Supplychain digital magazine - October 2016 by Supply Chain Digital

O c tob e r 2016

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BANKING ON

CAPABILITY Allied Irish Bank is leading a technological revolution in the countryâ&#x20AC;&#x2122;s financial sector

Questions to ask before choosing expensive supply chain software

AUSDRILL transforming a mining supply chain

Making societies more productive by helping our customers run their businesses. Birlasoft, one of the Global Leaders in IT service delivery, is proud to be associated with Close Brothers for last three years in its journey to become a leading Modern Merchant Bank. Birlasoft is a strategic partner of Close Brothers and supports its mission critical core banking application and Management Information System which puts it in a unique position to create value for next generation business transformations. Birlasoft has successfully implemented: A Fraud Detection Solution which has saved Close Brothers a million pounds since inception. It has been awarded

‘Best vertical solution of year 2014’ by IT Europa - European IT and Software Excellence Award. Close Brothers Premium Finance IT team has successfully delivered a very large Customer Service Program (CSP) by transforming the Banking Application for which Birlasoft was the partner of choice.

Founded in 1995, Birlasoft is a Global IT Services provider and part of 150 year old, multi-billion dollar CK Birla Group. Birlasoft deploys a host of innovative solutions and service architectures across the globe in Banking, Financial, Insurance Services and Manufacturing industries. Our core values lie in being a dependable service provider, with years of experience in managing mission critical systems for our esteemed customers. We achieve our mutual goals by engaging and integrating human capital across our people, customers and partners. Our expertise makes us unique as we challenge the status quo and strive for excellence. Birlasoft (UK) Ltd. 53-54 Grosvenor Street, London, W1K 3HU www.birlasoft.com | birlasoftuksalesteam@birlasoft.com Tel: + 44-207-319 5700 | Fax: +44-208-711 5103

“Birlasoft have had a strong delivery track record for Close Brothers; what separates them from other vendors I’ve worked with is the level of partnership and ﬂexibility the y consistently display” Chris Loake, CIO – Close Brothers Premium Finance

EDITORâ&#x20AC;&#x2122;S COMMENT

WELCOME TO THE OCTOBER 2016 issue of Supply Chain Digital. This month, we look at what questions you should be asking before selecting expensive supply chain management software. And Dynda Thomas, a Partner at Squire Patton Boggs, writes about the implications of the growing focus on responsible sourcing and human rights in supply chains. There are also interviews with Allied Irish Bank, Complete Office Supplies and Pharmacy One, all looking in depth at how these organisations are leading the way when it comes to procurement and supply chain management. Do let us have your feedback on Twitter @SupplyChainD

Enjoy the read Lucy Dixon Group Editorial Director lucy.dixon@bizclikmedia.com

CONTENTS

F E AT U R E S

06 PROFILE

Supply chain transparency and responsible sourcing LIST

TECHNOLOGY

10 questions businesses must ask before choosing expensive ERP software 4

October 2016

C O M PA N Y P R O F I L ES

Allied Irish Bank

COS

Europe

Australia

Ausdrill

JCB Brasil

Australia

Pharmacy One Middle East

Brazil

Supply chain transparency & responsible sourcing

PROFILE

What do supply chain professionals need to know about conflict minerals reporting? Dynda A. Thomas, Partner at Squire Patton Boggs, has the answers

AT THE END of August, the US Government Accountability Office (GAO) released its second report on the Securities and Exchange Commission conflict minerals reporting requirements under the Dodd-Frank Act. The GAO report found that, while more of the companies were able to determine the origin of the minerals that formed their products, nearly all reported that they had difficulty ascertaining whether those minerals were acquired with the assistance of armed groups. This is an important reminder to companies of the increased scrutiny on their supply chains, both in terms of materials and more generally on the overall human rights impacts. The analysis below considers the history of such legislation and where supply chain professionals go from here.

How did we get here? The procurement of goods used to be about price, delivery, and performance. Companies then began to manage their supply chains to maximize efficiency, with supply chain activities covering everything from product development, sourcing, production and logistics. Awareness 7

PROFILE of sustainability issues added a focus on product stewardship – that is, minimizing the health, safety, and environmental impacts of products from production, packaging, product use and disposal. Today, there is another important dimension to supply chain and procurement. Supply chain professionals are now having to account for and respond to non-governmental organizations (NGOs), customers, shareholders, and regulators. The expectation is that businesses should know the provenance of all the materials and components in their products, and that they should address the human rights impacts in their operations and throughout their supply chains. Every product can be reduced to the raw materials, minerals, agricultural and aqua cultural goods they contain and the work required to produce them. Concerns over the ”responsible sourcing” occur when raw materials and goods are sourced and converted to products where the population lacks education, individual workers are not empowered, governments fail to protect their most vulnerable, and economic (and physical) 8

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‘Concerns over the ”responsible sourcing” occur when raw materials and goods are sourced and converted to products where the population lacks education, individual workers are not empowered, governments fail to protect their most vulnerable, and economic (and physical) power is limited to a few’ – Dynda A. Thomas, Partner at Squire Patton Boggs

S U P P LY C H A I N T R A N S P A R E N C Y A N D R E S P O N S I B L E S O U R C I N G

power is limited to a few. The same circumstances put workers at high risk of coercion and abuse. Many resource rich countries in the developing world are home to extraordinary human rights abuses of workers. Where did this start? - UN Guiding Principles Following World War II, the United Nations focused on governmentsâ&#x20AC;&#x2122; obligations to protect human rights. Over time, there was a growing recognition of the human rights impacts of trade and commerce. In 2011, the UN Guiding Principles on Business and Human Rights (the UNGP) were adopted. The

objective of the UNGP was to enhance business standards and practices as a way for business enterprises to address human rights impacts they cause, contribute to or are directly linked with. In addition to the UNGP, there have been a long series of â&#x20AC;&#x153;responsible sourcingâ&#x20AC;? initiatives promoted by activists, industry groups, and business entities that address particular countries, raw materials, and industries. Many of these initiatives mirror the concepts and approaches in the UNGP but, like the UGDP itself, are optional and do not impose legal requirements on businesses. In response to these initiatives (and in light of their own ethical sourcing motivations), some businesses started to focus more on corporate social responsibility and the impact of responsible business conduct on their supply chains. Many of the companies that focused on these efforts early on were close to the sourcing of raw materials and agricultural products like coffee, cocoa, and cotton. Until recently, however, the vast majority of procurement professionals continued to focus on the objective standards of price, delivery, 9

PROFILE

October 2016

S U P P LY C H A I N T R A N S P A R E N C Y A N D R E S P O N S I B L E S O U R C I N G

product quality, and supply chain management. In some ways, the pursuit of supply chain management objectives is at odds with the additional time, resources and change in purchasing decisions required by a responsible sourcing focus. Many companies question their ability to impact the behavior of sub-suppliers that can be many steps removed from them. Moreover, corporate policy-making and far-reaching decisions about human rights impacts had not been in the scope of responsibility of procurement teams. Rise of the social media machine Despite the early responsible sourcing efforts, people continued to suffer not only from war and conflict but also in the course of working to sustain themselves and their families. At the same time, activists increased pressure on companies to address the human rights impacts of trade and commerce. The evidence of human rights abuses has become ever more obvious and visible. Word of mouth and still photos of dismal conditions have been replaced with television exposés and YouTube clips of children engaging in dangerous

work, trafficking of laborers, and more. Consumers see the connection between the products they purchase and the labor conditions in their production. This has led NGOs to organize and individual consumers to mobilize around ethical sourcing. The combination of notorious examples of grim working conditions, effective activism pressuring companies to change their purchasing practices, and powerful social media campaigns have now resulted in increasing expectations on companies. Required responsible sourcing efforts start with conflict minerals. Starting in 2012, with the Securities and Exchange Commission (SEC) conflict minerals rule, US reporting companies were required to disclose the use, source and chain of custody of tin, tantalum, tungsten and gold (conflict minerals) from the Democratic Republic of Congo (the DRC) and adjoining countries. It was expected that this disclosure would “name and shame” companies into adopting more responsible sourcing practices. In July 2016, the EU adopted a framework for an EU regulation aimed at reducing the financing of 11

PROFILE armed conflicts through the trade of minerals. The EU regulation is expected to impose mandatory due diligence and disclosure for smelters and refiners and for importers of conflict minerals into the EU. That obligation is expected to cover over 400 companies. In addition, large EU business entities (500 employees or more) will be encouraged to report on their due diligence and sourcing activities. Importantly, the EU regulation covers more than the US rule because it focuses on sourcing from all “conflictaffected and high-risk” areas, not just from areas in central Africa. Expect more, not less Although results of required supply chain transparency efforts to date have been mixed at best, companies should expect the number, scope and burden of responsible sourcing

obligations to grow. Expectations on companies to determine and improve the human rights impacts of their sourcing will grow as well – not only with respect to their own operations but for their supply chains. Risks of increased disclosure To date, the SEC has not indicated much interest in taking action to enforce the conflict minerals disclosure rule. But, there are significant risks that come along with increased supply chain and sourcing disclosure. Those risks arise from the various stakeholders reviewing the disclosure, which include consumers, customers, regulators, investors and NGOs. Now what? Supply chain professionals and senior management need to determine how their organizations will respond

“In July 2016, the EU adopted a framework for an EU regulation aimed at reducing the financing of armed conflicts through the trade of minerals” 12

October 2016

S U P P LY C H A I N T R A N S P A R E N C Y A N D R E S P O N S I B L E S O U R C I N G

to supply chain transparency requirements and increasing stakeholder expectations. Because of the variety of requirements addressing different human rights issues and to minimize supplier fatigue, companies should avoid developing different programs that are focused on once concern. Procedures should be scalable and need to reflect the nature and complexity of the

companyâ&#x20AC;&#x2122;s products, the character of its supply chains, and its business models. Importantly, companies need to plan for and implement IT support for information gathering, data analysis and record retention. Addressing the human rights impacts of operations and supply chains decisions will continue to and increasingly be part of the landscape for supply chain professionals. 13

TECHNOLOGY

questions businesses must ask before choosing expensive ERP software ERP investments often fail because software selection gets more attention than business strategy formulation. Hereâ&#x20AC;&#x2122;s how to avoid falling into that trap W r i t t e n b y : H E I N P R E T O R I U S O F O N P R O C O N S U LT I N G

TECHNOLOGY SOFTWARE THAT IS designed to direct business operations – Enterprise Resource Planning (ERP) software – has earned a bad rep as an expensive and drawn-out exercise that often does not live up to expectations. This is because software selection gets more attention than business strategy formulation. To counter this, here are ten questions that can help those planning to spend a significant amount of resources on new software to determine the true business purpose: What is limiting your business’ growth and competitiveness? It is all about: • Fast, actionable information • the business agility to act on the information across the value chain, not just within the organisation • automation and flow through the business. What is stopping you from achieving this? What behaviours and rules gave rise to the existence of these business limitations? • Bureaucracy designed with accountability shifting in mind, not with serving the business purpose. • KPI’s that are not aligned with the integrated nature of ERP • Internally focussed thinking instead of thinking about your place and role in the entire value chain. 16

October 2016

Thinking in terms of efficiencies or productivity, not effectiveness. For example, looking at whether staff or machines worked 8 hours a day, not at the outcomes they achieved for their effort. How are you planning to overcome these business limitations with the investment in the ERP solution? Start by: • Focussing on improving overall business effectiveness and making these the project critical success criteria. • Really understanding what the solution should do before deciding what software to purchase and before asking the system integrator to provide a fixed price quote. • Retaining absolute ownership of the business improvement and not shifting accountability to the system

integrator or software vendor. â&#x20AC;˘ Aligning strategic KPIâ&#x20AC;&#x2122;s to promote a project culture of company-wide business effectiveness innovation and not self-serving personal KPI chasing project conflict. How up to date and accurate are the current business processes, business rules, and data models? Enterprise software systems such as ERP are living, constantly changing systems. The documentation that describes how these systems work, are not.

When a new ERP project is kicked off, the line management, software vendor and system integrator all assume they know what the system needs to do, deadlines, budgets and expectations are set on this. Start by really understanding how your company works by following a comprehensive collaborative approach, to updating the current business processes and business rules. Use a business process modelling software solution, not word processing, presentation or diagram drawing tools. 17

TECHNOLOGY What are the new rules and behaviours needed to take the business forward? • Think effectiveness and not efficiency or productivity • Think of your place and role in the entire value chain • It is all about information and how you respond to customer demand • Continuous improvement thinking • Develop a strategic view of how you want to take your business forward and what you need of a technology platform to serve your business purpose. Requirements vs needs and wants • Make sure this strategic business purpose is front and centre throughout the project and is

October 2016

used as critical success factors for the project – resist using only budget, deliverables and deadlines as primary success factors for the project • Use business purpose to lead requirements and not what the current system does or the features of the new system. Remember, software sales people are rewarded for selling software, not for improving your business. How must the new software support the new rules and behaviours? Take care not to provide requirements that result in the new system being based on how the old

system works. The design criteria of the new system must be rooted in the business purpose of the project. The new system must serve to: • provide fast accurate, actionable information • enable business agility to ensure that decisions are implemented fast and accurately throughout the organisation • improve flow through your whole business not just within departments. • Flow must be improved for your value chain and not just for your company – talk to your suppliers and customers • Focus on benefits realisation and not only deadlines and budgets Who are the most important stakeholders both inside and outside the business? ERP in large organisations never operate in isolation, your value chain partners both upstream and downstream are critical stakeholders in enhancing flow through the entire value chain. Internal stakeholders include internal audit, risk, legal and compliance, not only the functional business areas.

How will you ensure that all identified stakeholders are consulted, collaborated with, informed, involved, and empowered throughout the project? It is important to ensuring that the entire ERP team, including staff, stakeholders, partners and vendors are working together towards the same strategic business objective. • Consulted – Ask their advice and opinions • Collaborated with – work with them to develop the solution • Informed – provide accurate, unfiltered information to all stakeholders. This breeds trust and leads to higher quality results • Involved – make them part of the team • Empowered – stakeholders must be in a position to affect change else they are not empowered What impact will the new software have on the business and its people? ERP projects typically follow one of four paths: • Effective: where you experience returns that far outweigh the 19

TECHNOLOGY ERP investment, Improved competitiveness and limitations in the business have been diminished. All stakeholders in the business are embracing the way ahead and the Future is exciting. • Efficient: The project team claims efficiency by performing against time and budget criteria. Changes were probably within palatable boundaries. The initial scope was doubtlessly reduced at some point to accommodate time and budget constraints. There is no recognizable improvement in the business to the extent that you might as well not have done the project. • Precipice: The project reaches a Point of No Return at which juncture going back to the previous system will be more painful and expensive than making available additional funding to just get the project done. • Fail: The Project is cancelled and legal options are explored. Money, time, business opportunity and valuable staff are wasted and broken. In an absolute worst case, the company suffers irreparable destruction of its competitive positioning. 20

October 2016

What have you done to determine whether the business is ready for the project? • Endeavour to bring nonnegotiables, positive and negative perceptions and the aspirations of the project stakeholders to the fore. Work to find the best possible compromises for the non-negotiables up front in order to avoid unpleasant surprises later in the project lifecycle. • Think about developing a code of conduct for the project team – each team member signs it including contractors. Keep focus on the best interest of the company. • Is your bureaucracy ready and aligned to ensure they are not a stumbling block, but rather a motivated support team for the project? • Scenario planning before project planning. Projects do not exist in isolation, there are always factors both outside and within the control of the project team that affect the successful outcome of the project. The success of the project is to a large extent dependent on:

a. the project management teamâ&#x20AC;&#x2122;s ability to identify and describe the flags that will indicate that a specific scenario is playing out; b. their ability to recognize the flags when they present themselves; and c. acting correctly once the flags have indicated their message. The scenarios applicable to the project environment along with the indicator flags must be thoroughly workshopped at the outset of the project. The project management team must then empower the project team to watch out for these flags and to report them when they appear. The project steering committee is provided with the required information on the scenarios and flags and they are empowered to act appropriately to steer the project in the desired direction. This becomes a separate and very strategic topic on the agendas of project progress and project steering committee meetings. Project managers and executives must guard against trivializing this important component of helicopter view project monitoring.

â&#x20AC;&#x153;Projects do not exist in isolation, there are always factors both outside and within the control of the project team that affect the successful outcome of the projectâ&#x20AC;? 21

LIST

The 6 bu s i e st containe r ports in the w orld Supply Chain Digital looks at the most important shipping hubs on the planet, a list dominated by terminals in Asia Wr it t e n by : TH O M AS WA D LOW

LIST

PORT OF BUSAN

SOUTH KOREA 19,467,000 TEUS HANDLED IN 2015

The Port of Busan lies on the south eastern tip of the Korean Peninsula. Located at the mouth of the Naktong River, the Port of Busan lies on a deep protected bay that faces Japan's Tsushima Islands. It is a metropolitan city under the direct control of South Korea's central government, giving it the effective status of a province.

October 2016

T H E 6 B U S I E S T C O N TA I N E R P O R T S I N T H E W O R L D

PORT OF HONG KONG

HONG KONG 20,073,000 TEUS HANDLED IN 2015

Located by the South China Sea, the Port of Hong Kong is a deepwater port which predominantly handles manufactured goods. The terminal is also a busy passenger hub while also processing raw materials, and was the busiest container port in the world in 2004. The natural shelter and deep waters of Victoria Harbour provide ideal conditions for berthing and the handling of all types of vessels.

LIST

PORT OF NINGBO-ZHOUSHAN

CHINA 20,627,000 TEUS HANDLED IN 2015

The Port of Ningbo-Zhoushan is a series of terminals located on the coast of the East China Sea, in Zhejiang province south of Hangzhou Bay. It acts as an important through point for cargo headed up the Yangtze River into the Chinese mainland, and had a deep history dating back to the year 738 when it was one of the countryâ&#x20AC;&#x2122;s main trading bases.

October 2016

T H E 6 B U S I E S T C O N TA I N E R P O R T S I N T H E W O R L D

PORT OF SHENZHEN

CHINA 24,205,000 TEUS HANDLED IN 2015

Shenzhen has seen the number of TEUs handled rise by a factor of five since 2001, now home to more than 40 shipping companies managing over 130 routes. It is split into eastern and western ports. The western port area is connected to the Pearl River region which houses cities and counties along the river. The eastern port is north of Dapeng Bay and is claimed to be the best natural harbour in southern China.

LIST

T H E 6 B U S I E S T C O N TA I N E R P O R T S I N T H E W O R L D

PORT OF SINGAPORE

SINGAPORE 30,922,000 TEUS HANDLED IN 2015

The busiest port in the world from 2005 to 2009, Singapore trans-ships half of the worldâ&#x20AC;&#x2122;s supply of crude oil, connecting to 600 other ports in 123 countries spread over six continents. It plays a vital part in the Singaporean economy given the islandâ&#x20AC;&#x2122;s lack of natural resources and land mass for other industry.

LIST

PORT OF SHANGHAI

CHINA 36,537,000 TEUS HANDLED IN 2015

The Port of Shanghai has been the busiest in terms of containers processed since 2010 when it took over from Singapore at the top. Its location at the mouth of the Yangtze River led to its development as coastal trade hub, developed during the reign of the Qianlong Emperor in the Qing dynasty. The port is arguably the most important gateway for foreign trade in China and set a record in 2014 by being the first port to handle 35 million TEUs in a year.

October 2016

T H E 6 B U S I E S T C O N TA I N E R P O R T S I N T H E W O R L D

Banking on Capability Written by Tom Wadlow Produced by Richard Durrant

ALLIED IRISH BANK

Allied Irish Bank is leading a technological revolution in the country’s financial sector through a series of strategic partnerships that have enhanced customers’ dayto-day banking experiences

veryday banking is no longer confined to call centres and branch visits between 9am and 5pm. Business and individuals now bank on the move, on any device and at any time. Call centres have become multichannel contact centres; branches are becoming highly automated, creating greater focus on individual customer service. Allied Irish Bank (AIB) now has over one million active online users and 578,000 mobile users, with the average monthly logins continuing to increase. 53 percent of all credit card sales are now through online channels and 76 percent of personal loans applications are through digital channels. AIB is at the forefront of this digital

October 2016

transformation in Ireland, whose capital city Dublin is rapidly being recognised as a booming European technology hub. And it is by leveraging global partner talent that AIB is growing its own capabilities, driven by the end goal of making the banking experience as seamless as possible for its customers. Philip Thomas is AIB’s Group Chief Procurement Officer (CPO). Since joining the company, he has overseen the progress of the bank’s outsourcing strategy, finding the appropriate expertise within Ireland to take it to the next level. “Companies like Google, Facebook, LinkedIn have all set up European centres here of substantial scale, and while there is a strong population of

TECHNOLOGY

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ALLIED IRISH BANK

Philip Thomas - Group Chief Procurement Officer Philip is the Group Chief Procurement Officer with Allied Irish Banks (AIB), based in Dublin. He is an experienced senior executive, with an in-depth knowledge of strategic sourcing, transformation, technology and outsourcing, with both client and supply side across many industry sectors globally. 36

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TECHNOLOGY

Graham Fagan - Head of IT Partner Management Graham Fagan is Head of IT Partner Management with Allied Irish Banks (AIB), based in Dublin. An award winning strategist and one of the most decorated IT transformation professionals in Ireland. Graham is a dynamic and versatile leader with 20 yearsâ&#x20AC;&#x2122; experience across a broad range of IT executive management roles in indigenous and global multi-national organizations, working on both client and supply side of these arrangements.

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“It’s all about the customer experience and it’s all about building that capability so we can quickly react to our customers” – Graham Fagan, Head of IT Partner Management

excellent people in Ireland, there are huge demands pulling upon this talent,” Thomas says. “For example, Google probably has up to about 6,000 people now so they, like others, are attracting a lot of technology resources out of the market, with their strong social media brands. The shortage of resources is making it difficult for businesses to recruit technology talent in the local market. “We decided that we needed to work with partners that could bring that talent to us in our market and that’s how the partnership ecosystem came about. But here lies one of the critical things in that part of the ecosystem, the fact that they had, or were willing to invest and establish delivery centres in Ireland to complement their global delivery capabilities. That was crucial.” 40

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Partner power It was soon clear that to become more agile, reduce risk and align with changing patterns of consumer behaviour, AIB had to depart from a traditional in-house delivery model. The first important partnership was actually formed before Thomas joined as CPO. HCL helped to overhaul legacy infrastructure and installed a new virtual desktop, compatible with mobile and tablets across the whole organisation, from head office to bank branches. “This provided some early learnings for us around the outsourcing world and allowed us to think about the longer term strategy,” comments Graham Fagan, Head of IT Partner Management. With the HCL partnership successfully deployed, AIB set about establishing a partner eco-system to support the

TECHNOLOGY

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October 2016

EUROPE

other areas of their technology operation and digital transformation. AIB has entered into a number of similar relationships with partners that have all bore fruit. “The first agreed in the first half of 2015, was with Wipro who provide strategic infrastructure management services. They have brought in their expertise and we are working with them to build agile and adaptive infrastructure while improving the predictability and cost effectiveness of our services,” Fagan explains. Wipro also supports critical payments infrastructure in ITO and is setting up a Mainframe Center of Excellence in Dublin. AIB’s three other partners include Infosys, eir and Integrity 360. The latter handles the vital IT security function, while eir provides the communications requirements, from voice data to contact centre technology, optimising omni-channel communications between agents and customers. Infosys provides application development and management for AIB, and has invested significantly into innovation projects in Ireland, including a dedicated site to develop products, including its flagship Finacle product, a universal banking solution. “Critical to the success of the partner ecosystem is ensuring that they work as an extended part of the AIB team. The partners unanimously understood the key to successfully realising this

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ALLIED IRISH BANK

ambition was to create and maintain a ‘trust centric’ partnership, where everyone worked collectively together with a ‘fix first, discuss later’ culture. There is a risk and reward mechanism in place where each of the partners put a percentage of their fees at risk to ensure collaboration is endemic across the ecosystem,” Thomas says. “Experience to date has been positive with the ‘One team’ culture prevalent.” AIB still has its own technology team, which is split into two vital component parts. The first handles running the bank’s services and driving operational excellence, led by the Chief Information Officer, Tim Hynes. The second is a digital group, driving the front end customer experience and dealing with new challenges that digital transformation presents, led by Seamus Murphy, AIB’s Chief Digital Officer. Both units leverage the expertise of AIB’s partners. “Our partners will support us developing and delivering excellence in customer service

October 2016

through transformation of our technology services,” says Hynes.

Mutual benefits Thomas explains how AIB has looked at examples of many other banks and taken what he sees as the best elements of various outsourcing strategies. While cost has been a benefit, the dominating motive behind the partnership network is all about improving AIB’s capability and supporting the delivery of its ‘Simple & Efficient’ transformation programme. “Our partner selection criteria is different, depending on the service line,” adds Fagan. “For example, if you look at eir, they have a strong indigenous network. We’re not looking for a large global telecoms player to come in and just front somebody’s infrastructure. We’re looking for incountry investment and long term investment in the development and quality of the network, because that’s going to impact the experience of our customers, from a branch perspective.

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October 2016

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“Whereas if you’re looking at an ADM partner, you’re looking for local capability but with global strength in some respects. Wipro and Infosys both fall into that category. They have both invested and setup local delivery centres and innovation centres, as a result of the operations with AIB, and they maintain those AIB staff who transferred locally.” Fagan also explained the importance of cultural compatibility, and all AIB partners boast a strong track record and reputation with an eagerness to innovate and change with the times. “The other thing I’d add to that is their willingness to invest in the relationship because actually, we’re looking at long-term relationships, and because we are mutually beneficial to each other,” says Thomas. “Certainly, if you look at the likes of eir and Integrity 360 locally, outsourcing is relatively new to them. They are growing their businesses as a result of our partnership, so that’s beneficial to them and it’s also beneficial to us because if they grow, they provide us with better services.”

All the partners have also taken on AIB staff as part of the agreements, meaning they each have tailored knowledge of how the bank runs, and its exact requirements. This does not mean they are no longer part of the AIB fabric, however. “Their local delivery centres are almost in walking distance of the key AIB buildings, so there’s people moving back and forth,” Fagan explains. “There’s space set aside in both buildings. They dine in our canteens and there’s still a very collegiate feel, even though they distinctly work for a different organisation now. “However, we can’t lose sight of that fact. We have done a lot to maintain the collaboration and the goodwill and that, in turn, plays into the knowledge share. You create the conditions for people to share knowledge and work together and that’s something a lot of thought has gone into.” Hynes adds: “Building partnerships takes a desire, willingness and commitment from all parties to make it work,

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ALLIED IRISH BANK

our relationships are in the early stages but there is a great spirit, commitment and collaboration to build something special.”

Revitalising the bank branch AIB’s backstage work with key partners translates into a forwardfacing, modernised organisation visible on the frontline. Innovation is at the centre of the bank’s customer first ethos, no better demonstrated than in it’s innovation centre, ‘The Lab’, in Dublin’s largest shopping centre in Dundrum. Customers are able to trial new technology and provide feedback which helps to shape AIB’s agenda for its new partner-powered IT ecosystem. “Customer-led design ensures we are relevant and delivering what customers need,” Thomas adds. The partners themselves are also encouraged to innovate, using their global reach and experience to deliver proposals to the bank. “We want to give our customers choices in how they bank, while maintaining a consistent customer

October 2016

experience, whether they’re online, in a branch or on a mobile device,” Thomas says. “One of things we have trialled in The Lab is a video service to our contact centre, so customers can receive instant support on things like mortgage applications, whether they start the application in the branch, with the contact centre or online the experience is consistent allowing them to change channels to gain support or advice and their application continues from the previous interaction, creating a complete, consistent and connected customer experience. “The feedback we received was excellent so we are now looking to roll this out for customers to be able to use this video technology on a much broader scale. Other such services that were trialled in the lab and are now live, allow customers to digitally upload documents, as part of a loan or mortgage applications.” Many will point towards branch redundancy as a sign of banking modernisation, however it is still very much a key component for

TECHNOLOGY

AIB. It is refurbishing scores of its branches to reflect the demand for more modern banking services with a personal touch, over half having been modernised by the end of 2017, and with a recent pilot of a branch in SupaValu, a market leading supermarket, where customers can avail of extended bank opening hours for staffed advisory, sales service and quick banking facilities.

“If you look at the likes of eir and Integrity 360 locally, outsourcing is relatively new to them. They are growing their businesses as a result of our partnership so that’s beneficial to them but it’s beneficial to us because if they grow, they provide us better services” – Philip Thomas, Group Chief Procurement Officer

Recognition These bold innovations have been recognised within the industry, with banks now coming to AIB to understand how it is transforming. AIB has also been formally recognised for its advances with numerous awards. International banking magazine Euromoney named Allied Irish Bank the best bank in Ireland, praising its progress in reducing non-performing loans, new lending drawdowns and pre-tax profits, driven by impressive delivery of efficiency. Most important according to Euromoney, however, was its ‘edge over its competitors in terms

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ALLIED IRISH BANK

October 2016

EUROPE

of its digital offering’. Indeed, its app is in the top quartile in Europe. Other awards claimed include the Consumer Experience Award from EFMA and Accenture, Business2Business Awards’ Best Business Bank of the Year and Procurement and Supply Chain Team of the Year, collected at the National Procurement and Supply Chain Awards in 2015. “I think what AIB did in entering the outsourcing sphere was a very bold move,” Fagan says. “It’s taken other organisations maybe 10 years to do what AIB has done in two and a bit. There’s always a lot of risk involved in doing that, and it requires real leadership from people like Phil and other leaders to take that and be at the forefront of this type of change. These awards are good validation of the execution of the strategy, and the vision that they had at the start of this process.” Thomas adds: “External recognition of our achievements provides the teams with context for what they have achieved in this timescale. It is sometimes too easy to focus on your own tasks

and lose sight of the big picture of what we achieved as a team.”

Forward thinking Despite only being a few years into the digital transformation process, AIB is thinking long term with its partner ecosystem, beyond the five-year agreements that are formally in place. “The partners are already having strategic impact in certain areas of the business which is great for us,” Thomas says. “We’re already seeing the green shoots but I think, like any journey, the intent and ambition is there to make them even more strategic.” “This is so we can feel the presence not just in the back room, in the data centre or in the quality of our infrastructure, but also the impact that these partners have on our customer proposition, in every which way.” Fagan concludes: “It’s all about the customer experience and it’s all about building that capability so we can quickly react to our customers.”

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The CVS of the

Middle East Written by Nell Walker Produced by Dennis Morales

PHARMACY ONE

Pharmacy One’s founder and President, Amjad Aryan, discusses the inherent challenges and subsequent success of Jordan’s first chain pharmacy

harmacy One holds the significant title of being the first chain retail pharmacy in Jordan, boasting 75 locations over just 15 years. Amjad Ayran, the company’s founder and President, grew and nurtured Pharmacy One from nothing and has his early work experience in the sector to thank for the entrepreneurial spirit which spawned his own company. “I’m a pharmacist by profession,” Aryan says. “I worked multiple jobs before starting at pharmacist school in Boston at the late age of 24, and while studying I worked for CVS. So by the time I graduated, I had five years of pharmaceutical experience. I decided that if I couldn’t build a new CVS of the US, why not build the CVS of the Middle East? It made sense to become a big fish in a small market.” Building a business Aryan started his business with just $200,000 and a vision to open 10 pharmacies. In 2001, he took this concept to Jordan and built what he calls the “pilot branch”. “I wanted to make sure the consumers understood and appreciated the big drug store concept,” he explains. “This is a pharmacy where you can browse the shopping court as well as picking up prescriptions, and I wanted

October 2016

MIDDLE EAST

www2.pharmacy-1.com

MIDDLE EAST

people to acknowledge the quality stores while working on perfecting of service. Then they would go out his business processes until 2005. of their way to receive that quality “During that time I was building the again, and there would always be a platform for the expansion, by which I pharmacist who could counsel them mean IT systems, trading procedures, on their medication, that would show personnel, and so on. I spent four years them how to use the medication, building that platform, and once it was and be readily available to serve.” ready, I started expanding at a rate The customer proved far of 12 new branches per year. easier to convince than “No one had done the authorities. Aryan this before so it was faced an uphill battle challenging. The against the Jordanian consumer accepted Pharmaceutical it and loved the Association idea of having The year that in attempting pharmacies with Pharmacy One to convince the the same name, with was founded historically conservative consistent availability organisation to allow of products, consistent an outsider to promote chain quality of service, and the pharmacies. Other pharmacies in ability to access the same records at Jordan are, in Aryan’s words, “mom any branch. The smaller competitors, and pop shops” and there were no threatened by the introduction of a chains despite the fact that the law big chain, began improving their own allowed them. Prior to Aryan’s arrival, quality of service; I would say we’ve that law had never been implemented. raised the bar for pharmaceutical By 2003 he had managed to open care in Jordan as a result.” the second branch of Pharmacy One, and remained with just the two Technological needs

2001

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PHARMACY ONE

Pharmacy Ones’s IT system was enormously important. It had to sufficiently support the customer, the company, and the community at large. Doctors and patients alike would need to be able to easily use the patient record software, and the records had to be extremely secure. A program to deal with Pharmacy One’s logistical needs was also required; the company has around 350 different suppliers, and the software orders medications automatically from the central warehouse when required, avoiding out-of-stock situations. In Aryan’s words, “inventory control is key”.

Aryan decided early on that he didn’t want to compete with his suppliers, but for them to complement each other. “We’re retailers, not agents or importers. It was a big fear that another big pharmaceutical company would come in and within a short time control a huge percentage of the market, join other agencies, and become agents for everything in Jordan. I took it upon myself to be the best retailer possible, and as I’m not in the business of importing medications or mass distribution to pharmacies, that really gives our suppliers comfort that after 15 years

“I am example of someone who came in as an unknown and was able to do something special” – Dr. Amjad Al Aryan, President & Founder

October 2016

MIDDLE EAST

we don’t want to compete with them.” The company’s IT system is very advanced for the Middle East, to the extent that multinational companies contact Pharmacy One directly wanting to use its data to better understand the market. According to Aryan, “beautiful things come out of those relationships”. Jordan’s emergency services number is now connected to Pharmacy One Drug and Poison center, and calls that are made which refer to medication or other relevant products will be directed to Pharmacy One, where a specialist can aid the patient. Other services, like sign language

translation, have been launched at some Pharmacy One branches along with a 24 hour video calling service. Both are intended to ease communication for the hearing impaired and enable all to take advantage of Pharmacy One services. Medication instruction stickers printed with Braille are available at all branches. Through different departments led by team of professionals, Pharmacy One has managed to set new pharmaceutical standards in Jordan and the Middle East. An automated inventory and ordering solution has been developed to manage stock refill

www2.pharmacy-1.com

PHARMACY ONE

and distribution to all branches, innovating new ideas to creatively introduce, expose, and provide different and new services. These are standardised to maintain product variety, mix and increase brands, and allow product visibility to become a standard and ongoing procedure. Pharmacy One also makes sure to continuously pay back to the Jordanian society through social responsibility projects and offerings, such as performing health service days, providing training and scholarships, supporting projects that help people in need, improving life for youths, and empowering women. Aryan is proud to add that “50 percent of Pharmacy One staff are female.”

“If I couldn’t build a new CVS of the US, why not build the CVS of the Middle East? It made sense to become a big fish in a small market” – Dr. Amjad Al Aryan, President & Founder Expansion While Aryan wishes to expand further into the Middle East, the process is complicated. “Laws here differ from one country to another,” he explains. “It’s not like in the US where federal law applies in all states. For example Saudi Arabia does not allow ownership of pharmacies for non-Saudi nationals, and UAE only allows 50 percent ownership to foreigners. It’s complicated and presents a huge challenge. So we decided to expand differently by giving franchises to Pharmacy One rather than owning branches. We can give the franchise to companies who

October 2016

MIDDLE EAST

www2.pharmacy-1.com

PHARMACY ONE

From Right to Left: Dr. Laral Al Abasi - Senior VP Internal Control, Mr. Farah Barghout - VP Administration , Mr. Mutaz T. Bseiso - Senior VP Innovation & Communications, Dr. Yousef Fanous - Chief Executive Office, Dr. Ezz Eldin Al Aryan - Chairman, Dr. Amjad Al Aryan - President & Founder, Mr. Mohammed Ibrahim - VP Supply Chain , Mr. Rani Abu Taha - Senior VP Retail Pharmacy Operations, Dr. Amani Abu Hilal - Senior VP Marketing & Merchandising

• Strong reputation in the market ranked within the top drug stores in Jordan. • Dedicated resources (100%) • Total Infrastructure support. • Expertise management and principals support. • Highly qualiﬁed and trained staff. Karmel Drugs House, 17 Abdulla Ghousheh Street, 7th Circle - Jabal, Amman Tel: +962 6 5826816

want it in different countries and we can expand accordingly. One place where we can expand into, however, is Palestine, which has very similar laws and consumer behaviors to Jordan.” As an entrepreneur – one who has won various Entrepreneur of The Year awards, at that – Aryan believes firmly in the power of persistence and resilience, and that his experience in the working world prior to and during his pharmacy education made him the man he is today. “There is a feeling in Jordan that you

MIDDLE EAST

have to be well-connected to succeed in business,” he says. “I am example of someone who came in as an unknown and was able to do something special. That’s the advice I want to give people from all parts of the world. Don’t listen to naysayers, believe in the power of ‘I can’, focus on what you can do, and ignore negative people.” Aryan has his team and Pharmacy One’s location to thank for a great deal of the company’s success. He stresses the importance of having an excellent team, and choosing wisely

when picking a place to start from: “I advise a lot of people who want to be the best in whatever sector of business they choose to come to Jordan,” Aryan concludes, “because they won’t be dealing with only the 10 million people who live here, but huge markets, smart people, and keen college graduates who can help them achieve their goals. Jordan is a great place to live and if I had to do it all over again, I’d still start from Jordan.”

www2.pharmacy-1.com

Sustainable approach Leveraging a winning combination that has sustainability and technology at its core, Complete Office Supplies (COS) continues to dominate in its field. As Australiaâ&#x20AC;&#x2122;s largest family-owned office supplies business, boasting a turnover in excess of $120 million annually, its continuing growth and success boils down to one key philosophy: superior customer service rules all

Writ ten by Sarah Megginson Produced by Erika Kracer

COS

“An overriding consideration for us as a fam understanding that we are in this game for t so decisions need to be made with a long te

OS offers an all-in-one solution for all office consumables, from paper and toner to coffee and bathroom products, for corporate and government agencies. Founded 40 years ago by Dominique Lyone, an Egyptian immigrant whose family fled to Australia after the 1967 Six Day War, its humble beginnings saw the business established first as a local office stationery business in Western Sydney. Back then,

October 2016

the top selling item was typewriter ribbon. “Today, we sell more hand towels than toner,” laughs Belinda Lyone, General Manager Strategic Sourcing and Marketing at COS. Product range Hand towels are one of the company’s more unusual product lines within the office supplies space, alongside toilet paper, technology, coffee and just last year, fresh milk. Belinda says they are always tuning in to their

Key People

mily is the the long term, erm view point” customers’ needs in an attempt to deliver them convenient solutions, which is why COS added dairy produce to its extensive range of 21,000-plus products. “Traditionally, office product companies didn’t sell coffee or toilet paper, but we have learnt that we do have to keep an absolutely open mind. We’re working on new categories at the moment and the under-lining thinking is always: what is the office buying and is there any reason they couldn’t

Dominique Lyone Founder & CEO Born in Egypt and emigrated to Australia at the age of 13. Dominique is the Founder and CEO of Complete Office Supplies. COS offers an all in one solution for all office consumables to corporate and government agencies. Major product groups are paper, toner, stationery, canteen, janitorial, furniture and printing. The company employs approximately 350 staff throughout Australia in 9 Distribution Centres and sales offices. Current revenue exceeds $120 million per annum. Dominique was the runner up candidate in his category competing in the 2011 Ernst & Young Entrepreneur of the Year Award. More recently, he was a finalist in the 2014 Ethnic Business Awards. Married to Mara Lyone, they live in the beautiful suburb of Hunters Hill on Sydney Harbour together with their 12 year old son Casimir. Dominique also has 2 daughters; Belinda (37) and Amie (35). Both are married and hold Executive Positions in the family business. Dominique’s personal prime interests include family, succession, boating, fishing and golf.

AUSTRALIA

350

Number of Employees at

COS

be buying it from us?” Belinda explains. “Last financial year we identified that our customers were buying fresh milk every week. Initially we thought, is it something we could source competitively, so that it would make sense for the customer to get it in one delivery and on one bill?” Evidently, it was. Milk sales are shaping up strongly and have proven to deliver convenience to key customers and diversification to the business. Being a family business, sustainability is always at the forefront of the way they operate, Belinda explains. “An overriding consideration for us as a family is the understanding that we are in this game for the long term, so decisions need to be made with a long term view point,” she explains. “To this end, we have a policy to ensure that no single customer is worth more than five percent of our business, and that is about preventing a knockout punch. We don’t ever want to be in a position where if we lost a customer, we’re at risk of losing the entire business. That wasn’t always the case – we have had times where one customer could have been worth 30 percent – but going forward, this strategy serves our sustainability goals.”

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JACOBS DOUWE EGBERTS Australia has built a strong reputation by delivering consistently high standards through our product quality and service. With coffee as our core focus, we provide a total solution offer. JDE is a leading global coffee player, but we’re very much in touch with the needs of the Australian market. We understand Australia’s coffee appreciation as we roast locally and cater to Australian preferences – continuing to serve the ‘daily joys of life’ with a coffee for every cup. In the world of B2B, there are different needs for different types of businesses. At JDE Australia, we take this into consideration as we continually innovate and deliver results for our business partners. Our main objectives when working with our business partners are to help them provide their customers with what we call ‘e ree S’s’ – Solutions, Savings and Sustainability. We achieve this through our industry expertise, tailored machine options and extensive range of products. Our brands are well known, loved, respected and continue to grow in popularity year aer year.

Delivering a solution for every cup

COS

Family business Together with her sister Amie Lyone, Head of Operations, and the rest of the six-person executive team, COS works globally to find strategic suppliers, with an aim of selling products that help make people more productive or more

“We do place a lot of emphasis on performance and we can’t perform if our suppliers don’t perform. If they have a strong technology platform across how they manage their inventory, that does help us to deliver a better service”

October 2016

healthy in the modern office. Dominique Lyone remains very hands-on as CEO and while Belinda looks after sourcing and marketing, Amie manages operations, including warehousing and distribution functions, as well as their customer support centre.“I’m responsible for the service level our customers experience and that means it’s up to me to make sure we deliver in full, on time, and that any touch point they have with the business is a positive one,” Amie says. One of the keys to COS’s success over 40 years in the industry has been its willingness to continually innovate and put the customer first, Amie explains. The introduction of technology to the product range is a prime example of this – as is its customer service team, which includes a call centre and a live chat team. As a family operation that was established in an era when customer service meant face-toface visits, Amie says delivering

S U People P P LY C H A I N Key

impeccable service remains at their core of the business. Customer service “Within our service centre today, live chat is the latest way our customers interact. That’s growing significantly in popularity. We still have customers who call and email, and occasionally we still hear a fax come through. But the majority of our conversations are happening via our website, where consumers are utilising live chat,” Amie says. “That team sits in our customer experience division and they are trained as our product experts, which means our customers are getting live interaction with a person. They know who they’re speaking to any one time. We even have a photo of the person on the screen, so they can see they’re talking to a real person.” This adds a personal touch to their ecommerce platform, which Belinda is proud to confirm is cutting edge.

Amie Lyone Executive Leader, Operations Amie is a driven second generation executive of Complete Office Supplies. Amie began her career in professional services where she quickly discovered her passion for people and process. After five years Amie stepped into the rapidly growing family business in 2004, at that point approximately 150 full time employees, with the brief to bring discipline into the people management. 11 years on with COS at 350 employees Amie’s remit has evolved to be responsible for all the operations team nationally including COS 9 distribution centres and own driver network.

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Key People

When building the digital service offering, it was “no longer about what are our competitors doing globally,” she shares, “but more a conversation about what is happening in ecommerce generally”. “Online shopping has exploded and ecommerce in the B2B environment was behind. We looked for inspiration by trying to see what are other big, successful retailers doing online, so we could make sure the customer experience of buying online at a personal level is translated into buying office supplies.” The team then took it one step further to consider the B2B aspect of ensuring reporting, approvals, progress management and business features were offered, without sacrificing the customer experience. Supplier sustainability With a large and diverse government and corporate customer base, COS takes its

Belinda Lyone General Manager, Strategic Sourcing & Marketing Belinda is a passionate second generation executive of Complete Office Supplies. Growing up exposed to the ups and downs of a private business, Belinda developed her passion early for marketing and business, completing her Bachelor degree in Economics and Masters in Marketing. Prior to joining the family business in 2003 Belinda began her career in reward marketing before spending six years responsible for marketing international spirit and liqueur brands. Over the past eleven years working in the family business Belinda has been responsible for the procurement and marketing functioning, instrumental in supporting the businesses ongoing success and growth, riding the e-commerce phenomenon, delivering the most loved website www.cos.net.au. Belinda was recently named Next Generation Achiever of the Year in the 2016 Family Business Australia (FBA) Awards.

COS

responsibility to deliver on its promises very seriously, and this extends all the way through the supply chain. “When we’re managing suppliers and the product coming in, the main thing for us is transparency. We need to know when it is arriving so we can ensure that when we make a promise to the customer, we can deliver it,” Belinda says. “We do place a lot of emphasis on performance and we can’t perform if our suppliers don’t perform. If they have a strong technology platform across how they manage their inventory, that does help us to deliver a better service.” Promoting transparency and maintaining an ethical supply chain is also “really important to us” she adds. “As a family, we’re conscious of our impact on the planet and we keep that as a core focus. We have an ethical sourcing policy and we’re pretty clear with our expectations surrounding child

October 2016

labour and the use of natural resources,” Belinda says. “Any supplier we choose to consider does have to review and acknowledge where they do and don’t comply with our policy. From a global point of view, we’re literally visiting the factories in China on a regular basis and if I see something that sets off a red flag, I’m not afraid to move on to another supplier who is more aligned with us.” It’s clear that a sustainable approach flows through every part of the business. The Lyone Foundation With family values at its core, COS established the Lyone Foundation as an initiative to support Australian people. A generous 15 percent of all profits pour into the foundation, which means that when a customer chooses COS, “they know that 15 percent of the money we make from the order is going to charity”, Amie says. In one of its recent projects, the company supported an

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COS

indigenous childcare centre in far north Queensland. “One of the challenges for indigenous children is arriving at school with literacy and numeracy skills. We were able to help fund a centre where children under the age of five can go for free, with their guardian

122

Million COS annual revenue

October 2016

and an indigenous elder on site, to provide a fun place where they have access to pre-school learning to get ready for ‘big’ school.” Staff are invited to join the charity selection committee if they wish to be involved, and both Amie and Belinda sit on the board of

the Foundation, which primarily supports Australian causes. “We’re a success story of immigration; our dad came here from Egypt in the 60s, didn’t speak a word of English, didn’t finish school,” Amie says. “If it weren’t for charity when he arrived, we wouldn’t

have survived, as he lived off food stamps and they helped him find a house. It was really important to our dad to give back to the country that gave him his start.”

TRANSFORMING A MINING SUPPLY CHAIN Ausdrill has taken advantage of the downturn in mining, taking the opportunity to grow a culture of innovation and lean thinking: this has partly been achieved through an IT-driven, end-to-end transformation in its supply chain Written by John Oâ&#x20AC;&#x2122;Hanlon Produced by Glen White

AUSDRILL

ounded in 1987 by Ron Sayers with just a single drill rig at Kalgoorlie, Ausdrill has grown to become one of Australia’s top 200 companies, listed on the ASX and counting the major mining companies including AngloGold, BHP Billiton, Barrick, Gold Fields and Newmont in its client list. Its rapid growth has been achieved mainly by acquisition, and today the group embraces 19 businesses located across Australia as well as major interests in Africa including a half share, with Barminco, in African Underground Mining Services (AUMS). Ausdrill has been affected in common with the entire mining services sector by the retrenchment in exploration and production following the recent slump in commodity prices. Though Africa has bounced back and Australian gold prices have firmed this year sparking renewed activity, in all its markets Ausdrill is facing greater competition. As Group Contracts and Procurement Manager Ashley Carey puts it, smaller players are desperate for any work to keep them going and

October 2016

are creating a price environment that, though unsustainable, skews the market in the short term. Carey and his colleague, financial controller Renée Harrold, have taken a lead role in easing the company through some very difficult times and refining its procurement processes and culture to a point where it can take full advantage of the upturn that can’t fail to materialise in this notoriously cyclical business. As Carey says: “The downturn has been a blessing in disguise: it has brought the supply chain to the top of the agenda. Without the downturn we may not have had the traction to drive the changes we’ve made over the last two years. Bad times breed good businesses and that is very true in our case.” A case for refinement With plenty of work around, and the highest standards of customer service, there had not been the incentive to introduce what might be called joined-up thinking. There was very little communication between the businesses in the group, and

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Ron Sayers

Managing Director w w w. a u s d r i l l . c o m . a u

AUSDRILL

October 2016

AUSTRALIA

“Without the downturn we may not have had the traction to drive the changes we’ve made over the last two years” – Ashley Carey, Group Procurement Manager

Ashley Carey Group Procurement Manager Since 2010, Ashley Carey has led procurement at the Ausdrill Group and overseas all procurement related activities, direct materials purchasing as well as sourced products and services. Ashley started out as a hydraulic engineer, working primarily in the agricultural and mining industries where he was picked up by Ausdrill to focus on cost reductions in all technical categories. In a short time Ashley had worked his way through the organisation and now sits as the head of procurement for the group which has operations in 8 countries around the world. Ashley has overseen a dramatic transformation within the Ausdrill procurement function driven primarily by the most dramatic mining industry downturn in a generation. The transformation includes the implementation of a best of breed procure to pay system, moving toward a fully centralised procurement function, large scale operational cost reductions and the completion of a comprehensive supplier rationalisation project. Ausdrill is now well positioned as an industry leader on many fronts in the procurement space and with an upturn imminent can take full advantage of its new structure.

when it came to procurement, every one of some 58 individuals scattered across Australia was entirely focused on his or her own cohort of users and suppliers. The supply chain function was entirely process driven: suppliers may have been taking advantage of that segregation and charging higher prices, and service levels were not as good as they might have been. “Our first task was to understand what we were spending money on, and look at the total global spend of the group,” he says. Not surprisingly this exercise delivered sizeable savings. It also highlighted that suppliers were not always realising the spend level they anticipated. Capturing procurement data across the group began to give insight into the supplier community.

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AUSDRILL

October 2016

AUSTRALIA

“Coupa is probably the most cost effective software available on the market … it is a cloud based solution that works” – Renée Harrold, Financial Cotroller But the first thing to tackle was the group-wide structure. “We started on a three and a half year project to centralise procurement,” Carey says. “We built a communication channel through a basic SharePoint based requisitioning system, and rolled that out in a small group of companies, reducing their procurement workforce

Renée Harrold Financial Controller Renée is a CPA qualified Accountant currently based in Perth, Western Australia. Having completed a degree in Accounting and Finance at Edith Cowan University she works extensively in Western Australia and throughout West Africa in the Mining Services sector. Renée takes a hands on approach when developing operational focussed financial solutions in the mining & energy services sector.

from eight to two. It was the start of something big for Ausdrill.” This was a key moment because it enabled his team to convince the board, generally conservative in attitude, of the enormous savings potential of IT – he identifies this as the point where innovation tailored to the business, as opposed to taking the cue from its large mining clients, started to be accepted as a strategy that could be applied across the group. Coupling with Coupa After 42 months, Ausdrill had a centralised procurement function, administered by thirteen people, four in Kalgoorlie, one in Queensland and eight in Perth. The workload is w w w. a u s d r i l l . c o m . a u

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AUSTRALIA

AUD

$744 Million no lighter than when 58 people were needed to handle it, despite the market downturn he points out. The quest for technology-based solution was clearly essential, though arriving at the right one took some effort. The industry has a number of incumbent solutions including Ariba, Quadrem and Basware – Ashley Carey and the team embarked on a two year project to identify the best partner for Ausdrill, visiting government, private, finance sector and of course mining users to analyse exactly how these solutions integrated with their core systems and how easy they were to use. In the end, it was a bold decision to pioneer a system that had not previously been adopted by any Australian company. There was a risk to choosing a cloudbased solution when Ausdrill’s existing Pronto ERP system had not been asked to integrate with any external

Ausdrill annual revenue (12 months to 30 June 2016)

software, but in the end the US based Coupa ‘value-as-a-service’ platform ticked all the boxes including scalability, flexibility, ease of use and return on investment. “Coupa is probably the most cost effective software available on the market,” says Renée Harrold. “Since we adopted Coupa, more of the majors in Australia are looking at it. It is a cloud based solution that works.” She and Carey have been jointly project managing the phased implementation and have found it infinitely adaptable. It delivers on the original requirements – for example it took only 18 months to roll out to some 1,300 users in 18 diverse businesses, and since it takes up little bandwidth it’s ideal for field use over tablets and handheld devices – but like a mining resource ‘open at depth’ it can be expanded by its users. Phased implementation helped

w w w. a u s d r i l l . c o m . a u

AUSDRILL

the businesses to digest the new programme gradually agrees Ashley Carey. â&#x20AC;&#x153;We introduced electronic requisitioning through from a request to a purchase order. The actual receipting of goods was still

October 2016

happening in our Pronto ERP and we simply matched that back in to Coupa so we didnâ&#x20AC;&#x2122;t have to train any of our stores people on how to receipt. On the supplier side, we tried it out in a couple of larger businesses, so about

AUSTRALIA

“We tell them that you can search like you do on Google and buy like you do on eBay” – Renée Harrold, Financial Controller

70 percent of the invoices for these two subsidiaries are now loaded direct by their suppliers. Part of the vendor optimisation programme we are embarking on now will look at how to integrate their systems with ours so

it takes out more manual handling.” Training was relatively straightforward, continues Renée Harrold. “Ashley and I conducted one hour sessions in rooms around Australia. We showed the team the procure-to-pay picture

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7 Noble Street, Kewdale Western Australia 6105

AUSTRALIA

and how Coupa sat in that picture. is not limited by geography by We then presented some examples helping other Coupa users around relating to the people we were training the globe. “It’s almost like a crowd – for example with workshop fitters sourcing platform,” says Harrold we would focus on the types of parts who represented Ausdrill at the San they work with. We set up a Coupa Francisco Coupa Inspire event. “Users blog and discussion forum on our can log on and download features that intranet where people could find a they like and find useful. They can get one page ‘how to’ guide, print it into the community and influence out and put it on the wall. its future - that is how it has That was enough to get developed, by being led them started using by the users rather the system. We tell than presented as a them that you can centrally prescribed search like you do package.” on Google and buy The investment Number of like you do on eBay.” decision has been employees at vindicated, adds Carey. Ausdrill Innovation allowed “The Coupa overlay Coupa users are Coupa has been the bedrock of our developers, a fact quickly picked transformation, allowing us to refine up at Ausdrill, which won a Coupa and automate our processes. Our Innovation Award in May this year for target is 70 percent automation of the the way it has rolled out the system procurement processes, and that will and pushed out its boundaries. One only need four full time procurement of Ausdrill’s systems administrators officers, balanced by a few more James Bargerbos was declared people in the group dedicated to Coupa Community Champion for contract management and cost demonstrating that community optimisation. That is the next step in

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AUSDRILL making this a truly lean company.” Attention has now turned to a vendor optimisation programme. Here the target is to knock a nought off the current 4,000 strong vendor base, with 80 percent of the spend focused in between 50 and 80 key partners. “We are taking this journey hand in hand with these vendors because we want them to reap the benefits of cutting out manual processes and communicating effectively over systems that talk to one another. Our vision is to be able to transact seamlessly with these partners, with minimal human intervention.” The supplier community needed some convincing to get them on board. Carey and Harrold travelled the length and breadth of Australia

October 2016

with a roadshow at which every vendor had the opportunity to learn at a face to face session and have their questions answered. Some reluctance was to be expected. Suppliers often have to pay fees to access client systems, and even have a percentage of each invoice passed to them. With that in mind, Coupa is free to Ausdrill’s vendors. Ausdrill has become a more dynamic company at all levels. It is more competitive. This is a business on a never-ending quest for improvement. By the end of this year all the Australian businesses should be equipped with the hardware they need to move out of paper-based requisitioning and getting used to completing a purchase in minutes

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instead of hours. In 2017 Carey wants to see Coupa rolled out to the African business, something that will present a new set of issues to integrate it with the Pulse ERP used there. The system has already paid for itself, but Harrold and Carey are hungry to see it do much more. “As a global company, we need a global procurement programme.” Coupa is delivering value in ways not foreseen when the decision was made to invest in it. The data from the field is already making management information and schematics available across Australia, and further innovation in in sight. For example, in the near future Ausdrill’s field staff will be able to order purchases directly from exploded diagrams – meaning a part can be

ordered at a touch with no form filling. Coupa is just a tool, but it is one that has given all its users the ability to proactively pare down cost, save time and make processes leaner and more dependable. They will have to get used to taking more control over the outcomes of their work, but that change is gathering traction, says Ashley Carey. “Other contractors in Australia are looking at what we are doing and taking notice. The more people we can get behind us the more we can push the tool to do more things. I have no issues making the mistakes and overcoming them because I am convinced that will help us stay ahead of our competitors.”

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JCB:

INNOVATING IN THE MACHINERY MARKET FOR OVER SEVEN DECADES Considered one of the world’s top three manufacturers of construction equipment, the company remains familiar

Written by: Ellen Mason Produced by: Nayara Ferreira Intervieweet: José Luis Gonçalves

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arked by a humble beginning more than seven decades ago building tipper trailers for agriculture, until achieving full global force in manufacturing that the company displays today, JCB has always chased the new to produce the best. Pioneering and innovation are the key words to describe the company founded in 1945 by Joseph Cyril Bamford, whose motto was ‘never settle for your achievements.” Today, JCB is the world’s third largest construction machinery company, leading with backhoe loaders and telescopic handlers, plus has a large presence in all ranges of construction machinery products, material handling machines and machines for agriculture. According to José Luis Gonçalves, president of JCB for América Latina.

, in 2015 the company sold almost 60,000 machines worldwide. He pointed out that despite earning a global position of relevance with 23 factories on five continents and over 700 distributors, 2,000 sales points and having some of the

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world’s best engineering facilities, responsible for producing more than 300 models of machines, JCB is still remains a family business. JCB Brazil and the Sorocaba plant

In 1995 the company celebrated its 50th anniversary and the arrival to Brazilian territory, commercializing a variety of products through importers. In 2001, JCB opened its first factory in the city of Sorocaba, in São Paulo state, manufacturing backhoes. In 2012 a new factory opened in the same city and it is now one of the world’s most modern when it comes to yellow machines. The new plant is responsible for the production of backhoe loaders, hydraulic excavators, wheel loaders, Loadall and compactor rollers, in addition to having a large postsales and support warehouse for the distributor network. The factory in Sorocaba still has one of the most advanced electrostatic powder-based painting chambers

in the world. “We do at home all key components paintings of our machines, ensuring maximum durability,” says Gonçalves. At the new modern factory, the company invested USD $124 million in a total area of

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201.000m², with 37.000m² of built area and production capacity to manufacture 10,000 units a year, currently employing 250 people. When Jose Luis Gonçalves took over the presidency of JBC of Brazil in 2015, he announced a new wave

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of investments in the country. â&#x20AC;&#x153;As a family company JCB always think long term. We believe in the potential of the country and we see a huge opportunity growth for machinery market in the future. Our goal is to double in size by 2018. Therefore,

we will continue investing in location and nationalization of new machines, consolidating our network of distributors and customer service.â&#x20AC;? Today the JBC of Brazil has in its portfolio three models of backhoes, two models of hydraulic excavators,

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“The proximity to the network, the exchange of information and co-management are essential to guarantee greater and better customer satisfaction. This is vital for JCB. We definitely see them not only as partners, but an extension of the relationship with our customers” - José Luis Gonçalves, president of JCB for América Latina.

two models of wheel loaders, three models of Loadall, five models of mini excavators, five compact loaders, two models of rolls, and machines for cargo transportation. “At the plant we have five production lines today which not only supply the Brazilian market but also all other countries in Latin America as well.” To put into prospective JCB’s size, José Luis Gonçalves points out that the company produces more than 300 models of machines offered worldwide. “In Brazil we offer about 40 different models of which 28 are produced in the country and 15 are imported.” Relationship with distributors network

José Luis Gonçalves reveals that JCB’s strategic pillar lies on its operational excellence, which

ensures the highest product quality. Moreover, the company takes the customer experience to the next level, always seeking to offer JCB patrons the lowest operating costs and best after-sales service, translated by its network of distributors present in all states. According to Gonçalves, distributors are the interface between the company and the final consumer, delivering satisfaction and positive customer relations. “The proximity to the network, the exchange of information and co-management are essential to guarantee greater and better customer satisfaction. This is vital for JCB. We definitely see them not only as partners, but an extension of the relationship with our customers,” says Gonçalves. The president also noted that customers have two main points

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“The network is a key part of our business because it takes care of JCB’s most valuable asset, which are our customers” - José Luis Gonçalves, president of JCB for América Latina.

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in their day-to-day, “one is the uptime that is the availability of the machine - that is, the machine is always working and operating properly. The other is the total cost of acquisition, operation, which varies from machine to machine, fuel, maintenance, tires and so on. So we have to acknowledge these variables and be able to perform our job, delivering to our customers maximum availability of the machine, as the distributors network play a key role in scheduling due maintenance of all machines, and

Key People

we focus on security and an operating cost that is as competitive and as low as possible so that the client has the best return on their business. “ José Luis Gonçalves also points out that the relationship with the network is a symbiosis. He states that they are not two separate entities, but rather a set from the factory to the network where the ideal is to be always close to each other, maintaining a continuous dialogue to guarantee customer satisfaction. Since 2014, the company has been undergoing a process of consolidation and strengthening of the network. Important changes took place in different areas of Brazil, bringing in companies that are of great commercial capacity, large financial health, all in full alignment with the values and traditions of JCB in Brazil. This enables the company to keep economic groups that have working in more than 60 points in Brazil, in all states of the country. The executive also added: “The network is a key part of our business because it takes care of JCB’s most valuable asset, which are our customers.” Social and environmental responsibility

The social projects developed by JCB Brazil are linked to the Lady Bamford Foundation, a worldwide project sponsored by JCB, which in Brazil includes support to the ‘Tomorrow Planters’ childcare facility, in addition to the IESA (Institute

José Luis Gonçalves President of JCB Brasil Born in January 20th 197, José Luis Gonçalves can be considered a citizen of the world. Son of a Portuguese father and a Colombian mother, the executive began his professional journey at 17 years old when he first started in the automotive industry. Since then, he has worked in countries such as Colombia, Venezuela, United States and Sweden. Passionate about soccer, he is the father of daughter Manoela and son Joaquim. José Luis has more than 20 years of experience in both technical and commercial areas of worldwide companies. In 2015 he joined the JCB team and his biggest challenge is to promote the business growth by strengthening the relationship with the distributors network and investments in releases and product locator programs, in view of the company’s strategic planning which is expected to double in size by 2018 as well as double its market share by 2020.

WEBSITE

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of Social Environmental Education) which is based on an ecological soap factory that turns part of its sales revenue to maintaining the social project. Learn more about the social projects of JCB:

IESA: On each machine manufactured by JCB in Sorocaba, a soap kit manufactured by IESA, is sent accompanied by a letter, which aim to spread the word about this

work to distributors and customers of the brand. COESO: Besides working with the children at its daycare, JCB also supports COESO on a project with the mothers of these children, providing workshops to manufacture handbags out of recycled materials and cooking classes, like the bread workshop. RESSIG Project (Reframing waste) is aimed at reusing materials, especially from industrial origin,

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as raw material in the artists and craftsmen production processes as well as students projects from schools in located the city of Sorocaba and around the region. JCB, as the project supporter, provides monthly donation of materials (which would otherwise be simply disposed of) to RESSIG. Among the donated materials are: cardboard, plastic bags, bubble wrap, foam blocks, styrofoam plates, nylon ribbons, among others. When it comes to the environmental issue, JCB’s plant in Sorocaba stands out for: - Solar Heating: all hot water used in the factory is obtained by solar energy. - Natural lighting: the production areas all have partly with natural light through transparent domus, enabling work to be done with only part of artificial lights being on. - Rain harvest system, prepared to the reuse the water in bathrooms and lots clean up. - ACL (Free Contracting Environment): all electricity JCB,

“So we have to acknowledge these variables and be able to perform our job, delivering to our customers maximum availability of the machine, as the distributors network play a key role in scheduling due maintenance of all machines, and we focus on security and an operating cost that is as competitive and as low as possible so that the client has the best return on their business” - José Luis Gonçalves, president of JCB for América Latina.

staring in January 2016, now come from subsidized sources (renewable), directly from CEMIG (largest supplier in this segment). - ETES (Effluents Sanitary Treatment Plant): JCB treats sewage, returning it clean.

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MOVING FROM P R E S E R VAT I O N T O I N N OVAT I O N

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