy what they need, when they need it from the suppliers.” Powell adds that this selection of high-tech tools has now spread to the strategic procurement end, such as easy-to-use RFX tools. Increasingly, staff in organisations expect to be able to use technology within their job the same simple way they would be able to use it from the stakeholder perspective at home. For example, if a consumer can use Amazon to purchase items at home on a smartphone anytime, anywhere, their DECEMBER 2018
FACTS
Richard Powell was recently interim Chief Procurement Officer at UK telecoms giant TalkTalk, where he led the organisation’s spend reduction programme. Powell has over 25 years of experience in the procurement space and is currently director of his own procurement consultancy service, Powell Procurement Services Ltd, and is a fellow of the Chartered Institute of Procurement and Supply (CIPS). Powell is an advocate for the role of the procurement professional, and has most recently written an article entitled ‘Fly procurement, Fly!’ on the topic, which garnered significant attention online.
wildly overestimated, as the ability to build relationships will always be necessary. The march of digitisation will certainly take away the more monotonous and administrative tasks, but humans will always be vital to high value transactions. “Relationships are still required to provide innovation, bringing competitive advantage and assuring appropriate protections,� says Powell. “Busi-
51
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C P O C S C O S T R AT E G Y
ness today is fast paced, and without
analytics is vital and is presently being
a strong commercial team in place,
underutilised. “The skills to interpret
things can and will go wrong. My fear
that data are in high demand in any
is that procurement professionals
procurement function – and rightly.
themselves will start to rely on those
Insight into history and forecast
tools rather than vital interaction with
expenditure is gold dust to anybody
the suppliers.”
trying to create deals.” Using those
While this relationship management role involves seeking best value while keeping loyal suppliers on board, Powell argues this needn’t be seen as a problem, and successful relationships can in fact allow both parties to grow together. “I think it’s 52
a perceived conflict rather than a real one,” he explains. “In any business, it’s really about creating shareholder value. Furthermore, ongoing relationships and strong SRM allow the supplier to grow, bringing innovation and creating competitive advantage for the buying organisation.” In terms of the most vital technologies impacting supplier relations, Powell points to the advent of cloud computing. “It’s made access to systems easier and cheaper. Cloud computing has been a revolution and a revelation, since it means that the big upfront investments are no longer required.” In addition, Powell adds that data DECEMBER 2018
two technological advancements, as
“ Business today is fast paced, and without a strong commercial team in place, things can and will go wrong” — Richard Powell, FCIPS, Procurement Consultant
53
well as a strong commitment to
“The best procurement people I know
collaboration across the board, should
are the kind who the stakeholder
make for successful procurement as
always wants in the room,” he concludes.
modern business brings this vital
“They want them there because they
strategic function to the fore. “Every
know their market, they know suppliers.
procurement manager is actually a
They have relationship skills to be able
project manager when they’re doing big
to get things done. If you’ve got the
deals,” Powell explains, adding that the
right skills, then both the suppliers
most successful deals he has witnessed and the stakeholders appreciate the involved pulling together the central
value that they're adding.” It’s a value
functions of the organisations,
which, despite the rise of eprocure-
including finance, sales and business
ment and all things digital, you
development.
simply cannot buy on Amazon. w w w.suppl yc ha i ndi gi ta l. com
PROCUREMENT INSIGHTS
“ Procurement with purpose” 54
how SAP Ariba guides supply chain and procurement transformation Social, economic and environmental sustainability should be at the heart of supply chain and procurement transformation. SAP Ariba is perfectly positioned to guide companies in this noble direction WRITTEN BY
DECEMBER 2018
MARCUS LAWRENCE
55
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PROCUREMENT INSIGHTS
“
‘Purpose’ is no longer something that’s nice to have; it’s become a must-have strategic imperative that is high on every organisation’s
agenda if they want to be perceived as relevant, admired, and innovative by their customers, employees, investors, partners, communities, and public entities,” advises SAP Ariba in its latest white paper which outlines its commitment
to supporting its customers in their “mission to create a more purpose-based, equal, and nondiscriminatory world through partnerships with organisations such as a Made In A Free World, ConnXus, EcoVadis, Maplecroft, and UN Global Compact”. 56
Increased awareness of the negative effects of supply chains which fail to conform to modern ethical and sustainability standards has been a wake-up call for organisations around the world. Due to the rise of social media the pressure on brands to be seen to be operating ethically has risen exponentially as public opinion, both positive and negative, can go viral in an instant. SAP Ariba identifies the challenge for businesses as confronting how to “use their influence to improve the human, economic, and environmental impact of every organisation that their supply chain touches”. Defining this as “procurement with purpose” SAP Ariba believes purpose-led businesses can redefine the value chain by designing models that create value for all stakeholders, supply chains, communities, and the planet. “SAP Ariba is a purpose-driven DECEMBER 2018
57
business and we fundamentally believe it is our role to find like-minded companies and provide a platform on which they can work together to build ethical, sustainable supply chains and make the world a better place,� maintains the software giant’s President Barry Padgett. An historic focus on the most cost-effective solutions has built harmful trends in communities which are open to exploitation, including forced labour, dangerous working conditions, impoverishing wage structures, and damage to the environment. For example, the whitepaper makes note of charity w w w.suppl yc ha i ndi gi ta l. com
PROCUREMENT INSIGHTS
Amnesty’s accusation against tech
since 2015 - enough to cover 2,545
behemoths Apple, Sony, and Sam-
soccer fields about one metre deep.
sung for their failure to ensure their
Elsewhere, Adidas sold one million
suppliers in Africa are not making use
shoes made out of Ocean plastic in 2017
of child labour.
and The Coca-Cola Company, the 24th
The white paper warns that, in 2018,
biggest industrial consumer of water,
48.5mn people around the world are
has invested $2bn to reduce water use
living in slavery, and they are often
and improve water quality in the commu-
“working at the very bottom of the
nities in which it operates.
supply chain”, therefore focusing on
SAP Ariba is a signatory of the UN
ethical practices that cut slavery out
Global Compact and supports the 17
of the equation is paramount to eradicat-
United Nations Sustainable Develop-
ing this human tragedy: “In the old days,
ment Goals (SDGs) and Guiding
a CPO may have said, ‘I can save us 58
three percent on our annual purchases and streamline our supply base.’ But times have changed. Today, it’s the CPO who says, ‘I can lift a man, woman, or child out of forced labour,’ who ultimately moves forward.” The white paper highlights examples of major global brands leading the way to proactively drive purpose. 3M integrates sustainability into its innovation pipeline through its ‘Pollution Prevention Pays’ program, which aims to proactively minimise waste and avoid pollution. Apple, though criticised for its child labour lapses by the report, has diverted 625K metric tons of waste from landfills DECEMBER 2018
Principles on Business and Human
“SAP Ariba is a purpose-driven business and we fundamentally believe it is our role to find likeminded companies and provide a platform on which they can work together to build ethical, sustainable supply chains and make the world a better place” — Barry Padgett, President, SAP Ariba
Rights. It serves as the Patron Sponsor for the Decent Work in Global Supply Chains Action Platform for the UN Global Compact and believes that, to achieve these goals, organisations need an integrated approach implemented through partnerships and involving the private sector. SAP Ariba wants to lead the charge against unethical and unsustainable supply chain and procurement practices by “making procurement awesome”. Its three pillars of Social Sustainability (to champion human and workplace rights), Environmental Sustainability (to aid the delivery of energy and climate change), and
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59
PROCUREMENT INSIGHTS
Economic Sustainability (to support decent work and fair employment) form a focused framework for best practice. These pillars support the definition of what SAP Ariba calls a “triple bottom line” which the white paper recognises as being in tune with the desires of the modern consumer: “Not long ago most consumers bought products with little thought to questions like, ‘Where are these products made? What is the carbon footprint involved in manufacturing them? Who made them, and are these people being paid properly?’ Today, many 60
consumers want organisations to be transparent about their practices and considerate of all stakeholders. The triple bottom line concept accounts for this full cost of doing business. Adding the ‘people’ element of social responsibility to corporate bottom lines shifts the focus to the fair treatment of employees and favourable practices in the communities where organisations operate.” By driving responsible sourcing that focuses on ethical operations, safe workplaces, fair wages, and mitigation of emissions and plastic pollution, companies can have a significant, meaningful, and deeply positive impact on communities and environments around the world. To that end, SAP Ariba is continuing to develop and supply cutting-edge solutions that focus on supply chain transparency DECEMBER 2018
“What truly makes procurement awesome, and the power we hold so important, is the collective purpose of our profession – to build a community and figure out ways that we can work together to create more ethical supply chains, eradicate slave labour, and level the playing field for everyone” — Barry Padgett, President, SAP Ariba
and sustainable development goals. Supplier Risk and Lifecycle Management, Strategic Sourcing and Spend Analysis, and Commerce Automation (for touchless processing to remove paper and reduce carbon footprint) are just a small selection of the firm’s solutions enabling companies to zero-in on the most vital data to help build sustainable and ethical supply chains. Its E-Procurement software can mitigate risk while reducing buying cycles by 50%, cutting supply costs by 10% and lowering processing costs by 25-60% with market-leading innovations in guided buying and spot buy. Its solutions support the purpose-driven organisation by empowering them across industries to achieve corporate objectives around purpose. SAP Ariba can help companies utilise spend analytics to optimise purpose-related spend and diversity in the overall supply base, deliver source-to-contract tools that support supplier qualification and compliance verification based on inherent risk factors for each specific engagement. Offering supplier management with a risk and sustainability lens, they enable sustainability evaluation by third parties for environmental, forced w w w.suppl yc ha i ndi gi ta l. com
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PROCUREMENT INSIGHTS
labour, and other human rights violations. “What truly makes procurement awesome, and the power we hold so important, is the collective purpose of our profession – to build a community and figure out ways that we can work together to create more ethical supply chains, eradicate slave labor, and level the playing field for everyone,” reasons SAP Hybris president Alex Atzberger. With its suite of supply chain and procurement solutions, SAP Ariba offers firms the opportunity to identify and choose suppliers which can 62
simultaneously boost profits and make a positive difference. In quantifying the value of sustainability, the whitepaper notes a positive correlation between it and stock market performance. In reviewing 200 academic studies on sustainability and corporate performance, researchers at the Harvard Business Review found that of those 200 studies, 90% conclude that ESG standards lower the cost of capital, 88% show that good ESG practices result in improved operational performance and 80% show stock price performance positively correlated with good sustainability practices. This results in brands with ‘purpose’ in DECEMBER 2018
63 the market outperforming those without by three times. By focusing on ethics and sustainability via total transparency, companies can leverage the positivity of this image to build their brands as powers for good, encourage investment, mitigate risk both in terms of supply chain stability and public relations, and boost value for shareholders.
To find out more visit www.ariba.com/about/procure-withpurpose to download the white paper #makeprocurementawesome w w w.suppl yc ha i ndi gi ta l. com
T O P 10
64
DECEMBER 2018
Supply chain apps Supply Chain Digital presents the world’s Top 10 Supply Chain Mobile Applications for 2018 that are helping companies make their way in the modern marketplace WRITTEN BY
HARRY MENEAR
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T O P 10
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Kintone
Cost: $24 per user per month Kintone is a “Platform as a Service” application that uses a code-free drag-and-drop interface to allow users to collaboratively create online databases. Apps created through Kintone can be used for “Sales CRM, ToDo lists, Project Management, HR Recruitment Management and so on” in order to fulfill different needs at multiple stages of the supply chain. The app also boasts compatibility with pre-existing software systems within the supply chain, integrating “seamlessly” with AWS, as well as easily converting data documents into visually digestible presentation material.
www.kintone.com
DECEMBER 2018
67
EazyStock
Cost: Basic package – $660 per month EazyStock is a cloud-based inventory management and organisational tool. In order to increase efficiency, the app examines “bad stock” that is being undersold or has a low turnover, replacing it with products it identifies as “faster turning” items. Inventory managers using EazyStock, according to Fronetics, “can automate procurement and replenishment processes that historically were guesswork cutting into profit margins”.
www.eazystock.com
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T O P 10
68
Omnifocus
Cost: $60 per user Omnifocus is currently in its third edition, which has added several core features to its task management functionality. The app is a personal and/or company-wide planner, allowing tasks to be broken down by priority, grouped according to overarching “projects”, and synchronised across the IoT. The new Third Edition adds the “tags” feature, allowing users to prioritise and organise tasks by “person, energy level, priority, location, and more”.
www.omnigroup.com/omnifocus
DECEMBER 2018
69
Gas Buddy Cost: Free
Gas Buddy is a personal and business application that allows drivers to find the cheapest gasoline in the surrounding area. The app is constantly updated by its 12 million monthly users, and logs information concerning 150,000 retail locations in the US and Canada. According to EazyStock, “for fleets constantly hauling freight across the country, saving a few cents per gallon can add up quickly and produce some serious savings�. Gas Buddy is free and available on iOS and Android.
www.gasbuddy.com
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T O P 10
70
Nimble
Cost: Free Nimble is a Customer Relationship Management (CRM) application that allows users to track the identity, employment status, place of origin, income, industry, education, executive details, and contact information of clients and client companies. The app compiles this into a “Live Profile� which, according to EazyStock, also keeps track of the contacts in your network that you need to meet and who in your client base you need to follow up with. Nimble is available on Android and iOS for free.
www.nimble.com
DECEMBER 2018
71
Stock IQ
Cost: Basic package – $750 per month Stock IQ uses hierarchical forecasting, lead time calculations, and a vendor scorecard system to monitor and manage warehouse inventory. The development team promises 10-30% reduction in inventory reduction, due to increased efficiency and automation. A large measure of this increase in efficiency is due, according to SoftwareAdvice, to “StockIQ’s supplier management module is able to generate lead times calculated from actual receipt history, instead of simple fixed numbers or averages”.
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T O P 10
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Khula
Cost: N/A Khula was recently awarded MTN’s Business App of the Year Award. The application allows farmers to collectively connect to suppliers, forming “one big virtual farm consisting of multiple emerging farms to crowd-source and deliver on bulk orders from supermarkets, restaurant chains and for home delivery”. Khula is still in the pilot stage, in partnership with 200 farmers, according to ITWeb.
www.kulahub.com
DECEMBER 2018
73
Booksy-Biz
Cost: $25 per user per month Booksy-Biz is a comprehensive appointment-booking and client management application. The application provides solutions for customer-facing organisations, including: client self-service, calendar management, client management, business management, and point of sales. The self-service aspect of the booking management system increases productivity and client retention by ensuring appointments can be booked outside of business hours.
www.booksy.com
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T O P 10
74
Scandit: Computer vision and augmented reality for enterprise applications
DECEMBER 2018
Scandit
Cost: N/A Scandit improves the efficiency of inventory management through its innovative barcode scanning software. While most barcode or QR code scanners require a perfect scan, Scandit’s algorithm compensates for low light or imperfect image capture, making inventory organisation quicker and eas-
75
ier. According to EazyStock, “Scandit is also enabled with cross-platform capabilities, allowing easy sharing of data across other smartphones, tablets, and computers.” Leading companies and brands Shell, Sephora, Louis Vuitton and Macy’s use the service, for which costs vary, depending on the scale of purchase.
www.scandit.com
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T O P 10
Logistimo Plus Cost: N/A
Logistimo Plus is a supply chain and logistics solutions app designed to help companies in “rural, emerging markets” according to Fronetics. The app helps provide retailers, transporters, and distributors with accurate, up-to-date reports of orders sales, pur76
chases, and other on-demand information. Logistimo prides itself on its simplicity, with an intuitive interface that allows “highly trained professionals to semi-literate first-time users of mobile devices” to be trained in as little as 15 minutes. The application’s software is open source, aiming to increase its reach even further beyond the 100,000 beneficiaries in emerging markets worldwide.
www.fronetics.com/tag/ logistimo-plus
DECEMBER 2018
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Logistimo Plus: RFID and QR Code for order tracking and fulfillment
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EVENTS & A S S O C I AT I O N S
The biggest industry events and conferences WRITTEN BY JAMES HENDERSON from around the world
26–28 FEBRUARY 2019
24 JANUARY 2019
Japan Supply Chain Summit 78
Biologistics World Asia 2019 [ SINGAPORE ]
Biologistics World Asia is the only event
[ TOKYO, JAPAN ]
in the Asia-Pacific region that focuses
Learn the latest and best practices for
on logistics and supply chain of biop-
improved supply chain and logistics
harmaceuticals! The event will bring
performance in Japan. In just one day,
150+ high-profile attendees together to
acquire the latest knowledge and the
discuss, debate and brainstorm on the
most effective techniques to grow
most pertinent issues affecting the
your supply chain, manufacturing,
biopharmaceutical logistics network.
logistics and distribution capabilities
Meet key Supply Chain, Logistics, Dis-
in Japan. This summit will draw upon
tribution, Procurement, Validation, &
the experience of leading companies
Quality stakeholders from International
to explore how a cross-functional
and Regional Biopharmas, BIG Phar-
supply chain team can enhance com-
mas, Biorepositories, CROs, Solution
pany results in Japan. Along with top
Providers, Academic & Research Insti-
experts, high-profile speakers and top
tutes and Government & Regulatory
practitioners will be invited to share
bodies across Singapore, South Korea,
their views on managing supply chain,
Taiwan, Japan, Australia, India, Indone-
procurement and logistics in Japan.
sia, Malaysia, and China.
Click to view website
Click to view website
DECEMBER 2018
13–14 MARCH 2019
Temperature Controlled Logistics in Biopharmaceuticals Europe 2019
Procurex Ireland
[ MILAN, ITALY ]
Procurex Ireland would like to thank
The Temperature Maintenance of Phar-
all partners, sponsors, delegates and
maceuticals in Distribution returns to
exhibitors for their involvement this
Milan, Italy- for its 15th Annual edition
year which has helped make the event
after an extremely successful 2018
a success once again. Throughout the
event. It promises to be its biggest and
day hundreds of delegates enjoyed
best to date with an event more diverse
the free training opportunities and the
range of parties and topics to be
wealth of innovation shown in the
included! This will be your one-stop
Product Showcase. Held in Dublin,
shop to all solutions to mitigate faults
Procurex Ireland brings together the
within the cold chain for a more stream
largest annual gathering of pan-sec-
lined and cost effective supply chain.
tor public procurement professionals
Whether you are from a small biotech or
and market leading suppliers, from
a large pharma company this event will be
both the Republic of Ireland and
the perfect platform to share challenges,
Northern Ireland, who contribute to
network with over 400 industry peers
the ongoing delivery and strategic
and hear informative case studies from
development of a combined annual
leading pharmaceutical companies.
spend of over â‚Ź12bn.
Click to view website
Click to view webiste
04 APRIL 2019
[ DUBLIN, IRELAND ]
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79
EVENTS & A S S O C I AT I O N S
25–26 APRIL 2019
American Supply Chain Summit 2019 [ DALLAS, TEXAS, USA ] The American Supply Chain Summit is a leadership focused meeting designed around improving supply chain and procurement strategy across the globe. The Supply Chain to exchange ideas and collaborate on
Total Supply Chain Summit
the impact of market dynamics and
[ HEYTHROP PARK, OXFORDSHIRE, UK ]
new technologies for current and
A highly focused event that brings
future supply chain & operations lead-
together logistics professionals and
ers. This year’s Summit creates an
key industry solution providers, the
opportunity to examine key case stud-
summit consists of one-to-one busi-
ies on how workforce management,
ness meetings, interactive seminars
advanced analytics, process improve-
and valuable networking opportuni-
ment and automation are being rolled
ties; in less than two days. The Total
out in the world’s best facilities. Join
Supply Chain Summit is specifically
the in-depth discussions on achieving
organised for senior professionals
innovation, maximizing supply chain
who are directly responsible for sup-
profitability and increasing visibility
ply chain within their organisation,
and flexibility to mitigate risk..
and those who provide the latest and
Click to view webiste
greatest products and services within
Summit serves as an annual platform 80
20–21 MAY 2019
the sector.
Click to view website
DECEMBER 2018
25–27 JUNE 2019
18–20 AUGUST 2019
Supply Chain & Logistics Summit and Expo 2019
Scope Supply Chain Conference
[ HILTON ANTWERP, BELGIUM ]
A unique engagement
[ ATLANTA, USA ]
Discover the latest
500 companies and
North America’s Most
insights in supply chain
emerging mid-size enter-
Senior-Level Supply
management. With a
prises. 250+ Influential
Chain Event. The Supply
solid track record of
Peers. Benchmark and
Chain Summit 2018 is the
delivering Directors and
network with the movers
meeting place for the
C-Suite Executives, the
and shakers of supply
forces of innovation,
EMEA Supply Chain &
chain. 30+Thought
transformation and con-
Logistics Summit & Expo
Leaders. Learn from the
nectivity that will
is one of the most estab-
best in the field and walk
fundamentally reshape
lished events of its kind
away with actionable
the supply chain industry
in Europe. Now in its 21st
insights. 60+ Leading
over the coming years.
year, it is a highlight in the
Solutions. Meet only the
Join us in Atlanta on June
calendar where world-
solution providers most
5 - 7 and decide the future.
class organisations meet
relevant for your projects
800 Attendees, 200 Man-
to maximise efficiency
and initiatives. 2.5K Con-
ufacturers / Retailers,
and minimise costs
nections. Unparalleled
100+ Educational Ses-
through supply chain
networking opportuni-
sions, 80 C-Level
strategies of the future.
ties with high profile
Speakers and 6 Keynotes.
Click to view website
industry leaders.
10–12 JUNE 2019
Supply Chain Summit
Click to view website
[ RED ROCK, LAS VEGAS ] opportunity with Fortune
Click to view website
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82
CUSTOMER CENTRICITY IS KEY TO ROSS VIDEO’S PERFORMANCE TRANSFORMATION WRIT TEN BY
ANDRE W WOODS PRODUCED BY
ARRON R A MPLING
NORTH AMERICA
83
ROSS VIDEO
Broadcast media company Ross Video has an extensive procurement department that delivers end-to-end services to a global client base… We speak to Bill Pulcine, Vice President of Supply Chain Management, to find out more 84
T
he supply chain organization at live production equipment manufacturer Ross Video is
“laser-focused on meeting the needs of our customers”, according to Bill Pulcine, Vice President of Supply Chain Management. “I think the fact that we’ve grown about 500% over the last 12 years, and have been able to integrate other manufacturing facilities from around the world into Ross Video’s Canadian manufacturing location, is an exciting and compelling story.” In the electronics world, it’s increasingly rare to find companies that do a substantial
DECEMBER 2018
NORTH AMERICA
Ross Video’s manufacturing facility in Iroquois, Ontario, Canada 85 amount of their own build. Subcontracting and offshoring have been constant trends in the electronics industry for the past two decades. Ross Video, however, bucks that trend. “The reason the Ross model still works so well,” says Pulcine, “is that we’re very high mix, low volume across a mixed model of manufacturing disciplines. Having our own shop allows us to be vertically integrated and also gives us the crucial ability to have direct control of quality.” Ross Video sells solutions in the broader sense and from a manufacturing angle offers a huge range of equipment to broadcasters, stadiums and arenas, as well as other vertical markets.
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NKK Switches (NKK) is a world leading designer and manufacturer of innovative electromechanical switches. By designing, producing and selling the industry’s most extensive selection of electromechanical switches, NKK sets the standard for quality, stability and reliability in switch solutions. NKK provides comprehensive full-service solutions to include system design, programming and value-added support by combining over 65 years of expertise and a true commitment to our partners’ success.
ROSS VIDEO
SUPPLY CHAIN STRATEGY Ross Video started life in Montreal back in 1974 and soon after established a manufacturing base in Iroquois, Ontario, Canada. As the televisual and media landscape changed, Ross and its procurement space moved with it. “It’s an interesting market. I think part of the reason we’re successful and have been able to have this dynamic manufacturing setup here is that we service a quite specific market,” says Pulcine. “It’s not consumer goods. Scale is a very popular term these days but it 88
is not always the biggest concern when you are making very high-value, application-specific products. We’re not selling a billion units, and what we do make is highly variable. Approximately 45% of our business is essentially driven by printed circuit board assembly (PCBA), and we manufacture roughly 300 different PCBAs. There’s also a large amount of mechanical assembly and server-based products where melting solder isn’t a significant element. In a recent 12-month period we shipped over 2,000 different products on over 7,400 different orders to over 3,500 different end users in 98 different countries. To put DECEMBER 2018
NORTH AMERICA
CLICK TO WATCH : ‘ROSS END-TO-END VIRTUAL PRODUCTIONS WORKFLOW DEMONSTRATION’ 89 that in perspective, Apple currently makes about 27 products,” he adds. “You can’t run a business like this without a skilled and dedicated team. We have a very experienced group here that knows and understands both the specifics of Ross Video’s business needs and the requirements and dynamics of the electronics manufacturing industry in a broader sense.” There are three main categories of inputs that Ross Video procures. According to Pulcine, a lot of parts are built to a required
The Ross Video Supply Chain Management Team
specification or drawing. “Mechanical pieces such as those used in our robotics w w w.suppl yc ha i ndi gi ta l. com
www.smithweb.com
F
ounded in 1984, Smith sources, manages, and distributes the electronic components that go into everything from mobile phones and computers to appliances and directional drilling systems. In 16 cities around the world, from Silicon Valley to Seoul, Smith’s legion of employees communicates in 50 different languages and dialects and buys and sells components 24 hours per day, with global annual sales exceeding $1.5 billion. Smith is always moving: helping manufacturers navigate market shifts; customizing supply chain solutions; testing components using cutting-edge technology. With testing and logistics hubs in Houston, Hong Kong, and Amsterdam, Smith’s processes focus on critical issues, from quality management to counterfeit prevention and environmental safety. Smith’s operations, purchasing, and sales worldwide are seamlessly integrated with the company’s global IT infrastructure, offering real-time inventory and logistics visibility anywhere in the world.
Smith is the leading independent distributor of electronic components and ranks number eight among all global distributors. Smith’s Intelligent Distribution™ model adapts to ever-changing demands by providing reliable global electronics sourcing and logistics, regardless of distribution channel or locale.
ROSS VIDEO
products, or the bare-boards that are used in printed circuit board assembly, are our designs. We own them and there’s competition for our business from around the world. These items are built to print, and reflect the diversity of the finished products we sell. Once again, it’s high mix, low volume for these suppliers.” On the other side of the coin, Pulcine and his team are buying other people’s designs, such as semiconductors and interconnect components. “We use the 92
famous names that people who know electronics would recognize; the same manufacturers are found in telecommunications products, computing and
Left to Right: Sandra Miller; Stockroom, Jamie Lake; Purchasing, Melanie Talia; Quality and Materials, Bill Pulcine, Deborah Dougherty; Export Compliance, Logistics, Order Entry, Order Management, Brad Somers, Master Scheduling/Planning
so on. In total, we are using over 5,000 different components from over 500 different manufacturers across our
electronic component manufacturers
current portfolio. These numbers have
who will sell direct to us, but they’re
doubled over the last six years as Ross
largely the exception. It’s a complex
Video’s product offerings have expanded.
ecosystem, really.” Ross Video uses
Most of the manufacturing suppliers
many distribution companies including
involved do not sell direct to compa-
NF Smith & Associates which operates
nies like Ross, but sell via a layer of
out of Houston. NF Smith deals in a
distribution. Ross uses a combination
massive line of electronic components.
of the largest international electronics
Smith has helped Ross Video keep
distributors and smaller niche players,
up to date with current component
where appropriate. There are some
price and demand trends in the supply
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S U P P LY C H A I N
93
chain and is one of several key
important part of procurement strategy
suppliers, they are especially strong in
and helps us secure parts ahead of
the embedded computing space. “They
shortages. Smith also runs inventory
send us a monthly market intelligence
management and logistics programs for
report with details on key component
us. These programs help us consolidate
outlooks, shortage situations, and
our warehouse and shipping needs. We
manufacturer news,� Pulcine explains.
use Smith as a central pull location for
“As a global independent distributor,
components which helps us increase
Smith obtains market conditions from
operational efficiency and ensures our
its vast network of direct and indirect
supply chain runs smoothly. We have
sourcing channels. This report is an
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distributors. Smith is among the most
solutions derived from hundreds of
flexible to work with.”
individual cards from dozens of
Finally, Ross has a multitude of OEM
94
companies. This cooperative effort
agreements in place. “Given the
gives users best of breed product and
diverse needs of our customer base, it
budget options, all while ensuring
doesn’t always make sense to design
common control and monitoring within
and build every element ourselves,”
the Ross DashBoard ecosystem.
says Pulcine. Ross has taken the OEM
Pulcine elaborates; “This means that
model a step further with its Emmy®
openGear partner companies can
award winning openGear® platform,
design and sell products (PCBA’s) that
part of the Infrastructure product line.
work in the Ross openGear frame. This
openGear is the industry standard
is unique. Competitors in this vertical
platform of choice for modular signal
typically deliver solutions that are
processing equipment. As the world’s
exclusive to their products. You can’t
first modular platform open to other
put anyone else’s product in their frame.
manufacturers, openGear provides
The Ross openGear solution gives the
An Acuity A3M switcher, part of Ross’ flagship Acuity line, features switches that Ross helped develop with NKK
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customer a lot more choice and allows the platform to evolve rapidly”. Ross works closely with other companies to develop the elements required to realize its product vision. CEO David Ross has worked extensively with NKK to develop componentry for Ross products. “NKK is a Japanese firm that develops control switches – the human interface into our flagship product line of production switchers. That’s a good partnership because we don’t own that design. We don’t own that technology. We’re not capable of making these switches – nor do we want to be – but we worked very closely with the manufacturer to develop the
“ It’s an interesting market. I think part of the reason we’re successful and have been able to have this dynamic manufacturing setup here is that we service a somewhat limited market”
— Bill Pulcine, Vice President of Supply Chain Management, Ross Video LTD
product that meets our needs.” As technology evolves, so does the company’s procurement strategy. “If
make the supply chain better on all
we’re using company X’s semiconduc-
fronts. Sometimes that means intro-
tors, and then company Y comes out
ducing new competitive elements to
with a better one, and we’re in a design
the situation. You might be reasonably
cycle where we can pick up the better
happy with your supplier or suppliers,
one, we’re going to do it. It doesn’t
but that shouldn’t stop you from
mean that you end the relationship and
pushing to see how the situation might
never go back, because a lot of these
be improved. That may mean looking at
technology companies leapfrog each
competitors. We certainly value our
other. Their positions might change
suppliers and give them every opportu-
every six months to a year. There’s
nity to compete and maintain their
certainly a balancing act in trying to
business, but not in a laissez-faire way. w w w.suppl yc ha i ndi gi ta l. com
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CLICK TO WATCH : ‘ROSS XPRESSION REAL-TIME MOTION GRAPHICS OVERVIEW’ 96 We need to do this to be competitive and to drive value for our customers.”
GROWTH THROUGH ACQUISITION Ross Video has experienced rapid growth through the strategic acquisition of other companies and this directly affects the procurement function. “We have never acquired a company that was more than 10% our size,” Pulcine explains. “That said, we have made many strategic acquisitions that really changed Ross. We quickly went from two product lines to twelve. Buying up these other companies has expanded our ecosys-
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tem. It’s still live production but not always the same customer base and often different verticals in that market.” According to the acquisition philosophy of CEO David Ross, the incoming products need to “touch the edges of the current product lines”. For a long time, Ross Video was known as a production switcher company before it then expanded into another part of broadcasting known as ‘infrastructure’. Together these two lines defined Ross Video in the
The XPression hardware that enables Ross’ graphics solutions
market for many years. Subsequently, the company became very big in character generators – the software that enables graphics to appear on screen during live broadcasts – following the acquisition of a startup. “You might be watching a sporting event and one of the players makes a big play. A graphic will then appear in the corner with his headshot and some statistics about how they’ve been doing, such as ‘Averaging 0.78 goals per game this season’. Well, that
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ROSS VIDEO
graphic has to be called up by an
or augmented reality elements
operator. The format of it will be
to broadcasts and help make programs
pre-canned, so to speak, but it’s
more visually interesting and compel-
produced on the fly in a live situation.
ling. Nine years after entering the
We have some very sophisticated
market Ross is now arguably number
software that allows you to create and
one in broadcast graphics.�
change the look of on-screen graphics in real-time, and add very sophisticated
A SHIFT IN STRATEGY
animations and effects. Taking this
That acquisition brought a whole
concept further, we can also add virtual
different manufacturing and supply
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chain challenge to Ross Video’s
acquisition was key to sparking a major
traditional PCBA-based work as it
spurt of growth in the company.”
began manufacturing servers specifi-
Soon afterwards, Ross bought
cally engineered for the broadcast
another two companies that manufac-
market. “We buy commercially avail-
tured products related to its Infrastruc-
able, high-end motherboards, CPUs
ture product line. “They weren’t so much
and disc drives, and assemble them
competitors as complements to our
to make a custom-built application
existing product lines, and this again
specific server that is uniquely a Ross
expanded our reach. One company
product. The XPression graphics
was manufacturing video routers in
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ROSS VIDEO
Australia. The other company was manufacturing products mainly focused on embedding data into broadcast transmissions and was based in Ottawa. Again, the acquisitions touched on the edges of the pre-existing products and we added routing and data insertion to our range of solutions.” Another product range Ross wanted to offer its customers was camera robotic systems. Robots are used in broadcasting to allow one person to control multiple cameras, as opposed to having an operator at every camera. “You can create more sophisticated and visually interesting camera moves with a 100
robot, so it’s an attractive solution for content producers. We acquired two robotics companies; one in Belgium, which was a small but fast-growing business, and one in California, which was a little more
Robotic products, such as the Furio pictured here, drove another significant expansion of Ross’ product line and underlying supply chain
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C OMPA N Y FA C T S
• Ross Video provided the equipment, including Vision Production Switchers and SoftMetal Video servers, that were used extensively by the host broadcaster at the Vancouver 2010 Olympic Games
established and had a longer track record.” This foray into camera robotics brought its own challenges to the supply chain team. “As you can well imagine, the supply chain to build a robot is completely different to the supply chain for building a server or making printed circuit boards. The challenges in the internal manufacturing processes are also completely different, as they were when we moved into embedded computing. Robots introduced a significant mechanical engineering challenge to the Ross team and, again, the capabilities of the supply chain organization had to morph to include a different supply base. As you can tell, all of these things are still related to live broadcast, so it’s still the same customer base.” “We concentrate on quality, service and cost, which is not a revolutionary approach. Lifecycle management is extremely important, because of the heavy investment Ross chooses to make in R&D in order to stay at the forefront of our market. Significant product improvements require significant change management and new product introduction. New product w w w.suppl yc ha i ndi gi ta l. com
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ROSS VIDEO
introduction is much smoother when third parties such as subcontractors are not part of the equation. Inventory has a reputation of being evil, but the fact of the matter is that inventory is either what you make or what you bought to be able to make what you make. If there’s hardware in your product, inventory is what you sell – so why is it considered to be so evil? Inventory allows us to be responsive to our customers’ needs. We have the best lead times in the industry and this is a definite competitive advantage. Inventory only becomes evil when it loses its ability to turn into revenue. Our customers 102
need us to support them for typically ten to twenty years. You don’t make substantial purchase decisions without the expectation of long-term support. This adds another significant layer of complexity to supply chain management.”
GLOBAL PRESENCE AND THE SUPPLY CHAIN “Our presence in Europe, the Middle East, Africa, Asia Pacific and Latin America has increased dramatically. Over the last decade, we have moved from selling less than 20% of our solutions to these markets to now selling 50% to countries outside North America. When we talk about supply chain here, we think of it as an end-to-end fulfilment entity, not just procurement. Yes, Ross Video’s DECEMBER 2018
“ Over the last decade, we have moved from selling less than 20% of our solutions to these markets to now selling 50% to countries outside North America” — Bill Pulcine, Vice President of Supply Chain Management, Ross Video LTD
NORTH AMERICA
C OMPA N Y FA C T S
• Ross Video Provides the switchers that are used by top music acts, including The Police, Bruce Springsteen, The Rolling Stones, The Who, The Red Hot Chili Peppers, Korn, Blink 182 and Rush, to run video for concerts when they’re on tour
supply chain team buys the parts, but we also manage the inventory, plan the shop build schedule, and coordinate configuration activities with the shop floor. We work closely with R&D, Sales and Marketing to manage product lifecycle. We take customers’ orders and provide them with acknowledgement of the order and a promise of delivery. We work in concert with the customer to handle the logistics of getting the goods to the end destination. It’s quite complex when you have thousands of different inputs into thousands of different outputs, sold to thousands of end users in almost every country in the world.”
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Brown-Forman 104
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105
WRIT TEN BY
L AUR A MULL AN PRODUCED BY
ANDY TURNER
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BROWN-FORMAN
Brown-Forman may be better known for its iconic repertoire of spirits and wines, but the American company is also earning its stripes as a digital trailblazer
F 106
rom Jack Daniels to Woodford Reserve, Old Forester to Canadian Mist, today Brown-Forman’s brands
are a mainstay of any bar or cocktail cabinet. The American wine and spirits company was founded almost 150 years ago when the founder, George Garvin Brown, created Old Forester, a brand that is often cited as America’s first bottled bourbon – and it seems that this pioneering approach is still present today. The century-old company is keen to preserve its long-lasting legacy but it isn’t naïve enough to think that the alcohol market will be untouched by the latest wave of digitization. In fact, Brown-Forman has put its weight behind a root-and-branch digital transformation that hopes to cement its brands as household favourites for years to come.
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“ We look at every employee as a tremendous brand builder” — Tim Nall, Senior Vice President and CIO at Brown-Forman
107
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BROWN-FORMAN
The skill to make things work.
The savvy to make things bloom. IT solutions to help design and implement new technologies. Managed services to help support and maintain your IT department. Deep knowledge, creativity and experience. When you need forward-thinking solutions, there's only one provider to think about: Data Strategy. data-strategy.com
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109 With over 18 years of experience at Brown-Forman under his belt, this job has fallen partly into the capable hands of Tim Nall, Senior Vice President and Chief Information and Data Officer (CIO/CDO). With an acute understanding of the inner workings of the American company, married with a continuous improvement mindset, Nall and his team have ensured that IT no longer plays a back-end function but rather is a key strategic driver of Brown-Forman’s operations. “Brown-Forman used to be a traditional place where IT was viewed as a back-office function,” observes w w w.suppl yc ha i ndi gi ta l. com
BROWN-FORMAN
Nall. “But a few years ago, we began to look at what tools Brown-Forman needed to really advance in this data economy. We began to view IT as an enabler and business partner, a function that could provide true solutions not just for the back office but for production teams, sales teams and marketing teams.” This has been a seismic shift in mindset for Brown-Forman, but it is undoubtedly an essential step for any company wanting to remain at the top of its game in today’s digital economy. Storytelling and brand building are the 110
backbone of a successful food or beverage brand, and it is a skill which Brown-Forman has honed for decades. “We absolutely believe the consumer is king,” observes Nall. “Our ultimate goal is for our consumers to understand our product – we want them to make educated choices, we want them to be fans of our brands.” How best to connect with these consumers is a pressing question for any food and beverage business, and Nall believes that technology could be a key part of the solution. “Whether you’re communicating on social media with that consumer, whether you’re creating interactive tools for that consumer, how you’re targeting that consumer – it all requires technology,” he explains. DECEMBER 2018
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CLICK TO WATCH : ‘WHO IS BROWN-FORMAN?’ 111 Over the past few years, the Jack Daniels maker has implemented a slew of technologies to become a more digitally savvy firm. These include everything from cloud-based productivity and collaboration tools to a modern data stack. “First, we realized our existing data stack was not adequate enough for us to really gather, harmonize and interrogate our information. We knew we had to modernize, so we started looking for a modern data ingestion platform that our employees could leverage and we settled on Talend as our partner working with the Talend Data Fabric,” explains Nall. “We knew we also wanted a modern, robust w w w.suppl yc ha i ndi gi ta l. com
BROWN-FORMAN
“ We want our consumers to know the stories behind Brown-Forman. We want them to engage with us so that we can tell them about Old Forester, the first bottled bourbon. We want them to understand our recipes so that they can create the perfect Manhattan” — Tim Nall, Senior Vice President and CIO at Brown-Forman 112
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warehouse for all this information to go into so we chose to work with Cloudera. Then we asked ourselves how our employees and our partners would really interrogate and examine the information that we give them. We wanted to ensure that we had modern toolsets out there as well, so we looked at different products and settled on Tableau as our visualization platform and RStudio as our analytical, statistical modeling platform.” Through these cutting-edge technologies, BrownForman has sought to democratize
113
data and its analytics so that employees from all departments can utilize this for their own ad hoc analyses every day. Gaining the data is only the beginning. For this tool to really earn its stripes, Nall points out that you need to gain true insight and analysis of the figures. “We’re always cautious to say that, in a way, the data isn’t doing anything,” he explains. “It’s the insights we’re gleaning from the information that are important. Data without analysis is wasted money. We’ve transformed how we look at the information; it’s w w w.suppl yc ha i ndi gi ta l. com
BROWN-FORMAN
surfacing new ideas that are really driving positive action within the company.” At Brown-Forman, data has been the bread and butter of the company’s digital transformation and it’s helping to deliver insights that drive tangible, real-life results, such as more informed pricing decisions. “It’s helped us see how our competitors are moving with regards to their price and how that affects us. Over the past few months, we’ve been rolling out a revenue management application globally that’s been well received,” explains Nall. Data analysis 114
$3.25bn Approximate revenue
1870
Year founded
4,600
Approximate number of employees
has touched every corner of the American company, including the heart of its operations: its production division. “We worked closely with the production organization and we saw that there
well known for its captivating market-
were issues that data analytics could
ing efforts but the company has taken
help resolve. Using data, we’ve taken
this one step further with its use of
a hard look at our barrel yield to see
data technology “We’ve engaged
what issues could be affecting it.
with partners like Salesforce to help us
Leveraging a lot of internal information
provide modern toolsets, and we’ve
and even external information like the
also looked at exact target marketing
temperature and other variables, we’ve
and consumer journeys so we can
provided dashboards that are really
better communicate with our customers
helping our production partners better
and deliver a better experience,” says
manage and forecast barrel yield.”
Nall. The wine and spirits firm has also
With its quintessential southern
made its first foray into chatbots and
American charm, Brown-Forman is
has used SMS text engagement at its
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115
distillery tours. Additionally, as a sponsor
employees but are also viewed as
of the Kentucky Derby, Brown-Forman
brand ambassadors. “We look at every
says it can use a balance of marketing
employee as a tremendous brand
and data analytics to track whether
builder,” observes Nall. “We want our
event promotions have been effective
consumers to know the stories behind
and to forecast the success of its
Brown-Forman. We want them to
future campaigns. This, in turn, helps
engage with us so that we can tell them
marketing dollars go further and
about Old Forester, the first bottled
increases brand awareness.
bourbon. We want them to understand
The biggest tool for marketing, though,
our recipes so that they can create the
is undoubtedly Brown-Forman’s team.
perfect Manhattan. I think that’s the
With a 4,600-strong workforce world-
real benefit for the consumer: they get
wide, teams are not only seen as
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BROWN-FORMAN
We view data and analytics as playing a significant role in our future successes.” Over the past decade, technology has undoubtedly revolutionized the customer experience. With a few swipes and taps of our devices, we can get the goods and services we want when we want them. Today’s consumers expect their experience to be seamless and indeed today’s workforces are no different. “Just like we want to understand the expectations of our consumers, we also want to understand the expectations 116
our employees,” Nall adds. “Our employees expect a consumer-like experience.” Making working life simpler for staff in over 160 countries is not an easy feat, but by leveraging trailblazing technologies and processes Brown-Forman is hoping to bridge geographical gaps and bring its teams closer together. “Whether it’s regarding their paycheques, their communications or their training, we want to make sure that it’s delivered seamlessly and that our employees have a great DECEMBER 2018
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118
experience with it. We want to make sure
borders and time zones,” says Nall. As
that all our 160 countries are connected.
a Salesforce customer, Brown-Forman
You could do that by hopping on aero-
has not only adopted the firm’s customer
planes but that can be very costly and
relationship management (CRM) tool
so we are leveraging modern technology
globally, but is also using its Chatter tool
to help connect our team.”
that allows employees to keep in touch.
Pushing for better communication,
“Our employees are used to tweeting
Brown-Forman quickly got on board
and using instant messaging apps in
with cloud technology like Google’s G
their personal life so Chatter gives that
Suite platform and Cisco’s Webex tool.
to them professionally,” he adds. “It really
“We believe these tools help eliminate
allows all of these employees just to
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“ We definitely believe that technology isn’t a solution, but it’s an enabler for change” — Tim Nall, Senior Vice President and CIO at Brown-Forman
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BROWN-FORMAN
“ Data without analysis is wasted money” — Tim Nall, Senior Vice President and CIO at Brown-Forman
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stay connected despite the time zones.” As more and more technologies come to the fore, it seems it’s an exciting time to be in the alcoholic beverage space. However, Nall is keen to point out the saying ‘if you have a hammer, everything looks like a nail’ – that is, if a business relies too heavily on particular tools it may miss out on the perfect solution or idea. Instead, he suggests: “When we think about digital we always think about our stakeholders, our employees and our consumers. We definitely believe that technology isn’t a solution, but it is an enabler for change.”
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Emaar, The Economic City: building a city of the future WRIT TEN BY
CATHERINE S TURM AN PRODUCED BY
HE Y K EL OUNI
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EMAAR, THE ECONOMIC CITY
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In order to build the largest privately-owned city in the world, Emaar, The Economic City has undergone a significant procurement transformation
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A
Tadawul-listed real estate development and management company, EEC’s primary focus
is the planning and development of KAEC. When it launched its successful IPO in July 2006, EEC made history: more than half of the Saudi population subscribed. EEC is headed by Emaar Properties PJSC and a number of high-profile investors from Saudi Arabia. KAEC focuses on five essential sectors, including logistics, non-oil industries, leisure and tourism, quality
MIDDLE EAST
of life “real estate development� and,
consultants and suppliers to the new
finally, youth support.
city to facilitate its ongoing growth.
Building more than 10K residential
Situated on the coast of the Red Sea,
properties, the company has devel-
the new city, named King Abdullah
oped six residential neighbourhoods
Economic City (KAEC), has become
outfitted with the highest standards of
the largest privately funded new city
facilities designed to suit all types of
worldwide. Spanning an impressive
residents. EEC is passionate about
181mn square meters the area is the
building a city for the future. Working
home to 30 tourism projects, 10 of
with partners, such as Creet Contract-
which are already operational, such as:
ing who are currently undergoing the
The Royal Greens Golf and Country
second phase of building the local
Club and Bay X Conference and
village, EEC has moved contractors,
Entertainment center, with 20 other 125
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YOU START... WE DELIVER EMAAR, THE ECONOMIC CITY
DESIGN & BUILD TURNKEY TURNKEY CONSTRUCTION MEP CONSTRUCTION MIDDLE EAST
Mission Maximising our long term benefits by satisfying customers’ needs through value added design, construction and project management services.
Vision To become the quality leader in KSA, and the preferred choice by our current and future clients, in all the business sectors we are specialised in,
VISIT OUR SITE CONTACT US DECEMBER 2018
MIDDLE EAST
The World Academy school, Murooj district
127
projects set to launch later this year.
international brands such as Mars,
EEC also aims to provide high-standard
Ikea and pharmaceutical giant Pfizer.
educational and healthcare services.
Additionally, the city has King Abdullah
It currently has two medical institutions
Port, the first port in the Middle East to
and has launched The World Academy
be fully owned, developed and operated
in collaboration with Global GEMS,
by the private sector, and is one of the
a well-known educational establish-
fastest growing ports in the world.
ment. Additionally, Prince Mohammad
However, to facilitate this process,
Bin Salman Collage for Management
Emaar, the economic city has sought
and Entrepreneurship has already
to transform its procurement capabilities.
welcomed its first batch of students.
Working for a multitude of multinational,
KAEC’s Industrial Valley attracted more than 100 companies, including
regional, local and private companies, Senior Director Hesham Elabd w w w.suppl yc ha i ndi gi ta l. com
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Waha district DECEMBER 2018
MIDDLE EAST
“We are moving into the partner phase where a lot of CEOs have procurement officers to help them get better economy of scale, leverage business and find new technologies” — Hesham Elabd, Senior Director, Emaar, The Economic City 129 E X E C U T I V E P R OF IL E
Hesham Elabd Graduating as an Electronics Engineer from Alexandria University, Hesham has worked in a number of senior management roles for companies such as Procter & Gamble Company, Alfozan Building Materials/Madar Holding, Savola Group, Rezayat Group and Emaar, the economic city. Working across various business areas, such as: General Management, Business Development Planning, Purchasing Sourcing and Procurement, Total Supply Chain & Initiative Management including Operations logistics, Administration, Systems Re-engineering, Projects Management and Manufacturing, Hesham has successfully led operations, built strong organisations and delivered significant results.
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has witnessed how the procurement industry has evolved and looked at ways to remain ahead of the curve, leading the organization to move procurement from a reactive participant to a proactive, trusted partner. “We’re the developers of a new city. Procurement for such types of a mega scale project is very challenging. Procurement is no longer about handling documents and being just processors and raising purchase orders. Our procurement model is way beyond that,” he says. “Now, we are moving into the partner 130
phase where a lot of CEOs have procurement officers to help them get a better economy of scale, leverage business and
Prince Mohamed bin Salman Collages for business and Entrepreneurship
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MIDDLE EAST
find new technologies. We’ve moved over the years from followers to leaders taking part in setting the company’s strategies and execution programme.” As companies continue to face increased challenges such as a global economic downturn, focus on cost reduction and global supply issues, the term ‘innovation’ has repeatedly been thrown around. Yet many businesses remain unaware of what this ultimately entails. “Most of these challenges are linked to the market dynamics, so procurement is a key enabler to overcome such challenges. Management are regularly pushing for
EEC offices, Baylasun District
value-add and how to get more for the money spent,” explains Elabd. “The best ways to do this is to go to a business, ask them for their requirements, share their plans, align with them on their needs and give them a procurement strategy of how to move forward. Through this, procurement can start developing plans to ensure sourcing the best value, share with business leaders the risks associated with what is being sourced, the available technologies and the expected outcome. For this to succeed, it is vital to have the right technical capability, what I would call the right buyer. The systems and processes supporting the w w w.suppl yc ha i ndi gi ta l. com
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EMAAR, THE ECONOMIC CITY
“KAEC’s vision is to become a great enabler of socioeconomic development in the Kingdom of Saudi Arabia. It provides investors from all over the world with unique business opportunities while working towards securing the future of Saudi Arabia’s youth by creating new skilled job opportunities and total housing solutions” — Hesham Elabd, Senior Director, Emaar, The Economic City
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Baylasun and Marina Hotel
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day to day operations have to be simply designed to allow smooth work flow.” Strong leadership and committing to deliver on objectives are something which Elabd stresses as essential. This should be coupled by having a good internal networking, alignment and strong communications. “To tackle our challenges, we undertook a six-strategy plan. First, we needed to understand our customer needs, develop our KPIs, set the goals, design the structure, re-defining our culture as procurement and finding the right people, skills and systems,” he explains. “For our KPIs, we asked different departments, companies and business units on their expectations from procurement. We had 12 questionnaires sent out and based on the findings, came up with the goal of “10 in 10 through Smart Buying,” which means 10% savings in 10 years.” Through the strategy, the organisation has overhauled its structure mix between centralisation and decentralisation. Adopting the approach of appointing the Right Business Partner, who takes the lead in sourcing strategies, tending and contracting for the Business Unit (BU), the move has ensured a single point of contact across the organisation. “The Business Partner also works alongside the Business Units’ CEOs and Head of Pro-
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EMAAR, THE ECONOMIC CITY
curement, enabling all parties to gain a complete understanding of what procurement is expected to achieve, an important element which has filtered into its cultural shift,” adds Elabd. “We now provide the needed procurement services based on the needs of the business – this is a huge cultural change. Introducing the customers’ experience was a very big thing. We also engaged with a consultant who looked at our employee capabilities in order to provide essential training.” 136
Shorooq District
DECEMBER 2018
Pfizer factory at Industrial Valley
MIDDLE EAST
CLICK TO WATCH : ‘A SPIRIT OF TRANSFORMATION’ 137 By developing the skills of its employees, Emaar, the Economic City has sought to address its digital infrastructure. Investing in Advanced Procurement Systems has enabled the business to implement the iSupplier portal which covers its entire procurement capabilities. Fully eliminating all paper-led processes has simplified the process by more than 90%, and also boosted customer satisfaction figures. Additionally, to ensure complete transparency across its procurement activities, EEC has placed all upcoming developments on its web site to enable contractors to look at each project with all basic essential informaw w w.suppl yc ha i ndi gi ta l. com
EMAAR, THE ECONOMIC CITY
138
“In 2015,our organisational engagement survey rated procurement at 44%. Last year it jumped to 86%. Customer satisfaction has reached 70%” — Hesham Elabd, Senior Director, Emaar, The Economic City
tion supplied. Companies which are awarded the business are also revealed, with project awarded values.
reached 70%,” Elabd says with pride. “Looking at the way forward, we have already launched the trusted supplier
“In 2015, our organisational engage-
programme. We have signed long-term
ment survey rated procurement at 44%.
deals with partners and fixed prices for
Last year it jumped to 86%. Our procure-
three years for our requirements such
ment team won four customer experi-
as building materials. In KAEC, a lot of
ence awards from the CEOs of the BU’s.
companies work in the Industrial Valley.
Overall Customer satisfaction has also
We recently launched a programme
DECEMBER 2018
MIDDLE EAST
139
Royal Greens, Golf and country club, Murooj District
offering them free procurement services
“Future Construction Initiative.” We as
through our “A Friend to Call” service.
EEC will be working with designers,
If they want any procurement advice,
suppliers and contractors to define the
they can call us and we can help. We’re
ideal new innovative construction
also extending this support service to
method for our upcoming developments.
SMEs operating in the city and introduc-
The aim is to make KAEC the hub for
ing them to potential partners.
advanced construction solutions and
“Our latest initiative that will soon be launched in a worldwide RfP is our
technologies enabling fast track, high quality, sustainable and cost-efficient w w w.suppl yc ha i ndi gi ta l. com
EMAAR, THE ECONOMIC CITY
“I am positive about the recognition we have received in such a small space of time” — Hesham Elabd, Senior Director, Emaar, The Economic City
140
Business park and Marina , Baylasun district DECEMBER 2018
developments in KAEC and possibly other Saudi cities.” Throughout its procurement transformation, Emaar, the economic city will continue to look for new opportunities to deliver savings, boost transparency and, at the end of the day, guarantee customer
MIDDLE EAST
satisfaction. Such commitment has
“Although we were unsuccessful,
even seen EEC Procurement become
I am positive about the recognition we
recognised by global institutions.
have received in such a short space of
The Chartered Institute of Procure-
time,” he says. “In November, we were
ment & Supply (CIPS) shortlisted
also nominated for two further awards,
EEC procurement for two global
by the Procurement Leaders, so we
awards, something which Elabd is
are being recognised internationally,
keen to highlight.
highlighting our upward trajectory.”
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PROCUREMENT TRANSFORMATION JOURNEY OF ANSALDO STS WRIT TEN BY
L AUR A MULL AN PRODUCED BY
RICHARD DURR ANT
DECEMBER 2018
EUROPE
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ANSALDO STS
In line with its parent company, Hitachi, Ansaldo has continued to deliver world-class transport services thanks in part to an innovative procurement transformation
F
aster, safer and more efficient: today’s communities are demanding more from their transportation systems and it seems that many
have found the answer when working with Ansaldo
Signalling and Transportation Systems (STS). Over the past decade, Ansaldo STS has continued to 144
make a lasting impression when designing and implementing railway signalling, automation and integrated transport systems for both metro networks and railway lines, and through its operations, has ensured that people can easily get from A to B. As a Hitachi Group company, Ansaldo STS has leveraged its international experience to help transform transport systems around the globe. This means that whether you’re in Italy or France, the US or India, Ansaldo STS has the expertise to help. In fact, today, the technology firm has designed and implemented solutions in around 28 countries, generating about USD$1.5bn in turnover. Now, as its global footprint expands further, the company has also transformed its procurement process to ensure that it can cater to its global outlook.
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$1.5bn Approximate revenue
1853
Year founded
4,228
Approximate number of employees
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ANSALDO STS
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“ Our procurement team is fully involved from the beginning of the process and can lead the sourcing of each package” — Filippo Fanfani, Vice President of Procurement at Ansaldo STS
DECEMBER 2018
EUROPE
This responsibility has partly fallen
therefore, a major part of our costs
into the capable hands of Filippo
comes from the external partners and
Fanfani, Vice President of Procurement.
suppliers. Recognising this, we have
Joining the firm in 2014, he says that
implemented a new strategy, manage-
for global companies like Ansaldo STS,
ment and organisation of our supply
having a best-in-class procurement
base. I would say that this is even more
function is more important than ever
important in a global environment where
before. “We are a global business: we
we have key projects across the globe.”
have our core business, such as sign-
With support from top management,
alling, where we design and produce
Ansaldo STS has undergone a restru-
our own products but on the other side,
cturing, creating a new procurement
we also offer turnkey solutions and act
organisation that deals with engineer-
as a technology integrator,” he explains.
ing, development, manufacturing, con-
“For this business, we create the main
struction and the projects through
contract on behalf of our customers and
supply chain planning organisation.
E X E C U T I V E P R OF IL E
Filippo Fanfani Mr. Filippo Fanfani has a multiyear industry background within automotive, industrial and rail businesses, cross functional experiences and a strong international exposure. As part of the Ansaldo STS Executive team Fanfani leads the global Procurement organization (1bn€ spend and about 90 team resources) with the aim to transform it into an effective strategic function. Process and People development are his forte, besides, sourcing strategies and operational initiatives. He believes in sustainable and reliable relationship with key supply partners to achieve progress.
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ANSALDO STS
This has helped to foster more robust
operations, moving towards a supply
and strategic sourcing process. “Our
chain and construction focused orga-
procurement team is fully involved
nisation spanning, procurement,
from the beginning of the process and
manufacturing, logistics, supply chain
can lead the sourcing of each package.
planning and construction.
It’s fundamental for the turnkey business
For Ansaldo STS, procurement is
so we can define the external cost of
organised in a global matrix structure
each project and maintain a sustain-
under Filippo Fanfani’s leadership.
able margin. I would say that negotia-
On one hand, roles are organised by
tion of cost and risk management are,
regions and on the other axle the global
for sure, two key aspects that they
commodities. This matrix responsibility
keep in consideration.” In order to be
provides the reasonable balance
even more effective today the compa-
between global efficiency and local
ny decided to restructure the global
effectiveness as well as a proper
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CLICK TO WATCH : ‘ANSALDO STS STRATEGIC BUSINESS OVERVIEW’ 149 managerial control over the decisionmaking process. Moreover, with this procurement organisation the benefits are two-fold: the firm can not only negotiate tenders from the beginning of the process but it can also enter the global market with sound knowledge of the specific technologies and processes needed for the project. “It’s important for us to work alongside the business and to go to the market as soon as possible,” observes Fanfani. “Technology changes every day and our customers are looking for innovative tools, so it’s w w w.suppl yc ha i ndi gi ta l. com
very important that we can go to the
“Leading the sourcing from the
market and understand what our part-
beginning of the bid, we understand
ners can provide to us from the offset.
the documents we have in our hand,
We need to lead the process.”
what we need to have shortly. We
Across its turnkey business, Ansaldo
definitely have to consider what are the
STS has to work closely with partners
constraints, the opportunities and the
to implement cutting-edge transport
supplier base we need to get on board.
technologies. Its supply chain organi-
There are several functions involved in
sation has, therefore, been invaluable:
the planning of the sourcing – providing
by working shoulder to shoulder with
data, documents and in general inputs
both customers and suppliers from the
during the sourcing process – and so it
offset, it’s allowed Ansaldo STS to lead
helps us lead that process respecting
the way and negotiate cost-efficient ten-
each function delegation of authorities
ders, without getting swept up by new
and get a proper match among techni-
waves of digitisation or time constraints.
cal contents, costs, prices and risks,”
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EUROPE
“ It’s really important for us to be updated with the latest digital transformation. It’s not something to be considered ‘nice to have’, it’s mandatory” — Filippo Fanfani, Vice President of Procurement at Ansaldo STS
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ANSALDO STS
adds Fanfani. “Thanks to this approach, we have a strong understanding of the specifications of our customers’ needs and we flow them down to our suppliers.” Supplier relationship management is a pressing concern for any supply chain professional and it is one which Ansaldo STS has tackled head-on. By working consistently with its partners and suppliers, creating lasting relationships has become second nature to the firm. “This continuous relationship 152
with our key suppliers is critical as well for our success in a global environment,” notes Fanfani. “As a buyer, you’re responsible for maintaining a strong relationship with your key suppliers. The balance between global and local interaction in our supply chain organisation also allows us to leverage the right partner who can deliver a costefficient product.” A digital enthusiast himself, Fanfani is keen to keep abreast of the latest technological innovations shaking up the sector. After the procurement organisation zeroed in on identifying the best practices and processes,
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EUROPE
C OMPA N Y FA C T S
Ansaldo STS is headquartered in Genoa, Italy, and has over 4,228 employees in 28 different countries.
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ANSALDO STS
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“ I strongly believe that in a global environment like today which is becoming more and more digital, procurement also needs to be in line with that” — Filippo Fanfani, Vice President of Procurement at Ansaldo STS
DECEMBER 2018
EUROPE
digitisation was seen as the next natural step. As a result, Ansaldo STS is currently in the process of implementing a new digital procurement platform. “This will help us streamline our processes and it will also give us a global tool where all procurement professionals can work during the sourcing process,” observes Fanfani. “I strongly believe that in a global environment like today, which is becoming more and more digital, procurement also needs to be in line with that. I would say that this is the first step for implementing further technologies in the future.” In today’s global market, Ansaldo STS may be facing stronger competition but Fanfani is confident that with its newfound global approach, the company is well up for the challenge. Leveraging the power and image of its parent group, Hitachi, it seems the only way for Ansaldo STS is onwards and upwards. “As a part of Hitachi, we can leverage their expertise and utilise the power we have behind us, particularly when it comes to technology. It’s really important for us to be updated with the latest digital transformation. It’s not something to be considered ‘nice to have’, it’s mandatory.”
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