Olam – Brochure 2020

Fearlessly expanding through procurement transformation Project partners

Fearlessly expanding through procurement transformation Piotr Teodorczyk, VP, Head of Global Procurement at Olam, discusses breaking down silos in a procurement transformation WRI T T EN BY PRODUCED BY

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s a leading food and agri-business supplying food ingredients, feed and fibre to over

25,200 customers ranging from multi-national, world famous brands to small family run businesses, Olam is all too aware of how each and every one of its customers depends on the company to provide goods and services on time and high in quality.

Recognised as one of the fastest growing food and agri-business firms, Olam’s involvement in the commodity value chain spans from upstream to downstream and encompasses selective upstream (perennial tree crops, broad acre row crops, dairy farming, and forest concessions); supply chain (global origination and sourcing, primary and secondary processing, inland and marine logistics, merchandising, trading, value-added solutions and services, risk management and commodity financial services) and; selective midstream/ downstream (value-added manufacturing, branding and distribution in Africa, ag logistics and infrastructure). Needless to say, Olam leads a complex product portfolio and so it requires a supply chain and procurement function that can support its global network across more than 60 countries.

In 2018, Olam embarked on a massive 4

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transformation journey, one that would see the function become a more strategic unit that delivers additional value to the wider Olam group. “The goal was to move from a position of decentralised traditional buying, where each business unit and branch buys for itself,” explains Piotr Teodorczyk, VP, Head of Global Procurement at Olam. “The existing function could very much benefit from having a more solid and sharper mission and adequate strategy, as well as greater line of sight on performance metrics and deliverables.”

The initial stages of Olam’s transformation journey saw the company implement a true hybrid globalised procurement model that consists of category

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management practices embedded within the operating model. These practices are guided by a clear vision, strategy, and mandate to cover and influence non-agri commodity spend, set-up a hybrid procurement organisation and implement category management best practices in top categories. In the first two years, Olam also successfully launched a training academy, deployed an IT helpdesk, and launched Ariba across the board.

“We are heading now, in the next two years, into what we call our Fearlessly Expand remit,” he says. “This will see us reach out to new geographies and categories through team expansion while deepening current team knowledge, supplier relationships and internal stake-

“ There’s still a long way to go for it to become a part of company culture,” he admits.

“But it’s a continuous process requiring constant commitment, focus and persistent messaging across every part of the organisation” Piotr Teodorczyk, VP, Head of Global Procurement at Olam

only strategy, but business growth.

As a procurement professional,

holder happiness by leveraging digi-

Teodorczyk has seen this evolution

tal tools. The key elements of this will

unfold firsthand. While he feels that there

include the expansion of organisational

has already been incredible change,

alignment and remit to new geogra-

Olam is now witnessing the most excit-

phies and categories, focusing on inno-

ing journey in procurement. “We have

vation and leveraging digitalisation as a

a unique opportunity to move from

key enabler all while establishing a P2P

a service function to becoming truly,

opportunity through shared services.”

trusted business partners,” he says. “By

Olam’s reorganisation of its procure-

building trust through delivering our

ment function aligns with a global busi-

core numbers of savings and cash flow,

ness shift that has seen procurement

we are now going very much beyond

become integral to business strategy.

simple material cost optimisation, moving

Once viewed as a back office function, it

procurement into end-to-end value

is now well and truly a key driver for not

creation.”

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In his own words, there are two key

expanding their value proposition and

enablers of becoming a world-class

focusing on five areas to differentiate

procurement organisation: technology

themselves: being trusted advisors to

and collaboration. “Today, many organi-

the business, driving suppliers inno-

sations are running in an extremely lean

vation, providing (big) data analytics

fashion, after years of self-cost optimisa-

insights, and proactively managing risks

tion. That might come at the cost of the

exposures.”

ability to reduce spending, levelling out

“A procurement, sourcing or supply

cost reductions and decreasing savings,”

chain function is only as strong as its

he says. “But world-class procurement

supplier base”, Teodorczyk says. “This

organisations are able to offset that by

journey is also impacting our supplier

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relationships for the better.”

According to Olam, the concept

“We do realise the value of supplier collaboration. We very quickly estab-

of collaboration within the supply

lished our SRM programme, with a target

management means much more than

of enhancing, formalising and structur-

the concept of open communication.

ing relationships with our most important

Collaboration involves the hand-in-

partners,” Teodorczyk says.

hand development (and execution) of

In his view, supplier relationships are

cross functional processes and capa-

assets that grow in value. For instance,

bilities. Procurement’s collaboration

suppliers can conduct needs-wants anal-

with its suppliers is a critical attribute

ysis to help prioritise and optimise spend

of leading-edge sourcing programmes

as well as provide a risk assessment of

and helps enterprises grow and adapt,

their own markets and solutions to help

consistently drive results and enable

sourcing teams mitigate various levels of

greater influence on strategic decisions

risk. Olam also uses suppliers to educate

by the entire procurement team.

sourcing teams on new products, price

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fluctuations and volatility as they often

generation within procurement. For him,

have a better understanding of the

the most important (and missing) piece

markets, risks, and customer needs.

of technology is spend analytics and this

“We have a strong desire to be

is something he is looking to address.

regarded as a “customer of choice” and

“Admittedly, we do not have perfect tech-

thereby gain access to the best offers

nology integration and we can struggle

from the highest-quality, most in-de-

with data quality internally, which can

mand suppliers,” he says. “We want to be

lead to lower efficiencies and high trans-

viewed as a company that’s easy to do

action costs,” he says. “We want to make

business with and operate with buyers

big data and spend analytics the crux of

that are easy to work with because it

all sourcing programs.”

helps them manage their own costs.”

With regards to the technology compo-

“Making sense of the data is the key issue, both driving actionable insights,

nent, Teodorczyk recognises the grow-

and accessing them when needed. We

ing reliance on automation and insight

will continue to make further investments

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int the right people and the right technology.”

The most critical requirement for Olam’s procurement organisation was to adapt its service delivery model to an extremely diverse set of budget owners and functional partners in the Olam value chain and create a level of agility.

“Delivering this level of agility required us to take a lot of time to understand the business culture and context of each business unit and country, the scope, requirements and the needs and wants of our various stakeholders across multiple business units.” he explains. “That helped us to define the most efficient way to implement the change and sustain it.”

For this, Teodorczyk looked closely at the business, particularly around understanding the business culture and context of each business unit and country. This process looked at the scope, the requirements and the needs and wants of its various stakeholders across multiple business units. This helped Teodorczyk be able to define the most efficient way to implement the change and sustain it.

Olam is a truly global business, or as Teodorczyk describes it, it had been a “coalition of very independent business 12

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“ From a procurement staffing perspective, my goal is to have people that feel comfortable being uncomfortable, understanding and embracing that real world-class performance begins where one’s comfort zone ends” Piotr Teodorczyk, VP, Head of Global Procurement at Olam

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units”.

These are:

In response, the procurement team

1) Aligning the organisation to create

took on the mission of working across

bridges between different business and

the business units and became a light-

synergise where possible by bench-

house of making the change in ways of

marking and building spend cube/ spend

working, embracing ‘ONE Olam’ as a

analysis

new approach. “There’s still a long way

2) Providing best practices and

to go for it to become a part of company

processes to develop and deliver stand-

culture,” he admits. “But it’s a continuous

ardised, scalable tools; map needed

process requiring constant commitment,

capabilities and ensure strategic sourc-

focus and persistent messaging across

ing process are scalable, repeatable, and

every part of the organisation.”

effective across enterprise

The concept of ONE Olam covers four

3) Developing holistic sourcing strat-

strategic principles that the company

egies to support Olam’s growth and

uses to operate within an enterprise

savings plan; collaboration is key and it

wide, holistic procurement function.

is important to build relationships and 15

influence without authority across all business units 4) Building a strong network, procurement identity and a feeling of belonging to a single procurement organisation measured by unleashment survey; develop measures to track overall performance In order to break the siloed approach, a common goal for many procurement organisations across the world, Teodorczyk sought to deliver quick wins and use them as user (business) cases to help people understand the benefits and how they can apply this new norm. As for the end-to-end transformation of the procurement function, Olam took a holistic view of establishing key building blocks in 2018. These building blocks saw Olam look at its operating model, spend management, supplier management and collaboration, and the concept of procurement value. “We looked at how our procurement team is organised to serve internal and external stakeholders and how it aligns and underpins the procurement functions and wider organisational objectives,� says Teodorczyk. “When looking at procurement value we asked the question: How does our procurement function engage key stakeholders in the development of 16

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Piotr Teodorczyk Vice President, Head of Global Procurement at Olam Piotr Teodorczyk is Vice President, Head of Global Procurement at Olam International, driving the transition from generating savings to creating business value. Prior to this, he worked at Mondelez Asia Pacific and Mondelez International for 16 years and was at other renowned food companies such as Masterfoods, Effem and Mars Inc. Piotr has 17 years of experience in leading procurement and supply in Global FMCGs in EU, GCC and Asia and is an expert in leading cost-effective procurement and achieving significant savings through strategic procurement processes, upstream innovation pipeline, end-to-end supply chain optimisation, and manufacturing productivity improvements.

He has deep experience negotiating and partnering with vendors to improve total delivered costs, quality and service and is a visionary leader with strong business acumen and ability to elaborate and implement strategies for business development.

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procurement strategy, and how aligned is it to the wider organisational strategy?”

To that end, Teodorczyk looks to obtain an executive mandate to engage all business units and leverage team members to develop the procurement organisation and continue to measure stakeholder happiness through a number of means.

“We established 360-degree feedback for the procurement function to measure success against set objectives and scored 4/5 in the first assessment. We call this our MeasureSatisfaction,” he says.

“Through the use of steering committees, we established cross-functional, cross-business-unit steering committees to drive individual projects. As for our

“ We focused so much on getting the small wins chalked up, getting people onboard and winning their trust. To be successful in this game, it’s about making sure that differences we make continue to be visible and noticed” Piotr Teodorczyk, VP, Head of Global Procurement at Olam

‘status quo’. But what does he mean?

“From a procurement staffing perspec-

executive mandate we were supported

tive, my goal is to have people that

by our Group CEO and Group COO to

feel comfortable being uncomforta-

include all non-agri third party spend to

ble, understanding and embracing that

procurement.”

real world-class performance begins

The final building block was centered

where one’s comfort zone ends,” he

around organisational alignment, which

says. “We have been extremely lucky

saw the support of individual business

and blessed to have teams like this in

unit CEOs and presidents to implement

procurement and that’s the most critical

the procurement strategy.

element of breaking the status quo. The

Teodorczyk truly believes that procure-

other typical characteristic of procure-

ment can be the change lighthouse

ment, enabling the change, is taking

that steers the transformational agenda

a customer centric approach and truly

across the wider organisation. He feels

understanding how you can make their

that procurement can in fact, break the

lives better, simpler and easier so we

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can all rest easy at night.”

One of the key objectives for

so far. He does recognise, however, that there is still a long way to go and that

Teodorczyk and Olam when breaking

the journey is far from over. Still, he can

down the traditional siloed approach,

reflect on what were the key moments to

was to embrace a culture of innovation

get to this point.

and a truly global cross pollination of

“We are living in an age of constant

ideas from across the business. In setting

change, innovation and collaboration,

out the key procurement building blocks,

where the speed and complexity of busi-

working in unison to the ‘ONE Olam’

ness will only continue to accelerate,”

vision and obtaining buy-in from CEOs

he says. “The truly winning businesses

and COOs across the world, Teodorczyk

will be agile organisations that can tap

can look back on a successful journey

into expertise and find value wherever

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it exists in the market. Connecting the people, process, and technology ‘dots’ will be mission critical to achieving both a sustainable advantage and overall enterprise success.”

Teodorczyk is keen to highlight that regardless of the increasing complexity, the real secret to success can be broken down into three key areas: connecting the “sourcing dots” to ensure that strategic sourcing processes are effective and repeatable across the greater enterprise, making spend analysis the crux of the strategic sourcing program (or as Teodorczyk describes it “the gold that runs through the walls of an enterprise”) and understanding that collaboration is the key to the future.

One thing that can be said of Olam’s procurement journey is that in order to get to its current position where it is ready for any future challenges, Teodorczyk had to take those small steps early on to make the giant gains it has achieved to date. “Small wins lead to large gains,” he says. “We focused so much on getting the small wins chalked up, getting people on-board and winning their trust. To be successful in this game, it’s about making sure that differences we make continue to be visible and noticed.”

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www.olamgroup.com