www.supplychaindigital.com
March 2018
Top 10 Procurement Strategies THE MOST IMPORTANT SKILLS CPOs NEED
INSIGHT: WHY GOVERMENTS NEED CPOs AND THEIR VITAL ROLE IN DRIVING AN ECONOMY
Inside a technology transformation Nokia’s Johannes Giloth and Bo Jensen speak exclusively about a company-wide transformation, digital disruption and its groundbreaking ‘conscious factory’
TECHNOLO GY
TRUST IN THE CLOUD –
THE FUTURE OF PROCUREMENT
14-16 May 2018 Hamburg, Germany SCIWeek.com
Introducing a New Concept for 2018: 3 IndustrySpecific Events, 1 Week of Cross-Industry Learning. With the rapidly increasing consumer demand for excellence in logistics and the emergence of automation in supply chain, it is now vital for senior executives to get ahead of the latest trends, strategies and techniques while expanding their professional network. Being able to benchmark and leverage best practices with industry leaders is important - however in this current climate, executives now cannot afford to focus merely on the very latest approaches within supply chain as an industry, it is now imperative that they drill down within their specific sector. Taking place at Hamburg’s newest terminal, The Cruise Center Steinwerder - The Supply Chain Industry Week event has been structured for delegates to have a concentrated day of learning and networking while vendors/exhibitors attend on the relevant day for their target audience. Day 1 will focus on Retail, Day 2 will focus on Industrial Manufacturing, and Day 3 will cover Food & Beverage and Chemicals. The conference will offer an interactive format, encouraging lively debate, in-depth discussion and exchange of ideas and best practice.
3 Industry Specific Days
9+ Hours of Networking 60 Speakers
80 Solution Providers 900 Delegates
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Join us for: • Informative presentations from leaders in supply chain. • Case studies from leading industry figures tackling the same issues you face. • Panel discussions with leading organisations in and outside of your industry discussing topical issues • Roundtable and other formats to encourage peer-topeer learning and benchmarking opportunities across the industry. Maximise your time out of the office – attend for a highly focused day of key learnings or benefit from a whole week of supply chain knowledge.
To join 300 of your peers at Supply Chain Industry Week contact enquire@SCiWeek.com or call +44 (0)20 7036 1357 quoting “Supply Chain Digital” Alternatively, if you are a cutting-edge service or solution provider for Supply Chain and Logistics professionals and wish to increase your presence among the Retail, Manufacturing, Food and Beverage or Chemical industries – please get in touch at +44 (0)20 736 89423
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HELLO AND WELCOME to the March issue of Supply Chain Digital – the must-read publication for supply chain, logistics and procurement professionals around the world. As usual, we have a packed issue for you this month, with Nokia’s supply chain and technology transformation story adorning the cover. It’s a piece nobody working in the industry will want to miss. Indeed, such was the quality of the story Nokia had to tell, we sent our very own roving reporter, Laura Mullan to Singapore to sit down with two of the company’s top brass – Chief Procurement Officer Johannes Giloth and Head of Delivery Operations Asia Pacific and Japan, Bo Jensen – to land the scoop personally! Elsewhere, we speak to Denis Niezgoda, Robotics Lead – a cool job title if there ever was one – at DHL to find out how the logistics giant is at the forefront of the adoption of collaborative robotic technologies that are automating warehouse activities. Also featured as part of our digital reports this month is healthcare giant Becton Dickinson, Two Roads Hospitality and Dabur International. And in this month’s very special top 10, the Chartered Institute of Procurement & Supply reveal what their members believe are the most important skills Chief Procurement Officers needs to be successful. As always, if you have any feedback please do join the conversation on Twitter, LinkedIn and Facebook and become part of the world’s fastest growing supply chain community. Enjoy the issue. @supplychaind
Enjoy the issue!
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3
F E AT U R E S
12 INTERVIEW
SECURING THE SUPPLY CHAIN
HOW EXOSTAR’S SUPPLY CHAIN LEAD KEVIN VANLOWE MEETS THE SCM SECURITY CHALLENGES OF THE AEROSPACE AND DEFENCE INDUSTRY
PROCUREMENT INSIGHTS
24
WHY GOVERNMENTS NEED CPOs 6
March 2018
TECHNOLOGY
34
TRUST IN THE CLOUD – THE FUTURE OF PROCUREMENT
LOGISTICS & DISTRIBUTION
48
ROBOTIC SOLUTIONS IN THE SUPPLY CHAIN
T O P 10
56 Top 10
Procurement Strategies
70 E V E N T S A N D A S S O C I AT I O N S
EVENTS 7
C O M PA N Y PROFILES WERC – Association USA
78
Two Roads Hospitality
102 84 118 USA
BD
USA
8
March 2018
NOKIA ASIA
176
Crown Resorts Limited AUSTRALIA
152
Dabur International MIDDLE EAST
164
Fanshawe College CANADA
192 Maersk Line AFRICA
9
INTERVIEW
SECURING THE SUPPLY CHAIN WE TALK STRATEGY WITH EXOSTAR’S SUPPLY CHAIN LEAD KEVIN VANLOWE ABOUT HOW IT MEETS THE SCM SECURITY CHALLENGES OF THE AEROSPACE AND DEFENCE INDUSTRY, AND WHAT IT CAN OFFER CUSTOMERS ACROSS ALL SECTORS WITH ITS COLLABORATIVE APPROACH… Written by DAN BRIGHTMORE
INTERVIEW
XOSTAR IS THE joint venture of five UK aerospace and defence (A&D) companies: BAE, Boeing, Lockheed Martin, Raytheon & Rolls-Royce. Formed in 2000, it created a common entry point to enable suppliers to engage with the five manufacturers who needed an ecosystem to support the development of the systems and platforms they were creating for the defence industry. 14
March 2018
Exostar’s initial mission was to manage and govern this exchange so the five could work securely with their suppliers. As technology moved forward, that approach of a centralised marketplace shifted. Each individual company wanted to work with the same suppliers, but wanted more autonomy and control over the functionality they had while engaging with them. “In 2008, the large defence contractors were given direction from the federal
Exostar helps Commercial Aviation companies in all phases of their supply chain government with a view to improving the security of their supply chains and combating leakage,” explains Exostar’s Supply Chain Lead Kevin VanLowe. “In response to that, Exostar launched its Identity, Credentialing & Access solution to provide a higher level of authentication to access the supply chain portal it was managing. By 2010, Exostar had become a cloud supply chain solution for the large defence contractors. “Today, up to 65% of US annual defence
spending flows through Exostar. Not only do we undertake multi-factor authentication, we also manage and host supply chain applications for these companies. Exostar is connected with over 150,000 organisations in more than 150 countries, which have seen around half a million credentials issued in A&D supporting this ecosystem.” As markets evolve, VanLowe believes the three pillars of Exostar’s supply chain offering meets the needs of a global supply ecosystem by addressing security, risk and compliance. “Allied to our Identity, Credentialing & Access offering, our Secure Collaboration and Supply Chain Management solutions leverage a global supply base so we are able to do fast qualifications of an organisation’s capabilities to certify they have appropriate industry level cybersecurity, allowing us to authenticate individuals so a buyer can get a complete and trusted picture. It’s like a security wrapper around the supply chain,” says VanLowe. “We can then execute a secure source-to-pay solution to put organisations under contract for specific requirements so that transactions are efficient. This can then be refined to meet global demand. As companies 15
INTERVIEW mature they want to manage different tiers of suppliers, for example they may need to source exotic materials such as titanium, and will want to balance the use of that across their suppliers to get the best deal.” VanLowe asserts that Exostar can offer cloud delivery that helps its customers avoid expensive ERP transformations while delivering a rapid ROI and remaining compliant. VanLowe’s colleague Tim Zullo, Exostar’s Corporate Marketing Director, has two decades of experience working in the supply chain arena for industrial manufacturers, and highlights the challenge this poses when working in a highly-regulated industry such as A&D. “The necessary secure access for viewing data makes it incredibly challenging to adopt cloud solutions,” he notes. “A&D has lagged behind so we’ve been taking these technologies and moving them into Exostar. We’re a managed host service company so we can provide those cloud services in a secure manner, which meets those regulatory requirements because you can’t take your direct spend when you’re building missiles and stick it in Cooper and do 16
March 2018
your sourcing and procurement from there – it just isn’t going to fly. Exostar sidesteps the quandary companies usually face such as do you put it on-prem, use your legacy systems or do it all manually via encrypted emails? “By working with us, companies can create that safe digital connection,” Zullo assures. “It’s those controls we have which set us apart and ensure our security levels meet certain standards, so we can become an extension of their enterprise. We’re providing offschedule information, sharing with
“WE HELPED ONE COMPANY IMPLEMENT A PROCESS TO IMPROVE SOURCING AND ORDER MANAGEMENT, WHICH DELIVERED $7MN OF SAVINGS WITHIN A FEW MONTHS” – Kevin VanLowe, Supply Chain Lead, Exostar
Exostar enables thousands of within Life Sciences community to work together via an industrytrusted identity credential applications and tools to support encryption in transit and at rest while leaving behind the audit trail you need, to know who has accepted that information, so you can maintain the integrity of those ITAR (International Traffic in Arms Regulations) or official sensitive controls.” As organisations continue to automate their processes, machine-to-machine analytics applied to big data becomes more important. Exostar is committed to innovation, and is looking at leveraging blockchain for a global ledger for trackand-trace and material ownership across
different tiers in A&D and beyond. “With respect to digitalisation, it’s partly about eliminating manual and automating,” says VanLowe. “But it’s also about taking full advantage of digital business models driven by the rise of IoT, artificial intelligence and predictive analytics. We’re helping people get much better at delivering actionable insights.” Exostar is keen to make standard supply chain processes more efficient, effective and secure to help companies avoid the paper blizzard to focus on working capital, cost reduction and ultimate response to their end customer. “When you’re talking about supplier management we have a model called Collect Once, Connect Once, Certify Once, Share Many,” reveals Zullo. 17
INTERVIEW
“SECURITY IS KEY TO HEDGE THE RISK OF WORKING WITH A MULTITUDE OF GLOBAL PARTNERS ACROSS INDUSTRIES. WE REALLY SEE THAT AS A GROWING OPPORTUNITY FOR EXOSTAR GOING FORWARD” – Kevin VanLowe, Supply Chain Lead, Exostar “When we work with suppliers we issue an ID credential. We then proof that individual and then their ID can be used and accepted across multiple organisations. That requires a lot of governance. We have a steering committee set up with chief information security officers and heads of supply chain to deliver these standards. It creates an industry synergy allowing us to meet requirements. There was a mandate in the US built on the National Institute of Standards and Technology (NIST) framework called NISTF800171. It required those cyber security standards to be flowed down to their suppliers – and the prime contractor 18
March 2018
had to ensure this. But how do you collect that information? As part of our Supplier Management solution, our model collects that information and helps the prime contractor manage it so this eliminates the burden on the supply chain. It’s one way we’re innovating and taking some redundancy out of the supply chain for the A&D industry.” To keep delivering that innovation, Exostar has been working for several years with E2open, an end-to-end supply chain company providing software solution tools around supply chain planning, execution, collaboration and connectivity. “Recently we’ve been working with Wax Digital in the UK,” adds VanLowe. “As a cloud provider within our security solutions, they are able to help us link into organisations of different sizes who may have issues with legacy systems and give them access to best practices, delivering rapid ROI on sources and order transactions.” Exostar also works with US manufacturers in the naval business where older ERP systems are prevalent, but where companies have aspirations to achieve visibility and
Exostar helps companies in the chemicals industry utilise and protect their intellectual property identify alternative sources of supply to help them reduce cost and improve delivery. “We helped one company implement a process to improve sourcing and order management, which delivered $7mn of savings within a few months,” affirms VanLowe. “We’ve seen this in the UK too with companies who source steel for the naval business and need better control of their inventories.” Zullo notes that across A&D and beyond companies are sharing information with their suppliers in a central fashion, and are strengthening their internal
digital capabilities. “A lot of applications out there are point solutions for separate functions. If you log onto Amazon, you can manage your orders, Prime video, your subscription… you can see all of that in one single portal. Large manufacturing companies are trying to share information with suppliers who need that same level of functionality, but using multiple solutions is not a very clean way to achieve a holistic view,” he says. “Because we’re a central point across multiple contractors, we can create a better supplier experience on the other side to give full visibility and 19
INTERVIEW
create that single pane of glass. We’re making an investment in this because our customers have engaged us to solve this problem and offer a central view of their suppliers – one database, one source of truth that can feed your multiple ERP systems. You have one vendor, one look and one vision so you can monitor spend and do high level analysis in a new way.” VanLowe sees the trend for growth in the aftermarket side of the business giving more opportunities for companies to leverage insights via IoT from assets in the field that respond to global inventory needs. “Companies are shifting from simply buying a component to buying a 20
March 2018
level of service, so you’re not just responding to factory orders, but repair and maintenance activity around the world.” VanLowe’s holistic view of the supply chain is the product of more than 20 years’ experience working for the likes of GM. As manufacturing companies move more towards outsourcing while becoming integrators (as opposed to being vertically integrated), the weakest link in many organisations is their supply chain, he argues. “Security is key to hedge the risk of working with a multitude of global partners across industries. We really see that as a growing opportunity for Exostar going forward.”
In 2017, 65% of all US defense spend was managed through Exostar’s various supply chain and collaboration solutions From sourcing to procurement and payment, order management, and more, we provide visibility, consistency, and efficiency for the entire buying process.
What is Exostar? Exostar provides secure and innovative business collaboration solutions… Built from scratch to serve highlyregulated industries Exostar was founded as a joint venture by leading aerospace and defence manufacturers; BAE Systems, Boeing, Lockheed Martin, Raytheon, and RollsRoyce. For over 15 years, it has provided solutions specifically designed to help A&D OEMs and suppliers stay compliant with US Department of Defence and UK Ministry of Defence regulations. An integral part of the aerospace and defence supply chain In 2017, 65% of all US defence spend was managed through Exostar’s various supply chain and collaboration solutions.
Extending into life sciences Since inception, Exostar has focused on security and compliance – needs many highly-regulated industries share. It has been able to leverage expertise in these industries, to help them control access to their sensitive data. It now serves eight of the top 20 Life Sciences companies, supporting over 100,000 investigators as they conduct clinical trials of new pharmaceuticals. Hosting a growing global community Exostar helps large organisations collaborate with the smaller organisations and individuals in their network – whether small suppliers of airplane parts, individual physicians writing prescriptions, or clinicians administering experimental drugs as part of clinical trials. This adds up to 575,000-plus active users of various Exostar solutions. 21
PROCUREMENT INSIGHTS
WHY GOVERNMENTS NEED CPOs SAP Ariba’s GM for EMEA and MEE, Paul Devlin, discusses the vital role government CPOs can play in driving tangible benefits for a country’s economy, citizens and perception on the world stage Written by Mark Spence
PROCUREMENT INSIGHTS
“ One of the things that governments would admit is that it has been difficult for them to change and take advantage of tech that’s coming to market” – Paul Devlin, GM for EMEA and MEE, SAP Ariba
EMPLOYMENT, INNOVATION AND general citizen wellbeing are the fundamental cornerstones of any government. But how can CPOs help create the conditions that will allow these themes to flourish? SAP Ariba’s Paul Devlin believes private sector CPOs could hold the key to exponentially altering a government’s perception on the world stage. Despite the inherent challenges 26
March 2018
moving from private to public sector entails, there’s a clear opportunity for their experience, skillset and knowhow to play a key part in transforming the supply chain, according to Devlin. Indeed, it would appear there has never been a better time. “What we’re seeing in the public sector is a pace of change that we probably haven’t seen in the past,” he says. “As governments react to
world events, and become proactive in thinking about what the future is going to be like in 10 or 15 years, this is leading to a pace of change which is, in some ways, breathless. It’s a great time for a CPO, who has perhaps spent their career in the private sector, to move across,” he continues. “There’s a real understanding [in procurement] that every dollar, euro or pound can change a life.
And to take that concept into government is really exciting.” There are existing examples too. “We’re working heavily in the US where governments are looking to create change through technology to ensure their supply chain is ethical. Look at the likes of Abu Dhabi or Saudi Arabia. Their 2030 vision is all about how they can move away from an oil-based economy towards 27
PROCUREMENT INSIGHTS new emerging economies, but at the same time asking how they can sustain employment and innovation. “As an example, a lot of [governments] are spending hundreds of billions of dollars – how much of that spend can be spent on startups? Imagine if 10% of that spend is targeted only on start-up businesses, minority-owned businesses or female-owned businesses? Now, [the government] can start to shape its economy and employment in a fundamentally different way.”
SO, WHERE DO CPOS FIT INTO THIS? “Governments are starting to say ‘Well, if I’m going to do that, I need people who understand procurement; I need people who have done this before, who can bring some of their private sector thinking. Not only that, I can bring in CPOs that have purpose at the heart of their leadership. I can bring in CPOs that have this knowledge of technology and innovation and can bring those things together to create the vison that I have for my citizens.’ That is something we’re seeing as an emerging trend across the globe.” All of which begs the question – is 28
March 2018
“ One of the things that has really come to the fore for CPOs in the private sector is how they deal with compliance and making sure that every penny is driving value for their company” – Paul Devlin, GM for EMEA and MEE, SAP Ariba
the role of a procurement officer in government more about helping these organisations become more commercially savvy? “A lot of governments are already very commercially savvy. We’ve only got to look at the likes of Boston, Asia, Dubai and Abu Dhabi. They’re already at the forefront of technology that is commercialised today. The government of Dubai is really driving smart government and that has led to huge scale in the Internet of Things. They’re challenging tech companies to think and behave differently, which has resulted in new tech coming to market. In Santa Clara in the US they’ve been incredibly innovative with their use of procurement to drive cost savings, better supplier relationships and sustained employment. Governments are bringing in that private sector thinking, particularly in relation to technology innovation. “But I think one of the things that governments would admit is that it has been difficult for them to change and take advantage of tech that’s coming to market, whereas a lot of private sector CPOs have lived and breathed this change management over a prolonged period of time.” 29
PROCUREMENT INSIGHTS While governments might face challenges in the shape of change management, what are the obstacles CPOs making the transition from private to public are likely to encounter? “In the public sector, for every penny you spend you have to be certain you’ve achieved the best value; that you’ve made the right decision with the right supplier for the right value composition on behalf of the public you serve. And that can be a different ethos to what they may experience in the private sector. Governments can sometimes be so vast that there could be issues with things like data siloing. The public sector can also be complex in terms of its technology landscape. CPOs will undoubtedly inherit a number of different technologies. And then there’s change management. People who have grown up in government become used to a way of working which can be driven by the pursuit of best value for their citizens or by legislation. But what CPOs bring is their ability to manage those things. They’ll be used to companies that are complex and have legacy issues. They can find new ways to bring technology in and make better, faster decisions. 30
March 2018
It’s about being able to break through the change management process and that is very valuable to governments.” The perception of public procurement still remains one of inflexibility that is heavily influenced by ‘top down’ decisions. Does Devlin think that’s something private sector CPOs may struggle with? “I don’t. One of the things that has really come to the fore for CPOs in the private sector is how they deal with compliance and making sure that every penny is driving value for their company. It’s about a different way of thinking about the same problems. The value that they bring is in doing large complex projects for large organisations, making them successful, driving savings, building better supplier relationships, creating ethical supply chains and then supporting them. These themes are also really important to government. It might not be seamless, but CPOs have the experience, and this means they’d be able to go in and create value from day one.” Clearly, a CPOs role in the public sector transcends the traditional buying, planning and contract admin
“ CPOs have the experience, and this means they’d be able to go in and create value from day one” – Paul Devlin, GM for EMEA and MEE, SAP Ariba
but, crucially, there’s also the question of the effective reuse of human capital and the impact that will have on procurement officers in government. “If you think about technology today the reality is that what can be automated, will be automated. There’s no stopping that,” says Devlin. “What
you’ll find are a lot of redundant processes in government because of the benefits that automation brings. A lot of highly skilled people can then be freed up away from mundane tasks to much more valuedriven activity – things that will drive real value back to citizens.” 31
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TECHNOLOGY
TRUST IN THE CLOUD –
THE FUTURE OF PROCUREMENT Ivalua delivers cloud-based end-to-end spend management software solutions on a unified platform, empowering organisations to unlock the maximum value of procurement. CMO Alex Saric reveals how Ivalua is investing in R&D to keep ahead of the supply chain curve and planning for expansion across North America Written by DAN BRIGHTMORE
TECHNOLOGY
Ivalua helps hundreds of customers manage spend “ IVALUA PROVIDES A comprehensive Source-to-Pay platform allowing companies to do more than just better manage spend, but also identify opportunities, negotiate and manage their contracts as well as pay for, order and manage their suppliers,” says CMO, Alex Saric. “Technology addresses the full source of the pay platform and we deal with both the direct and indirect 36
March 2018
material, and even allow them to manage the master data integrated into the back-end system. It’s a very comprehensive solution for procurement and supply professionals.” It’s a solution which has seen Ivalua evolve rapidly since entering the North American market in 2011 where half of its global revenue is now generated. “A big milestone for us was when we entered Gartner’s Magic Quadrant in
‘ Today, Ivalua helps almost 300 customers achieve a competitive advantage by managing over $500bn in spend’ 2015 and have maintained our position in the top right quadrant since. Earlier this year we received $70m in growth equity funding from KKR (a top global investor helping fund the likes of Lyft and DarkTrace), validating the business model and allowing us to invest more in R&D and sales and marketing to accelerate our development and growth.” That focus on growth will hone in on the Canadian market where Ivalua is
now working with eight major clients including the British Columbia Lottery Corporation (BCLC), Scotiabank and Transalta. “BCLC was a focused project looking at contract and supplier relationship management,” explains Saric. “The challenge with BCLC was that they were resource constrained so it was important to work on prioritising their objectives and focus on what they’re really trying to achieve. Identifying the unique needs of customers in terms of expectations, making sure all the stakeholders are aligned and navigating any bumps in the road, are typical for us.” The latest win for Ivalua is the Calgarybased energy provider Transalta who were seeking help to deliver an intensive supply chain optimisation project. “We selected Ivalua for its comprehensive source-to-pay platform, flexible architecture and overall ability to give us a competitive advantage,” affirms Transalta CAO Dawn De Lima. Globally, large companies like KPMG partner with Ivalua and it’s the proven fruit of these alliances Saric believes drives the best retention rate in the business while building trust in new 37
TECHNOLOGY
Ivalua is investing 10% of its R&D budget in AI 38
March 2018
markets. “It’s 98% historically and we actually haven’t lost a customer since 2015,” he says. “That’s a testament to us being able to work through challenges in projects thanks to the continuous integration we offer throughout the process.” It’s a process that has Ivalua’s innovative technology difference at its heart. Founder and CEO David Khuat-Duy stresses the importance of its single cloud-based platform and a user-friendly interface which he states is “at the best level on the market”, making it a powerful tool for flexibility and configurability of everything from supplier management to strategy and analytics. “Nothing is impossible with our workflow engine,” maintains Khuat-Duy. Large corporations like EDF and BNP Paribas take advantage of integrated services between the Ivalua Platform and Ivalua Cloud, helping them improve working capital management and drive innovation. A unique feature and advantage of Ivalua’s suite is that its entire platform was natively developed with a completely unified data model, perfect for procurement. “Integration for us is something we’ve maintained from day one, it’s seamless,” maintains Saric. “That means if a customer makes a change on one part of the platform, someone else can see that immediately in real time.” It’s taken over a decade of development for Ivalua to reach this stage with an offering that clients like Gap, Whirlpool and Michelin could not practically emulate in-house, he stresses. “To develop suites that meet the complex requirements of big organisations… there’s so why Ivalua versus someone else? Ultimately, it comes down to our empowering approach,” emphasises Saric. “We give customers the benefits of SAS (spend analytics 39
TECHNOLOGY
“ Earlier this year we received $70mn in growth equity funding from KKR” – Alex Saric, CMO, Ivalua software) without any of the trade-offs. We have the most flexible platform on the market with a unique infrastructure giving customers the highest level of configurability so they can meet unique or evolving requirements. If there’s some capability that’s not out of the box available, they can configure it without any coding due to the flexibility of the architecture. Most of our competitors offer limited configurability with a generic best-in-class solution. Our customers don’t have to compromise between the integrated suite and best of breed capabilities – we offer options to cover the whole source of the pay process. BCLC started with just part of our suite 40
March 2018
– contract management and SRM – but as their needs evolve if they need to move to source-to-pay they can stick with the same company and add specific modules.” So how can customers leverage the power of the Ivalua Open Network for their business? “We don’t constrain
our customers or their stakeholders,” explains Saric. “Our network is truly open – we don’t charge fees to suppliers and we don’t place limits on a customer’s volume where many of our competitors enforce caps or coverage charges.” Saric maintains it’s about more than
merely digitising documents now more than 1mn suppliers connect with a world of commerce through Ivalua. “It’s a true collaboration platform where businesses can define workflow and enable processes and include suppliers and other third parties in their approaches to add value, improve performance and take cost out of the overall supply chain. Our customers can evaluate suppliers with score cards to gather information, ultimately inspiring high adoption and collaboration and avoiding a conflicting relationship between buyers and suppliers. To achieve this level of adoption, Ivalua is investing over 10% of its R&D budget in AI to enhance digital enablement of cloud-based spend management through its Add-On Store. “Machine learning is a big focus for a range of applications with our services for stakeholders including consumerised purchasing, valued buying and chat bot support for suppliers,” says Saric. “We’re focused on providing actionable insight and presenting it to the users at the right point of the process. There’s so much information captured through these platforms, but actually mining real insight to find where there’s a missed 41
TECHNOLOGY opportunity or some overlooked efficiency represents a huge opportunity because, if you can action information at the right point, it becomes really valuable.” Ivalua’s Add-On Store enables the packaging of insight, integrations and even an entire suite configuration into a bundled Add-On that can be downloaded just like an app. “It means we can offer bespoke configurations in industries like public sector manufacturing where they have unique needs a generic solution can’t solve,” suggests Saric. Collaboration is key for Ivalua in delivering its services to clients. “Our goal is to make things easy for our users and provide them with more information. This can help our customers who are focused on CSR and many of them work with Ecovadis, a partner of ours, and one of the leaders in the sustainability space,” explains Saric. “Rather than have a generic reporting tool with a bunch of reports that aren’t populated, because certain customers don’t do that, we focus reporting on what our customers do have. If they have a CSR initiative and want to work with Ecovadis, we have an add-on which automatically integrates third party data from a company, configuring all the reports and CSR reporting and matching it to suppliers to enhance their capabilities.” Ivalua also partners with Amazon’s business division so customers can leverage the benefits of its catalogues and spend categories, and has deep ties with Comsys and Shelby Group with their Middle East business. “We realise we can’t have all of the best information and expertise in everything, so we make sure we’re open to work smoothly with partners that can provide that for our customers,” says Saric. 42
March 2018
250
customers worlwide
12
different industries
50,000 procurement professionals
43
TECHNOLOGY
$
INVOICES & PAYABLES
STRATEGY & ANALYTICS
Invoices & Payments
Spend Analysis
Invoice Data Capture Accruals Expenses Early Payments
CONTRACTS & PRICING
Savings Tracking Performance Evaluation Program Management Advanced Analytics
Contract Management
Purchase Requisitions Purchase Orders
Price List & Catalogs
Goods Receipts
Contract Authoring Assets & Tooling
Budget Tracking
Item & Service MDM
SUPPLIER MANAGEMENT
STRATEGIC SOURCING
Supplier Info Management
Sourcing Projects & RFx
Third-Party Risk
Auctions
Issues Management
Category Action Plans
Improvement Plans
Bills of Materials
Vendor MDM
44
PROCUREMENT
March 2018
Complex Services
Alex Saric, CMO, Ivalua
‘ A unique feature and advantage of Ivalua’s suite is that its entire platform was natively developed with a completely unified data model, perfect for procurement’ Looking ahead, an excited Saric reveals Ivalua is hiring more sales staff in Canada in a bid to maintain its lead, ramp up the noise and help drive commercial growth in global sales by 70% next year. “We’re planning aggressive international expansion and investment in North America to maximise brand awareness and carry on empowering our customers.”
David Khuat-Duy, CEO & Founder, Ivalua 45
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LOGISTICS & DISTRIBUTION
ROBOTIC SOLUTIONS IN THE SUPPLY CHAIN SUPPLY CHAIN DIGITAL SPEAKS WITH DENIS NIEZGODA, ROBOTICS ACCELERATOR LEAD AT DHL, ABOUT HOW THE LOGISTICS GIANT IS AT THE FOREFRONT OF THE ADOPTION OF COLLABORATIVE ROBOTICS TECHNOLOGIES TO AUTOMATE ITS WAREHOUSES Edited by ANDREW WOODS
LOGISTICS & DISTRIBUTION
“ F AR FROM REPLACING THEIR HUMAN COUNTERPARTS, (ROBOTS) WILL ACTUALLY HELP PROVIDE A SOLUTION TO ONE OF THE BIGGEST CHALLENGES FACING THE LOGISTICS INDUSTRY” – Denis Niezgoda, Robotics Accelerator Lead, DHL
DHL IS THE leading global brand in the logistics industry and Denis Niezgoda has worked for the company for over seven years and currently leads the Robotics Accelerator programme, which supports the business by encouraging the adoption of robotics technologies and solutions. He works closely with partners, customers and startups to prototype new solutions to help businesses benefit from the potential 50
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that robotic technology can bring. Denis, can you tell us about the partnerships DHL is leveraging to deliver pilot programmes integrating collaborative robots alongside warehouse staff? We have a number of partnerships in place with a variety of leading robotics companies to deploy their solutions across different operational environments. For example, our DHL
that were specifically designed to work alongside employees and help them with physically strenuous tasks. The robots are helping to increase productivity and safety in the warehouse working environment too. Workers are able to interact with the robots via touchscreen technology, enabling them to quickly and easily assign tasks and send them on their way, at the push of a button. Our work with these companies has already helped us to understand the value the use of robotics can deliver to the logistics industry, and we’re confident that further trials will continue to help us unlock the potential these technologies can bring. Supply Chain division purchased around a dozen Sawyer robots from Rethink Robotics to support our customer operations with co-packing activities or other highly repetitive work streams. For the past year we have also worked with Effidence, testing its follow-me robots to help streamline our warehouse and last-mile delivery operations. Most recently, we have teamed up with Locus Robotics and Fetch Robotics to introduce robots
Why is there a need for robotics solutions in logistics? What are the benefits of using collaborative technologies in the workplace? Up until now, robotics technology has not made a large impact in the world of logistics. However, this is about to change as we start to see advanced robots enter our warehouses, sorting centres, and even help with final-mile delivery. We believe that logistics workers will benefit from collaborating 51
LOGISTICS & DISTRIBUTION with robots, which will be able to take on some of the more physically strenuous and repetitive tasks. Meanwhile customers should benefit too – they will likely see faster, better quality service. Following a number of successful implementations, we’re starting to see robots and their human counterparts work side by side in warehouses, deliveries and at sorting centres. Logistics plays a fundamental role in the success of the manufacturing process and by using robots, we are able to evolve business models to increase productivity and profitability. From inbound logistics to the finished product leaving the site ready for delivery, robotics has an increasingly important role to play in the logistics industry. How can businesses successfully implement collaborative technologies into the workplace? As a first step, I would say that it’s important to understand your business needs and pain-points to identify metrics you want to improve in the process that could potentially benefit from the use of robotic technology. This could be, for example, highly 52
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“WITHIN A GENERATION, WORKERS IN WAREHOUSES AND DISTRIBUTION CENTRES WILL BE ABLE TO WORK SIDE-BY-SIDE WITH ROBOTS” – Denis Niezgoda, Robotics Accelerator Lead, DHL
repetitive tasks with limited complexity in manipulation and navigation. What new skills will workforces need to ensure collaborative technologies can work for the industry? We have always looked for people who carry a certain technological understanding. This is a requirement for us because of the nature of logistics and the types of technologies that we already have in place. However, as we start to introduce more niche and startup-based robotics solutions into our business, we are seeing a real rise in the need for software engineers. Historically, the industry has not been known for 53
LOGISTICS & DISTRIBUTION its wealth of roles in technological engineering beyond stationary automation, but this is fast increasing. Take the partnership with Fetch as an example. Here, 80% of the technology is software compared to hardware. As a leading business, we believe we are responsible for recruiting into our industry, not just for our own business benefit but to ensure the progression of the industry as a whole. We hear a lot in the news about robots replacing workers. How do you see the increase in robots affecting the workforce at DHL? What has the reaction been like from DHL staff to their new robotic coworkers? With the increase of technologies such as robotics we naturally see a growing debate around their use in everyday life and the impact on people. However, we believe that robots, far from replacing their human counterparts, will actually help provide a solution to one of the biggest challenges facing the logistics industry today – a lack of labour availability. It’s not easy for companies around the world to find enough high-quality employees 54
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“FOR THE PAST YEAR WE HAVE ALSO WORKED WITH EFFIDENCE, TESTING ITS FOLLOW-ME ROBOTS TO HELP STREAMLINE OUR WAREHOUSE AND LAST-MILE DELIVERY OPERATIONS” – Denis Niezgoda, Robotics Accelerator Lead, DHL
to move goods from suppliers to customers. Two competing factors are making this especially difficult. The first is an increasing need for more logistics workers, driven by e-commerce and a greater need for parcel shipments driven by a globally growing economy. The second is a decline in the size of the available workforce as a result of shrinking population levels in the western world.
Take a look in your crystal ball… five years from now, what does the warehouse floor at DHL look like and how are robots used? Already today we are seeing the first examples entering distribution centres. It seems clear that it is not a matter of “if” but rather “when” robots will be working in our warehouses. The outlook for robotics is very positive and the world of logistics will
benefit from the coming advances in robotics technology. Within a generation, workers in warehouses and distribution centres will be able to work side-by-side with robots. With robots taking over the more labour focused, repetitive jobs, workers will be free to concentrate on more challenging and enriching tasks, thereby helping to drive the progression of the industry. 55
T O P 10
Top 10 Procurement Strategies Supply Chain Digital asked the Chartered Institute of Procurement and Supply to quiz its members about the most important skills CPOs need to be successful Written by CIPS
T O P 10
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Develop commercial skills
Commercial capability is a tool that needs constant sharpening as it is an important consideration for procurement professionals, no matter which sector they work in. The public sector can make equal use of commercial skills by sharing best practice with stakeholders such as suppliers or partners and indeed, many governments are developing commercial capability so the value is recognised across all sectors. To understand commerciality, the first step is to establish what ‘good’ looks like, which serves as a direction of travel, as well as highlighting capability gaps. Take a look at the start of the procurement process and ensure that any specs are accepted on the basis 58
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of end-to-end cost-to-serve, with the customer fully in mind. Sometimes under or over-specification can drive waste further down the supply chain, or are incomplete which means the contract ends up not being fit for purpose. Having commercial acumen also means understanding what needs to be measured. Procurement can still be process-driven and transactional and all about cost rather than strategicbased, which offers true value across the supply chain. ‘Being commercial’ is often perceived as cost-cutting and driven to take excess out of supply chains, but it also means measuring non-financial elements as well as creative, innovative thinking.
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Get to grips with financial data
Regardless of the focus on true value in the supply chain, the supply chain professional still needs to understand figures, highlight efficiencies and cut costs. Those are the measures that CEOs, boards and leadership teams understand more readily.
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Understand big data
Companies have a huge amount of data in their supply chains so managing it and using it effectively will give you great insight and intelligence to re-use in your business. This information gives businesses the opportunity to make more informed decisions and increase accountability for why certain decisions were made.
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Supplier, stakeholder and management relationships
Think more about developing partnerships and being collaborative rather than beating down suppliers or kowtowing to needy stakeholders. Good suppliers can help you resolve problems and key stakeholders can offer good advice at crucial times, so having strong relationships with all key partners makes sense. Think of internal stakeholders as partners too. Harness opportunities to collaborate and share insight and staff to offer that level of support too.
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Embrace ethics and sustainability
A robust supply chain will have ethics embedded in throughout, understanding the impact of decisions and offering transparency; an important aspect to modern day global trade. Reputations are built and sustained on good ethics. The Modern Slavery Act of 2015 is an important development in the protection of human rights, health and life itself. Strong ethics and the desire to go beyond the basics enhances reputation and ultimately protects corporate business. CIPS has an ethics test which takes a few hours to complete, but offers a detailed look and training around all aspects of ethics in the supply chain. As John Ruskin said: “There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are this man’s lawful prey.” 62
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Managing risk
The system of interconnected supply chains is becoming more complex and diverse and professionals are expected to be the experts driving the resilience in supply chains. Developing, crafting and managing markets and the security of a company’s supply chain is to mitigate against any failures to deliver goods and services, so there’s a big responsibility.
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Search out the future of the profession and business
Develop more soft skills
This sits firmly under the relationship banner, but strong soft skills are an essential part of the negotiating process, whether you are an influencer with your CEO, board or even your team. Being a CPO means being a leader, so having a range of skills rather than pure procurement talent will become ever more important to gain the confidence of partners, colleagues and suppliers.
It doesn’t take the skills of a futurologist to know that supply chain management is likely to experience disruptive events over the next decade. Probably every profession will be affected by volatile trading environments, increasing complexity and the influence of digital technology. Product life cycles are getting shorter and skillsets are changing beyond recognition. Automation is reshaping the workforce and eliminating lower level roles. Buyers need to look to developing new skills or risk being left behind. 65
T O P 10
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Digitisation of supply chains
There has already been a mini revolution in supply chains as metadata is being used to check the sell-by date of cargo, real time shipping progress and factory information regarding low stocks. Supply chains are now running on physical and digital networks and so get to grips with the latest advancements. 66
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But before supply chain managers rush to embrace this technology wholeheartedly, it does come with a health warning: managers are exposing themselves to fraud, theft and cybercrime, so they need to develop new skills and knowledge to keep up and prosper in the digital age. Data travelling along the supply chain can be stolen at any point.
01
Artificial intelligence
Already adopted as a game changer in China, AI is transforming supply chains in a range of key sectors such as manufacturing, retail and healthcare. For supermarkets, reliant on a fresh flow of food and other products, AI can help analyse purchasing and make predictions on future need at a really high level of accuracy. The value of this automation without human interference is that it can reduce food waste and boost consumer interest if food is plentiful and fresh. For instance, Robin Li Yanhong, CEO of China’s largest search engine provider Baidu, has suggested that using AI in the mining industry for example, could improve health and safety by checking for product defects before the products get to steel mills. 67
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E V E N T S & A S S O C I AT I O N S
Events The biggest and best events and conferences from around the world‌ Writ te n by A N D R E W WOO DS
E V E N T S & A S S O C I AT I O N S
LogiMAT 2018 – 16th International Trade Fair for Intralogistics Solutions and Process Management Stuttgart Trade Fair Centre, Germany 13–15 March Between 13 and 15 March 2018 international exhibitors and decisionmakers from industry, trade and the service sector will be coming together at the exhibition centre at Stuttgart Airport to find new business partners. LogiMAT will focus on innovative products, solutions and systems for procurement, warehouse, production and distribution logistics. International trade visitors from over 60 countries. Full-service suppliers, niche operators, start-ups and established global players – the exhibitors at this show – come here to meet customers at eye level. www.logimat-messe.de/en/exhibitor-services-0 72
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ISM – Institute for Supply Management Nashville, USA 6-9 May
ISM2018 is the ‘must-attend professional development conference of the year’. With sessions developed by industry leaders, ISM2018 is the only supply management conference developed by practitioners for practitioners. Guest speakers will include Mitt Romney CEO Bain Capital), Arianna Huffington (Huffington Post) and John Rossman (ex Amazon). www.ism2018.org
Internet of Supply Chain Berlin, Germany 15-16 May
The only IoT event for supply chain and logistics professionals, providing you with insights to transform your supply chain strategy, deliver transparency, value and efficiency throughout your business. Leading supply chain and logistics operators are facing a perfect storm as huge technological advancement, coupled with changing consumer habits, drive businesses to adapt to survive and thrive in 2018. If you are a forward-thinking supply chain and logistics professional, this conference is for you, providing you with insight to transform your supply chain strategy, deliver transparency, value and efficiency throughout your business by revolutionising your inventory, warehouse and fleet management. www.iosc-de.internetofbusiness.com 73
E V E N T S & A S S O C I AT I O N S
5th Annual World Procurement Congress London Intercontinental London, The O2, London, UK 16–17 May Agile Procurement: Thriving Through Disruption is a key theme for this year’s Annual World Procurement Congree, and guests include 50 senior procurement professionals, plus more than 100 speakers from companies such as Adidas, Avril and Shell. Topics to be discussed include digital procurement, cyber security, talent recruitment, upskilling and retention. World Procurement Congress has established itself as the foremost global gathering for senior procurement professionals. https://events.procurementleaders.com/events/congress/ world-procurement-congress
European Procurement Excellence Dresden, Germany 26 June The 13th European Procurement Excellence Summit will continue to offer a high-level platform for intense exchange and high-quality networking to procurement executives from Europe’s leading companies, bringing together thought leaders, highly regarded mentors and influencers whose experiences benefit their organisations and inspire the business ecosystem they operate in. ‘Through inspirational keynotes and small, interactive working groups we aim to contribute to enable Europe’s procurement executives to meet every challenge ahead’ www.bme.de/en/all-events/epe-european-procurement-excellence
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9th Annual North American Supply Chain Summit The Westin Peachtree Plaza, Atlanta, USA 5-7 June The event features 50-plus keynote speakers from companies such as Coca-Cola, Nike, IBM and Schneider talking about the new wave of disruptive digital technologies is transforming processes for businesses and their customers. Discover how leading companies are capitalising on digital trends to update their business strategy, create sentient supply chains and empower the workforce of the future. Organisers have also created dedicated tracks and sessions that address how organisations are driving the responsible business agenda, bringing together experts from sustainability, communications, procurement and innovation departments as well as investors, NGOs, governmental bodies and academics. http://events.eft.com/scsc 75
E V E N T S & A S S O C I AT I O N S
Gartner Supply Chain Executive Conference – Gartner London 23–25 September Gartner Supply Chain Executive Conference is the world’s most important gathering of supply chain leaders, discussing how disruptions large and small confront today’s supply chains on a daily basis and how ‘organisational survival depends on the ability to anticipate, adapt, and transform supply chains to deliver reliability and performance’. www.gartner.com/events
CSCMP EDGE 2018 Nashville, USA 30 Sept–3 Oct Discover over 100 forward-thinking sessions covering real world strategies implemented to maximise and transform supply chains and learn from some of the brightest academics and practitioners in supply chain today. ‘The Council of Supply Chain Management Professionals (CSCMP) hosts the must-attend supply chain event of the year — CSCMP’s Annual Global Conference, EDGE. From leading-edge content to cutting-edge supply chain solutions, EDGE reflects the unparalleled resources CSCMP offers today and symbolises our unwavering commitment to supply chain in the future.’ www.cscmp.org
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CIPS SM Awards – Chartered Institute of Procurement & Supply Queen Elizabeth II Conference Centre, Barbican, London 31 October Chris Bell FCIPS, Commercial Director – City of London Corporation, one of this year’s Judges, and winner of the ‘Procurement and Supply Management professional of the year 2016’, will chair the day while presenters from the various winning organisations will deliver case studies. www.cips.org/en-gb/events/international-events/ cips-uk-conference-2018
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HEAR THE LATEST BEST PRACTICES WHILE LEARNING FROM AND NETWORKING WITH INDUSTRY PEERS AT 41ST ANNUAL WERC CONFERENCE Written by Gerald Perritt, Vice President, U.S. Contract Logistics, Kuehne + Nagel and WERC 2018 Annual Conference Chair Produced by Denitra Price
WERC Annual Conference brings together 1,000 logistics professionals to upgrade their knowledge with expert-led sessions, expand their network with peers from across the country, to discover the latest innovations and tested solutions
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arehousing and logistics professionals like yourself are at the center of the supply chain. No other association recognizes this more than the Warehousing Education and Research Council (WERC). That’s why WERC has put on its Annual Conference for Logistics Professionals for the past 40 years, with the 41st edition to be held in Charlotte, North Carolina, May 6-9, 2018. Participants both past and present attend this event each year to discover targeted, relevant insights from their industry peers about the latest trends and best practices within our field. For that reason, WERC’s Conference topic selection committee puts significant effort into evaluating and selecting all of the 80-plus educational sessions. Because every session is peer-sourced, peer-reviewed and peer-delivered, you can be sure that you’re hearing about the strategies that are most applicable to your operation. This year, 81% of the Annual Conference sessions explore
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topics never before presented at the event. Among the featured subjects are emerging supply chain technologies and innovations, workforce development, the latest in slotting processes, and inspirational tales from the front lines of operational improvement.
Suppliers and practitioners meet in the WERC Solutions Center to examine the latest innovations
Additionally, 19% of the sessions are back by popular demand. Things like the latest developments and best practices in metrics and key performance indicators (KPIs), transportation, labor management, outsourcing and execution strategies. All are perennially popular and will
be covered across thought leader presentations, panel discussions, TED-style talks, Peer-2-Peer dialog groups, and brand-new Learning Pod gatherings. Further, the 120 expert presenters and panelists themselves are predominantly folks “in the trenches�:
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WERC
WERC CEO Michael Mikitka addresses attendees at its 2017 Annual Conference in Fort Worth, Texas. The 2018 event takes place in Charlotte, North Carolina
79% are director level managers, 37% are practitioners, 21% are C-suite executives, 20% are consultants, 18% are third-party logistics providers—an increase across all titles over the speaker mix percentages of last year’s Annual Conference. (Concerned that some sessions might become a sales pitch? Don’t be. Suppliers only represent 17% of the speakers—10% fewer than in 2017—and they’re primarily sharing case studies or technology
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selection and implementation tips.) In addition to filling their brains with three days of learning, the majority of WERC Annual Conference attendees are on a mission to fill their contact lists. That’s why the event is specifically designed with numerous opportunities for intimate networking, both in formal and casual settings. Among the organized networking sessions, Sunday includes a Kick Start Welcome Reception followed by “Meet and Eat” dinner outings
that give attendees a chance to meet new people while sharing a casual meal. Monday and Tuesday feature three separate opportunities to network while visiting with vendors within the Solutions Center, plus a Women @ WERC breakfast and evening receptions. And, for those who join one (or more) of the offsite facility tours, some of the best informal networking happens on the bus rides to and from the convention center to the host site. I personally can say that many of my top, go-to people for brainstorming ideas and sharing operational insights and perspectives are connections I’ve made at the WERC Annual Conference during my almost 20 years of participation. Truly, the relationships formed at the Annual Conference have brought me both personal and professional value that has extended far beyond the three days of activities that occur during each event. I am confident you and your colleagues will benefit in the same way. So don’t miss this opportunity to discover the latest trends
Attendees enjoy a variety of session types at WERC’s Annual Conference, from TEDstyle talks and general speakers, to deepdive sessions that get to the core of today’s industry issues
Logistics professionals meet at WERC’s Annual Conference, expanding their networks and building lasting relationships
and best practices throughout the warehousing and logistics industry at the WERC 2018 Annual Conference. For more information and to register, I encourage you to visit www.werc.org/2018 today.
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BECTON DICKINSON – A procurement transformation
BD’s procurement operations have been completely revolutionized in recent years, as the company has embraced transformative technology Written by James Henderson Produced by Glen White
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oday, the procurement operations at Becton Dickinson (BD) – the global medical technology company – are admired and respected across the industry spectrum, with collaboration and joined-up thinking from the company’s procurement teams driving forward the medical equipment giant which turned over more than $12bn in 2016. But what you see today is the result of a near two-decade effort to make BD’s procurement functions best-in-class. The transformation began in 1999, a time when the company’s procurement was decentralized, fragmented and not perceived to be especially important in the grand scheme of all things BD. In total, BD’s core procurement team numbered four. One of the first ambitions for the procurement function was developing effective category management and sourcing, as well as delivering demonstrable value to the business as a whole. That gave BD a base from which to build into what is now a truly global end-to-end procurement operation, with various skilled and
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knowledgeable teams – including source-to-pay, indirect, risk and supplier management to name a few – working together for the benefit of the wider company. From a team of just four less than 20 years ago, BD’s present-day procurement function is home to more than 180 employees and growing, who work towards carefully planned three and five-year roadmaps.
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BD Global Procurement strives to continuously deliver the highest sustained value for the company by leveraging its full competitive supply base using highly effective and efficient systems and processes. Source-To-Pay Critical to the success of BD’s overall procurement function is sourceto-pay. Roger Ambrose is BD’s Senior
Director for Global Source-to-Pay, and has been with the organisation since 1994, when he joined as its European Internal Audit Manager, before taking on responsibility for implementing SAP across the business. Since 2002, Ambrose took responsibility for global processing in Europe, before taking on his current role. Originally a Chartered Accountant, Ambrose says: “As you move into
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S U P P LY C H A I N
“The challenge right now is there is so much information out there – how do you bring it all together in a way that is meaningful and easy to use, so that our expensive sourcing managers can spend their time using the data instead of collecting it?” – Roger Ambrose, Senior Director, Global Source-to-Pay
the procurement space, you realise that actually paying the invoice is the least thing that you’re really worried about from a procurement point of view. You want to be using the right suppliers, have the right supply base, get the right pricing, and have access to accurate analytics.” Ambrose says that the changes made since 2002 are marked, with BD utilizing technology to drive its supply chain transformation. “If I think back to what I was doing in 2002, it’s vastly different to what we’re trying to do today because of technology, but also because of our maturity as a company. That maturity also shows itself up on what we’re doing on the category side.
“I would say that is true particularly with indirect, but probably across the entire spectrum; our sourcing managers are much more knowledgeable about what goes on in their market sectors. Their job is to understand their category, and not just what BD wants out of it, but what we can then offer to our users and stakeholders, so that they can really leverage that and make more use of it. “The challenge right now is there is so much information out there – how do you bring it all together in a way that is meaningful and easy to use, so that our expensive sourcing managers can spend their time using the data instead of collecting it? I think that’s
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the journey that we’re on. I think back to those early days, what we used to collect information from, all of our different systems and spreadsheets. “It was very heavy workload just to put it all together in sensible categories, even assuming the data was correct. Then, we went over to the category managers who would look in their categories, and their job really was to manually cleanse the
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data and make judgements about supplier categories or look the reasons for increased spending. “Over the last few years, what we have done is automate a lot of that work, and freed up our teams to use their time more effectively. We’ve eliminated a lot of the administration that’s needed just to bring them together, and we have been pretty successful in building business rules
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that reflect the cleansing that the category managers did last time, and so they don’t have to do it again. You can see there’s a shift there from the cleansing, even the analytical work, to leveraging it and using it.” Ambrose believes that there is now an opportunity to begin to build in technology – and automation in particular – when designing new procurement tools and systems.
Giving the example of building a new vendor into master vendor list, he says: “We currently have a workflow process that goes through various approvals, and we have to collect a significant amount of data for that vendor for legal and regulatory purposes as well as a sourcing and category strategy purposes. A lot of this information is public and we have the opportunity to use AI to collect it for us. “We can collect that information in, which not only speeds the transaction, but also probably provides more data than we could get on that supplier, that we can feedback into spend analytics and help our sourcing managers do their jobs. “We have the opportunity to be really creative about thinking how we use suppliers in our environment, either to ease the transactions or provide information or identify a risk, or be proactive, such as recognising when a supplier is struggling and how can we help, or being able to identify whether one of our competitors has just signed a deal with them. It’s a really exciting time.”
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S U P P LY C H A I N
Indirect Procurement Williams and the Indirect Procurement Since being appointed as VP team have been able to build and Procurement – Global Indirect in April implement five-year strategies across 2014, Patrick Williams is credited with multiple channels, saving hundreds of leading a large-scale transformation millions of dollars for the organization across the full breadth of the Indirect in the process. Such has been the categories to utilize cross functional success, the ‘ReCapture’ name has teams to develop category strategies fallen by the wayside – “it’s just the that drive competitive advantage. way we work now, indirect is very The program was known internally as much on the company’s radar now,” ‘ReCapture’, and is says Williams. fully endorsed by “When I first joined BD’s management BD, our ‘spend committee. under source plan’, Williams says which is when you the buying and develop a strategy, engagement from actually write what Number of senior management we call a ‘source Employees at BD has been integral to plan’, which is the the success of the official document initiative, describing that completely it as “critical”. “The management outlines the strategy I think was in the committee is not something we had 20% range. We are now at 59% and before,” he says. “The program is climbing, so we are making excellent not just sponsored, but governed progress when it comes to developing and controlled by those at the very strategies and implementing them.” highest level of the company. Teams In the company’s journey to supply also do not get to opt-out, so the chain transformation, Williams says scope of it stays consistent.” it has benefitted from taking a wide Off the back of the program, view of what strategies are working
49,500
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“As an R&D team, we have to push the status quo when it comes to technology and how it can help the business” – Noelle Lee, Vice President, WW Procurement R&D
S U P P LY C H A I N
within the market sector, an approach which has led to the company exploring other business avenues. “Essentially, we have the advantage of many companies have actually done some really great things that we can leverage. We can follow it, so it gives us that late-mover advantage of saying, ‘There is a model, somebody cut their teeth on it a little bit, and we can actually apply it and gain lots of advantage.’ A good example would be outsourcing, which BD has started to do more. “There used be zero appetite for it; the philosophy was that our business extended to the fence at the end of our offices – the attitude is that we could do things better than anyone – which is obviously now not smart. So, this idea of outsourcing is an example where we’re smartly doing certain things. We recently outsourced some IT and it drove tremendous value.” On leveraging new technology – AI, machine learning, automation, et al – to drive BD’s procurement journey and transformation, Williams is unequivocal. “I am convinced that is the wave of our future across all
of our categories, not just indirect – our focus on digital is laser. “I’ve assigned members of our IT procurement team to develop strategies for their peers in departments such as IT, finance, legal, sales and marketing, plant indirect, etc. What we’re asking them to do is pair up and look at digital opportunities where there’s machinery involved and you can use technology to be smarter. “We think on a long-term basis, we could drive hundreds of millions of dollars in the categories themselves by leveraging technology. We are looking at what we can get working on today, and what is perhaps in more of a concept stage that we need to develop to eventually make it usable.” Global R&D Procurement Less than 12 months old, BD’s Global R&D Procurement division is headed up by Noelle Lee. She leads a global team of associates and that help drive sourcing strategies that supports BD’s innovation pipeline, enabling top-line growth and accelerated time to market. She says the division was
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created due to a recognition that as the importance of innovation grows, more dedicated R&D procurement will be needed to manage the rising spend. Elaborating on the division’s remit, Lee comments: “It’s about getting as much value out of every dollar that we spend. The industry is going through a lot of change and innovation is being driven forward, so it’s really important for us to have
established this R&D team. We want to become a really trusted partner of the business, and push real top line growth for the company. “As an R&D team, we have to push the status quo when it comes to technology and how it can help the business. For example, there are now companies that can automate a function such as labelling, which in the past has been typically a manual
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BD
Better together: BD and Bard
job. So we are able to take that to the business with the argument that it will drive efficiency and take over from a function that was previously very labour intensive. This R&D team is taking these ideas and implementing them, which is very positive for BD.” The expectation for the division is such that members of the team are required to have a broad breadth of experience across the procurement
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spectrum, so they speak the language of all stakeholders – liaising with IT in one instance, and then marketing the next, for example. “It is essential that we are able to fully understand the challenges and targets of all of our stakeholders,” Lee comments. “We are being asked to connect the dots and drive change; we need to act as a change agent and to do that we have to be able to speak the
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“I want BD to become bestin-class compared to our peers, the best-of-the-best” – Patrick Williams, VP Procurement – Global Inderect
language and get everybody on board with our ideas. BD has been very consistent in driving change, whether that’s across the entire organisation or in single functions, and we have to be an important part of that.” In the months since it has been established, the R&D Procurement division has already introduced insight and perspective to the overall global procurement operation, and Lee says there are many more areas where it can push improvements and growth. “We need to collaborate more with our preferred suppliers to really challenge them and drive innovation. We know what the business needs
now and will need in the future and we need to challenge the supplier base to drive that and innovate with us. There is a lot more we can harness from our suppliers and that’s something we will look to do over the next three to five years. “It’s also important that when we’re working in a global role, we understand how different approaches work for different territories, negotiating with suppliers is very different depending on where you are. A Japanese supplier is going to be very different from an American supplier, for example.” Lee believes that the transformation
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BD
Founded in
1987 100
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being pursued by BD and the R&D procurement team will be vital in the overall effort to secure and develop the best new talent to the organisation. “There is an opportunity for us to
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understand procurement so we have to engage with them, communicate what procurement really is and the opportunities within the industry.”
establish procurement as a hugely important driver for change in the business and that is only going to help attract and retain the best talent. I think many graduates don’t really
Driving ahead BD has come a long way since the turn of the millennium. Where there was previously just a handful of procurement staff, there is now a highly competent and knowledgeable division comprising almost 200 professionals. Once perhaps considered a cautious, BD’s global procurement teams have fully embraced technology to drive both the procurement function and the wider company’s top-line performance. The company is now thinking about how it can utilize AI and machine learning, automation and further bleeding-edge technology to improve yet further. Describing his goals for the future, Patrick Williams says: “I want BD to become best-in-class compared to our peers, the best-of-the-best.”. If BD continues its current trajectory, it would take a brave person to bet against the organization achieving exactly that.
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TA K I N G TH E R OA D LESS TRAVELLED WITH PERSONALIZED PROCUREMENT
By balancing the unique demands of its hotels and resorts with the need to drive efficiency, Two Roads Hospitality is creating distinct travel experiences from the moment you check in
Written by Laura Mullan Produced by Denitra Price
T W O R O A D S H O S P I TA L I T Y
T
he hospitality market is saturated with hotels that often look and feel the same. However, amidst this, one hotel management company is cutting through the noise to offer unforgettable, custom-tailored getaways to its guests. Whether it’s managing a sleek boutique hotel or a hazy, sun-drenched resort, Two Roads Hospitality aims to capture the true spirit of a place. The Colorado-based hotel management company has a collection of 70 properties in its North American portfolio and it prides itself on embracing the unique nuances between each of these locations, and each of its guests. Believing that no two trips should be the same, Two Roads Hospitality’s personalized approach is an integral part of the company’s DNA. However, when tasked with sourcing the products and services for such an entrepreneurial operation, this philosophy can prove challenging. With a wealth of experience across an array of gaming casinos and hospitality companies, this responsibility has fallen into the capable hands of industry veteran Bryan Edwards, Vice President of Strategic Sourcing & Supply Chain. Personalized approach “For me, probably the biggest draw to join Two Roads Hospitality was the challenge of building a sourcing strategy that embraces the unique needs of each property but still aggregates our national
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INVOICE AUDITING SPEND MANAGEMENT TOOLS COMMODITY TRACKING REBATE MANAGEMENT NEW SAVINGS OPPORTUNITIES
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S U P P LY C H A I N
“On a daily basis, we aim to create meaningful financial results for the properties, improve services and product value” – Bryan Edwards, Vice President of Strategic Sourcing
spend,” says Edwards. “On a daily basis, we aim to create meaningful financial results for the properties, improve services and product value, whether it’s the food in our kitchens or the operational items needed
for housekeeping. We see how can we can identify opportunities to add value to the overall operation, while embracing the unique needs of these individual properties.” Launched in 2016 following a merger between Destination Hotels and Commune Hotels and Resorts, Two Roads Hospitality takes a unique approach when managing and operating its portfolio of properties for brands such as Alila Hotels & Resorts, Destination Hotels, Joie de Vivre Hotels, and Thompson Hotels. Whilst overseeing the day-to-day running of these hotel brands, the company champions the unique differences between each of its locations, properties and guests.
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“Really, everything we do at Two Roads is built on this idea of true authenticity,” explains Edwards. “We have properties in highly unique markets that embrace everything about the part of the world that they’re in. Whether it’s the design or aesthetic of a property, the ingredients that are incorporated into the food, the language and the approach from our team members. All of these things are designed to bring about a unique guest experience that embraces where we are in the world.”
Focusing on each unique property Less reliant on traditional group purchasing organizations (GPOs), the company’s meticulous, customtailored approach also extends to its sourcing function. As such, Two Roads Hospitality has brought strategic-sourcing in-house with notable success. “When I talk to a property about their needs, my only focus is that specific property,” Edwards explains. “I want to know what’s important to
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them, what they need to run their business, where their opportunities are, where their pain points are and how I can help resolve these issues. In that way, we personalize our strategic sourcing experience more than a traditional GPO does. “GPO’s take a wide net approach to procurement whereby they throw a wide net out into the water and catch what they catch,” adds Edwards. “In this way, they’re not necessarily focused on what the specific needs of the property are. Meanwhile, at Two
Roads Hospitality, we’re like a line fisherman. We have a very specific target and a very specific strategy to catch what we’re after. That’s the key sourcing strategy here – how do we focus on the very specific needs of our business when we go to market?” Sustaining supplier relationships With the growing pressure to reduce spending whilst enhancing value, cost cutting has become a fundamental part of strategic sourcing. As such,
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Partnering with hotels, resorts and venues from coast-to-coast, AVMS combines innovation and expertise to deliver upon your objectives. When you collaborate with AVMS, you are selecting a trusted audiovisual provider that creates unforgettable experiences. With our skillful team, you will receive technology with a te hospitality approach for every interaction and event. EXPLORE MORE
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Two Roads Hospitality recognizes that its tight-knit supplier relationships help the company drive value and differentiate it in the market. “We’re very proud to do business with our suppliers because they’ve invested a lot to meet the varying demands of our 70 properties,” comments Edwards. “One specific product that we’ve identified for 60 properties may not work for the other 10 and so we collaborate with our partners to come up with a solution for that group. I think it’s that creative approach that enables
“I think it’s those little things – making it a personal experience, making it fun, and making everybody feel like the company owner – that are so important for the team’s morale” – Bryan Edwards, Vice President of Strategic Sourcing
everybody to focus on collaborative work and mutual investments. “I also think, personally, that our business style has a lot to do with these crucial relationships,” he adds. “Shaking somebody’s hand, looking them in the eyes and knowing that they’re genuine in their interest to do business with you and that they’re invested on a personal level - that sort of approach really goes a long way. Although this business style might take a bit more time, it creates
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much deeper lasting relationships that we’re able to leverage. It enables us to have suppliers who are invested in making sure our hotels succeed.” Technological ingenuity In an industry that is being pushed to do more with less, technological innovation is helping Two Roads Hospitality stay ahead of the curve. As a result, the international company is utilizing big data to create efficiency and add real-time supply chain insight to a fast-paced and ever-evolving business model. Partnering with innovative companies like Buyers Edge Purchasing, Two Roads Hospitality utilizes data warehousing to see itemized details about what the company has bought, where it was bought, how often was
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it bought, what was paid and what the product’s specification is. “As well as that, Buyer’s Edge also offers something that our industry is not famous for and that’s price assurance,” adds Edwards. “It’s great that we spend months on a sourcing event, deliver a great contract and get a high degree of alignment from our properties into that program, but if nobody is auditing the price to ensure we’re getting the right price delivered, we’re leaving money on the table. Buyer’s Edge has really enabled us to be able to do that work in an automated way. “As partners go, I consider these folks an extension of my sourcing team,” he adds.
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Retaining key talent The personalized approach Edwards takes to sourcing is one that also transcends the company’s work culture. In the hospitality industry, a sector that has been plagued by a high turnover of staff, Two Roads Hospitality has been an anomaly. By promoting a flexible, balanced work culture the company has managed to retain its young, talented and forward-thinking team. “Not only is it a challenge to find key talent, it’s also a challenge to keep them,” notes Edwards candidly. “Therefore, we work really hard to promote a positive working culture. We have a very flexible working environment. The home
office is casual and open. We have a CEO who believes in a family-first lifestyle, and walks the talk. I think it’s those little things – making it a personal experience, making it fun, and making everybody feel like the company owner – that are so important for the team’s morale.” Working alongside property owners Just as the company knows what makes a guest happy, Two Roads Hospitality also understands the needs and expectations of its property owners. Boasting a deep understanding of global trends and what’s driving change in the sector, Edwards and his team guide properties and help them become a crucial part of local communities
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T W O R O A D S H O S P I TA L I T Y
“For me, probably the biggest draw to join Two Roads Hospitality was the challenge of building a sourcing strategy that embraces the unique needs of each property but still aggregates our national spend” – Bryan Edwards, Vice President of Strategic Sourcing
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in a bid to create lasting value. “I think, fundamentally, we’re very good at managing a business,” Edwards says. “We know how to make money, we know how to manage a hotel or manage a resort properly. Not only do we know the nuts and bolts of hotel management well, we do it in a way that allows you, as the property owner, to have an opinion and a perspective on how your business should operate. This balance allows the General Manager and the local team at the property to have a voice in the equation.” The road ahead Despite its short history, Two Roads Hospitality has grown rapidly to become one of the world’s largest independent lifestyle hotel management companies. Offering the flexibility of a lean and agile organization with the scale property owners need to succeed, Two Roads Hospitality has gone head-to-head with some of the industry’s major brands. In doing so, the company is ready for the next
generation of travellers – expressive, engaged individuals who want to truly experience a place and who appreciate the personalized touch the company brings to its portfolio. With 70 North American properties under its wing, the company’s history has continued on an upward trajectory. But when the hospitality sector is rapidly innovating and evolving, what does the future hold for Two Roads Hospitality? “At Two Roads Hospitality I’m surprised every day,” reflects Edwards. “We have a very busy business development team who are focused on acquiring new management agreements with some very unique properties in unique markets. However, we’re being very purposeful about how we select those opportunities. We want to get into good business partnerships and good business relationships. I’m surprised every day at how sophisticated that is. That’s really an art and a science. Looking forward, I think our portfolio will continue to grow but I think we’re going to grow smartly.”
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Nokia’s ‘conscious’ factory of the futur
Written by Laura Mullan Produced by Charlotte Clarke
re
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NOKIA
Unveiling its groundbreaking ‘conscious factory,’ telecoms giant Nokia is truly ready for the fast-changing manufacturing needs of the future
S
everal years ago, Nokia set itself an ambitious objective: to envision and create the ‘factory of the future’. Fastforward to today and the telecoms giant has made this distant future a reality with its state-of-the-art concept – ‘the conscious factory’. With every industrial revolution, factories have evolved to create something unlike anything that has come before. Now, in the midst of Industry 4.0, analytics, robotics, and 3D printing are just some of the emerging trends that are redefining the manufacturing space at large. By harnessing the potential of these technological trends, Nokia’s
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42Q is Proud to be a Solution Provider for Nokia’s Conscious Factory and Factory in a Box
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NOKIA
“It’s a complete game changer” Johannes Giloth (left), Senior Vice President of Global Operations and Chief Procurement Officer at Nokia
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Conscious Supply Network is ushering in a new era of supply chain transformation and battening down the hatches for Supply Chain 4.0. Nokia’s vision was a simple one: to transform its factories into ‘the conscious factory’ – an agile and intelligent manufacturing service that is fully-automated, green, self-learning, and able to predict and prevent supply flexibly. To make this hi-tech network a reality, the Finnish giant zeroed in on four crucial areas: digitisation, analytics, robotics and transparency. It leveraged tools such as cloud computing, Internet of Things (IoT), analytics, machine learning, robotic process automation (RPA) as well as augmented and virtual reality. In doing so it has created an endto-end supply chain solution that is more visible, adaptable, and smarter than anything before. A conscious supply network It has been a mammoth task for Nokia, but it is one which the team believes will revolutionise manufacturing forever. “In former times, if you outsourced a factory it was like a black box,” explains Johannes Giloth, Senior Vice President of Global Operations and Chief Procurement Officer at Nokia. “You placed an order there and waited until the delivery arrived but, in between, you couldn’t see anything. With our conscious factory, I can see in real-time
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EMPOWERING NEXT GENERATION MOBILE COMMUNICATION Created in 2015, Ampleon is shaped by 50 years of RF power leadership and is set to exploit the full potential of data and energy transfer in RF. Ampleon has more than 1,350 employees worldwide, dedicated to creating optimal value for customers. Its innovative, yet consistent portfolio offers products and solutions for a wide range of applications, such as mobile broadband infrastructure, radio & TV broadcasting, CO2 lasers & plasma, MRI, particle accelerators, radar & air-traffic control, non-cellular communications, RF cooking & defrosting, RF heating and plasma lighting. Amplify the future | www.ampleon.com
Taco Zwemstra, Senior Vice President
Arttu Ollinaho, Global Key Account
and Chief Operating Officer: “With
Director: “By closely collaborating
our balanced mix of in-house and
with Nokia, the flexibility of the entire
external manufacturing, supported
supply chain is being significantly
by state-of-the-art planning
improved. This increased flexibility
and execution tools, Ampleon is
and an overall lead-time reduction
prepared to embark on the next
are needed to meet the volatile
journey towards greater customer collaboration and support.”
TRANSFORMING THE SUPPLY CHAIN FOR BETTER CUSTOMER EXPERIENCES
market requirements and to speed up new technology developments.” Nokia is a leading customer in the Mobile Broadband business, purchasing high volumes of Ampleon’s Radio Frequency Power Amplifiers (RFPA) for 4G and 4.5G base stations. Examples for 4G RFPA high volume parts:
Ampleon, being a young company with a long history in RF Power, has had the ideal opportunity to transform its supply base and supply chain operations. Following the carve-out from a large company, the establishment of an independent company created many challenges, but also many
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First and foremost is the ability to transform our previous
frequency bands. These 5G products require complete new
in-house manufacturing to a balanced combination of in-
RFPA technologies for various power levels and frequency
house and external manufacturing. Partnering with leading companies, leveraging their strengths with our needs,
bands. At the same time, the speed of development and technology creation in the entire supply chain is challenged:
offered us to the chance to optimize our supply chain. Our
the even more complex new products must be available way
own in-house back-end manufacturing gives us the flexibility
faster than before. This requires high attention to the overall
and quality to launch key technologies which help to boost
lead- and cycle times within the global supply chain. The way
our business.
towards a massive MIMO (Multiple Input Multiple Output) type of Base Stations in 5G requires scalability in volume
Secondly, we have had the opportunity to redefine our
capacity and an adjustable supply chain more flexible than
IT landscape and advance our business processes and
ever before. This can only be achieved when supplier and
associated tooling. Choosing state-of-the-art business
customer are partnering for success.
planning and supply tooling will enable Ampleon to become even more flexible with the aim to further grow our business with our key customers. Ampleon has embraced “Partnering for Success” as one of the key business drivers towards future growth. Together with our customers, suppliers and R&D partners, and with a next step in supply chain excellence and system support, we are well on our way.
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what happens in each factory and I can optimise the process. “It’s a complete game changer.” With over 30 factories worldwide, Nokia’s supply chain is a far-reaching one spanning several continents. However, the Finnish company only owns three of these factories with the rest being outsourced. Instead of focusing on owning bricks-andmortar, Nokia is concentrating on owning the information, the data, and knowledge behind it. By understanding how the industry is connected together, the
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organisation is creating a conscious supply network, an end-to-end ecosystem built on end-to-end understanding and knowledge. “Only three of our factories are owned by Nokia because we have not been focusing on manufacturing, we have been focusing on managing a manufacturing network,” observes Giloth. “I only can manage this network if I have data. I don’t care about owning the equipment, but I care about owning the data. “We are putting thousands of sensors in our factories and
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Nokia has more than 30 factories around the world
connecting all our manufacturing and logistics assets together so that they can talk to each other,” he continues. “With that, we are creating what we call a ‘conscious factory’, where all transactions are visible in real-time in a controlled centre. With that, you can optimise throughput, inventories, quality, and you can apply machine learning to it. It helps you automate the entire process, it helps you ensure quality, it helps you to reduce cost in inventories, and it helps you be more flexible in adapting your supply chain. But having one conscious
1865
Year founded
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Solutions for me. “False calls can be avoided! I trust solutions from Viscom and invest in sustainable quality assurance.“
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micro-computed tomography. The offer also includes solutions for conformal coatings and wire bond inspection. Thus, all inspection gates are covered by a single source.
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NOKIA
factory is just the start of it. We want to create an entire network.” Presenting the ‘factory in a box’ This is just the beginning of Nokia’s vision for the future; it is also resigning the idea of large manufacturing locations to the past. Unveiling its ‘factory in a box’, Nokia is anticipating the fastchanging manufacturing needs of the future, by creating a conscious ‘Lego’ building block factory. Offering unparalleled flexibility and agility, this factory in a box aims to revolutionise today’s factory floor. It can be transported to the location, build the necessary volume for ‘country of origin’ requirements and can be moved again as needed. Agility is a factor which can make or break a company, especially in the telecoms industry, and so the factory in a box could be instrumental as it allows product prototypes to be quickly created, tested and fixed if necessary. What’s more, if a site is hit by a natural disaster, critical customer orders can still be achieved
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“Having one conscious factory is just the start of it. We want to create an entire network” Johannes Giloth, Senior Vice President of Global Operations and Chief Procurement Officer at Nokia
quickly with a portable factory. “It is a step towards a modular supply chain factory,” says Giloth. “A big problem in the manufacturing space is that R&D and manufacturing should be close together because then you have an immediate feedback loop. “Every time I have a factory request, whether it’s in Nigeria or elsewhere, I cannot create a factory there and demolish it after a year. With the factory in a box, you can ship that modular container there, produce
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The future of intelligent productivity MY700 - The ultimate in high-speed jet printing and jet dispensing The future of electronics production belongs to those who can handle any solder paste or fluid deposit with absolute precision and unmatched speed. Part of the new MYPro series, the MY700 Jet Printer and Jet Dispenser combines solder paste jet printing with jet dispensing of adhesives, UV materials, epoxies and more – with micrometer precision and at speeds of more than one million dots per hour. Thanks to a combination of intelligent software and revolutionary jet-printing technology, you can accelerate your production with on the-spot revisions, 3D mounting, and perfect quality solder joints for both rigid and flexible boards. Simply put, it’s the smartest way to boost quality and utilization across a vast range of challenging applications. Whatever your ambitions, the future is already here. In fact, it’s just in time.
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Number of employees at Nokia the product and when it’s ready for mass production, you go elsewhere.” A global company with a local focus “This will not only transform the supply chain landscape at large, it will also create opportunities for unique regional players,” explains Bo Jensen, Head of Delivery Operations Asia Pacific & Japan at Nokia. “If we look at it from a local perspective, it also allows us to adapt to local requirements, so this would be advantageous for regions such as Indonesia, for instance, where there’s a lot of discussion about local content and requirements. It creates a lot of flexibility and it also provokes our customers to take a bigger step,” he comments. Sitting in Nokia’s gleaming regional office in Singapore, Giloth and Jensen passionately bounce back-and-forth as they talk about the latest exhibitions where they will showcase this ground-breaking concept. Sitting in the epicentre of the bustling business district, Nokia
has firmly cemented itself as a major player in the manufacturing space. The ‘conscious’ factory may have seemed futuristic but it is possible - and Nokia made it happen. However, this state-of-the-art concept didn’t come about in an instant. It is the result of over a decade’s work, and it is just one step in what has been a complete rootand-branch transformation of Nokia. A high-level supply chain transformation On this journey, the organisation faced three successive challenges that created what Giloth called an ‘existential moment’ for Nokia – one which would bring about one of the biggest supply chain transformations in the industry. In the past two years, Nokia jumped from 101st to 15th in Gartner’s Top 25 Supply Chain ranking, an extraordinary turnaround that the research firm hailed as ‘triumphant.’ It has been a lengthy process for both the company and its people but Nokia is keen to keep up this momentum.
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NOKIA
“This supply chain transformation has been a journey of around eight years,” Giloth says. “We were undergoing external shocks to a certain extent. The first challenge was the battle of profitability that was driven by major Chinese competitors, and because of this we needed to cut costs and drive efficiency in the supply chain, and therefore one of the solutions was to create an integrated supply chain. “We applied a lot of lean, Six Sigma, Kaizen continuous improvement efforts – the bread and butter of a good supply chain,” he adds. “We renovated our organisational setup. We introduced KPIs and that was just the first step.” The next challenge confronting Nokia was the pressure to be agile and responsive in a volatile market. “The need for an agile supply chain became more and more paramount,” Giloth reflects. “We invested a lot of time and also money in making our supply chain and demand planning, reacting faster to the market changes while not compromising on the lean setup. Then that created an integrated and demand-driven supply network.” Customer-focused The third and perhaps most pressing priority? Customer centricity. In many organisations, supply chains are seen
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“We used to be in the trenches of the back office but now we’re more involved from the beginning of the opportunity in order to create the best possible customer experience” Johannes Giloth, Senior Vice President of Global Operations and Chief Procurement Officer at Nokia
as a back-end function, but at Nokia, that notion is being flipped on its head. Giloth and Jensen believe that ‘creating the technology to connect the world’ is more than just a tagline that people associate with the telecoms company – it is a core value that should be interwoven through all aspects of Nokia, including its supply chain. “Our market is diversifying hugely,” observes Jensen. “We have new customers, new segments, and therefore it’s critical that we are more customer-specific and more consumer-driven. In all aspects, user experience is really influencing our behaviour. “Interestingly, we’re also seeing that by making our supply chain more customer-centric, we can grow our top line,” he continues. “We are having more strategic engagement with our customers and more what we call ‘stickiness’. This is significant because the more we are in, the more we can help them, and the more likely it is that we can build on this. “It’s also about building a company
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mentality in the organisation that shows we are an important part of what the customer is seeing in their daily life. We used to be in the trenches of the back office but now we’re more involved from the beginning of the opportunity in order to create the best possible customer experience.” From top to bottom, customer needs are driving decisions at Nokia. But as each customer has their own unique demands, Giloth describes how the Finnish company has worked to understand and cluster its customers into segments so that it can deliver the things that really matter to them. “Some customers want to have fast delivery, but they are not really price-sensitive,” Giloth says. “Others are looking at the price only, but the supply chain related KPIs are not that important. You need to really understand the different KPIs and what your customers want. Our customers have completely different requirements in terms of throughput, reactiveness and on-time
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delivery so we need to understand the requests of the customer and segment our supply chain towards it.” However, a customer segmented supply chain is just the start, Giloth says. “You also have to create customer intimacy, to really talk with your customers, and be exposed to the customers. “Therefore, we have people like Bo in the regions being more and more connected with Nokia customers, rather than it being a very back-ended function. On top of that, you need to design your processes and your tools to make it easy for customers to use. Your product configuration can be cumbersome, or it can be Amazon-like. If the customer has a good feel of that user interface, that’s added value in itself.” True digital transformation Often, ‘digitisation’ can seem like just another buzzword; a few syllables that have saturated business press releases worldwide. However, Nokia has proven it can be more than just on-trend lingo. Over the
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past several years, it has worked diligently to revamp its digital space but it doesn’t underestimate the challenges that lie ahead. “Digitisation has become a buzzword because many global supply chains are far away from being truly digitalised,” says Giloth candidly. “The benefits and the potential have not been fully uncovered. At Nokia, we think that the next S-curve in achieving supply chain maturity is digitalisation. “Nokia is a company of different legacies,” he continues. “It’s a combination of Nokia, Siemens, Alcatel-Lucent, Nortel, Motorola and Panasonic. All those companies we have merged with over the last few years have brought legacy systems and IT systems with it. It is unrealistic to have a monolithic IT system in a dynamic company like Nokia and so we are trying to bridge that by using technology like RPA and artificial intelligence, for example.”
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Sustaining supplier relationships Nokia is taking radical steps to accelerate its digital maturity and influence the shape of things to come, but it isn’t doing it alone. Sustaining strong supplier relations has been key to unlocking Nokia’s supply chain transformation. “We are working closely with companies to help us automate our processes on a daily basis,” Giloth says. “When it comes to that conscious factory environment, we have been working closely with a lot of sensor companies, small IoT startups, and cloud companies to
really get a deeper understanding. When it comes to digitalising entire process chains, we have a lot of internal projects, but these are also supported by specialised consultants in those areas. “As well as this, we have just consolidated our business process outsourcing and that strong focus has really helped us transform our auto management process,” adds Jensen. “We’re also using everyday tools like Office 365 and SharePoint Online to digitise the everyday life of the employee as much as possible. We want to change the mindsets
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of our people and encourage them to utilise the opportunities that are at our fingertips every day.” Open collaboration ‘No man is an island’, and the same can often be said about business. In this ever-evolving industry, the right collaboration could set you miles ahead of a competitor and perhaps no one understands this better than Nokia. As a result, the Finnish company has turned to the Open Ecosystem Network. Built on the principle of data democracy,
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this innovative platform has shaken up traditional business models and proposed a new way of working with different ecosystems and industries. By connecting developers, startups, business incubators, universities, subject experts and entrepreneurs, the platform allows groups to share ideas and find the right people to develop them. “It revolves around co-ideation and co-creation with our suppliers, but also collaboration within the company,” Giloth explains. “It’s a digital platform where you can post
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“Getting that outsidein perspective was one of the key levers that helped us reach the next level� Bo Jensen, Head of Delivery Operations Asia Pacific & Japan at Nokia.
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your ideas, where you can have private rooms and where you can also have protected information in there, in case of sensitive intellectual property rights (IPR) discussions, for example. In this way, you can just accelerate the way you are dealing with your suppliers and prepare for the future. In the creation environment, it’s all about speed.” An outside-in approach This sense of open collaboration is largely a result of what Jensen describes as an “outside-in”
approach. “Getting that outside-in perspective was one of the key levers that helped us reach the next level rather than being satisfied with what we’ve always been doing,” he says. “After a very long time of trying to optimise looking at ourselves, we managed to turn it around. We are working with a lot of exciting external companies in order to get a perspective on what others are doing. “Instead of just looking at ourselves and polishing the chrome it’s about really asking ‘okay, what
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“Customer segmentation is going to become more important with 5G, because today our major customers are the major telecoms operators of the world, the big internet players. In the future, it could be someone like BMW or Tencent. It could be a bank or a hospital� Johannes Giloth, Senior Vice President of Global Operations and Chief Procurement Officer at Nokia
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can we do substantially different? How can we disrupt the sector?” 5G ready With the looming roll-out of 5G on the horizon, the telecoms industry is a thrilling yet unpredictable one to be in. Nokia has consistently been readying itself for 5G, chipping away at any obstacles in its path. Whilst Giloth and Jensen recognise the challenges it still poses, they feel that conscious supply network will propel the firm to new heights. “The first generations of mobile phone technologies were incremental to each other, but 5G is changing everything,” notes Giloth. “It will open the communications sector to hundreds of other industries because it is vital for uses like autonomous driving and robotics. “It’s a huge technology shift. We have invested heavily in R&D which has helped to set us apart, but you cannot do this just alone, you need to have partners. We have strategic partnerships that are helping us develop the necessary chips
and technologies. Without those industry ties it’s difficult, and so it takes a much more collaborative approach in many areas. You need to have long-lasting partnerships. “The market is changing and our customers are changing, and so our supply chain needs to be changing too,” he continues. “Customer segmentation is going to become more important with 5G because today our major customers are the major telecoms operators of the world, the big internet players. In the future, it could be someone like BMW or Tencent. It could be a bank or a hospital. With that, you need to completely rethink your value chains.” A true telecoms behemoth, Nokia has always left a lasting mark on the sector. The Finnish giant has come a long way since the humble, hardwearing phones it became infamous for and now, as Giloth and Jensen take the ‘conscious factory’ to the global stage, it seems that Nokia’s historic legacy is beginning a new chapter.
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How emotional and artificial intelligence transforms procurement Written by Ben Mouncer Produced by Heykel Ouni
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Raman Singh, Global Procurement Head at Dabur International, reveals how a blend of emotional and artificial intelligence is powering a transformation in the company’s global supply chain
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orldwide expansion can be the defining achievement for a business – but such success doesn’t come easily. Conquering each corner of the globe presents major challenges for every key stakeholder in a company, and those in the procurement division know better than most about what it takes to ensure efficiency in very different markets. Technology is a major help for supply chain leaders. Recent innovations have led to most procurement operations becoming obsolete only after a few years. With businesses in the midst of confronting the inevitability of the ‘Fourth Industrial Revolution’, technology such as artificial intelligence (AI) is now mission-critical for the compatibility of a supply chain. As Global Procurement Head for Dabur International, the global expansion arm of Dabur Group India, Raman Singh is overseeing a technology-driven transformation of the company’s procurement strategy. Yet, while
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RAMAN SINGH Global Procurement Head at Dabur International
he is in no doubt about the impact AI has and will continue to have on his team’s work, Singh also values a different type of intelligence when it comes to taking the business and its suppliers to new shores. “Emotional intelligence is also becoming very important,” explains Singh in an exclusive interview. “A person working in Egypt will have a very different work culture than a person working in India, a person working in Europe or a person in the United States. “When you are operating on a global scale, each country, each culture is different to another and they have to be respected in the same way. You have to build confidence with them, within your team, and with your supply partners. “What you are doing here or what is right here may be wrong there, and vice versa. Each of them will be different so they need to be treated differently. They need to be respected differently. EI is now a very important tool – it’s what can make
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you succeed in global business today.” Singh’s transformation plan for Dabur International’s procurement started 18 months ago, and there are a number of technological innovations that are already up and running. As part of the division’s fullyintegrated e-procurement platform, key processes are completely automated. Product demands are shared on the platform, supply of vital components for Dabur’s wide range of products is managed under one channel. This efficiency model saves valuable time and money while creating the potential for microanalysis of every step on the e-procurement journey, generating data which can help inform Singh in his decision making. “Our procure-to-pay system is completely digitised; there is no manual intervention in our procureto-pay process,” he adds. “It automatically gives you the small and big listings and details of what you have been doing with your procurement, giving you the scope and areas of improvement to work on.
“When you are operating on a global scale, each country, each culture is different to another and they have to be respected in the same way” RAMAN SINGH Global Procurement Head at Dabur International “I would say a decade ago, nobody had even thought of digitisation in procurement, or the role of e-procurement. Today, artificial intelligence in procurement is everywhere and e-procurement has become a much bigger platform than what somebody would have thought back then. Procurement has transformed; it is more intelligence, analytics and strategy based “In the future, AI will play an even bigger role in procurement. It will
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help you crunch data in real-time and and Kohler followed before he became give you the input and an overview Head of Packaging Procurement on what’s happening today, and then for Reckitt Benckiser’s South Asia how it’s going to affect you tomorrow. business, a role that provided the Based on that, you’re going to necessary experience for make your decisions.” him to take on global It’s evident that procurement for the procurement Dabur International. landscape has altered He currently immeasurably since manages a team Singh began his of 25, but how has The number of career nearly 17 years the importance staff working for ago as an executive of supply chain Dabur Group in vendor development management to a at LG Electronics. From business changed over there, he became an associate the past two decades? manager in supply chain at Electrolux. “CEOs are now looking at CPOs to Senior positions at Bausch + Lomb support them in terms of the overall
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business success. They are looking at a strategy wherein CPOs are playing a really important role in terms of achieving the overall goals of the business. “CPOs and CTOs (Chief Technology Officers) have never worked so closely as they have been working in the last four or five years either. The CPO goes to the CTO and says, ‘these are the things which I want to change in terms of the making it more technology-driven’. Today, they are working together to make important changes in the processes, methods and everything else.” Dabur International, which is headquartered in Dubai, United Arab Emirates, manages a global portfolio of over 1,000 natural health and beauty products. Capitalizing on its strong reputation as an established company of over 130 years trading in its market, it has successfully seen the growth of its brands in over 80 countries across all five continents. Established overseas markets include Africa, where it has seen particular prosperity in countries such as Nigeria, Egypt and South Africa. To make procurement effective in business expansion, Singh believes it to be essential for Dabur International to work on building meaningful and long-standing partnerships with its suppliers, so they can stand side-by-side with the company on its journey to worldwide growth. Singh focuses on two aspects of the relationship to develop a sustainable business that will benefit both
“Procurement has transformed; it is more intelligence, analytics and strategy based” RAMAN SINGH Global Procurement Head at Dabur International
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“Technological transformation and partnership development are the two key things for me for the next five years” RAMAN SINGH Global Procurement Head at Dabur International 162
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in the long term. Firstly, he emphasises that ‘the cheapest cost is not the best cost’, preferring to measure the ‘total delivered cost’ when choosing the right partner. Secondly, it’s crucial that the partner’s ambitions complement with those of Dabur International. “Their growth and your growth have to go along,” he says. “You cannot grow and let them not grow, or you cannot grow at the cost of their growth. That will not be sustainable. “At Dabur International in the last two years, we have drastically filtered our list of partners. We had been working with 200 or more suppliers, so we made a core group. In the core group, we have identified
15 or 20 who would grow with us. We have taken a challenge that in next year-and-a-half at least 15 of 20 will be growing just like us. “With these suppliers, we work very closely, and then we formed a ‘we’ kind of structure, wherein we are investing in the goals which we have for both of us. Partnerships are more about ‘it’s not me, it’s we’. “Technological transformation and the development of these partnerships are the two key things for me for the next five years.”
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A 1967 Ford Falcon Rebuilt for Fanshawe’s 50th Anniversary
ENGAGING A COMMUNITY THROUGH EDUCATION The college of the future needs to be run as much on vision as fixed processes. Innovation through IT is helping to shape this future at Fanshawe College, explains its strategically-minded CIO Written by John O’Hanlon Produced by Glen White
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anshawe College, or to give it its full title, Fanshawe College of Applied Arts and Technology, has just celebrated its 50th anniversary. Established at London, Ontario in 1967 as the successor to the Ontario Vocational Centre, it has since grown to become one of Canada’s largest further education institutions, with additional campuses at Simcoe, St. Thomas and Woodstock. It enrols close to 45,000 full-time, part-time and online students each year, not only from Canada and south-western Ontario, but from some 80 other countries around the world, and offers more than 200 degree, diploma, certificate, graduate certificate and apprenticeship programmes. Subjects available include applied arts, business, healthcare, human services, hospitality and technology, and Fanshawe also provides re-skilling and skill upgrading opportunities for mature learners sponsored by business and industry or by government. Since 2013, Peter Gilbert been Chief Information Officer (CIO) of this hugely important regional college,
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adding a second key role to his portfolio in February 2017 – that of Chief Infrastructure Officer. So, he’s a double CIO: “Over the last couple of years the opportunity arose to expand the purely IT work more into the actual running and building of our facilities, and it became clear that many of the challenges facing an IT department are shared by a facilities department.” Smart facilities, he explains, depend so heavily on IT these days that the old demarcations are disappearing. As an example, he cites parking. Anyone visiting a large campus anywhere in the world will know what a pain it is to drive around looking for a space – and the cost in wasted time and missed appointments can be significant. Fanshawe has more than 3,000 parking spaces for students and staff, all on the flat, and of course there are never enough of them at peak times. “We’re now starting to look at smart parking solutions that would direct people to available parking, rather than having to drive round and round,” says Gilbert. Part of the solution would be for many more people to use public transport, but
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Peter Gilbert CIO
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“We’re taking the best project management practice from both facilities and IT” – Peter Gilbert, CIO
for those who need to use a car, not having to use up time and fuel looking for a parking place would help achieve the college’s carbon reduction goals. Gilbert is considering introducing a card-based entry system, which would also facilitate payment. Another example is that of physical security. Issuing and tracking keys is a poor way to ensure that buildings are secured: a centrally controlled smart card system is much more robust, and would allow the campus or a section of it to be locked down fast in an emergency. “We’re taking the best project management practice from both facilities and IT. Project management was born in the construction industry, and they’re very good at it, but over the years
IT has adapted that and become good at that as well. But construction projects often end when a building is handed over whereas IT extends right into operation and maintenance.” Tracking and reporting on its physical assets while at the same time being able to respond in a timely manner to service requests from facilities managers in all parts of the campus has been made a lot easier by IT initiatives at Fanshawe. In particular, partnering with real estate services provider JLL Technology Solutions, it implemented ARCHIBUS facilities management software to support all its facilities operations. The software-as-a-service (SaaS) solution was deployed within the JLL Cloud environment within just three months.
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Gilbert is enthusiastic about the opportunities for IT and innovation to make a difference to the student experience too. With an increasing number of students on campus, it’s important to automate as many of the paper-based enrolment processes as possible, he says. And once the students are admitted, they quickly learn that Fanshawe will help unlock their potential in ways they had not expected. “Innovation is at our core, and we’re always looking for ways to
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push the envelope. We introduced iPads into learning several years ago, which really unlocked the potential of students that come to us with fewer academic qualifications, or who had additional challenges such as autism.” iPads have been around a while now, but young people are increasingly buying drones, which are readily available. In anticipation of new laws surrounding usage, Fanshawe introduced a drone course and encouraged students to
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Fanshawe at the 2018 Food and Wine Show
become certified operators. It was a far-sighted decision: “We’re seeing regulation coming in, and I think we’re well positioned to help train people in the proper use of that technology.” Drones are an engaging, and far from being just fun technology. Gilbert believes one of the benefits of the college system lies in its use of employer groups to help advise curriculum development. “Technology is creeping into every aspect of the world, and getting employers to help
us design the next generation of courses leads to a two-way learning process. Sometimes our students will enlighten the employer, other times the employer will enlighten the student that they employ. I think a lot of our future innovation will come from the innovation that’s happening in the many businesses we serve with our graduates.” This virtuous circle is epitomised in the close relationship Fanshawe has with the construction industry. The
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Students and staff taking part in a United Way fundraising event featuring remote controlled cars
London Home Builders’ Association (LHBA) is a case in point, providing a lot of feedback to college building programs. “They also create research opportunities for our students as well,” he adds. “One of our goals is that every student who goes through Fanshawe should have at least one applied research experience as part of their time here. Construction firms always have projects under development that need tweaking before they become the new mainstream product, and our students are more than happy to assist in
some of that applied research.” The Centre for Research and Innovation (CRI) is Fanshawe College’s Research Office and Industry Innovation Centre (IIC). CRI links industry, business and community partners with Fanshawe student and faculty researchers to develop research and innovation projects and programmes, and serves as the College’s liaison to external funders. Gilbert is excited about the concept of an ‘Innovation Village’ that would be much more than a fancy name for a community hub. “It’s built on the
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“One of our goals is that every student who goes through Fanshawe should have at least one applied research experience as part of their time here” – Peter Gilbert, CIO
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View of Fanshawe new downtown building
African proverb that ‘it takes a village to raise a child’. It’s the antithesis of the old teaching model where a student comes in, takes a course and leaves. What we’re trying to work towards is a ‘village’, part physical and part virtual, where the student can encounter professors and also people from different professions, some of them retired perhaps, who want to mentor and indeed learn from new students.” He sketches a campfire scene round which young people learn from the people who have done the job or lived the experience in the
past; sharing experiences, but also reaching out to others from different disciplines. “You might introduce somebody into the village that has financial background to a group that’s talking about architecture questions or a marketing person to come in and help take ideas out into the community, or socialise them. It takes more than just a few professors to make a difference for a person. It’s the whole experience, involving a variety of people and materials that they could experiment with,” says Gilbert.
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INSIDE THE SUPPLY CHAIN OF CROWN RESORTS
Crown Resorts is known for its first-class casino, hotel and entertainment facilities in Melbourne and Perth. But how is procurement for such a complex enterprise handled? Written by John Oâ&#x20AC;&#x2122;Hanlon Produced by Jeff Debicki
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rown Resorts is a much larger business than it first appears. Crown Melbourne, a feature of the city since its opening in 1997, is a massive gaming and entertainment complex boasting more than 45 bars and restaurant spreading across multiple city blocks. Itâ&#x20AC;&#x2122;s become a major destination for Victoria and a magnet for tourists from around the world. Far from being just the best and largest place for gambling in the entire Southern Hemisphere, it offers its visitors cinemas, retail complexes, luxury accommodation and global food experiences from outlets such as Dinner by Heston Blumenthal, which can be found at Crown Towers, one of three hotels on the site. Though city-based, Crown Melbourne is aptly called a resort since it delivers everything a visitor could need, all on one site. Whilst the Melbourne property is more of an urban resort, Crown Perth has a traditional resort feel. Though it first opened in 1985, it has been renewed and hugely expanded since Crown acquired it in 2007. Situated a little further out, it is a major
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destination for the fast expanding city of Perth and is now the largest single-site private sector employer in Western Australia with approximately 5,800 people on its books. It too has a Crown Towers hotel, which opened in December 2016 and features 500 luxury hotel rooms and suites, villas, private gaming salons, restaurants, bars, a grand ballroom, convention centre, luxury retail outlets, resort pool and spa facilities. The success of the business over the last couple of decades is going to be replicated in years to come, and Crownâ&#x20AC;&#x2122;s energetic chairman James Packer has announced his determination that Crown Sydney, to be built on the waterfront at Barangaroo, will be the best hotel in the world. Food and beverage requirements for a business of this size form a major part of the supply chain across a very diverse range of categories. Making sense of the complexity of this procurement challenge is the job of Procurement Systems and Compliance Manager Justin Purss, who reports to Ben Briggs, the Group General Manager of Procurement
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“THAT NIMBLE INSIGHT WE GET VIA ZYCUS IS A GAME CHANGER FOR THE COMPANY” – Justin Purss, Procurement Systems and Compliance Manager
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“WE TAKE EVERY and Supply. Purss has more than two decades of experience in the gaming and hospitality sector and has managed analytics and reporting, ERP and procurement data management, cost control and inventory management teams across Crown’s Australian resorts since 2014. At that time, he says, the available data was held in a disparate manner – each site was responsible for its own information and with very little crossfertilisation within the business. “There was really no consistent reporting ability on our expenditure. Getting the information out of the ERP system was difficult unless you had knowledge in that area, and when management called for an overview there was a lot of telephoning.” He recalls that there was just one individual within the group who knew how to access it all – the spend data was reconciled annually, and preparing that report took up to four months. Enter smart procurement What was needed was a smart procurement management system (PMS) that would permit the team
OPPORTUNITY WE CAN TO IMPROVE OUR FOOTPRINT AND OUR RELATIONSHIP WITH SUPPLIERS, REDUCING COSTS ON BOTH SIDES WHILE BEING MORE ENVIRONMENTALLY FRIENDLY” – Justin Purss, Procurement Systems and Compliance Manager
to standardise sourcing processes, give clear visibility into the different categories of spending, and streamline the time-consuming manual processes that were being used. The major benefit from this would be that it would enable analytics to be applied through artificial intelligence and introduce a UNSPSC (United Nations Standard Products and Services Code) taxonomy of
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products and services, carry out meaningful supplier performance evaluations across the board, and streamline business processes. The system chosen to manage all of Crown Resorts’ upstream procurement activity was Zycus. It was selected for its sophisticated functionality, ease of use, interoperability, scalability, and had a local, Australian presence who understood Crown’s challenges and needs. As a result, says Purss, his team can now make sense of category data across all sites. “They have visibility into supply rationalisation
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opportunities, for example, to try to streamline some of our business processes and create efficiencies and savings by leveraging that information.” It means better visibility within the company too, he
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explains. “We have the spend data extracted from our ERP system sent through to a spend analytics module within the PMS, and that runs through a classification AI computer learning platform that understands the data.” Many of different items are purchased every
day. Some are commodity items from a large, contracted supplier, while others are one-off purchases from a small local vendor. The tool understands each of those purchases and categorises them, giving total and immediate visibility. Now, thanks to the spend analytics tool, the data that could only be assembled periodically can be assembled in minutes rather than months, and the same insight gained into the 90% of the vendor base that accounts for just 10% of the spend. “That nimble insight we get via Zycus is a game changer for the company,” Purss adds. “We can
“BECAUSE WE HAVE THE ABILITY TO LOOK INTO OPPORTUNITIES, WE CAN JUMP ON THEM QUICKLY” – Justin Purss, Procurement Systems and Compliance Manager
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react very quickly. For example, if in a meeting someone needs to know the details of a particular vendor we can check that on the spot instead of having to ask for a week to get the data together.” It has also enabled the procurement team to set up dashboards for each of the category streams so purchasing staff have visibility into the category for which they are responsible. There’s a wider spend dashboard that gives them the ability to look at specific metrics by setting their own filters. “Because we have the ability to look into opportunities, we can jump on them quickly,” says Purss. “We have saved the company tens of millions over the last couple of years by just having better insight and being able to identify opportunities that we might previously have missed.” In addition to Analytics, Crown’s PMS also includes Supplier Information Management (SIM), Supplier Performance & Relationship Management, Contract Management, Project Management and Sourcing. “We have thought about the long term here. For example, in
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our vendor profiles for the SIM module, we have created a place where we can truly understand our vendors. This has been a big change for Crown and will create efficiencies by allowing a centralised location where all of their company related information and documentation can be maintained,” Purss explains. This has been a major push by Crown to not only ensure compliance but to give their suppliers a sense of inclusiveness and support. Checking them inward and onward All of this is about business process improvement. It is vital to the health of any modern company: it involves a lot of change management and training and enables employees to be more
productive and happier in their work. But what about the concrete nature of goods received? Crown Melbourne in particular is located at the centre of a busy and congested city, and getting supplies in when they are needed without trucks backing up at the loading bay is a challenge, especially if for each item paper delivery notes have to be checked against orders and invoices. Replacing that system with a modern warehouse management system (WMS) became imperative, so the company is currently implementing Peacocks WMS, a highly configurable system that will significantly increase efficiency in delivery receipting and dispatch to the right end-user. It’s a big change for the vendors,
“WE NEED TO BE VERY FLEXIBLE AND HAVE A WMS THAT WILL FIT EVERY SUPPLIER FROM A MULTINATIONAL TO A LITTLE PRIVATE LOCAL BUSINESS” – Justin Purss, Procurement Systems and Compliance Manager
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Crown Melbourne – Welcome to a World of Entertainment
so they were called in to a forum in November 2017 to take them through the innovation and explain the new partnership opportunity it gives both sides. “It creates a lot of efficiencies for them too,” states Purss. “There’s a new labelling system with 3D barcodes on all items, automatically scanned in on arrival, speeding up that process and immediately pushing that information into our ERP to go on to the payment system. “We need to be very flexible and
have a WMS that will fit every supplier from a multinational to a little local business. We needed to spend time to think through the problem of how to deliver a programme they can all use. But the system is scaleable. Our larger international suppliers can print their own labels in a way we can accept at the loading dock, while for smaller suppliers we provide a portal they can log into and find all the purchase order information and print labels locally from that order, at no cost to them.”
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Peacocks WMS will be trialled from the end of March 2018 and will be fully implemented by the new financial year in July. This is a tight schedule that has called for close coordination between the Group Warehouse and Distribution Manager and the IT ERP team, which had to ensure smooth connection between the new systems via an API (application programming interface) and the PeopleSoft ERP system. Purss takes his hat off to vendors large and small who have put effort into understanding the system and pretesting the end to end process. As the new PMS beds in, the benefits of Crown’s existing inventory management system will come to the fore. Stocktaking will always have to have an element of manual input into checking the number of
bottles of gin at a bar, for example, but it no longer involves closing down for the day as staff members tick off items on a paper record. Each month a stocktaking pack including a handheld PDA (personal digital assistant) is sent out to the sites and the inventory recorded in an hour, with the information sent to the ERP system. Managers have instant access to the stock at their site, and the procurement team always have the company wide figures available – just one member of Purss’ team is able to coordinate the stocktake process at 50 different business units in Melbourne. There’s better information, less room for error, and any anomalies are quickly seen, he says. “It is all tied into our POS system which depletes the inventory daily.”
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Responsible procurement for an effective supply chain Readers who saw the Business Chief report on Crown Resorts’ environmental and sustainability performance will not need reminding about the company’s record on CSR and green issues. However, it is worth noting the contributions of supply chain management. Some are simple, like the substitution of returnable and reusable crates for
fruit and vegetable supplies. “We take every opportunity we can to improve our footprint and our relationship with suppliers, reducing costs on both sides while being more environmentally friendly.” Purss also draws attention to Crown’s Reconciliation Action Plan, which monitors its involvement with indigenous Australian businesses and encourages supplier partnerships with them. “We seek them out, and help
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them with a development plan,” Purss adds. “Many are small scale, niche businesses supplying seafood, herbs or fruit for example, but they are just as important as the multinationals we deal with. We help them to partner with a large concern like us and compete with bigger companies.” When dealing with larger concerns a full supplier profile is drawn up that covers compliance, energy use, emissions, waste policy and human rights among other things, and of course indigenous engagement. Despite the huge purchasing clout of a company with a multiple billion-dollar market capitalisation, it is a matter of pride for Crown that 90% of its spend is within the state in which each site is located. Crown Resorts is a reliable company to do business with, Purss
emphasises. 80% of transactions at Melbourne, and 70% at Perth where the system was introduced more recently, are completed through evaluated receipt settlement (ERS) matching. This is a paperless solution that automatically transmits a recipient-created tax invoice upon receipt of goods, and schedules payment. “Those vendors with an ERS agreement don’t need to invoice us. A delivery automatically generates an invoice so we will provide an electronic invoice to the vendor. Once they receive their payment they will get a remittance advice.” This is just another example of an innovative, end-to-end business process that cuts out paperwork, making the transaction easier and more transparent for both parties.
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Written by Catherine Sturman Produced by Justin Brand
MAERSK LINE
The International Monetary Fund has created ripples within the Egyptian economy. How has Maersk Line Egypt transformed its supply chain services to remain resilient against this sea change? Managing Director Nabil Samy tells us more
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he Egyptian economy is undergoing a significant transition. The adoption of new reforms has eradicated a number of government subsidies as part of the International Monetary Fund’s (IMF) Extended Fund Facility (EFF), which came into force in November 2016. The EFF arrangement of US$12bn has led to sweeping reforms in Egypt, which have notably resulted in increased foreign investment, reduced government spending and a boosted
overall economy, providing a multitude of advantages for its citizens. However, with decreasing annual core inflation of up to 22%, according to TradingEconomics, such economic reform has significantly impacted the transportation industry, particularly with the volume of imports and exports within the country. “There has been a big shift in the trade balance between imports and exports,” acknowledges Maersk Line Egypt’s Managing Director Nabil Samy. “Imports were up to 70% of our business, which has now completely changed. It has been quite a change for the whole market and its dynamics.” According to the Ministry of Trade & Industry, exports rose exponentially in 2017 to $20.4bn, whilst imports fell 14% from the previous year.
“There has been a big shift in the trade balance between imports and exports. Imports were up to 70% of our business, which has now completely changed” – Nabil Samy, Managing Director
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Number of employees at Maersk Line (Egypt)
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A step in the right direction in macro view The country’s currency devaluation and subsequent aim to tackle soaring interest rates has also impacted Maersk’s competitiveness across the region. Nonetheless, Samy is optimistic about what the year will bring. “Egypt is a country that is advancing and therefore, we are expecting 5% GDP growth for 2018,” he says positively. “Egypt is quite an important country for the company to be in because of the Suez Canal, as well as it being
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a major waterway for global trade. That is the intention - to grow more in Egypt, within this area and this coast.”
Internal overhaul With high turnover rates and a transforming economic climate, Maersk Line Egypt has undergone a significant internal transformation. the company has outsourced most of its transaction-based roles, which previously accounted for up to 60% of its workforce, Instead, has replaced these internal roles with ones which are commercially-focused, in order to
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attract further talent and stay focused on creating value for its customers. “Just to give you the scale, we have changed approximately 60 jobs out of 150. It has been quite a turnaround. We’ve also centralised all the work which was previously undertaken in six offices,” reflects Samy. The company has also committed significant investment in new digital solutions, in order to place greater emphasis on the customer experience, and on trade. Maersk Line Egypt has strenuously worked towards centralising its different systems to give the customer one core platform, where they can access all available services. This has enabled it to pre-empt any potential bottlenecks within its customer-facing
services before they occur. “It is one of the business solutions that we came up with to give us a better edge when it comes to the customer experience,” explains Samy. “Another business solution we came up with as a company was an application for our business, which is called C360, which undertakes predictive maintenance and provides a 360-degree view, rather than remaining siloed through our data interchanges. “We’ve also just launched a new service just a couple of months ago which is an inland haulage,” he continues. “We aim at delivering a quality service to our customers, in an area where they have been historically underserved”
“Egypt is a country that is advancing and therefore, we are expecting 5% GDP growth for 2018” – Nabil Samy, Managing Director
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Supply chain strengths The use of its electronic data interchange (EDI) has therefore enabled the business to continue on its journey to provide exceptional supply chain data and build positive relationships with customers and suppliers. “We try to streamline the relationship between our suppliers and us, so that what we offer to our customers becomes one integrated solution and they don’t have to see through the different parts of the supply chain,” observes Samy. “The intention is to try to enhance that. Right now, one of the projects we’re running is that we use off-dock depots (depots which are not ports or terminals, but inland). So, we partner with them and try to bring them up to speed to make sure that there is EDI between their systems and ours. “The aim is to have big data 24/7 and not depend on finicky email. We present the customer with a one-stopshop solution for the entire continent which requires us to work very closely with our suppliers and have a realtime data interchange between us.”
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Additionally, the company has partnered with IBM to look at the advantages of blockchain technology, which will enable further data sharing and tracking capabilities by allowing suppliers to contract digitally with other carriers, as well as support the development of future products and services.
One-stop shop Whilst sustainability remains a key topic across the supply chain industry, Samy admits that this remains relatively low profile across Maersk
Maersk Line Egypt is looking at the advantages of utilising blockchain technology
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Line Egypt’s operations. However, in order to remain competitive, it continually works to drive industryleading sustainability programmes in areas such as paper waste. Providing a one-stop shop within its supply chain solutions, Maersk Line Egypt will continue to leverage customer-centric technologies which no other carrier can deliver across the region, where users can book all services within one transaction. “Customers don’t even have to have a supply chain department, we can take care of that,” concludes Samy.
“We’re halfway there with our inland and ocean offering, but we can also give customers the customs house brokerage and key financing in the future, these are still projects to come. “Shipping is quite a complex industry, but we want booking a container to be as easy as booking a flight or booking a hotel room somewhere, that is the end goal. If we are to reach this, we will be miles ahead of all our competitors.”
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