Supply Chain Magazine - September 2021 by Supply Chain Digital

Sept 2021 | supplychaindigital.com

The Value of Sustainable Sourcing:

Procurement’s ESG Leadership

Exclusive Preview: Procurement & Supply Chain Live 2021

Supplier Innovation:

There’s More Value in the Chain

UK GOVERNMENT

SAVING LIVES WITH NHS TEST & TRACE Jacqui Rock, Chief Commercial Officer for NHS Test & Trace for UK Government, on leading the response that’s winning the digital war against COVID-19 FEATURING:

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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 JENNIFER SMITH

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

Can supply chain solve the climate crisis? Solving global warming will require global cooperation, collaboration and problem solving. Sound familiar?

“The time to act is now” Soren Skou, CEO, A.P. Moller - Maersk

Over the past few weeks, climate change supplanted COVID-19 in the headlines - for a short time, at least. The IPCC’s damning Sixth Assessment Report laid bare the true and present threat that inaction poses to our planet. But in truth, the climate crisis and the pandemic are two facets of the same issue: global crises that require global action and cooperation. And there are perhaps no people better equipped to deal with these concerns than supply chain professionals. Sustainability is fast becoming the top priority in global supply chains, with greater pressure from investors, consumers, and even internal stakeholders placed on organisations to be more proactive in combatting their impact on the planet. As Maersk chief executive Soren Skou says, “The time to act is now”. It is an exciting and transformational period for supply chain, however fraught with responsibility, but the actions of every individual, at every point in the supply chain will play its part in overcoming humanity’s biggest conundrum. .

RHYS THOMAS SUPPLYCHAIN DIGITAL MAGAZINE IS PUBLISHED BY

Rhys.Thomas@bizclikmedia.com

supplychaindigital.com

CONTENTS

Our Regular Upfront Section: 10 Big Picture 12 The Brief 14 Timeline: The Evolution of Cold Chain Distribution 16 TrailBlazer: Carol Tomé 20 Five Mins With: Klaus Staubitzer

Procurement

ESG: The Value of Sustainable Sourcing

Saving Lives with NHS Test & Trace

Beyond the Deal – The Power of Brand Value

UK Government

76 68

Vodafone

Shaping the Future of Procurement

Supply Chain

Supplier Innovation: There’s More Value in the Chain

Logistics

Pallets: The Hidden Linchpin of the Supply Chain

102

Sonic Manufacturing Technologies

Building the First Autonomous Digital Supply Chain

116

Technology

IoT: The Eyes and Ears of the Supply Chain

124

Dole International

A Fresh Approach to Indirect Procurement & Procurement Excellence

134

The Ultimate Procurement & Supply Chain Live Event

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

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.”

Learn more

BIG PICTURE

September 2021

Out of Stock

United Kingdom

Separated physically and politically from mainland Europe, Brexit and the pandemic are taking their toll on UK food supply chains. Reports of panic buying and empty supermarket shelves are exacerbating the issue. Senior industry figures warn of further shortages if disruption and labour strains persist. supplychaindigital.com

THE BRIEF “What we're looking at over the years and into the future is an organisation that can help you transform, can help you be more strategic, and add value in a different way”

BY THE NUMBERS What is your biggest commitment to a more sustainable supply chain? Based on Supply Chain Digital Linkedin poll of 283

Larry Phelan,

Global Chief Procurement Officer, EY  READ MORE

“As soon as you go digital and have your computer buy from their computer, there’s a true win-win. Your people can now focus on exceptions”

37%

Source sustainable material

28%

Partner with local suppliers

18%

Reduce transport emissions

17%

Convert to clean energy

David Ginsberg,

Vice President of Supply Chain, Sonic Manufacturing  READ MORE

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

Global Head of SCM Development, Operations & Digital, Vodafone  READ MORE

September 2021

DHL Express orders electric plane fleet Model: Eviation Alice Capacity: 1,200kg Range: 815km Charge time: 30 minutes (per flight hour) Launching: 2024 READ MORE

Gartner: What CEOs Expect of Their CSCOs 17% want greater control over spend and cost saving 16% expect enhanced supply chain resiliency 16% want to see digital investment to support ecommerce 60% expect an economic boom by the end of 2022 READ MORE

IBM Powers Sustainable Fashion Supply Chain Platform Fashion has a pollution problem and IBM, along with a number of tech firms and UK garment and fabric brands, are piloting a new platform to solve the issue. Is this not a case of closing the barn door once the horse has bolted? There’s still plenty of opportunity to get things back on track. The UK Fashion & Textile Association is partnering on the project, along with global retailer H&M, and a handful of other retailers and brands. How exactly will this help make fashion more sustainable? The Sustainable Supply Chain Optimisation will operate on a combination of IBM’s blockchain and AI technologies running on the IBM Cloud, and will be prototyped during a nine month project. The UKFT says the blockchain technology will enable greater supply chain transparency, while AI will detect supply chain disruption and provide real-time insights for analysis of current business performance, rapid problem solving and optimisation of business flows.

 UPS UPS CEO Carol Tome’s ‘better not bigger” strategy paid off in Q2. Sales hit $23.4bn, a y-o-y rise of 14%. Consolidated operating profit reached $3.3bn, up 47.3% compared to the same period in 2020. International revenues grew 30%, and its domestic US segment rose 10%.  PHILIP MORRIS INTERNATIONAL Tobacco giant PMI won a £1.1bn bid for inhaler manufacturer Vectura, whose board unanimously voted the acquisition through. US private equity group Carlyle had offered £958m earlier this year.  NEWPORT WAFER FAB A takeover of the Welsh chipmaker by Nexperia, a Netherlands-based company owned by Chinese firm Wingtech, could be blocked by the UK government. Boris Johnson ordered a probe over national security risks. A consortium of UK businesses are interested if the deal falls through.  ORSTED Good weather has taken the wind out of the sails of Orsted, the world’s largest offshore wind farm developer. It warned profits would sag due to “significantly lower than normal wind speeds” across its turbine portfolio.

W I N N E R S SEP21

L O S E R S

supplychaindigital.com

TIMELINE THE EVOLUTION OF COLD CHAIN DISTRIBUTION Walk through the history of cold chain distribution in the pharmaceutical industry

1940 The King of Cool Redefining the global market, Frederick McKinley Jones in 1940 patented his first practical application of a transport refrigeration unit for trucks. The air-cooling device had a gasoline motor to handle the jolts of travel. Beyond commerce, when the US entered World War II in 1941, the Defense Department selected a portable refrigeration unit designed by Fred Jones to refrigerate food, water, drugs, and blood plasma. 14

September 2021

1976

1980

The World Health Organisation (WHO)

The Start of Monitoring solutions and Styrofoam Packaging

In 1976, the World Health Organisation (WHO) created a strategy to address critical issues in vaccine distribution, including temperature monitoring, lack of storage equipment, and staff training.

1980s Companies in the US and Switzerland began developing monitoring solutions for cold chain distribution that followed the shipments from manufacturers to countries. 1990-2000 Though inexpensive, the use of Styrofoam for temperature control in the pharmaceutical industry often resulted in temperature changes during shipping or storage, which resulted in delays due to damaged products.

2000

2020

2021

PCM and Monitoring

COVID-19

In the mid-2000s, Phase Change Material (PCM) became the preferred packaging for many shippers, as more precise temperature changes became standard. PCM gave shippers greater control over temperature ranges during transport In the last decade, temperature monitoring (whilst still not quite real-time yet) has come a long way with the help of advanced technology. Shippers are now able to prove packaging performance for custom clearance.

Following the outbreak of COVID19, the need for effective and reliable transportation of the vaccine was needed in order to quickly distribute around the world. Logistics companies such as UPS, DHL and FedEx during the pandemic were quick to work on developing suitable solutions to distribute the vaccine.

VIPS and the Future of Cold Chain Packaging Current standards for temperature-controlled transportation are Vacuum Insulated Panels (VIP) and PCM inserts. Those who use them experience fewer quarantines and clear shipments quicker. As pharmaceuticals continue to rise in value and regulations become more stringent, it is predicted that real-time data will be the next advancement, as well as reusable packaging. supplychaindigital.com

TRAILBLAZER

Breaking Glasses in Logistics

CAROL TOMÉ CEO: UPS

aking the world by storm, Carol Tomé stepped out of retirement in 2020 to take on her dream role of CEO at global shipping and logistics services company UPS. Prior to UPS, Tomé worked for 24 years at Home Depot, where she worked with every CEO in the company’s history, starting with co-founders Bernie Marcus and Arthur Blank, Robert Nardelli, Frank Blake and Craig Menear. Tomé retired from her role as Executive Vice President and Chief Financial Officer in 2019. “I was at peace. I’m like, this is going to be great. I’m going to do corporate boards, my foundation, my family office, the farm, and spend more time with my family and friends.” However, her retirement was short-lived... “Seriously bored” with retired life on her farm, Tomé, who has had a career of making money and getting things done, stepped into the role of CEO at UPS - as she puts it - ‘breaking glasses’. “I am the first outsider CEO (at UPS), the first woman CEO [in the company’s 114 years] and the first woman CEO in the industry,” said Tomé, who is currently one of Fortune: four female Fortune 50 CEOs.

September 2021

Commenting on her appointment, Blank said: “Beyond her familiarity with UPS’s complex operations, she is simply an exceptional, thoughtful leader with uncommon financial acumen and a keen understanding of how important a thriving culture is to the success of a large business. I know she’ll be an outstanding leader for this great company, just as she was for so many years at the Home Depot.”

Years on the UPS Board: 2003 - Present Became UPS CEO: 2020 Years at Home Depot: 24 (1995-2019) Fortune 50: 1 of 4 women CEOs

TRAILBLAZER

Menear added: “We at the Home Depot know Carol firsthand as an inspiring, strong, values-based leader. I’m confident she’ll carry that same great leadership to UPS.” Committed to ‘Better, not Bigger’ Discussing her return from retirement, Tomé said: “The [UPS] stock price had been flat for about six years. I’m like, I think I could get in there and swizzle the business model a little bit and create some value.” “I like to make money,” added Tomé. “I have a pretty good track record at it. I thought I could really move the needle here, and that would be fun.” Continuing the momentum of departing from typical UPS practice, Tomé began

September 2021

as she meant to go on - ‘shaking things up’. From implementing review boards and divestitures to same-day delivery, sustainability, diversity and inclusion, employee development, and local philanthropic engagement, Tomé has been working to change the way UPS operates to promote its strategy of being a customer first, people-led, and innovation-driven organisation. Faced with the outbreak of COVID19 and the eventual distribution of the vaccine, as well as rising market demands, and the company’s commitment to change for the ‘better not bigger’; from the off, Tomé was faced with world-changing challenges in her first 100 days as CEO.

“I thought I’d be travelling the world, meeting people, visiting our facilities, shaking hands and meeting customers [...] We’ve got lots of challenges here, but they’re fun to work on. We’re making some real good progress,” commented Tomé on the outbreak of COVID-19. “As COVID took hold and our lives suddenly and drastically shifted, I was blown away by UPSers’ ability to react. There’s no playbook for something like that [...] A year later; I have a much deeper appreciation and respect for the professionalism, agility, humility and sense of service I see in the UPSers I meet [...] Someone asked me recently what makes me so optimistic about the future of UPS. To me, it’s simple. We can do anything. That’s the absolute truth.”

“UPS is a company with a proud past and an even brighter future. Our values define us. Our culture differentiates us. Our strategy drives us. At UPS, we are customer first, people-led and innovation-driven”

supplychaindigital.com

FIVE MINUTES WITH...

KLAUS

STAUBITZER THE CHIEF PROCUREMENT OFFICER OF SIEMENS TALKS NEW HOBBIES, THE SHIFTING ROLE OF PROCUREMENT, AND THE MOMENT DIGITAL TRANSFORMATION CLICKED Q. WHO ARE YOU AND WHAT DO YOU DO?

» I’m Klaus Staubitzer, the Chief

Procurement Officer at Siemens. I’ve had many different roles within the company over more than 25 years, but today, along with the many other folks in what we call the Siemens Supply Chain Ecosystem, we manage more than €40bn in annual spend. It’s a massive amount of spend and we do our utmost to make the most of it, which is very interesting, and very, very challenging at the moment.

Q. WHAT ARE THE BIG QUESTIONS OCCUPYING YOU PROFESSIONAL TIME?

» At the moment we have the

obvious challenge of getting all the materials and all the services that we need on site, due to the global availability issue that we’re all experiencing. But aside from this, the big challenge is how can we transform our function from a pure cost-cutter into a value-add orchestrator. Where is our next north star? 20

September 2021

Getting the cheapest price is no longer the best thing we can gain out of having such a huge purchasing volume; there are many other different facets we have to focus on. That means productivity is a given, quality and availability are other facets, and on top of that, using the power of our suppliers’ innovation is also something we have to focus on. The real discipline is to find the right balance in between all those - and of course sustainability is the outcome of how we manage that transformation from cost to value-add.

Q. WHAT ARE THE BIGGEST CHALLENGES YOU CURRENTLY FACE?

» Really this is a question of both

challenge and opportunity. If I think back to 2017, some of our board members returned from the World Economic Forum, energised and excited that all the technical systems we needed for our digital transformation already existed. Great, but that was never really the limiting factor.

“ THE QUESTION PEOPLE ALWAYS ASKED ME IS WHAT IS THE SIEMENS MASTER PLAN?”

supplychaindigital.com

FIVE MINUTES WITH...

The question people always asked me is what is the Siemens master plan? And that was the big challenge. At that time, I thought that maybe it was impossible to define what our big DT master plan was. But then a trainee approached me and said, “Why don’t we try this differently?” What he meant was that instead of having a centralised, top-down approach that could take years to implement, why don’t we turn the process around and try to start a bottom-up process. And that's what we did.

September 2021

We asked a bunch of people at that point in time how we could make their life and their responsibilities easier. We had 500 people meet regularly to discuss these topics and that became the key ingredient for us to scale up our transformation, make it transparent and push past these ‘proof of concept’ stages.

Q. WHAT IS YOUR PERSONAL MANTRA?

» Not really a mantra, but a good

way to think: don’t work harder, act smarter. A lot of people work like hell

everyday, but what’s their impact? If you always think about the impact you have on an organisation, you’re much more valuable. And of course, nobody’s perfect, because we’re all human, and we all say we can take on all of these tasks, when in reality that’s absolutely not true. Again, it’s about this bottom up approach for me, building on each other’s perceptions, and creating an added value. And if people are self motivated, self organised, then they are motivated to work towards the next level.

Q. WHAT CAN YOU NOT LIVE WITHOUT?

» For the past 18 months, like many

people, I’ve been working from the home office. It became so relevant for me to find some sort of activity to add balance and refresh my batteries.

“THE BIG CHALLENGE IS HOW CAN WE TRANSFORM OUR FUNCTION FROM A PURE COST-CUTTER INTO A VALUE-ADD ORCHESTRATOR. WHERE IS OUR NEXT NORTH STAR?” So for me, it was something as simple as rope jumping. My son pointed out I can do it everyday, anywhere, and all I need is a rope. At the beginning it was a challenge - it’s not so easy when you’re not 25 years old anymore - but it’s a small thing I can try and get better at everyday. supplychaindigital.com

In Association With:

THE ULTIMATE PROCUREMENT & SUPPLY CHAIN EVENT SEPTEMBER

28th - 30th STREAMED LIVE FROM TOBACCO DOCK LONDON A BizClik Media Group Brand

Confirmed Speakers Include: Sheri Hinish

Global Executive Partner and Offering Leader IBM

Ninian Wilson

Group Procurement Director & CEO, Technology Procurement Director Vodafone Procurement Co Sarl

Jim Townsend

Chief Procurement Officer Walgreens

Mark Bromley

Director of Sourcing, Supplier Management Mastercard

Chris Shanahan

VP Global Procurement Thermo Fisher Scientific

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Creating Digital Communities

UK GOVERNMENT

UK GOVERNMENT: SAVING LIVES WITH NHS

TEST & TRACE WRITTEN BY: SCOTT BIRCH

September 2021

PRODUCED BY: GLEN WHITE

UK GOVERNMENT

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UK GOVERNMENT

September 2021

UK GOVERNMENT

Jacqui Rock, Chief Commercial Officer for

NHS Test & Trace for UK Government, on leading the response that’s winning the digital war against COVID-19

Jacqui Rock CCO for NHS Test & Trace

ll the executives that feature in the pages of this magazine have earned their place through hard work, dedication, and a huge dose of the X Factor. That said, you’d be hard pressed to meet anyone with more personality, drive and passion for service than Jacqui Rock. Officially designated Chief Commercial Officer for NHS Test & Trace for the UK Government, she is simply the person you turn to in an hour of need. Someone who Gets Stuff Done. Just the person, in fact, to help the UK in its fight against COVID-19. This sense of duty is something that has stayed with Jacqui throughout her distinguished career. “I would work all day on the trading floor then go out and put on a police uniform,” recalls Jacqui. “I have always felt a strong desire to give something back and make a difference. We write our legacy every day and, in the words of Heather Small, ‘what have you done today to make you feel proud?” supplychaindigital.com

THE EXCEPTIONAL EVERY DAY Proud to support the UK Government to help Britain get Back to Business

MITIE COVID-19 CHECKLIST ASSURED

Mitie: Frontline Heroes in the COVID-19 Response MITIE COVID-19 CHECKLIST ASSURED

Mitie, a key partner in the UK government’s COVID-19 testing programme, is also supporting businesses to return to the workplace safely and seamlessly. Most adults in the UK will have been impacted by the vital work carried out by thousands of Mitie colleagues in the past 18 months. As the UK’s leading facilities management company, Mitie is a key supplier to the UK government’s COVID-19 testing programme, and has played a pivotal role in helping communities monitor and control coronavirus infections.

“We have more than 11,000 Mitie colleagues working in our test centres across the length and breadth of the UK, and 65,000 colleagues in total on the frontline” says Simon Venn, Chief Government and Strategy Officer, Mitie. “We call them our frontline heroes, and they’re delivering everything from cleaning and clinical waste management, to security and intelligence services.” Mitie is already running more than 138 test centres but that figure is expanding to 175 regional and local fixed testing centres in the coming months, alongside a further 105 mobile testing units across Great Britain. “It’s a huge capability,” Venn says. “And now that lockdown restrictions have eased and we enter a new phase of the pandemic, we stand ready to support local communities as and when they need to respond to potential outbreaks.” Alongside infrastructure and boots-on-the-ground services, that also means intelligence. Mitie leverages AI and ML technology to analyse a variety of data streams to predict spikes and outbreaks at both the micro and macro level. “Horizon scanning is a key component of our ability,” Venn says. The company also tracks developments in other countries such as Israel, which shares many parallels with the UK’s situation. “That puts us in the best possible position to act proactively,” Venn says. “Everything we do has a scientific thread running through it. Cleaning, for example, is no longer about mops and buckets. It’s about nanotechnologies, sprays that leave antibacterial films on surfaces, and UVC air handling technologies that kill airborne pathogens. It’s this underlying science that gives us a real edge when it comes to turning the tide on the pandemic.”

As the economy reopens, Mitie is extending its expertise and support to the business community. “We’re really proud to share our expertise, to help get Britain back to business as quickly and as safely as possible,” Venn says. Mitie’s research shows that more than half of British employees working from home say they are ready to return to the office, but a third are concerned that their office’s aren’t COVID secure.

“In that vein, we've created a comprehensive guide called Getting Britain Back to Business, to help companies prepare for a safe and seamless return to the workplace and our guide is all about facilitating that.” “Many of us have experienced working from home, and the one thing that the pandemic has proved is that it is possible to do so,” Venn explains. “But it's also highlighted how difficult it is to build genuine social rapport. That's where you really need that face-toface time with your colleagues.” The Mitie COVID-19 Checklist Assured mark takes that one step further. “This is really about us working in genuine collaboration and partnership with our customers. It’s been developed based on our experience of creating and managing efficient workplaces, as well as leading organisations through the current pandemic,” Venn says. “For me, to be declared Mitie COVID-19 Checklist Assured is a way for all of our customers to demonstrate that they've taken the strategic and responsible steps to provide a safe, secure workplace for all of their people." Written by: Rhys Thomas

UK GOVERNMENT

UK Government: Saving lives with NHS Test & Trace

Jacqui worked for 30 years in the Financial Services industry where she held multiple executive positions with the likes of Credit Suisse, JP Morgan, Barclays and Bank of America Merrill Lynch. She then followed her calling and joined the Ministry of Defence as director for the Defence Infrastructure organisation – where she was responsible for £4 billion annual investment across the whole military estate for the Army, Navy, Royal Air Force and Joint Forces Command. “When the call went out across Government for a chief commercial officer, I felt compelled to stand up and be part of the solution,” says Jacqui. “I have never been a good observer, always wanting to be in the thick of it, and this was the most challenging situation our country and the world has faced for decades.” 32

September 2021

“ I found myself managing the most complex delivery challenge across government” JACQUI ROCK

CCO FOR NHS TEST & TRACE, UK GOVERNMENT

NHS (National Health Service) Test & Trace was established in May 2020 as a government-funded service in England, in response to the crisis to track and help prevent the spread of COVID-19. NHS Test & Trace forms a central part of the country’s recovery strategy, which seeks to return life to as close to normal as possible, for as many people as possible, in a way that is safe and protects the NHS and social care.

UK GOVERNMENT

EXECUTIVE BIO JACQUI ROCK TITLE: CHIEF COMMERCIAL OFFICER FOR NHS TEST & TRACE COMPANY: UK GOVERNMENT Jacqui Rock is the Chief Commercial Officer for NHS Test & Trace. She is a member of the NHS Test & Trace Executive Team of trusted directors in the Government’s strategic defence against COVID-19. She is the driving force behind dynamic and rapid innovation and technology development in the supply chain. Jacqui is formerly director for the Defence Infrastructure Organisation at the Ministry of Defence: where she was responsible for £4bn annual investment across the UK and Overseas Defence estate with a total value of £35bn. She led delivery on hard & soft FM, construction projects and major programmes across the full military estate for the Army, Navy, Royal Air Force and Joint Forces Command. Jacqui is a member of the Cabinet Office Commercial Function and joined the UK government after 30 years in the Financial Services industry where she held multiple Executive positions in companies including: Credit Suisse, JP Morgan, Barclays and Bank of America Merrill Lynch. Previous positions included International Chief Procurement Officer for Bank of America Merrill Lynch, where her passion and leadership style delivered procurement and risk management for US$22bn of spend

across 42 countries. As an experienced Commercial Executive, Jacqui brings subject matter expertise, an extensive global network and a proven track record of complex start-ups and transformation delivery.

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Brighter Together Baringa Partners is an independent business and technology consultancy. We help businesses and governments run more effectively, navigate industry shifts and reach new markets. We use our industry insights, ideas and pragmatism to help each client improve their business. Collaboration is central to our strategy and culture ensuring we attract the brightest and the best. And it’s why clients love working with us.

Baringa. Brighter Together.

Baringa: Defining the COVID-19 Response Ecosystem Baringa has been instrumental in defining and establishing the ecosystem and supply chain that underpins NHS Test and Trace and the UK’s vaccination programme Baringa has served at the forefront of the UK’s COVID-19 response since the outset. Teams led by Sarah Ashley, Government Partner, and John Calder, Partner and Practice Lead for Supply Chain and Procurement, have been instrumental in the past 18 months. As a commercial partner to NHS Test and Trace, Sarah Ashley, worked early on with Jacqui Rock, CCO, NHS Test and Trace, “building the pipeline, working with different suppliers, and putting in place the commercial agreements that have allowed Test and Trace to deliver”. That involved providing commercial assurance for over £1bn in spend, engaging with 150+ suppliers, negotiating rates, working with business owners to challenge requirements, and executing 300+ contracts, Ashley explains. “This has resulted in multimillion pound savings for NHS Test and Trace.” It is a high-pressure, high-stakes environment, and one in

which Baringa’s most senior teams drew upon all their experience to deliver the required outcome. “What you don’t want is teams of consultants writing decks all day,” Ashley says. “Our clients needed experienced people to have conversations with them as peers, to define the risks, the knock-on impacts, and the logical next best step. That’s why we’ve been successful.” In the UK’s vaccination programme, Baringa was integral in establishing and rapidly scaling a supply chain at a pace. “Today, more than sixty million vaccinations have been delivered and 75+% of all adults in the UK have received both vaccinations,” Calder says. “The supply chain has been a key contributor to that. It has stood up to all the challenges thrown at it, delivered 99% on time, and all with minimal damage or loss of the precious vaccine, which has been a key part of the mandate.” As the efforts to combat COVID-19 evolves, so too will Baringa’s involvement. “It’s really important for us to hand over and not do these roles forever,” says Ashley, who has placed great emphasis on building resilient processes and frameworks. “Handing back to the whole health ecosystem is vital,” adds Calder. “We’re building a legacy, and making sure that when the consulting engagements end, we’ve transitioned to an up-skilled client team to run this going forward.”

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UK GOVERNMENT

“In July 2020, we set out the plan for NHS Test & Trace to take us through summer and into winter,” says Jacqui. “When the Test & Trace service began, we were still learning about the virus. We did not fully know how prevalent COVID-19 was, or the number of people who had the virus but did not display symptoms. “To help stop the virus, we stood up an integrated system at extraordinary speed so we could test at scale and trace the contacts of people who tested positive to advise them to self-isolate. We also created the Joint Biosecurity Centre which, with public health England, the Office for National Statistics and analysts from across government and academia, has deepened our understanding of the progress of the virus, allowing us to intervene early and with evidence.” As with any effort of this scale, it was essential that the UK Government drew on both public and private sector expertise and experience to try to deliver an app that would meet the unprecedented needs of the pandemic response. The NHS COVID-19 app was launched in September 2020 and is currently the second most downloaded exposure notification app in the world. “This was made possible by working in partnership with others,” says Jacqui. “We were striving to be ‘teams of teams’ made up of local authorities and Directors of Public Health, the NHS, Public Health England, public, private and not-for-profit sector partners and the devolved administrations [the Scottish Government, Welsh Government, Northern Ireland Executive]. It is thanks to them that as a country, we have made such unprecedented strides in developing our testing and contact tracing capacity and systems.” 36

September 2021

UK GOVERNMENT

“ I am immensely proud of the work and achievement of Test & Trace and being part of the COVID response team. We often remind each other when it gets tough that this is something you can be proud of for life” JACQUI ROCK

CCO FOR NHS TEST & TRACE, UK GOVERNMENT

The stats are staggering. By May 2021, the first anniversary of NHS Test & Trace being established, it had achieved: • 5 million lateral flow test provided a week • 92 million PCR tests conducted • 1 million+ antibody test kits delivered • 22.2 million app downloads • 180 million+ tests carried out across the UK • 3.9 million positive cases identified (as of 2 June 2021) • 87% of cases traced and asked to provide close contacts • 82% of close contacts identified reached and asked to self-isolate • 1,390 asymptomatic and 1,100 symptomatic testing sites • 600,000 PCR tests conducted a day Many of those 180 million tests were conducted at 1,200 test sites. Within two weeks, 14,000 staff were hired to establish contact tracing – the largest call centre in UK history. Lighthouse Labs across the UK now process more than 2 million tests per day. supplychaindigital.com

Business transformation. Made easy. Our unique approach to procurement and supply chain delivers both immediate and long-term sustainable results. 4C combines the extensive experience of its teams, a deep and personal understanding of your business and goals, with the latest processes and technologies to create transformative solutions that deliver both immediate and long-term results. 4C are proud partners on the NHS Test and Trace programme.

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Start your transformation today Allison Ford-Langstaff Managing Partner

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Testing times for 4C Associates Executives from 4C Associates explain how they worked as a team to support the NHS Test & Trace efforts to combat COVID-19. When the call went out to support NHS

“There was no precedent, there was

Test & Trace in the UK’s hour of need

no infrastructure and the only thing

as it prepared to combat COVID-19,

certain is uncertainty. And this is where

procurement and supply chain experts

our knowledge of transformations

4C Associates were the natural choice.

really came to the fore. The ability to

With more than 20 years of international experience and extensive knowledge to draw on, coupled with the latest technological innovations and processes, 4C were able to provide a transformative, sustainable solution. “Our focus is procurement and supply chain, that is where our deepest expertise lies,” says 4C Managing Partner Allison Ford-Langstaff.

deal with ambiguity is something we consider to be a real strength of ours.” Ford-Langstaff says she feels immensely proud to have been part of this mission and how the entire 4C Associates team have worked together in incredibly difficult circumstances. “We have to remember that we are people dealing with people in a very, very difficult time,” says Ford-Langstaff.

“When we were first contacted by NHS

“Any of us sitting in our rocking chairs,

Test & Trace it was a couple of months

looking back on our lives and telling

after the pandemic started and we were

tales of our times, we will be able to

asked to deliver their procurement

bring out the scrapbook and show

agenda and deliver to the mission –

our grandchildren all the amazing

to control the spread of COVID-19.”

things that we’ve achieved.”

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UK GOVERNMENT

With the world clamouring for solutions to combat COVID-19, and an ever-changing, uncertain landscape, the procurement and commercial challenges Jacqui and her team faced were immense. They had to establish effective commercial support, a robust commercial function and a sustainable Commercial Operating Model in a matter of weeks. Flexible contracting and speed of commercial delivery was vital to support an emergency response organisation and enable protection of public health. “I found myself managing the most complex delivery challenge across government,” recalls Jacqui. “We created a new organisation without systems infrastructure and domain experience to deliver at scale which procured more than

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September 2021

UK GOVERNMENT

“ We used a modern, 21st-century solution to connect with a modern public in a way that resonated and was easy for all to use” JACQUI ROCK

CCO FOR NHS TEST & TRACE, UK GOVERNMENT

1,000 contracts across 600 suppliers in three months – and all of this was done remotely as it was during lockdown. “We created a volatile demand with a short window of confidence where we faced supplier resistance to deliver without committed growth. I could write a book on the procurement and commercial challenges, but we stayed focused on the mission and executing the appropriate government commercial governance to deliver a service that is compliant and auditable.” Like so many responses to the pandemic, NHS Test & Trace was reliant on digital solutions beyond the development of a user-friendly app. From the supply chain solutions that manage the provision of tests to the lab systems that manage the analysis, to the test digital reporting systems, contact tracing systems and data analytics platforms – all underpinned by cloud platforms. However, it is the app, Jacqui believes, that made the most significant contribution and demonstrated the power of digital. “We used a modern, 21st-century solution to connect with a modern public

Rock Salutes Suppliers “There was an army of more than 50,000 people delivering NHS Test & Trace services (including the Army). Suppliers made valuable and innovative contributions towards the delivery of the pandemic response. They delivered multiple service, capabilities, tech and manufacturing solutions including test sites, labs, contact tracing, building the app, executing community testing, workforce and schools testing, and new testing technology. “Our suppliers acted in an outstanding way, bringing ideas and innovation to the table. It was a joint effort and the best example of supplier collaboration and engagement I have ever witnessed.”

supplychaindigital.com

in a way that resonated and was easy for all to use,” she says. “At its peak, the digital solutions were processing 300 test results per second. “We worked closely with Google and Apple, scientists within the Alan Turing Institute and Oxford University, medical experts, privacy groups, at-risk communities, and teams in countries across the world to bring a state-of-the-art testing and contact tracing product to market that is safe, simple to use, and secure. 42

September 2021

“ When the call went out across Government for a chief commercial officer, I felt compelled to stand up and be part of the solution” JACQUI ROCK

CCO FOR NHS TEST & TRACE, UK GOVERNMENT

UK GOVERNMENT

“We will continue to work closely with academia and the science industry across the world. This was a global pandemic and needed a global response.” It’s fair to say that when Jacqui began her role in NHS Test & Trace, it was a crisis response unit. There was no end-to-end process, no operating model and no team. They started from scratch and had to scale activities to contain the virus and then test the entire UK population. This already pressurised situation was magnified by constant pressure and scrutiny.

“We have been under relentless scrutiny from the media, audit committees and legal challenges,” says Jacqui, “but we knew that what we were delivering was the roadmap out of lockdown and we were saving lives. “I am immensely proud of the work and achievement of Test & Trace and being part of the COVID response team. We often remind each other when it gets tough that this is something you can be proud of for life.”

supplychaindigital.com

PROCUREMENT

September 2021

ESG:

The Value of Sustainable Sourcing Procurement’s role in a company’s ESG commitments goes far beyond checkboxes and cost-saving, says Vishal Patel, VP of Product Marketing & Technology Partnerships WRITTEN BY: RHYS THOMAS

orporate social responsibility (CSR) is a term that has been around for decades. Ostensibly a strategy for businesses to improve society as they push the bottom line higher, it is often seen purely as a reporting exercise: a nod of understanding and acceptance that a company could and should do better, jotted in the margins of quarterly financial reports, while often failing to enact any real change. But the winds have changed. CSR has been supplanted in recent years by environmental, social and corporate governance (ESG), a more proactive and measurable strategy for understanding and shaping the impact of corporate activity. Damning reports revealing the very real threat of environmental collapse, abusive, illegal and immoral labour practices, and a systemic lack of diversity and inclusion throughout global supply chains have pushed these issues to the top of corporate agendas.

It is no longer enough for organisations to be good at doing good. health and safety, carbon neutrality, sustainable sourcing or diversity and inclusion among the other challenges facing society. ESG has become the new battleground for future value, the metric by which socially conscious consumers and socially responsible investors now judge an organisation. Reputation, profit, and long-term growth are on the chopping block for those that fall behind in their responsibilities, and this shift in priorities is creating an interesting new dynamic for procurement professionals. “I think what's driving ESG is that company boards are now more focused on this topic and asking the question, ‘What are we actually doing around these things?’,” says Vishal Patel, VP of Product Marketing & Technology Partnerships. Procurement’s entire purpose is ‘actually doing things’, proactively supporting other departments and ensuring the goods and services are in place for the rest of the supplychaindigital.com

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PROCUREMENT

organisation to function. Much has been written about procurement’s shift from penny-pincher to strategic lynchpin, and it is in ESG where professionals are most readily seizing upon the opportunity. “Procurement is taking on more responsibility,” Patel says. “Procurement is now expected to manage risk, to ensure that a business is spending with diverse and small businesses, with women and minority-owned businesses, and those in local communities. And it’s also expected to ensure that a business is executing on its sustainability initiatives. “What's really interesting is that this is actually the first time that you also have a connection between how procurement, and the way it manages supply chains, has a direct impact on the reputation of a company,” he adds. “This is now absolutely key, and that's also how procurement becomes more strategic.” Procurement is still fundamentally a supporting role, however, and cannot enact change in a vacuum. Take the S in ESG,

social, the banner under which human rights, health and safety, diversity, and an array of other areas of improvement to the lives of others sit. Organisations must first address imbalances and discrepancies within their own structure and processes, areas beyond the purview of procurement. But look beyond an organisation’s own four walls, and procurement is king. Procurement controls where spend is allocated, which suppliers and partners an organisation works with. It is responsible not only for the supplier innovation that these partnerships bring, but also the baggage that comes with it. Procurement’s Impact on Company Reputation “Procurement impacts how an organisation’s ESG commitments apply to all the companies that they do business with,” Patel says. “Are they meeting the health and safety rules? Are they abiding by human rights laws and regulations in the different countries that you do business in. How are you able to monitor that? supplychaindigital.com

PROCUREMENT

“But I think the part that many miss when it comes to ESG is it's not just what procurement can do. Procurement has access to all these thousands of suppliers, and they need to better leverage those relationships to come up with innovative solutions to benefit the company.” The good news is that there are more of these innovative suppliers than ever before. Companies such as Apple and IKEA, though not infallible, demand innovation and have been open in their mission to work more sustainably. The result is a growing number of suppliers “now used to working the Apple way, or to the IKEA standard”, Patel says. “These suppliers will likely be ahead of the game because they've worked with these types of businesses. Um, but also for procurement, it's also the reverse as well. It's like procurement also wants to be the customer of choice, right? So when a supplier has a new sustainably conscious ideas, sustainably leading idea, they want to 48

September 2021

be the, or they should strive to be the first to get to that idea. Right. Because they've built a good relationship because they have a good way to accept that idea and process it. And so on. But often, often what happens is like new, new startups, for example, find it very difficult to work with larger organisations because of the procurement organisations, asking them to fill out, you know, 400 questions, it's like six week process to get in. And there's a large contract. So procurement organisations have to figure out a way to work better and foster with startups so that they get, get more innovation in foster. Right The world’s global leaders, the likes of Apple and IKEA, though not infallible, have been pushing sustainable initiatives for many years. They’ve also been pushing back on suppliers, expecting more. Current market conditions have shifted the balance of power, however. Where procurement professionals were once comfortable auditing and scoring suppliers,

PROCUREMENT

Vishal Patel TITLE: VP OF PRODUCT MARKETING & TECHNOLOGY PARTNERSHIPS

“ What's really interesting is that this is actually the first time that you also have a connection between how procurement, and the way it manages supply chains, has a direct impact on the reputation of a company” VISHAL PATEL

COMPANY: IVALUA INDUSTRY: COMPUTER SOFTWARE LOCATION: CALIFORNIA, UNITED STATES Vishal Patel is the Vice President of Product Marketing at Ivalua. Patel has spent the last 15 years in various roles within the procurement and supply chain technology market. As an industry analyst, he researched and advised organizations in various industries on best and innovative practices, digitization and optimization. He brings a thorough understanding of market trends and digital technologies that can help enterprises be more effective with their Procurement and Supply Chain strategies. He works to ensure that organizations are empowered with technology platforms that enable impactful transformation, business agility and competitive advantages.

VP OF PRODUCT MARKETING & TECHNOLOGY PARTNERSHIPS, IVALUA supplychaindigital.com

PROCUREMENT

September 2021

PROCUREMENT

placing pressure on them to rise above the competition, suppliers now have options. Shortages and global disruption has up ended supply and demand- and only the best companies attract the best suppliers. This also applies to ESG. Global leaders such as Apple and IKEA are not infallible. The companies that are the best at this are those that set the standards internally, Patel says. Global leaders such as Apple and IKEA are not infallible, but they are transparent and forward-thinking in their sustainability practices and initiatives. But what you see time and again is procurement being left out completely from this conversation. And then there are gaps in a company’s goals and objectives, and in how they actually do it.” More sustainable supply chains, greater equity for minority stakeholders and decades-long decarbonisation programmes do not happen in a vacuum.

Supplier collaboration piece. So when procurement has decided and, uh, decided to work with a certain supplier to, to improve, you know, the environmental aspect or the sustainable procurement aspect, um, what often happens is they'll, they'll put that supplier into a development programme, right? Like here, Hey supplier, we need you to improve on these aspects and we will continue doing business with you for X, X amount, right? So it could be around energy usage, right. It could be around water usage. Um, it could be around different aspects, but that's, that's what a lot of the leading, um, procurement organisations do is they'll, they'll actually develop programmes, not only to get suppliers, to give them more sustainably, innovative solutions, but also to help the suppliers improve their own, uh, processes and programmes around sustainability. supplychaindigital.com

BEYOND THE DEAL – THE POWER

OF BRAND VALUE 52

September 2021

WRITTEN BY: RHYS THOMAS PRODUCED BY: MIKE SADR

supplychaindigital.com

September 2021

Larry Phelan, EY Global CPO, shares his philosophy on the future of procurement and why value goes far beyond doing deals and cutting overheads

Larry Phelan, EY Global CPO

arry Phelan is on a decadeslong journey, the destination of which has just appeared upon the horizon. The EY Global Chief Procurement Officer moved into this position in the professional services giant in July 2009, hot on the heels of the 2008 financial crash, and after spending 10 years in the EY Mergers and Acquisitions service line. In the intervening 12 years, he has reshaped procurement’s value proposition and led a diverse group of professionals across the globe. He has also dedicated his time to the pursuit of one big question: how to elevate procurement as a strategic advisor to the board. “I think it's really important that procurement is seen as more than just doing deals and saving money,” he says. “It's about the transformation that companies are going through and getting the board to feel comfortable with procurement's unique role. That is to me a big bet.” It is a quandary that has shaped his approach to leadership and, in recent times, become a wider talking point in procurement circles. Phelan admits he is not alone in working toward this goal, however he does believe EY is well-placed to achieve it. In many businesses, procurement is a bureaucratic function that sits somewhere in the middle of the organisational structure, reporting to a department that reports to a department, and so on. It is a difficult supplychaindigital.com

We’re helping organizations connect strategy, risk and operations through technology to transform into a resilient workforce, enterprise and ecosystem that future-proofs the entire business. Reframe your future | ey.com/transformation-realized

Are you prepared for change or reacting to it?

EY Consulting: building resilience to supply chain risk Strengthening supply chain resiliency and forging true supply partnerships is a key imperative that today’s procurement organizations must tackle.

NOTE: Video screenshot appears here.

Written by: Rhys Thomas

No organization is immune to the challenges that threaten supply chains and operational continuity. But risk can be mitigated by building resiliency as an imperative — an objective for which procurement organizations are uniquely placed to achieve.

“

You have to be a good customer to your vendor — especially with regard to mitigating risks throughout the supply chain. Chris Windfelder Managing Director EY-Parthenon Ernst & Young LLP

“

Procurement is expected to create resiliency for certain risks that exist within the supply chain. Vijay Yalamanchili Partner Supply Chain & Operations Consulting Ernst & Young LLP

This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Member firms of the global EY organization cannot accept responsibility for loss to any person relying on this article.

“Procurement is expected to create resiliency for certain risks that exist within the supply chain,” says Vijay Yalamanchili, Ernst & Young LLP Advisory Services Partner. “We’re seeing a shift of those organizational capabilities in procurement, going beyond sourcing and starting to differentially invest in other areas, including contracting excellence and supplier risk analytics.” Risk comes in many forms, but can largely be defined under five categories, as identified by Chris Windfelder, EY-Parthenon Managing Director: changes in customer preferences; adoption to technology and associated cyber vulnerability; geopolitical turmoil and governmental regulation; brand perception and social media; and unforeseen supply shocks, such as COVID-19. “Building resiliency in your supply chain helps to mitigate, or at least understand, where your risk may be across those five overarching profiles,” Windfelder says. Tabletop exercises and stress tests can be invaluable tools in understanding where an organization’s biggest risks lie. He adds: “It really all starts with trying to laser in on which risks are most likely to occur, while also understanding that there’s always an unknown.” Strengthening partnerships is also key in today’s market, where the more stretched supply chains and procurement ecosystems become, the more options suppliers have. “You have to be a good customer,” says Windfelder. “Providing a true understanding of how you as a customer can add value to your vendor is equally as important as your vendor adding value to your own market — especially with regard to mitigating risks throughout the supply chain.” Data is the final tool that procurement organizations must leverage when building true resiliency. “We’re working with many of our clients to understand how they capture data, how they enhance the data that they already have with automation and AI, and then how they bring in the external information that is most valuable to their organization, because there’s a cost in doing so,” Yalamanchili explains. “These are the key elements of data and analytics that are absolutely critical for driving all the outcomes that are related to risk and building that resiliency.”

Beyond the Deal - The Power of Brand Value

position from which to enact change of any real significance or scale. “It's harder for many procurement organisations to make that jump,” he says. "At the EY organisation, procurement has a seat at the Global Practice Group table (top 125 partners at EY) and is at the top of the organisational structure because of its value proposition. So, it's appropriate for us at EY and other procurement organisations to be thinking and pushing for that change as a logical step in our evolution.” For Phelan, while organisational structure is important, it is equally “about the philosophy”. Traditionally, procurement organisations are tasked with the two core objectives of sourcing the right goods or services and closing a deal that saves the organisation money. Once the job is complete, they move on to the next. Fundamentally, these objectives are why procurement exists, and many organisations excel at them. This is quantitative value, 58

September 2021

simple to track on a quarterly basis, and rooted in the core financial principles of business. But Phelan is driving procurement at EY toward another form of value, which he calls “brand value”. “Brand value is tracked under the four (4) main pillars of Client, People, Social and Financial that define the EY Next Wave strategy,” he explains. “Procurement is driving deals beyond the aforementioned quantitative value in support of transformation, user experience, employee well-being, diversity, sustainability, revenue growth, and serving and advising clients with internal procurement team members. It's bringing forward what we do to help EY client servers, to work with clients in a better way. It's understanding the sustainability environment that's out there and working with our supplier ecosystem. It's a combination of all those things to support that goal.”

COMPANY NAME EY

Larry Phelan TITLE: GLOBAL CHIEF PROCUREMENT OFFICER INDUSTRY: CONSULTING

EXECUTIVE BIO

LOCATION: UNITED STATES Larry joined EY as a partner in June 1999. He is an experienced transaction advisor, professional services consultant and, currently, the EY Global Chief Procurement Officer. In this role, he is responsible for travel, meetings and events, real estate and facilities management, technology and talent sourcing as well as the Environmental, Sustainability and Governance Services group who drives supplier diversity for EY across the globe. Larry is a member of the EY Global Practice Group, which is made up of approximately 125 of the most senior and influential EY professionals, and serves as the Functional Transformation sponsor,a programme to redesign functional operating models across the enterprise to establish a leading-class enablement platform to drive revenues, growth, and earnings. Larry is an authentic, inclusive and inspirational business enablement leader focused on innovation. He is a keen supporter of diverse teams and suppliers and has been presented with several awards for his work in this area. Larry is a member of multiple procurement professional organisations, including the “by invitation only” Procurement 50, a World 50, Inc. international group, which provides, organises, and operates an exclusive organisation of procurement officers composed of global members from a variety of fields and industry sectors, namely, providing business networking services.

“ I think it's really important that procurement is seen as more than just doing deals and saving money” LARRY PHELAN

EY GLOBAL CHIEF PROCUREMENT OFFICER

How will business leaders set in motion a better working world? Environmental Social Governance Services

ESGS is driving an inclusive and sustainable mindset across the EY organization through our procurement strategy. Our purpose is to drive sustainability and economic impact for EY and the communities we serve.

“ To drive this procurement as a business, to get that board-level visibility, it has to be about value return. If procurement costs you a dollar, the reporting needs to show that you get US$5 in value back” LARRY PHELAN

EY GLOBAL CHIEF PROCUREMENT OFFICER

The group provides 500 brand value submissions annually, which contribute to top-line growth, innovation, and people engagement, to name but a few. But there remain hurdles in realising the true goal, one of which is a challenge as old as the profession itself: procurement has an image problem and is fundamentally misunderstood by many stakeholders outside its often tight-knit community. “Those same stakeholders will look in and say, ‘Well, what does that matter? Just do the deal for me, save me money,’ or whatever it might be,” Phelan says. “Well, I think, no, that's yesterday's organisation. What we're looking at over the years and into supplychaindigital.com

the future is an organisation that can help you transform, can help you be more strategic, and add value in a different way. So, we are working through that with stakeholders every day.” Family Matters Larry Phelan is an experienced business leader at one of the world’s largest and most influential professional services networks. His procurement group is collectively responsible for US$8 billion in annual spend across a multitude of categories, from travel, events, and talent management to technology and every piece of EY real estate. He is also a proud New Yorker of Italian and Irish heritage, who loves nothing more than a hearty serving of lasagne washed down with a limoncello, and whose prized possession is the Bronze Star medal awarded to his grandfather for service in the Second World War. His colleagues, peers, and direct reports already know all of this about him. They may also know he loves going to the opera and, rather conversely, counts AC/DC among his favourite bands. None of this is a coincidence; Phelan is an open and approachable professional, a mentor to many, and a source of knowledge and experience for many more. He is a major proponent of enacting change from within, and that begins with what he considers the “procurement family”. “These are the individuals who sit within the procurement organisation, and we absolutely consider our suppliers part of that procurement family,” he says. “What we're trying to do is instill a consistency of how they interact with stakeholders, how they should bring data to stakeholders, how they bring transparency of issues to stakeholders, and how they are proactive in solving problems 62

September 2021

“ What we're looking at over the years and into the future is an organisation that can help you transform, can help you be more strategic, and add value in a different way” LARRY PHELAN

EY GLOBAL CHIEF PROCUREMENT OFFICER

for stakeholders. So, it's making sure that the family acts and thinks and reports and brings data the same way.” Engendering a familial atmosphere is no easy task given the fact Phelan’s procurement group speak 47 languages and are situated in 35 countries. “The EY organisation is centre-led by design so that our stakeholders feel that each and every one of their goals and objectives are satisfied by the people who sit in their country, speak their language, and understand their culture,” Phelan says. “That also means we have key performance indicators and reporting that get set from the centre and then rolled out to all of our global teams. “But it's about making sure that members of our team are healthy and that their wellbeing is looked after,” he adds. “Especially over the last year and a half — with the COVID-19 pandemic — making sure that we're bringing some levity to their lives has been more important than ever. And even before the COVID-19 pandemic, getting connected on a regular basis, hearing what's on their minds, and introducing opportunities for them to raise concerns about certain issues throughout the organisation makes you truly feel like you're a family.” supplychaindigital.com

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Transformative Change Extending the procurement family philosophy to suppliers is a natural extension and one that forges stronger connections and leads to better results. “We put a lot of pressure on our suppliers to bring innovative ideas to us. I mean, that's what they are supposed to do, and they are doing that because we have a number of true success stories,” Phelan says. One example is a sustainability drive in the hotel sector. “How often does one really need to have the towels in the hotel room or the sheets on the bed washed? You go into a hotel today, and they’re washed every night. Well, now you can check that card and opt out,” he says.

To enhance well-being for their travellers, procurement family members in the talent category worked with suppliers to provide stretchy resistance bands on longhaul flights to relieve tension. These are ostensibly simple projects, but, as with the handful of other examples Phelan shares, they belie the nuance of the procurement teams that worked diligently and tirelessly on them behind the scenes. “Getting that mobilised across an organisation of our size is a tough task, but it's an important thing to do,” he says. "So, there are examples like that, where we're trying to go beyond the quantitative value into the brand value.” supplychaindigital.com

It all folds into Phelan’s brand value philosophy, the key to the overarching goal of elevating procurement beyond black and red ink. “I'm not saying that procurement should have a seat on the board. What I'm saying is the content of what procurement brings to the table, for me personally, needs to be packaged differently so that the board fully understands the risks of something not happening, to the value that's being sacrificed,” he says. Driving procurement forward as a business — Phelan considers EY his foremost client — will be key to this elevation. He adds: “To drive this 66

September 2021

procurement as a business, to get that board-level visibility, it has to be about value return. If procurement costs you a dollar, the reporting needs to show that you get US$5 in value back. It's the transparency through the reporting that gets that in front of people, to showcase those examples.” Procurement is at the crossroads of major change. The COVID-19 pandemic redefined the importance of an organisation’s sourcing professionals, just as geopolitical turmoil, natural disasters, and terrorist attacks have in the past — and will continue to do in the years ahead. But Phelan senses the road is levelling out.

“ Brand value is about driving user experience. It's bringing forward what we do to help EY client servers, to work with clients in a better way. It's understanding the sustainability environment that's out there and working with our supplier ecosystem”

“The future goal for the procurement organisation is to make sure that the global executives on our board at the EY organisation fully understand the value proposition beyond the quantitative value, getting into the brand value and the transformation value,” he says. "If we're sitting here a year from now, two days before the end of fiscal 22, I would expect to see more of a regular cadence with our global executives on a number of the transformative events that we have active right now. If we're doing that, then I think we’ll have had a good fiscal year.”

LARRY PHELAN

EY GLOBAL CHIEF PROCUREMENT OFFICER supplychaindigital.com

SUPPLY CHAIN

SUPPLIER INNOVATION: THERE’S MORE VALUE IN THE CHAIN Collaborative ecosystems bare innovative paths to risk mitigation, revenue, stability and future-proofing WRITTEN BY: RHYS THOMAS 68

September 2021

SUPPLY CHAIN

ntil very recently, the supplier that delivered on time, on or under budget, and stuck to the letter of the contract was the golden standard by which all others were judged. Whether or not a supplier of such infallibility truly exists - or can be expected to - is still up for debate, but these were the qualities procurement leaders meticulously sought out. There are, after all, a great deal of efficiencies and savings to be found in stringent adherence to rules and guidelines. If cost is the measure, however, even this conventional wisdom is being tested. In a survey conducted by McKinsey, Reimagining Procurement for the Next

Normal, the organisations that regularly innovated in partnership with their suppliers were the ones that saw the biggest earnings growth - achieving up to 10% more. Procurement leaders already know this; 88% of the survey’s respondents said they were already engaged, or were planning to start, joint-innovation initiatives with their suppliers. The simple fact is that there is more value in the chain. If organisations are to overcome today’s challenges, greater reliance and support for innovation at all points in the supply chain will be necessary. Optimisation is no longer enough; supply chains must be agile and resilient in their elasticity. supplychaindigital.com

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THE ULTIMATE PROCUREMENT & SUPPLY CHAIN EVENT SEPTEMBER

28th - 30th GET TICKETS HERE

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Creating Digital Communities

SUPPLY CHAIN

“ FOR SUPPLIER INNOVATION TO FLOURISH THIS STATE OF PLAY NEEDS TO TRANSFORM FROM COMBATIVE TO COLLABORATIVE” MARK PERERA CEO, VIZIBL

Ask any supply chain or procurement executive what their biggest challenge is and you’ll get roughly the same answer: everything. Each issue will impact organisations by varying degrees, but there are dozens that are common to all. Take the climate crisis. While organisations have taken great strides in addressing their own carbon emissions, pledged trillions in investment towards renewable energy and sustainable sourcing initiatives, the ultimate goal of keeping global warming

below 1.5c is an impossible task to tackle alone. Scope 3 emissions, the greenhouse gases pumped into the atmosphere by each member of the value chain, requires collaboration and, ultimately, innovation. Unlocking Supplier Innovation To unlock the value of that innovation, procurement organisations will need to adapt. The traditional dynamic of forcing an extra percentage point in savings or cutting a cost for the next quarterly report will need to change. Relationship management must evolve from a “battleground for power”, says Mark Perera, CEO at Vizibl. “For supplier innovation to flourish, and for organisations to begin reaping its benefits, this state of play needs to transform from combative to collaborative.” supplychaindigital.com

SUPPLY CHAIN

“ IN HIGHLY COMPETITIVE MARKETS AND VERTICALS EVEN SMALL INNOVATIONS MAKE THE DIFFERENCE BETWEEN LEADER AND LAGGARD” MARK PERERA CEO, VIZIBL

September 2021

If procurement leaders did not realise this at the begin of 2020, the pandemic has taught them a harsh lesson over they past 18 months that they won’t soon forget. “As businesses attempt to tackle these ever-mounting threats to their operations, profitability, and in some cases even their continued existence, embracing a supplier innovation model becomes crucial,” Perera says. Becoming a customer of choice has become crucial not just for growth, but for survival. In an environment where shortages persist at every level of the supply chain, the buyer-vendor dynamic has shifted from rigid and transactional to collaborative. The value of a supplier now goes far beyond its ability to deliver a product or service. Businesses need solutions to pressing issues, they need them now, and they can’t create them alone. “The ultimate goal should be to become the customer of choice with strategic

SUPPLY CHAIN

suppliers – a status which grants you privileged access to supplier ideation, existing IP, and future innovation,” says Perera. “In highly competitive markets and verticals where even small innovations make the difference between leader and laggard, this status confers considerable competitive advantage.” It’s true that partnering on supplier innovation is not a new concept in 2021, but is still difficult. Oil and gas giants are quickly rallying their suppliers to provide groundbreaking green energy solutions. Car and consumer electronics brands are pressuring their suppliers to develop new avenues to manufacturing and source semiconductors, sidestepping the biggest foundries that have failed to keep up with demand. Time and again, Perera says, organisations routinely fall short on collaborating in a fashion that is “agile, efficient, transparent” and able to innovate at scale. “Many organisations consider

themselves leaders in collaboration, but frequently use siloed, offline ways of working that lack systematic people and process governance,” says Perera. But technology has caught up with the ambition. Technology is Paving the way for Supplier Innovation Digital transformation has broken down the barriers between organisations and their suppliers. Centralising communication, accountability and transparency through next-generation collaboration platform such as Vizibl, which Perera co-founded, has revolutionised the way organisations interact. As well as building trust, Perera says the platforms provide a unified and consistent governance process to bring structure to an array of simultaneous projects. These aren’t just contractual obligations, but about defining the quality and mitigating the costs and other ramifications associated with delivering past deadline. supplychaindigital.com

SUPPLY CHAIN

“ [TECHNOLOGY] POWERS SUPPLIER COLLABORATION AT SCALE, AND FOSTERS INNOVATION AND SUCCESS AT SPEED” MARK PERERA CEO, VIZIBL

September 2021

SUPPLY CHAIN

“Through adopting Vizibl’s collaborative platform and approach to supplier relationships, a large Telco customer achieved a faster and more effective proof of concept process that not only increased ideas capture, but also increased the conversion of PoCs into fully realised innovation projects, delivering supplier-led innovation back to the business in a much shorter time frame,” Perera says. “They can now track and forecast value generation from supplier-sourced innovation through realtime reporting dashboards in Vizibl, enabling the procurement team to refine and grow its supplier-led innovation strategy.” “The power of technology to expand your efforts is also a vital consideration; it powers supplier collaboration at scale, and fosters innovation and success at speed,” Perera adds. But technology alone is not enough. Procurement leader are rapidly transforming their organisations towards new, more strategic processes such as outcome-based buying, which involves “carefully detailing the problem you’re looking to solve, rather than the solution you think you need to buy”. This mindset moves the dynamic beyond transactional product purchase, Perera says, and towards the types of collaboration that strikes at the heart of the issue at hand. Not all supplier innovation is linked to solving problems, however. Organisations already adept at working collaboratively with suppliers are focusing on the long-term goals: better customer experience, greater representation for minority-owned business, and new avenues for revenue beyond their core capabilities. All organisations around the world have been forced to restructure around the impact of COVID-19, but it will be the organisations that fully embrace the innovation of their suppliers that thrive in the unsteady years to come. supplychaindigital.com

VODAFONE PROCUREMENT COMPANY

September 2021

VODAFONE PROCUREMENT COMPANY

SHAPING THE FUTURE OF

PROCUREMENT WRITTEN BY: RHYS THOMAS

PRODUCED BY: GLEN WHITE

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VODAFONE PROCUREMENT COMPANY

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

September 2021

VODAFONE PROCUREMENT COMPANY

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

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

VODAFONE PROCUREMENT COMPANY

Title of the video

insights to enable business foresight. In other words, enabling fully end-to-end connected solutions that provide transparency about what is happening in their area of spend. Extending the reach to identify external factors that will influence the business and leveraging artificial intelligence to advise and recommend the best course of action to minimise risks and maximise the value for the organisation.” Plaza-Bartsch joined Vodafone 14 years ago in the nascent era of digitalisation, when centralization and standardization were the buzz words of the hour. That initial unification process took some years to accomplish but resulted in “a data foundation for the supply chain organisation” that has been instrumental in accelerating the digital transformation over the past five years. “The degree of insights that we can get from the data that we've created over those years is tremendous,” says Plaza-Bartsch. “We can see how our operations perform in realtime, identify patterns and behaviors in our business and take laser sharp actions to drive performance. We can see how our users are 80

September 2021

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

GLOBAL HEAD OF SCM DEVELOPMENT, OPERATIONS & DIGITAL, VODAFONE

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

VODAFONE PROCUREMENT COMPANY

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

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

1982

Company founded

€44bn+

Revenue in the 12 months to 31 March, 2021

EXECUTIVE BIO

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

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

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

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VODAFONE PROCUREMENT COMPANY

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

GLOBAL HEAD OF SCM DEVELOPMENT, OPERATIONS & DIGITAL, VODAFONE

VODAFONE PROCUREMENT COMPANY

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

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

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

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VODAFONE PROCUREMENT COMPANY

actually maximise their contribution to the organisation, rather than being consumed by administrative activities.” Today that score sits 117 points higher at positive 84. “User experience is and will always be something to chase, PlazaBartsch admits. “This is basically because our expectations as individuals continuously evolve. We are all exposed to great user experience in everyday applications we have in our private lives, so naturally our expectations will not be different at work.” The improvement achieved in user experience represents a complete turnaround in the course of just three years. That development will continue as Vodafone continuously influences the innovation roadmap of its partners, but also through a new approach to partnerships which is taking shape through the development of new 88

September 2021

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

GLOBAL HEAD OF SCM DEVELOPMENT, OPERATIONS & DIGITAL, VODAFONE

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

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

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

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

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

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

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

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KEY PARTNER: BLOCKGEMINI

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

GLOBAL HEAD OF SCM DEVELOPMENT, OPERATIONS & DIGITAL, VODAFONE

September 2021

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

VODAFONE PROCUREMENT COMPANY

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

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

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FEATURE HEADER LOGISTICS

PALLETS: THE HIDDEN

LINCHPIN OF THE

SUPPLY CHAIN Shortages of lumber, transport, and tracking measures have made pallets incredibly difficult to procure. What’s going on? WRITTEN BY: ELISE LEISE

emand for pallets is as high as it’s ever been in the 15 years that I’ve been in the business’, says Chris Lasseter, Summerford Pallet Company, in PalletEnterprise. ‘Lumber prices are astronomical if you can even get wood. Core prices are going through the roof. Nail prices are up. Fuel prices are up’. Ask most supply chain leaders how their pallet strategy is going, and you’ll find their responses startlingly similar. Pallets transport fresh produce, chemicals, pharmaceuticals, machinery, and construction materials all over the world. And they’re rapidly gaining attention as supply chain teams find it more and more difficult to procure them on schedule. 94

September 2021

Why Do Pallets Matter? Imagine shipping in bulk. You shift your packages onto a pallet and secure them with straps or shrink wrap. Following that, workers drag or drive the pallets across the factory floor to load them on trucks, where they stack up nicely. Pallets reduce loading time, improve worker safety, make logistics more efficient, and protect your products. In addition, they’re ideal for SMEs and e-commerce since they allow 3PL companies to ship more products for less. As the UK’s Association of Pallet Networks (APN) puts it, pallets help you achieve faster turnarounds and higher customer satisfaction. In 2020, its members delivered

LOGISTICS

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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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LOGISTICS

“ THE MARKET WASN’T USED TO THIS KIND OF ACTION. THE PRICE OF WOOD HAS ALWAYS BEEN FAIRLY STABLE” LUC GRAUWET

VICE PRESIDENT, PGS GROUP

27.8 million pallets, with a 3.2% year-on-year growth. In short, pallets are the linchpin of a successful supply chain. That’s why it’s a wee bit concerning that we’re facing—you’ve guessed it—a massive shortage of pallets. Why Do We Have A Shortage? The lovely wheel of cause and effect. Simply put, pallet makers can’t procure many of the materials they need to make the pallets in the first place. That’s wood for the planks you nail together, wood treatments to renovate old pallets, and steel for the nails you need

to hammer in. That’s why, back in April, wood pallets rose by more than a 400% increase. Bloomberg reported that US$9 wood pallets spiked to US$15—not shocking by itself, but drastic once you multiply that by hundreds of pallets. What’s more, there’s a dearth of UK truck drivers. In contrast to 15% year-on-year growth in freight volumes, there’s a major shortage of men and women to transport it - almost 80,000, in fact. In part, this is due to Brexit and a loss of European manpower, but we can’t overlook the new IR35 rule— which ensures that contractors pay the same national tax and insurance rates as equivalent employees—an ageing workforce and new cross-border trade restrictions. supplychaindigital.com

LOGISTICS

Finally, the pallets that circulate around England’s roads and freight routes aren’t necessarily in the right place at the right time. Some have suggested using improved RFID (radio-frequency identification) to track where pallets are and where they’re going. But while we’ve seen an increase in companies offering track-and-trace solutions in recent years, introducing any new tech will take time. How Are Logistics Companies Affected? They have to pass costs on to their customers and consumers. Weber Logistics, for example, has started to update its rates per pallet each Monday based on current prices. ‘We’re doing everything that we can do to buy pallets at the best market price’, Robert E. Lilja, CEO of Weber Logistics, explains. ‘We buy in truckload quantities. Unfortunately, demand is currently exceeding supply, and many pallet vendors won’t accept purchase orders from new customers’. As a result, pallet makers doubled down to serve their current customer networks, leaving many out of the loop. ‘Every pallet that we provide our clients has turned into a net loss’, says Lilja. Pallet prices have risen by roughly 100% across the board. According

September 2021

to Bloomberg, the Producer Price Index (PPI) shows that the pallet category has risen for 13 straight months—increasing by 31% this year alone. When Will It Return To Normal? Not tomorrow by any stretch of the imagination. B&B Albany Pallet Company, located in one of the highest lumber cost regions of the US, expects a lengthy recovery. ‘Our speculation is that we may see a return to normalcy in late Q4’, says Dorian Orellano, Pallet Sales, Design & Production. ‘But considering the supply chain bottlenecks occurring throughout the world, [the shortage] may persist into mid-Q1 2022’.

LOGISTICS

Industry leaders think that lumber prices will also stay high throughout 2021. ‘Wood is a raw material, just like iron, gas, or oil’, says Luc Grauwet, Vice President of PGS Group. ‘Price variations can be significant, or even speculative’. He notes: ‘The market wasn’t used to this kind of action. The price of wood has always been fairly stable’. According to John Lieber, President of Profile Technology, high lumber prices will continue through 2021 but drop back down to normal in the summer of 2022. For many, however, that’s too long to wait. Reimagining the System Do we need a radical re-envisioning of our pallet supply chains? Some argue that there are better, more sustainable options to building and buying thousands of wood pallets per year. And for many, it’s a decision based on cost. Rick LeBlanc says: ‘A closed-loop or pallet retrieval programme—if done right—can dramatically reduce your pallet spend’.

What’s the Association of Pallet Networks? Founded In: 2006 by current chairman Paul Sanders. Made Up Of: 600+ hauliers, 24,400+ vehicles, and 13mn+ square feet of warehouse space. Purpose: Member hauliers work together, collect and deliver palletised freight, take it to a central hub, and make next-day deliveries. Benefits of Pallet Networks • 98% reliability • Reduced congestion • 800 fewer vehicles on the roads per day • 73% average vehicle fill (compared to the industry average of 51%) • Less than 6 miles away across most of the UK

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LOGISTICS

“ WE’RE SEEING CUSTOMERS PULL AWAY FROM THE ROLLER COASTER RIDE OF NEW LUMBER PRICES BY SWITCHING TO RECYCLED PALLETS” RONNIE BARRETT

REGIONAL MANAGER, PALLET SYSTEMS AND RECYCLING

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September 2021

LOGISTICS

That means either refurbishing used wooden pallets or procuring ones that are made from recycled materials. ‘Lack of supply has caused increased cost in every sector from cores and nails to labour and new lumber’, explains Ronnie Barrett, Regional Manager of Pallet Systems and Recycling. ‘We’re seeing customers pull away from the rollercoaster ride of new lumber prices by switching to recycled pallets’.

But more fundamental than what materials we use is how we communicate these new systems to customers. Increased shipping and freight prices blindsided many. As a result, pallet companies are starting to make a greater effort to reach out. ‘Now more than ever, we have to educate our customers about what’s happening in the market’, says Wes B. Bonine, President at Popp Brothers Lumber. ‘With improved transparency, they can make more informed decisions’. Adds Rick LeBlanc: ‘You can look at the 2021 pallet crunch as an opportunity’. We now need agile systems based on ever-changing supply and demand. As a result, lumber and logistics companies have resorted to monthly pricing. Pallet procurement teams have started to seek out plastic and recycled options. And pallets, once an everyday fixture of our supply chains, are now at the forefront of the conversation.

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