Procurement Magazine - March 2021

March 2021 | procurementmag.com

THE LANGUAGE OF RISK

According to David Loseby, Group CPO of Rolls-Royce READ NOW

P2P Platforms FIND OUT

DocuSign Leveraging Tech for CLM READ NOW

THE POWER NTT GLOBAL SOURCING:

OF ONE

Arvind Kumar, Global VP of Indirects, on partner ecosystems and delivering true value FIND OUT MORE

FEATURING:

GoDaddy

G4S

T-Mobile

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EDITOR'S LETTER

EDITOR-IN-CHIEF

LAURA V. GARCIA DEPUTY EDITOR

RHYS THOMAS GEORGIA WILSON EDITORAL DIRECTOR

SCOTT BIRCH CREATIVE TEAM

OSCAR HATHAWAY SOPHIA FORTE HECTOR PENROSE SAM HUBBARD MIMI GUNN JUSTIN SMITH PRODUCTION DIRECTORS

GEORGIA ALLEN DANIELA KIANICKOVÁ PRODUCTION MANAGERS

OWEN MARTIN PHILLINE VICENTE JENNIFER SMITH

VIDEO PRODUCTION MANAGER

KIERAN WAITE

DIGITAL VIDEO PRODUCERS

SAM KEMP EVELYN HUANG MATTHEW EVANS TYLER LIVINGSTONE

DIGITAL MARKETING EXECUTIVE

KAYLEIGH SHOOTER PROJECT DIRECTORS

TOM LIVERMORE

MEDIA SALES DIRECTOR

JAMES WHITE

SALES AND MARKETING DIRECTOR

JASON WESTGATE MANAGING DIRECTOR

LEWIS VAUGHAN

EXECUTIVE ASSISTANT

JORDAN HUBBARD CHIEF OPERATIONS OFFICER

STACY NORMAN PRESIDENT & CEO

Procurement’s epic battle Procurement fights an epic battle, ‘under the gun’ to deliver cost savings, resilience, and sustainability.

Luckily, it’s got some big tech, and us, on its side.

The vitalness of procurement and supply chain management has never been more apparent.

The need for resiliency and risk management is as evident in Canada’s vaccine rollout as it is in the emerging semiconductor crisis. However, despite the mighty buzzword making its way to the White House, risk management and resiliency aren’t as easy as signing an executive order. Our once linear supply chains have long since transitioned into highly intricate and interdependent global networks of supply, with global trade affecting both supply and demand.

Now, more than ever, procurement leaders find themselves in a precarious position.

As the threats of geopolitics and cybersecurity loom over every node in your supply chain, improved risk management and increased resiliency takes a valiant effort and alignment of values and objectives across the C-Suite. As do sustainability, digitisation, cost reduction and innovation initiatives. And procurement must deliver it all.

Luckily, you’ve got some great big tech, and now, Procurement Magazine, on your side. So let’s get on with it.

GLEN WHITE

We hope you enjoy the ride.

PROCUREMENT MAGAZINE IS PUBLISHED BY

LAURA V. GARCIA

laura.garcia@bizclikmedia.com

© 2021 | ALL RIGHTS RESERVED

procurementmag.com

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CONTENTS

09 Big Picture IT on the up

10 The Brief

By the numbers. DocuSign Webinar.

Good times, bad times

12 Global News

Procurement news from around the world in the last month

134

14 People Moves

Who is moving around the procurement world

16 Timeline

The chips are down

18 Legend

Rick Hughes

76 20 NTT Global Sourcing The power of one

42 Digital Procurement

Pushing the envelope; BCG helps orgs jumpstart their way into digital procurement

50 GoDaddy

Tuning in to the dynamics of change in procurement

68 Spend Management

68 4

March 2021

SX: Intelligent spend management with a CX approach

76 G4S

Procurement and supply chain transformation

CONTENTS

20 100 92 Procurement Strategy

The Hackett Group's 2021 key issues; frustratingly accurate

100 T-Mobile

Enhancing CX with supply chain solutions

116 Risk Management

The language of risk; framing risk governance

126 ESG

Aveva unites leaders to talk tech and sustainability

134 Deutsche Bahn

Infrastructure – Transforming procurement

154 Technology

116

DocuSign: The high value of leveraging tech for CLM

162 Top Ten

P2P Platforms procurementmag.com

5

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Apex Logistics Increases Air Charters by 225% in 2020 Apex Logistics International increased total air charters from 500+ flights in 2019 to over 1200 charters in 2020. While some 50% of usual airfreight was deeply disrupted by the pandemic, the constant disruption forced the airfreight supply chain industry to immediately adopt an innovative approach, focusing on results over processes, making fast, smart decisions, and embracing outside trends quickly and effectively.

In 2020, E-Commerce sales jumped by more than 30% as consumers who followed stay-at-home orders and social-distancing measures discovered convenient and reliable online shopping options with faster delivery times. Spiked demand for time-sensitive personal protective equipment (PPE), consumer electronic devices, groceries and essential products, combined with the halt in ocean vessel movement, kept aircrafts flying during the pandemic.

Apex responded swiftly to the challenge by expanding commercial airfreight capacity and scheduled charters by over 225%. This move to increase dedicated charters supported retailers with flights that allow for faster recovery at destination, virtually eliminating terminal delay issues. This model extends to origin and destination services, where they control these processes by utilizing their own Container Freight Station (CFS) facilities.

While many outsource this work to 3PLs, Apex delivers these critical services in house.

Although industry challenges on both supply and demand side may likely persist through 2021, Apex is committed to meeting and exceeding customer needs with continued expansion of services to do what they do best, deliver passion.

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March 2021

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BIG PICTURE

IT on the up Worldwide IT spending will reach $3.9 trillion in 2021, up 6.2% from 2020, according to a forecast from Gartner. This is fuelled by investment in remote working (accounting for $332.9 billion in 2021), cloud adoption, and accelerated digital transformation.

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THE BRIEF “A FUNDAMENTAL PART OF THE SUSTAINABLE DEVELOPMENT GOALS IS ABOUT LEAVING NO ONE BEHIND. AND SO, WE MUST CLOSE THE DIGITAL DIVIDE.” Robert Opp

Chief Digital Officer, UNDP READ MORE

BY THE NUMBERS 5.25 South Africa

What are countries paying for the Oxford and AstraZeneca vaccine in US$?

2.15

European Union

“What prevents organisations from transforming today is more commonly cultural resistance and organisational or process complexity.”

Laura Gibbons

Senior Research Director, Supply Chain and Procurement The Hackett Group

READ MORE

"Failure to take advantage of volume discounts and consolidation opportunities means revenue leakage.”

Jim Wagner

VP of Agreement Strategy, DocuSign READ MORE

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March 2021

Did you know China imports over US$2tn in goods globally, and are a big influencer in both supply and demand, importing over US$500bn (24%) in electrical machinery and equipment, and 65% of the world’s iron ore.

China also accounts for 50% of the world’s semiconductor consumption and sources over 80% (US$190bn) from foreign suppliers.

DocuSign Webinar Have you spent the last year navigating disruption brought on by the worldwide pandemic? You’re not alone. Procurement teams are analysing their exposed weaknesses in their contract management practices and are learning how to lessen their risk exposure and future-proof their supply chain.

The pandemic has prioritised technology implementations that help with contract optimisation and AI to mine contract data to extract meaningful intelligence.

Join Stuart Brock, Senior Agreement Cloud Strategy Practice Director at DocuSign, to hear how leading procurement teams are adapting their contract management processes and improving their contract data analysis with DocuSign.

This webinar – Digitalisation in the Supply Chain with DocuSign – also features Jane Liang, CPO of British American Tobacco (BAT) who will be sharing her insights and experiences.

Hosted by BizClik, publishers of Procurement magazine, the webinar takes place on 19 March and will also feature a Q&A session.

 GEP The GEP Outlook 2021: Supply Chain & Procurement Report says there is optimism that better times are around the corner. The report is available for download.

 TAIWAN Limited supplies and container shortages mean Taiwan is under pressure to deliver on semiconductors – with many manufacturers having to halt production as a result.

GOOD TIMES BAD TIMES

 HERSHEY Candy king Hershey has said it will end deforestation across its supply chain by 2030 and also introducing human rights guidelines.

Life is sweet.

MAR21

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GLOBAL NEWS 1

CANADA

Canada’s lesson in poor risk management Canada’s Vaccine procurement strategy gives the world a lesson on the impacts of poor risk management and the geopolitical risks that lay in global supply chains.. manufacturing.

2

UNITED STATES

Resiliency makes it to the White House President Joe Biden issues an executive order on America's most critical supply chains and underscores the White House’s commitment to promoting U.S. manufacturing.

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March 2021

3

UNITED KINGDOM

Brexit and COVID-19 cause chaos at EU-UK customs More than half of businesses importing and exporting goods between the EU and UK have faced delays since 1 January, when Britain officially left the bloc, a situation which is likely to get worse before it improves, according to the Chartered Institute of Procurement and Supply (CIPS).

5

CHINA

China coming up short on US trade deal Last January, China agreed to buy an extra $200bn (£146bn) in US imports over the next two years, as well as strengthen intellectual property rules. In exchange, the US was to cut the new tariffs it had imposed on Chinese products by half on a $120 billion worth of Chinese goods, reducing the rate to 7.5%.

But China is coming up short.

4

UNITED KINGDOM

Mars UK reports new US$477mn sustainable logistics operation In a landmark project between Mars UK and DHL, the two organisations have entered into a US$467.8mn sustainable logistics multi-year partnership.

As part of the partnership, two ‘state of the art’ warehousing facilities and development of a ‘world-class logistics operation’ will be built.

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PEOPLE MOVES STÉPHANE DELBOS FROM: COTY TO: COTY WAS: SENIOR VICE PRESIDENT (SVP) FOR TRANSFORMATION, INDIRECT AND PROCUREMENT OPERATIONS NOW: CHIEF PROCUREMENT OFFICER Coty Inc., one of the world’s leading beauty companies and the global leader in fragrances, has promoted Stéphane Delbos to Chief Procurement Officer (CPO). Delbos will be responsible for implementing Coty’s multiyear procurement strategy, which includes achieving a significant cost reduction target by FY23, reducing complexity and strengthening Coty’s new product pipeline with leading innovation from external suppliers. This forms an important element of Coty’s transformation program, announced in 2020. Delbos has 18 years of experience in the beauty and pharmaceutical industries. Prior to joining Coty, he held several local and global procurement positions at Pfizer and Ipsen.

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March 2021

“Stéphane’s diverse experience and proven track record over 10 years at Coty make him a great addition to Coty’s senior leadership team.”

JAN GROTHE FROM: DEUTSCHE BAHN TO: DEUTSCHE BAHN WAS: SVP PROCUREMENT INFRASTRUCTURE NOW: CHIEF PROCUREMENT OFFICER Big congratulations to Jan Grothe who this month has been rightly rewarded with the CPO role at Deutsche Bahn in his 20th year with the German rail giant. Check out our exclusive interview with Jan, conducted in January, to read all about his career, interests and strategy, plus insights into coping with Covid and climbing other, physical, mountains.

READ MORE

JOE CARSON FROM: SPEND STRATEGIES TO: VISLINK TECHNOLOGIES WAS: CEO NOW: VP OF GLOBAL OPERATIONS AND SERVICE Vislink has appointed Joe Carson as VP of Global Operations and Service. His remit is to optimise the firm’s supply chain and procurement operations in addition to growing its services business portfolio.

Carson has been awarded the Supply Chain Medal of Excellence and is renowned for his leadership in supply chain risk management and operational compliance. He has previously worked at Micron Technology (where he was VP and CPO), Juniper Networks, and Sensus. procurementmag.com

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TIMELINE THE CHIPS ARE DOWN

There is a global semiconductor crisis emerging that is impacting production of everything from SUVs to TVs. With 5G, IoT, artificial intelligence, autonomous driving, and more all relying on semiconductors, this is increasingly important. The United States has 47% of the global sales market share, but 80% of semiconductor foundries and assembly operations are in Asia. Global supply chains have driven value and efficiency gains but also highlighted the need for the US to consider strategic investments.

1990 US share of global semiconductor manufacturing stands at 37%.

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March 2021

2019 2020 2008 2020 2020 Trump administration bans sale off US-made semiconductors to Huawei, starting trade war with China.

US share of global semiconductor manufacturing stands at 12%.

US-based Intel – main supplier to Apple – says it may outsource semiconductor design and manufacturer.

Report by the US-based Semiconductor Industry Association (SIA) says cutting off American sales unlikely to stop Huawei from procuring the technology elsewhere.

2020 2021 Apple hires the world’s biggest chip manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC), to fabricate chips based on an instruction set designed by Intel rival Arm Holdings.

United Auto Workers union tells Biden administration production of hundreds of thousands of vehicles could be lost due to chip shortage.

2021

2021

2021

Sony says shortage of new PlayStation 5 consoles due to shortage of semiconductors.

General Motors says global semiconductor shortage could hit 2021 profits by $2bn, with production affected. Ford, Honda, Fiat Chrysler also hit.

SIA writes to President Biden calling for “robust funding” for manufacturing and research.

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LEGEND

Rick Hughes

Formerly CPO of Procter & Gamble (P&G), Rick Hughes served in a variety of leadership roles in 31 years with the company, where he transformed the purchasing team into a best-in-class model.

Which person or event had the most impact on your career?

My early bosses (both good and great) at Procter & Gamble (P&G) influenced my professional lens for supply chain management and procurement. They provided me with the day-to-day coaching, behaviour role-modeling and a sense of norms and practices that stayed with me across my 30+ year career. Early in my career we had numerous supply chain issues (shortages, surprise disruptions, plant fires at suppliers) that we dealt with – causing me to think longer term about how to build more resilient supply chains.

What is the biggest challenge facing the industry in 2021?

I’m not sure there is any single challenge for supply management/ procurement practitioners. Because of our profession’s focus on supply side – supply assurance in every industry has to be top of mind for most, if not all, procurement professionals.

As a former CPO, I worried about 18

March 2021

Years working for P&G

31

supply assurance/resilience and the risk of black swan events (war, weather, fires, even nuclear disruptions), but because the P&G business strategy was to provide innovative products for our consumers – procurement also concentrated heavily on supplierderived innovation.

What advice would you give yourself as an 18-year-old?

When I was 18, I was in university. I wasn’t thinking very long term, and didn’t have an idea what my career path would be. My first job was the US Army, where I was exposed to supply chain thinking and procurement challenges. I found that to be hugely interesting and an exciting area for me. So I guess my advice for an 18-year-old is to pursue with vigour your planned path; but don’t be surprised if it takes a turn or two.

Opportunities come in many forms, and sometimes they don’t quite fit what you think is best, but relying on mentors, good bosses and trusted coaches will always help you through.

How are you enjoying retirement and what are your plans?

Since my retirement from P&G in 2014, I’ve stayed busy as an advisor and consultant. More recently I have begun to focus on family commitments and reconnecting with friends and colleagues, but I continue to actively coach and mentor supply chain professionals. In downtime, I have taken up golf – which is a great way to clear one’s head through focus on something completely different.

“Opportunities come in many forms, and sometimes they don’t quite fit what you think is best, but relying on mentors, good bosses and trusted coaches will always help you through”

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NTT GLOBAL SOURCING INC.

NTT Global Sourcing: The Power of One Arvind Kumar, Global VP of Indirects at NTT Global Sourcing, on partner ecosystems and how a novel approach to indirect sourcing delivers true value WRITTEN BY: RHYS THOMAS PRODUCED BY: GLEN WHITE & CAITLYN COLE

Arvind Kumar

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March 2021

It is 4 am in Houston, Texas, when Arvind Kumar checks his emails and preps for the day ahead. The Global Vice President of Indirects at NTT Global Sourcing has an important call with a team in India, 11 hours ahead, and will be working right through to the early evening. It is a demanding role, but one that Kumar relishes. He is an executive energised by the prospect of big picture programmes and an emphatic champion of bringing businesses together to achieve through collaboration that which would be impossible alone.

Kumar’s values very much align with the shared philosophy of the NTT Global Sourcing team, a 60-strong global outfit that was assembled two and a half years ago

by CEO Mark LeNeve to advance the role of sourcing within NTT and centralise the group’s buying power. Commanding upwards of $30bn in annual spend, it is a powerhouse of procurement.

From the outset, the startup identified three core areas that would need to be modernised and reformed to excel in the modern landscape, and to realise the vision of the group’s top executives. NTT GS’s primary directive is to leverage the group’s combined influence and unify the hundreds of companies and entities that operate under its banner. “Our whole focus has been to

NTT GLOBAL SOURCING INC.

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Arul C.T, founder and CEO of HelixSense, holds more than 25 years of global experience in automation and venture exits calls HelixSense a “disruptive digital transformation company”. HelixSense aims to leverage technology and literally disrupt and reimagine how companies manage their assets.

Integrated Facility Management HelixSense provides stakeholders with real-time insights on assets, allowing one to take a proactive stance and mitigate risks with data-driven decision making that extends the life cycle of assets and improves returns.

Helixsense’s very own platform “Hsense” integrates people, processes and technologies. Arul describes the entire digital asset management process using four simple words -Connect, Compute, Monitor, Control and a four-step process to bring digital transformation.

Using unique edge analysers, the HSense platform collects data from assets and makes them self-reporting.”

Using the cloud only for secondary analytics, “HSense” orchestrates digital asset management, while following maintenance standards and allowing for highly reliable risk mitigation.

The process consists of IT-OT integration where “big data” is collected by connecting IT databases and building management systems to “HSense,” integration of people with process standards such as ISO55K and SMRP practices, analytics and AI with structured, relevant and auditable data. AI-powered reports alert on trends and predictions providing actionable insights.

Another game-changer is Helix’s R-FIT IOT ready to fit technology which accelerates transformation, creating Return on Investment (ROI) from the start.

Combining the Internet of Things (IoT) and operation technology, HelixSense’s Enterprise Asset Management (EAM) replaces traditionally siloed functions with a fully integrated digital ecosystem that leverages data for the betterment of all stakeholders, resulting in

Digital Twins “A digital twin is a digital representation of a physical object. In the case of building construction, a digital twin can tell you how to build, help you collaborate between stakeholders and assist you in maintaining and managing with optimum eff iciency. We are currently building a number of digital twins (cobots) to assist managers and technicians in using virtual reality. Our digital twins can also provide reports and prescribe risk mitigation actions.

“HelixSense partners with NTT Global Sourcing on their transformation road map. NTT supports us with an extensive global customer base. We collaborate to create new joint revenue models for our customers,” says Arul.

NTT GLOBAL SOURCING INC.

“NTT has created a meeting platform which allows everybody to work together seamlessly.”

Arvind Kumar

Global VP of Indirects, NTT Global Sourcing

bring the strength of NTT as a group into one programme. Our job is to make sure we bring projects into a central focus area that can help us drive the big picture value and give back to the various operating companies across the group.”

First, NTT GS established a common platform through which these decentralized

entities could bring their initiatives together.

Better planning and strategic sourcing allows for the consolidation of spend across the business and its categories. The team also identified roughly 200 best-in-class vendors with which to build long-term partnerships.

Kumar’s role with this newly minted procurement division is indirects, a broad remit that encompasses payment solutions, everything to do with real estate – from land acquisition and construction through to lease back and infrastructure built for data centres – and managing all the facility workplace services around the globe. It is also involved in the digital transformation programmes within the group, though “there's a slight difference in our approach,” Kumar explains.

The implementation of new digital platforms such as SAP Ariba are group-level decisions that roll down to the company level.

In this regard – in the traditional definition of digital transformation – Kumar’s division has little involvement. “But what we do in

Arvind Kumar; An insight into NTT Global Sourcing

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March 2021

NTT GLOBAL SOURCING INC.

2018

NTT Global Sourcing Inc. founded

60

Number of Employees for NTT Global Sourcing Inc.

80+ Projects

$100m Estimated Savings

contributing to the digitalisation efforts is to look at the pre-existing programmes and processes across the group and within the categories that we manage. We also ensure there is automation, enforce digitalisation, and transform the category and processes from legacy to next-generation.”

Ecosystem of value This process of upscaling and reshaping legacy systems is also evident in Kumar’s approach to indirect sourcing. Traditionally, procurement is a one-way process of assessing and negotiating terms with a vendor to supply a product or service. Kumar’s model has upended this linear structure, instead creating an ecosystem of partners with an economy of shared capabilities, ideas and revenue generation opportunities.

“I’m very passionate about this,” Kumar says.

“I truly believe there's a larger picture that a lot of procurement organisations don't realise. The supplier partner ecosystem we are building on a strategic level provides vast opportunity to create and add incentives to businesses within

Executive Profile:

Arvind Kumar Title: Global VP of Indirects Industry: Strategic Sourcing Arvind Kumar joined NTT Global Sourcing when it was established in 2018, and oversees the group’s indirect sourcing as Global Vice President Indirects. His remit covers payment solutions, real estate construction, land acquisition, and managing all the facility and workplace services for NTT Group globally.

An experienced executive, Kumar’s 20-plus year career has seen him work with market-leading organisations in banking, real estate, sourcing, and telecommunications, among others. Prior to joining NTT, he held several senior roles at French multinational Capgemini, including Global Head Workplace Transformation / Furniture & Fixture Standardisation, and Regional Chief Procurement Officer for India, UAE and APAC.

NTT GLOBAL SOURCING INC.

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March 2021

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our group, and for partners to work together to generate new income and business. I am a big proponent of building a supplier ecosystem, depending on certain projects, initiatives or categories, and promote collaboration with NTT in the middle of it as an incubation hub.”

Kumar envisions NTT Global Sourcing as the “choirmaster” of this global network,

standing with an overview of the entire ecosystem, driving strategy and aligning these partners to work together – the upshots of which are beneficial to the entire value chain. “Not only does it help us generate better value with the partners, but also for our partners to work together in collaborative programmes,” Kumar says. “As a result, NTT procurementmag.com

27

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NTT GLOBAL SOURCING INC.

has created a meeting platform, which allows everybody to work together seamlessly.”

He explains that today, partners that never knew each other before aligning with NTT are now working closely in conjunction to create new business and revenue opportunities.

At the same time, these collaborative projects strengthen NTT’s supply chain and develop go-to-market solutions that benefit the group’s existing and new clients.

Building the future This complex network of partners will soon be enshrined in a major capital project that has been in the works for some years and, in many ways, sits at the heart of NTT’s future. In Sunnyvale, California, the group is readying the unveiling of One NTT Vision Campus, a smart, sustainable building that is a physical manifestation of its capabilities

“ [One NTT Vision Campus] is a living, breathing showcase of our ecosystem partners and what they deliver together with us.”

Arvind Kumar

Global VP of Indirects, NTT Global Sourcing

NTT Global Sourcing

procurementmag.com

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NTT GLOBAL SOURCING INC.

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March 2021

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Community impact

Supporting local partners is central to the One NTT Vision NTT is a global conglomerate, but remaining local and supporting the communities it works in is central to the One NTT Vision. Arvind Kumar, Global VP of Indirects at NTT Global Sourcing shares more: “I think it's our responsibility as a strategic sourcing arm of a company to maximize the benefit for everybody in the supply chain,” says Kumar. "We do that by making sure the vision and mission for a company gets translated to everybody that's in that combined team, whether internally or externally, because in many cases these are an extension of NTT.

At the same time, we must keep a focus on impacting the community.

“I strongly believe when you do projects in my space, in real estate, we should always look to local partners, local players who are in the community, because they need a lot of help through COVID. It’s a combination of taking the big boys that we work with and integrating it with the smaller partners in the community that are in a five, 10, 20-mile radius of our office. We want to bring value to them and make sure that they're sustainable, make sure they get through this hurdle, and give them an opportunity to truly live and breathe. At NTT these are the missions and values we stand by, the One NTT Vision, and that touches all these elements as a company.”

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NTT GLOBAL SOURCING INC.

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March 2021

NTT GLOBAL SOURCING INC.

Arvind Kumar: Sunnyvale, the one NTT vision substainable campus

and future goals. Upon its mention, Kumar is instantly energised.

“That is a very special project, very dear to my heart and the work I do every day because I've always wanted to be part of a sustainable, smart building programme.

This is the vision of our CEO, bringing NTT companies together in one common real estate platform, one common office, but also make it a smart and intelligent workplace which focuses on employee experience, sustainability, wellness – all the key measures that today are important. At the same time, it has state of the art technology in terms of sensors, automation, IoT, and so on. And on top of that, it is a sustainable building, which means we have a solar captive fuel cell hybrid system with backup power being managed to back up the building and save utility energy costs.

“This is a living, breathing showcase of our ecosystem partners and what they deliver together with us, how we use it

internally, and how we give back to employees.

And also it becomes a showcase to show clients what we can do for them with these kinds of platforms and technologies as a solution provider.”

For Kumar, the central role NTT Global

“The key for sourcing organisations in the future must be a solutions-driven approach.”

Arvind Kumar

Global VP of Indirects, NTT Global Sourcing

procurementmag.com

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Sourcing played in the Sunnyvale project illustrates how his division deviates from the traditional procurement function.

“Sunnyvale is a classic example of how we brought that spirit to life and really demonstrated that we go above and beyond standard procurement negotiation and other sourcing activities. We were also there

advising, guiding, developing the strategy, supporting the business, integrating the partners, bringing the ecosystem, creating this whole smart building concept of the One NTT Vision.”

The outbreak of COVID-19 threatened to derail this construction project, and Kumar vividly recalls the onset of the virus.

procurementmag.com

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NTT GLOBAL SOURCING INC.

“ I truly believe there's a larger picture that a lot of procurement organisations don't realise.”

Arvind Kumar

Global VP of Indirects, NTT Global Sourcing

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March 2021

Returning from Sunnyvale to Texas on a flight last February, he awoke the next day to find companies shutting down, airports beginning to empty out, and individuals and businesses standing still, not quite sure how to react.

“Now imagine, I'm running a construction project in Sunnyvale, I'm sitting in Texas, and we are in the heart of COVID. But we still have a timeline to meet, and we are pressured, and there's a cost impact associated with shutting down, then reopening, and other delays.”

Here, indirect sourcing came into its own.

“We played a big role, as you can imagine.

In terms of procurement, we needed safety gear, PPE, masks, hand sanitiser – all of these things that were in short supply. On the other hand, we also had to help our clients

NTT GLOBAL SOURCING INC.

procure these things, so we used our supply chain to support them through that process.”

In the end, construction never stopped on the One NTT Vision campus. “We are close to completing the building and looking ahead to the big launch,” Kumar says. “We never stopped. We actually pulled through the procurementmag.com

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NTT GLOBAL SOURCING INC.

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NTT GLOBAL SOURCING INC.

Arvind Kumar: Expresses his opinion on small businesses during these difficult times

times and really made it happen against all odds. We kept people-focused, kept people safe and positive, and ensured that the business could continue.”

With the global vaccine effort now well underway, Kumar believes we should remember the lessons learned during this turbulent period. “The key for sourcing organisations in the future must be a solutiondriven approach, focused on the value the supply ecosystem brings to the company when you build strategic partnerships. I think we need to look at a larger focus on that because in the next world that we're living in post-COVID, the supply chain partners and suppliers can add a lot of value in terms of not only managing the cost structure but being resilient to these activities.”

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PUSHING THE ENVELOPE; BCG HELPS ORGS JUMPSTART THEIR WAY INTO DIGITAL PROCUREMENT 42

March 2021

DIGITAL PROCUREMENT

“Jumpstart to Digital Procurement” guides organisations in leveraging digitisation to increase the value beyond savings that procurement can bring.

WRITTEN BY: LAURA V. GARCIA

Daniel Weise Managing Director and Partner, Boston Consulting Group (BCG).

D

aniel Weise, Managing Director and Partner at Boston Consulting Group (BCG), is a self-proclaimed “procurement enthusiast” and leads BCGs procurement business line globally.

Founded in 1963, Boston Consultant Group is an “O.G.” (original) in business strategy. Today, working with industry leaders, BCG tackles some of industry’s biggest challenges.

Working in a highly collaborative business model, BCG helps clients clear the path on their digital transformation journey, making way for opportunities that generate high-impact and truly transformative results. Across industries and around the world, Weise focuses on value delivery, going beyond cost to encompass supply chain resilience, sustainability, operating model redesign and digitisation programs.

Together with his colleague, Dr Wolfgang Schnellbächer, Weise literally wrote the book on digital procurement.

“Jumpstart to Digital Procurement: Pushing the Value Envelope in a New Age” reflects on the insights Weise and Schnellbächer have garnered in their nearly 100 digitally-focused, value-minded and objectives-driven procurement projects.

Throughout its 140 pages, Weise and Schnellbächer help guide executives in leveraging digitisation to increase the

procurementmag.com

43

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DIGITAL PROCUREMENT

BCG, Pushing the envelope Now available on Amazon, in “Jumpstart to Digital Procurement”, Daniel Weise and Dr Wolfgang Schnellbächer show the power of leveraging digitisation to revolutionise procurement and empower buyer decisions through AI. The pair believe that with a clear company strategy and a focus on objectives, all desired outcomes are possible. “Jumpstart to Digital Procurement” is an essential hands-on guide for those looking to grasp the opportunities provided by digital transformation. We’re giving away 25 signed copies...

“ Innovation… that is where the art of procurement happens” DANIEL WEISE

MANAGING DIRECTOR AND PARTNER, BCG

value beyond savings that procurement can bring.

In “Jumpstart to Digital Procurement” the pair write, “Few CPOs doubt that digital will strongly affect their function; however, only a handful claim that they are happy with the digital advancements they have made so far. Indeed, the majority of CPOs struggle to find a digital vision—a clear strategy to communicate with their employees, internal business partners, and suppliers.”

“We need a new model, a revolutionary narrative of what procurement does on which to base our digital thinking. To put it more simply, if we want to make digital procurement with all its benefits real, we need to think differently.”

But differently, how? We Zoomed so I could find out.

Finding the right fit(s) “What we see is 80% want to digitise then only 20% are actually happy with the outcome.”

It seems the way to a digital roadmap that leads to unleashing the type of competitive advantages that allow companies to thrive can often be littered with confusion bred from ambiguities on priorities and objectives.

Weise says he believes, and the reason why they wrote the book, is that many companies often approach digitisation from procurementmag.com

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DIGITAL PROCUREMENT

the wrong perspective. Organisations look to the tech market in search of vendors and options, but what they should be doing, Weise says, is taking an objective first approach.

First, figure out your priorities, and determine whether you are looking to achieve, savings, sustainability, innovation, risk, quality or speed. Then, assess your starting stance and look for opportunities where you can “leapfrog to the next level of excellence.” And only then do you begin to look at an execution strategy.

Weise says he firmly believes that procurement needs to follow organisational values and objectives. He lends a few examples. For retail, cost will be of the utmost importance, while in the high luxury segment, speed to market would be the main objective.

Yet, in other industries like packaging and Fast-Moving Consumer Goods (FMCG) sustainability would be the focal point. “I would even go as far as arguing that some consumers are accepting higher prices if they receive a good closer to nature or packaging from recycled cartonnage.”

About misconception that may be leading organisations astray, Weise says, “I think the biggest misconception is that there will be this one thing which solves it all for you.

It is simply not the case. There will be those 20 things which will help you a whole lot but not to 100%... I think that is the biggest misperception towards digitisation. And it's probably the best excuse why people keep on waiting instead of really starting.” Weise says.

Get the people, empower your people Organisations have to be more deliberate about making sure they have the right people for the job and ensuring that they bring them all along for the ride.

Organisations often try to digitise without inserting the necessary talent for managing digitisation into their organisation. “You need 46

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to have your own people who can work with data. You need to have your own people who can maintain a bot program and new functionality and keep those tools up to where we are in time. And if you don't do this, if you only rely on the outside market, it's a very good way to fail, unfortunately.”

Weise says they see many organisations that acquire the tools that they need, but they don’t empower their people and set up the organisation for success. There are, of course, budgetary concerns as well. Weise points out that although digitisation can increase procurement efficiencies and free up people, the savings in labour costs is almost irrelevant compared to the potential for cost savings from shaving a few points off of a suppliers price.

“I think the biggest misconception is that there will be this one thing which solves it all for you” DANIEL WEISE

MANAGING DIRECTOR AND PARTNER, BCG

Automate, then elevate “For me, digitisation is not a synonym to reduce the workforce. What you're trying to do with digitisation, is set people free to work on value-creating tasks,” said Weise.

Weise believes the path to better outcomes and a more fulfilling career in procurement is automating things such as tail spend, so procurement can be freed to engage in more strategic discussions and unearth innovation and other differentiators.

Digitisation can be a means to bring procurementmag.com

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“ We need a new model, a revolutionary narrative of what procurement does on which to base our digital thinking”

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more joy to the people in the workplace, he says and can be the driving force behind procurement, bringing a higher level of satisfaction to the job. “As digitisation takes over more menial tasks, people should be repurposed to work on higher-value projects.”

When looking for where best to automate, Weise suggests looking for “leapfrog” opportunities. “I think back when I started procurement, and we wanted to do LPPs with a large amount of data, it took us days to do one calculation. And today, I just press a button, and it's there.

The same with the AI Negotiation Coach

by BCG, you answer questions and provide input to about 20 parameters, and you get a ready-to-use strategy within minutes.

And that's where I think leapfrogging is possible today because we have the computational power.”

Analytics and tools like BCG’s AI negotiation coach can help coach you to do the right things with your major or upcoming supplier events you can focus on value add things like innovation.

“Innovation… that is where the art of procurement happens, where we need to think about partnering, where we need to elevate.”

More often than not, innovation comes from outside of your company. Typically, 60 % of your cost base is in procurement.

You could have thousands of engineers within your supply base. And if you manage to leverage that right, that's when you can create real value.

Once you’ve linked digitisation to the respective value you are looking to bring you must build your business case and create a shortlist. Weise says he sees that the companies that try to do everything fail and that the ultimate goal for CPOs should be to create a shortlist by putting things into perspective and “business casing it out.”

Among the most critical topics in procurement and will remain so for the foreseeable future. As the competitive landscape continues to evolve, only those who digitise their procurement models are likely to remain viable and deliver additional value to their organisation.

For anyone working in procurement or supply chain or is looking to drive digital transformation, “Jumpstart to Digital Procurement: Pushing the Value Envelope in a New Age” is a must-read, and the BCG guys are must-follows.

Jumpstart to digital procurement PUSHING THE VALUE ENVELOPE IN A NEW AGE “Few CPOs doubt that digital will strongly affect their function; however, only a handful claim that they are happy with the digital advancements they have made so far. Indeed, the majority of CPOs struggle to find a digital vision—a clear strategy to communicate with their employees, internal

business partners, and suppliers.”

“We need a new model, a revolutionary narrative of what procurement does on which to base our digital thinking. To put it more simply, if we want to make digital procurement with all its benefits real, we need to think differently.” procurementmag.com

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GoDaddy: Tuning in to the dynamics of change in procurement Keith Tice, Chief Procurement Officer, walks us through the comprehensive transformation that has radically upgraded GoDaddy’s procurement processes WRITTEN BY: WILL GIRLING

I

've been with GoDaddy just shy of eight years: I came in May of 2013, just as GoDaddy was beginning a new transformation,” states Keith Tice, Chief Procurement Officer. “When I joined the company, procurement essentially did not exist here.” It’s a bold conversation opener, and one which perfectly anticipates the details of both Tice’s and GoDaddy’s accomplishment, which saw a function primarily managed by business stakeholders and a legal contracts team become a developed, dynamic, and digital process of its own.

Founded in 1997, GoDaddy’s stature as one of the US’ foremost internet domain registrars and web hosting companies has only grown over the years. Now with over 20 million customers worldwide spread across almost 60 different markets and 9,000 employees in 14 offices speaking roughly 30 languages to 50

March 2021

PRODUCED BY: GLEN WHITE service them, this Scottsdale, Arizona business is one of the internet age’s most enduring global success stories.

Although Tice arrived with a significant challenge to overcome when he first joined, his expert level of experience gained from over 20 years of work in purchasing gave him the clear vision needed to begin overhauling procurement at GoDaddy. “I brought a mindset that focused on how we structure, separate and categorize the various spend aspects of what we're doing, particularly in terms of understanding suppliers and how they fit in the company,” he explains. Integrating this mindset required good oversight and command of data, something which was made difficult by legacy infrastructure. Tice’s goal was to spearhead a digital transformation that would go above and beyond the solutions he’d worked on previously.

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“ When I joined the company, procurement essentially did not exist here” KEITH TICE

CHIEF PROCUREMENT OFFICER, GODADDY

The first step of Tice’s plan required a broad evaluation of GoDaddy’s supplier network, “prior to my arrival the company had about 10 times the number of suppliers that we have today.” Following a six-month period of rationalizing the available data, he made the decision to shift away from difficult-to-manage Excel spreadsheets to an integrated platform that provided a single pane of glass visibility into the

Keith Tice: Insights to vendors and suppliers @ GoDaddy.com

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KEITH TICE TITLE: CHIEF PROCUREMENT OFFICER LOCATION: ARIZONA, UNITED STATES INDUSTRY: INTERNET SERVICES

• Why are you doing this?

• Why this vendor in particular?

• Why does it cost this much?

• Why are we paying for that?

• Why is it necessary?

Tice’s next move was to transmit the idea that each and every vendor is “expendable”, acting as a challenge for them to proactively justify GoDaddy’s spend through competitive service and delivery. “Step three was then

EXECUTIVE BIO

company’s spend with each supplier. “I needed to figure out what makes sense for GoDaddy, and I did that through a series of interviews with internal stakeholders about why they have certain vendors performing certain tasks for us.” Tice used the ‘five whys’ as his model:

Keith grew up in a very small town in the northern high plains of Texas. After attending college at Tarleton State University, Keith began his career working in the protein industry for IBP, Inc., which is now a part of Tyson Foods. The goal Keith had set after leaving Tarleton was to establish a career in Procurement. His first role came in 1997 with The Dial Corporation, not a part of Henkel. Keith initially managed Procurement for the Armour Star Brand of food products, a division of The Dial Corporation. As he progressed through the various functional areas within Procurement for Dial/Henkel, Keith was recruited to build a Procurement function and organization at GoDaddy.

Starting in May 2013 the transformation and building of the Procurement organization with GoDaddy began as a team of three focused on IT requirements alone.

Today, the organization and team Keith has built is managing all third party spending through the efforts of 12 staff located around the world.

Drive Demand.

Drive Action.

Drive Results.

Turning results into revenue. Performance marketing focused on business outcomes.

Learn more

GainShare: Transparency and Accountability in Performance

Bryan Walkey, CEO of GainShare Performance Marketing, discusses the company’s partnership with GoDaddy alongside its mission and culture.

With a career spanning over 30 years, Bryan Walkey is the CEO of GainShare Performance Marketing.

“I joined the firm full-time four years ago, but I've had an association as an advisor to the firm for over 30 years. Before joining as a partner and CEO, I had worked with Gainshare to coordinate teams and delivery in both Toronto and Chicago. The goal today is to drive seamless delivery and results across teams, tactics, and markets.”

Known as Northern Lights Direct for more than 35 years, the company recently rebranded as GainShare Performance Marketing. “We started in DRTV, and so we felt it best to change our brand name to better represent who we are today. We now do so much more than direct response TV. As a performance marketer, we coordinate the customer journey across all channels, and we wanted to ensure we showcased that scope.”

GainShare’s relationship with GoDaddy Discussing GainShare’s partnership with GoDaddy, Walkey explains, “GoDaddy is a performance culture, and they're looking for a high return on their ad spend, and we help them accomplish that and acquire customers in the most efficient way possible.

We provide strategy, media planning, buying, optimization, and analytics. We work with a number of their teams, including performance & brand video, creative and business intelligence.”

“With GoDaddy, it is truly a collaborative effort.

We feel like we're part of their team. Because they're a performance-driven company, they hold us to account every day, every week, and every month. We're in contact with them multiple times a day, measuring daily and continually optimizing.

At the end of the day, it is all about performance,” he adds.

What makes GainShare different from its competitors?

“As a performance marketer, we provide transparency, accountability, and we're driving return on investment, return on ad spend,” begins Walkey. “There's been a lot of moaning in the marketing community about procurement driving the price to zero. Well, we believe it’s essential to drive the cost of marketing and investments directly to the bottom line.

We are excited to work with CMOs, CFOs, and Procurement equally because we're focused on business outcomes,” he continues.

“We talk about return on investment, return on ad spend, we profess transparency and accountability, all things that resonate with both procurement and finance. We deal with the marketing team on the things that are important to them. And we plan and answer procurement on the things that are important to them as well. So, it's a true business relationship.”

gainshare.com

GODADDY

$3.32bn Revenue in FY 2020

1997 Year Founded

9,000+ Number of Employees

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to renegotiate and/or add the right suppliers categorically across the company to service our business needs adequately, not just the way people perceived our needs,” continues Tice. “That shift, while difficult, put us in

“I brought a mindset that focused on how we structure, separate and categorize the various spend aspects of what we're doing, particularly in terms of understanding suppliers and how they fit in the company” KEITH TICE

CHIEF PROCUREMENT OFFICER, GODADDY

a position where the relationships with vendors have become very strong. To take us to the next level of innovation, we needed to bring in vendors that could change the game for us: new technologies and new ways of working.”

In addition to consolidation, GoDaddy’s digital roadmap meant that the daily admin of procurement needed to modernize. Dispensing with rote manual tasks that introduced margins for error as information was traded from one system to another through automation was key, as was incorporating spend analytics and e-procurement platforms. Of course, no tech-based transformation story of the last 12 months could avoid the effect of COVID19, and it is in this regard that Tice adds special praise to GoDaddy, “I really have to emphasize how well the company did moving everyone quickly from the office to remote working.” However, the challenge procurementmag.com

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Partnership goals: Zones LLC and GoDaddy on DT

Zones LLC is a strategic partner of GoDaddy. We chat to Sean Hobday, SVP of Global Business Development, about digital transformation on a global scale.

Sean Hobday, SVP of Global Business Development for Zones LLC, has had an exciting 12 months. The company is a strategic partner to GoDaddy - the internet domain registrar and hosting company based in Arizona.

Zones offers a wide variety of solutions. At the company's core, Global Supply Chain as a Service (GSCaaS) has been in overdrive since the start of the pandemic in early 2020.

Hobday says, "Making sure that businesses and enterprises can get the IT hardware, software, and solutions that they need domestically within the US, but also all around the world, has been a critical differentiation to ensure clients’ success for Zones during COVID." Hobday describes the relationship Zones LLC has with GoDaddy as evolutionary because it has grown significantly since the companies formed the partnership.

From working on projects in one location for the global internet and hosting company, Zones LLC now handles much of the corporation's IT logistics worldwide.

"GoDaddy approached us because they had a business problem in one of their locations, and they needed

quick fulfilment of hardware to support a small office.

We were able to do that efficiently and effectively."

He continues, "GoDaddy is a company that continually acquires smaller companies within their space around the world to enhance their growth. We were a good fit because Zones has offices and fulfillment centers in key locations to align globally.”

Flexibility in the current working climate is also essential; Hobday points out. “We make sure that at our core DNA, we have the right flexibility and processes frameworks that allow for adaptability to help clients succeed in their digital transformation” The work-from-home mandates have been challenging; however, it is essential for businesses to navigate the complexity, Hobday states. "The solutions that we offer bring tremendous and immediate value to ensure GoDaddy's business continuance with a distributed workforce.”

He adds, "As our partnership grows, we'll be able to address and fortify other solutions within data center, security and networking areas as well.

zones.com

GODADDY

Keith Tice: Talks to us about user experience @ GoDaddy.com

was far from being merely a technical one: procurement, he states, is strongly rooted in person-to-person negotiation on both sides of the table. Reflecting on the beginning of the pandemic, Tice claims that he genuinely feared the effects of losing this important aspect, “I was becoming increasingly worried that the effectiveness of my team was going to start to decline because they just don't have that ability to work with the vendor one-on-one.”

Despite his concerns, GoDaddy’s saving grace turned out to be the ready availability of conferencing software like Zoom. Tice’s team quickly adapted to the new paradigm and didn’t miss a beat; turning in a 2020 60

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performance that was equal to or better than the previous year, Tice states that he was pleasantly “shocked” by the results.

“It’s gotten to the point now where I've recently hired two new permanently remote employees. I didn't hire them with any intention whatsoever to move them into one of our hub offices. Whatever the new normal looks like, I don't see my team going back to how things were unless specific needs arise.”

The spirit of embracing change at GoDaddy is easily visualized by its recent rebrand that features a slick image of the word ‘go’ shaped into a heart. “With our logo change, we're thinking about over 20 million customers out there: what’s their

GODADDY

“ To take us to the next level of innovation, we needed to bring in vendors that could change the game for us: new technologies and new ways of working” KEITH TICE

CHIEF PROCUREMENT OFFICER, GODADDY

philosophy and what can we do to support them? ‘Go’ exemplifies all that we want them to do; it captures that entrepreneurial spirit and it's paying homage to the importance of humanity and joy that we wanted in that logo.”

Focusing on CX (customer experience) is a big part of fulfilling the renewed promise of that logo. “A few years ago, if you went to GoDaddy with the intention of buying a domain, adding hosting or email, or any of the various products that we're offering, you would have found a front of site architecture that was cumbersome,” says Tice. Subsequently, this was improved by reducing the amount of clicks customers procurementmag.com

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EPAM and GoDaddy Join Forces to Help Small Businesses Succeed After a decade of strong growth, internet pioneer GoDaddy recognized the need for a strategic partner to help navigate the ever-increasing pace of digital transformation and constantly evolving customer demands.

“We needed a highly-skilled workforce that could hit the ground running,” says Keith Tice, Chief Procurement Officer at GoDaddy. “We trust EPAM’s quality of service, their people, attention to detail and leadership. They are a partner we can grow with.”

EPAM offered what GoDaddy was looking for: the ability to accelerate roadmaps, re-prioritize technology plans, transition to a modern AWS Cloud architecture and engage the right mix of professionals to get it all done seamlessly.

GoDaddy started as a domain registrar and is now the world’s largest services platform for entrepreneurs around the globe. GoDaddy is the place where entrepreneurs and small business owners come to name their idea, build a website, attract customers and sell their products and services online. Today, GoDaddy has more than 20 million customers.

Over the years the need for engineering resources at GoDaddy has grown dramatically.

The small business owner that once came to GoDaddy for just a domain name and hosting services, now looks to the company for everything from eCommerce to social media marketing.

In 2020, GoDaddy and EPAM kicked off projects to modernize GoDaddy’s eCommerce platform and deliver a more streamlined single sign-on experience for its online customers.

Previously, the customer sign-on and signup experience was focused on security more than convenience. GoDaddy wanted both. Already, A/B testing has shown significant success in changes delivered by EPAM. GoDaddy’s customers now have easier access to the company’s products in a highly secure environment.

Meanwhile, EPAM engineers on the eCommerce project team are ensuring that the existing architecture is seamlessly supported as they build a more scalable and flexible platform that will further GoDaddy’s ability to offer solutions that meet customers’ unique needs. At the same time, GoDaddy gets the tools they need to be more agile in responding to demands.

As GoDaddy continues to grow, company leaders wanted to ensure that whatever project they initiate to help their customers, they would have the right partner to make it happen. EPAM is excited to be a part of this journey helping GoDaddy and its customers build businesses globally that will grow and thrive as we all discover new ways to harness the power of digital.

Learn more

GODADDY

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GODADDY

“ Go’ exemplifies all that we want [customers] to do; it captures that entrepreneurial spirit and it's paying homage to the importance of humanity and joy that we wanted in that logo” KEITH TICE

CHIEF PROCUREMENT OFFICER, GODADDY

need to perform to find what they need.

GoDaddy also introduced automated chatbots to streamline its communication channels and ensure queries are resolved diligently. “We’ve brought in chat automation so that our customers can come in, get what they need, and then move on. Speaking with a GoDaddy care representative is a fantastic experience, but, at the end of the day, running their business is what's important for our customers.”

This sense of technological pragmatism combined with a refreshingly adaptable mindset will form the bread and butter of GoDaddy’s approach to procurement in

2021. However, Tice has grander visions for his department beyond cost reduction, value creation and capital management. “We now are very focused on reducing supply risk and members of my team have goals set against that - we call it ‘joining forces’. I've also moved our organization into becoming more of a strategic advisor to the business as a whole. We now understand their roadmaps and where they're headed, and we're able to align suppliers and or technologies to match that.” As digital transformation continues to accelerate there will still be challenges, particularly relating to properly onboarding and training new remote-based team members, but Tice is certain that “every dollar spent” will enhance procurement’s influence, build supplier relationships, and facilitate its growth. Times are changing, he reasons, and those who can’t keep up with the new program are in danger of being left behind.

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SPEND MANAGEMENT

SX:

INTELLIGENT SPEND MANAGEMENT WITH A CX APPROACH

John Wookey is back at SAP, helping procurement up its game, bringing a CX approach to intelligent spend management WRITTEN BY: LAURA V. GARCIA

A

s one who loves procurement, there are some people I deem myself lucky to meet. Mr John Wookey, President of SAP’s Intelligent Spend and Business Network Group, is one of those people.

Wookey has spent much of his career changing the face of how we work, and as the enterprise technology industry continues to evolve, Wookey continues to do just that.

Having boomeranged to his old stomping grounds at SAP, Wookey is once again smashing silos and building bridges. Wookey re-joined SAP in October of 2020, after

spending most of the previous decade at Salesforce during a time when they were going through some pretty expeditious growth. Wookey had left SAP for Salesforce back in 2011 when the company consisted of about 5,000 employees. By the time Wookey left Salesforce that number was nearing the 49,000 employees that it reports today.

Prior to his departure, Wookey had spent a few years at SAP building the first set of on-demand applications to take to market.

This marked the beginning of the cloud journey. Years later, Wookey reconnected with a few board members. As Wookey explained, “We had a very strong alignment in terms of where we saw the market going, and the criticality of things like cloud computing and the operating model for software in the future. We also agreed that some of the new emerging technologies like artificial intelligence needed to come into applications in a much more integral way

“ Every CPO is trying to think about how to make their suppliers a more integral part of their innovation strategy and get them more engaged in the process” JOHN WOOKEY

PRESIDENT, INTELLIGENT SPEND AND BUSINESS NETWORK SAP

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SPEND MANAGEMENT

“ The fact is, all these organisations have these networks of relationships, but they're effectively managing them outside of the technology that they're using to drive the procurement process” JOHN WOOKEY

PRESIDENT, INTELLIGENT SPEND AND BUSINESS NETWORK SAP

than what we saw happening in the marketplace.”

He continued, “We also saw a need to move beyond an org-centric approach to software to a network-based approach. We wanted to really delve into how software could not just help to improve internal operations and efficiencies, but also help organisations to interact more effectively with their trading partners. We were looking to build a software model that connects

organisations and helps them optimise various objectives as part of that exercise.”

“It was really a meeting of the minds around where we saw the industry going and then an idea for how we wanted to help SAP get there.”And get there they did.

Beyond the Org; More Than Just Spend SAP’s Intelligent Spend and Business Network Group break down digital barriers, building bridges instead, creating a network that gives organisations the framework they need to drive improvement initiatives, increase efficiencies, and foster innovationfuelling collaborations.

Allowing the free flow of information makes for a more dynamic business model, allowing suppliers, business partners, and stakeholders to gain valuable insights, share procurementmag.com

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Intelligent Spend Management

“ It's about how you provide business continuity in the relationship. And that's what we're trying to really support with our business network approach” JOHN WOOKEY

PRESIDENT, INTELLIGENT SPEND AND BUSINESS NETWORK SAP

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ideas, source suppliers and respond to offers.

“Every CPO is trying to think about how to make their suppliers a more integral part of their innovation strategy and get them more engaged in the process. That's much easier to do on a common, single platform than over a hodgepodge of systems,” Wookey said.

“The fact is, all these organisations have these networks of relationships, but they're effectively managing them outside of the technology that they're using to drive the procurement process. So the idea is, you have a framework in place but what we need to do is change the boundaries of that framework.

We need to take it from the organisation to the network of relationships you're really trying to support as part of optimising that process.”

“And in doing so, this opens up the opportunity for you to drive more cost efficiencies, more operational efficiencies as well as environmental measures and social objectives such as ethical sourcing, or supporting women-owned businesses.

People want to be able to instrument all of this with their system. In my view, we're doing two things. We're making the framework bigger, and we're adding more dimensionality to it.”

“It's interesting because when I was at Oracle, my biggest competitor was SAP. And I always admired the fact that not only did they have compelling solutions but they took on some of the hardest business problems in the industry,” Wookey said.

Finding a way for procurement to gain control and harness spend on things like direct

and indirect materials spend, travel expenses, and contingent labour are some of those industry problems SAP tackled.

Cost, Control and Compliance: Gaining Control of The Seemingly Uncontrollable As The Hackett Group’s Key Procurement Issues report showed, increasing spend influence remains a top priority for CPOs for 2021. Hence, a need for better ways to manage all categories of spend across an organisation.

John says when it comes to spend management, procurement is always looking to gain what he calls “The three Cs; cost, control and compliance.” This is what allows procurement to gain the control they need to strategise on spend, find and realise cost savings and enhance compliance. procurementmag.com

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100,000

SAP staffing number for 2020

Of course, SAP provides some handy solutions such as SAP Concur and SAP Fieldglass so you can do just that. As Wookey said, “What's unique about SAP is we provide the best in class capabilities for each of these spend categories across the organisation from a single solution provider. And all of them connect to the SAP Analytics Cloud.”

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that gives CEOs and CFOs visibility to look at all the dimensions of spend from operational costs to social responsibility and environmental objectives.

SX: The Supplier Experience Before we “sat down” I had dug up an old article Wookey had written while at Salesforce.

“You asked me about the CRM article, and it's interesting because CRM to me, is the mirror image of spend management. You're

SPEND MANAGEMENT

“ As a customer, it's frustrating to buy something, then call the service department, and you have to spend time explaining who you are, what you bought and when you bought it" JOHN WOOKEY

PRESIDENT, INTELLIGENT SPEND AND BUSINESS NETWORK SAP

either the buyer or the seller. With CRM, what you need to think about is the full life cycle experience of a customer from the time they're a part of the marketing campaign until you sell your service and you upgrade.”

“As a customer, it's frustrating to buy something, then call the service department, and you have to spend time explaining who you are, what you bought and when you bought it. It just doesn't make sense to you that they don't already know that. That's the

problem, not understanding the full lifecycle of the customer. And it's the same for a supplier. Suppliers get frustrated too when they go through that process from being awarded a contract from a sourcing event, to then go through the requisitioning, ordering, invoicing, and settlement process.

Then if some part of that process breaks, they call up the buyer, and they can't get it fixed because those systems aren't connected.” procurementmag.com

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G4S PLC

GLOBAL

PROCUREMENT

AND SUPPLY CHAIN

TRANSFORMATION Robert Copeland, G4S PLC’s Group Procurement Director (CPO) discusses running procurement for the leading global technology-enabled security solutions provider WRITTEN BY: OLIVER JAMES FREEMAN PRODUCED BY: CAITLYN COLE

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he British firm G4S – known for being one of the world’s leading security services providers – recently found time for senior leader Robert Copeland to sit down with Supply Chain Digital to discuss the organisation’s experiences of a year plagued by the COVID-19 pandemic.

Robert Copeland is G4S’s Group Procurement & Supply Chain Director, and has over 20 years in Procurement and Supply Chain.

To start our discussion, we addressed the elephant in the room, COVID-19. The global virus has cast shade over almost every aspect of the supply chain process, and it only seemed fitting to ask Robert about its effect on G4S activity.

“COVID-19 has impacted all organisations, some for the better, and others sadly for the worse. However, G4S has been incredibly resilient during the Pandemic.

In several regions especially in the US, demand for G4S security services increased to ensure customer properties and facilities were fully protected during the pandemic.

In the UK G4S has played an important part in supporting national efforts by successfully

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“ I also want people to get away from their desks and truly understand why things are the way they are, and to pinpoint the problems we are trying to solve” ROBERT COPELAND,

GROUP PROCUREMENT & SUPPLY CHAIN DIRECTOR (CPO), G4S PLC

mobilising testing facilities across the country, including 18 regional, 92 local & 65 mobile sites, requiring G4S to rapidly recruit thousands of additional staff.

With all of these programmes around the world in addition to day-to-day activities, the Procurement function has been thoroughly challenged. The procurement team adapted and worked hard during the first few weeks

of the crisis to source and expedite over 10 million items of PPE, helping keep over 500,000 employees and our customers safe.

We teamed up with the G4S subsidiary Hill & Associates Consultants Limited, one of Asia’s leading provider of specialist risk mitigation, to rapidly go on site in China to screen PPE manufacturers who had never supplied G4S before, giving us greater visibility of the product quality and business standards.Beyond that, we had to ensure G4S supply chains were responsive and agile to adapt to customers’ requirements, which in some cases changed overnight.

In parallel, the procurement team led the development and implementation of infrastructure to enable the rapid recruitment of thousands of staff to run the Covid Test Centres across the UK, using the latest digital workforce management platform and recruitment partners such procurementmag.com

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“ Several regions especially in the US, demand for G4S security services increased” ROBERT COPELAND,

GROUP PROCUREMENT & SUPPLY CHAIN DIRECTOR (CPO), G4S PLC

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G4S PLC

ROBERT COPELAND TITLE: GROUP PROCUREMENT & SUPPLY CHAIN DIRECTOR (CPO) COMPANY: G4S PLC INDUSTRY: SECURITY LOCATION: LONDON, UK

EXECUTIVE BIO

Robert Copeland is an experienced supply chain professional with over 20 years’ experience in multinational organisations both in the UK and abroad.

Having studied in the UK and France, he started his career at Peugeot Citroen (PSA) in Paris, returning to the UK to work at Danone and the Post Office before joining G4S in 2015.

Robert has built his reputation reshaping Procurement and Supply Chain functions in a digital age, allowing the supply chain to become a business competitive advantage.

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G4S PLC

“ In a lean business like G4S, our stakeholders are won over by delivery – conversely, reputations can quickly be tarnished if change outcomes fall short of promises made” ROBERT COPELAND,

GROUP PROCUREMENT & SUPPLY CHAIN DIRECTOR (CPO), G4S PLC

as HR Go. The cloud based workforce management platform gives G4S real-time visibility and reporting, ensuring the entire recruitment process is compliant, transparent, and controlled from end to end.

At the same time, the business was preparing for Brexit, the divestment of its

DID YOU KNOW...

TRUSTED PARTNER: THOMAS KNEALE “Thomas Kneale has been G4S’ preferred supplier for contract quality, fire retardant bedding and bathroom textiles and prisoner clothing for nearly 20 years, providing sector compliant textile solutions for end users with differing needs and requirements across multiple business segments, primarily custodial,” says Thomas Kneale director Richard J. Manville. “Having invested in a specialist digital stock forecast system which permeates the whole of TK’s supply chain, the G4S/ TK partnership has grown to now include

Thomas Kneale operating an end-to-end, vendor-managed G4S stock holding, ordering and replenishment business model. This system operates on a fully accredited and audited supply chain evidenced by the Gold medal award to TK on the EcoVadis Sustainability platform. G4S is rightly vigilant and uncompromising that it’s supply chain is transparent, auditable and compliant to its sustainable objectives. Thomas Kneale fulfils these obligations meticulously operating only with fully regulated and audited factories in China and the Sub Continent.”

procurementmag.com

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G4S PLC

2004

Year founded

£7,758m+ Revenue in GBP (2019)

570,000+ Number of employees

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G4S PLC

conventional cash business in 40 countries and the mobilisation of new major contracts won in 2020, including a new 10-year contract to operate the UK’s first resettlement prison, HMP Five Wells in Wellingborough.

The pressure has been with us at every step; however, I am immensely proud of the way our teams around the world rose to every challenge.

Given the on-going refocusing at G4S in a competitive market place, Copeland talks about a major supply chain transformation

“It is important to take the time to engage with the business and suppliers at all levels to find opportunities that are often known of, but not acted upon” ROBERT COPELAND,

GROUP PROCUREMENT & SUPPLY CHAIN DIRECTOR (CPO), G4S PLC

programme to enable operational excellence and cost leadership.

When I visited the G4S Procurement teams around the world, I spent time with the operational teams to get a direct understanding of how the businesses operated.

I noticed the work-wear supply chains were highly decentralised and often suffering from range proliferation (i.e. 60 variants of white shirts used in just 6 European countries) and large amounts of stock obsolescence cluttering up storage areas.)

Work-wear is a major spend area for G4S with an annual spend of $50M supporting over 500,000 employees. Anyone who has been involved in the transformation of corporate work-wear will attest to the fact that it is deceptively complex. procurementmag.com

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G4S PLC

Work-wear is also an emotional subject and understandably so. The saying goes, ‘if you dress well, you feel well’ and this meant that any changes were scrutinised and challenged by many, from works councils to Managing Directors. The business was interested in improving how they managed work-wear and reducing costs, but the countries often lacked the capability to implement sustainable change.

The competing dynamics of works councils, customer standards, staff churn, uniform customisations, bulk manufacturing lead times, mobilisation of new business (typically 30-day go-live from contract signature), seasonality, special events, quality and cost vs. garment design life, create a rather complex algorithm when blended together.

Since 1996 G4S has owned a garment manufacturer in India called IBG, which currently supplies 15% of G4S’s uniforms

“ The digitisation of procurement at G4S has allowed my teams to focus more time on front-line projects and business growth and allowing us to accelerate our important supply chain ESG agenda.”

ROBERT COPELAND,

GROUP PROCUREMENT & SUPPLY CHAIN DIRECTOR (CPO), G4S PLC

G4S Integrated Security

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globally. IBG had a difficult relationship with G4S as an in-house supplier. Each local country operation demands a high touch and responsive distribution service, and frankly, the demands are often unreasonable but this is driven by the needs of our customers.

Whilst IBG was renowned for the quality of its products, it simply could not compete on service with strong local distributors (200 suppliers in Europe alone). This truly had become an existential threat to IBG and so the opportunity for the procurement team to help IBG pivot it’s business model and to focus on its core strengths was timely.

G4S, like many companies, over time can find itself becoming overly reliant on and beholden to suppliers where the knowledge sits firmly with the supplier

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base. It can be a real struggle to get hold of robust management information, performance KPIs, accurate stock liabilities, and in the case of work-wear a clear understanding of the specifications and cost per wearer. Past attempts made by local business units had limited success. This presented a great opportunity for the Group Procurement team to showcase its ability to re-imagine the way the business thought about work-wear.

As we developed the operating model, we identified 3PL as an option and one that had the potential to solve many of our problems. We evaluated the merits of both a fully outsourced 3PL solution alongside maintaining a direct relationship with a panel of manufacturers/distributors. What we found during the detailed evaluation was that for a tight margin business such as G4S, a direct relationship with a uniform distributor, in terms of technical and service support along with a TCO price, outweighed the benefits of a 3PL solution.

In a lean business like G4S, our stakeholders are won over by delivery – conversely, reputations can quickly be tarnished if change outcomes fall short of promises made, so a robust operating model was critical to withstand the operational pressures and demands exerted through the lifecycle of managing customer expectations.

Given that work-wear covers six continents, it was important to divide this programme into manageable phases, with the first phase being the UK & Europe in 2018. The first element was to develop the right operating model, which critically would allow G4S to retain control, scale the solution and leverage volumes with flexibility for any local and national requirements.

The solution had to conquer key issues including the build-up of obsoles-cence stock, wearer level management (including start and end of life), zero based budgeting, cost per user tracking, garment performance in the field tracking, order vs user requirements, working capital optimisation and inventory management.

To ensure the new operating model met stringent business ethics, we collaborated with EcoVadis to independently audit our work-wear supply lines for modern slavery risks and ethical standards.

We also partnered with a boutique Dutch software house, EC Manage, which developed a digital work-wear management procurementmag.com

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system for distributors, able to give wearer level allocations and controls, the trick being to create flexibility without excessive working capital. Customer contracts often require G4S to mobilise a workforce numbering in the 1000s with 30 days’ notice.

The Procurement team ran several complex prequalification tenders and e-auctions during 2018 to ensure the best partners were selected to deliver the right economic and operational blend. We appointed the well-respected UK based workwear distributor Incor-poratewear Ltd, to to supply the six largest European countries, consolidating over 200 suppliers into one contractual relationship.

The project team had to undertake a major user trial phase as agreed with the European Works Councils to ensure that the optimised range was exactly right, often with very positive feedback from the users, in parallel to the trials the supply chain had to be fully Brexit proofed, able to operate in all possible Brexit outcomes.

The output of the programme in Europe delivered overall cost efficiencies of 20%-25% (40% in some countries), and a range rationalisation of around 60% across Europe. This enabled G4S to reinvest some of the savings in targeted areas to improve the look and feel of the uniforms and the morale of our people.

Work-wear transformation has been a challenging project, one that has seen us navigate through some interesting moments (including Brexit), but it has also demonstrated the value of a truly capable and trusted procurement function, able to provide leadership and commercial credibility.

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“ The procurement team led the development and implementation of infrastructure to enable the rapid recruitment of thousands of staff” ROBERT COPELAND,

GROUP PROCUREMENT & SUPPLY CHAIN DIRECTOR (CPO), G4S PLC

procurementmag.com

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PROCUREMENT STRATEGY

The

Hackett Group’s 2021 Key Issues; Frustratingly Accurate I ask Laura Gibbons, co-author of The Hackett Group’s 2021 Procurement Key Issues report to help part the clouds on the high demands facing CPOs in 2021.

WRITTEN BY: LAURA V. GARCIA

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A

t first glance, The Hackett Group’s 2021 Key Issues report, is quite frankly, frustrating. Seeing reduced purchasing costs at the top of the list was disappointingly unsurprising.

After the year that should have taught us that there is more to life than the mighty dollar and that risk doesn’t always remain simply just a threat, but can, in reality, decimate your business; after all the screaming about increasing resiliency and the need to focus on sustainability, I was perhaps naively so, hoping for different.

But of course, business is business, and money must be made.

So, reduce spend cost remains firmly at the top of the priority list. Right underneath it, however, “reducing supply risk to ensure supply continuity” hits a firm landing in second place. Although I’m happy to see it, the trending term “cognitive dissonance” comes to mind. This is where the problem often stems and where my frustrations lie; procurement professionals are often tasked with sometimes quite contradictory objectives. More on that later.

PROCUREMENT STRATEGY

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PROCUREMENT STRATEGY

Regardless, leveraging technology can help get you there. And yet, companies seem slow to get onboard, often stalling out before even getting started. The Hackett Group’s 2019 Procurement Transformation Poll showed that “fewer than one-half of procurement transformation initiatives consistently meet or exceed management expectations.”

The challenges So, what exactly is the problem? Do organisations simply not have the budget, or are they lacking in executive buy-in? I turned to Laura Gibbons, co-author of The Hackett Group's 2021 Procurement Key Issues report for the answer.

“Sometimes that's the case, yes.

But what prevents organisations from transforming today is more commonly cultural resistance and organisational or process complexity. And interestingly, if you looked at this same question

two or more years ago, you would see that inadequate funding and lack of commitment from enterprise executives were the top hurdles to procurement transformation. Today, however, they’re at the bottom, indicating that executives are now on board with transformations.” said Gibbons.

Gibbons expands, “But procurement isn't quite ready to do it from a tactical or logistical standpoint, and that's why the top two hurdles to procurement transformation are stakeholder resistance to change and procurement staff skills deficiency. It's not necessarily about having the wrong people on the team. In many cases, it's about not training them, not communicating with them or not bringing them along on that long-term, transformational journey.”

Supply chain and procurement’s deepening talent gap has long been procurementmag.com

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2021 procurement key issues 1. REDUCE SPEND COST Reducing purchasing costs has consistently been a top priority for procurement organizations, indicating that providing core services is a basic requirement for success.

2. REDUCE SUPPLY RISK TO ENSURE SUPPLY CONTINUITY Following the early impacts of COVID-19, procurement's ability to assure supply was a critical capability. In 2021, procurement must continue to invest and reinforce third-party risk management.

3 ACT AS A STRATEGIC ADVISOR TO THE BUSINESS Top-performing procurement organizations recognize that a strong relationship with the business enables early involvement with greater spend influence.

4. ACCELERATE PROCUREMENT DIGITAL TRANSFORMATION Adoption of modern digital tools will allow procurement to make drastic improvements across its entire suite of services – from customer-centricity to predictive analytics to process efficiencies.

5. IMPROVE PROCUREMENT AGILITY Becoming an agile enterprise is increasingly important for businesses, but that means developing agile behaviour at the functional level.

6. MODERNIZE PROCUREMENT APPLICATION PLATFORMS Modernizing technology provides several

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benefits to procurement, including improved agility, customer-centric processes and costefficiencies.

7. ALIGN SKILLS AND TALENT WITH CHANGING BUSINESS NEEDS Organizations increasingly understand the need for top talent. For procurement, this means leveraging cross-training and investing in developing talent.

8. IMPROVE ANALYTICAL AND REPORTING CAPABILITIES The potential of analytics is increasing quickly.

Organizations should prioritize leveraging external data, optimizing dashboards, and adopting predictive and smart analytics.

9. ENABLE CORPORATE SUSTAINABILITY GOALS Corporate social responsibility is climbing the ranks of priorities at many companies in 2021.

Sustainable procurement is among the most critical areas in which procurement can make a big impact.

10. INCREASE SPEND INFLUENCE Spend influence is among the top measurements of procurement's performance, leading to reduced purchasing costs, improved quality and better strategic outcomes like product innovation..

PROCUREMENT STRATEGY

“ It's not necessarily about having the wrong people on the team. In many cases, it's about not training them, not communicating with them or not bringing them along on that longterm, transformational journey” LAURA GIBBONS

SENIOR DIRECTOR, PROCUREMENT EXECUTIVE ADVISORY THE HACKETT GROUP

discussed. But to Gibbons’ point, this is more about doing better with the people we have. Transformations are a team effort. And as many offices are now made to rely on remote work, the challenges of remaining a unified, high-functioning unit aligned in values, mission, and action are greater than ever.

Despite procurement’s difficulty in quantifying its value proposition, we have made headway. Stakeholders and board members are now looking to procurement as a strategic advisor (third on the key issues list), and to deliver on valueadds through intelligent procurement strategies such as leveraging spend volumes with strategic sourcing and category management. Of course, after the disruptions faced and still to be faced by the global pandemic, increasing procurement agility remains on the list, coming in at number five.

Improving analytical and reporting capabilities comes in at number eight and will help you to reduce costs and mitigate risks.

And once again speaking to procurements lack of ability to quantify value, improving performance measurement capabilities comes in last on the list.

Laura Gibbons, Senior Director, Procurement Executive Advisory Gibbons has industry and consulting experience in areas such as organizational and process design, product innovation and management, strategic sourcing, supply chain, and manufacturing operations. She previously worked in The Hackett Group’s Strategy & Operations consulting practice, where she specialized in sourcing, procurement and supply chain.

Before joining The Hackett Group, Gibbons served as Product Strategy & Operations Associate at Groupon, Inc. where she helped launch several new products at the rapidly growing company.

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PROCUREMENT STRATEGY

So, heading into 2021, and likely thereafter, the key themes for procurement are cost, risk, people, and digitisation. However, diversity and sustainability is not to be forgotten and should be part of every transformation agenda.

“Sustainability jumped up to number nine on the key issues list — it's never been on the top 10 before," said Gibbons. “And then supplier diversity placed number 11, which is also the highest it has ever appeared.

Particularly within the US, diversity is now a must-have. And it's on everyone's mind, even at the C-suite level, so it's something procurement has to get on board for.

Sustainability is a bit bigger in Europe, but we're seeing it growing in the US as well. I would expect that to continue in the same direction, following the new administration in the US.”The study also showed there is still room for improvements in extracting

Procurement solutions Modernising– consolidating, upgrading and migrating – the technology supporting the procurement function is critical for efficient processes, customer-centric workflows and user-friendly interfaces.

These tools will enable agile behavior and free up time for strategic work.

According to the 2021 Key Issues Study, procurement is halting investment in legacy or onpremise solutions, while 29% and 22% of organizations plan to grow cloud-based core procurement applications and best-of-breed solutions, respectively (Fig. 2). This indicates a widespread move to digitally enabled procurement operations.

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“ What prevents organisations from transforming today is more commonly cultural resistance and organisational or process complexity” LAURA GIBBONS SENIOR DIRECTOR, PROCUREMENT EXECUTIVE ADVISORY THE HACKETT GROUP

further value from areas such as category management, supplier relationship management, improved demand forecasting and planning and strategic sourcing. Luckily, all are areas where we can leverage today’s tech to achieve more rapid advancements.

Transformation is hard, however. The complexities and the challenges to be faced are rarely evident until you are deep into the process, far after commitments have been made.

Procurement technologies are still somewhat in their infancy. The path isn’t yet cleared, and the ones leading the charge and cutting down the brush, are perhaps the ones who will feel the deepest cuts.

Implementing new technologies, designing new processes, smashing silos and creating information flows; these aren’t battles easily won. The efficacy rates of those daring to pave the way show the wounds.

Navigating cost vs risk Back to my frustrations, or better stated, my concerns. Let’s be clear; my point here isn’t to lament about the woes of procurement. It is, in fact, quite the opposite.

We live in a marvellous age of deep tech and emerging technologies, and the wonderful new world of collaborative environments and real-time data exchange that they afford us.

True procurement transformations really are

PROCUREMENT STRATEGY

possible. And yes, both cost reductions and risk mitigation can be achieved. Ambiguities, however, are often the death of success.

When it comes to risk management, most especially when looking at the area of availability of supply to ensure continuity of business, mitigation strategies often come at a cost. For instance, a standard tactic, diversifying your supplier base could mean new asset requirements as well as production trials, third-party testing and all their associated costs. Reducing risk may also mean moving to more local, often higher-cost suppliers.

Other common mitigation measures include increasing safety stocks and reverting to a ‘plan b’ such as less efficiently packaged material options.

The costs of minimising your risks can stack up quickly, and they must be evaluated against the likelihood of disruption and the level of impact on your organisation. But yes, with the right procurement framework, alignment on company values, and a full understanding and acceptance of trade-offs being made, all can be accomplished.

As I’m fond of saying, procurement is a tough gig meant for strong hearts and brave souls. May you go forth with strength in your step and make this year better than the last.

And may The Hackett Group’s 2022 report reflect your efforts.

Download The Hackett Group’s 2021 Key Procurement Issues Report at TheHackettGroup.com procurementmag.com

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T – MOBILE US, INC.

ENHANCING CX WITH DIGITAL SUPPLY CHAIN SOLUTIONS

Erik LaValle, Digital Supply Chain Technology Leader, explains how digital transformation has helped T–Mobile find innovative market solutions WRITTEN BY: WILL GIRLING PRODUCED BY: GLEN WHITE

T

-Mobile’s presence in the US began in 2002 when Deutsche Telekom (its parent company) acquired and rebranded VoiceStream Wireless Corporation.

Headquartered in Bellevue, Washington, and currently ranked among the top three largest wireless carriers in the country with over 100 million subscribers, T-Mobile’s dynamic approach to the customer experience is best encapsulated by its ‘un-carrier’ strategy. Officially debuting in 2013, this philosophy saw the company actively seeking to ‘break the rules’ of industry tradition, eliminating everything that has no (or even negative) consequence to the customer, including contracts and international roaming fees.

Far from being an approach siloed in a single aspect of T-Mobile’s business, the spirit of imaginative reinvention permeates every core operational element. Erik LaValle, Digital Supply Chain Technology Leader, explains how the company’s cultural agility has enabled it to address challenging supply requirements during COVID-19 and why delivering a superior customer experience is contingent on flexible digital solutions. procurementmag.com

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SCApath and T-Mobile: Delivering Omni-Channel Supply Chain Capability Evan McCaig, SCApath President and Managing Principal, explains how it is growing T-Mobile’s digital supply chain platform and supporting its 5G network expansion “We’ve been T-Mobile’s supply chain consulting partner for the last four years, working across multiple supply chain initiatives. The most well-known are the T-Mobile Sprint merger, and T-Mobile 5G network, which is extremely important to the development of IoT and really the supply chain of the future.

Our team of supply chain experts have worked hard to deliver a seamless customer experience, so you can go into a T-Mobile store and buy or return Sprint inventory, and vice versa. We’ve also deployed a highly automated multi-channel distribution center solution for all US mobile devices and accessory fulfilment. We’re currently modernizing their 5G supply chain to drive their network nationwide.

We’re extremely grateful to have been chosen by the T-Mobile team to optimize their supply chain and support their focus on delivering 5G capability.

When I think about our continued partnership with T-Mobile, it’s really about two key strategic elements: supporting their business as they move to a fully digital supply chain platform – from customer experience and enterprise

architecture perspectives – and developing their 5G network supply chain. It’s a perfect example of SCApath’s cross-discipline supply chain expertise, and value of bringing order management, fulfilment and transportation together to build advanced supply chain capability.

The IoT, enabled by 5G, will allow more real time track and trace, and increased visibility from the manufacturer to the end customer enabling more agility than ever before. So, T-Mobile, indirectly, is going to be instrumental in supply chain innovation that we’re going to see in the next five to 10 years.

In today’s complex supply chain and technology environment, you really must understand the trade-offs between speed, cost, quality and agility. It’s critical you understand those relationships to deliver an omni-channel supply chain capability.

The ability to tie together supply chain operations and technology is not only what makes SCApath different but it’s also a necessity for future commerce – and that’s the reason why we’re so bullish and excited about the future.”

T – MOBILE US, INC.

“WE WANT TO BE ABLE TO DO THINGS THAT NO OTHER COMPANY CAN DO ON BEHALF OF OUR CUSTOMERS”

Responsible for first 18 years of his career overseeing an end-toas an industry consultant, end technology solutions which he credits as portfolio across a being highly formative, US$13bn supply chain of “it’s in my nature now more than 8,000 stores to look for those big for the flagship Magenta business challenges, to brand, over 11,500 stores understand what the for the Metro brand, as outcome is intended well as for the buildto be and then to find out of the network itself, the technology needed LaValle and his team to solve that problem.” field the technological Having spent his career ERIK LAVALLE requirements associated primarily in the retail DIGITAL SUPPLY CHAIN with T-Mobile TECHNOLOGY LEADER, T–MOBILE sector, LaValle admits he procurement for was initially unsure why external sales and internal consumption.

T-Mobile (a telco) reached out to him. “It was Highly experienced both academically and then that I learned T-Mobile, in addition to professionally in his field, LaValle spent the being a telco, really operates as a retailer for 104

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ERIK LAVALLE TITLE: DIGITAL SUPPLY CHAIN TECHNOLOGY LEADER COMPANY: T-MOBILE

the customer experience aspect of obtaining devices and accessories. So much of the customer experience and the brand promise comes from its supply chain, and I was very intrigued.” Complimenting the company’s “great culture”, which gives employees autonomy, fosters learning and always offers fun challenges, LaValle joined in early 2017.

Naturally curious and a problem solver, LaValle finds the behind-thescenes complexities of supply chain to be fascinating. Stating that the importance of logistics to enabling T-Mobile’s high-quality customer experience really resonated with him, he adds that the company’s agile attitude has been key to weathering the substantial changes that supply chains have undergone in recent years. “As US businesses began to do more offshore sourcing and

EXECUTIVE BIO

INDUSTRY: TELECOMMUNICATIONS Erik leads Product & Technology for T-Mobile, responsible for the technical solutions as well as the process definition from concept to delivery for device and accessory supply chain, along with procurement, inventory management and distribution and logistics for network supply chain, building out T-Mobile’s 5G network. Erik held similar leadership roles at L Brands and Carter’s OshKosh.

He is a former industry consultant, and approaches challenges balancing the business outcome with appropriate technical solve.

Erik is known for his innovative approaches with business partners, and for developing seamless teams with his internal teams and delivery partners.

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Delivering the best of IBM Chip Schneider and Glenn Finch from IBM on working with T-Mobile to deliver cognitive process transformation Chip Schneider, partner in IBM Global Business Services (GBS), worked alongside T-Mobile to bring about what he calls a “cognitive process transformation” with data analytics, artificial intelligence and cognitive cloud.

IBM was chosen by T-Mobile as their strategic partner to deliver the programs and projects to propel T-Mobile forward with back-office functions like financing in supply chain.

IBM has been a partner with Sprint for a number of years so when T-Mobile and Sprint merged last year, it was an opportunity for IBM to showcase their expertise.

Schneider is enthused when discussing the working relationship between IBM and T-Mobile, saying there is “always an air of excitement” and “they’re so willing to listen”.

“T-Mobile asked us to make the work we do for them ‘palatable and meaningful’,” says Schneider.

“That means bringing industry leadership, functional leadership in finance, supply chain customer management, and the technical aspects of hybrid cloud, cognitive and machine learning, data intelligent workflows, and blockchain. We had to make sure it’s not just us talking to them, but us working together with them.”

Of course, the benefits of a close, collaborative relationship like this work for both parties, especially when digital transformation is accelerated by a pandemic.

“That changed everything,” adds Glenn Finch, Global Leader Big Data & Analytics at IBM.

“2020 was a matter of survival for most companies with a focus on business continuity and cost reduction. So you saw this radical growth in back office transformation, in front office transformation, and then this this unprecedented growth in data.

We are a hybrid cloud and AI company. That’s exactly what the market wants right now.”

Finch explains how companies were faced with a critical cloud decision and turned to IBM as a trusted, reliable partner.

“When clients were having to bet their careers, they bet on us,” says Finch. “When we go into a process and we drive a bunch of AI into it, we’re shrinking cycle time by 80 to 90%, we’re cutting costs by 50 to 60%, and NPS scores are going up by 10 to 20 points. Sometimes clients think that can’t be right as it sounds too good to be true.”

Schneider emphasises the importance T-Mobile placed on not only transforming the technology but also empowering individuals.

“T-Mobile are hyper focused on ensuring that not only their customers feel the human connection, but also employees,” says Schneider. “And so our job is to take the data – internal and external – and present it back to them and say, ‘Hey, here’s what I found’. It’s really like building a colleague for them to help drive their strategic decisions on their supply chain.” ibm.com/hybridcloud

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ADVERT PAGE GOLD “ DIGITAL TRANSFORMATION HAS BEEN VERY MEANINGFUL TO T-MOBILE” ERIK LAVALLE

DIGITAL SUPPLY CHAIN TECHNOLOGY LEADER, T–MOBILE

supply chains became longer, the need for facilitated communication and a shared understanding of the intended outcomes was very important. As that shift began to happen, then came the emphasis on product development, which, with the proliferation of the internet, placed the emphasis on product development and the creative process.” This also brought technology to 108

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the fore, and in this respect, T-Mobile has undergone a significant transformation.

“When I first joined T-Mobile, there was very little in the way of digital solutions. We were a monolithic,” LaValle explains. “That made for a very complex environment that really wasn’t flexible or tailored for our business’ needs.” As such, his first challenge was serializing T-Mobile’s inventory over an 18-month period to develop a digital platform. Having subsequently rolled this out to great success, LaValle calls this the

PARTNERING FOR SUCCESS

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LaValle makes it clear that, in his opinion, who a company chooses to partner with can have a substantial effect on overall success. Aside from the ‘table stakes’ of technical knowledgea, market success and trust, T-Mobile is looking for collaborators who are willing to challenge and elevate the company’s current standards.

Complimenting T-Mobile’s “great ecosystem of partners”, he states that relationships developed with IBM, Rimini Street, Insight Global, and SCApath, each of which play different (yet interconnected) roles, have been particularly important:

IBM “IBM is our key partner for operations support, as well as development around our core ERP (enterprise resource planning). The firm fields a very large team, a combination of onshore, nearshore, and offshore professional resources that are helping to advance our operations stance. T-Mobile has a stable performance solution, but with IBM we are really taking it to the next level, moving to a continuous delivery stance, and looking for even more robust performance and stability.”

INSIGHT GLOBAL “Insight Global is a partner that helps us in our digital spaces. It’s been a fantastic partner in terms of sourcing talent for T-Mobile, both in terms of technical skills and business skills. It’s a flexible and responsive company. We have been so pleased with our partnership; the resources

they bring to the table for us are consistent and it’s an integral part of our team.”

SCA PATH “SCApath has become a very trusted advisor. It’s a boutique consulting firm that focuses on distribution, logistics and order management. Using a stable of extremely experienced and pragmatic professionals, SCApath helps us solve some of our most challenging problems by leveraging their deep industry experience in the industry.

It’s been transformative in changing our relationship with our business partners."

RIMINI STREET “Rimini Street provides our third-party support for SAP and has been helping us in highly challenging areas to keep SAP performance stable.”

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Together anything is possible.

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Insight Global: a flexible and responsive skills resource Sourcing talent with the technical and business skills to meet the unique demands of thousands of clients across the US Insight Global provides long-term contract, short-term contract, temporary-to-permanent, direct placement, and enhanced staffing services; specialising in Information Technology, Accounting and Finance, Engineering (non-IT), and Government roles.

Connecting People “We’re focused on empowering our people and connecting them with the best opportunities; while supporting our customers with staffing and services solutions,” pledges Jessica Calzaretta, the Vice President of Insight’s Global Technology Division. “We support thousands of different customers, spanning every major industry, offering staff augmentation and supply managed services, culture consulting and training ranging from diversity and inclusion to talent optimization. At its core, Insight Global is driven by its consultants who give them purpose, the clients who fuel their drive and the IG family who inspire others every day with their determination, passion and care.”

Digital Transformation Providing staffing for their digital transformation, T-Mobile is one of Insight’s largest customers.

“We deliver a range of technical resources supporting them across all of their locations in North America,” confirms Calzaretta. “The skill sets we staff for companies like T-Mobile range across high-level technical resources supporting agile transformation efforts; project managers, scrum masters, agile coaches, and everything in between.”

Compass In April 2020 Insight Global launched its culture consulting division Compass, responding to the importance of company culture in these difficult times. It was built to help clients get centered on values and align them with their business strategy to create massive trust and connectedness along the way.

“Our culture and shared values have been our true north that have grounded and guided every decision we make, especially when focused on meeting the

Jessica Calzaretta of Insight Global everyday challenges of supporting our people and clients during the global pandemic,” says Calzaretta.

The demand for a flexible workforce capable of pivoting to meet demand has surged dramatically over the past 12 months prompting Insight Global to launch its Global Healthcare division she explains: “We can now better support those industries and customers with everything from different types of patient care resources and the coordinators and support personnel who can step in and provide help to those in need during this difficult time when the demand for a contingent workforce has increased overnight.”

Investing in the Future Allied to its commitment to retaining staff during the pandemic, Insight Global is investing in its employees through training and promotion. “Our shared values are core to who we are as a company,” maintains Calzaretta.

Insight Global’s team is 70% female and the company remains committed to making women “amazing leaders”. Its Women’s Leadership Council creates programs and communities to empower and support women throughout their careers; leading the company to be recognized among the Best Workplaces for Women in 2020 by Fortune & Great Place to Work.

“We help them bring their perspective to the table,” says Calzaretta. “This informs decisions we make across our business to advance the role of women within our organization.” insightglobal.com

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Erik Lavalle @ T-Mobile

“ I SEE MORE CHANGE AT T-MOBILE IN THE SHORT-TERM. BOTH THE VOLUME AND THE MAGNITUDE OF THESE CHANGES WILL BE SIGNIFICANTLY GREATER THAN I HAVE SEEN IN ANY OTHER INDUSTRY” ERIK LAVALLE

DIGITAL SUPPLY CHAIN TECHNOLOGY LEADER, T–MOBILE

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“founding element” of the company’s digital strategy. “I see more change at T-Mobile in the short-term. Both the volume and the magnitude of these changes will be significantly greater than I have seen in any other industry,” he states. This is a bold statement, particularly in the wake of COVID-19, which has seen many organizations make years of accelerated development in a remarkably condensed period. Yet, he affirms that T-Mobile’s status as the ‘un-carrier’ will always give it an edge over competitors: “We want to be able to do things that no other company can do on behalf of our customers.”

This statement gets to the heart of the matter; the customer experience is paramount for T-Mobile and it is willing to invest the time, money and talent required

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1994

Year founded

$45.0B+ Revenue in US dollars (2019)

80,000 Number of employees

to keep it exceptional. Recent events have certainly changed the expectation - from the historically store-focused experience to the digital, web-based experience - but success is ultimately measured the same way: providing the customers with the service they want. “Buy online and pick up in-store, same-day delivery, and special delivery options are all components that are powered mostly by supply chain; it’s really stepping up to be a partner with digital properties and with retail to be the third major component in the overall customer experience.” COVID has pushed forward T-Mobile’s plans in this regard, including buy online/pick up in-store, contactless and curbside delivery, and sameday delivery. “Customers can now have options to get their product where, when and how they want to get it,” he summarizes.

With such a decisive stance on the issue, LaValle makes it clear that pre-existing solutions are often not enough to realize T-Mobile’s vision. Instead, the company opts for in-house business process design to bring specificity and relevance to its customers. “Digital transformation enables that flexibility and ability to achieve exactly what the business is looking for, instead of something that comes pre-configured from a partner vendor.” T-Mobile considers its supply chain solutions to be truly meaningful, an attitude that is integral to producing optimal outcomes. Creating a bespoke solution might be more challenging than selecting a ready-made option, but by forging strong partnerships and “sitting at the table” from the earliest inception of new initiatives, LaValle says that his team is procurementmag.com

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Lead the way to IT cost optimization and business innovation Procurement has a strategic role to play in helping IT transform to a business-first organization by identifying smarter options for traditional services.

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“ IT’S IN MY NATURE NOW TO LOOK FOR THOSE BIG BUSINESS CHALLENGES, TO UNDERSTAND WHAT THE OUTCOME IS INTENDED TO BE AND THEN TO FIND THE TECHNOLOGY NEEDED TO SOLVE THAT PROBLEM” T-Mobile’s quest for a better customer ERIK LAVALLE

DIGITAL SUPPLY CHAIN TECHNOLOGY LEADER, T–MOBILE

able to gain a deep understanding of desired business outcomes that helps to define product options.

At the beginning of 2020, no-one at T-Mobile could have predicted the sweeping changes that have affected national and international supply chains. With the March lockdown soon followed by the completion of the company’s merger with Sprint Corporation in April, LaValle says that the added challenge of integrating two separate supply chains into a single ecosystem has been difficult, although nothing has impeded

experience. “Going into 2021, I think there are three things we’re going to focus on: internal transformation to become a more unified company, transformation around our customer experience, and finally our ongoing digital evolution,” he summarizes.

The usual pressures of meeting expectations and delivering value will remain, but new technology such as T-Mobile’s rapidly expanding 5G network will play an essential role in realizing its ambition. “Digital transformation has been very meaningful to T-Mobile. My encouragement to anyone would be to pick one of your most challenging areas and just get started.”

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RISK MANAGEMENT FEATURE HEADER

THE LANGUAGE OF RISK;

FRAMING RISK GOVERNANCE Procurement Magazine sits down with David Loseby, Group CPO (Director of Procurement) at Rolls-Royce, to discuss the framing of risk governance in the industry WRITTEN BY: OLIVER JAMES FREEMAN FRSA 116

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RISK FEATURE MANAGEMENT HEADER

“ Institutional Framing influences how people connect a process with internal and external structural conditions, invoking the ‘creation of shared conceptions” DAVID LOSEBY GROUP CPO, ROLLS-ROYCE

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aving just spent the best part of a year in a surreal state of – mostly – global lockdown, multinational corporations and domestic suppliers have been faced with unprecedented levels of adversity, and an ongoing uphill struggle against mother nature’s wrath. Experts who work in the world of Procurement and Supply chain Management (P&SM) have learnt at speed to innovate and develop solutions that strengthen existing systems and build resilience, enabling organisations the world-over to retain the ability to provide goods and services to a highly-demanding global population.

Needless to say, it has been an incredibly tough task, and in many cases, previously

thriving businesses and sectors have crumbled under the pressure. Many are now questioning how the companies that have adapted to the new ‘normal’ did so with such haste – a question that can be answered succinctly with one term: risk governance. If you haven’t heard it before, risk governance is a term that refers to the way that businesses, individuals or societies applies a set of rules, processes, and mechanisms to minimise the potentially negative consequences of a decision or scenario. According to David Loseby, Group CPO at Rolls-Royce, you could class it as the “conscious strategic response to market conditions, by adapting and remodelling resources and the [business] models they procurementmag.com

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Listen Now

“ When you consider that risk governance is a relatively new research area, we also need to recognise that corporate risk culture is increasingly important” DAVID LOSEBY GROUP CPO, ROLLS-ROYCE

must operate within to meet a changing risk landscape.”

Risk governance is a standard expectation within every company or institution, but it relies heavily on leaders and models having supreme dynamic capabilities to adopt new norms almost as quick as the markets change. A dynamic capability is essentially an organisation’s underpinning ability to purposefully build, integrate, and reconfigure internal affairs to bring about change within the everyday business environment. In essence,

an organisation’s dynamic capability is defined by its ability to adapt its business model to suit evolving market norms and necessities.

Loseby, a thought leader in P&SM, highlighted the importance of dynamic capability in modern markets when he stated that “The business of achieving a stable business model, particularly when it’s under external and organisational pressure is one of the recently debated leadership competencies.” Fortunately, Loseby recently took the time to sit down and share with Procurement magazine his experience and research and discuss the five factors that he believes should define and help shape an organisation’s risk governance process.

Framing It For Loseby, “communication and the way that procurement risk management professionals frame their approach to the adoption of alternative methods is absolutely crucial to the successful implementation of systems that improve the way organisational risk procurementmag.com

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management is recognised. There’s a lot to be said for the way that an individual can word something. Take a look at the history books – some of the greatest, most renowned addresses by leaders were inspirational, not just because of the words that they said but because of the way that they arranged and spoke them.” I suppose we can all agree that the manipulation of words, in the form of wordplay, is very nearly an art form; one which, I should add, the greater majority have not yet completely mastered.

So, in essence, to bring about the change that we need to see in procurement and supply chain management, we must first change our approach and our individual methodologies, to ensure that we positively frame the alternative idea in a way that is undeniably beneficial for future progress.

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The Enterprise Risk Management System So, to begin with, Loseby believes that the future of risk management – and, presumably, mitigation – all comes down to Enterprise Risk Management (ERM).

ERM is a plan-based business strategy that breaks away from traditional risk management methods; the system aims to identify, assess, and prepare an organisation for any potential disasters or hiccups that may disrupt and interfere with business objectives and daily operations.

Loseby told us that “ERM is essentially an improved version of the risk management approach of yesteryear. If organisations begin a journey towards adopting a mindset that says ‘we’ll embrace ERM as a more engaging and holistic way of providing risk governance’, then they’ll

RISK MANAGEMENT

see a big difference in their risk mitigation strategies going forward. The key to this is how we frame the suggestion. It must be framed in a manner that improves the way in which the decision-makers and influencers of risk respond to managing the portfolio of risks.”

An often-cited example of the framing effect in psychology, sourced from an excerpt in Daniel Kahneman’s book Thinking Fast and Slow, which is wholly applicable – but theoretical – to our current COVID-19 situation: Consider two potential framings of two vaccination programmes that are being rolled out across a nation. They could save 600 people affected by the novel Coronavirus: • Program A will save 200 people.

• Program B has ⅓ chance of saving 600 and ⅔ chance of saving none.

• Program A will leave 400 people dead.

• Program B has ⅓ chance that nobody will die, and ⅔ chance that 600 will die.

Loseby highlighted that “Subjects in the study choose a response that inferred survival by preferring A in the first scenario and B in the second.” This shows that the respondents overwhelmingly supported the wording that implies survival, suggesting that ‘framing' influences risk aversion.

According to Loseby, risk management is defined as the process of identification, measurement, analysis, and control of the risk. The Group CPO emphasised that “Risk management focuses on reducing risk by sophisticated quantitative modelling, and the harmonisation of risk models and processes are more likely to lead to mechanistic – purely physical or deterministic – risk management. This will, to all intents and purposes, filter out the majority of the risks and controls applied to the models; as a result, senior decision-makers in an organisation will struggle to take in and understand fully the risk faced.”

The five domains of framing risk governance Institutional (How it fits into the organisation, its systems and external systems)

Emotional (How you feel about it)

Cognitive (What it is)

Strategic (It’s intent)

Action (How to use it)

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THE FRAMES Cognitive Framing “Cognitive Framing aims to establish a knowledge structure that assists both the organisation and the individual in their understanding of new information and experiences in the most consistent and simplistic form.” According to the research conducted by Stein, Wiedmann & Bouten, there could be two approaches that deploy the use of cognitive framing: 1. Firms applying the cognitive framing of risk governance direct the usage of firm 122

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resources towards risk-related adaptive steering of the business model.

2. Firms applying the cognitive framing of risk management direct the usage of firm resources towards mitigating and minimising risks.”

Strategic Framing “Strategic Framing sets the 'sellers' – focus on three core attributes: Purpose, Intent, and Functionality. In framing a series of approaches and social identities, a strategic approach becomes a catalyst for others to engage with the idea; this gives everybody equal opportunity to influence the direction

“Communication and the way that procurement risk management professionals frame their approach to the adoption of alternative methods is absolutely crucial to the successful implementation of systems that’ll better organisational risk management” DAVID LOSEBY GROUP CPO, ROLLS-ROYCE

being set and creates a sense of unity and shared meaning across the organisation.”

In the long run, Strategic Framing and the concept of sharing the load creates a culture within an organisation that offers longterm value creation and business model sustainability. Everybody has an opportunity to innovate solutions and an equal platform to present them from – employees love that, and so do external investors.

Action Framing Action Framing is an action-orientated approach centred on simplifying and condensing the rules and regulations

surrounding risk and how these should be managed in relation to the organisation itself.

This is in line with ISO 31000, a globally recognised set of standards relating to risk management, which gives general guidance on architecture, principles, framework, and process.

Emotional Framing Emotional Framing is a form of framing that the majority of humans implement inherently in both personal and professional life. “It’s the purposeful intention of making something attractive to get people involved and committed to a course of action. This procurementmag.com

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is said to be achieved through habitual language and positively connoted cultural symbols to create a common ground for all levels in the organisation. Emotional Framing plays an important role in the affective perception and comprehension of potential risks.”

Institutional Framing Finally, “Institutional Framing influences how people connect a process with internal and external structural conditions, invoking the ‘creation of share conceptions.'" Essentially, linking events or occurrences for the whole organisation to connect with and stand behind – rallying the squadron with a call to arms if you like. “Therefore, institutional framing of risk governance accentuates the supplementary control mechanisms such as interfaces between top management and the overall system of internal and external monitoring and supervision along with, or intensified information flows between internal and external supervisory bodies,” Loseby added.

“Looking at the above, if we summarise it, it’s clear that the opportunity for small and medium-sized enterprises to consider and engage with non-financial risks, such as growth, key talent and reputational issues are evident. When you consider that risk governance is a relatively new research area, we also need to recognise that corporate risk culture is increasingly important. It has also been suggested that the deliberate framing of risk governance might help to increase awareness of design alternatives, reduce uncertainty in an increasingly volatile world, and make ambiguity slightly more controllable as a positive outcome for business resilience and sustainability.” procurementmag.com

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ESG

AVEVA UNITES LEADERS

TO TALK TECH AND SUSTAINABILITY Hosted by Robert Opp, chief digital officer at UNDP, AVEVA united industry leaders to talk tech, sustainability and the power of a connected workforce WRITTEN BY: LAURA V. GARCIA

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osted by Robert Opp, the chief digital officer at the United Nations Development Programme (UNDP), convened industry experts including leaders from the UNDP, Schneider Electric, PETRONAS and Verdantix to discuss how organisations are leveraging tech to drive sustainable practices, reduce carbon footprint and hit their green ambitions for a more sustainable future.

Although things had started to shift to a more sustainable mindset prior to the global pandemic, Opp says, “Since then, we've really

seen a surge in these approaches that are being driven by the thriving digital innovation that we see. As people and governments have rushed to respond to cope with the terrible tragedy, they have also spurred a lot of innovation that is really being driven by digital technologies available to us.”

The talk was to focus on how companies can reimagine business models with an aim to not only achieve financial objectives but to do so sustainably.

Opp shared his sentiments, “I think it's no exaggeration to say that today we're experiencing unprecedented and accelerating changes in our environment.

These are being driven by unprecedented levels of inequality and the fact that a good portion of the world's population are still not able to access basic services like financial services. It's also in terms of the climate shocks that we see that over 60 million people are affected annually by extreme weather events. And if that weren't enough, we see the Covid-19 pandemic and the incredible tragedy that is endemic worldwide. At least 70 million people have joined the ranks of extreme poverty because of the Covid-19 pandemic, and now, as we see a vaccine on the horizon, the challenge for us all is how are we going to recover globally from this.”

“ This is what drives us at the United Nations, and these goals provide a rallying call for the entire world" ROBERT OPP,

CHIEF DIGITAL OFFICER, UNDP

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ESG

“ We really believe that Covid-19 is a disruption that we have to take advantage of - to not just build back better but build back greener as well” ROBERT OPP,

CHIEF DIGITAL OFFICER, UNDP

As Opp explained, the power of the technology available at our disposal can have an impact on peoples lives. “It's not only the individual technologies. It’s actually the convergence between them where we start to see incredibly powerful business models and opportunities emerge that have the potential to impact on people's lives.”

In 2015 the global community approved a list of 17 Sustainable Development Goals, “saying this is what humanity stands for in terms of our relationship to each other

and our relationship to the planet. This is what drives us at the United Nations, and these goals provide a rallying call for the entire world.”

From the United Nations, “The Sustainable Development Goals are a universal call to action to end poverty, protect the planet and improve the lives and prospects of everyone, everywhere. The 17 Goals were adopted by all UN Member States in 2015, as part of the 2030 Agenda for Sustainable Development which set out a 15-year plan to achieve the goals.

However, progress is slow, further emphasising the need to get further faster with technology, and to bridge the digital divide. “Today, progress is being made in many places, but, overall, action to meet the goals is not yet advancing at the speed procurementmag.com

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$1.7bn

Inequality: $1.7 billion unbanked population

60m

Climate change: affected by extreme weather

70m

Covid-19: 70m pushed into extreme poverty

or scale required. 2020 needs to usher in a decade of ambitious action to deliver the goals by 2030.”

The digital divide While the convergence of new technologies created opportunities to increase agility and create more resilient supply chains, as Opp pointed out, “If you're not on the right side of the digital divide, in other words, if you are unconnected or you do not have the ability to use your device or the skills to use it or you can’t afford to use it, you're going to be left out. So one of the big issues for us, that we see globally, is the need to bridge the digital divide.”

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Opps says we can expect the current inequalities we see will continue to rise if we don’t make a concerted effort to reach out. “A fundamental part of the Sustainable Development Goals is about leaving no one behind. And so, we must close the digital divide, and we must use digital approaches that can include the entire population.”

He also noted that cross-sector engagement and the creation of ecosystems is critical to success, “At the UN, we are actively looking to recruit across sectors in the overall effort to push towards the Sustainable Development Goals, to assist our work in reaching the world's poorest people and make sure that we are leaving no one behind.”

ESG

affordable and clean energy, industry, innovation and infrastructure, and sustainable industries and communities.

Speaking to the issues of data collection caused by disparate systems, Hayman says, “It is not realistic to say you can magically coalesce all into one system. However, advancements in things like AI and cloud capability will help to bring this data together and allow operators to understand the data, and predict what is going to happen. For the first time, we can now start to do that in the industrial sectors.”

Hayman further underscored AVEVA’s commitment to sustainability and social responsibility by announcing it has joined the Business for Social Responsibility (BSR,) a global non-profit that works with an estimated 250 like-minded member companies to support business leaders in their efforts on climate change and women’s empowerment.

As for how AVEVA is leveraging technology for sustainability, Hayman points to their work in Nava Raipur Atal Nagar, India, where AVEVA software is powering a smart city, a Technology; building a sustainable future Craig Hayman, CEO of AVEVA brought the conversation back around to leveraging technology to build a sustainable future. “I think this is a strategic choice, where you believe you can convince yourself that economic growth can support environmental sustainability. And as a business, as a CEO, you decide that you can serve shareholders, you can also serve employees, you can serve customers and you can also serve the communities in which we all work and live.”

Joining the United Nations Global Compact, Hayman is targeting several of the Sustainable Development Goals related to AVEVA’s work: clean water and sanitation,

“ It's not only the individual technologies. It’s actually the convergence between them where we start to see incredibly powerful business models and opportunities emerge that have the potential to impact on people's lives” ROBERT OPP,

CHIEF DIGITAL OFFICER, UNDP procurementmag.com

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“A fundamental part of the Sustainable Development Goals is about leaving no one behind. And so, we must close the digital divide, and we must use digital approaches that can include the entire population” ROBERT OPP, CHIEF DIGITAL OFFICER, UNDP

more resilient and transparent IoT enabled ecosystem with sustainability at its core.

Before bringing the meeting to a close, Opps offered a final observation on “the breathtaking use of digital technologies” to power new efficiencies and the accelerated pace at which they are evolving before reminding us all of the imperativeness of action.

“The last observation I would make is around this impact of Covid-19. I don't want to minimise at all the tragedy of this global crisis that is unprecedented, at least in modern times.

“For the first time since 1990, we are seeing a reversal in human development, and that is something that we at the UNDP track every year in our human development index. This is the first time we've gone backwards. And yet, but there is an amazing opportunity here of disruption and innovation that I think we are witnessing.

“In response to this crisis, what we're seeing is that digital comes forward and is really starting to have an important impact.

If we look optimistically at the situation, we look forward to hoping that out of this disruption comes the opportunity not only to get back on track to where we were but potentially even to become stronger

and follow a steeper trajectory toward the Sustainable Development Goals in 2030.

“We really believe that Covid-19 is a disruption that we have to take advantage of to not just build back better but build back greener as well.”

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Jan Grothe, SVP Procurement Infrastructure at Deutsche Bahn, gives his insight into managing multi–billion–Euro, multi–year rail infrastructure contracts and the importance of digital technology WRITTEN BY: SCOTT BIRCH PRODUCED BY: CAITLYN COLE & GLEN WHITE

Jan Grothe, SVP Procurement Infrastructure

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t’s fair to say that most supply chain executives had a metaphorical mountain to climb in 2020 and face an uphill task this year to achieve the ‘next normal’. The irony is not lost on Jan Grothe, Deutsche Bahn’s Senior Vice President of Procurement Infrastructure, who regularly climbs some of the world’s tallest peaks, and whose career path mirrors his passion.

“I love challenges. I love ambitious goals and I love mountaineering,” says Grothe from the rail and logistics giant’s Berlin headquarters. “So even above 7,000 meters, wherever in the world you are, it’s the same story. You have an ambitious goal, you need to prepare for this if you want to reach the top. This is the same in the mountains as it is in business.”

The DB Group is one of the world’s leading mobility and logistics companies, employing around 338,000 people around the globe.

They design and operate the transport networks of the future, moving people and goods via an increasingly smart and sustainable system.

2021 will mark Grothe’s 20th year at Deutsche Bahn, where he has steadily risen through the ranks to scale new heights – both on a personal and company level – and overseen Deutsche Bahn’s digital transformation in procurement. procurementmag.com

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Technology and qualified personnel for top level safety and security 40 years of experience combined with permanent R&D-activities qualify CONDOR Group to be one of the leading suppliers of Deutsche Bahn in the field of safety and security service suppliers. Patented safety barriers, the integration of IoT-based Track Warning Systems and high profiled specialists grant workers and engineers on site an excellent level of personal safety.

Additional technologies as temporary noise reduction solutions, newest level crossing technology for work sites and the electronic qualification portal support the regular solutions.

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CONDOR – Safety Professionals on Track.

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DEUTSCHE BAHN

JAN GROTHE TITLE: SVP PROCUREMENT INFRASTRUCTURE COMPANY: DEUTSCHE BAHN INDUSTRY: RAIL LOCATION: GERMANY

EXECUTIVE BIO

He had previous experience setting up platforms as a procurement consultant and was drafted into Deutsche Bahn to develop their own procurement platform.

“I originally thought that this would be a two-year project, and then I obviously stayed,” says Grothe. “That was because the people were great and they loved to have someone with them with an entrepreneurial approach – bringing things to an end, making decisions and leading the way. I had 50 people at that time for this project and we were very successful. So Deutsche Bahn actually was one of the first companies in Germany which had the full set of e-procurement systems, e-tender systems, and auction tools. And this was at the very beginning of my time there, so this really was state-of-the-art at that time.”

Always keen to take on a new challenge and push himself higher, it was not long before Grothe was moving beyond simply providing procurement platforms. He found himself responsible for two regions (North and West) and heading up the procurement infrastructure.

2021 is Grothe’s 20th year at Deutsche Bahn, where he has steadily risen through the ranks to scale new heights – both on a personal and company level – and overseen Deutsche Bahn’s digital transformation in procurement. He had previous experience setting up platforms as a procurement consultant and was drafted into Deutsche Bahn to develop their own procurement platform.“I originally thought that this would be a two-year project, and then I obviously stayed,” says Grothe. “That was because the people were great and they loved to have someone with them with an entrepreneurial approach – bringing things to an end, making decisions and leading the way.”

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DEUTSCHE BAHN

Jan Grothe | Intro | Deutsche Bahn

“We were procuring something like one billion euros,” he recalls. “That is when I really learned all about these operational processes and supply management in those regions. Shortly after this, I was asked to come back to the central functions and set up a supplier management and quality assurance team.

“That was quite a challenge because we hadn’t had this before. The quality engineers usually didn’t have anything to do with procurement and they weren’t operating as a real team.”

The following challenge facing Grothe was huge. He was tasked with not only heading procurement strategy but also implementing IT systems – putting procurement at Deutsche Bahn through a literal digital transformation.

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Seven years prior to Grothe joining, Deutsche Bahn was formed as a new legal entity in 1994 out of a merger of the eastern and western rail companies. The workforce stood at around 500,000 and in a drive to increase efficiency, that was halved by the time Grothe arrived. He says that had a significant impact on the culture of the business and was one of the many initial hurdles he faced.

In 2019 Grothe took over the procurement infrastructure department with almost 500 colleagues, facing a huge challenge as the German government recognized the importance of rail transport in its fight against climate change. The resulting cash injections (currently EU12 billion in 2021 and rising to EU15 billion each year to 2025) mean that a new strategy

DEUTSCHE BAHN

“ You have an ambitious goal, you need to prepare for this if you want to reach the top. This is the same in the mountains as it is in business” JAN GROTHE

SVP PROCUREMENT INFRASTRUCTURE, DEUTSCHE BAHN

was developed and Grothe found himself responsible for a procurement budget larger than the GDP of Albania.

Needless to say, this was a gamechanger. So where does the money go?

“Mainly, of course, in track and civil construction,” says Grothe. “So, for instance, bridges, stations, tunnels. We also invest heavily into the digitization of our track system, and that means mainly new signaling technology. That will allow us to increase capacity on the track by 20 per cent. And that’s what we need to do if we want to transport passengers and goods on the biggest network in Europe.

It is currently operating at 100 per cent capacity on the main corridors, so we need to increase efficiency. procurementmag.com

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STRONG RAIL

DEUTSCHE BAHN

Announced in 2019, DB Group hopes to make a major contribution to Germany meeting its climate change targets.

“Germany will only meet its climate targets if we succeed in shifting traffic to rail on a massive scale over the next decade,” said DB CEO Dr Richard Lutz. “Germany needs Strong Rail: for the climate, for people, for the economy and not least for Europe.”

The ambitious strategy includes 10 core messages:

1

5

Strong Rail focuses on DB’s core business. DB will assess its shareholdings based on their contribution to Strong Rail. DB Schenker is viewed as providing key support to DB Cargo. DB Arriva has little strategic relevance to building a strong rail network and will be sold.

2

6

Long-distance transport will double its patronage. DB’s long-distance transport will double its number of passengers to over 260 million per year.

Over 30 major cities will enjoy twice-hourly connections.

3

7 8

Germany’s climate targets can only be met with Strong Rail. Deutsche Bahn will achieve 100% of traction power from green sources by 2038, more than a decade ahead of its original target.

4

DB will add one billion new regional and local passengers. This will be achieved by strengthening local rail services and integrating new forms of mobility. It will also be introducing smart services for transport in cities and in rural regions

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DB Cargo will raise its rail traffic volumes in Germany by 70%.DB Cargo will increase traffic volumes by 70%, for example by purchasing 300 locomotives.

DB Cargo will increase its market share from 18% to 25%.

DB will work with the German government to expand rail network capacity by 30%. DB will add 350 million train-path kilometres (t-p km), a 30% increase in capacity, to the German rail network. This will be achieved by upgrading the system, utilising tech innovation and digitalisation.

DB will enter a new era with Digital Rail for Germany. DB’s Digital Rail for Germany Group program will improve capacity, quality, reliability and efficiency.

DB’s stations will become hubs for stateof-the-art mobility. Stations will be hubs of multimodal mobility and the centre of life in the city. The goal is to double station capacity to host up to 40 million guests a day and to create seamless transitions between rail, bike or bus or new mobility services (such as car-sharing, e-scooters).

DEUTSCHE BAHN

9

DB will hire 100,000 new employees in the coming years. DB is hiring on a massive scale. Over the next few years, some 100,000 employees will need to be recruited for DB to reach its goals.

10

DB will have more trains and offer more connections than ever before.

DB is aiming to double seating capacity in passenger transport by increasing its long-distance fleet up to 600, with a focus on high-speed trains. Some 80% of the population will have access to the long-distance network.

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All from one source With more than 6,500 highly qualified employees at 35 locations worldwide and annual sales of around 1.7 billion euros, Max Bögl is one of the largest construction companies in the German construction industry. Since its foundation in 1929, the company’s history has been characterised both by innovative strength in research and technology - and configurable solutions of high quality and sustainable construction technology.

With forward-looking in-house developments on issues of our day and age such as renewable energies, urbanization, mobility and digitalisation, the Group is already realizing solutions for the megatrends of our globalized world. Based on many years of experience and competence in highprecision precast concrete construction, Max Bögl Group also positions itself as an important driving force in the development of innovative products, technologies and construction methods.

The use of BIM, lean management/ production and standardised project management ensure adherence to schedules and cost-effectiveness from the initial concept idea to the finished building product. www.max-boeg.com

Build your progress

DEUTSCHE BAHN

“And that’s why we are talking about introducing digital. Digitisation does not just affect signaling, we’re talking about IoT sensors e.g. at switches to help monitor and maintain tracks – which will also ultimately reduce costs.”

DIGITAL TRANSFORMATION While Grothe has propelled procurement at Deutsche Bahn along its digital transformation path, he admits that the pace of change within the industry, and slow uptake of digital, has been a hindrance – with some of their suppliers even struggling with basics such as email.

The railway industry does have a reputation for being slow on the uptake when it comes to digitization compared to some other industries, and that is partly down to safety concerns. However, suppliers have also proved slow at moving with the times.

“When we digitized the interface to the suppliers, a significant number of companies were actually not able to access the platforms or auctions,” he says. “Three per cent said they weren’t able to work with emails! I couldn’t believe it.”

Branding himself as an eternal optimist, Grothe focuses on the positive aspects

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Jan Grothe | Digital Transformation | Deutsche Bahn

of the Covid pandemic when it comes to accelerating the digital transformation that suppliers are finding themselves having to adopt, plus the fact that DB itself was well prepared for a move to the cloud.

“We introduced the digitized processes three years ago and also introduced flexible working at the same time. So, everyone was able to work wherever they wanted and all the processes were digitized. When the lockdown came, we were able to switch from one and a half days of working from home on average to five days a week, so it didn’t affect our productivity at all. That was a good sign.

We were well prepared.

“We decided as a company four years ago to migrate completely – and I mean completely – into the cloud. We finished 144

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“ There’s an amazing energy in the room right now. Suppliers who have been slow to adapt to digital, we can push them right now” JAN GROTHE

SVP PROCUREMENT INFRASTRUCTURE, DEUTSCHE BAHN

TRUSTED PARTNERS

DEUTSCHE BAHN

SPITZKE A leading railway infrastructure company that carries out new build, revitalization and repair work on railway systems, stations and bridges.

“Spitzke is one of our strategic partners trackside and was infrastructure supplier of the year in 2018. “What makes them special is whenever we see a strategic demand for adapting processes or introducing new technology, they will invest, learn quickly and adapt. They are agile and a very reliable supplier.”

MAX BÖGL One of the largest construction, technology and service companies in the German construction industry.

“Max Bögl handled mainly civil works for us and is a very reliable and innovative long-term partner. They are willing to drive innovations in order to achieve win-win situations. We are just about implementing the new hybrid bridge system and learning with them, together. The idea is to save a lot of time and capacity, while also building which in the end makes savings as well.”

CONDOR MULTICOPTER & DRONES Specialists in providing drone solutions for industry and critical infrastructure.

“When it comes to safety solutions, Condor has not only been reliable over the last 10 years that we have worked together but also very innovative. Condor is always thinking beyond today and we are testing various drone services with them at the moment – for safety checks, for instance.”

SCHEIDT & BACHMANN One of the most successful manufacturers with more than 130 years of experience in signalling technology.

“Scheidt & Bachmann have always met the highest of expectations. Over the last couple of years and during the Covid-19 pandemic, they stepped up at their own risk to always deliver for us on time. They are willing to invest heavily in supporting us in digitizing signaling technology, which is great.”

INOSIG Provides signaling services for the rail technology industry.

“InoSig has been playing a minor role so far in terms of signalling, but we really appreciate them helping us reach our digital goals at track side and this is excellent, this endurance of the partnership. We love it all.”

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SPITZKE is a leading innovator for rail mobility.

With our areas of expertise – track, technology, equipment/ electrical engineering, large-scale projects/structural engineering, logistics and production – we are already creating the future of railway infrastructure. We develop and connect our business segments systematically to ensure that sustainable mobility remains permanently available. www.spitzke.com/en/home

DEUTSCHE BAHN

that migration at the beginning of 2020, so we had no problems scaling up. Our reaction to the situation also saw us accelerate some new functions and new ways of working together.”

PRESSURE ON PRODUCTIVITY It’s fair to say that Deutsche Bahn’s revenues have been significantly hit by the Covid19 pandemic, as passenger numbers were decimated and remain low, while the company is still expected to provide

a public service. Fortunately, DB’s worldwide operating freight and logistics arm, DB Schenker, stepped up and experienced higher demand when it came to delivering vital supplies – including Personal Protection Equipment (PPE).

“In the freight and logistics sector, DB Schenker is one of our subsidiaries and, in air freight, there was a huge increase in operations,” explains Grothe. “Even with the rail freight at DB Cargo, it was okay, and we did some new things. We set up a rail bridge from Asia to Europe which delivered a lot of essential masks and other PPE. There was a huge demand in Germany for this so we did pivot and freight was not as affected as passenger transport. Rail freight is more or less on the same level as before the Covid crisis.”

One thing is for sure. The economic fallout of the pandemic will put even greater pressure on CPOs to deliver under extreme budget restrictions and pressures as those companies that emerge look to tighten their belts. Does this inevitably mean that there will be pressure on suppliers to cut their prices? DB already enjoys a strong position when it comes to procurement thanks to its size and standing, so is there a danger that some suppliers simply will not be able to meet expectations in the ‘new normal’? procurementmag.com

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Jan Grothe | Future of Deutsche Bahn | Deutsche Bahn

“ We initiated a whole transformation from a traditional procurement department to a procurement department which became award-winning” JAN GROTHE

SVP PROCUREMENT INFRASTRUCTURE, DEUTSCHE BAHN

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“Generally speaking, I think there’s a huge pressure on productivity on both sides,” says Grothe. “So, on us but on the suppliers as well.

We have to find solutions and new contracts to ensure we are in a better position, that’s for sure.

“You know, sometimes we have to give something. We have a very stable company and people like to do business with us because we always pay – and in times like these, that is quite valuable. So, we have started initiatives to renegotiate contracts that will work for us and the suppliers.”

“This certainty is very valuable for a lot of suppliers right now and as some of our contracts last up to eight years, that can provide suppliers with perspective. With huge volumes, of course, they are in a position to lower (their) prices.

DEUTSCHE BAHN

“On the other hand, the solution is innovation on both sides, so we do not just have to procure the same thing for a lower price. I would ask the suppliers to introduce better solutions for the same function.”

DB has roughly 20,000 suppliers, which creates its own challenges, and is one reason why Grothe prefers to work with long-term strategic partners. In the last few years, 80 per cent of DB’s business is procured from just 500 suppliers – whereas it was previously more than 3,000.

Grothe makes dealing with thousands of suppliers sound straightforward, and while it is clear he cannot handle them all personally, he does like to get hands-on and ensure everything is on track and meeting the high standards set by DB. “I really like to see and meet personally from time to time,” he says. “Once a year, I do a whole day, spending time working with a key supplier. This may be on a construction site, on a safety issue, or in a planning office.

This is most valuable as sometimes you don’t get the full picture. It’s always good to know how it really works.”

€40bn Revenue in Euros

295,000+ Number of employees

Rail Industry

ACHIEVING WORLD-CLASS PROCUREMENT This hands-on approach and attention to detail are key factors in Deutsche Bahn achieving World Class Procurement status.

In order to do that Grothe had to first recognize that benchmarking was essential to measure success, adapt strategy and meet ambitions.

He started looking into existing measurement systems – not just in rail operators but the best procurement departments in the world – and came across the German consultancy company h&z. This kind of transparency is a leap of faith for any organization as you never know how highly you are going to be rated, but Grothe was procurementmag.com

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Digital Interlocking Systems www.inosig.de

YOUR SYSTEM INTEGRATOR FOR DIGITAL SIGNALLING SOLUTIONS

Command and control, interlocking and level crossing solutions for railways in a digital age LEARN MORE

DEUTSCHE BAHN

convinced it was the right way forward and a starting point.

Marked out of 20 points on the h&z scale, and based on interviews with five subdivisions, anything between 11 and 15 is considered ‘professional’ while above that is ‘world-class’.

Grothe, as well as the whole DB procurement team, was happy to achieve professional status from the first assessment in 2015 but was keen to improve.

“We looked at the processes, the IT systems, the supply management and the people, and then we worked on the biggest gaps that we could make improvements on,” he says.

“We did another assessment in 2016 and 2019 and it was great, good news for the whole team. There’s still a way to go because this is a moving target. You compare yourself

to others and they do not stand still, they keep improving, so we have to do that as well.”

In the latest assessment, DB ranked World Class in three out of the five categories, with the other two registering high scores in the Professional tier.

THE FUTURE It is impossible to consider what the immediate future may hold without reflecting on 2020’s disruption. With so much turmoil and negative impact on revenue, it’s almost inevitable to see a return to ‘normal’ as being a significant achievement. And when you heard the numbers involved for a company like Deutsche Bahn, it’s easy to understand why a return to status quo would be a win. procurementmag.com

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DEUTSCHE BAHN

“ When we digitised the interface to the suppliers ... three per cent said they weren’t able to work with emails!

I couldn’t believe it” JAN GROTHE

SVP PROCUREMENT INFRASTRUCTURE, DEUTSCHE BAHN

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DEUTSCHE BAHN

“We expect to make a loss around six billion euros [for 2020] and another six billion euros over the next two years. So, this is something like 12 billion euros in losses compared to the plan we had in 2019. We will be quite happy if we get back to that level first and then talk about new plans,” says Grothe.

“But, we strongly believe that the number of passengers and commuters will increase rapidly by 2030. This is still our assumption, and that’s why we invest heavily in our track and we invest heavily in our rolling stock.

“It will probably take us two years to get back where we started but we expect everything to increase as projected before.”

Grothe firmly believes that this is also an opportunity to learn and adapt, and to use Covid to push for even greater digitalization.

“There’s an amazing energy in the room right now. Suppliers who have been slow to adapt to digital, we can push them right now.

I expect this to boost productivity. We can use that energy and when the crisis is managed, we want to focus on what I call responsible procurement,” he says.

“This means corporate social responsibility (CSR) from us and our strategic suppliers.”

Grothe admits that he has personally invested a lot into DB’s culture because he wants to make procurement the place to be within the company. So whereas just 10 years ago, no one really wanted to work in the procurement department because it was mainly seen as boring – just writing orders all day – the culture has shifted.

“I think we as a procurement management team have already made this a great place to be,” Grothe concludes. “We are close to world-class and people are proud to work here.”

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TECHNOLOGY

DocuSign:

The high value of leveraging tech for CLM

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TECHNOLOGY

Jim Wagner, VP of Agreement Strategy at DocuSign, on how CLM can safeguard your dollars and mitigate organisational risks

WRITTEN BY: LAURA V. GARCIA

Jim Wagner VP of Agreement Strategy, DocuSign

C

ontract Lifecycle Management (CLM) may sound less exciting than watching a nanny knit. And quite frankly, with all of the problems facing procurement, managing contracts perhaps seems like the least of your worries. So why bother? I reached out to Jim Wagner, VP of Agreement Strategy at DocuSign, to find out.

"Deeper visibility comes from understanding what's in all those agreements. Failure to take advantage of volume discounts and consolidation opportunities means revenue leakage.

Failure to understand force majeure and related termination provisions means supply chain disruption. Failure to understand data privacy implications of supplier agreements can mean security vulnerabilities and legal liability, not to mention geopolitical changes like Brexit that obviously have significant procurement implications."

Wagner knows how to make a point.

CLM is the management of a company's contracts through every stage of the life cycle, including initiation, review, approval, execution, performance and renewal or expiry. And although it may not sound exciting, it's integral to your business.

Chicken or the egg?

As the pressures on procurement for cost savings continue to mount, leveraging tech for better Spend Management (SM) continues to rear its head as a hot topic. procurementmag.com

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TECHNOLOGY

"Deeper visibility comes from understanding what's in all those agreements. Failure to take advantage of volume discounts and consolidation opportunities means revenue leakage" JIM WAGNER

VP OF AGREEMENT STRATEGY DOCUSIGN

Because, of course, in order to capture cost savings, you must first have control over when and who you are buying from. So, what comes first, SM or CLM? "CLM is not a magic pill in and of itself, but it is the cornerstone to ensuring that your preferred business terms and your contractual terms align. It's also foundational to any procurement organisation's ability to look across its spend and to identify opportunities for improvement, above and beyond basic vendor pricing," says Wagner.

Speaking from experience, Wagner adds, "we know that it is impossible for any organisation of scale to implement its spend management policies without a technology solution that enforces that framework during the contracting process. We also know that it is impossible at scale to efficiently review the key terms of its supplier relationships without contract analytics. So whether CLM is the chicken or the egg is less relevant than whether you have CLM when and where you need it to support your spend management initiatives." procurementmag.com

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TECHNOLOGY

10 challenges faced by CPOs 1. Limited transparency when it comes to claims and service credits 2. Lack of information on supplier performance 3. Unclear responsibilities in disputes 4. No spend tracking 5. Lack of contingency or risk mitigation plans 6. Lack of notifications of terms, rights or obligations 7. Undefined handover processes 158

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8. Cost and scope 9. Business cases rarely revalidated 10. 10% to 15% of contract value is lost Understanding these challenges and gaining control will provide multiple benefits for organisations, including increased and sustainable, improved contract breach penalties, streamlined claims processes, reduced operational costs and effective risk mitigation.

TECHNOLOGY

DocuSign CLM for Salesforce

LEVERAGING CLM FOR RISK MANAGEMENT AND COST REDUCTIONS Bring some method to your madness "A key initial challenge for many organisations is that their procurement agreements are scattered across the organisation in multiple platforms, file shares and drives," says Wanger, who identifies that "the first step is bringing all of those agreements together so they can easily be located, searched and tracked."

When it comes to step two, he continues to say that "the most frequent second step is setting up rules and alerts to notify users when key dates are coming up, such as an expiration or renewal, for example. This ensures that contracts don't just sit in a virtual file cabinet and allows organisations to proactively manage them."

Providing businesses with actionable information can be used to improve

compliance, reduce supply chain costs, minimise disruption, and improve cash flow, "CLM+ includes DocuSign Insight.

Its AI-powered contract analytics can automatically extract hundreds of procurement-specific terms from agreements," explains Wagner.

"It does this by profiling large volumes of contracts and clearly showing, for

“ CLM is not a magic pill in and of itself, but it is the cornerstone to ensuring that your preferred business terms and your contractual terms align” JIM WAGNER

VP OF AGREEMENT STRATEGY DOCUSIGN

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TECHNOLOGY

“It is impossible for any organisation of scale to implement its spend management policies without a technology solution that enforces that framework during the contracting process” JIM WAGNER

VP OF AGREEMENT STRATEGY DOCUSIGN

example, which contracts have minimum spend or billing commitments, which have' most favoured nation' or other competitive costing clauses, and which have a notification requirement if a product is terminated or delayed. Next to a simple Yes/ No answer, Insight will display the extracted text with the contract's specific requirement for that term."

"You can even send this intel to dashboards where it can interact with ERP data or other process information. For example, Insight can extract a vendor's payment terms and to allow your accounting team to compare the contractual terms to the actual payments made — so you can improve cash flow by driving to optimal Days Paid Outstanding.

But, exactly how does it work?

When it comes to initiating the contract process, organisations that prefer to use their own templates can benefit from DocuSign's CLM, "it provides flexibility and leverages pre-configured forms to autopopulate contracts with data from outside systems. For more complex contracts, CLM provides procurement professionals with a guided form wizard that can conditionally change clauses or data points in the generated contract as well," says Wagner.

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"Based on the terms of the contract and the data inputs, users can also configure CLM's flexible workflow engine to automatically route the contract to the next contributor, editor or approver. The end approver can also send the document out for review using a safe, self-contained review portal," he adds.

In doing so, "this helps organisations avoid sending sensitive contracts via email or other less safe methods. After the external party downloads the contract and makes revisions, they can upload it right back into the portal and submit it with notes and comments.

This routes the document right back to the procurement professional in CLM, where they can compare versions and see redlines

Three ways in which organisations can take control of their CLM functions include: • Establish a coherent monitoring function • Categorise contracts by their value and complexity • With high volumes of tasks involved, automation is key to getting the most efficient contract management functions in place

TECHNOLOGY

65%

of businesses experience delays related to contract management

59%

lack visibility into the location and status of agreements during the negotiation process

even if the other negotiator didn't turn on track changes."

"The next phase, of course, is addressing the revisions proposed by the supplier. When those changes are substantial, our AI can augment attorney review to identify risk and compliance concerns and to dramatically speed up the process."

So, as it turns out, automation of CLM streamlines workflows, limits risk exposure and allows organisations to shift into proactive management of contracts, bringing increased efficiencies and significantly improving cost savings while maintaining or increasing legal compliance and safety of data. And it's every bit worth doing. procurementmag.com

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TOP TEN

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TOP TEN

MOST VALUABLE P2P PLATFORM ORGANISATIONS Procurement Magazine lists its top 10 P2P platform organisations ranked by their revenue WRITTEN BY: GEORGIA WILSON

P

rocure-to-Pay (P2P) - defined as the process of integrating purchasing and accounts payable systems to create greater efficiencies, the process forms part of the wider procurement management operations and involves: selecting goods and services; enforcing compliance and order; receiving and reconciliation; invoicing and payments.

In this Top 10, we list our top P2P platforms for managing this process, ranked by the revenue of the organisation that owns it.

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10 Infosys

CEO: Salil Parekh

Market Value: US$12.8mn First up at number 10, we have Infosys’ Procure-to-Pay Outsourcing Services which “covers the entire spectrum of accounts payable processes.”

Infosys, strivew to deliver business value for its clients by reducing operations costs, develop world-class cost structures, and implement effective controls. “We have a comprehensive and integrated P2P service capability. We augment our capability by continuously investing in building our P2P expertise.”

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09

Wax Digital CEO: Paul Ellis

Market Value: US$49mn (Medius) Transforming Medius in 2019 into a comprehensive product suite with full source-to-pay (S2P) capabilities, Wax Digital’s web3 Purchase to Pay (P2P) solution is said to be a highly intuitive webbased purchase order system.

The benefits of web3 include: • Costs savings • Security that all requisitions are approved before the money goes out • Labour and time savings with automated processes • Enforcement of all procurement policies • Granular access permissions • Visibility on all spend data

TOP TEN

“A modern and collaborative Procure-to-Pay solution”

08 GEP

CEO: Subhash Makhija

Market Value: US$72.6mn Describing itself as “a best-ofbreed provider of managed procurement and supply chain services,” GEP SMART – GEP’s P2P solution – is said to unify the order-to-invoice process with the source-to-contract process, effectively providing a full procure-to-pay functionality alongside a ‘best-in-class’ user experience. “Easy to use and easy to deploy, GEP SMART can be implemented rapidly across multiple lines of business, effecting game-changing results.”

07 Ivalua

CEO: David Khuat-Duy

Market Value: US$100mn Ivalua’s Procure-to-Pay solution provides “a modern and collaborative Procure-to-Pay solution,” with five core benefits: • A digital P2P Process for all categories • A modern intuitive ecommerce experience • A reduction in maverick spending and tail spend visibility • A closed gap between strategic sourcing and operational buying • Improved procure to pay cycle times and reduced discrepancies

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6 Ways Inventory Management Fuels Supply Chain Explore How Inventory Management Enables Supply Chain to Reach Its Fullest Potential For most businesses, the supply chain is not only the primary cost centre but one of the most challenging aspects of running a profitable operation.

This ebook examines the role of inventory management in each step of the supply chain and share best practices for how businesses can use inventory management to optimise and run a more profitable operation.

Download Ebook Now

TOP TEN

05

Coupa Software

CPO: Michael Van Keule

06 Basware

CEO: Klaus Andersen

Market Value: US$180mn For organisations looking to reduce costs, increase efficiencies, and mitigate risk across global operations, Basware’s automated procure-to-pay (P2P) solution drives cost savings, boost processing efficiencies, and helps organisations to gain 100 per cent visibility across suppliers and spend.“Basware offers a phased approach to support all your automation needs for today, tomorrow, and the future. Once you have the foundation in place to eliminate paper and manual steps from your procure-to-pay (P2P) processes, you can future proof your business operations to gain complete visibility.”

Market Value: US$260mn At Coupa Software, its core focus is business value, explaining that “it’s more than how much you paid for something or what a new solution saved. Value is the quantifiable, measurable improvement that a solution or process delivers.

It’s explicit, but it isn’t a singular achievement or a moment in time.”

With its Procure-to-Pay solution, Coupa Software provides its clients with cloud-based Procure-to-Pay software that is pre-integrated to provide visibility and control over the entire procurement process.

TOP TEN

04

JAGGAER

CEO: Jim Bureau

Market Value: US$260m At number four, we have JAGGAER One’s Procure-toPay solution, which helps clients to improve their procurement processes as well as establish a more strategic and flexible accounts payable team. “You need a powerful, modern shopping experience that makes procurement effortless for your suppliers, buyers and accounts payable teams. As a one-stop P2P solution, our software gives you full control of procurement processes so you can save time and money,” says JAGGAER.

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03 SAP

President of Intelligent Spend and Business Network: John Wookey

Market Value: US$33.53bn SAP Ariba was established in 1996, to help clients better manage their spend. SAP Ariba’s services cover a wide range of solutions, platforms, technologies, and business needs when it comes to procurement, including Procureto-Pay (P2P). Its P2P software provides ways for organisations to “stay flexible and achieve procurement goals with scalable software that can be dialled up or down as you need different resources at different times,” says SAP Ariba.

02

TOP TEN

Oracle

Head of Sourcing: Sakari Sippola

Market Value: US$39.07bn Oracle's Procure-to-Pay, comes in the form of an integrated solution that links purchasing and payables to maximise return on invested capital. Oracle reports that with its Procure-to-Pay solution, “companies can reduce cost to improve margin, streamline procure-to-pay processes to improve working capital, and drive compliance to optimise asset usage.”

Its key features include: • Reduce spending on goods and services • Streamlined procurement practices • Enforced fiscal policies across procurement processes

“Companies can reduce cost to improve margin, streamline procure-to-pay processes to improve working capital, and drive compliance to optimise asset usage” procurementmag.com

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TOP TEN

“ End-to-end visibility, real-time insights and recommended actions to turn disruptions into opportunities for customer engagement, growth and profit”

172

March 2021

TOP TEN

IBM

CPO: Bob Murphy

Market Value: US$77.14bn At number one, we have IBM, who believes that in order to succeed today, “your supply chain needs to be dynamic, responsive and interconnected to your ecosystem and processes.” To help its clients to achieve this, IBM offers the supply chain industry its IBM Sterling Supply Chain Suite, which highlights its capabilities to provide “end-to-end visibility, real-time insights and recommended actions to turn disruptions into opportunities for customer engagement, growth and profit.”

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