customer

the sourcing function needs to match each business to drive the right value agenda. Our businesses are facing different markets in terms of customer expectations, trends, business logic, and growth outlook.

Within the indirect supply market there are hundreds of service and product groups, all of which require deep knowledge to source effectively. It is a fragmented landscape with tens of thousands of suppliers and thousands of stakeholders (internal and external).

Sourcing contributes bottom line savings and adds to top line by acting as a commercial function, extracting value from the suppliers, and pursuing business opportunities, with good knowledge of the business, the suppliers’ capabilities, and the markets.

In recent years, UPM has also faced a highly turbulent operating environment with for example, the pressures of covid, geopolitical crises, regulatory changes, and economic volatility. While tremendously supporting UPM to weather the storms, sourcing and procurement has also driven an ambitious development agenda anchored in our recently created source-to-pay vision and process, indirect sourcing being a pilot and frontrunner in many areas.

The ongoing push into new markets and deeper dive into existing areas has seen procurements stock rise. The business has long since realised the value of procurement and so three years ago UPM embarked on its sourcing transformation. What does this transformation journey look like and what was the catalyst for this move?

We clearly think that sourcing can provide strategic value when it expands beyond traditional boundaries. We want to enable world class efficiency in source to pay processes and ensure full supplier base value for UPM businesses. Develop digital solutions supporting source to pay process activities end-to end and enabling full transparency in the supplier base.

We want to unlock the potential of automation, industrialisation of reputable sourcing and procurement tasks, and strengthen capabilities for category sourcing to focus BA’s / SBU’s strategies and profitability.

Three years ago, UPM sourcing and finance changed operating model and updated source to pay processes for strategic sourcing, tactical sourcing, and procurement. Service centres for tactical and operational activities were set up in Wroclaw and China.

Process efficiencies and quality were approached through a digital platform renewal, target to have a simple, automated, and error-free source to pay process. Digital solutions (main ones SAP Ariba, Basware, SAP S/4) are being rolled out and related development actions ongoing to support our vision. www.lindstromgroup.com

Within indirect sourcing the focus was first to renew and implement our STP processes and business rules. Increase compliance by implementing operative procurement platform and ramp up procurement organisation. Category focus gradually shifting more on the development of the strategic category plans and setting targets, identifying applicable opportunities and relevant value levers. New spend areas have been taken under management. By gathering relevant MI from the new markets and building a risk screened supplier base we are supporting the UPM ‘growth and beyond fossils’ strategy.

Lindström is a family-owned textile service company whose business is based on circular economy. Our company was established 175 years ago in Helsinki, Finland, where our head office is located. We offer a wide range of textile services to our customers in Europe and in Asia – ranging from workwear and cleanroom textiles, mats, industrial wipers and washroom products to textiles for hotels, restaurants and healthcare.

Our customers can focus on their core business, as we take care of their textile needs with our easy-to-use services. The comprehensive services include textiles, their washing and maintenance, as well as recycling in the end of their lives. Our digital service enables efficient textile management and smooth, transparent service.

Sustainability is at the heart of who we are. It is also our business interest to avoid overproduction and optimise the use of natural resources. We always strive to raise the bar to make our service more sustainable. That’s why we are committed to reducing our emissions and reaching carbon-neutrality by 2035. All our decisions are guided by our purpose of caring for people and our planet by inspiring people to shine and businesses to grow in a sustainable way.

Transformation will continue, there needs to be a continuous evaluation and development of our operating model to assure quality and user experience. We need to develop our competencies & gain new skills, understand what is needed in the future. This year’s target setting includes headlines like, next level supplier management, partnerships, collaboration, and co-creation, being a customer of choice, digital trade.

UPM puts sustainability at the forefront, it is ingrained, and the business has been recognised for many years as true investor and innovator in sustainable practices. For many businesses going through a sourcing transformation it would also incorporate a full overview of its sustainability actions. Given the maturity of sustainable practices at UPM what is procurement doing to drive the agenda further?

UPM’s Biofore strategy drives our transformation as a bioeconomy frontrunner. UPM seeks sustainable growth by enabling our customers and consumers to make more sustainable choices. High performance, innovations, and world-leading responsibility are the cornerstones. We create a future beyond fossils. EcoVadis recognised UPM on a platinum level based on its sustainability performance.

Impact on our own operations: Our ambition guides us to improve our own operations continuously. It shows in how we manage forests, treat people, innovate products, and reduce emissions.

Impact on our value chain: Our positive impact is larger when we work together with our suppliers and partners. This means collaborating to produce more with less.

Impact on society and the planet: Together with our suppliers and partners, we build a future beyond fossils. Since 2018 topics like innovating climate positive products with our partners and collaborating with value chain to reduce emissions have been on the sourcing and procurement agenda.

In February 2022 we received a supplier engagement leader position in CDP’s Supplier Engagement Rating. The rating shows how effectively companies are engaging their suppliers on climate change. Only the top 8% of companies who disclosed to the full climate questionnaire received this recognition.

As an example, we have launched a -30by30 program which focuses on emissions reductions in the three most significant sources in our value chain. We want to make climate a key factor in our product development and procurement decisions. We strive for even closer collaboration with our value network and want to engage our suppliers and partners.

In sourcing and procurement, we can embrace our unique position to orchestrate internal and external networks. We enable UPM’s vision, building a sustainable future. We want to embed sustainability in everything we do.

Staying with the innovation theme. To drive sustainability, create value, agility, and resilience, supplier innovation and collaboration is key. How are you addressing this with your suppliers?

UPM Value Chain - roots on forest biomass

Leading suppliers and innovation are one of our key themes for 2023. We want to boost understanding that this is not just a “cost saving” program and we want to cover aspects of availability, efficiency, quality, sustainability, risk management, geopolitical/economical volatility and innovation with suppliers and businesses. We have many innovation projects at different stages of completion. Best