social awareness in a business culture
On page 14
Teva
Global Optimisation in Three Stages
On page 62
Lonza Setting New Precedents in Supply Chain
On page 50
Schneider Electric
Doing More, Better
On page 36
Kent FRS
Fighting Fires, Championing Change
On page 76
Transforming at pace
Arnold Chatelain
outlines what signifies success in procurement transformation
On page 88 Calculum Generate Free Cash Flow!
What’s inside this edition?
Our front cover star is Signify’s Arnold Chatelain who just loves driving transformation projects. With 25 planned for this year it is a case of eat sleep repeat as 5 years into the start of their journey, Signify’s procurement function shows no sign of settling for mediocrity.
Responsible sourcing case studies are few are far between, so we are delighted to showcase how pharma and biotech giant Lonza have approached and conquered.
Moving back to transformation but sticking with Pharma Teva’s Noam Shamir, the company’s soon-retiring Senior Vice President for Global Supply Chain discusses an expansive three stage supply chain transformation.
In fact, we have loads of great content from Schneider Electric’s Global Procurement Capability Centre who are transforming the art of transformation, across to Dormakaba’s Nina Bomberg offering the knowledge behind why Indirect Procurement should not be the fall guy.
We hope you enjoy
The Business Profile Team
It was essential not to start by thinking about the solution. Many companies jump straight into selecting a tool or platform, but we took a different approach. We believe that the journey to value is quicker if you first slow down, analyse the problem, identify the root cause, and then begin the transformation process from there.
Arnold Chatelain
Signify
Feature on page 76
Kormotech is renowned in Ukraine as the country’s first producer and biggest manufacturer of pet food, but the past two years have delivered unprecedented challenges. The war could have been a test of resilience and defence, but Chief of Supply Chain, Ulyana Fitsa explains how confidence in Ukraine’s victory has been translated into a proactive expansion plan, and a defiant mission to forge an exciting future for Kormotech, its people, and its partners.
Hi Ulyana. As one of the original empoyees of Kormotech, you’ve had a front row seat for its rise to prominence. How could you possibly sum up the extent of growth over the past two decades, as a way to introduce the company?
As you say, I’ve been with the company for 20 years since its inception in 2003. Kormotech is a secondgeneration family business belonging to the Vovk family, and they initially hired me as a translator. It’s fair to say that my role has evolved almost as much as the organisation since then.
Kormotech was the first company in Ukraine at the time to produce pet food to international standards. However, as a newcomer to the industry, the family invited international consultants into the project to ensure we got off to the best possible start. Hence the need for a translator.
I assisted the group of US consultants who supervised the construction of our first pet food plant in the Lviv region. This evolved into Kormotech becoming the first pet food manufacturer
in Ukraine that met all international standards relating to the pet food itself, its ingredients, and the equipment used in production.
Fast-forward 10 years and I was promoted to the role of Chief Supply Chain in March 2013, as a result of my strong insider knowledge of (and experience with) the entire production process and supply needs.
And if we fast forward another 10 years?
Now, we produce more than 650 SKUs from more than 2,000 ingredients, and I am responsible for the whole process of on-time delivery and quality control. I essentially put best practice in place to ensure we can produce premium and super premium pet food products.
At present we occupy a third of Ukraine’s market, and are 55th
in the global pet food industry’s TOP100. We will always be Ukraine’s founders of the pet food industry, though.
Before we dive into some of the more challenging aspects of your role and the supply chain landscape, what would you, more generally, attribute the company’s success to over the past 20 years?
We have a belief that pet food standards are just as important and demanding as baby food. It’s a value we always encourage in every new starter or new business partner, and if they don’t share this philosophy or are not on the same page, then we won’t be able to find common ground.
For my raw material partners, for example, if they don’t understand why our quality standards are so high, I always tell them that there is a psychological similarity between how we feel about pets and how we feel about our children. We now have the same attitude to our dogs and cats as we do to our children - we care for them, and they make us happy.
They deserve the best.
When striving for the best from a supply chain management perspective, what challenges do you typically face in your role?
Pet food supply chains are complex operations and dozens of critical decisions are made at both strategic and tactical levels by company executives, CSCOs and ordinary workers to keep the system running smoothly and on time. Any disruption, security risk, labour shortages, unexpected governmental regulations or export limits can have a major impact on the company’s resilience levels.
I guess, sadly, that Ukraine serves as a current example of how these challenges can come together at the same time to create extremely testing conditions?
Sadly, yes. Since February 2022, when the invasion of Ukraine began, all of the aforementioned factors have become a reality for Kormotech. But these risks are not confined to Ukraine’s borders. It has obvious implications for the European and global economy and its supply routes, which have suffered from blocked Black Sea transport corridors
or have had to adapt to expanding sanctions and other new risks that may emerge as black swans.
And then there’s the consumers to consider…
Absolutely. Customers expect greater speed of delivery and more expansive product choice, despite our constraints and restrictions. As a global pet food market, we need to respond to various growth forecasts being made, all while supply chains in many parts of the world are feeling more vulnerable than before and facing more unprecedented risks than before.
It’s a strategic dilemma that requires a new approach and a new dynamic to decision making, to ensure ongoing supply chain efficiency and wider business resilience.
How has this “new dynamic” transpired for Kormotech?
When Kormotech faced the real risks of disruption to logistics routes and supply chains, a series of decisions were taken to balance the situation and renew production and delivery, and this experience could be relevant to any pet food
producer facing a crisis or uncertainty in logistics and supply.
To manage the super-crisis of wartime, we switched to a mode of flexibility and adaptability in production, logistics, supply and management. Some days there was no hierarchy, and people previously separated by four levels of subordination worked side by side. Specifically, the logistics and supply chain team was rebuilt as a horizontal structure reporting directly to the CEO.
We also developed more than one backup plan. There were many ‘plan Bs’ designed to respond to different risks and rapid changes. For instance, Ukrainian companies faced a short-term ban on imports in 2022. This hit many manufacturers that rely on foreign suppliers, including us, but we quickly looked to solve the problem.
A key factor for us was the close partnership we share with local suppliers in Ukraine, who we often treated as business incubators. We relied on their raw materials and packaging, helped them relocate, or
Kormotech was the first company in Ukraine at the time to produce pet food to international standards. However, as a newcomer to the industry, the Vovk family invited international consultants into the project to ensure we got off to the best possible start.
extended our payments during the crisis when export-import restrictions were in place. In a crisis situation, shared values and quality standards became a guarantee of continued supply despite the highest risks.
The practical part of the strategic contingency plan was to relocate or expand our warehouses to a safer region or a more open market. That’s why we accelerated the opening of a warehouse in Poland in 2022 that was
later transformed into an operational hub and the point of further expansion into Eastern European markets.
Backed by these solutions, we have created a secure ecosystem that is guaranteed to work in the event of force majeure.
That is a quite incredible level of adaptability in such a short timeframe and under the most intense pressure. It is one thing to show resilience, but to actually put in place growth and
expansion plans is quite something.
Yes, we continue to grow. A week after the war started, we decided to run the business on the basis of a scenario where Ukraine is victorious. We therefore looked to continue our expansion strategy and go to international markets as priority goals.
One of the main conclusions of 2022-2023 was to increase the speed of entering foreign markets… to withdraw the old timeline and make a new one.
The war forced us to make a bolder move outside our own country. We removed our fear of limits, and our fear of distances. Today we export to more than 42 countries in Europe, Asia, America and Africa.
Some markets and regions are completely new for Ukrainian companies, but we invest in this expansion, experiment, go through various experiences, and then we succeed.
How far have these new distances taken you so far?
In 2023, Kormotech signed its first contracts with distributors in South Korea and Malaysia. These are new markets for the company. Expanding its marketing search in Asia, Kormotech presented its brands for the first time at the International Industrial Fair in Kobe, Japan.
Closer to home, Kormotech’s Lithuania’s expansion has also been significant, involving an investment of €60 million euros, granting us the status of a major investor, which guarantees
access to investment incentives and tax exemptions. It is important for us, not only in terms of business development, but also in terms of reputation, to be on the same list with as many as 30 other major investors in the Lithuanian economy.
We now export more than 30 percent of our production and we are increasing this share. Our strategic goal is to be among the top 30 companies in the world by 2028.
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When a company is growing as fast as you are, and is as ambitions as you are, it’s easy to lose what made you so special to begin with. How important has it been to retain the familyfeel culture even as your horizons and aspirations grow?
The culture doesn’t change, and it’s partly my role to continue the education that I mentioned before, with new employees and partners.
In 2003 and the years that followed, people had little knowledge of the benefits of pet food and the idea that quality rations improved their pets’ wellbeing. This was the culture we nurtured and later we turned it into a mission to change attitudes towards pets in the entire region of Central and Eastern Europe. We inspire people to enjoy their role as pet parents and provide them with high quality pet food that supports the health and wellbeing of their pets.
For my part, I had to educate suppliers in Ukraine, who often had misconceptions about pet food standards. This is one
of the areas where we have been successful. Local manufacturers, mediumsized companies and even large agribusinesses have received a lot of help in terms of quality standards, and have learnt to meet our requirements and remain long-term partners.
These relationships and these stories of cooperation laid the foundation for future sustainability in times of great crisis. This business education was a very good investment and both sides continue to benefit.
After such a significant couple of years, is it possible to make solid predictions for the years to come? What are your personal hopes for Kormotech’s supply chain function in the immediate future?
Indeed, my biggest challenge is always the uncertainty that exists in the supply chain, which means we have to be as flexible as possible. What’s unique about my job and my team’s job is that the supply chain is always a team effort. You can’t do it alone because there’s too much responsibility and too many points to control.
My team of 160 is always thinking about how to make the best of every situation. They’re not afraid to take responsibility, or maybe even a few risks. Most people in my team have 10 years or more experience, and they help me make the right decisions, because sometimes they see more than I do.
It is a combination of teamwork, risk management and leadership. Everyone in my team, including me, is ready for change and challenge. We believe in our strategy and will continue to focus on doing the best we can to make it a successful strategy.
Teva Pharmaceuticals is undergoing a three-stage supply chain transformation under the guidance of Noam Shamir, the company’s soon-retiring Senior Vice President for Global Supply Chain. After “fixing the foundations”, attentions have turned to more expansive and innovative ways to align supply and demand across a truly global operation.
Hi Noam. Working as Senior Vice President for Global Supply Chain at any company would be a challenge. However, when the company in question is as ‘global’ as yours, the challenge is even greater. Please introduce us to this role and responsibility…
My responsibility is, simply, to align supply and demand. But, as you say, this implicates 60 manufacturing sites and 60 markets around the globe. It’s a ‘many to many’ interface where many sites are supplying many different markets. And of course, this management and aligning of supply and demand must be done while
optimizing the working capital of the company - the cash flow of the company –to make sure we’re providing the right product at the right cost at the right time, and at the right quality.
The complexity doesn’t stop there, though.
Traditionally, Teva is a company that has grown through mergers and acquisitions, with the latter the most familiar route. Through this approach, we
have ended up with many, many different ERPs – a very diverse system with more than 20 different ERPs, which naturally works against the idea of optimising the endto-end supply chain.
So, three years ago when I began my current role, we initiated a refresh of our supply chain strategy, with the main aim of having an end-to-end, concurrent, realtime solution to align supply and demand through one system.
Given the infrastructure you described, where did you even begin with this refresh?
Well, indeed, we realised that we had major gaps and there were things we had to do to fix our foundations first before moving to the next stage. First, we established that we wanted to use SAP’s Advanced Planning Optimizer as our basic tool, and made sure this was deployed as standard across our 60 sites. This standard set out how to use the system,
For the IBP implementation
we chose KPMG to be our partner. The profound under-standing of corporate financial, specifically on SAP environment with vast experience in change management was key for successful implementation and helped us to avoid critical mistakes.
Noam Shamir
what planning parameters to use, and how we should be working as a whole organisation. So, we had a standard way of planning our supply at that point. Naturally, there is no “one solution fits all” to our diverse portfolio so we applied a segmented approach where products are planned based on their criticality to the business (ABC), and the volatility of their supply and demand patterns.
The segmented approach enabled minimal risk to the business with minimal working capital impact.
We also extended our planning parameters. Until then, we had a constrained planning horizon of four months, and the next four months beyond that was unconstrained. We wanted to extend the planning horizon to two years to better anticipate the capacity, headcount, and capex investments needed. Of course, this brings better visibility.
Another element is that we improved our demand sensing by introducing artificial intelligence and machine learning as part of our focused initiative.
This was a very successful initiative where we were able to significantly improve the demand signals that we got from the market, which is of course essential to make sure that we have good supply.
And the final element in terms of fixing the foundations was addressing human capability. We’ve worked really hard on upskilling our people to make sure they are prepared for this digitisation effort. This included courses for planners, a planners’ academy, a special programme for supply chain leaders and project management. We really worked very hard on people engagement and making sure that people understand what the strategy is, and what they need to be able to do to help us in meeting that strategy’s objectives.
How long did all of this take?
This all took around two years, the ‘fixing the foundations’ stage. We’re technically still working on it as improvement needs to be continuous, but we have now reached a level where we can begin the second stage of our plan.
So here, the focus is on IBP (Integrated Business Planning), end-to-end. We have deployed SAP IBP (Integrated Business Planning) as our planning tool, and we’ve done this after developing an operating model where we asked ourselves: ‘what is the standard way Teva is doing supply chain planning?’
Another element in this stage is the end-to-end collaborative planning, extending our connectivity both upstream and downstream. Upstream meaning our vendors –making sure we have a digitised connection with them with the right level of transparency. And then of course, downstream, to our customers. This stage is ongoing as we continue to explore and deploy several tools that will allow this to happen, with a view to ending that stage some time in 2025.
Dare I ask then… is there a stage three?
And what does stage two comprise?
Absolutely! A stage three will follow straight after. And this is really about the modernisation and complete digitalisation of our supply chain. By this, I mean exploring and embedding new technologies such
Naturally, there is no “one solution fits all” to our diverse portfolio so we applied a segmented approach where products are planned based on their criticality to the business (ABC), and the volatility of their supply and demand patterns.
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as machine learning, the internet of things, blockchain and many others, to make sure we have the most sophisticated tool suite possible.
All of this will be supported by an extended control tower that allows that end-to-end visibility and management.
As a high-level overview of this future, this is the kind of ecosystem we’re trying to build. We’ve made very nice progress so far, and can already see from the middle of the second phase how these changes are benefitting us. Every aspect of our supply chain performance, our service, our efficiency, our customer effectiveness, our inventory positioning and our overall customer proposition has been improved. It’s been fantastic so far!
You’ve covered quite a broad time period there in terms of the overarching transformation plans. Just to take you back to the start of this process, though – what were the main challenges or bottlenecks that triggered such comprehensive steps to be taken?
Well firstly, it was a very challenging period of course, and not just because of COVID. The macroeconomic and geopolitical landscape had huge impacts on everyone’s supply chains – experts have called it the biggest disruption since World War Two, and probably for a reason.
The ripple effects touched all parts of the operation. Recruiting people, sourcing raw materials, managing logistics… and then, in pharmaceuticals, the direct impacts of COVID were also very stern in our space.
The headwinds really exposed shortfalls we had in terms of transparency, disconnections between systems, the issues of siloes, and so on.
What made you turn to SAP specifically to help guide the transformative first steps?
We have long had a strategic partnership with SAP, so it was always a priority to see what they could deliver for us.
Specifically, we found the IBP (Integrated Business Planning) and the S/4HANA to be effective solutions,
complemented by an external solution that we adopted for detailed scheduling. This was where we incorporated Microsoft Azure into our SAP environment.
In each case, it was my responsibility to show to the ultimate decision makers and boardroom, the challenges of working in siloes and how that impacted our working capital. I received such good support from our CFO in particular, which is really important. They quickly understood what we were trying to achieve and helped convey the right message. Ultimately, this clarity and alignment of what we needed has helped to speed up deployment.
That makes sense, given the amount achieved in a relatively short space of time…
Exactly. I’ve even been surprised by how well the whole strategy has been adopted and driven by people outside of supply chain. They can see the advantages, are willing to explore tools we’ve never tried before and can see what a real-time, end-to-end solution would do from an optimisation perspective.
There will always be difficulties along the way but when everyone is agreed on the bigger picture and the direction we want to head, then people also get encouraged by the wins along the way – the feedback from customers and vendors.
This points to a cultural transformation as much as a digital one?
Absolutely. We used to have supply chain planning and financial planning and commercial planning, and they weren’t always aligned. Now, with one system and
one set of numbers we’re speaking the same language and decisions are made much more quickly.
And that filters to the customer too. When you’re reducing huge amounts of inventory and start doing much more with fewer
corporate resources, they ultimately see the results of that efficiency just like we do.
According to our own metrics, our customer service level has improved by 2.5 points to 97.5 percent, we have reduced almost 30 days on hand in terms of inventory, as well as reducing almost half a billion dollars in our write-off.
Compare that to where we were in 2020, despite the headwinds we discussed, and the argument for change is very clear.
One aspect we haven’t discussed that I know is important, is sustainability…
For sure, this is so significant in everything we’ve been doing. Teva was the first pharma company to issue sustainability-linked bonds –bonds that are actually linked to sustainability performance.
Our ambitious goals were to reduce our scope one and two emissions by 50 percent by the end of the decade, while still improving the accessibility of our drugs to more people. In the supply chain specifically, we want to reduce our CO2 emissions by using electric
trucks and trains instead of air shipments, while also being far more efficient with the packaging of our products to be more efficient in transportation.
A global company that has grown through acquisitions, as we said at the start, has a more complex supply chain than most. Adding to that complexity, is there also a responsibility to lead by example in your ecosystem, especially when it comes to things like sustainability?
Absolutely! Our emissions aren’t just reliant on what we’re doing. They also include the ecosystem around us, and partners who maybe don’t have the resources to make quick changes like we do. It’s complicated, but it’s important to measure our sustainability success as a complete activity, and for that we also need to bring our ecosystem with us on the journey.
When it comes to companies that we have acquired, it’s also important to have the standards we now have in place to ensure a quick and seamless integration to our system and our way of working.
So, looking ahead – you’re in the middle of stage two with eyes firmly set on stage three. If we were to speak again this time next year, what would you hope and expect to have achieved?
We have several systems that we are either deploying as we speak or looking into for the coming months. To mention a few, I should start with the focus on demand sensing and harnessing machine learning to better understand true demand. This wouldn’t just be based on internal data but also on weather forecasts, air pollution forecasts and a host of additional external factors which impact a global operation.
We’re also looking into decision automation and how AI can help us there. This could mean tweaking our planning parameters, and will work in conjunction with a digital twin to carry out scenario-based analysis of future opportunities or challenges. To carry out different possibilitiesthrough a computer simulation helps with risk identification and management. We want to be able to quickly identify possible issues ahead of time and then plot the best way forward.
We are also looking into integrating our logistics planning. So, using smart cards that have GPS and internet of things capability on them, that will enable us to monitor where our goods are around the globe, and what condition they are being exposed to.
We are also looking into incorporating blockchain capabilities into our supply chain security.
These are the main elements that we want to add in order to digitalise our supply chain. The vision is to have a control tower built of all these elements and all of this interconnected information, giving us the best possible visibility of supply and demand factors.
Having been at the heart of a comprehensive supply chain transformation for the past three years, at such a large company, what would
your advice be for others considering whether it’s worth the complexity? Or indeed, where they should start?
The supply chain really is all about collaborative integration of supply and demand. If you’re a global company, this means taking a global optimisation approach, rather than a local one. People don’t realise that just because every local node in your network is optimised,
When it comes to companies that we have acquired, it’s also important to have the standards we now have in place to ensure a quick and seamless integration to our system and our way of working.
it doesn’t mean that the whole network is. If they are independent then there will still be challenges, and actually, the different nodes would usually have to work in a suboptimal way in order to help the whole network run as well as it can in that scenario. Optimising each node individually, comes at the expense of another.
For us, having a clear vision and looking at our entire supply chain, end-to-end,
and making sure we are using corporate resources in the best way, holistically, has been our differentiator and has set the foundations for more progress to come.
Indirect procurement is often the elephant in the room, or the unloved child of the supply chain. Nina Bomberg, Global Director of Indirect Procurement at Dormakaba, explains why sending a little bit of affection in the department’s direction can have a more seismic effect than expected.
Hi Nina. I know you want to use today to put forward your case for investment into indirect procurement, but does this mean it was always your ambition to occupy the kinds of roles you have in your career so far? I’m taking that smile as a ‘no’, perhaps?
Not just indirect procurement. I stumbled into procurement in general right after university, just like everybody else. Nobody ends up there by initial choice. You then either grow to love it or hate it, and I guess after 20 years and six different industries, I’m one of those who love it.
Where the love/hate differs between direct and indirect is in what you’re procuring. Across six different industries, in direct procurement, this would mean a lot of different goods and specs and regulations.
With toilet paper and pens, not so much.
But that’s not necessarily a bad thing. It brings specific expertise, networks, relationships and experience that can be applied in each new role. It also means I know very quickly when entering a new environment what is working and what needs transforming.
I keep saying: ‘I can build up, or I can tear down, but I can’t just dust’. Three percent year-onyear gains, I’m not made for.
You’re not scared of a change then, even if the “toilet paper” remains the same?
I appreciate change. I love the opportunity it brings. But you always need a good reason to change, and this is usually nothing to do with what you’re sourcing in indirect procurement. It’s the structure, the people and the processes.
I’ve been in massive companies with basically no human resource, and
enterprises that have had to drastically scale back their global indirect procurement function while having to remove a lot of associated processes and spreadsheets along with it. In both scenarios, it’s about making a change that is fit for the purpose of the department and the organisation.
So, where did dormakaba fit in on this spectrum?
Probably right in between. They had global procurement people fulfilling indirect procurement roles, but not really department leadership in indirect procurement. It was very isolated, and usually juggling indirect with direct responsibilities. In fact, when I first arrived in late 2022 it would have been quite difficult to even
have teams meetings with everyone as they had very little in common or very little shared knowledge.
On the positive side, a lot of the people in those roles had been there less than three years, were keen to change, and certainly weren’t unaware of the challenge. And then, actually, it was like a mixand-match bikini where everyone offered a different experienced challenge, and we could cherry pick the best ideas and processes and discard the rest, to form the best plan for moving forward.
And we’ll certainly go into what that plan has
comprised. But, more generally, it sounds like this scenario for indirect procurement isn’t unusual? Do you see it as an undervalued or unloved department in general?
‘Undervalued’ is a relative term. It depends what it means to each organisation. In areas of engineering, for example, the scope and priority around direct procurement might push indirect into the background. Here at dormakaba though, the balance between the two is a lot more even, and so, therefore, is the value placed on it.
Let’s be honest, we are also
supposed to be the silent, hidden, smooth-running function enabling all parts of the business to run well. We don’t want to be talked about a lot because that would usually mean there is an issue. When we’re operating seamlessly that’s a good sign.
However, importantly, this doesn’t mean it should fall off the hitlist when looking at supply chain transformation or investment. We have a lot to offer when it comes to savings and value.
It’s the financial aspect that gets you noticed when banging the ‘change’ drum?
I keep saying: ‘I can build up, or I can tear down, but I can’t just dust’. Three percent year-on-year gains, I’m not made for.
Of course! I can talk about processes and resources… but if I say, there’s an opportunity to save X million euros, heads pop up. That’s
my job to identify those possibilities to be more efficient and productive and ‘valuable’.
Just to reiterate though, our primary role is to enable functioning processes across a business. Whether I buy stationary for X or Y amount doesn’t matter much revenue-wise. But if we’re taking 30 minutes to purchase them instead of 15, then over a year that is a lot of time and money wasted.
Also, to confirm, it’s rarely the case that I’m brought into a business, I notice things aren’t as they told me they’d be, and I start advocating
for a transformation. I’m usually there because they’ve already had that lightbulb moment and have identified me to fix things.
It’s then my job to actually form a roadmap for change and to show where improvements and efficiencies lie.
So, from that point, there is a level of trust in you and your department, typically?
Yes, because there’s actually not that much of an overlap between direct and indirect procurement. Generally, there’s nobody who knows better than we do about the
department, so we provide the information, we’re given targets, and we then work – largely – independently to achieve those targets in the best way.
And that is also when it’s my job to advocate for new processes, structures, technologies, etc, that would help me in realising the company’s objectives for our department. Other than that, we’re largely left to our own devices.
Okay, so taking into account the general supply chain strains of the past few years, does that mean you’ve not been included in those big transformation conversations?
It depends. I’m usually saying from minute one that we do need to be part of the conversation, especially when it comes to digital investments and IT tools, for example. Here, I can make the case of using indirect procurement as a bit of a prototype for new solutions, because – trust me – if it can work in indirect, then direct will be a walk in the park.
always as clear. With direct procurement you can plot the lifecycle of every part or component or material. There is a clear outcome every procured item is lending towards. That’s not the case with indirect procurement. We’re a constantly rolling function with a lot of items ‘unclassified’, for want of a better word. That’s not ideal for analytics and data management. So, that’s a very specific indirect challenge that can set the better solutions apart from the competition.
That is quite a high-level challenge of course, though.
So, there’s more recurring day-to-day tech challenges that you face in indirect procurement?
I’d say it goes back to that element of ‘value’, this time being placed on our time.
That’s why I’m a big advocate for encouraging digital transformation in a way that elevates what we actually do. Right now, this is seen through a machine learning solution that, when we want to buy a pencil, there is a direct link to a catalogue for our requestors. Seamless!
It’s the same for more rare items too, though, like maybe an acoustics wall. Those providers won’t be so familiar but will all be loaded into this tool, channelling our team towards a seamless process of getting a quote, and seeing through the entire process much more quickly.
We have different requirements and it’s not
You’ve got 100 apps on your phone, say… how many of those did you need training on? Probably none. We’re all experienced people living in a digital world. And yet every prospective new solution comes with hours of training, so that we can apparently better buy a pencil or toilet paper. It’s not relative.
Remember, indirect procurement also spans the need for maybe a plumber or something like that too. Anything that enables the business to function, we need access to, and this level of automation to help find the best provider for what is needed in real-time, is what I’d call fit for purpose.
Has there been a lot of disruption to accumulate and integrate the information needed to fill this tool?
Nowhere near as long as I’d have thought. It’s quite
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incredible. We’ve worked with AslLio to set this all up and actually it’s been developed and readied quicker than our internal approvals processes can manage. But the trial was set up in a week. Pivotally, the solution understood the different formats of data that were being brought together, which is typically a huge hurdle when integrating new IT systems and bringing together large swathes of data.
And this is just the tip of the iceberg, tech wise. We are also in the process of implementing Ariba and already have in some areas. We do have to be careful though, as we always have to be mindful of our vendors and business partners. If we’re making their lives more difficult, they will not move everything to make things work for us. They won’t necessarily move to a new platform just because it suits us, if it means a big overhaul for them.
So, while we are enjoying very good momentum with our digital transformations of late, we do have our own bottlenecks in indirect procurement to be mindful of.
I’m presuming you’ve had great buy-in from your own team? They’re onboard with reasons for change?
Yes, totally. With every change management project the biggest problem is if the people involved don’t understand why it’s happening. If they don’t see the benefit of a change, why would they change, individually? Why would they engage with it?
When I say ‘people’, that’s not just my team either. It is decision makers across the organisation, seeing how we as a department are changing and why we needed to. It could be because you’re bleeding money, wasting time, causing yourself regulatory headaches, threatening security, annoying customers or business partners… it’s often the financial benefits that grab the attention of peers of course, but all the reasons need to be clear as there will be different priorities for different people.
There are clearly plenty of areas to find small improvements?
that, the improvements can be quick and relatively easy to attain. Yes, we are not usually the biggest department, but that brings agility, quicker alignment of thought and team strategy, and quicker integration of new solutions and ideas. If you have the agility to enact lots of small changes, then they soon add up to a lot of quick wins, which is good financially, for team moral, and for the shareholders of course.
Looking at your time at dormakaba so far, what has been the biggest of those wins?
To go back to one of your earlier comments, too,
Absolutely, but not only
I would say the directive put in place after I arrived. It laid the foundations and gave us a mandate to work towards everything else. It stopped debates around what areas we should or shouldn’t be involved with and allowed us to formulate a clearer mission and strategy that we could deliver on for the benefit of the organisation. It confirmed what the company needed from us, what we could deliver, what we should change to deliver more, and what indirect procurement’s potential is at the other side of those changes.
I’m a big advocate for encouraging digital transformation in a way that elevates what we actually do. Right now, this is seen through a machine learning solution that, when we want to buy a pencil, there is a direct link to a catalogue for our requestors. Seamless!
There is even a risk that, in indirect procurement, we’ve become too homogenous. We could come up with our vision and mission statement in about 45 minutes, so we do joke we need to be careful not to form an echo chamber. But in all seriousness that was just a reflection of us all aligning on how to be a better business partner, to be more resilient as part of the supply chain, and how to unlock faster and easier processes. It’s hard not to align on those kinds of things.
It’s not like the missions were easy to accomplish, either?
Certainly not. We’re talking about big business projects here, and we’ve set expectations high.
It involves changing our SAP landscape, moving over to Hana like everybody else, implementing Ariba, and also leveraging the rollout of our new machine learning categorisation solution. None of it is simple as we’re a company that has evolved through mergers and acquisitions, resulting in as many as 78 different ERP systems alone, running across the company. If
you ever want to run a benchmark, honestly just come and talk to us. We know them all.
What’s the vision moving forward then, having already embarked on quite a big period of change?
It’s to retain a culture that is agile to change. We’re lucky in indirect procurement, and especially here where the global team all reports into me. We can discuss something on a Tuesday, roll it out on the Wednesday and feel the benefits by Thursday. We have a common mission, a shared series of objectives, and the landscape doesn’t really differ significantly from region to region or office to office. Our purpose remains consistent. That’s obviously not the case in direct procurement with different customer needs also playing a huge part, and compliance much more of a bottleneck for materials and components.
This again helps us align on ideas, and generates great levels of buy-in from everyone. We all believe in what we’re doing, the changes we’re seeing and the goals we’ve set.
So, in terms of advice to other organisations yet to ‘love’ or ‘value’ indirect procurement the way they should…?
Just think about what there is to gain. If you can spare 3%, 4%, 5% of your spend then good for you. But I’m guessing you can’t and good luck explaining that to your shareholders, too. It might not be the biggest portion of your business, but it’s still money that’s essentially being left on the table when companies choose not to invest in a more efficient and productive indirect procurement function.
Kent Fire and Rescue, as one of the larger fire authorities in the country, is taking on the responsibility of bringing together services from around the country. In his relatively new role as Head of Procurement, Gavin Wolstenhulme wants to join forces to achieve greater value when it comes to securing critical contracts. Chief Executive, Ann Millington has long championed this idea, and is happy to see steps in the right direction despite imminent regulatory changes on the horizon too.
Kent Fire and Rescue is presumably quite selfexplanatory as a title, to explain what you do. But Gavin, perhaps you could introduce us to your specific remit, and especially to the procurement side of the organisation…
I’m Head of Procurement at Kent Fire and Rescue service, but the formal name is Kent and Medway Towns Fire Authority – we are a fire authority.
We rescue people in lots of different situations they find themselves in. We work closely with partners across blue light – fire, police, ambulance and coast guard –and other public services too.
My role specifically relates to everything that we as an Authority source, buy and procure. It involves management of the contracts we have, to ensure everything is where and how we need it to be in critical situations across Kent.
I have a team of 13 and in the office we’re very much category managementled. So, we have Category Managers who specialise in certain areas. And then our
customers are those internal customers – firefighters, station managers, corporate services, etc.
We ensure that we compliantly buy everything that the fire service needs.
Could you go into more detail around the category management areas? To a layperson on the outside, the needs of a fire service seem quite obvious but I’m sure there are far more nuances than that?
Yes, so we have professional services too, to account for the vast amounts of training that has to take place. This also envelopes HR and consultancy and the like.
You’ve then got fleet, which does indeed speak for itself. However, it is important to confirm you can’t just buy a fire engine off the shelf. We’re talking very specialist equipment in that area.
That goes for operational equipment as another category, too. This is your hoses, your ladders, your PPE.
that house our people, fleet and equipment.
There are subcategories to these too, and I’m blessed with a very good team behind me who are very skilled and know exactly what they need to do, which makes my life a little bit easier. I can trust them to go on and do the job that they’re employed to do.
Within the team, we also have people who work with more a national mindset too, working collaboratively with other fire services.
Is that commonplace, to collaborate with other fire services?
Then there’s facilities management too, managing the buildings and stations
Maybe not as much as we’d like, which I’ll certainly come to. But there are good examples, such as with PPE. MSA, who provide our structural fire kits, came about as a partnership as a result of us driving national collaboration and creating a framework for that specialist fire PPE to be used. So, there are examples where a localised service can drive a good idea into the national structure, and to then manage the contracts that are formed off the back of that.
The collaboration becomes continuous at that point too. We enjoy regular meetings, reviews and strategy revisions with MSA, and I’m very much using it as a template for how I’d like all category managers to operate moving forward. Every company and organisation seems to be undergoing a form of transformation at the moment. Is it the same with you, in the public space?
Yes, but maybe in a different way. Our transformation is very much compliancydriven, and there’s a very significant reason for that. I joined in August ’23, but the work of both myself and my predecessor has been focused on the smooth transition to the new UK procurement regulations as a result of the new Procurement Act 2023, and the Procurement Regulations 2024 which come into effect this October.
We’re moving away from the EU procurement regulations, and it’s been my responsibility for the past year to ensure not only a smooth transition to remain compliant, but a successful
one where I identify and realise value from the new framework.
My goal to this end hasn’t been to make sweeping changes, but to ensure my great team are also aware of the new regulations and remain compliant to them. And then, as a united team, we can see where efficiencies and value can be found.
How drastic are the regulation changes that you’re facing?
To be clear, it’s the biggest transformation in regulations and compliance in 25 years. Other organisations might be driven by tech ambitions and sustainability goals, and I want it to also be clear that they do form part of our objectives. But if we’re not compliant then all of those elements would fail to hit their mark.
So, my priority has been around partnership building. We work in a niche sector, and the best way to build an enabling environment where innovation can thrive and efficiencies can be made, all while being compliant, is to do so as a series of partnerships…
an ecosystem. We have to build relationships, manage contracts effectively, and ensure there is mutual benefit for you and the supplier.
Presumably, this more collaborative culture means you’re more likely to unearth best value?
Exactly! We’re a public entity so are restricted by what we can spend, and this adds pressure to not ‘buy cheap and buy twice’, but to ensure the best quality every time. And by ‘quality’ what I really mean is ‘value’.
Value for money is critical in any public sector contract - it has to be managed in such a way that both the supplier and us as an authority get the best out of that contract. And you can only do that by working together as a partnership and managing those contracts correctly. If you don’t have that, authorities don’t have the time or the capacity to constantly rectify and double check or revise contracts that were wrong to begin with.
What are the main elements of the new regulations that are presenting either challenges or opportunities?
I suppose the new regulations are there to add flexibility, to aid the contract management side of things, and to encourage transparency with spending. The challenge is that it does put more onus on procurement to publish more notices, and more contracts over a certain value. So, you also need to go in and redact things and make sure that these published notices aren’t giving any commercial sensitivities away. So, it’s transparency with an extra dose of workload. But the payoff is greater flexibility in the contracts you’re able to generate.
With this new way of working, it puts extra emphasis on the need to get the requirements right first time. This means working with suppliers to design a specification that is correct straight off the bat, rather buying what we think we want, and suppliers then taking it upon themselves to be more creative or innovative and adapt that initial request.
The new regulations allow for that flexibility to talk to suppliers in pre-market engagement and get the whole process off to the best possible start.
When you talk about ‘collaboration’ I’m sensing that this still feels quite novel as a general concept in the sector?
Well, let’s put it this way, there are 44 fire authorities and services, and essentially we’re all buying the same things – fire engines, equipment, PPE, etc. And yet, for the most part, different services do this in different ways, and you wouldn’t believe some of the conflicts or arguments that arise.
The colour of a uniform, the wording on the back of the uniform, how it’s embroidered, the emblems, etc. I’m not underplaying those elements as they are sources of pride and identity, but they do work against the notion of collaboration which would really help when it comes to contracts and procurement more generally.
Greater economies of scale give you more flexibility to go out and find the absolute best solution in the market.
Ann, if I can come to you at this point. I understand you joined as HR Director back in 2007, and have occupied a variety of roles since then, culminating in the Chief Executive position since 2011. How critical from your perspective, is this coming together of national fire authorities?
So, in my current role, I’ve helped introduce the People Programme and the National Commercial Programme. The latter was very much formed with the intention of joining the fire services
together when it comes to procurement.
It really is the holy grail.
From your vantage point, how have you seen the procurement function change over your tenure?
The function is far bigger now. Before, it was much smaller, but it was also like the wild west. You had people with good intent, having conversations with suppliers and choosing something because it felt
and looked right. There was no great analysis and project management as a concept was quite nascent.
The intent was good, but there wasn’t a whole lot of attention being paid to actual value.
So, with the two Heads of Procurement I’ve worked with before Gavin, and now Gavin himself, I’ve tasked them with making the project management side of things more mature and meticulous. What are we trying to do? What are the specifications
of the contract? What issues might there be?
These are questions that have become part of a much more mature procurement function under the great guidance of those three people.
And then greater collaboration can help to take that default culture to the next level?
Yes, precisely. There are already lots of good threads and genuine collaboration as Gavin has explained with MSA for example.
At MSA, our business is safety. It’s what we live and breathe, and we’ve been passionate about protecting people, facilities, and the environment for over a hundred years. We pride ourselves on listening to the needs of firefighters and first responders to provide them with innovative solutions and technologies to help them stay safe on-scene.
MSA’s Firefighter Protective Clothing range is designed with the expertise and experience of the MSA Bristol team (formerly Bristol Uniforms), offering fire and rescue customers comprehensive safety solutions worldwide. Working with leading fabric and fibre manufacturers, our world-class design team aims to create quality garments using the latest fabric technology.
In addition, MSA offers a fully managed service in the UK, which includes cleaning, decontamination, inspection, maintenance, garment tracking, collection and delivery, stock support, and monthly performance reports. Customers can also access dedicated Service Coordinators 24/7 via a telephone helpline and an online helpdesk portal.
To find out more about the MSA Bristol range of firefighter protective clothing, visit gb.msasafety.com/MSA-Bristol
We see the odd projects coming to fruition through great collaboration among some services, and also the rest of the blue light ecosystem too, but we are still driving to get energy behind that becoming a standard way of operating.
Ann, what would you say are the implications of a lack of analysis and collaborative input? Well, it would be like needing to buy a car and literally going for the first one you come across. That’s without thinking about what you both like and need. Diesel, or petrol or electric? Colour? Power? Mileage?
Is anyone seriously saying they didn’t attempt to look into those elements before deciding? Of course not, so it shouldn’t be the case here. Yes, it might mean a slower process, but if you end up buying right, first time, then it’s worth it in the end. And then, once that patience is there and the mindset is there, having more flexible regulations, a team that knows what it’s doing, and greater economies of scale alongside other authorities, all ensures you get the best
value from the best product or service.
Gavin, if I can come back to you… Are there examples where you’ve seen positive collaboration come to fruition, even in your short tenure so far?
Oh yes, certainly. Here in Kent, I can immediately think of three. One was where we worked with three other fire services for our control and command system. Another revolved around our breathing apparatus. And we’re national leads on the national framework for structural fire PPE as mentioned already.
We’re all working to wards the same ultimate goal, which is to help people, and we can best do that with contracts that have come about from a greater economy of scale and national collaboration.
It sounds as if you’re trying to establish a change in culture. And presumably, that has also been the case internally, with the development of your team?
for the new procurement regulations, and really that’s for their own development as much as anything else.
We need them to be compliant here, but these are national regulations, and having the training on their CV will be something that helps them long into the future and into their careers.
We want to keep them as long as possible of course, though, and we now have such a great team who can speak confidently with customers and with partners and suppliers, knowing exactly what’s allowable and doable from a regulatory perspective.
I’m all for development and in my one year here I’ve already promoted people within my team from Officer to Manager, recognising the hard work they’ve put in to better themselves and to help the Authority.
When you think of successes and milestones over the course of your first year in the role, is that training of the team right up there?
Absolutely – we’ve undertaken the Governmentbacked certified training
Definitely. Having them all trained and certified in the new regulations
Value for money is critical in any public sector contract - it has to be managed in such a way that both the supplier and us, as an authority, get the best out of that contract. And you can only do that by working together as a partnership and managing those contracts correctly.
Procurement is at the centre of these more general fire authority drives and improvements. We have to find solutions that are fit for purpose, but also feasible.
was imperative, but also so beneficial for us in finding value and forming partnerships.
Inevitably, there has also been some staff churn during this period too, so I must also commend the recruitment process, to juggle alongside the training and development of remaining staff.
Then there’s the project side of things and moving closer to awarding contracts. For procurement, it might just sound like our day-to-day imperative, but we’re talking big projects amounting to 10s of millions of pounds. So, to identify value, form partnerships, move forward in the right way, and then award those contracts is definitely a point of success to mention.
Ann, how about you? What has stood out for you over the past year?
What people love about Gavin is that he’s very solutionoriented and very pragmatic. We have new legislation coming our way and he’s firstly made sure that everyone understands it. He’s not dived in with new ways of working – he’s initially
ensured everyone is up to speed with what compliancy looks like moving forward.
This generates a quick sense of trust, but also means that any problems are solved much more quickly when everyone can see immediately what is going wrong. There’s consistency in our messaging and communication because everyone knows the regulations.
Then I’ve also been impressed by the balance between preparedness and risk. Procurement isn’t risk averse. You can spend the entire time thinking ‘I can’t do that, or I shouldn’t try that’ and you could end up doing nothing. That is just tiresome.
Gavin has immediately picked up from where his predecessor left off, to get everyone reading from the same page and then achieving that balance of proactivity and preparedness.
Moving forward, Gavin, I’m sensing a major goal for you is to enhance that level of national collaboration as we’ve already discussed?
We don’t live in siloes as things stand – we do talk to each other and there are opportunities to explore. However, it does then tend to be a few larger authorities who have to lead on ultimate projects. Some of the smaller ones simply don’t have the capacity we do or the team size we have.
And that’s why, for a long time now, my overarching aim is to get all 44 heads of procurement in one room and have a chat about what can be done and how we could buy better as a more collaborative and holistic group. I realised quite quickly that wasn’t possible at the time, but the goal remains.
I can’t emphasise enough how important this collaboration is. We can be more standardised, put silly arguments around shirt colours and emblems aside, stop wasting time and money, and instead create much greater economies of scale to seek out the absolute best suppliers and proposition for the whole country.
The new regulations actually give us more flexibility in this regard, so as long as we
remain compliant with those, the only thing left holding us back is our own separation or lack of unity. With the new framework, we can strive for eight or even 10-year contracts which is far longer than what we’ve had until now, so there really is the opportunity to set our stall out, find the best value, and then secure that value for years and years after.
Here, that value means access to innovation, seamless supply of critical solutions and products, better sustainability, and all at a much lower - overall - cost.
Ann, how would you like to sign off?
I think it’s just to remind that we are managing, essentially, by public consent. This goes
beyond just being compliant and being there with hoses when someone needs us. It means spending money wisely, and sometimes creatively. For example, we’re excited about the introduction of a new robot that will remove firefighters from some dangerous situations, new kit, new equipment, better ways of managing wildfires.
Procurement is at the centre of these more general fire authority drives and improvements. We have to find solutions that are fit for purpose, but also feasible.
It’s why Gavin’s team has got so much bigger, as we make sure we have every base covered.
We’re also answerable to the firefighters, though.
An emblem or colour may sound trivial but research has shown their three main concerns are what the station looks like (as their second home), their PPE and their kit. It’s not just safety. It’s also pride in their work, and we can’t just ignore that.
The good thing about the kind of procurement function that we’re striving for is
that it enables change, no matter how big or small those changes are. It’s not a mute partner, but a pivotal strand of broader project management. Ultimately, it’s a fundamental part of how we as an organisation, and – hopefully, more and more – as a united national entity, operates.
50 Schneider Electric
62 Lonza
Srinivasan Ramakrishnan, popularly known as Srini to those close to him, is joined by some of his most trusted colleagues and business partners to illustrate how Schneider Electric’s Global Procurement Capability Centre is transforming the art of transformation. The company is doing so through the lens of global procurement, emphasising that change management, and ‘being better’ can be simpler than many organisations are currently making it.
Hi Srini. We have a team of both internal colleagues and external partners with you today, but would you like to begin by introducing yourself?
As you’ve said, I’m usually and affectionately known by my colleagues as Srini, and overthe years I’ve had the opportunity to see the procurement world transforming from a purely functional part of an organisation, to a driver of innovation. With further changes expected in the next decade, especially in the space of artificial intelligence and machine learning, we expect the expanding procurement function to be more techfunctional and transformational in nature.
This is where I come in, and how I’d introduce myself, as a transformational leader. I define leadership as a process of social influencing, which maximises the efforts of others towards achieving a specific goal. My vision is to always deliver year-overyear productivity while also positioning the organisation for growth. This involves building competency within the procurement community which helps generate insight for the enterprise. I strongly believe that this transformational leadership mindset has inspired teams to go through complex transitions and challenges, fostering a culture of continuous improvement, with an ability to motivate
and steer teams during pivotal changes.
Having begun your role as Vice President of Global Procurement Services at Schneider Electric at the start of 2023, what has been your initial strategy to overcome some quite well-documented global challenges?
The global Procurement Capability Centre’s strategy is built on three core strategic pillars: simplification, synergy and scale.
These tenets help establish a direct line between performance and tangible results, and eventually becoming a powerhouse
If we didn’t know it before, crisis management is no longer a requirement that comes and goes. It’s just the way things are now, and procurement and supply chain leaders need to rethink how they organise their teams and the work they do
Srinivasan Ramakrishnan
for our global procurement teams. It is a strategy designed to free up the energy of category teams, regions and business procurement teams, to deliver significant impacts on Schneider Electric’s top and bottom lines.
With around 153 factories, 79 distribution centres, 1,500 procurement professionals and the management of around 17 billion euros in
annual spend, one core challenge is sheer scale. In addition, like any other organization’s supply chain, we are impacted by both macro and global forces, since COVID began in 2020, all the way through to the UkraineRussia war and everything else going on in the world today.
If we didn’t know it before, crisis management is no longer a requirement that
comes and goes. It’s just the way things are now. And procurement and supply chain leaders need to rethink how they organise their teams and the work they do, to be able to build more agile, resilient, and sustainable supply chains. This also includes needing to better anticipate the next waves of disruption by systematically building resilience in the form of ongoing supplier
risk management, business continuity planning, extra inventory buffers, and building competencies across the complete procurement landscape.
You’ve alluded to your approach to continuous improvement. How does the balance between workforce development and tech augmentation play out in this respect?
There are multiple strandsto any procurement function but it’s not a case of either/or when it comes to labour and tech. My bet is placed simultaneously on people and digital competency. For example, our Global Procurement Capability Centre is in the process of transforming into something of a global skills centre for excellence, as innovation and upskilling are one and the same.
That being said, we need to equip our people with the best technologies possible for them to thrive. In this respect. Supply chain transformation has recently revolved around aligning all processes and data on one platform, automating key processes, and using AI and machine learning to help filter and analyse the massive amounts of data we have to deal with.
UiPath plays a crucial role in Schneider Electric’s transformation by providing advanced automation solutions.
Through a partnership with UiPath, Schneider Electric’s Global Procurement Capability Centre has automated critical processes, enabling efficiency and innovation.
Their strategy, built on simplification, synergy, and scale, aims to address challenges like sheer scale and global disruptions. The Centre, transitioning into a global skills hub, partners extensively with UiPath, leveraging automation and AI to streamline processes.
UiPath’s technology empowers automation capabilities, allowing Schneider Electric to focus on scalability and business transformation. The partnership emphasises the integration of automation with AI and ML, driving cognitive automation and enhancing efficiency.
UiPath’s solutions align with Schneider Electric’s vision of becoming a transformation and innovation partner, contributing to industrial productivity and margin enhancement objectives. Together, they aim to streamline operations, optimize processes, and address shared challenges while promoting sustainability and scalability.
Schneider Electric is a multinational company providing energy and automation digital solutions for efficiency and sustainability. It addresses homes, buildings, data centers, infrastructure and industries, by combining energy technologies, real-time automation, software and services.
To make its Supply Chain more efficient, the Group chose Business Automation with the aim of eliminating time-consuming tasks with no added value for the benefit of its employees.
All with a view to better identify, predict, and prevent problems.
In procurement you need to constantly evolve how you develop your supply base and this calls for more robust digital intervention across the digital ecosystem to ensure a single version of truth. Not only does this ensure customer reliability and employee satisfaction but it aids areas of compliance, ethics, and sustainability as well.
Within procurement specifically, we will continue to focus on guiding processes through enterprise automation, AI and ML, and greater analytics engines to give our people the best chance possible of dealing with relevant, timely, customer-serving information.
Could you please go into more detail about the Global Procurement Capability Centre model?
It really represents the culmination of decades of transformation in the procurement function within Schneider Electric.
The role of the buyer has significantly changed from managing the end-to-end sourcing process, to focusing more on developing the supply base, moving the spend concentration to more strategic suppliers, sustainability, and towards increased use of green materials in our products, etc.
This led to the birth of our Global Procurement Capability Centre to manage all operational and tactical related activities including - but not limited to - PO processing, vendor onboarding, purchase info records, RFx management, tactical/tail buying, tail spend consolidation, supplier onboarding and qualification support, and associated activities.
All of this has freed up energy for our category teams, regions, and business procurement arms to deliver significant impact elsewhere.
What have been the most significant outcomes of this transformation so far?
Our approach and vision have been very clearly laid out to move from a typical cost centre model to one based on
value drivers. This further led to a key structural change, which we refer to as our Twin Engine Approach. As part of this Twin Engine model, we restructured ourselves into two core service towers called Procure-to-Pay (P2P) and Source-to-Contract (S2C) supported by our transversal function and Capability Centres. The Twin Engine Approach focuses on efficiency (P2P) and value generation (S2C) to drive further simplification and synergies.
From this structural shift we have introduced a first of its kind Tactical Sourcing Buy Desk for direct purchases, focusing on head, middle and tail of the spend, using AI to gather pricing intelligence, performance analytics, and to better select suitable suppliers including across the B2B marketplace.
We received awards for Best Shared Services Team and Best Shared Services Leader at the 12th edition of the Shared Services Summit and Awards Forum in 2023 for this effort; as well as Visionary Leader in Global Procurement Services across India at TIMES POWER ICON 2024.
As evidenced by the people you’ve brought with you for this conversation, I know this has been far from a solo mission. Perhaps you could describe the significance of this team effort, both within and outside of Schneider Electric?
Absolutely, at this stage it’s important to mention our digital transformation partner, UiPath, which we have worked alongside extensively to build the right solution for our processes and scaling ambitions. My Global Strategy, Transformation and Innovation Leader, Hamston Anto, would be best placed to illustrate this broader transformation effort, however.
Over to you first, Hamston…
Thank you. Really, since the inception of our team here, our adherence to LEAN methodologies has been ingrained, forming a culture of challenging the status quo. This can be seen strongly through our efforts to automate and become more efficient.
our procurement services, for example, our teams began proposing solutions to enhance their work experience. Following a successful pilot, we have automated 10 business critical processes using 26 automations, with an additional 40 more ideas in the pipeline for future automation. This is where UiPath has come in, with its advanced features empowering us to extend our automation capabilities and allowing us to focus on innovation without being hindered by software limitations.
As the benefits of automation become increasingly evident across our Capability Centres, the focus has turned to establishing an effective automation journey that enables scalable deployment across all our Centres, driving substantial and enduring business transformation.
To achieve this, we initiated work directly with UiPath to impact our transformation through two evolutionary paths: ‘Do it More’ and ‘Do it Better’.
The former started by identifying more automation opportunities based on our team’s experience in a similar setup to ours. We strongly believe in a bottomup approach, leveraging the wealth of knowledge from our staff performing critical processes to provide creative solutions for improvement. Deskilling processes with the help of process experts further paves the way for automating tasks and deploying necessary tools to harvest and assess employee ideas, in collaboration with UiPath’s expertise. This democratisation of automation saw the rise of low-code and no-code platforms, scaling automation POCs from concept-tosolution and accelerating automation adoption. UiPath’s citizen developer features offer a user-friendly solution, empowering individuals with limited programming skills to create and implement automation workflows.
Witnessing the positive impact of automation on
What did these two paths comprise?
When it comes to ‘doing it better’ the focus is on intelligent process automation. The integration of automation with AI and ML represents a significant trend, propelling traditional automation into cognitive
Our approach and vision have been very clearly laid out to move from a typical cost centre model to one based on value drivers. This further led to a key structural change, which we refer to as our Twin Engine Approach.
automation, enabling automations to handle complex decision-making processes, leading to enhanced efficiency and broader task capabilities. The future of enterprise automation is where endto-end processes are entirely automated by combining automation with AI and ML technologies such as process mining, analytics, and decision management. Our end goal is to create seamless and fully automated workflows for automations, optimising upstream and downstream processes of our Global Procurement Capability Centres.
Of course, automation is never a one-size-fits-all solution, so it would be good to hear from Sean Dunphy, Senior Director, Strategic Engagements at UiPath about how you’ve created
a bespoke proposition for Schneider Electric during this critical transformation?
Thank you. Our partnership with Srini and Hamston exemplifies how we work best with customers: we have fostered an open-book, trust-based partnership that tightly aligns UiPath’s business automation platform capabilities with Srini’s vision. This alignment will contribute tangibly to Schneider’s industrial productivity and margin enhancement objectives, sourcing the right materials at the right price point. Central to our collaboration is the recognition of the extensive manual, repetitive tasks involved in supplier coordination, contract finalisation and purchase order execution. The partnership aims to spark and maintain momentum by streamlining these processes, ultimately facilitating an autonomous supply chain.
Hans Thalbauer, as Global Supply Chain Leader at UiPath, would you like to add to Sean’s introduction?
data-driven ecosystem approach is a benchmark in the agility that AIpowered automation brings, seamlessly integrating customers, suppliers, partners, and employees. Our ongoing partnership is dedicated to enhancing the purpose-driven performance that has become a hallmark of Schneider’s supply chain excellence.
Absolutely. It’s important to emphasise that Schneider’s
Our portfolio approach strikes a balance between capturing immediate, high-value opportunities across Procureto-Pay (P2P) and Sourceto-Contract (S2C) service towers while showcasing the substantial benefits of blending automation with AI, which is AI at work. This includes upskilling teams in Schneider’s Global Procurement Capability Centres to address last mile challenges across today’s complex supply chain landscape. Key areas identified for impactful automation include vendor master data management, purchase requisition and order processing, price anomaly detection, goods receipt creation/correction, and supplier performance monitoring. These enhancements are pivotal
to transforming operations, reducing time-consuming manual work, and setting the stage for scalability and efficiency.
However, it is also vital to remind everyone that Srini’s strategy to bolster ‘People & Digital’ competencies still puts people at the forefront, despite operating at the peak of digital innovation as well.
Bringing you back in, Srini – is this an assertion you’d like to comment on?
I’m not sure I could say it any better than Richard Branson: “Keep your employees happy and they will keep your customers happy.”
That being said, my colleague Manisha Dokania, Global HR Business Partner, is best placed to explain how we’re looking to build a team that is not only satisfied, but future ready.
Thanks, Srini. Manisha, what is your perspective on personnel development dovetailing with these concerted digital transformation activities?
respect, our focus has been on developing five core capabilities: agility, innovation, customer centricity, efficiency and digital transformation. These capabilities are intangible assets and are the outcome of investments in talent and workforce development.
We have invested in the development of our people by having a structured plan to assess and close the critical skill gaps through education, experience and exposure. Our leaders use a growth mindset to coach and give feedback on performance, development, and career paths. This helps to create opportunities and an environment for people to learn and grow. We aim to upskill our people on critical skills like Lean Six Sigma, project management, digital technologies, and functional expertise, to drive results with efficiency and innovation. We have curated programmes to create succession plans and develop high potential talents through exposure to crossfunctional, cross-regional projects, mentoring and other talent development initiatives.
believe in their abilities to form a culture of high performance and significant impact.
Srini, what would you like to add in terms of this cultural aspect?
Attitude is something that can’t be taught which is why we seek out those people with the right mindset, and then focus on building competencies thereafter. These development themes revolve around the end user experience, merging with our Capability Centre mindsets, leveraging the Twin Engine focus on P2P and S2C, continuous improvement more generally, and to realise that data really is king.
When the right attitudes synergise with optimal understanding of these areas of our business, then the Schneider Electric Procurement vision can be realised.
And that vision is?
For me, the key word is ‘impact’. And, in this
As a result, we’ve nurtured trust, encouraged extra effort, and made people
…to build a team made up of transformation and innovation partners, as we become a global skills hub for the supply chain and procurement function.
We have invested in the development of our people by having a structured plan to assess and close the critical skill gaps through education, experience and exposure. Our leaders use a growth mindset to coach and give feedback on performance, development, and career paths.
We feel we have a unique cultural DNA as a result of this vision, driven by our emphasis on ‘impact’. Our intended behaviours and ways of working positively impact both individuals and us as a collective, each and every day. And by having shared values, we create the power to accelerate growth.
Sean, perhaps you could comment on how you’ve seen these values play out from a business partner perspective?
Schneider Electric is leading the way in creating connected value networks that boost productivity, foster innovative supplier and customer experiences, and deliver positive societal and environmental impacts. UiPath is honoured to be a key partner in this transformative journey, playing an increasingly significant role in bridging people, processes, and technologies.
From a practical standpoint, the fusion of AI and automation brings new opportunities and urgency to boost Schneider’s industrial productivity through endto-end process automation across systems and teams.
Our collaboration focuses on enabling Schneider’s dual Procure-to-Pay (P2P) and Source-to-Contract (S2C) engines. We aim to break down data silos and unify processes, providing a holistic view that enables rapid diagnosis and proactive - if not fully automated - resolution of issues as they arise.
As such, we align with the vision of Schneider Electric, to be a Transformation and Innovation Partner. The goal is to free up capacity, allowing for a more dynamic approach to talent development and allocation. This strategy optimises the use of multidisciplinary expertise, directing it toward priority areas across Schneider’s most significant cost base. It’s about leveraging an integrated business automation platform to not only streamline operations but to also ensure that the right skills are applied where they can have the most impact, driving direct contributions to Schneider’s “Next Frontier” strategy.
On that note of ‘the next frontier’, would you like to provide the final words, Srini, looking ahead to the future?
Transformation never stops, and certainly with digital transformation, we see huge potential to bring our employees a much-loved experience. We can augment their efficiencies, continuously bring them best-in-class digital experiences and better support their worklife balance while offering new and exciting career opportunities.
Moreover, we enjoy coinnovating with partners like UiPath, so we can both be ready for what the future has in store. We can leverage our open ecosystem and platforms and empower each other to create more value while tackling shared challenges.
One of those challenges is of course climate change and sustainability and this next frontier also seeks to provide end-to-end sustainability and more efficient solutions.
And, ultimately, we want to do all of this at scale, to meet not only our digital vision in procurement, but the vision of our entire global ecosystem.
Lonza’s purpose as a global healthcare manufacturer is to ‘enable a healthier world’. Beyond its core products, this philosophy has expanded into one of the industry’s most tailored supply chain responsibility initiatives, as shown by a dedicated responsible sourcing programme, and an efficiency-driven CapEx function. Sila Vogiatzaki represents the former, and Thiago Gomes the latter, as both explain Lonza’s commitment to enabling a healthier world by driving supplier sustainability and decarbonization.
Hello to you both. It would perhaps be a good start to get a bit of an introduction from each of you about your specialty and your current focus within the company? Sila, can we start with you?
Since 2021, Lonza has focused its activities on seven key sustainability areas aligned with the UN’s Sustainable Development Goals (SDGs) and our material topics. These topics range from climate and water action to people development, gender equality and customer satisfaction metrics. We have assigned each SDG to
a member of the Executive Committee (EC) and an SDG Global Champion, who are responsible for driving improvements across our business.
In 2022, I joined Lonza’s Procurement Excellence department to develop a Responsible Sourcing programme, and embed ESG principles and requirements within our procurement management processes. I have built a global team of seven experts who work closely with our suppliers and procurement buyers to adopt these requirements and principles. The programme
is a central element of our commitment to SDG 12 (Responsible Consumption and Production), of which I am the Global Champion.
Over the past two years, we have set up the programme based around two main initiatives. One is supplier sustainability, which involves careful due diligence of our suppliers to ensure we identify, measure and mitigate the ESG risks in our supply chain. The other is supplier decarbonisation, engaging with suppliers to support them in setting minimum Scope 1 and Scope 2 science-based targets.
As Sila mentioned, this points to a strategy where we’re aligning with partners who have similar sustainability and decarbonisation goals as Lonza, and ensuring that each new asset gets off to a positive start from a sustainability perspective.
Every year, we target a number of incumbent suppliers as part of our initiatives, while we have also started working on embedding similar principles into our supplier onboarding process.
Perfect. And Thiago, I’m sure your role overlaps with this strong emphasis on
sustainability, but what is your primary focus within the company?
For sure. I joined at the same time as Sila in 2022, to support the global CapEx procurement team. Here, I’m especially involved in areas of Automation, Civil Structural & Architectural (CSA) and Fitout.
Lonza is very active in the CapEx arena, and we’re building a lot of new assets to meet the vast demand we have from customers. We need to increase capacity and that requires investment. So, I’m supporting the company to come up with these assets as quickly and, more importantly, as sustainably as possible.
As Sila mentioned, this points to a strategy where we’re aligning with partners who have similar sustainability and decarbonisation goals as Lonza, and ensuring that each new asset gets off to a positive start from a sustainability perspective.
Great, thanks Thiago. Because there is an inevitable overlap between the two of you, we can bounce back and forth between the two disciplines. However, one theme that certainly relates to both of you are industry trends and challenges. What would you pinpoint as the main issues you’re navigating more generally at present? Thiago…
Yeah, I’d like to start from a CapEx and facilities perspective by mentioning
three secular trends; the first falling under the banner of ‘people’. About 30 percent of office space will be consumed as flexible space by 20301 due to new work models, as a result of recent events including the pandemic. The whole real estate landscape is changing, and people are changing the way they work.
Then there’s the broad banner of ‘business’. As much as 80 percent of a building’s lifecycle cost occurs in the operation phase, which would suggest an opportunity to scale back on this type of investment. However, 74 percent of building owners still believe building design and management is key to attract new talent, so business real estate’s value is still there2
Then there is the environment. Buildings account for as much as 40 percent of energy consumed worldwide3. This illustrates how big the opportunity is to use new assets to realise energy ambitions and sustainability goals. Digitalization is also key to ensure the success of more sustainable new builds, yet only 37% of digitalization projects4 currently succeed in merging innovation and
sustainability through their buildings.
The reason I bring these points up is because it shows the importance of having an ecosystem of likeminded partners when scaling up our real estate. Having the right partners will help us to produce more sustainable buildings, which will both save energy and attract new talent.
And Sila, what have you noticed from a trend perspective and what are the main challenges in your area?
I’d like to incorporate the aspect of regulatory changes into our perspective. While developing the Responsible Sourcing programme aligns with our internal objectives, it’s crucial to recognise that the framework for assessing, reporting, and auditing sustainability and decarbonization is evolving due to new regulations and laws. This shift is not only significant for us but also for our partners who we aim to inspire and guide.
1According to Siemens research
2According to Siemens Building
2 X Trends
3Alliance to Save Energy
4According to Siemens research
It’s worth noting that many of our suppliers may currently lack the resources or digital tools necessary to integrate and accurately report data. This aspect underscores much of what Thiago has emphasised. We must provide them with the support they need to join us on this journey towards achieving responsible sourcing. This involves assisting our suppliers in acquiring the resources and capabilities required to integrate responsible practices effectively.
Even more pressure on you, then, to set an example and bring partners along with you on your journey?
Absolutely. Our approach involves coaching suppliers and sharing our experiences transparently. We reflect on lessons learned, and then offer practical advice along with free tools to support them in their journey.
Earlier this year, we hosted a large-scale digital event with more than 1,000 attendees from more than 450 suppliers. During this event, we introduced our Responsible Sourcing programme, outlining our expectations
while dedicating ample time to coaching and providing clear guidelines on how they can meet these expectations.
Going back to that term, ‘overlap’, how does this coaching ethos play out in your area of CapEx and supplier relations, Thiago?
Within my team, we aim to support Lonza in tracking and reducing Scope 3 emissions, both for our own business and our suppliers.
Also referring to the digi-
talization element, we have focused on using building management systems which can elevate the way we heat and cool different rooms within buildings, for example. We are also working with partners that provide tools to track water and electricity consumption. They also provide forecasting capabilities, so you can see if you are going to meet your own specific objectives that month or later in the year based on current consumption trends. The systems identify quick actions
that can be taken to reduce consumption.
Alongside coaching suppliers, it is also about choosing the right partners based on our current strategic goals. For example, we seek to work with partners offering platforms that enable us to be more agile and flexible with regards to maintenance and fixing assets. Platforms that can raise notifications or alerts relating to our assets can saving time by reducing the need for continuous manual checks, and reduce
costs through better energy management, while also supporting our general sustainability KPIs.
You mentioned your ‘team’ there Thiago. Obviously with all of these focus areas, it’s not just you two translating these objectives and missions to suppliers. Sila, how vital has it been to get buy-in from your own colleagues and teammates to ensure the culture is consistent?
Good question, but this has thankfully been quite
easy to manage from my perspective. We in Responsible Sourcing are all experts on sustainability and decarbonisation and have a shared ambition to educate people, make partners and suppliers sustainability ambassadors, and to form relationships based on mutual goals.
Have you received much resistance to the programme from suppliers, or has this united front and clear message hit its mark so far?
The primary - and perhaps the only - concern that some may have revolves around the sustainability assessment and the repercussions if they fall short of expectations during an inventory. “What happens if we don’t meet the score you require?” is a common question.
Our message is straightforward: it’s not about excluding companies or cutting business ties. Instead, it’s about embarking on an improvement journey together. This involves understanding
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each supplier’s starting point, acknowledging their unique challenges, respecting varying resource capacities, and engaging with them consistently to set realistic goals and milestones over time.
That’s why we’re committed to sharing tools, insights, data and industry knowledge with each of our partners. Our aim is to support them, not to penalise or categorise them as good or bad. We’re focused on helping them progress and succeed in their sustainability and decarbonisation efforts.
Thiago, you have something to add?
Yes, just to help understand that with smaller suppliers especially, some do not even have a sustainability department, but it is not something that would stop us partnering with them. Quite the opposite. We show them the potential of certain tools, the benefit of more efficient processes, the impact of different regulatory demands and expectations on their business. This is to support them in their own
sustainability journey, as much as it is to support our sustainability strategy.
A good example of this is us finding sponsors for new tools that will help suppliers reduce their energy consumption, that they do not have to pay for upfront. They can use resources and financing from other organisations initially, with the evidence from us that they will save money over time when these solutions essentially pay for themselves.
We can show them what their business will look like at the other side of these investments, based on the experience we have and numerous scenarios we have experienced with other suppliers. It can be the push they need to improve their business, ensure compliance, and become more attractive as a partner more generally, not just to Lonza.
Crucial to that communication, I imagine, is also being transparent about your own progress? Sila…
Annually, we undergo an assessment by EcoVadis, the same provider we utilise to evaluate our suppliers. This assessment allows us to showcase our score, our progress to date, and our performance across four pillars: environment, human rights, ethics and sustainable procurement.
In particular, over the past year alone, we’ve made significant strides in sustainable procurement, improving by 20 points. This progress not only
reinforces our commitment within the programme but also demonstrates to our partners that the journey we’re advocating for yields tangible and positive outcomes. It’s about showing them firsthand that embracing responsible sourcing initiatives leads to measurable improvements and benefits.
Presumably, Sila, there are targets you’ve set internally, that are then compared against these score increases?
Bilfinger is an international industrial services provider. The aim of the Group’s activities is to increase the efficiency and sustainability of customers in the process industry and to establish itself as the number one partner in the market for this purpose. Bilfinger’s comprehensive portfolio covers the entire value chain from consulting, engineering, manufacturing, assembly, maintenance and plant expansion to turnarounds and digital applications. Bilfinger is primarily active in Europe, North America and the Middle East.
Bilfinger Life Science
The Business Line Life Science covers the areas of Pharma & Biopharma, Nutrition and Pure Water. On the one hand, the systems help to maintain and improve people’s health and quality of life and on the other hand, they make the use of resources in production more sustainable and efficient.
This year, our primary objective was achieving our Science-Based Target initiative (SBTi) verification for Scope 3 emissions, which we successfully received and announced this April. Looking ahead, our focus for the remainder of the year includes increasing the proportion of our spend derived from suppliers that have undergone a sustainability evaluation. In 2023, we have reached 72% of our spend coming from suppliers with sustainability evaluations.
Additionally, we have identified a targeted group of suppliers with whom we aim to deepen engagement on decarbonisation efforts, by engaging with each one to facilitate and support their improvement efforts throughout this year and beyond.
And Thiago, how about your goals? One aspect we haven’t touched upon much yet, is the way you achieve improved efficiencies through the physical construction of new real estate assets. Perhaps you could shed some light on these ambitions?
It is a good point, as these elements are good evidence of identifying the right partners so far. So, for example, in terms of partnering with suppliers that help to reduce CO2 emissions, there has been a focus on reducing pipe supports by 20 percent, which not only reduces weight and installation times, but also CO2 emissions by as much as 42 percent5. Further with piping, we are encouraging reuse of pipe supports as well as cleanroom panels as part of our material recycling activities. And, also for a CapEx project in Visp (CH), we are reducing the use of welds and extra bulk materials in the piping, such as fittings and flanges, by doing pipe bends. Again, this reduces time and costs associated with the overall piping package and reduces the CO2 footprint.
Other interesting innovations being implemented can be seen through 3D printing valves to reduce waste material. While, in Stein (CH), we are implementing a new freeze-drying solution which uses CO2 air cooling to reduce energy consumption and greenhouse gas emissions.
Perfect. Thiago, we have discussed how CapEx is intertwining with the Responsible Sourcing programme in terms of identifying suppliers, encouraging innovations, and upskilling the SME segment. But, as a final question to you, how would you surmise Lonza’s role within this overall ecosystem?
We are an enabler. Our key competitive advantage, despite our size, is our speed. To be competitive in this market you must be extremely fast in serving customers’ needs and getting products to market quickly. That means having fit for purpose processes, a united team, strategically located facilities, and a smoothrunning supply chain. And all of that is dependent on having suppliers that can respond just as quickly as we need to.
Right now, sustainability is a key concern that we want to be ahead of the game with. Encouraging and helping suppliers to sprint along with Lonza, enables us to promptly execute our corporate strategy, while swiftly delivering on our sustainability goals.
Our message is straightforward: it’s not about excluding companies or cutting business ties. Instead, it’s about embarking on an improvement journey together.
Sila, your final thoughts?
The central message here is that our approach isn’t about simply demanding suppliers to meet our standards. It’s not about subjecting them to endless evaluations and examinations. Instead, we’re establishing an ecosystem aimed at fostering a movement that impacts us collectively. As Thiago pointed out, we possess the necessary resources and expertise to act swiftly and proactively. However, this capability also brings a responsibility to assist others. We want to demonstrate to suppliers that we are not distancing ourselves from them; rather, we are eager to collaborate and support them in every possible way, ensuring that we progress together.
5According to research from Hilti
This year, our primary objective was achieving our Science-Based Target initiative (SBTi) verification for Scope 3 emissions, which we successfully received and announced this April.
Partner trust, employee buy-in, constant flexibility and a challenge-first approach are listed as critical to a successful procurement transformation programme by Arnold Chatelain of Signify. His dashboard still consists of 25 ongoing transformation projects for the year ahead, and they are just the tip of the iceberg of what’s already been achieved over the past five years.
Hello Arnold. Transformation will undoubtedly be the theme of this conversation but that can of course cover a multitude of activities. What was your initial focus and transformation remit when joining Signify?
I joined in 2019 and was charged with the digitisation of procurement, initially focusing on direct procurement, before also turning attention to indirect procurement, freight and distribution, packaging and more. The scope has extended, but the focus on digital transformation has remained the same since arriving in 2019.
I presume Signify acquired your expertise in transformation based on some of their experiences prior to 2019? What were the initial challenges being faced by the company when you arrived?
Yes, I have indeed worked at several technology companies, where I led extensive transformation programmes in professional services, R&D workforce strategy, transformational capability development, and procurement. Signify brought me onboard for my expertise in transformation, leveraging my experience with similar challenges prior to 2019.
When I arrived, the initial challenges included the overall maturity of their digital assets and the urgent need for a comprehensive digital transformation. Although they had a digital system in place for procurement, the system was not evolving and was not interconnected with other systems. Additionally, some processes were still being managed using Excel, which needed to be modernized. In terms of what was being asked of me at the other side of a transformation, there was a call for greater speed, efficiency, transparency, better user experience and – as always – cost-effectiveness.
We moved quite quickly once the programme began. The first step was to establish a baseline, which involved identifying metrics from which we could - and still canmeasure performance.
Arnold Chatelain
When embarking on the programme itself, what were the initial steps taken? A transformation can seem quite overwhelming during the planning process as it includes many incremental steps. So, what were those first steps and approaches implemented by you?
We moved quite quickly once the programme began. The first step was to establish a baseline, which involved identifying metrics from which we could - and still can - measure performance. This included carrying out an inventory of our current systems and processes, as well as documenting all the issues we were encountering. This established our baseline, from which we could plan and visualize revisions and improvements over the next two to three years.
As part of this process, we conducted a digital maturity assessment survey to measure our performance against best-in-class companies and identify the gaps. This allowed us to benchmark ourselves both in the present and in terms of where we wanted to be in two or three years.
The second step was to define our performance goals to stay ahead of the competition and become a best-in-class company within that timeframe. The third step involved creating a detailed plan to achieve these goals, focusing on the necessary technological, personnel, and process transformations.
How did you go about prioritising the initial overhaul of systems and processes?
Prioritising the initial overhaul was quite straightforward as the contract with our former direct procurement platform was ending, providing the perfect timing for a change. In indirect procurement, we decided to outsource, and the chosen partner, GEP, brought their own platform.
The COVID-19 pandemic also played a role in our prioritization, as the need to work remotely highlighted the necessity for better digital systems. This urgency helped drive our initial decisions.
analysis. We assessed the complexity and return on investment for each initiative, then prioritised the steps that were most needed and could deliver quicker value. When transforming each area, how did you decide which digital tools would be most suitable?
It was essential not to start by thinking about the solution. Many companies jump straight into selecting a tool or platform, but we took a different approach. We believe that the journey to value is quicker if you first slow down, analyse the problem, identify the root cause, and then begin the transformation process from there.
Since then, each digitization initiative has been prioritised based on a business case
A tool alone won’t solve your problem if you don’t understand why you need it, what it will do, what the returns on your investment will be, and – crucially - how to use it. By starting with the problem, you can identify countermeasures specific to your business requirements. From there, you can find a tool that effectively addresses that exact challenge. The choice of a tool and a platform cannot be separated from the people using it and the process.
We presented the problem to vendors to leverage their experience with existing customers, which opened up communication and fostered a partnership. This approach allowed us to utilise their standard solutions, pushing us towards process simplification. In cases where no standard solution existed, it triggered the development of new ones. This process helped us value flexibility among vendors who understand our challenges, propose tailored solutions, and work with us to meet our specific needs, while also pushing back when a standard solution could meet our requirements with minor process adjustments. All of this would be missed if we went straight to the solution first.
And, as you say, with this approach, the transformation itself goes much faster?
Exactly. In some cases, we moved extremely quickly. For direct procurement with JAGGAER, we finalised the first tender for the initial model in March and had five modules implemented by August. This speed is achievable when you find
a vendor whose standard solution fits your needs well due to thorough research. While small adjustments might be necessary, trusting the standard solution without extensive customisation makes integrations much faster.
On the indirect procurement side, with GEP, the process was also swift. By outsourcing to them, we benefited from their knowledgeable team who could effectively leverage their platform, allowing us to focus our digital transformation efforts on direct procurement. They significantly helped us achieve the first stage in our transformation journey.
Could you please go into a bit more detail about the role of GEP?
Yes, after completing the first stage of our transformation journey, we decided to bring part of the indirect procurement process back in-house and enhance their platform. This transformation and shift in our relationship allowed us to standardise elements, integrate them with our
broader infrastructure, and better utilise the data generated by the platform, thereby improving our performance. The success of this programme has elevated our indirect procurement function and underscores the importance of partner flexibility.
Indirect procurement is often left out of the thought leadership conversation when discussing procurement transformations. Why do you think that is?
computers or broader IT expenditures to stationery, business travel, consultancy services, and office requirements.
On the indirect procurement side, with GEP, the process was also swift. By outsourcing to them, we benefited from their knowledgeable team who could effectively leverage their platform, allowing us to focus our digital transformation efforts on direct procurement.
I’m not sure because indirect procurement is extremely important. At Signify, we place a strong focus on this area at all levels of the organisation. It represents a significant portion of company spending and involves everyone. This can range from purchasing new
Compared to direct procurement, indirect procurement involves a much larger volume of small suppliers and a broader user base that isn’t necessarily specialised in procurement activities. Therefore, having a platform that can address the diverse sourcing needs of these items and is easy for the entire organisation to use, is both challenging and crucial.
You mentioned the impact of transformation on your people there. In general, what has been the reaction to your approach at Signify since 2019? As you mentioned, many of them were using legacy technologies or even Excel before your arrival, so are people seeing these changes as positive, or as a challenging overhaul?
It is a very interesting topic because you have different types of people in an organisation – some are more tech-savvy than others and will adopt a
new tool immediately and be enthusiastic about it, but others will have been working the same way for as long as 20 years and don’t always, immediately, see the value of change. It can be overwhelming.
to everyone so they can see where we, as a company, are falling behind competitors or need to improve. We demonstrate a clear path for achieving market-leading performance and emphasise that we can’t afford to lag behind, creating a sense of
Secondly, there needs to be accountability. For each initiative, we implement an adoption KPI to measure how extensively people are using the tool. This isn’t intended to punish anyone but to identify which group is struggling to adapt. We
continued from page 81 Can I presume, therefore, that the second step is more of a bottom-up approach?
Absolutely. It’s crucial to make it clear why we are doing this for them. Additionally, this involves training and upskilling, so they become actively involved in developing the solution itself.
For our sourcing platform, users have played a significant role in understanding its benefits and providing feedback. A tool should never remain static. It should always be optimised and regularly enhanced with the help of our partners. We gather feedback through workshops, structured internal continuous improvement systems, and bi-weekly meetings to identify viable ways to improve the platform based on input from internal users and suppliers. The bottom-up approach is just as important as the top-down approach to ensure effective change management. And, over time, it’s not just the technology that’s changing, but the culture and the attitude towards change more generally?
Exactly. And now, they are even involved in the identification process when researching new tools. We can bring them into testing so, when we finally integrate a solution, we know it’s as suitable and valuable as it can be, right from the start.
Almost five years on from your arrival at Signify, how would you analyse the success of your transformation so far? What milestones along the way really epitomise the progress you’ve made?
In terms of the procurement function’s performance, we have consistently exceeded the majority of our challenging annual targets. We’ve seen reductions in lead times across almost all processes, including the onboarding and integration of new platforms. Referring back to the baselines established at the start, this process is continuous, and the baselines keep improving.
From an innovation perspective, our relationship with GEP has been very significant, particularly in bringing indirect procurement back in-house with their ongoing assistance. Additionally, our
investments in platforms like Viima, which collects and structures improvement ideas from our suppliers, and Apriori, which automates should-cost analysis for certain commodities, have been crucial. The Collabswith platform, used to sell our obsolete inventory, has also provided a competitive advantage. These tools were especially useful during COVID for streamlining and maturing product ideas and moving away from an Excel-centric culture.
By co-developing and innovating alongside these trusted suppliers, we have quickly met our stringent targets while also improving adoption rates within the company. The culture has transformed significantly. Now, if a piece of information is outside our new platforms, it’s considered nonexistent, and people are coming regularly with new digitalisation ideas. People have realised the importance of aligning with new tools to ensure their work is relevant and meaningful.
If we were to speak again next year then, what is the next phase of the transformation?
By co-developing and innovating alongside these trusted suppliers, we have quickly met our stringent targets while also improving adoption rates within the company.
WHEN WORKING ON SO MANY DIFFERENT INITIATIVES, WE CONTINUE TO COLLABORATE WITH KEY PARTNERS
More generally, after the past five years, what would your message be to other organisations considering or needing a similar scale of transformation?
I’ve mentioned it before, but the term ‘flexibility’ really is important. We spent a lot of time identifying baselines and benchmarks to have the best ‘plan A’ possible, but we still need to be adaptable enough should market situations or our requirements change.
That has definitely been one of our key strengths, reacting to what is happening around us as well as what is happening within Signify, and to then develop and integrate a suitable solution at short notice.
You might call it flexibility, but you could also call it resiliency. It comes from having an innovative mindset that is shared with our trusted suppliers and partners. All of these capabilities and resources have been key to our transformation so far, and actually get stronger with each passing year.
Oliver Belin has over 15 years of experience in supply chain finance and credit finance solutions. He has worked for numerous leading organizations notably in 2008, he founded Swiss Commercial Capital, a company specialized in trade finance solutions, which was successfully sold to Macquarie Bank. Oliver is the author of two books focused on Supply Chain Finance Solutions and is a frequent speaker on this topic.
Currently, he is the CEO of Calculum, a company that specializes in analyzing, optimizing, and negotiating payment terms. Under his tenure, Calculum had been recognized for its excellence in working capital and supply chain finance, winning several awards.
Oliver’s achievements demonstrate his position as a recognised thought-leader who is dedicated to advancing the field of Supply Chain Finance and we were delighted to sit down and learn more about the impressive capabilities on offer at Calculum.
Oliver, what is Calculum?
Calculum is an AI-powered Supply Chain Analytics Platform that unlocks working capital and generates billions in free cash flow.
Calculum provides insights to finance and procurement teams on their suppliers, allowing them to transform the way payment terms are benchmarked, negotiated, and optimized. The result is, on average, 8-11%
in additional cash flow, considering ESG, credit ratings, and supply chain risk assessments.
Headquartered in Miami, with operations in Europe and South America, Calculum’s platform is a spinoff from the leading University of St. Gallen in Switzerland and is currently used by some of the largest companies in the world to gain a competitive advantage.
What issue does your solution solve?
There are over 200 million firms worldwide. Every one of them is negotiating payment terms with suppliers. Today, however there is no solution that provides insights on what payment terms should be.
Calculum provides insights to finance and procurement teams on their suppliers, allowing them to transform the way payment terms are benchmarked, negotiated, and optimized.
Every company is negotiating and setting up payment terms without knowing what each individual supplier is offering to its customers. This leaves millions of free cash flow on the table for an average buying organization – liquidity that can be allocated for R&D, acquisitions, and other growth opportunities.
Who is your solution aimed at? What does your perfect client look like?
Calculum’s ADA Platform is focusing on procurement professionals including CPOs and category managers looking to get insights on how to better negotiate payment terms. The platform is also used by financial professionals such as treasurers to find ways to unlock working capital and generate free cash flow.
Our solution is aimed at companies that are looking at ways to improve working
capital, generate cash flow and optimize payment terms. Our platform is used by clients with annual revenue of at least USD 0.5B. Typically, our clients are multinational organizations in manufacturing industries such as Food & Beverage, Automotive, Pharmaceuticals, IT as well as Retail, and Distribution, Telecom and Oil & Gas.
What is the biggest challenge Calculum faces?
The challenge for Calculum is market awareness.
Currently, some of the largest organizations in the world are using the Calculum Platform to gain a competitive advantage when negotiating payment terms. However, most organizations and procurement professionals in the market are still not aware that such a solution exists.
Why pick Calculum?
Calculum’s ADA Platform provide specific data points that all our clients are actively using in their negotiation terms. The platform indicates for your individual supplier, what payment terms are offered to other customers (Average, 3rd Quartile, and Maximum Payment Terms). In addition, the platform shows what similar suppliers, selling similar products and
services to similar
Our solution is aimed at companies that are looking at ways to improve working capital, generate cash flow and optimize payment terms.