Supply Chain - October 2021 by Supply Chain Digital

October 2021 | supplychaindigital.com

Technolgy: Digitial Twins Logistics: 2022: Future tech in supply chains Spring Branch: Leveraging innovate technology Losberger De Boer: Broaden horizons in pandemic

UNIVERSITY of MASSACHUSETTS Chief Procurement Officer, DAVID CHO

UNIFYING PROCUREMENT TO CHANGE.

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The SupplyChain Team EDITOR-IN-CHIEF

RHYS THOMAS EDITORIAL DIRECTOR

SCOTT BIRCH

PRODUCTION DIRECTORS

GEORGIA ALLEN DANIELA KIANICKOVÁ PRODUCTION MANAGERS

OWEN MARTIN PHILLINE VICENTE JACK THOMPSON

PRODUCTION EDITOR

JANET BRICE CREATIVE TEAM

OSCAR HATHAWAY SOPHIE-ANN PINNELL HECTOR PENROSE SAM HUBBARD MIMI GUNN JUSTIN SMITH REBEKAH BIRLESON DUKE WEATHERILL JORDON WOOD VIDEO PRODUCTION MANAGER

KIERAN WAITE

DIGITAL VIDEO PRODUCERS

SAM KEMP EVELYN HUANG HABBIE AMOS JACK NICHOLLS MARTA EUGENIO MOTION DESIGNER

TYLER LIVINGSTONE MARKETING MANAGER

KAYLEIGH SHOOTER PROJECT DIRECTORS

TOM LIVERMORE MIKE SADR

MEDIA SALES DIRECTOR

JAMES WHITE

SALES AND MARKETING DIRECTOR

JASON WESTGATE MANAGING DIRECTOR

LEWIS VAUGHAN

CHIEF OPERATIONS OFFICER

STACY NORMAN PRESIDENT & CEO

GLEN WHITE

FOREWORD

Is procurement transforming supply chain business operations? Very different types of companies are modifying the way that they work by tackling procurement issues with new technologies and centralised systems.

“But we managed it, and in relatively quick fashion: we were able to put this procurement transformation into action for many hundreds of people in just over a year”

Welcome to the October edition of Supply Chain Digital! In this edition we speak to CPO David Cho about transforming procurement at the University of Massachusetts. He joined the university during the autumn, 2019, at a time when each of the four campuses was responsible for its own procurement and accounts payable, sourcing, and contract management activities. Cho’s first task was to unify not only the campuses, but the six different ways in which the university was being run. Today, the University has a new centralised system, known as the United Procurement Services Team (UPST), sharing services across the campuses. Cho and his team managed to close $1 billion in annual spend and more than 17,000 active suppliers. We also speak to Patrick Foelk, Head of Strategy & Transformation at healthcare giant Roche. He takes us inside the wholesale transformation of procurement and his ambitious 2030 target.

RHYS THOMAS SUPPLYCHAIN DIGITAL MAGAZINE IS PUBLISHED BY

Rhys.Thomas@bizclikmedia.com

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CONTENTS

Our Regular Upfront Section: 10 Big Picture 12 The Brief 14 Timeline: UPS a Walk Through History 16 Trailblazer: Kathy Wengel 20 Five Mins With: Ambeshwar Nath

Procurement

Roche: A New Value Chain For Procurement

University of Massachusetts

Unifying Procurement to Drive Change

Losberger De Boer

Broadens Horizons in Pandemic

Supply Chain

Supplier Relationship Management

Logistics

2022: Future Tech in Supply Chains

Spring Branch

Driving Cost Savings Through Diverse, Innovative Procurement

106

Technology

Digital Twins 101: Understanding the Technology

Gain control over contracts and manage obligations efficiently GTAA achieved smooth operations and automated its manual contracting processes with SirionLabs’ contract management solution. The airlines breezed through the constant changes brought on by the pandemic owing to continuous, uninterrupted flow of data between GTAA and Wipro. Explore smarter contracting solutions

October 2021

GTAA & Wipro: Partnering with SirionLabs for Success

Canada’s airports are coming back from COVID stronger than ever—thanks to SirionLabs’ automated solutions “It’s not an exaggeration to say that the pandemic brought the aviation industry to its knees,” says Angella Dikmic, Manager of IT Vendor Management at Greater Toronto Airports Authority (GTAA). But with the help of SirionLabs, she and Anudeep Kambhampati, Director & Global Client Partner at Wipro, have successfully maintained their operations. “As Canada’s largest airport, a variety of passengers from around the world depended on us. That meant we had to innovate and return stronger than ever. With partnerships like Sirion and Wipro we are able to achieve this.” she adds.

GTAA: Flexing A Future-Oriented Mindset

When the world was facing the height of the pandemic, GTAA relied on SirionLabs’ automation solutions to manage its contract renewals, negotiate savings, maintain relations and mitigate risks. “We used SirionOne, Sirion’s CLM platform, to report demand to our IT leadership team in a time of crisis,” says Dikmic. “Through it all, Sirion was responsive, flexible, and aware of the latest trends in contract management.”

Wipro: Maintaining Core Airport Operations In addition, Sirion’s end-to-end CLM platform caters to all functions and levels—and helped Wipro maintain its close technology partnership with GTAA. Even prior to the pandemic, Wipro helped GTAA manage its core operations with artificial intelligence and automation. “Now, every manager on our team uses Sirion on a daily basis,” says Kambhampati. “Because SirionOne handles most tasks, we can easily pull up our contract clauses, review our obligations, and provide GTAA with weekly status updates despite industry disruption.”

Overall, GTAA intends to work with SirionLabs to make Canada’s airports more efficient, effective, and successful. The journey ahead is an interesting one. “We want to take advantage of economies of scale,” says Dikmic. “Our vision is to develop an airport framework that promotes consistent, data-based interactions. We want to drive effective outcomes. We want to draw upon our strengths. And we believe that our partnerships with Wipro and Sirion will allow us to give our passengers a transformative air travel experience.”

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BIG PICTURE

October 2021

UK Petrol Stations Face Unprecedented Demand With Limited Supply United Kingdom

What started out as BP closing several petrol stations due to 100 of its locations experiencing a shortage of at least one grade of fuel, has turned into a national crisis of organisations up and down the country experiencing an influx in demand and limited supply. Despite the Petrol Retailers Association (PRA) urging consumers not to panic, many have flocked in their hundreds to petrol stations up and down the country. What is Causing this Crisis? The fuel industry estimates that there is currently a gap of 100,000 lorry drivers

in the UK in part due to COVID, as well as BREXIT. During 2020, the UK saw 25,000 HGV drivers from the European Union (EU) leave the UK, not to return; coupled with the backlog of 40,000 waiting to take their HGV test, there is a shortage of drivers. The Road Haulage Association believes that the government isn’t taking the problem seriously enough: “The average age of a truck driver in the UK is 57, every day this problem is just getting worse as more and more retire,” said Rod McKenzie, managing director of policy and public affairs at the RHA.”

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THE BRIEF “We are utilising techniques that private equity firms might use for optimising their portfolio companies” David Cho

Chief Procurement Officer & Managing Director, University of Massachusetts 

BY THE NUMBERS Supply chain disruptions hit Japan’s exports

“We are going to be the best procurement platform in the K-12 world. Whatever it takes to do it, we need to make sure it we're doing that every day when we come into work” Richard Gay

Director of Procurement Services, Spring Branch ISD  READ MORE

“Everything starts with having good data, particularly when you’re working in different markets” Oscar Gersjes

Group Procurement Director, Losberger De Boer  READ MORE

October 2021

Preliminary data taken from August year on year.

26% 30% $5.8bn $66bn Exports Increase

Analyst Forecast

Trade Deficit

Imports Total

CO2 Emissions Reduced by: 80% for air freight 90% for sea freight Did you know? The vast majority of biofuel is cooking oil.

DHL Rolls Out New UK Green Fleet: • 320 electric vehicles by the end of 2022 • 50 vehicles already on the road to mark World EV Day • Part of €7 billion investment by Duetsche Post DHL Group to reach net zero by 2050

Ivalua Links Sales Increase To CSR initiatives CSR is no longer a trade off, according to a study of 467 business decision-makers from organisations across the globe, commissioned by global spend management leader Ivalua. How has supply chain helped businesses spend more wisely? The study, which began in March 2021 and was completed in August 2021, showed that one of the main challenges holding organisations back is the inability to effectively assess individual supplier CSR performance and measure supply chain performance, followed by a lack of systems to enable effective and scalable collaboration. The most effective strategy for improving sustainability was providing suppliers with more flexibility in how they meet requirements, followed by digitising supplier collaboration. Is it all good news for CSR? While 69% of respondents reported an increase in sales as a result of CSR initiatives, only 33% have taken the next step and defined official sustainable policies and targets, while social and ethical priorities still lag.

 ACHILLES: Achilles, a global leader in supply chain risk and performance management, has been acquired by Bridgepoint Development Capital, bringing access to the capital and expertise to deliver new capabilities around areas like ESG, CSR, EDI, health and safety, and supply chain mapping.  MAERSK The Danish shipping group which carries around one-fifth of seaborne freight is predicting operating profits of $18bn to $19bn after a surge in customer demand, far exceeding forecasts. This would be the highest operating profits in the company’s history, beating $12bn in 2008.

 FORD: After $2bn in losses over the past decade, Ford India is shutting its car factories. Around 4,000 employers are likely to be affected. Government tax and the valueconscious market are believed to be the prime reasons for the closure.  EVERGRANDE: The property giant is struggling to sell assets fast enough to service its massive $305bn debts. With more than a million people waiting to move into new homes, hundreds of housing projects remain unfinished. The firm currently owns more than 1,300 projects in more than 280 cities across China.

W I N N E R S OCT21

L O S E R S

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TIMELINE A WALK THROUGH HISTORY 1907 Two Teenage Entrepreneurs Starting out in a basement in Seattle with a loan of US$100, two teenage entrepreneurs Claude Ryan and Jim Casey - opened the American Messenger Company.

1919 1930

1953 1975

Becoming United Parcel Service (UPS)

There’s No Stopping UPS

Between 1919 and 1930, the two entrepreneurs made their first two expansions. Once in 1919, they moved beyond Seattle to Oakland in California debuting its new name - United Parcel Service (UPS). And again in 1930 the pair expanded to the East Coast in New York City, moving its corporate office from Los Angeles (LA) .

By 1953, UPS became a common carrier operation serving both residential and commercial customers in several cities. After a failed two-year venture in air services in 1929, UPS entered into the market again in 1953 offering a two-day delivery service to major East Coast and West Coast cities. By 1975, UPS became the first package delivery company to serve every address in the US. That same year, UPS expanded abroad for the first time into Toronto.

Discover the history of UPS and its journey to becoming a multinational shipping, receiving and supply chain management company

1985 1989

1994 1999

2020 & Beyond

UPS Takes Flight

Going Green and Going Public

More Than 100 Years of Innovation

In 1994, UPS moved its headquarters to Atlanta. With the move UPS placed emphasis on energy efficiencies and an extensive tree protection and replacement programme. UPS also debuted its website - UPS.com - in the same year. During the 1990s UPS further expanded its vision to become a true enabler of global commerce. As a result the company went public in 1999.

In 2020 at the height of the global pandemic (COVID-19), Carol B. Tomé stepped out of retirement to take on her dream role as CEO of UPS. Becoming the first outsider and first women CEO in the company’s 114 year history, and the first female CEO in the industry, Tomé is proud to be a UPSer, and ready to ‘break glasses’. Tomé is currently one of only four women CEOs in Fortune 50 companies. Since her appointment Tomé has been ‘shakeing things up’, by changing the way UPS operates to promote its strategy of being a customer first, peopleled, and innovation-driven organisation.

In 1985, UPS’s Next Day air service, became the first network to reach every address in the 48 contiguous states, and began its first intercontinental service between the US and Europe. Between 1988 and 1989, UPS won approval from the Federal Aviation Administration (FAA) to operate its own aircraft, extending its services to the Middle East, Africa, and the Pacific Rim.

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TRAILBLAZER

KATHY

WENGEL EVP & Chief Global Supply Chain Officer, Johnson & Johnson

ith a passion for building globally diverse teams, and committed to furthering women in leadership and STEM, Kathy Wengel joined Johnson & Johnson (J&J) in 1988, and has been the company’s EVP and Chief Global Supply Chain Officer since 2014. In her role, she leads all aspects of the supply chain and several enterprisewide functions across its three business sectors: Consumer Health, Medical Devices and Pharmaceuticals. “I’m extremely proud to work alongside so many dedicated, caring people and organisations all working to put a healthy mind, body and environment within reach of people everywhere,” said Wengel. Responsible for the development and execution of J&J’s enterprise supply chain strategy, Wengel in her time as EVP and Chief Global Supply Chain Officer has co-led efforts to redesign and rebuild J&J’s supply chain and quality operating model, modeling the company’s operations into an integrated process focused on the end customer.

October 2021

“No statistics or prediction is unchangeable, and while progress takes time we can accomplish so much more when we work together”

Supply Chain Digital Top 100 Women:

TRAILBLAZER

“As we go after many of the worlds most unmet diseases - ebola, TB - the ability of the supply chain and […] our capabilities become incredibly important” Wengel attributes the success of its supply chain initiative to the diverse and global supply chain team that J&J has spent years building. During her more than 30 year career at J&J Wengel has held a variety of positions, but her passion for building diverse teams shines through in her commitments as executive sponsor for J&J’s Women’s Leadership and Inclusion (WLI) initiative and J&J’s Women in Science, Technology, Engineering, Math, Manufacturing and Design (WiSTEM2D) program. “In my opinion, a top challenge for every supply chain executive is a question I ask myself every day: How do we find the best talent to drive future innovations for patients, and ultimately the growth of our company? I spend more than a third of my time working on this challenge; 18

October 2021

accelerating talent development, identifying the most promising future leaders, establishing a culture of self-direction and accountability, and ensuring we equip our entire workforce with the skills and capabilities they will need for the future,” said Wengel. Wengel’s two proudest workrelated achievements include, the implementation of J&J’s redesigned supply chain model. “While this journey never ends, I want to recognise our more than 50,000 supply chain associates for their fantastic work,” committed Wengel. Relating to the first, Wengel is proud of the efforts she has made to build more diverse global teams throughout her career. “I've seen so many times how results are dramatically improved when you

put people with different experiences, from different backgrounds, and with different perspectives together and give them a problem to solve,” she added. Modest when it comes to the recognition she has received over the years - lifetime Distinguished Service Award from the Council of Supply Management Professionals (CSCMP), the National Association of Female Executives’ (NAFE) Women of Excellence Award, AWESOME’s

Legendary Leadership Award, and elected to the Supply Chain Hall of Fame - she noted that, “I'm extremely honored and humbled at being named the recipient of the 2019 Distinguished Service Award from CSCMP. Each of these recognitions is due to the strong, dynamic, and diverse teams we have that are tackling the complex challenges that come at us in health care each day.” supplychaindigital.com

FIVE MINUTES WITH...

AMBESHWAR

NATH SVP & INDUSTRY HEAD, CONSUMER, RETAIL & LOGISTICS, INFOSYS Q. WHAT IS YOUR EXPERIENCE IN THE SUPPLY CHAIN INDUSTRY?

» I have worked for over 20 years

across numerous geographies and industries, including Consumer Goods, Retail, Logistics and Pharmaceuticals, helping to drive business transformation, operational efficiencies and disruptive innovations within the supply chain industry.

Q. HOW DO YOU SEE THE INDUSTRY EVOLVING OVER THE NEXT DECADE? WHAT TREND ARE YOU MOST EXCITED TO SEE EVOLVE?

» There are many changes happening around us that will impact the supply chain industry forever. Over the next decade, there will be widespread adoption of technology to drive agility and flexibility, intense focus on sustainability and climate change, changing market demographics and increased focus on collaboration and transparency. 20

October 2021

There are a few trends that really excite me, one being the ‘technology in hyperdrive.’ Following the pandemic, futurefocused companies are investing significantly in making technology capabilities that allow their supply chains to become more agile and responsive. Technology capabilities such as IoT, AI/ ML and Cloud Computing are becoming core to the differentiated capabilities that companies are trying to build. Another exciting trend we’re seeing in the industry is the idea that data is the new oil. Being able to generate insights from data is critical in today’s world, not only from your own organisation, but the ability to leverage data across ecosystem (customers, suppliers) is essential to truly make your supply chain robust and responsive. With the cost of computing continuing to follow Moore’s law, the ability to build such capabilities is becoming more relevant and affordable.

FIVE MINUTES WITH...

WHO IS INFOSYS? A global leader in next-generation digital services and consulting for 40 years, Infosys enables clients to navigate their digital transformation. Infosys is experienced in managing the systems and workings of global enterprises, expertly steering clients by harnessing AI and agility to deliver highquality performance and customer experiences.

Q. OVER THE LENGTH OF YOUR CAREER SO FAR, WHAT HAS BEEN THE BEST PIECE OF ADVICE YOU HAVE EVER RECEIVED?

» Our industry has been

continuously evolving and has been one of the most disruptive, which would not have been possible if we were not on a continuous path of learning. I am always inspired by one of Steve Jobs quotes ‘Learn continually there's always 'one more thing to learn!’. This is a piece of advice I continuously give to my leadership team – each day needs to be a bitesized learning experience.

Q. HAS THERE BEEN A PARTICULAR ACHIEVEMENT THAT YOU ARE PROUD OF?

» Over the last five years, there has

been a significant shift in our clients’ priorities, with the role of technology becoming a critical differentiator to deliver market-leading business growth. This has necessitated us to recognise the shift and build platform solution offerings. I am proud of the fact that I am leading a phenomenal team that has shaped digital solutions and delivered them successfully, helping our clients transform their supply chains, thereby significantly improving their business performance.

Q. WHAT INSPIRES YOU?

» I’m always inspired by the impact

we’re able to make to a clients’ business. We are in an interesting era of disruption and change – I am enthused with the transformational work that we are able to contribute to and the outcomes that my teams enable us to deliver.

“ WE ARE IN AN INTERESTING ERA OF DISRUPTION Q. WHAT ARE YOUR AND CHANGE – I AM FAVOURITE THINGS TO ENTHUSED WITH THE DO OUTSIDE OF WORK? TRANSFORMATIONAL » With the lockdown early last life reached quite a standstill. WORK THAT WE ARE year, I happened to read Ikigai: The ABLE TO CONTRIBUTE Japanese Secret to a Long and Happy Life to improve my mental TO AND THE and wellbeing. I have now OUTCOMES THAT MY health incorporated gardening and cooking TEAMS ALLOW US TO in my daily schedule – I have found DELIVER” my Ikigai for now! supplychaindigital.com

Get contract management expertise that you can bank on Digitization of contract management enabled Raiffeisen Bank International to work seamlessly on contracts with both external and internal business partners. Rich insights and robust regulatory compliance solutions from SirionLabs helped the bank further extract maximum business benefits. Learn more

Raiffeisen Bank: Smarter Contracts, Better Banking with SirionLabs Founded in 1886, Raiffeisen became a pioneering financial force in Austria before expanding its horizons beyond the country’s borders a century later into Central and Eastern Europe. Raiffeisen Bank International (RBI) today has 45,000 employees servicing 17.7 million customers. By partnering with SirionLabs, the bank has rolled out a 36,000-contract system across 14 countries in 18 months.

Better Banking: SirionLabs will allow the bank to refocus on more complex, forward-looking challenges. “Now, we have all the documents we need in that system,” Janssen explains. “We have a single source of truth for all of our contractual information. We have all relevant metadata including the complete relevant regulatory information stored in the system and we have the flexibility to add metadata if it is required.”

Smarter Contracts with SirionLabs: As Edzard Janssen, RBI’s Chief Procurement Officer, explains it, regulation in banking is ever strengthening and bringing more complexity also in the areas relevant to outsourcing risk management. This meant RBI needed a way to store its contracts and prove to Austrian and European regulators that it met the irrequirements by a) having complete visibility of contractual landscape, b) identifying and managing outsourcing relationship, c) ensuring ease of reporting. This may seem straightforward, but it’s slightly more difficult than it sounds. European regulators, after all, don’t differentiate between internal and external suppliers when checking for banking risks and compliance. In this regard, SirionLabs enabled RBI to track more than 1,000 internal suppliers in addition to its 36,000 external contracts. “In other words, SirionLabs provided RBI with a fully-fledged contract management system,” says Janssen. “With their Smarter Contracting Platform, we can report to all authorities in real-time – on whichever dimensions they decide to track. SirionLabs’ system is compliant by default.”

So far, Janssen has been highly pleased with how the contract management platform has unfolded. After all, SirionLabs excels at what it does. The company was named a Leader in the Forrester Wave for CLM, Q1 2021, a Visionary in the 2021 Gartner Magic Quadrant, and a Value Leader in the Spend Matters CLM Solution Map. But RBI and SirionLabs are good partners not only because they lead their respective industries but also because they’re aligned on final outcomes. “There are many contract management systems out there. The technology itself is not a differentiator. What is important to us is how much flexibility we have to adapt to changes in our banking environment. And here, SirionLabs helps us to solve specific banking challenges, specially in regard to compliance,” says Janssen.

UNIVERSITY OF MASSACHUSETTS

October 2021

UNIVERSITY OF MASSACHUSETTS

UMASS: Unifying Procurement to Drive Change WRITTEN BY: RHYS THOMAS PRODUCED BY: GLEN WHITE

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David Cho, Chief Procurement Officer and Managing Director, UMass

UNIVERSITY OF MASSACHUSETTS

CPO David Cho on transforming the University of Massachusetts’ procurement functions, and the ‘better, faster, cheaper’ philosophy to deliver value

1863

Year Founded

24,163

Employees including students

18,615

Employees excluding students

$3.4bn Revenue

he University of Massachusetts is a world-class public research university committed to advancing knowledge and transforming lives. Through its world-class educational programmes, groundbreaking research enterprise, and its impactful community service and industry engagement activities, UMass harnesses the revolutionary spirit of Massachusetts to deliver an unparalleled student experience. With four comprehensive campuses, a top-ranked medical school and a missiondriven law school, each campus offers a dynamic educational experience in a uniquely Massachusetts location, from the coastal town of Dartmouth to the international hub of Boston, from the vibrant mill cities of Lowell and Worcester to the bucolic hills of Amherst. Though separated geographically, the campuses are unified through a central goal of preparing students to contribute to their communities, thrive in a new economy and change the world by providing a broad range of rigorous academic programs and opportunities. However, not everything shared this central spirit. Until 18 months ago, the university’s procurement function was fragmented, with each campus responsible for its own procurement, accounts payable, sourcing, and contract management activities. That began changing in fall 2019, when David Cho, who was the CPO of BlackRock, was recruited through a national search to join UMass as the first-ever system-wide Chief Procurement Officer. Hiring a CPO followed the recommendation supplychaindigital.com

WEI is an innovative, full service, customer centric IT solution provider.

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WEI: Value Added at Every Step of the Procurement Process Value-added reseller WEI strengthens its partnership with UMass and how it is empowering procurement organizations to unlock value beyond just price More than an IT solution supplier, WEI is a valuable problem solver and key supplier to the University of Massachusetts’ procurement organization. WEI has worked on several projects with the university’s newly appointed CPO David Cho. “I met David close to 18 months ago when he started,” says Greg LaBrie, VP of Technology Solutions, WEI. “The pandemic slowed that project down, but fortunately we were invited to participate in the UMass procurement process that we’re now involved in.” Cho unified the university’s procurement function and processes under the Unified Procurement Services Team (UPST), and enacted a new strategy to work more closely with suppliers to extract more value - a philosophy wholly aligned with that of WEI. “When organizations that we work with open up and collaborate with us, that’s when we’re at our best,” says WEI COO Todd Grubbs. “Now

we’ve created a regular cadence to meet with the UPST, and have a vision going forward that is not a hunt-and-peck type of model, but has a cohesive strategy. Our pre-sales group and our architects will meet with them frequently to discuss price, lead times, strategy and vision all at the same time. And that’s how UMass is going to get the technology solutions they’re looking for.” Together, WEI and the UMass procurement organization are unlocking value that goes beyond price, LaBrie adds: “UMass’ new vision, to standardize the procurement process, and standardize technology and procedures across the campuses, allows students and faculty to go from campus to campus and benefit from the same technology. That makes a big difference to their people, and it also provides all that data back to the procurement organization about the devices, people and how they’re leveraging the environment.” The partnership between WEI and UMass has also been an emphatic win for promoting spend with diverse suppliers, says Grubbs. “When UMass supports someone like us, who are a minority business enterprise, that helps us scale, that helps us hire from the minority community, and that helps us support minority suppliers ourselves,” he adds. “The effect of UMass making that commitment is exponential in the diversity community.”

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UNIVERSITY OF MASSACHUSETTS

of a comprehensive shared services plan, a collaborative, system-wide, cross-functional project that was released in April 2019 and endorsed by the UMass Board of Trustees. “The outcome was very similar for each of these separate functions at the campus level, but business was conducted in six different ways, with different operating procedures, and even the same technologies were configured differently,” Cho says. His first challenge was to unify these disparate organisations and harmonise a “patchwork” of policies, procedures and technologies into a standardised system for conducting business. The new centralised organisation driving procurement efficiency for UMass is known as the Unified Procurement Services Team (UPST). “The premise of this was to create a shared services environment to support the campuses,” says Cho, whose newly unified team now manages close to $1 billion in annual spend and more than 17,000 active suppliers. “The good thing is we had the opportunity to deepen the

procurement competencies of the folks in these legacy organisations, who can now go deeper, instead of being generalists,” he says. The team reduced in scope from 70+ to 50 specialists, but “we built competency frameworks specific to the function, and we can plan training paths for each individual and role to build more domain expertise”. With the mandate to create a functioning shared services organisation while still maintaining business-as-usual support for campus procurement activities, the UPST had their work cut out for them. Unfortunately, within three months of becoming operational they had to face the COVID-19 pandemic and its ripple effects on the system. UMass experienced a $240m revenue shortfall. They shifted their focus to supporting UMass in meeting specific short-term objectives, such as health and safety goods and services, and remote learning equipment, that needed to be addressed instantly. But when the initial dust of the pandemic had settled, so too did Cho’s focus. “Better, Faster, Cheaper” The procurement harmonisation project is underpinned by a philosophy to derive more value at every point, something Cho characterises as “Better, Faster, Cheaper.” “It’s about ensuring that we have more strategic partnerships, and that we're getting the best value in reducing operational risks,” Cho says. “We’re faster by using catalogues, for example, and pre-negotiating a lot of framework agreements so that people can point, click, and buy, just like we do every day in our personal lives. To be cheaper, we’re using market intelligence benchmarks that come not only in the form of price points, but operating procedures, best practices, and really using that market intel to its full extent.”

UNIVERSITY OF MASSACHUSETTS

“ We are now closer to being a datafirst organisation”

David Cho

DAVID CHO

TITLE: CHIEF PROCUREMENT OFFICER AND MANAGING DIRECTOR

CHIEF PROCUREMENT OFFICER AND MANAGING DIRECTOR, UMASS

EXECUTIVE BIO

COMPANY: UMASS Cho is the Chief Procurement Officer for the University of Massachusetts, Unified Procurement Services Team (UPST) that provides strategic sourcing, contracts, supplier management, procurement operations, accounts payable, travel services, and customer services to the various campuses within the UMass system. Before joining the UMass System, he was the former Global Head of Sourcing and Vendor Management at BlackRock where he led Sourcing and Vendor Management (SVM) for the World’s largest Asset Management firm. SVM covers all third-party sourcing for technology, HR, marketing, L&C, professional services, and corporate services. Over Cho’s 25+ years of work experience, he has maintained COO roles for emerging alternative asset management companies, and also provided strategy and operations management consulting services to regional, national, and global companies during his stint at KPMG, Archstone Consulting, IBM, Deloitte Consulting and JP Morgan Chase. Cho is a graduate of Boston College and completed the MIT Sloan Executive Program in Technology, Operations and Value Chain Management.

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UNIVERSITY OF MASSACHUSETTS

UMass: Unifying Procurement to Drive Change

“ We're capturing this low hanging fruit, but once we realise those recurring savings, we need to continue to optimise and extract costs and inefficiencies out of the system so that it's something that we can confidently harvest year over year” DAVID CHO

CHIEF PROCUREMENT OFFICER AND MANAGING DIRECTOR, UMASS

The results of Cho’s and the USPT’s efforts have been immediate. An initial target of achieving $16.5m in annual cost reduction was eclipsed within the first 18 months of operation. The UPST delivered $33.9m in savings through 100+ initiatives, within those 18 months, across each of the five UMass campuses. “The key to that is data, and we are now much closer to being a data-first organisation,” Cho says. “We are utilising techniques that private equity firms might use for optimising their portfolio companies. We're factoring in methods that you would use for mergers and divestitures, and all these different tools and approaches.” Cho expects to see twice the amount of financial benefits in the next year, but the ultimate goal of his initial five-year plan will not necessarily follow a linear path. “It doesn't mean we have to continue to double the output that we're getting from supplychaindigital.com

UNIVERSITY OF MASSACHUSETTS

a cost reduction standpoint,” he says. “We're capturing this low hanging fruit, but once we realise those recurring savings, we need to continue to optimise and extract costs and inefficiencies out of the system so that it's something that we can confidently harvest year over year. We may not necessarily maintain that growth trajectory annually, but I am confident that it's something that we're going to be able to benefit from on an ongoing basis.” 36

October 2021

Procurement with Purpose Beyond the mechanics of cost-saving, Cho and his team are driven by their contributions towards the UMass mission of providing affordable and accessible world-class education. This is procurement with purpose. “That’s why I think many of the leaders who joined us, particularly from the non-higher-education verticals, are so excited about this, because the mission really resonates,” Cho explains.

UNIVERSITY OF MASSACHUSETTS

MICHAEL E. DURKIN TITLE: DIRECTOR OF STRATEGIC PROCUREMENT Michael describes himself as a “dynamic procurement leader, educator, manager and coalition builder”. These attributes have helped him establish and grow the capabilities of the UPST strategic sourcing team which handles, category management, strategic sourcing, contracts and supplier management needs. He is passionate about adding value to people and processes through efficiency, effectiveness, and driving best business practices. Prior to rejoining the UMass System as a part of the UPST Leadership Team, he held a variety of leadership positions with the University System of New Hampshire, University of Massachusetts Lowell, Merrimack College, Stonehill College and with the National Association of Educational Procurement (NAEP) of New England.

BRIAN L. GIRARD

MEET THE TEAM

TITLE: DIRECTOR OF PROCUREMENT OPERATIONS Brian is a leader known to have the proven ability to influence and manage stakeholders, innovate and drive process improvements throughout the supply chain to capture optimised cost benefits and budgetary control. Brian continues to leverage his over 25 years of experience in Procurement and Supply Chain within both the public and private sectors, to lead harmonisation of UMass procurement operational processes.

He currently oversees the Procurement Operations function which encompasses Accounts Payable, Bank Card (Procurement Card Operations), Travel and Expense, Process Improvement, and Procurement Compliance teams. With his team, he continues to focus on streamlining internal business practices to ensure operational process efficiency and effectiveness.

AMANDA ONWUKA TITLE: DIRECTOR OF SERVICE & QUALITY Amanda’s focus is to ensure that UPST continues to put its best foot forward as it progresses in its maturity journey as the harmonised procurement services centre for the University of Massachusetts system. Within her UPST portfolio are the Customer Services, Procurement Technology, Data Analytics, and Training & Communications teams. They support the operationalisation of the harmonised processes while ensuring resources are available to support enhanced change and communications management. Prior to joining UMass system, Amanda worked as a management consultant with KPMG leading and providing strategy and business transformation services to global and national companies.

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UNIVERSITY OF MASSACHUSETTS

“ We are utilising techniques that private equity firms might use for optimising their portfolio companies” DAVID CHO

CHIEF PROCUREMENT OFFICER AND MANAGING DIRECTOR, UMASS

Technology adoption and an overarching digital transformation have been crucial to UPST’s results. The organisation leverages tools like Jaggaer for daily procurement activities, Salesforce for case management,

and Tableau for business intelligence, among others. But in Cho’s mind, technology alone will only get you so far. More important is to prioritise, harmonise, and modernise policies and targets, upgrade procedures and processes to align with the policies, and ensure the team has the core competencies to operate within them. “When you have all those pieces together, the rollout of technology enablement becomes much more elegant, and it gets you to the outcomes and the output that you're looking for,” Cho says, pointing to ensuring applications are uniform across both desktop and mobile devices to enable flexible work, as an example. “The more important thing is being able to leverage your suppliers’ technologies, as well. We can't be

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UNIVERSITY OF MASSACHUSETTS

“ The good thing is we had the opportunity to deepen the procurement competencies of the folks in these legacy organisations, who can now go deeper, instead of being generalists” DAVID CHO

CHIEF PROCUREMENT OFFICER AND MANAGING DIRECTOR, UMASS

everything to everyone. It’s not just about building the catalogue, for instance, but how do we leverage their platform? Some of our partners’ data on the things we buy is better than the data we have in-house. So we can leverage that kind of intelligence.”

The Power of Partnerships A good example, Cho says, is the partnership with Huron, with which UMass’ investment has risen over the past 18 months. “They've been terrific in looking at where we are today and where we want to be tomorrow,” Cho says. “What’s really vital is that it's not just what they know, it's how they deploy. It's how the team we work with at Huron take in that input from us and understand the particular outcomes that we're looking for. To be able to factor in change management, very gracefully as part of the underlying sense of processes and services that they're delivering, has been tremendous.” Another key supplier, SupplyLogic, provides “intelligence that we can't build,” Cho says, which is helping the organisation towards its supplier diversity objectives. Taking print services as an example, the UPST can leverage SupplyLogic’s platform to discover veteran-owned suppliers, supplychaindigital.com

UNIVERSITY OF MASSACHUSETTS

October 2021

UNIVERSITY OF MASSACHUSETTS

“ We're also incorporating inclusion and equity into all of our competitive processes” DAVID CHO

CHIEF PROCUREMENT OFFICER AND MANAGING DIRECTOR, UMASS

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UNIVERSITY OF MASSACHUSETTS

minority-owned businesses, womanowned businesses, and other diverse partners in the local community. “This is really valuable to us,” Cho says. “That's an area where we can leverage our partners’ technologies to get that visibility, and to make those kinds of important decisions.” Enhancing the diversity of suppliers is a key objective of the University of Massachusetts, and by extension the UPST, and although the central procurement organisation is barely 18 months old, Cho is happy with the progress it’s already made. The university’s spending with diverse suppliers is “trending in the right direction,”

LISA A. CALISE TITLE: SENIOR VICE PRESIDENT FOR ADMINISTRATION & FINANCE AND TREASURER

EXECUTIVE BIO

COMPANY: UMASS Lisa A. Calise is the Senior Vice President for Administration & Finance and Treasurer for the University of Massachusetts. She has been with UMass since February 2017. In her role, Lisa oversees the University’s financial and operational departments including Treasury, Insurance and Operations, Budget and Planning, Enterprise Risk Management, Human Resources, Controller’s Office and the University-wide Unified Procurement Services Team (UPST). Lisa was most recently the Chief Financial Officer at Watertown-based Perkins School for the Blind, focusing on global services and education for those living with blindness and deaf blindness. Before joining Perkins in 2010, Lisa served the City of Boston for over a decade, most recently as the Director of Administration

with both a short and long-term plan to build a more robust diverse supplier base. “We're also incorporating inclusion and equity into all of our competitive processes,” Cho adds. “That’s not something that was mandated by any government programme. We have imposed those requirements on ourselves to build accountability. We're also pushing strategic providers that act as primes to provide more visibility into their second-tier level spend, so that as dollars flow to them, they also make their way to diverse suppliers. That is very impactful.” The UPST has performed above expectations throughout its first 18 months,

and Finance, and previously as Chief Financial Officer and CollectorTreasurer and Budget Director, implementing efficiency improvements and managing the City’s finances through challenging economic times. Prior to coming to Boston, Lisa served in the White House Office of Management and Budget as a budget examiner. A Massachusetts native, Lisa obtained her B.A. from Boston College and a Master's Degree in Public Management from the University of Maryland. She recently served as a member of both the MBTA Finance and Management Control Board and MassDOT Board.

UNIVERSITY OF MASSACHUSETTS

“ We're also incorporating inclusion and equity into all of our competitive processes” DAVID CHO

CHIEF PROCUREMENT OFFICER AND MANAGING DIRECTOR, UMASS

and as it matures further, Cho is confident that procurement will provide further savings, and reroute vital value and resources into the university’s educational programs. But Cho is quick to highlight that the work of UPST, its future ambitions, and its ability to deliver transformational results is a holistic effort, achieved through collaboration with various UMass stakeholders. “Being able to promote this level of change in coordination with the campuses couldn’t have been done without leadership sponsorship,” Cho says. “We've been 46

October 2021

empowered. We have UMass President Marty Meehan's backing, the support of all the campus chancellors, the campus Administration & Finance (A&F) Vice Chancellors and the UMass Senior Vice President for Administration and Finance (CFO) and Treasurer, Lisa Calise.” “I’m so proud of all that we’ve been able to accomplish in such a short time, and under such challenging and unprecedented circumstances,” says Calise. “The collaborative approach between the system and campuses, especially between

UNIVERSITY OF MASSACHUSETTS

the A&F leadership, has been paradigmshifting for the university, and enabled us to leverage the university’s buying power to benefit the campuses. Our team – driven by exceptional leaders like David – will continue to experiment, innovate and push the organisation to realise every efficiency and ensure that we are delivering on our mission in the most competitive manner possible.” According to Cho, the UMass campus leaders are “encouraging us to do more and continue to move the agenda forward. With 75,000 students and

24,000 employees, UMass is the largest university and third-largest employer in the state of Massachusetts. So there are many priorities, and being able to have that one vision that leadership endorses, is just tremendous. What really makes this incredibly powerful is that egos are checked at the door and it's all about just doing the right thing.”

supplychaindigital.com

PROCUREMENT

Roche:

A New Value Chain For Procurement Patrick Foelk takes us inside the wholesale transformation of procurement at Roche and how the function will support an ambitious 2030 target WRITTEN BY: RHYS THOMAS

t seems that there is one thing all procurement executives can agree on is that something needs to change if the profession is to remain relevant and extant in the decade ahead. What course that change will take, how extreme a transformation journey is necessary, and where the lines that the human and digital blur remain the key differentiators. Patrick Foelk, Head of Strategy & Transformation at healthcare giant Roche, stands firmly in the camp of precise, planned, but potent transformation, believing that simply tweaking and optimising outmoded processes is a shortcut to irrelevancy. The former consultant was brought internal in late 2019 to put his outsourced transformation plan into action, an interesting twist in his career that would draw on both his 15 years of consultancy experience and his ability to learn to build the plan. “As a consultant, you usually make great recommendations that work on paper. The business case makes total sense, but 48

October 2021

actually doing it is the challenge,” he says. “But we managed it, and in a relatively quick fashion we were able to put this procurement transformation into a plan of action for many hundreds of people in just over a year.” Foelck’s plan was a wholesale reshaping of Roche’s procurement function: “From old, decentralised ways of working, into new systems, new people with new job profiles, and a new organisational structure, with new management and new processes.” The results a year later were significant, with almost 50% more savings, increased performance across the board, and 25% cost out. But despite what was a dramatic and overarching transformation by any definition. Roche which has built its success and reputation on “thinking twice,” Foelck observed that procurement remained in the same familiar loop. “I think this is important,” says Foelck. “But it is not the future. I think we need to think about a new value chain for procurement.”

PROCUREMENT

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PROCUREMENT

“ We were able to put this procurement transformation into action for many hundreds of people in just over a year” PATRICK FOELCK

HEAD OF STRATEGY & TRANSFORMATION PROCUREMENT AND HEAD OF PROFESSIONAL SERVICES PROCUREMENT, ROCHE

The New Value Chain for Procurement Spurred by Roche' ambitious target to produce a three to five times greater medical impact for half the cost to society by 2030. Foelck is spearheading the next step for the healthcare and pharma group’s procurement function. “I think that the next step for the business is to look at ways to transform it, and implement the solutions that we identify. I would like to give you some examples to make this more colourful. And the third step is we should take care of running that solution, right. We should do more than enable the business to just use it.” supplychaindigital.com

PROCUREMENT

“Can we work with suppliers, or build services with our suppliers that they don’t offer today?” PATRICK FOELCK

HEAD OF STRATEGY & TRANSFORMATION PROCUREMENT AND HEAD OF PROFESSIONAL SERVICES PROCUREMENT, ROCHE

“Everything we do starts with an idea, lots of tests, lab work, and research,” he says. “So if we want to do three to five times more in our industry, only a small fraction of what we put in actually delivers a successful output - we need to scale up the amount of researching in labs significantly.” The obvious solution, and one that Foelck initially encountered, was the business simply asking procurement to buy more 52

October 2021

buildings and lab equipment. “We said, ‘Well, yeah, of course we can’,” says Foelck. “But I don’t think this is good enough. So instead of clarity and declaring savings on sourcing this stuff, we decided to look into leasing equipment rather than buying it. Can we work with suppliers, or build services with our suppliers that they don’t offer today?” “That's relevant for us. And we can do this much faster and much better. And it's

PROCUREMENT

Patrick Foelck TITLE: HEAD OF STRATEGY & TRANSFORMATION PROCUREMENT AND HEAD OF PROFESSIONAL SERVICES PROCUREMENT LOCATION: SWITZERLAND cheaper, right? That was one of the pilot ideas. We've got a number of other pilots that we are working on. I think it is also very attractive for the business. And I think it fits into these times. The Art and Science of Procurement Foelck is wrestling with spearheading the next step for the healthcare and pharma group’s procurement function. There are two disparate purposes for procurement which have held the function back. “I mean, procurement is two things; it's an art and a science. Regarding the science section,” he says. “It is rule driven and a process that many people can quickly understand. You need some content, no question. But if you just focus on content, there's lots of technology available that can do many of these things today already.”

INDUSTRY: BIOTECHNOLOGY Foelck is an experienced transformation leader with a focus on procurement and operations. He bring 15+ years of consulting and industry experience, including leading large project teams and line organisations, working with senior leaders and executives. He has led and delivered several global transformations, functional excellence, and productivity projects from strategy to full implementation for large global corporations in the life sciences and other industries across Asia, Europe, and the US. Among other facets, his expertise includes: procurement transformation, strategic sourcing, category management, P2P, SRM, digital procurement and change management.

supplychaindigital.com

PROCUREMENT

October 2021

PROCUREMENT

“Procurement is two things: and art and a science” PATRICK FOELCK

HEAD OF STRATEGY & TRANSFORMATION PROCUREMENT AND HEAD OF PROFESSIONAL SERVICES PROCUREMENT, ROCHE

There is still a lot of demand for traditional procurement, which I'm not arguing will go away. We need people to work across the section. “The one thing that I think could be the killer to this solution and future ways of a working, is the digital platform,” Foelck adds. “We have been lucky to have been given the opportunity to sell this well, I guess, to develop the platform, and divert a lot of the traffic that was coming to procurement into technology, self-service automation and content. I think it needs good planning, good thinking and a bit of risk taking. But it will yield so much more value and ultimately ensure that the procurement function survives. “Everything is taken care of as I'm used to working in this way and it feels great. I think we can deliver the experience, and get the business hooked. Adopting new methods is everything in technology. I think that's very important. So when we did this, then we said, okay, we need technology, no question. We need robust technology, but I want to invest more time and effort and money into, the content that lives within this technology. And I want to invest more time into engaging with everyone in the business. I always use an example of getting a new computer to my teams.You get a new computer and it's the fastest, the best, and the brightest, but unfortunately it has very little software on it.” supplychaindigital.com

LOSBERGER DE BOER

October 2021

LOSBERGER DE BOER

LOSBERGER DE BOER BROADENS HORIZONS IN PANDEMIC

WRITTEN BY: DOMINIC ELLIS PRODUCED BY: TOM LIVERMORE

supplychaindigital.com

LOSBERGER DE BOER

1919

Year Founded

Events Industry

1,0005,000 Number of Employees

212mn Revenue in Euros (2019)

October 2021

LOSBERGER DE BOER

While Losberger De Boer remains focused on events, it has been busy targeting military, medical and industrial sectors in the pandemic

’ve been taken on a virtual round-theworld trip by Oscar Gersjes, Group Procurement Director at Losberger De Boer, as we hop from emergency shelters in Haiti and military camps in Mali, to the most well-known motorsports event in the world, a number of highly customized storage facilities and even find time in our one-hour Zoom meeting to discuss European cultural nuances. The breadth of work underlines two key messages: the company’s global presence and ability to pivot in the pandemic, broadening its business alongside its core events expertise. Rapid Deployment Solutions (RDS), Commercial and Event buildings are its key sectors, with rental space and special projects accounting for the largest slice of turnover. Perhaps surprisingly, given its events exposure during the teeth of the crisis, 2020 came in above budget although 2021 projections are currently a little below forecasts – although he is confident it will close the year hitting targets. Major upcoming projects include large scale racing and golf events. “Every change provides plenty of opportunities. At the moment there haven’t been many events but we’ve built a lot of commercial buildings in Europe, sport centres in France, and a wide range of medical facilities to help fight the pandemic all over the world, from temporary hospitals and triage centres to test and vaccination centres,” he said. supplychaindigital.com

LOSBERGER DE BOER

“ We try and change materials to more composites, they tend to be cheaper, lighter and environmentally friendly. The importance of weight reduction is getting more and more important” OSCAR GERSJES

GROUP PROCUREMENT DIRECTOR, LOSBERGER DE BOER

October 2021

The global events supplier – whose long client list includes the Mobile World Congress, G7 and G8 meetings, NATO summits, Wimbledon, Tour de France, and the Farnborough Air Show – has chosen to invest in product innovation during the pandemic, in order to expand its role as industry leader in the events sector when events are completely back, as well as re-inventing its product portfolio to not only keep up, but stay ahead of the changing times. Throughout 2020, the company has adapted its products to help the healthcare sector in dealing with the pandemic. Alongside healthcare professionals, a blueprint for an optimized temporary mass vaccination centre was developed, to allow large numbers of people to be vaccinated efficiently and safely. Structures that are normally used for events were transformed

LOSBERGER DE BOER

into triage centres or facilities that help businesses and institutions adapt to social distancing requirements, like temporary auditoria and canteens. The company used this knowledge for the events sector as well, creating blueprints for ‘covid-proof’ events. For German kitchen giant Nobilia, Losberger De Boer helped create a venue that could safely hold large numbers of people whilst complying with strict German covid-regulations. Tennis events like the Barcelona and Hamburg open were able to come back, partly because Losberger De Boer was able to adapt its facilities to meet the constantly changing restrictions. In case of the Porsche European Open in Hamburg, the entire venue was redesigned two weeks before the start of the tournament. In terms of product development, the company has invested in innovation. Last

Oscar Gersjes TITLE: G ROUP PROCUREMENT DIRECTOR LOCATION: NETHERLANDS

EXECUTIVE BIO

INDUSTRY: CONSTRUCTION Working for (Losberger) De Boer (LDB) over the last 15 years has been an excellent experience. New challenges “on the way” made this journey more than interesting and a reason to stay such a long period. With my passionate way of working, I created a strong preference for project orientated management. The dynamic environment of project orientated business and -management is completely different compared to process operated business as I experienced at SigmaKalon (PPG). Being in the position of Procurement Responsible of De Boer Structures B.V. I visited all main competitors and suppliers. Based on this knowledge an increase of efficiency and creativity are key to be seen as the leader in the markets. Getting processes improved combined with smart and functional products was always my passion.

supplychaindigital.com

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0808 169 1919

LOSBERGER DE BOER

year, it launched a structure that complies to the Eurocode, just like traditional buildings do, and that is still fully modular and adaptable, as well as quick to build. A new, lighter and highly sustainable flooring system was devised, as well as an innovative system that sets a new standard in terms of acoustics and insulation for events. In the final quarter of this year and throughout 2022, Losberger De Boer will introduce several new products as well as optimised parts for its existing structures. We speed onto Baku, where Losberger De Boer handled a challenging assignment for one of the largest racing events in the world. “We had to strengthen the roof of the parking garage, and build on top of the columns, and they weren’t equally spaced. This was specifically for the race cars,” he said.

“ Whether it’s discussing technical options, or negotiating big deals with customers – you have to go there and be on the same table” OSCAR GERSJES

GROUP PROCUREMENT DIRECTOR, LOSBERGER DE BOER supplychaindigital.com

LOSBERGER DE BOER

Losberger De Boer broadens horizons in pandemic

“There were supply issues too, with steel coming from Turkey, and wood from Latvia. We had major problems on the border – it was stressful as it was stuck for six days. It’s getting worse to source supplies. We try and change materials to more composites, they tend to be cheaper, lighter and environmentally friendly. The importance of weight reduction is getting more and more important.” While much of its work is on site, it is adopting the hybrid model for office-based staff. “The pandemic made us realise you can create a lot of efficiencies and also understand the limitations of zoom and teams. Whether it’s discussing technical options, or negotiating big deals with customers – you have to go there and be on the same table.” Today Losberger De Boer focuses strongly on Europe, Middle East and US, the latter presenting openings in the military sector. Sustainability is also providing untapped opportunities. 64

October 2021

LOSBERGER DE BOER

“ Everything starts with having good data, particularly when you’re working in different markets”

IMPORTANCE OF GOOD DATA Everything starts with having good data, particularly when you’re working in different markets.

OSCAR GERSJES

DID YOU KNOW...

GROUP PROCUREMENT DIRECTOR, LOSBERGER DE BOER

“If you want to have a clear, aligned strategy, you need a lot of data. We invested in a system called VendorLink, which we use for spend analysis, supplier contracting, certifications and e-signing, and we are also looking to extend it to include vendor rating. VendorLink has been invaluable to us for our procurement. “We have looked for a single system for a long time, but have yet to find an ERP system that covers all these functionalities, at least how I like it. That was another issue with the merger, as companies had different systems, and we are going to work with SAP on integrating – it’s very easy to link with Vendorlink.” “There are lot of interesting things with digital solutions. It’s important to make the right choice – you have to look at what will most add value. Big companies like Boeing and mobile operators want to see up front the result later on.” In future, a Vendor Rating is cited as a priority, and new technologies will be embraced when needed. “We are only in projects, so it’s essential we can rate quality. If the quality fails, costs go up considerably, and so that’s a key focus in the coming years.”

supplychaindigital.com

WE LOVE A GOOD CLIMATE! As an innovation leader in the fields of temporary heating, cooling and power supply, Helot has been a first classpartner for optimal air-conditioning supply -for every occasion and every temperature since 1949. In setting itself the goal of reducing CO2 and NOx emissions to a minimum, Helot offers the most efficient supply concepts with the lowest possible energy and resource consumption, among other things through the careful handling of fuels and the use of alternative fuels such as HVO and GTL. In addition, Helot makes an important contribution to permanently sustainable air conditioning concepts by constantly investing in the development of future-proof, climate-friendly technologies.

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LOSBERGER DE BOER

New energy sector opportunities Companies such as TATA Steel are having big problems with external coal storage, and there is a good chance it will be forbidden – so you need huge structures to cover it, he adds. “That’s a new area of business. We have done it in Asia, we have good partners in Spain and US. “There are a lot of areas where you can make a difference – we’re changing more from truck to train, looking to source lighter, and negotiating with companies to have environmentally friendly trucks. We have events equipped with solar panels, and at our military sites, we built a big camp in Mali, which will operate for two-to-three years. It can provide half of the camp’s total energy consumption.

“ Last year the results were above forecasts. We see a lot of opportunities on the military side and think we’ll come in close to budget this year” OSCAR GERSJES

GROUP PROCUREMENT DIRECTOR, LOSBERGER DE BOER

supplychaindigital.com

LOSBERGER DE BOER

October 2021

LOSBERGER DE BOER

The panels are getting better, ultimately we hope to provide camps with all their electricity through solar so there isn’t a need for external electricity anymore. That’s probably around two or three years away.” He adds it is also working with big aluminium companies, and looking more to suppliers which can secure their own raw materials and have their own melting facilities, collaborating with a Turkish company and two Spanish suppliers. Cross Rental Services is key service provider, which pick up smaller projects – Losberger De Boer delivers the materials and they build it – and Helot is one of its climate solutions companies, which is strong in Germany. Other leading supplier partners include NEDAL Aluminium, Richter Aluminium and Top Events Exhibition (Furniture/Rental). Another big focus is modular structures, to extend its container business in Germany to markets such as the UK and Benelux, where housing shortages have led to high demand “We deliver home offices in Belgium and the Netherlands, which has also seen a spur in demand with the pandemic. The units are separate to your house with high insulation systems, and we combine it in a lease strategy – people can lease a small electric car and combine it with a home office.” Four years on from the merger, Gersjes, who joined De Boer as Procurement Director in 2006, describes the company as still “in transition”, which reflects the scale of the operation and challenges integrating its disparate entities. He concedes the merger “wasn’t smooth” but today, technology is helping improve efficiencies.

supplychaindigital.com

SUPPLIER RELATIONSHIP MANAGEMENT

SUPPLY CHAIN

Supplier Relationship Management is fast becoming imperative to any business, but how does the supply chain in particular benefit by adopting the concept?

WRITTEN BY: ELLIE DEAN

n theory, Supplier Relationship Management (SRM) is the strategy of managing and fostering partnerships in the buyer-vendor dynamic, as opposed to quantitative, contractual obligations. The relationship that’s developed between buyer and supplier sets the overall tone for the working relationship and is fast becoming a popular industry technique to harness the benefits a healthy partnership offers in enhancing the capabilities the supply chain offers. Deemed a core skill for all procurement and supply managers, SRM requires a systematic approach to target and maintain supplier partnerships. Foundations should be set on efficient communication, solid levels of trust, and a degree of empathy between the involved parties, with a joint focus on growth and value creation. But key to adopting successful SRM is selecting suppliers that are cost-efficient and prove themselves as easy partners, resulting in maximising the degree of the relationship’s value. Alex Saric, Smart Procurement Expert at Ivalua, and Sven Mandewirth, Supply Chain Practice Lead for Europe at Infosys Consulting, are keen to promote the importance of SRM in generating new revenue streams, managing risk more efficiently, and developing a competitive advantage, believing digitised procurement platforms are key to paving the way for enhanced SRM. supplychaindigital.com

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SUPPLY CHAIN

Why is SRM important? Put simply, if you were to walk into a shop to buy a product and were promptly shouted at by the owner, would you want to continue to shop there? Similarly, if you owned that shop and had a customer enter only to hurl insults, would you be happy serving that customer? While exaggerated, the same theory applies to the supply chain and how important it is to place supplier relationships at the top of a corporate agenda. After all, it’s these very relationships that allow you to continue to buy and sell and to keep the cogs of the industry turning. Upholding a strong sector reputation and building upon pre-existing partnerships to strengthen these industry ties will only benefit businesses in the long term. “Supplier relationship management encompasses how organisations assess, select and engage with their suppliers,” states Saric. “Historically, most enterprisesupplier relationships have been very transactional, with suppliers selected based on pricing and other factors and the relationship mostly consisting of transacting against those contracts and monitoring performance.

“But the nature of those relationships has been rapidly evolving, with business success increasingly dependent on supply chains. Businesses have outsourced more of their operations, so they are more dependent on suppliers. The rapid pace of innovation and specialisation means suppliers are a key source of innovation. And as supply chains have grown longer and more global, businesses are increasingly susceptible to risks in their supply chain - and increasingly held accountable for them by consumers and governments. So the balance of power has shifted from buyers to suppliers. “As a result, how businesses select and manage their suppliers is increasingly important. In the future, innovative suppliers will be in a position where they can pick and choose who they work with. As a result, UK businesses need to ensure they are managing relationships and becoming customers of choice, not just managing data input. This means moving away from supplier relationships that focus primarily on negotiating lower prices, which can financially stress suppliers and result in lower prioritisation when disruptions occur. Instead, organisations must concentrate on

“ Supplier relationship management encompasses how organisations assess, select and engage with their suppliers” ALEX SARIC

SMART PROCUREMENT EXPERT, IVALUA supplychaindigital.com

SUPPLY CHAIN

sustainable ways to interact with suppliers to make the most out of their relationships.” Mandewirth adds, “Facing recent disruptions in global supply chains, supplier relationship management has become more important than ever. Today, the success of many industries depends more and more on safeguarding critical supply. This includes computer chips, raw materials, chemicals, intermediates and much more. In addition, services like logistics and IT have become a significant bottleneck.” How do you distinguish between Supplier Management and Supplier Collaboration? “Supplier collaboration revolves around the improvement of supplier-related processes in a two-directional way,” explains Mandewirth. “This could include processes like planning, order management and invoicing. “The set-up for supplier collaboration depends on the market scenario, especially the number of relevant suppliers and the need for specialised supply and services. The standardisation or commoditisation of materials, products and services also plays an important role.” Saric mirrors a similar sentiment. “I view it mostly as a difference in mindset between which term is used. Supplier management for many entails selecting the optimal suppliers and maintaining visibility of their risk and performance. It is a very enterprise-oriented view. Supplier collaboration recognises the bi-directional nature of relationships, motivating suppliers and giving them the opportunity to provide input as a trusted partner on new products and strategic objectives. Those focused on supplier collaboration typically work to optimise results for both organisations and can drive co-innovation and support of each organisation’s cash flow needs.” 74

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Building good SRM When developing a strong SRM, it’s important to lay down the correct foundations. And these, like any relationship, are fairly self-explanatory. In theory, good SRM should include effective communication to avoid misunderstandings. Prioritising listening to a supplier results in them feeling valued and seen, and allowing for their contributions to be taken into consideration encourages consistent and healthy levels of conversation. “A good supplier relationship balances market orientation and reliability,” notes Mandewirth. “High competition might lead to spend optimisation, but could also lead to increased process and manufacturing costs. It will become key to simulate

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What makes good SRM so appealing? • Reduced costs - working collaboratively and openly with suppliers allows for conversations to take place regarding the subsidised price of production processes. Without good SRM, potential financial negotiations may remain undiscussed, resulting in missed opportunities for money to be saved. Throw in the additional advantage of being able to converse more succinctly regarding inventory reduction and the total cost of delivering commodities and services, and businesses may very well be having to dig into their pockets less often.

market scenarios, supplier behaviour, trade regulations as well as sustainability data and internal costs in a comprehensive model. “Already today, a low material price is not necessarily a first choice, if the geopolitical risk is high and the sustainability data is poor. Beyond facts and figures, personal relations will remain important, especially when it comes to high value deals. Additionally, trust in capabilities and information can also be supported by blockchain and distributed ledgers.” But where to begin? Saric notes that supplier choice plays a pivotal role in successful SRM. “It starts with selecting suppliers, effectively assessing them and providing sufficient information and, when possible

• Higher up the priority list - when holding a closer relationship with a supplier, it’s guaranteed that these companies sit higher up their suppliers’ priority lists. In comparison to the customers they hold weak SRM ties with, those nurturing the importance of a healthy collaboration means they’re more often than not given first choice in production availability. An underlying element of loyalty is established. • Sharing innovation - honing good SRM holds massive possibilities for opening up industry doors, sharing exciting new developments, and offering market opportunities. If a supplier doesn’t feel valued, then there’s little chance they’d come forward with any suggestions, bypassing innovation, collaboration, and failing to unlock potential. supplychaindigital.com

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flexibility, on how suppliers meet your requirements. Once suppliers are selected, there is the transactional element of placing and tracking orders and managing payments. More collaborative organisations also exchange information on forecast and planned orders and provide options for payment based on each organisation’s cash strategy. Supplier performance and risk are then monitored, which feeds future decisions on which suppliers to retain and which to replace.” An environment of openness and respect between both parties is just as vital. Suppliers are keen to work with buyers who show appreciation and a willingness to work 76

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together, and this evolves into an eagerness to cooperate. Building trust and honing respect increase performance quality and the chances of collaborating to innovate which may just prove invaluable for future operations. Having clear, concise, and understandable agreements with suppliers also ensure both parties are clear on their commitments, downplaying the risk of confusion and disruption. “A healthy supplier relationship is based on transparency and effective collaboration,” Saric continues. “A recent report found that a lack of appropriate mechanisms and technology is the top hindering factor

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“ A good supplier relationship balances market orientation and reliability” SVEN MANDEWIRTH

SUPPLY CHAIN PRACTICE LEAD FOR EUROPE, INFOSYS CONSULTING

limiting effective collaboration between buyers and vendors, as poor transparency and openness reduce trust in a supplierbuyer relationship. To ensure that suppliers remain on board, organisations must ensure that they have the right technology in place to facilitate effective collaboration.”

SRM and digitalisation Technology makes SRM simple. It’s somewhat self-explanatory but investing in suitable SRM software results in increased ease when it comes to keeping a hive of supplier information located in a single place. Similarly, utilising IT capabilities allows for value creation, enabling transparency and enhancing the management of said information. supplychaindigital.com

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SRM and Covid-19 A more recent example of why good SRM is crucial would be its role in the pandemic. With almost every inch of the globe affected by the repercussions of Covid-19, good SRM played a pivotal role in the efficient supply and procurement of vaccines, PPE, ventilators, hand sanitisers, and face masks. Companies pulled on their suppliers to provide the necessary materials - important to note, not always for a financial benefit - as pressure mounted on the supply chain to meet demand. Even now, as we emerge from the other side of a very dark, long year, Covid-19 has left the supply chain battered, bruised, and struggling to recover at speed. But with good SRM comes vital communication, clear financial information, and valuable priority given to customers deemed to have a closer relationship with their supplier, imperative during a time when supplier and buyer relationships are strained and battling for number 1 spot ahead of competitors. Equally, collaborations resulted in fast and efficient problem solving, avoiding further issues regarding delays, miscommunication, and often leading to the development of greater efficiency through shared objectives. Innovation was a side effect of an otherwise dismal year within the sector, with suppliers and buyers putting their heads together to solve issues as they arose.

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But how is digitalisation driving SRM beyond management and towards collaboration, and how is that helping businesses in their current and near-term future? Well, digitalisation allows for everything to go that little bit quicker. As we enter into an exciting, new, digital age, the implementation of technological resources designed to enhance the relationships between buyer and supplier are invaluable. Delivering real-time feedback is enabled through the adoption of manual tasks by intelligent automation, and using technology to analyse large volumes of data cuts cost, time, and effort. “There is a growing need to collaborate with suppliers, whether to drive improvements in ESG, co-innovate on new products and services or minimise supply disruptions,” Saric points out. “To maximise results in such areas, organisations must scale collaboration to more suppliers and more categories of spend. Digitisation is key to this, helping

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make collaboration efficient and effective. Unsurprisingly, a recent study found that 77% of businesses say that digitisation of processes is a top priority for their company’s procurement function over the next year.” Mandewirth, likewise, agrees that digitisation is imperative for efficient and sustainable SRM and supplier collaboration. “Multiple digital collaboration platforms are available depending on the specific industry, spend categories and regional scope. Collaboration platforms can help buyers and vendors to optimise processes, creating a win-win situation. Good examples are synergies in order placement or invoice management. “There is a tactical difference between neutral market platforms and collaboration systems being set-up by buyers or vendors. It has to be taken into account, to what degree the investment in a platform will help to improve processes on one hand, while

leading to dependencies on the other hand.” Digitalisation opens doors for increased communication and means for collaboration, and this has a direct effect on the way that SRM is changing from mere management to more of a partnership-based concept. Technology is helping to encourage a stricter structure to keep tabs on supplier and buyer information and updated facts and figures and is allowing for a quicker pace of implementation within the supply chain. Sharing and managing information, whilst improving communication, is made more accessible when utilising digital capabilities, so it makes sense that technology is now so closely intertwined with the concept of SRM and the future of its widespread prevalence within the industry. It’s essential to have people in the business that are assigned dedicated roles to deal with the management of supplier supplychaindigital.com

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“It starts with selecting suppliers, effectively assessing them and providing sufficient information and, when possible flexibility, on how suppliers meet your requirements” ALEX SARIC

SMART PROCUREMENT EXPERT, IVALUA

relationships as, like with any relationship, it needs work to be maintained. SRM doesn’t just profit the supplier, but the buyer too, offering up a bounty of benefits for both parties involved in the partnership. In the long run, nurturing collaboration increases the chances for valuable innovation - after all, two heads together are better than one. And as the world gravitates towards consistent technological adaptations, it’s important to make sure SRM keeps pace with the changes, using them to advance the concept in and of itself and ensuring suppliers feel valued, appreciated, seen, and heard.

Saric encourages more businesses to prioritise SRM and see it as a valuable concept to adopt into business practice. And now, more than ever, it’s imperative to the smooth running of the supply chain. “As the UK is currently struggling with supply shortages across several industries, building strong relationships with suppliers is paramount. Maintaining bonds with suppliers and engendering two-way trust is key to enabling seamless collaboration, helping to ensure that vendors can become the ‘customer of choice’. “A close relationship between buyers and vendors allows them to support strategic objectives and solve problems, as well as drive down costs, yield new revenue streams, and tap into new innovations. Take the ongoing chip shortage, for instance. As the market begins to recover, the competition to be at the front of the queue will be fierce. Vendors are likely to prioritise buyers that they share stronger relationships and similar values – making it all the more important that organisations take a collaborative approach with their suppliers,” concludes Saric.

supplychaindigital.com

SPRING BRANCH ISD

October 2021

SPRING BRANCH ISD

DRIVING COST SAVINGS THROUGH DIVERSE, INNOVATIVE PROCUREMENT WRITTEN BY: LAURA V. GARCIA PRODUCED BY: GLEN WHITE supplychaindigital.com

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October 2021

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By leveraging technology, Spring Branch ISD is making their way to innovative and diverse strategic procurement and picking up the cost savings

ichard Gay, Director of Procurement Services at Spring Branch ISD, is a passionate leader who derives great pride in doing good through good procurement. Whether it’s capturing cost savings that make their way back into the schools to further support learning, inclusive procurement practices that ensure fair and equitable access to opportunity or leveraging digitisation to lighten the work of school officials so they can spend more of their time focused on their students, Gay leaves no stone unturned. His quest is to ensure his department and his team is, as his father urged, the best that it can be. “I grew up in the space program. My dad worked in the Mercury, Gemini, Apollo and space shuttle projects. Those were very challenging times. We were doing things as a country and as a citizenry that had never, ever been done before. My dad left all of his children with the legacy of not being afraid to try something new. Get out there and take risks when you need to be a leader and an innovator. “ Mission: Be the Best Procurement Team We Can Be “The charge that I give to my staff is that we are going to be the best procurement platform in the K-12 world. Whatever it takes to do that, we need to make sure that we're doing that every day when we come supplychaindigital.com

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“ My dad left all of his children with the legacy of not be afraid to try something new. Get out there and take risks when you need to be a leader and an innovator” RICHARD GAY

DIRECTOR OF PROCUREMENT SERVICES, SPRING BRANCH ISD

into work. What I can do to make them successful is to make sure that they have the professional development, guidance and mentorship that they need to be able to achieve that goal.” “Being innovative and being a mentor, and being able to share those experiences with younger, less-experienced procurement professionals and enlightening them to the possibilities of things like e-procurement bidding and digitisation of the contractual process is one reason I came to Spring Branch.” “We became ISO certified in Baltimore County, and I follow much the same model as ISO, which says what you're going to do, do what you say and then prove it. I think that it enables you to be the best that you can be. And that's why we apply for nationally recognised certifications and peer reviews. The achievement of Excellence in 86

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Procurement from the National Procurement Institute, the Quality Public Procurement Department from the National Institute of Governmental Purchasing (NIGP).” “Here in Texas, we have the Texas Association of School Business Officials. They have the Award of Merit for purchasing operations. Applying your procedure and policies to these outside organisations and having your peers review them, and awarding you a plaque or certification for doing things right gives you something tangible that you can show your employees and say, ‘good job, you’re doing it right.’” “We also go to the schools and walk around where they can see the children learning in the classrooms or playing basketball, and that helps them to gain a more solid understanding and appreciation for what their role and their mission are here in the public school.”

SPRING BRANCH ISD

RICHARD GAY TITLE: DIRECTOR OF PROCUREMENT SERVICES COMPANY: SPRING BRANCH ISD INDUSTRY: EDUCATION MANAGEMENT

EXECUTIVE BIO

Fair, Inclusive, and Transparent (FIT) Procurement Throughout his procurement career, Gay has strived to offer a fair and equitable bidding environment designed to encourage and provide equal opportunity to minority and small business participation in all contracts. Over the past 10 years, BCPS has issued State and County funded contracts valued at $1.94bn with a Minority Business Enterprise (MBE), Women Business Enterprise (WBE), Disadvantaged Business or Small Business Enterprise (DBE/SBE). In 2010 and again in 2014, Gay also had the honour of receiving the award for “The Most Inclusive School Administrator of the Year for Minority Business” from the Maryland Washington Minority Contractors Association, something in which he holds great pride.

Richard Gay has been a school business official for the last 25 years and Director of Procurement Services for the Spring Branch Independent School District since March 2018. Gay has a Bachelor of Arts degree in Public Administration from Stephen F. Austin State University as well as a Master’s Degree in Public Administration from Troy University and an MBA from the University of Houston. He also stands as a graduate of the US Army Command and General Staff College. Upon graduation from Stephen F. Austin, Gay received his commission as a Second Lieutenant in the United States Army Field Artillery and served 28 years as a commissioned officer in the United States Army and United States Army Reserve.

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Unlike the private sector, in public procurement, relationships are created through the bid and contract process. It’s within this process that Gay needs to ensure fair access to all vendors. “If I need to buy textbooks, I have to issue a public bid. I have to advertise, and I have to take all commerce. I have to make sure that what I consider with the procurement environment is Fair, Inclusive, and Transparent (FIT). “I still think there's a lot of room to be innovative in areas like e-procurement and digitisation of the procurement process. I have been a leader and an innovator in bringing e-procurement platforms to the K-12 environments that I work in. And that has created huge efficiencies and the ability to save large amounts of resources. We are able then to redistribute and reuse those resources throughout the organisation. “We took an organisation that was mostly paper-driven and turned it into a digitalfirst organisation, which has in the last three years created a savings of about $4 million. So that’s really brought a whole new way of thinking to the district. Measuring things

“ I have been a leader and an innovator in bringing e-procurement platforms to the K-12 environments that I work in. And that has created huge efficiencies and the ability to save large amounts of resources” RICHARD GAY DIRECTOR OF PROCUREMENT SERVICES, SPRING BRANCH ISD

October 2021

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Spring Branch, From Transactional to Strategic Procurement

like savings we’ve captured through the purchasing process that frees up resources that can then be used in the classroom, that's very important to me. And that's what's guided me through my career in public education.” “We have limited budgets that are based on tax rates and tax dollars that are in revenues that are collected. So, you need to pride yourself on being able to get the biggest bang for your buck. I've been very fortunate in that a lot of the initiatives I've brought to play have saved more than $75mn for the public schools for which I've worked for. And those dollars go back into the classroom to educate children.” The COVID Challenge: Building Agility with Amazon Realising the efficiencies gained from technology, Gay is leveraging the powers of the Amazonian giant to shift from transactional to strategic procurement. supplychaindigital.com

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“When I started with Spring Branch, I noticed that some of the processes that we had in place were extraordinarily bureaucratic, paper-driven and timeconsuming. And I realised if we could automate and streamline our processes, we could then reorient and refocus our staff on what I consider to be the strategic process of procurement, rather than the administrative, which is essentially issuing purchase orders, receiving and paying invoices. Gay’s goal of transitioning to strategic procurement practices led him to become an early adopter of e-procurement. “We have an electronic ordering system. We use Dynamic Punchout Catalogues to create a shopping environment, if you will, for our end users. One of the key ones we use is the Amazon Business platform. We're able to leverage the Amazon platform and order just about anything that we could possibly need on a campus digitally and have it delivered within 24 to 72 hours.” “It's been estimated that if you use a digital procurement process versus the oldfashioned paper process that you save about $73 per transaction. When you have that kind of soft savings in your process, that returns a lot of time and effort back to the principal and to the teachers. Those are hours that can be spent on things like working on curriculum, putting effort into the education side things instead of administrative tasks.” “We've only been on the Amazon platform for about two years, and we've generated more than a half-million dollars in savings. And of course, we got hit with COVID and having a platform like that available to us was absolutely the best decision we could have made as far as being able to get the supplies we needed to move to a digital education program, which requires an entirely different supply chain than in school learning.” 90

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“You have to have the tools that students and teachers need for remote learning, which requires a whole different supply chain. And then, after labour day, we came back to the campuses. We now have about 81% of our students back in the classroom. Again, that takes additional preparation of supplies such as gloves, cleaning and sanitation supplies, plexiglass shields for desks, different types of masks for students of different ages, sanitising products that aren't harsh on the kids' skin yet still effective against germs, different types of filters for cleaner air supply, etc. It’s a long list of supplies with complex requirements, and it’s been quite a challenge for us, one that Amazon helped us to meet.”

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DocuSign CLM, Mitigating Risk and Increasing Efficiencies As the world began to procure the supplies needed to combat COVID-19, spiking demand far beyond the norm and planned for, supply chains became fraught with issues. Mitigating risk and securing supplies delivered on time and as needed was critical to avoiding stockouts. Gay’s trusted vendors, and well-tuned inventory and order management, kept him safe. “We’re very lucky. I have not had a real delay in any of those supplies because we've used contractors and contracts that we already had in place that had very robust supply chains. We left the classroom back in March of 2020, and

we didn't come back until September of 2020. That gave us time to get all of those supplies into place and make sure that each teacher in a class term had plenty of all the necessary supplies without risking deadstock, and so our strategy was to ensure a steady supply versus an oversupply.” Digital Contract Lifecycle Management (CLM) ensured proper management of those vital contracts. “In July of 2019, supplychaindigital.com

SPRING BRANCH ISD

“What used to take maybe a couple of months of negotiation meetings and mail, we now do digitally, and in 24 to 48 hours, we’ve got a contract” RICHARD GAY DIRECTOR OF PROCUREMENT SERVICES, SPRING BRANCH ISD

October 2021

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Spring Branch ISD implemented the use of DocuSign CLM for contract lifecycle management. We've been able to restructure all of our contract templates and negotiate some very complicated contracts using that product. Having one of our most important processes on a digital platform during COVID was a lifesaver. I must say, that was a very good decision on our part to make that all work for us.” “I can now send my contracts back and forth between vendors electronically, and we’re able to track changes. We can then negotiate over the changes. And with the push of a button, all the changes are then incorporated into a brand-new document. We get signatures electronically. What used to take maybe a couple of months of negotiation meetings and mail, we now do digitally, and in 24 to 48 hours, we’ve got a contract.”

Gay also mitigates further risk against fraudulent requests for payment using PaymentWorks. “It takes several days for one of my staff members to track down just one request from a vendor. We get anywhere from 20 to 40 requests a day, and a lot of them are fraudulent, which is why we have a partnership with PaymentWorks. They verify bank accounts and tax ID numbers. They will verify and ensure that our payment actually goes to the right account and the right vendor. I'm sleeping better at night knowing we’re not going to send a check accidentally out to the wrong bank or the wrong vendor because I have a good solid verification process in place.”

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LOGISTICS

October 2021

2022: FUTURE TECH IN

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SUPPLY CHAINS Supply Chain Digital speaks to the leading consultants from the UK and US on the future global technology trends in the industry for 2022 WRITTEN BY: GEORGIA WILSON

xperiencing no shortage of shocks to supply chains, most disruptions outside of COVID-19 and the global financial crisis have been industry specific. “We've seen flooding disrupt the electronic components supply chain, hurricanes disrupting the chemicals industry, and earthquakes disrupting the automotive sector just to name a few. Global production networks that took shape to optimise costs and efficiency often contain hidden vulnerabilities—and external shocks exploit those weaknesses,” reflects Knut Alicke, Partner at McKinsey & Co. Global events such as COVID19 have exposed existing challenges across business operations and pushed organisations’ ability to adapt to dramatic shifts in supply and demand. “All of this is occurring against a backdrop of changing cost structures across countries and growing adoption of revolutionary digital technologies in global manufacturing,” adds Alicke.

With most companies, before the pandemic, accelerating the digital transformation of their customer journeys and value chains, McKinsey & Co, “expects digital technologies to be at the core of the next normal, enabling organisations to better meet the needs of their customers, and improving the agility and responsiveness of operations without increasing their costs,” says Alicke. “During the crisis, many companies have been able to overcome staff shortages by automating processes or developing self-service systems for customers. These approaches can accelerate workflows and reduce errors—and customers often prefer them. Digital approaches can transform customer experience and significantly boost enterprise value when applied end to end. “Companies are also taking a closer look at the suppliers in their value chain in order to gain a better understanding of their production footprint and financial stability. In fact, in a McKinsey survey of supply chain executives, two-thirds of respondents reported asking key suppliers whether they have business continuity plans in place, and an overwhelming 93% reported that they plan to take steps to make their supply chains more resilient, including building in redundancy across suppliers, nearshoring, reducing the number of unique parts, and regionalising their supply chains,” adds Alicke. supplychaindigital.com

We are Procurement. Sustainability in supply chains is our responsibilty. We will build a sustainable future for people and our planet.

Join our grassroots initiative and community of more than 4,000 change agents who want to ensure that all supply chains across the world have embedded sustainable procurement practices by 2030.

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SUPPLY CHAIN & OPERATIONS LEADER, EY EMEIA

The Pace of Digital Transformation in Supply Chains With recent events exposing the complexity and inherent vulnerabilities in global supply chains, “the scale and pace of change was unprecedented, for example online grocery deliveries increased more in the first 10 weeks of lockdown than in the previous 10 years,” says Matthew Burton, Supply Chain & Operations Leader, EY EMEIA.

“Supply chain has since become a boardroom priority for many companies. This has triggered a new wave of technology investment focusing on building supply chain intelligence, resilience and agility to better respond to events, risks and opportunities.” Adding to Burton’s comments, Brian Houck, Partner and Mark Hermans, Managing Director Operations Consulting at PwC explains that the industry is “at a significant crossroad in the adoption of supply chain technology. With the growth in cloud technology, artificial intelligence (AI) and machine learning (ML), we are seeing a shift from the supply chain tech approach with discrete applications (e.g. Transportation Management System (TMS), Warehouse Management System (WMS), Demand Planning) to an evolving platform approach. supplychaindigital.com

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MEET THE SPEAKERS So I started over. Now, more than 30 years later, I am Accenture’s Global Technology Lead for Supply Chain & Operations, along with leading our North America SAP Supply Chain Practice and our SAP Practice for Communications, Media, High Tech and Aerospace & Defense clients in the South.

Knut Alicke

Brian Houck COMPANY: PWC

COMPANY: MCKINSEY & COMPANY I’m Knut Alicke, a Partner at McKinsey & Company in Stuttgart, Germany. I primarily advise clients on supply chain management, digital supply chains, advanced analytics and supply chain transformations, and am the Head of Supply Chain Europe and a visiting professor at the University of Cologne.

Steve Davenport

My name is Brian Houck. I lead PwC’s Supply Chain practice in the US, as well as, having global responsibilities for our Connected Supply Chain Solutions. I have over 25 years of supply chain experience in both consulting and industry, working across the end-to-end consumer value chain with deep experience in Retail, Distribution/Wholesale and CPG clients. I support clients to achieve growth and profitability objectives, through transforming their operations through better strategies, processes and technologies.

COMPANY: ACCENTURE My name is Steve Davenport and I’m the Global Technology Lead for Supply Chain & Operations at Accenture. As someone with a degree in aerospace engineering from Virginia Tech, I’m occasionally asked how I ended up as a business consultant and not an engineer. The answer is that I was - for a while. Fresh out of college and 22 years old, I was a testing director for the Tomahawk cruise missile program, spending my time between the office, the simulation lab and naval vessels. But while I was spending all of my time ensuring that a missile was on track, I began to think that my life wasn’t.

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Mark Hermans COMPANY: PWC My name is Mark Hermans, I am the Managing Director, part of PwC's Operations Transformation consulting practice. I have over twenty years of operations transformation consulting experience with a focus on digital enablement, and a successful track record helping clients with operations strategy development, operating model redesign, large-scale transformation, digital enablement, advanced analytics and operations due diligence.

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Matthew Burton COMPANY: EY EMEIA My name is Matthew Burton I am the Supply Chain & Operations Leader at EY EMEIA. I am a seasoned supply chain professional with extensive experience in digital supply chain and operations transformation. I have led supply chain transformation projects at multiple blue chip products and services companies across EMEIA. I primarily focus on helping clients harness the power of industry 4.0. (Source)

Chris Andrews COMPANY: EY UK My name Is Chris Andrews I am the Supply Chain Transformation Leader at EY UK. I lead tech-enabled Supply Chain and Procurement transformation in the Consumer Products and Retail sector, helping clients to deliver their goals and unlock benefits.

Passionate about making great businesses even better – I bring 17 years of broad business transformation experience, delivering over US$2bn of benefits for clients including Unilever, Heineken, AB-InBev, KraftHeinz, WBA, BAT, Diageo, Upfield, Tesco, Walmart, and BP.

Gustav Mauer COMPANY: EY UK My name is Gustav Mauer, I am the Associate Partner and Consumer Products Supply Chain Leader at EY UK. My mission is to anticipate and shape the future of Supply Chain – helping organisation’s with their overarching end-to-end supply chain and operations strategy to grow, optimise and protect their operations.

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“Old approaches of black box and on-premise software can’t keep the pace of our clients’ businesses. Organisations must raise the bar on supply chain efficiency, agility, and resilience to meet customer demands in the most cost-effective manner, and supporting technology needs to adapt with the same agility.” With the pace of digital transformation accelerating for nearly every organisation, “technology is more strategically important than ever before for businesses,” adds Steve Davenport, Global Technology Lead for Supply Chain & Operations at Accenture. “In fact, our research shows that 64% of supply chain executives report the pace of digital transformation for their organisation is accelerating. As a result of the rapid digital transformation, we’ve seen growing investments in data, AI and digital twin technologies to power supply chains. “In the coming months, businesses will be able to prioritise the idea of learning from the future. New sources of data and AI driven models can be applied across companies’ product development, supply chain, and sales lifecycles to give them greater confidence, knowing they are on the right path to growth. Ultimately, learning from the future can help companies prepare for risks.” 2022: Future Tech in Supply Chains “Over the past 18 months, leading organisations have developed the ability to rapidly adapt business models and supply chain ecosystems to live with a high degree of volatility and disruption. In many cases, driven by necessity, companies used this period to increase overall investment in digital supply chain technologies and replace legacy platforms in order to gain end-to-end visibility and bring risks under control,” says Burton. 100

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“Organisations must raise the bar on supply chain efficiency, agility, and resilience to meet customer demands in the most costeffective manner, and supporting technology needs to adapt with the same agility” BRIAN HOUCK & MARK HERMANS PWC

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“Moving into 2022, we expect to see companies move from ‘survive’ to ‘thrive’, with priorities moving away from managing risk and disruption and towards exploiting future growth. To accelerate this growth, innovation and investment will target winning in the market with new products, service offerings and consumption models. This will require digital technology to build new capability around (1) designing for consumer perceived value (both product and experience), (2) driving scale and efficiency through new distribution models including direct to consumer, click and collect and subscription, and (3) harnessing the power of the full supply chain ecosystem by improving interconnectivity across customers, partners and suppliers,” Burton continues. Adding to Burton’s comments, Chris Andrews, Supply Chain Transformation

Leader, EY UK says “in 2022, we expect businesses to continue investing in building the ‘intelligent foundation’, improve end-to-end visibility and better enable risk management and decision making when it comes to their supply chains. There is a recognition that the volatility and disruption witnessed in recent years will continue to be facts of life, requiring businesses to have the ability to ingest, process and make sense of billions of data points to stay ahead and remain competitive.” As companies continue to build out their existing supply chain technology capabilities, Andrews expects to see “further investment in (a) advanced planning solutions to better sense changes in demand and supply and accelerate the ability to respond, (b) endto-end control tower to enable real-time visibility of supply chain performance, risks, opportunities and events and allow leadership teams to make better informed end-to-end decisions, (c) cognitive automation platforms to make real-time recommendations, predict outcomes and make supply chain decisions autonomously within the context of agreed boundaries and business rules, creating the self-driving supply chain.” Agreeing with Andrews, Alicke adds, “the next generation of supply chains are based on advanced technologies, like AI, Internet of Things (IoT), and robot process automation (RPA), and has the potential to transform manual repetitive tasks into highly automated processes with superior performance. However, these approaches will only be successful if the right roles are embedded in an appropriate organisation structure. In the supply chain organisation of the future, we will find new organisational units supporting end-tosupplychaindigital.com

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Environmental sustainability We are seeing a new paradigm emerging where companies no longer have to consider competitiveness or sustainability, but competitiveness and sustainability achieved through smart manufacturing. While industry leaders recognize a need to reduce the environmental footprint of their organiszation, they’ve struggled to define actions with a clear business case for investments to do so. Applications of 4IR technologies are already improving our response to global challenges, such as climate change and pandemics. Organisations that are a part of the Global Lighthouse Network, a community of worldleading manufacturers and value chains, are using Fourth Industrial Revolution (4IR) technologies to increase efficiency and productivity, in tandem with environmental stewardship. In addition to reporting productivity increases of up to 90%, leadtime reduction of up to 80 percent, and a halving of time-to-market, lighthouses also see energy efficiency improvements of up to 50 percent including reducing waste, resource consumption, and emissions.

Acceleration of Fourth Industrial Revolution Technologies The aforementioned global disruptions and supply-chain breakdowns coupled with heightened customer demand for digital-first experiences is speeding the Fourth Industrial Revolution (4IR) forward. While the COVID19 pandemic continues to drive significant uncertainty, manufacturers are revamping their growth strategies with a renewed appreciation for how operating models determine strategic outcomes. Maximising productivity is no longer enough. To support a lasting competitive advantage, companies know their operations must achieve more than ever before;: stronger resilience, faster innovation, higher customer satisfaction, more-engaged workforces. And it all needs to happen at the same time. That means making the most of digital transformation across the entire manufacturing organisation, including support functions. Whether it’s ahead of the digital curve or lagging behind, no manufacturer is immune to the automation revolution that COVID-19 is accelerating. To truly reimagine manufacturing for a sustainable, digitallyinfused future, companies must find pathways that extend value through novel customer experiences, with scalable technology that supports the business goals.

KNUT ALICKE

PARTNER, MCKINSEY & CO.

LOGISTICS

“The scale and pace of change was unprecedented, for example online grocery deliveries increased more in the first 10 weeks of lockdown than in the previous 10 years” MATTHEW BURTON SUPPLY CHAIN & OPERATIONS LEADER, EY EMEIA

end supply chain management: predictive demand management, end-to-end supply planning and execution, no-touch order management, operational logistics, advanced network and configuration, and data mastery.” “In 2022 companies will begin to realise that the original use for AI/ML is not returning the expected value and results due to weaknesses in underlying data and hesitancy to fully trust these engines. This will not stop investment in AI/ML, but will result in a repositioning of where and how to apply the technology. We believe that the concept of ‘self-healing’ supply chain data will emerge, shifting focus on AI/ML to help identify and correct data issues in realtime. This will enable supply chain leaders to spend less time debating the quality of the data and more time driving actions. As a result, these innovations will pave a path for AI to become a standard by 2023/2024 for front-end technologies,” adds Houck and Hermans.

Emerging from the pandemic, companies are already moving to provide value and building the foundations to scale and drive the next level of intelligence and automation, “we expect three new technology trends to continue to emerge. First is technologies related to improving visibility and collaboration around sustainability in the extended supply chain. This is largely driven by the increased commitments companies are making in driving towards net zero carbon emissions and the extension of this commitment to Scope 3, which includes their external suppliers and their respective value chains,” says Gustav Mauer, Consumer Products Supply Chain Leader at EY UK. “Second is a renewed interest in revitalising product lifecycle management (PLM) technologies to support the volume and rate of innovation ramp-up required to meet the everincreasing consumer need for new products and services. The third technology trend is in the area of risk and cybersecurity where companies will really push hard to bring cyber security beyond just their corporate IT systems into their factories and warehouses’ operational technology (OT) environments. This trend is driven by the increased number of cyber attacks and the significant vulnerability of these physical environments due to their increased level of reliance on technology,” adds Mauer.

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Other priority technologies expected for 2022 include cloud, digital twins, and augmented reality (AR) technologies. “Cloud is a top-priority technology for supply chain executives, cited by 42% of executives surveyed by Accenture earlier this year. The fact is, the pandemic opened the eyes of enterprises to a new reality and cloud is now at the core of the company, not just the periphery. The hyperscalers will start to be seen by customers as strategic supply chain ecosystem partners, providing innovative capabilities and services well beyond cloud hosting of traditional supply chain vendor software. Technology is no longer just one vehicle for success—it’s the vehicle all possible success depends on,” says Davenport. “In addition to cloud, we believe more businesses will implement digital twin technology. This will allow for businesses to gather, visualise, and contextualise data from across their physical assets and projects, bridging their physical operations and digital capabilities. This new and improved line-ofsight across business operations is critical for businesses to remain agile in the everchanging global environment. Technologies like augmented realities (AR) will also continue to gain traction, as AR provides access to data and digital systems enabling businesses to in turn be more efficient, accurate and safer,” concludes Davenport. supplychaindigital.com

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DIGITAL TWINS 101:

UNDERSTANDING THE TECHNOLOGY Supply Chain Digital takes an in-depth look at the innovative technology - digital twins WRITTEN BY: GEORGIA WILSON

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hat is a smart supply chain? Putting it simply, a smart supply chain brings awareness to all stakeholders in the industry to make efficient decision-making. A smart supply chain taps into the data gathered, providing detailed visibility of products and items from manufacturer to retailer. With a smart supply chain, industries can automate not only shipping and delivery operations but also predict the status of products in real-time,

monitoring important details of the overall productivity of the supply network. What is a digital twin? Creating a virtual representation of a supply chain from data gathered in the physical world, “a digital twin is used as a safe space to stress test different scenarios and see what impact various changes to the manufacturing process would have, enabling you to take the right decision in the real world with minimal risk of downtime,” explains Sebastian Elmgren, Portfolio Manager for Smart Manufacturing at Ericsson. supplychaindigital.com

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“Digital Twin technology can help manufacturers monitor production lines, evaluate equipment performance, quantify scrap rates, optimise energy usage, and solve quality-control problems,” says Cobus Van Heerden, Senior Digital Product Manager, Analytics and Machine Learning, GE Digital. “One international food manufacturer decreased customer complaints related to product weight by 33%, improved product quality, and decreased waste. Additionally, a pulp and paper manufacturer predicted Critical to Quality (CTQ) KPIs to improve productivity and eliminate wastewater regulatory issues. As a final example, a third company implemented an advanced process control solution to increase throughput by 10% using optimisation technology,” adds Heerden. Enhancing Digital Twins with Other Advanced Technologies When it comes to other advanced technologies such as 5G, Big Data, advanced analytics, artificial intelligence (AI) and machine learning (ML), Elmgren comments that it is these technologies that “play an important part in getting the most out of a digital twin. Big data is needed to store and manage all the collected data, while AI and ML applied to a digital twin enable you to automate the development of insights, test scenarios, and optimise production. “But 5G is what all of these technologies depend on, particularly private 5G. A private 5G network is worlds apart from what you might use on your phone as a consumer. It’s a network only you use, and it can be configured specifically for your environment and needs. A private 5G network makes it possible to link the physical and digital world reliably, with only 5G capable of handling the massive amounts of data a digital twin

Sebastian Elmgren TITLE: PORTFOLIO MANAGER COMPANY: ERICSSON INDUSTRY: TELECOMMUNICATIONS COMPANY LOCATION: SWEDEN My name is Sebastian Elmgren; I am the portfolio manager for smart manufacturing at Ericsson. Ericsson is a global leader in the research, development and manufacturing of telecom equipment. For manufacturers, we provide the expertise and technology to implement nextgeneration private 5G networks, which underpin truly smart factories.

“ You wouldn’t start manufacturing a new product at scale without testing, and the exact same holds true of digital twins” SEBASTIAN ELMGREN PORTFOLIO MANAGER, ERICSSON

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Cobus Van Heerden TITLE: SENIOR PRODUCT MANAGER COMPANY: GE DIGITAL INDUSTRY: COMPUTER SOFTWARE LOCATION: UNITED KINGDOM I am a Senior Product Manager for Analytics and Machine Learning Software at GE Digital. I have 20 years of experience in developing and implementing industrial software globally. My speciality is helping industrial organisations realise transformational productivity gains through applying digital technology, advanced analytics, and machine learning. GE Digital is putting our industrial software to work to accelerate global transitions that will impact every industry on the planet. For 30+ years, our software has helped more than 20,000 global manufacturing customers achieve operational agility with software that delivers enterprise-wide visibility and scalability.

requires, at speed, reliably and with strong security built-in,” he continues “One technology we have been working with is Humble AI. Humble AI operates within a zone of competency, pinpointing where data is most accurate and in which instances it is comfortable making straightforward operational decisions. If a situation falls 110

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outside this zone, it recognises and redirects the situation to a human operator or reverts back to its traditional algorithm. Humble AI is part of a digital twin that ‘partners’ with its human operators to improve the speed and accuracy of decision-making to reduce business risk,” adds Heerden. Implementing a Digital Twin into Your Supply Chain First and foremost, it is important to select a digital twin technology that allows success without requiring a team of data scientists. From a manufacturing perspective along the supply chain, Heerden explains that “the process engineers are key. They are the domain experts and can drive results without the manufacturer having to add more resources. There are software solutions that manufacturers can quickly deploy that will help them implement Digital Twins in their operations.

TECHNOLOGY

“Companies will offer advisory services that jump-start the deployment and set up to align with a business’ specific desired outcomes, and manufacturers should make sure they work with their partner to define the right roadmap to lay the groundwork for future success. Start with the low-hanging fruit, drive some early successes, and expand from there.” “You wouldn’t start manufacturing a new product at scale without testing, and the exact same holds true of digital twins. It’s best to start small, get comfortable with the technology and the approach, then scale. Begin with a specific part of the production process, preferably a quality critical part, and then grow from there. From a product point of view, in most cases, products are already in a CAD system, so creating a virtual reconstruction is a relatively straightforward matter of enriching the data already there,” adds Elmgren. “Digital twins are key. It is impossible to create a smart factory without a digital twin.

Product Lifecycle and Digital Twins Product lifecycles are becoming shorter and shorter. Meanwhile, the demand for customisation is growing. Against these pressures, the traditional approach to product development involving test runs and debugging is almost obsolete. With almost every product leaving a factory being unique in some way, perfect quality has to be achieved at the first trial. There is precious little room for error or a reset. By running a virtual reconstruction of any product through a digital twin of your factory, you can conduct virtual test runs to find and solve any issues before the first physical product has even rolled off the line. supplychaindigital.com

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“ Humble AI is part of a digital twin that ‘partners’ with its human operators” COBUS VAN HEERDEN

SENIOR PRODUCT MANAGER, GE DIGITAL

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In reality, as soon as you start collecting any data from the factory floor, you’ve begun creating a digital twin. To really maximise the impact of that data and test new processes in a reliable, safe manner, it makes sense to take the next step and build a ‘proper’ digital twin,” continues Elmgren. The Benefits and Challenges of Digital Twins There are numerous benefits of digital twins to optimise key KPIs, “Digital Twin technology can optimise production

TECHNOLOGY

uptime, reduce waste, and accelerate learnings,” says Heerden, who adds that they can also “reduce process variability by combining data, analytics, and machine learning and speed troubleshooting of asset and process performance issues. This ultimately decreases downtime and increases productivity.” Elmgren also emphasises the “drastic cost and time reduction for solving quality issues, more effective predictive maintenance, and the ability to introduce

new products at a faster pace” as a result of digital twins. However, “the challenge with a digital twin is that you could collect too much data and get lost in it. The quality of the data you collect would become diluted, keeping it up-to-date would become more difficult, and ultimately the digital twin and the insights you developed from it would become less useful. A strong strategy and the right AI tools can help avoid this, though.” supplychaindigital.com

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