Procurement - November 2023

November 2023 | procurementmag.com

Procurement Leaders

SUPPLIER RELATIONSHIP MANAGEMENT Danone’s Jean-Yves Krummenacher: the key to strong procurement partnerships

ELLEN MACARTHUR FOUNDATION How procurement can accelerate circular economy transition

HOW A PROCUREMENT LAUNCHPAD WILL HELP NASA

BACK TO THE MOON AND BEYOND Karla Smith Jackson on encouraging innovation and exceeding expectations

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The Procurement Team CHIEF CONTENT OFFICER

SCOTT BIRCH

MANAGING EDITOR

NEIL PERRY

CHIEF DESIGN OFFICER

MATT JOHNSON HEAD OF DESIGN

ANDY WOOLLACOTT SENIOR DESIGNERS

REBEKAH BIRLESON SAM HUBBARD

FEATURE DESIGNERS

JULIA WAINWRIGHT VICTORIA CASEY EMMA WALLER LEAD DESIGNER

JULIA WAINWRIGHT ADVERT DESIGNERS

DANILO CARDOSO CALLUM HOOD ADRIAN SERBAN VIDEO PRODUCTION MANAGER

KIERAN WAITE

DIGITAL VIDEO PRODUCERS

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GEORGIA ALLEN DANIELA KIANICKOVÁ PRODUCTION MANAGERS

JANE ARNETA MARIA GONZALEZ YEVHENIIA SUBBOTINA KENDRA LAU

MARKETING MANAGER

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PROJECT DIRECTOR

STUART IRVING JAMES BERRY

MEDIA SALES DIRECTOR

LEWIS HAMMOND MANAGING DIRECTOR

LEWIS VAUGHAN CEO

GLEN WHITE

FOREWORD

Challenging best practice can help us all reach for the stars “You can never be too big to challenge how you go about your procurement and supply chain operations”

Even the biggest companies and organisations need to challenge established norms to find smarter solutions to their procurement challenges Whatever the size of a business, you can never be too big to challenge how you go about your procurement and supply chain operations. Our cover story with NASA this month demonstrates how an organisation that is the very definition of cutting edge feels the need to find fresh ways to encourage innovation both through their own workforce and their trusted partners through their launchpad.

It was also a real pleasure to see so many of you at Procurement and Supply Chain LIVE London 2023 at the Business Design Centre. The amount of delegate interaction was extraordinary, which continued the theme of challenging how we approach the world of procurement, and finding every available opportunity to find a competitive advantage.

NEIL PERRY

neil.perry@bizclikmedia.com PROCUREMENT MAGAZINE IS PUBLISHED BY

© 2023 | ALL RIGHTS RESERVED

procurementmag.com

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CONTENTS UP FRONT 014 BIG PICTURE Procurement leaders gather in London

016 THE PROCUREMENT INTERVIEW Zakaria El Rhezaoui of Unifonic

014

024 LIFETIME OF ACHIEVEMENT

John Dickson: overcoming the biggest procurement challenges

016

024

032 8

November 2023

NOVEMBER 2023

074

FEATURES 032 TOP 10

Procurement leaders

044 PROCUREMENT STRATEGY Danone’s key to effective supplier relationship management

056 CENTRAL CO - OP

056

How Central Co-op is creating a sustainable society for all

074 DIGITAL PROCUREMENT

NASA’s procurement launchpad to the Moon and Mars

088 SELLAFIELD

Sustainable impact begins with a sustainable mindset

044

088 procurementmag.com

9

Knowledge Partners

THE TOP 100 COMPANIES IN PROCUREMENT READ NOW

NOVEMBER 2023 FEATURES 104 TECHNOLOGY

The future of AI in procurement

104

114

114 SUSTAINABILITY

Procurement’s crucial role in a circular economy

procurementmag.com

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CASE STUDY

Turn Rebates into an Engine For Growth Hear the challenges ERIKS faced with rebates and why they chose Enable to support their rebate management process

ERIKS, a leading industrial service provider with a global presence and a €1.9 billion turnover, embarked on a journey to enhance their customer rebate management processes. Recognising the complexity and challenges in managing B2B customer rebates across various countries, suppliers, and formulas, ERIKS partnered with Enable, a specialised rebate management company, to simplify and optimise their approach. Stijn van Roosmalen, European Procurement Director at ERIKS, spearheaded this initiative as part of the broader goal to improve their relationships with suppliers and overall service delivery.

ERIKS faced several challenges prior to adopting Enable’s solution. They operated with multiple ERP systems, diverse rebate calculation formulas, and manual processes that introduced room for error. Stijn aimed to streamline their

processes, focusing on factors like quality, delivery performance, and compliance.

Stijn described the intricacy of their rebate management: “There’s a huge focus and huge investment trying to bring that together. But if you look at different countries, different ERP systems, a whole lot of suppliers, and then also, again, different formulas where the rebates and bonuses are calculated upon turnover or more on growth, etc., it’s a very complex task.”

Their manual efforts to gather and verify data from suppliers were time-consuming and error-prone. ERIKS recognised the need for a system to support their rebate management.

Stijn’s expectations were met when Enable’s solution not only reduced manual efforts but also uncovered additional revenue: “The software has already paid for itself. During rebate settlements at the end of 2021, we disputed a rebate, which landed us a higher band and netted us an additional €200k.”

ERIKS selected Enable after a thorough evaluation process, praising Enable’s team for their dedication to onboarding and customer focus. With Enable’s rebate management software, ERIKS gained daily insights into rebate status, eliminating the need for annual or biannual reconciliation. They can now act proactively based on real-time data, reducing workload and capitalising on tangible benefits.

Stijn emphasised the impact of Enable’s solution: “We can also now act upon that, so it should not only reduce workload but also really tangible monetise benefits.” ERIKS achieved higher rebates by strategically placing additional orders to meet threshold requirements, resulting in increased revenue.

By using Enable as a centralised source for managing rebates, ERIKS anticipates even more significant insights and optimisation opportunities. They can

track and optimise rebate programs, strengthening their supplier relationships and improving stakeholder interactions.

In conclusion, ERIKS successfully overcame the challenges of managing complex B2B customer rebates with Enable’s specialised rebate management software. Their proactive approach has not only streamlined processes but also uncovered hidden revenue streams, making their future in rebate management look promising.

Try Enable Rebate Management With our platform, you can take control of your rebates and leverage them to drive growth, returns, and more opportunities.

Request a Demo

BIG PICTURE

Procurement leaders gather in London

London, United Kingdom

Some of the world’s most influential and leading procurement leaders gathered in London in September for Procurement & Supply Chain LIVE. Across two action-packed days, the event featured acclaimed keynote speakers, one-on-one meetings, expo stands and interactive high-energy workshops and panels.

To watch 2023’s sessions on demand, or to attend one of our virtual events this year, click here.

procurementmag.com

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THE PROCUREMENT INTERVIEW

UNIFONIC:

BRINGING PROCUREME PERFORMANCE TO A TECH STARTUP ZAKARIA EL RHEZAOUI TITLE: SENIOR DIRECTOR OF PROCUREMENT COMPANY: UNIFONIC INDUSTRY: COMMUNICATIONS LOCATION: UAE Zakaria El Rhezaoui is Senior Director of Procurement at Unifonic. He joined in 2022, after a procurement career spanning international brands such as Nokia Networks, Mars and Unilever.

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November 2023

Like many of the best business ideas, the beginning of Unifonic came from finding a solution to a problem

I

n 2006 brothers Ahmed and Hassan Hamdan were trying to contact a large number of people via SMS in their student club at a university in Saudi Arabia. This led to the creation of a website called Resalaty, where users could input their contacts and bulksend SMS messages to large groups of people.

This idea quickly began to gain traction with business clients and eventually the Unifonic B2B customer engagement platform was born.

It has grown across the Middle East, Asia and North Africa to be a leading platform in customer communications technology.

ENT

Zakaria El Rhezaoui

THE PROCUREMENT INTERVIEW

Get to know more about Unifonic WATCH NOW

“ In the first year of the procurement function at Unifonic, we were able to achieve really great milestones” ZAKARIA EL RHEZAOUI

SENIOR DIRECTOR OF PROCUREMENT, UNIFONIC

Bringing procurement to a start up As the business reached the next phase of development, the brothers needed toinvest in automation to help the organisation progress to further success.

Zakaria El Rhezaoui was brought in as Senior Director of Procurement in 2022, following a career atmultinational companies like Nokia Networks, Mars, Unilever and Philp Morris. He was tasked with setting up an efficient procurement operation to drive performance and efficiency for the wider business.

“It was a new experience for me to move to a startup,” El Rhezaoui explains.

“I had to dig deep onthe company, read about it, find the story behind it,

get more insights from the company about its perspectives, its strategy, and what it wants to do.”

Today, Unifonic is a trend-setting customer engagement platform that handles morethan 10 billion annual transactions for millions of recipients in 160 countries, backed by a local corporate presence in five countries and a dedicated team of 500 professionals, serving clients at all hours of the day. It has become an omnichannel solution that integrates customer communication channels – including text, voice, messaging and web – into a single platform that enables companies to create stronger customer relationships.

Its customers include leading banks, financial institutions and government agencies throughout the region, as well as healthcare providers, retail and e-commerce, and transport and logistics providers worldwide.

Change management The company is growing fast, and the Hamdan brothers knew they needed a proper procurement function in place to help with their transition. It was a challenge that appealed to El Rhezaoui: “I wanted to bring in all the experience I had in these big multinationals and implement it in a fast-growing startup,” he says. procurementmag.com

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THE PROCUREMENT INTERVIEW

“Startups can achieve cost optimisation, risk management, innovation, compliance, and sustainable growth through effective procurement, making it an essential function for overall success” AHMED HAMDAN,

CEO AND CO-FOUNDER, UNIFONIC

“Procurement today is an essential strategic and operational enabler to secure service deliveries to customers which are essential for overall performance. It supports sourcing efficiently, while elevating governance and compliance. Hence, a high performing and strategic procurement function is a competitive advantage for any business.”

STEFAN CARLSSON

CHIEF FINANCE OFFICER, UNIFONIC

“The part that you can never control is the change management and people” ZAKARIA EL RHEZAOUI

SENIOR DIRECTOR OF PROCUREMENT, UNIFONIC

“I had to start everything from scratch.

We worked on building the team, on putting in place the proper policy, processes, the training for people, working on a strategy for change management, because people had the habit of doing things by themselves, bringing in a new function that will control all the spend and control all the purchases was very new to them.”

The key challenge, admits El Rhezaoui, was that embedding procurement in a startup is not just a technical operation, but a human challenge.

And so he began by communicating to the workforce that the value of procurement lay in it bringing efficiencies that would help the business.

El Rhezaoui says: “We explained to them that we will not delay their work, rather, we will automate it. Automation was a keyword in our journey because if we just focused on savings and compliance, we’d not have had the support we needed to meet our goal of speedy change management.”

Communicating intelligently with staff was crucial to the initiative a user- friendly procure-to-pay system was the foundation for a series of early successes for the team.

“In the first year of the procurement function at Unifonic, we were able to achieve really great milestones, in terms of having a P2P system in place, which is functioning a hundred percent with an adoption rate of more than 90%,” El Rhezaoui says.

This was coupled with more than US$1m in savings in the first year, along with a review of supplier and contract bases, to ensure every relationship was fully compliant. procurementmag.com

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THE PROCUREMENT INTERVIEW

Finding early success One challenge for Zakaria El Rhezaoui was moving from a multinational to a startup environment.

“In multinationals, everything is preset, everything has been there for many years, so it is more of maintaining this process,” he says.” Moving to a startup gave me new perspectives because I had to build everything from scratch, and it’s added to my experience, especially the parts related to change management.”

The technical and automation aspects of the role came easiest to El Rhezaoui, but he admits the greatest challenge was delivering the change management needed to underpin the short-and longterm success the company needed.

“The part that you can never control is the change management and people,” he explains.How can you build a good relationship with people? How can you convince them of your ideas while they have their own targets and their own pressure, in terms of either product development or in terms of sales and business development?”

Knowing and empowering your customers Asked to cite the guiding principle of creating a procurement function in a start-up, El Rhezaoui says:“Forget everything you knew from before.

Get to know your customers, and what they need, because that is the starting point.”

El Rhezaoui adds that rapid growth brings its own challenges, and that being ill-prepared for this leads to wasted opportunities. This is especially true 22

November 2023

“ I wanted to bring all the experience I had in big multinationals to a fast-growing startup” ZAKARIA EL RHEZAOUI

SENIOR DIRECTOR OF PROCUREMENT, UNIFONIC

of scale-ups, he says, who typically undergo fast growth and have ambitions to expand their customer and geographical bases. Such businesses must have a proper procurement function in place, he feels.

El Rhezaoui’s hard-earned experience is that attempting to overlay past experiences on a new business is a mistake. Far better, he says, to approach things the other way around. “You need

to understand the business and the requirements of your stakeholders,” he says. “You use your experience to implement best practices based on their perspective, their background, and their priorities.”

It is these best practices that are helping Unifonic deliver on its mission, to empower organisations to engage and communicate seamlessly with its customers. procurementmag.com

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LIFETIME OF ACHIEVEMENT

OVERCOMING THE BIGGEST PROCUREMENT CHALLENGES John Dickson was Chief Procurement Officer at AstraZeneca during the height of the pandemic and knew early on in his working career that procurement was where he belonged WRITTEN BY: NEIL PERRY IMAGES: ASTRAZENECA

A

t the outset of his career, as part of a graduate trainee programme with the Yorkshire Electricity Board in the UK, he spent time in the purchasing department, where he found he enjoyed the excitement of the bidding process.

From those early beginnings Dickson has landed a succession of prestigious roles at world renowned companies, including Rolls Royce, BP, and most recently, as Chief Procurement Officer at AstraZeneca.

Procurement career challenges Through his long career Dickson has

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November 2023

experienced the modernisation and digitisation of the procurement sector, and has had to overcome onerous challenges along the way. He says one of the biggest challenges is communicating the value of procurement to colleagues across one’s employer.

“Gaining recognition for procurement is always a challenge,” he says. “Everyone generally believes they can do the job of procurement professionals because outside of work we are all buyers. Yet corporate procurement is very different from personal spending. But this challenge comes with the territory, and I actually see it as one of the attractions of the job.”

JOHN DICKSON TITLE: FOUNDER COMPANY: JOHN DICKSON PROCUREMENT ADVISORY LTD

EXECUTIVE BIO

INDUSTRY: PROCUREMENT John Dickson has more than 40 years of experience in the procurement sector, including senior roles at AstraZeneca, Rolls-Royce, BP and Diageo, and now runs a procurement advisory business – John Dickson Procurement Advisory.

LIFETIME OF ACHIEVEMENT

Managing internal relationships is part of the skills of a chief procurement officer (CPO), but Dickson stresses that delivering value – rather than simply focusing on cutting costs – is what really defines the function, but says achieving this goal is hugely problematic.

“Ensuring procurement focuses on total value delivery has always been hugely important to me, but at times it’s difficult to achieve because of the pressure and expectation that the function reduces the cost of goods, year over year.”

Procurement successes during times of adversity But for Dickson, challenges came no bigger than his being CPO at AstraZeneca from 2018 until 2023 – where he found himself in the front line of the medical fightback against COVID-19. There, his procurrement team had to work at pace, and under great stress, as part of a crossbusiness project to not only prepare a vaccine in double-quick time, but also make sure that all risk was identified and mitigated. It is all an achievement of which he is justifiably proud.

“The performance of the procurement team at AstraZeneca during the pandemic was incredibly stimulating and fulfilling, while also being exhausting at times,” he says. “Working with internal and external partners towards such a hugely important common goal was incredibly rewarding.”

The pressure on pharmaceutical companies to create COVID vaccines was immense. Under normal circumstances, a vaccine might take years to research, 26

November 2023

“ Gaining recognition for procurement as a function is always a challenge”

LIFETIME OF ACHIEVEMENT

procurementmag.com

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LIFETIME OF ACHIEVEMENT

“ Helping provide a Covid vaccine in eight months filled me with a huge sense of pride” develop, test and have ratified.

But for its COVID vaccine, AstraZeneca was working to hyper-accelerated timeframes, with procurement and supply chain operations having to keep pace. “Providing a solution in eight months – something that normally would take around five years – and doing it within budget to meet a pressing global need, filled me with a huge sense of pride,” he says.

Lessons from a varied procurement career After AstraZeneca, Dickson moved onto the next phase of his career, launching his own procurement consultancy service. In his role as an advisor, he is able to draw upon deep experience gained from a varied career across pharmaceuticals, aerospace, oil and gas, and the public sector.

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November 2023

Having an advisory role has given Dickson pause for thought, and enabled him to see essential truths about the profession about which he is so passionate.

“Listening must always be the most important part of being a procurement professional,” he says. “Listen to your colleagues within the function, but more importantly, listen to your business stakeholders.”

Dickson also understands that in any walk of business life, there are no short-cuts to understanding the needs

LIFETIME OF ACHIEVEMENT

AstraZeneca and its partners released

two billion

doses of their COVID-19 vaccine to more than

170

countries across every continent on the planet in just

11

months

and priorities of stakeholders. But this, he says, is the essence of procurement, because “one can “challenge the status quo by bringing your own knowledge and ideas to the table”.

He adds: “You must always strive to gain as much knowledge about the business you are supporting as quickly as possible. Engage with the business at all opportunities and establish a relationship that gives the freedom to challenge and bring a different insight than they may have had up to that point.” procurementmag.com

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Supplier relationship management designed for the future Kodiak Hub is a one-stop shop for supplier management and takes strategic sourcing to the next level As an intuitive SRM solution, Kodiak Hub offers complete visibility and insights into crucial aspects in the supply chain, ranging from performance tracking, spotting risk, to ESG progress.

“When the most influential figure within the entire supply chain makes a conscious choice to incorporate stakeholder value into the equation, transformation will happen” Schmidt continues.

Founder & CEO of Kodiak Hub, Malin Schmidt, says she launched the company because the market needed an intuitive platform that would enable Procurement to forge lasting sustainable impact in global supply chains, but did not require years of consultancy support, yet still met the needs of strategic buyers”.

Systematically measuring supplier performance, says Schmidt, allows organisations to set strategic expectations and to apply KPI criteria to suppliers.

Schmidt’s guiding principle is that, to unlock the full value from global supply chains, effective supplier relationship management is key.

She adds: “Short- and Long-term value can be achieved only with transparent relationships between suppliers and buyers, where performance and impact goals are shared”.

The most powerful individual in the entire supply chain is the strategic buyer,” she says. Kodiak Hub is designed to empower procurement professionals to be the best versions of themselves.

She stresses that a prerequisite of all data analytics, AI and ML is “large amounts of data”, and that this is what can take strategic buying to the next level.

“Many companies waste data points readily available to them,” she says. “They are missing out on powerful supplier insights, and predictive analytics on the likely future performance of any given supplier.”

Schmidt adds: “ We work with a wide data-scope that includes not only thirdparty and ERP data but also data that is normally lost or not used, such as that found in any reports or data that is entailed in collaborating with the supplier.

TOP 10

PROCUREME Procurement Magazine highlights 10 of the top leaders who are navigating global challenges and redefining business success

WRITTEN BY: NEIL PERRY 32

November 2023

ENT LEADERS I

n an era where global supply chains are under relentless pressure, technological disruption is the new norm and sustainability credentials are scrutinised as never before, procurement leaders have arguably never been under more pressure.

This month, Procurement Magazine highlights 10 of the industry’s leading figures who are reshaping not only their organisations but the wider business landscape.

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TOP 10

09

Alexandra Lopez

Title: CPO Company: Cisco Systems

10

Natasha Gurevich Title: CPO Company: Nike

Natasha Gurevich is an experienced logistics, supply chain, strategic sourcing and procurement professional with over 22 years of results-driven performance with Fortune 500 companies.

Since beginning her career at Visa, Gurevich has worked in multiple leading executive roles for Gap, PayPal, The Clorox Company, Accenture, IBM, McKesson and Salesforce.

Gurevich has a consistent track record of delivering significant cost reductions and continuous improvement initiatives.

She also has success in deploying processes and procedures to streamline corporate operations, increase efficiency and enhance profit performance.

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November 2023

Alexandra Lopez is SVP and Chief Procurement Officer of Global Procurement Services at Cisco Systems, leading the organisation responsible for the end-to-end buying ecosystem, including Cisco’s enterprise contingent workforce strategy and the continuous digital transformation evolution.

Prior to Cisco, Lopez held executive leadership roles at Fortune 500 companies including Kaiser Permanente and Hewlett Packard. Her executive experience covers a broad spectrum of functions and verticals including operations, sales, marketing, strategic planning, finance, supply chain, transportation, logistics and banking.

07

Klaus Staubitzer

Title: CPO Company: Siemens AG

08

Ninian Wilson

Title: CEO Company: Vodafone Procurement Co Ninian Wilson is CEO of Vodafone Procurement Company and Director of Supply Chain Management. He joined Vodafone in 2009 as Supply Chain Management IT director and was appointed to the board of Vodafone Procurement Company in November 2009.

From 2014-2016, he held the role of SCM Technology Director and was responsible for all technology sourcing in the company, including networks, IT and new product development.

In March 2016, he was appointed director of group SCM and CEO of Vodafone Procurement Company.

Dr Klaus Staubitzer has had many different roles within Siemens over more than 25 years.

Staubitzer started his career at Siemens in 1996 with different responsibilities in the areas of procurement, process consulting and strategic marketing. He was responsible for different business segments and business units within Siemens as CEO/ CFO. From 2008 until 2014 he took over the responsibility as CPO Industry Sector and Head of Supply Chain Management.

He has been CPO since 2014.

Staubitzer has a PhD in Economics from Universität der Bundeswehr in Munich, and is an Advisory Board Member for Procurement Leaders.

TOP 10

05

Shashi Mandapaty

Title: CPO Company: Johnson & Johnson

06

Daniel Coe

Title: CPO Company: The Coca-Cola Company As Chief Procurement Officer at The Coca-Cola Company, Daniel Coe is responsible for managing more than US$35bn in annual spend.

Coe leads The Coca-Cola Company procurement portfolios for agricultural commodities, equipment, logistics, marketing, general and administrative, IT, procurement analytics and supplier diversity.

He is also the Vice Chairman of the Cross Enterprise Procurement Group (CEPG), the goals of which are to run a sustainable, cost focused, brand building, supplier appreciative and talent-rich operation.

Shashi Mandapaty is Chief Procurement Officer for Johnson & Johnson, where he guides the company’s strategy for delivering value, quality and innovation through responsible sourcing. He has deep experience leading procurement organisations and brings a global perspective to his role, having lived and worked in diverse cultures and economies across Asia, Europe and North America.

Mandapaty is passionate about building strong relationships with suppliers who can collaborate with Johnson & Johnson to create innovative healthcare solutions while providing livelihoods for families in communities around the world.

TOP 10

03

Patricia Stroup Title: CPO Company: Nestlé

04

Rhonda England Title: Global CPO Company: Deloitte

Rhonda England is the Global Chief Procurement Officer at Deloitte where she leads a talented team of procurement, supplier sustainability and diversity experts. Building upon a foundation of strong relationships with strategic suppliers, England’s team delivers superior cost savings and return on investment while driving meaningful impact to Deloitte’s global WorldClimate strategy and commitment to a diverse and inclusive supplier base.

Prior to joining Deloitte, Rhonda’s procurement/purchasing career spanned 30 years in the retail industry, most recently Chief Procurement Officer for JCPenney Corp.

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November 2023

Patricia Stroup is the Chief Procurement Officer for Nestlé and has a long history in the dairy industry.

In her current role, Stroup’s focus is on improving processes and has been instrumental in the forging of relations between Nestlé and dairy farmers.

For over 15 years, Stroup has helped lead the sourcing of diverse ingredients and materials for the world’s largest food and beverage company. Together with her team, she works to be a part of transforming the sourcing of key commodities, not only for Nestlé, but for the wider industry.

02 Willem Uijen

Title: CPO Company: Unilever Willem Uijen’s career at Unilever spans over 23 years, having first joined the organisation in 1999 as a trainee engineer. Since then, he has worked across numerous supply chain disciplines including logistics, manufacturing, customer service and distribution, and planning.

In September 2022, Uijen was appointed Chief Procurement Officer, where he is responsible for the procurement of all goods and services globally, supporting the creation of 400 brands sold in over 190 countries.

Prior to his current role, Uijen was the Executive Director of Supply Chain

at Hindustan Unilever, India’s largest FMCG company, and the Head of Supply Chain across South Asia, Southeast Asia, and Australasia. During this time, he led Unilever’s Supply Chain in the region through a transformation journey focused on agility and resilience and passionately drove a sustainability agenda which resulted in Hindustan Unilever becoming plastic neutral in 2021.

Before that, Uijen held several leadership positions within Unilever, including VP for Unilever Mexico and the Caribbean Supply Chain, VP for Home Care Supply Chain Latin America and VP for Unilever Home Care Supply Chain.

WATCH NOW

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TOP 10

How to simplify procurement with Google Cloud Marketplace WATCH NOW

Jennifer Moceri Title: CPO Company: Google

An established global executive with extensive experience in the consumer, automotive and food ingredients industries, Jennifer Moceri is the Chief Procurement Officer at Google and its Vice President of Global Procurement.

Before joining Google Moceri was the Chief Procurement Officer of Diageo.

She joined Diageo from Tate & Lyle where she held the position of SVP and Chief Procurement Officer. Prior to Tate & Lyle, Jennifer spent the first half of her career in the automotive industry, much of it with Lear Corporation.

Jennifer is a proven global executive and change agent with experience in the consumer, automotive and food ingredients industries. She is recognised as a highly accountable and resilient leader, achieving results by building collaborative relationships with a relentless focus on continuous improvement to drive step changes in productivity.

Her passion is around organisational transformation and building talent and capabilities to enable growth, improve profitability and increase value to customers. procurementmag.com

43

PROCUREMENT STRATEGY

DANONE’S KEY

TO EFFECTIVE SUPPL RELATIONSHIP MANA

An effective supplier relationship strategy is a vital foundation for any business, however large they are and whatever their global footprint WRITTEN BY: NEIL PERRY

44

November 2023

LIER AGEMENT

H

aving a systematic approach for evaluating the vendors that supply your organisation and getting the best from the relationship can be the difference in achieving wider business success.

For a multinational company like Danone, it is essential for its business growth in line with its ‘Renew Danone’ strategy and its wider sustainability agenda.

Chief Procurement Officer Jean-Yves Krummenacher says the key to its approach is simplicity. First, he says, the company secures the “basics of safety, quality and service levels”. “This allows us to nurture strong and transparent relationships to find the best solutions for efficiency, technology and sustainability,” he adds.

Benefits to customers Krummenacher continues: “It all starts with our mission: bringing health, through foods to as many people as possible.

The link to the end consumer is critical in everything we do.

“We cannot achieve our mission alone; we need our suppliers and partners.

We have a track record of working in a collaborative way in everything from research and innovation to sourcing and sustainability. This approach remains at the core of our strategy for growth.”

The supplier relationships it has fostered allows Danone to achieve deeper collaboration in areas such as science, technology and sustainability. In science, for example, Danone has major assets around fermentation, and it combines these with the tech capabilities of its suppliers to create a competitive advantage. procurementmag.com

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PROCUREMENT STRATEGY

“ IT ALL STARTS WITH OUR MISSION: BRINGING HEALTH, THROUGH FOODS TO AS MANY PEOPLE AS POSSIBLE” JEAN-YVES KRUMMENACHER

GLOBAL CHIEF PROCUREMENT OFFICER, DANONE

In sustainability, meanwhile, Danone is a pioneer in packaging collection and recycling, and is leading the way on methane reduction. It also works with partners across its ecosystem in the construction of factories that work with recycled polyethylene terephthalate (rPET) – a plastic made from repurposed waste PET from businesses and consumers. It’s a material commonly used by manufacturers to help them meet sustainability goals.

Krummenacher explains this kind of longterm thinking is informed by the products we all see on supermarket shelves. “A good supplier relationship is the starting point for this process,” he explains, adding: procurementmag.com

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PROCUREMENT STRATEGY

WATCH NOW

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November 2023

“For more than a century we have been a science-based, consumer-centric company.

Everything we do starts and ends with our customers, consumers and patients. This ensures we deliver the right products at the right time and that they are of superior quality. This is what they expect from us.”

Danone’s wider business goals A key pillar of Danone’s supplier relationships strategy is its four-pillar ‘Partner For Growth initiative: • Emerging science and technology • Precision capacity creation • Cost competitiveness • Sustainability

“WE HAVE ONLY SCRATCHED THE SURFACE OF HOW AI CAN BE USED – THE POTENTIAL IS IMMENSE” JEAN-YVES KRUMMENACHER

GLOBAL CHIEF PROCUREMENT OFFICER, DANONE

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The initiative is designed to not only expand and strengthen existing global partner relationships but also forge new ones with start-ups, scale-ups, corporates and academic institutions.

“It is transforming the way we work with our partners, by strategically seizing opportunities based on consumer trends and insights to support mutual growth,” says Krummenacher. “It is a very ambitious and disciplined approach and is endorsed at the highest level at Danone, which makes a big difference. Each member of our executive committee is a sponsor of select partners, and this enables us to elevate partner relationships to board level.”

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The strategy was further reinforced by a recent Partner for Growth event, which saw 50 select suppliers gather at the company’s Daniel Carasso International Research and Innovation Centre in Paris. The collective aim was to deliver even more for consumers, by creating healthier and more-sustainable products, without compromising on taste and texture.

Benefits to sustainability strategy Krummenacher is emphatic on the importance of sustainability to Danone’s sourcing strategy. He says between 85-90% of its social and environmental impact sits within its supply chain, meaning

PROCUREMENT STRATEGY

What is the Renew Danone Strategy?

EMBRACING STRENGTHS...

“A unique heritage”

“Iconic local and global brands”

“Healthy, on-trend and growing categories”

ADDRESSING AREAS OF UNDER-PERFORMANCE...

“We have not been growing at the speed of our categories”

“We lacked consistency in guidance and delivery”

“Our organisation and disclosure have been unstable

FOUR STRATEGIC PILLARS...

WIN

where we are

EXPAND where we should be

SEED the future

MANAGE our portfolio

In 2022 Danone CEO Antoine de Saint-Affrique, pictured right, unveiled Danone’s strategic plan, Renew Danone, which is designed to help the company implement a sustainable and profitable growth model.

The strategy is based on “an end-to-end step-up in the quality of execution”, de Saint-Affrique said.

He added that it is also a “strengthened innovation model geared for scale and impact”, and that it is designed to “increase investments in consumer value, as well as brands and commercial development”.

Danone is delivering the plan by aligning purpose and performance, and “by consistently putting consumers and customers at the heart of everything we do”. de Saint-Affrique adds that it also gives the company stronger discipline on capital allocation, and a greater sense of urgency in seizing opportunities and tackling issues.

Its strategic pillars include: • Restoration of competitiveness in core categories and geographies • Selective expansion of segments, channels and geographies • Seeding of future growth avenues • Portfolio rotation

embedding sustainability into its operations is essential.

“Sustainability sits at the heart of our sourcing strategy, and procurement is the driving force behind this,” he explains.

“At Danone, when it comes to sustainability, we act. We are proud of that. Here, again, the relationship with our suppliers is key. We partner with them in an open and transparent manner to achieve our sustainability goals.”

Key areas of Danone’s supplier relationship management include the tools it uses to improve traceability, and also its 52

November 2023

responsible sourcing programmes, which help influence tier 1 -suppliers.

“On Scope 1 and 2 emissions we will meet our science-based targets initiative,using traditional transactional ways of working with suppliers.

“On Scope 3, we need a much more collaborative approach. This is where our Partner For Growth program comes into play. It strategically leverages the power of our partner ecosystem.”

This package of measures is paying dividends, with Danone securing Triple A status from the Carbon Disclosure

PROCUREMENT STRATEGY

Jean-Yves Krummenacher speaking at a Partner For Growth event

Project for a fourth year in a row. Danone is just one of just a dozen organisations to achieve this accolade.

To earn a triple-A score from CDP, organisations must show environmental leadership, and be meticulous and transparent about disclosing actions on climate change, deforestation or water security.

Managing suppliers of different sizes Danone products are available in 120 countries, so simplicity of approach and supplier relationship KPIs are critical,

Jean-Yves Krummenacher TITLE: GLOBAL CHIEF PROCUREMENT OFFICER COMPANY: DANONE INDUSTRY: FOOD AND BEVERAGES LOCATION: AMSTERDAM, NETHERLANDS Krummenacher has been Global Chief Procurement Officer at Danone since October 2020, having filled other senior procurement posts at the company since 2014. procurementmag.com

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PROCUREMENT STRATEGY

“ SUPPLIER RELATIONSHIPS IS KEY. THESE ARE OPEN AND TRANSPARENT, WITH A VIEW TO ACHIEVING OUR SUSTAINABILITY GOALS” JEAN-YVES KRUMMENACHER

GLOBAL CHIEF PROCUREMENT OFFICER, DANONE

says Jean-Yves Krummenacher: “Relationships work best when you have transparency on the intent and a clear picture of success.

“Key factors include a KPI scorecard, senior management involvement, and the agility to make quick decisions if the supplier relationship is not working” The future of technology As well as maintaining clarity and transparency in its supplier relationships, Krummenacher says emerging technologies also have a vital role to play.

Of course, this begs the question whether AI can make significant improvements to sourcing at a company the size of Danone?

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“Data is the starting point for supply security,” says Krummenacher. “Thanks to certain partnerships, we use AI for Tier 2 and 3 identifications. This really is a game changer in our ability to anticipate supply disruptions.”

This mastery of data is providing competitive advantage, with Danone recently using its partnerships to leverage AI to optimise decisions around ingredient- choice.

“I believe we have just scratched the surface of how AI can be used; the potential is immense. Some companies are embracing and investing in AI, but others are being too slow. Generative AI is already transforming procurement. It’s up to us to transform it fast into a game changer for Danone.”

Danone’s headquarters

CENTRAL CO - OP

How Central Co-op is creating a sustainable society for all WRITTEN BY: TOM CHAPMAN PRODUCED BY: CRAIG KILLINGBACK

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CENTRAL CO - OP

Paul Lockwood, Head of Procurement at Central Co-op, outlines the importance of sustainability in his own department and across the entire organisation

C

entral Co-op can trace its history all the way back to the mid-19th century, when the modern co-operative movement was just taking off.

Today, it exists as the second-largest co-operative in the UK, having assumed its current form following the merger of Anglia Regional Co-operative Society and Midlands Co-operative Society back in 2013.

At the heart of Central Co-op’s operations is its retail offering, consisting of more than 250 convenience stores across the nation.

On the other side of the business is the funeral division, comprising 180 funeral homes, a crematorium, three stone masonry outlets and a coffin factory. And that’s without even mentioning the organisation’s property arm, responsible for buying, selling and maintaining thousands of buildings.

Many of Central Co-op’s core values remain the same as those established around 175 years ago but, in 2021, the company unveiled its new purpose: to ‘create a sustainable society for all’.

This ethos now stretches right across the business, impacting decision-making and actions at every level of all departments.

That includes in the field of procurement, which is headed up at Central Co-op by Paul Lockwood, who joined the company in February last year.

“Within that new strapline there are numerous themes,” explains Lockwood.

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Paul Lockwood, Head of Procurement at Central Co-op procurementmag.com

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“ It’s amazing how, more than 150 years after the first co-ops were started, their core values are still just as relevant today” PAUL LOCKWOOD

HEAD OF PROCUREMENT, CENTRAL CO-OP

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“There’s the environment and sustainability; there’s self-funding; there’s inclusion; and there’s self-help, as well.

“You may think when you join Central Co-op that you’re joining a movement, but actually what you join is a social movement, which makes for an interesting dynamic. It’s amazing how, more than 150 years after the first co-ops were started, their core values are still just as relevant today.”

Energy crisis accelerates Central Co-op’s solar strategy It certainly hasn’t been a straightforward start to life at Central Co-op for Lockwood, who

CENTRAL CO - OP

PAUL LOCKWOOD TITLE: HEAD OF PROCUREMENT COMPANY: CENTRAL CO-OP LOCATION: ALREWAS, ENGLAND

became Head of Procurement just a couple of weeks after the global energy crisis escalated thanks to Russia’s invasion of Ukraine.

However, as the saying goes, in the midst of chaos there is also opportunity. That opportunity for Central Co-op came in the form of accelerating its investment in solar power, an important future-proofing strategy that had long been discussed.

Solar panels were installed at two convenience stores by the end of July; within a further eight weeks, Lockwood and his team had tended and contracted a provider to roll out solar panels at no less than 180 stores by end of 2023.

EXECUTIVE BIO

Paul Lockwood has worked in the field of procurement for more than 20 years, including in both the public and private sectors. For six years, Paul headed up procurement at BNP Paribas Personal Finance, before moving to Dignity in 2019 to lead the company’s procurement transformation programme. Last year he joined Central Co-op to look after GNFR for the entire retail and funeral business. Over the past 18 months, he has overseen the rollout of solar panels across 180 stores and modernisation of the organisation’s ceremonial fleet. Paul has a proven track record in delivering year-on-year savings and process improvements through the application of innovative business techniques and by optimising operating and delivery models.

Inspired PLC: Energy procurement, cost control and net-zero leader Through expert insight and tailored advisory services, Inspired PLC empowers businesses to manage their energy costs, consumption and net-zero strategies.

for any organisation, but with the right support and advice, businesses can achieve these goals in a commercially and operationally beneficial way,” says Alex Mackey, Account Director at Inspired PLC.

Inspired PLC are a leading technology-enabled service provider supporting corporate businesses to control energy costs and transition their journey to net-zero carbon.

“Our purpose can be summarised as helping businesses manage their journey to net-zero and responding to the climate emergency whilst controlling their costs.

Energy is a significant overhead and now a board-level concern for UK organisations. Inspired PLC provides the expert insight and tailored advisory services to help businesses manage their costs, optimise energy consumption and reduce their carbon emissions.

Inspired PLC also helps clients to prove their net-zero and ESG credentials to their investors, customers and other stakeholders.

“We know that reaching netzero is a massive challenge

“Our solutions create clear and actionable long-term plans to help realise these goals.” All businesses need to understand how to effectively control their 4Cs; cost, carbon, consumption and compliance.

Co-operatives, owned by members, aim to positively impact their communities, including the environment.

They typically have large and diverse portfolios, so energy and carbon make up a key operational cost. Energy and sustainability is often seen as

an area of complexity, but it is also an area of opportunity to look to reduce impacts on the environment wherever possible.

Inspired PLC is assisting cooperatives to formulate a strategy to best manage these energy risks through innovative and collaborative procurement solutions, while exploring every avenue to reduce consumption and ultimately carbon emissions, helping to further those goals to have positive impacts on their community.

Mackey concludes: “In light of the mounting challenges businesses encounter in addressing sustainability and ESG concerns, it is crucial for them to engage expert advisors who can demonstrate to their stakeholders a comprehensive plan to effectively manage costs, achieve carbon neutrality, and enhance their ESG performance.”

CENTRAL CO - OP

“ For us as an organisation, investing in a green funeral fleet is massively important, and there’s also an expectation from the public” PAUL LOCKWOOD

HEAD OF PROCUREMENT, CENTRAL CO-OP

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Moreover, in May the company opened a new shop in Staffordshire which, for the first time, had panels pre-installed.

“We’re just over a third of the way through that journey and we’re very fortunate to have an executive and board who want to kick on with the investment,” says Lockwood. “We’ll have payback in less than three years based on our current commercial model which, for us, is unheard of.

“For me, it’s brilliant as well because it’s something I’ve always been passionate about.”

Praising Central Co-op’s key partner on the project, he adds: “The supplier we’ve had, SolPV, has been amazing and really hit the ground running.

“Now, the exec is asking me ‘what’s next?’, which is exciting and it’s great to be challenged like that.”

Bidding to become self-sufficient taken such as investment in more Creating a sustainable society for efficient freezers and putting all covers numerous aspects but, doors on chiller cabinets. as Central Co-op’s solar efforts “It all contributes,” Lockwood Year founded suggest, a significant proportion goes on. “It’s all very well of the strategy relates to energy producing green electricity, but usage and becoming more selfit’s no good if you’re then burning Number of sufficient in this space. it off really quickly.”

Employees In the relatively near future, That all-important it is hoped the organisation will co-operative team spirit is truly be producing 100% of its own coming to the fore from an energy Revenue power, which is evidently a big perspective, with the launch of a ask. Nevertheless, things are most new consortium including Central certainly heading in the right direction.

Co-op and a host of independent co-ops.

Lockwood forecasts that the solutions The goal is to collaborate on the purchase currently being put into place at of utilities, while sharing knowledge and convenience stores will produce around investment opportunities.

30% of the energy needed in a supermarket “This is a journey we’re going on together,” setting. Within that, simple steps have been says Lockwood. “We’re trying to share that

2014

7,000+

£961.4mn

procurementmag.com

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How SOL PV helped Central Co-op become a greener business SOL PV has become a standout in the renewable energy industry and is helping organisations like Central Co-op to achieve their sustainability goals SOL PV Group is an established name in the solar sector, specialising in the installation of PV panels.

While an increasing number of requests for projects on the ground are flooding in, the company’s bread and butter remains the commercial rooftop sector.

Very few large installers in the UK are doing similar work to the same standards, making SOL PV a standout in its field.

Forming a partnership with Central Co-op In early 2022, Central Co-op invited SOL PV to tender two trial sites with a tview to rolling out solar capabilities across its portfolio.

The trials proved successful and ultimately resulted in the go-ahead for installation at 180 Co-op sites, including convenience stores and funeral homes.

Already, the aforementioned trial locations are producing an energy yield which is 10-15% greater than originally predicted.

“We’re very much focused on quality products and materials because, for us, it’s all about safety,” says Brett Reynolds, Sales Director at SOL PV.

“Supermarkets open seven days a week are fantastic models for utilising solar because they’re using 90-100% of what they generate.

“Everyone’s happy because we’re making greater savings and a quicker return on investment for the Co-op.”

A good time to go green Reynolds calls the nine years from 2010 to 2019 a “solar coaster” thanks to the government’s feed-in tariffs scheme.

Although customers were paid for exporting energy to the National Grid, firms like SOL PV were confronted with a “nightmare” in trying to keep up with demand.

Now, the market has matured and can stand on its own two feet.

Reynolds adds: “Two factors are stimulating the commercial marketplace: the rise in energy prices and this requirement for businesses to reduce their carbonfootprint.

“That, combined with the reduction in price of materials, means solar has become a fantastic addition to commercial buildings and we’re seeing extremely favourable ROIs on these systems.”

“ What we’re doing is quite cutting edge for the industry and it’s an exciting time for us” PAUL LOCKWOOD

HEAD OF PROCUREMENT, CENTRAL CO-OP

good information between ourselves to help each other on that journey.

“There has always been co-operation, but last year – with the energy crisis and cost-ofliving crisis – created a need to do more, and it has been fantastic. Coming together and sharing resources will help us to be more sustainable, not just as individual societies but as a movement.”

Energy strategy extends to colleagues Crucial to Central Co-op’s values is looking after its people, to the extent that its investment in renewable energy capabilities has also been extended to colleagues.

“It’s great investing in our stores,” continues Lockwood, “but part of what we do as an organisation is invest in our colleagues.”

After receiving various enquiries, Central Co-op reached an agreement with its solar provider to extend the commercial terms of their deal to staff, giving them the option to purchase clean energy infrastructure such as panels or EV chargers.

“For us, it’s about putting options in front of our colleagues and leaving the decision up to them,” says the procurement chief. “It’s quite a unique scheme, but it’s something we had the ability to do.

“So far, we’ve had about 200 colleagues show interest and it’s only been going for a few weeks. It definitely helps as well that we’re offering them a trusted provider with a quality product that is going to last.”

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Funeral fleet going green Despite the industry’s obvious traditions, Central Co-op has been careful not to overlook green aspirations in its funeral business, too. This process has begun with its fleet of vehicles, which can cost upwards of £120,000 apiece – making for a complex and expensive transition.

CENTRAL CO - OP

Paul Lockwood, Central Co-op’s Head of Procurement Highlights Sustainability’s Organisational Impact WATCH NOW

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CENTRAL CO - OP

Central Co-op is the secondlargest co-operative society in the UK Central Co-op employs around

7,700

people across divisions including retail and funeral services Central Co-op’s history can be traced back to the modern co-operative movement of the mid-19th century

“It’s a significant investment,” Lockwood explains. “For us, we had an ageing fleet and we had reached a crossroads, so you could say it’s been a case of right place, right time.”

In looking to go green, Lockwood’s team went through an exhaustive procurement tender exercise, before finally identifying the Ford Mustang Mach-E as its limousine and hearse solution. The new fleet is due to be rolled out over the next 12 months.

Investment has also been made in charging infrastructure courtesy of a new partnership, and will evolve as the fleet expands: “For us as an organisation this is massively important, and there’s also an expectation from the public. This investment has been really popular with our colleagues as well.

“We are a traditional business, but we have to evolve. When we’re talking about helping the environment, we need to look at every aspect of what we do.

“I think what we’re doing is quite cutting edge for the industry and it’s an exciting time for us as a business. There are bigger providers and bigger competitors out there who are maybe not as far down the road as we are in this space.”

‘Amazing’ partners across Co-op’s business Clearly, a vast operation like Central Co-op cannot function without crucial input from partner organisations.

“We’ve been fortunate to have some amazing partners,” says Lockwood. “One of the things we talk about with regards to partnerships is trying not to just have a transactional relationship. We want to put in effort across the business – not just in procurement – to drive value and sustainability.”

One such example of a fruitful partnership is with Lyreco, which has spent time trying to procurementmag.com

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CENTRAL CO - OP

“ One of the things we talk about with regards to partnerships is trying not to just have a transactional relationship. We want to put in effort across the business – not just in procurement – to drive value and sustainability” PAUL LOCKWOOD

HEAD OF PROCUREMENT, CENTRAL CO-OP

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Central Co-op has also entered into a partnership with Inspired Energy, a consultancy which is helping various co-ops with the process of buying utilities.

Lockwood continues: “Their insight so far with regards to the environment has been massively powerful. They’re helping us future-proof ourselves as an organisation which, in essence, involves buying smartly and buying with the right people – but also looking at who we are in terms of sustainability, which is at the heart of what we do.”

understand the motivations of Central Co-op and its colleagues. As a provider of supplies and workplace solutions, the firm introduced a bio-hygiene cleaning product which has proved to be a roaring success in terms of cost reduction and environmental benefits.

Technology-wise, Central Co-op recently implemented a purchase-to-pay solution provided by Zycus, a pioneer in cognitive procurement software. Positive impacts have already been seen in various departments through the automation of processes which were previously paperbased or required manual inputting.

Lockwood adds: “We’re trying to create a core of suppliers who we work with and, instead of us just going to them, we want it to be a two-way street, giving them the opportunity to talk about what they can do.

“For us, with our suppliers, whether it’s in the retail business, property business or funeral services, that’s a common approach we’re trying to roll out at the moment.”

Looking ahead With eyes on the future, Lockwood believes macro-economic factors and the growing importance of sustainability must remain key considerations in the procurement space.

The war in Ukraine has, of course, had a profound impact on the supply chain and forced companies to rethink their suppliers.

“We are living through turbulent times,” Lockwood concludes. “What’s going on in Ukraine has been utterly horrendous and there has been a huge knock on effect throughout the world.

“One of the things I’m looking at and considering is the ability to source locally because shipping goods over from the Far East is more expensive. Sustainability’s massive as well, so local sourcing is important when we start looking at our carbon footprint.

“I think for us, working in procurement, we’re probably going to find more challenges and demands in understanding who our supply base is in more detail and measuring their impact on the environment.”

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DIGITAL PROCUREMENT

NASA’S PROCUREMEN LAUNCHPAD TO THE MOON AND MARS When the objective of an organisation is to reach Mars, then every facet of that organisation has to be functioning at the highest possible standard WRITTEN BY: NEIL PERRY IMAGES: NASA

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NT

NASA’s Space Launch System (SLS) rocket with the Orion spacecraft aboard, pictured ahead of an Artemis mission launch rehearsal at the Kennedy Space Center in Florida in 2022

November 2022: NASA’s SLS rocket with the Orion spacecraft aboard atop a mobile launcher, as it rolls out of the Vehicle Assembly Building to the launchpad

DIGITAL PROCUREMENT

W

ith this in mind, the Office of Procurement at NASA has introduced a new tool to find fresh procurement ideas, encourage innovation and, ultimately, exceed the goals of the agency.

The tool is NASA Acquisition Innovation Launchpad (NAIL), which allows everyone from contractors, engineers and staff, to field and test ideas to improve the agency’s procurement processes. The aim is to allow people to identify improvements by challenging sub-optimal ways of operating.

Through NAIL they can recommend tools to increase acquisition process quality or speed, or provide ideas to reduce the burden on industry, or barriers to entry.

NASA currently spends approximately $21 billion (85% of its budget) on acquiring goods and services. It plans to use NAIL to facilitate industry input through public focus groups.

A digital space for ideas and innovation NASA Senior Procurement Executive, Deputy Chief Acquisition Officer & Assistant Procurement Administrator Karla Smith Jackson has been a major force behind NAIL since joining three years ago.

“We were doing quite a few innovative things, but we had not established either a virtual or an actual physical space to be able to leverage innovations and acquisition,” she explains.

“I wanted NASA to have a space around the acquisition of innovation, and we opted to call it a launchpad, hence the name.

“I didn’t want this to be a headquartersdriven thing, I was really looking for just the opposite – a grassroots way to collect information and innovations from the centres.” procurementmag.com

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DIGITAL PROCUREMENT

Karla Smith Jackson at NASA headquarters in Washington DC

“ You’ll see over the next six to 12 months, there’s going to be a huge rollout talking about NASA 2040” KARLA SMITH JACKSON

SENIOR PROCUREMENT EXECUTIVE, NASA

Encouraging diversity and improving reach A core aim of NAIL is to encourage diverse perspectives, reduce barriers and improve reach. By having a digital portal to allow the sharing of ideas, and a cultural atmosphere that encourages that sharing, it gives people the licence to step forward and contribute.

Smith Jackson describes NAIL as a “‘dynamic catalyst for innovation”’ in both procurement and programme management, because it applies NASA’s culture of exploration and innovation to acquisitions and empowers its workforce to meet challenges and objectives. She adds: procurementmag.com

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“ I found myself wishing there was a way to constructively share ideas without criticising what is perceived to be the status quo” KARLA SMITH JACKSON

SENIOR PROCUREMENT EXECUTIVE, NASA

NASA’s Artemis I flight test was the first integrated test of the agency’s deep space exploration systems

DIGITAL PROCUREMENT

1. Empathise

2. Define

5. Test and Evaluate

3. Idea Generation 4. Prototype Solutions

“What we have now is an electronic presence whereby if somebody has an innovation they want us to look into, they just click on it, fill out a form, submit it, and then we follow up. We have around 70 projects that have been submitted, on which we’re getting comments from individual employees who see things that can be done differently.”

She adds that employees are encouraged to share ideas regardless of how experienced they are in the agency, as this “allows new perspectives and ideas to get their moment in the spotlight”.

“I try to talk to everybody, not just the seasoned acquisition professionals because they think they have all the answers,” says Smith Jackson. “People who are new to

NASA Acquisition Innovation Launchpad (NAIL) Process 1. Empathise: What are our pain points?

2. Define the problem 3. Idea Generation: Aggressive collaboration and refinement of ideas using divergent thinking techniques 4. Prototype Solutions: Select and prepare for test cases 5. Test and Evaluate

“ People who are new to NASA are far more likely to question why we are doing things a particular way” KARLA SMITH JACKSON

SENIOR PROCUREMENT EXECUTIVE, NASA

NASA are far more likely to question why we are doing things a particular way.”

NAIL is born partly from Smith Jackson’s not-entirely-positive experiences from earlier in her career.

“I found myself wishing there was a way to constructively share ideas without criticising what is perceived to be the status quo,” she says, adding that this is something NAIL actively encourages. NAIL also allows collaborative networking opportunities,

DIGITAL PROCUREMENT

An image from flight day 22 of the Artemis I mission showing the engines on Orion’s service module

NASA: A Look Ahead WATCH NOW

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for people of differing experience and backgrounds to explore and evolve ideas.

“It is a less threatening way for people to share ideas in a conversation space.

This way, we can attack weak spots, and hopefully something that didn’t work before will work successfully.”

NASA procurement success stories Since launching in early 2023, NAIL has already started to deliver results.

A significant early achievement has been how it has brought clarity to 84

November 2023

the relationship between NASA’s technical and procurement teams.

Smith Jackson explains that, previously, there were engineers and researchers whose dealings with procurement were rare, and who found it opaque and intimidating, without help or expertise.

NAIL, however, offers an Acquisition Navigator, which is a virtual space that answers procurement questions – everything from how to go about a solicitation or putting together a statement of work.

DIGITAL PROCUREMENT

Karla Smith Jackson TITLE: SENIOR PROCUREMENT EXECUTIVE, DEPUTY CHIEF ACQUISITION OFFICER & ASSISTANT ADMINISTRATOR FOR THE OFFICE OF PROCUREMENT AT NASA COMPANY: THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA) LOCATION: USA

The inside of Orion shows the display of the Callisto payload. Callisto is Lockheed Martin’s technology demonstration in collaboration with Amazon and Cisco

Smith Jackson says: “Acquisition Navigator will show you what a good policy looks like, and give you a template.

“It is micro-training, so people can access all this information without having to engage anyone. It is a living, breathing thing; we’re constantly adding to it as policies change.”

Even though the project is still in relative infancy, Smith Jackson believes the strategy is making a difference to the way NASA works, and to the culture of innovation it is looking to promote. In a little over six months 50 industry partners have used NAIL

Karla Smith Jackson is Senior Procurement Executive, Deputy Chief Acquisition Officer & Assistant Administrator for the Office of Procurement at the National Aeronautics and Space Administration (NASA).

She provides senior executive leadership and oversight of NASA’s procurement functions, policy, and initiatives to an acquisition workforce of over 4,000 personnel.

Ms. Jackson serves on the Federal Acquisition Institute Board of Directors and on the Federal Acquisition Regulation Council.

She is one of only three signatory authorities that can execute procurement policies and procedures on behalf of the United States Federal Government.

She represents NASA’s enterprise procurement organisation across the Federal Government, industry and international organisations.

NASA spends approximately

$21 billion or

85%

of its budget on acquiring goods and services

The future of NASA In 2023 and beyond, the agency will prepare for our future by exploring the secrets of the universe. All for the benefit of humanity.

NASA’s future will continue to be a story of human exploration, technology, and science. They will go back to the Moon to learn more about what it will take to support human exploration to Mars and beyond. They will continue to nurture the development of a vibrant low-Earth orbit

economy that builds on the work done to date by the International Space Station.

NASA engineers will develop new technologies to improve air transport at home and meet the challenges of advanced space exploration. Their scientists will work to increase an understanding of our planet and our place in the universe. They will continue to try to answer the question, “Are we alone?”

DIGITAL PROCUREMENT

NASA’s SLS rocket carrying the Orion spacecraft launches on the Artemis I flight test on November 16, 2022

to promote ideas and share ways they can bring value to NASA. NASA Mars 2040 In terms of NASA’s wider operational goals, it aims to return to the Moon by 2025, and then to reach Mars by 2040. This means all departments need to work together and at their optimum level to make this a reality.

Smith Jackson says issues such as slow procurement processes hold up progress, and that anything that accelerates these will help in NASA’s wider mission goals.

“You’ll see over the next six to 12 months, there’s going to be a huge rollout talking about NASA 2040,” she explains, knowing that every department needs to be at the top of their game if they are to reach the 2040 goal.

“When I came up with this, I didn’t realise there were others in the agency thinking of similar things,” she says. “I feel that in a year or so it will converge in NASA’s different areas of expertise, be it science, engineering, or research. We will see a different NASA. NASA 2040 starts now.” procurementmag.com

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Sustainable impact begins with a sustainable mindset AD FEATURE WRITTEN BY: TOM SWALLOW

AD FEATURE PRODUCED BY: GLEN WHITE

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Eirini Etoimou showcases how Sellafield integrates sustainability moving from the ambition to action and to long-term results

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here is a misconception that one person can tackle all of the global challenges in an instant.

This is especially true with areas of sustainability.

The imminent threat of centuries of damage to the planet makes sustainability a very passionate subject, but it is not without its challenges. This is why one of the most critical tasks for some of the most impactful organisations is managing expectations of what their businesses can achieve in the eyes of those that work for them – but also those that look from the outside-in.

It is in this sense we can say that the majority still don’t grasp the concept of sustainability whereby one change can cause a chain reaction in a particular direction, albeit related to business or climate, that can alter how the world works. In combining the attributes of the economy and sustainability, we open up a very complex environment, of which all businesses will learn to navigate over the coming years – or so we hope.

Some of the most critical industries, namely supply chain and energy, are undergoing great shifts to first de-risk, then decarbonise, with a number of social implications along the way. Facilitating this monumental transition requires passionate people with the ability to listen, learn, and act upon the challenges that come their way – true advocates of, not just sustainability, but ensuring environmental prosperity, social justice, and effective governance.

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Eirini Etoimou Head of Corporate Sustainability & Supply Chain Development at Sellafield Ltd procurementmag.com

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“ Not everyone is ‘ready’ to listen or to be part of the sustainability journey, but this should not stop us” EIRINI ETOIMOU

HEAD OF CORPORATE SUSTAINABILITY & SUPPLY CHAIN DEVELOPMENT AT SELLAFIELD LTD

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Someone with passion and at the same time realism, for sustainability within her sector and beyond, is Eirini Etoimou, Head of Corporate Sustainability & Supply Chain Development and Sourcing at Sellafield Ltd. Etoimou seeks to tackle the challenge at its very core in an industry that is under a watchful eye due to the nature of its nationally important work.

As one of the key centres for nuclear engineering management, Sellafield Ltd is tackling the legacy of the past and building a capability for the future. Having spent over two years with the organisation, heading up supply chain development, strategic SRM, and sustainability practices, Etoimou is well

SELLAFIELD

EIRINI ETOIMOU TITLE: HEAD OF CORPORATE SUSTAINABILITY & SUPPLY CHAIN DEVELOPMENT AND SOURCING LOCATION: UNITED KINGDOM

aware that it is not realistic to make the company more sustainable in a heartbeat, but instead takes a more pragmatic approach to the task – starting with its people.

Winning the hearts and minds of the workforce One of the key points that Etoimou makes is about action. Ambiguity around sustainability and the different definitions make people feeling intimidated or reluctant to contribute or even to find out more.

Now we’ve all heard the cliche phrase ‘we just need to take action’, but Etoimou’s approach to building sustainability into

Eirini Etoimou is the Head of Corporate Sustainability & Supply Chain Development and Sourcing for Sellafield, and the Chair of the Nuclear Forum of the Institute of Collaborative Working.

She holds a MSc in Procurement, Logistics and Supply Chain Management, MBA in Leadership and Sustainability and speaks four languages.

In addition, she is a visitor lecturer on sustainability and global sustainable supply chains.

Eirini participates as a keynote speaker at UK and international conferences. Additionally, she is an author of academic papers and a contributor to business editions, focusing on sustainability, supply chains, procurement, leadership, business strategy.

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WATCH NOW

Sellafield Ltd is to transform sustainability from being opaque and complex, to easy, accessible and meaningful for all Sellafield’s people and its partners.

There is a realistic approach here, as Etoimou shares: “not everyone is ‘ready’ to listen or to be part of the sustainability journey; but this should not stop us. We can always focus on the ones that want and are ready. We can identify these areas that can deliver quick wins in order to attract some positive attention and gain more advocates, but we should not fall into the trap of ‘short-termism’.

There are quick wins, but sustainability is equal to the bigger picture and longterm. It is important to pass this message to everyone in the business that would expect immediate results.

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“Considering the nature of our business, and taking a holistic approach, we identified four key focal areas, the interconnectivity of which will allow us to move from ambition to action and to long-lasting results. These areas are aligned supply chains, positive environmental impact, innovative solutions, and motivated people,” says Etoimou.

It is not just about working with advocates but ensuring that their missions align with those of the business because, as Etoimou points out, there are some individuals with a passion in sustainability that can work against the effort to strategically move in the right direction.

“For me pushing back sustainability is equally a problem with the obsessive passion,” says Etoimou. She continues: “In the sustainability journey, we need to work

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together. Everyone may have an idea or a thought, but quick, opportunistic raids, won’t help anyone. Sustainability requires structure and focus. Everyone should be clear of the plan, their role; have an idea, have a thought, but share, be aligned, build up on this structure.

This is the reason why I keep avoiding the phrase ‘sustainability strategy’. Instead, I say “I build the strategy for the sustainability integration”. Sustainability is a mindset, and from my perspective, you don’t strategise the mind; work with it, influence it, inspire it”.

“Many years ago, when I realised what sustainability was about, I remember I had a T-Shirt-slogan, ‘I love Sustainability’, approach; back then I thought sustainability was self-explicit, no further details needed.

Obviously, that was a mistake. That was

“ In the sustainability journey, we need to work together.

Everyone may have an idea or a thought, but quick, opportunistic raids won’t help anyone.

Sustainability requires structure and focus” EIRINI ETOIMOU

HEAD OF CORPORATE SUSTAINABILITY & SUPPLY CHAIN DEVELOPMENT AT SELLAFIELD LTD procurementmag.com

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“ Those who will seriously and strategically integrate sustainability in their businesses, in their projects, they will experience positive financial performance and long-lasting savings” EIRINI ETOIMOU

HEAD OF CORPORATE SUSTAINABILITY & SUPPLY CHAIN DEVELOPMENT AT SELLAFIELD LTD

when I realised that I had to personalise my message to every individual or team I spoke to about the subject. So, it was and still is my responsibility to find ways to approach and to bring people along.

“I am not saying it is easy. It requires a lot of time and effort to engage with every single person, but there are ways,” says Etoimou.

“Obviously sustainability is not down to one person, therefore some specific actions can achieve some quick wins. Impact requires more advocates, and you can attract people with a different voice or way of communicating to work with others that you may not be able to.

“This could be somebody’s friend or close colleague with a completely different way of approaching that one person or group of people. However, we need to accept that

some, no matter what, simply don’t want to engage. So, let’s focus and work with the ones that are more receptive.”

You could say that Etoimou refers to a pyramid effect here, whereby working with the right mindset towards sustainability creates a pool of individuals that can carry the message to others – creating a ripple effect throughout the organisation. In doing so, not only does this reduce time to impact others but also the extent of which Etoimou must address individual cases of nonadvocacy or even ‘over-advocacy’.

“I am a big believer of the impact the environment has on you as an individual, and we are affected by other people’s behaviours – so we can be influenced,” Etoimou says.

“Even if one person is not, I doubt that person would remain 100% against sustainability. This is where we discuss equal rights, we talk about our children, our parents, and the environment, there is nothing that this person won’t relate to. It is not black and white, and we start with those that understand it and can support what we are doing.”

There is one major factor among the first steps to bringing teams on board. Making sustainability’s impact more measurable and having an equal share in the business plan or corporate KPIs. “Thinking of a CFO as an example, we need to acknowledge that they are right in some respects. The language is different: they discuss Return on Investment (ROI), Earnings Before Interest, Taxes, Depreciation, Amortisation (EBITDA), and we discuss waste management, carbon reduction, and social value. The ambiguity on metrics and the numerous and inconsistent approaches to measuring sustainability impact does not help either.

“There is also a ‘short-termism’ effect, which means trying to prove procurementmag.com

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“ From the awareness level and throughout the supplier journey, sustainability will be there. We are taking an end-toend approach with our supply chain” EIRINI ETOIMOU

HEAD OF CORPORATE SUSTAINABILITY & SUPPLY CHAIN DEVELOPMENT AT SELLAFIELD LTD

that a sustainability activity will have an immediate result, and this is where any evidence remains incomplete, and we lack this evidence of sustainability’s value.”

Embedding Sellafield’s principles into the supply chain There’s a common theme here, which is all about taking action on things that are achievable. In an ideal world, Sellafield Ltd would align its entire workforce to sustainability as a way of living and operating as opposed to a strategy. This was stressed

by Etoimou as a staple part of society and how it functions as more than just a means of achieving the climate netzero emissions goal.

When looking at the supply chain the approach is very much similar, whereby feasible actions can be taken to ensure that new companies tendering for contracts with 98

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Sellafield align with its sustainability goals.

The controllable aspect of this is the criteria, which is how the organisation ensures that suppliers meet the necessary requirements to do business going forward.

“We are taking an end-to-end approach with our supply chain. From the awareness level and throughout the supplier journey, sustainability will be there. Considering the nature of our business, which predominantly relies on our supply chain for our purpose of delivery, it only makes sense to work collaboratively with our partners to support, directly and indirectly our sustainability goals,” says Etoimou.

“We want to ensure that we will achieve our goals, but most importantly, that we will contribute so more of our existing and potential partners can appreciate the importance of embedding sustainability principles in their organisations. It is fundamental to have more role models around us; only in this way we can achieve a greater, positive impact.

“Evidently, there is a direct correlation between meaningful business relationships and exponential impact from sustainability actions. In our case, our social value programme, our Six strategy, combined with our environmental strategy, and the carbon management programme, can only multiply and maximise their impact through collaboration with our supply chain.

This provides both parties with the right visibility and understanding of each other’s priorities and maturity level, allowing sharing of knowledge and expertise to advance progress.”

Etoimou then explains the need to align its principles and actions with those of its partners.

“First of all, it is important and only fair for everyone that would like to work procurementmag.com

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with us to be aware of our expectations and principles in advance. Our ‘supplier journey’, an interactive guidance tool that describes every step of a supplier’s life cycle within Sellafield, includes among other useful information guidance, sustainability and collaborative working principles. We created a new market engagement strategy, introducing the ‘principles alignment’ and as part of the tender process, new, meaningful, sustainability questions,” says Etoimou.

“We are seeking commitment, not perfection, and we ensure that we cover cases of existing contracts as part of our SRM model”, she explains, “this is as well one of the reasons we decided and recently launched an upskilling programme, initially focused on our SMEs, and we are working with our major partners on a joined socioeconomic programme, ensuring alignment and targeted actions with credible results for our communities.

“Having said that, I still believe that despite all of these being in place, and all the interactions with the supply chain and our colleagues, in principle, all of this is necessary, but still reactive. In the procurement world, sustainability should start from the design phase, but even this is the second step for me. The first step where everything starts with sustainability, is the mindset. Only a person, a team, an organisation with a mature sustainability mindset will design or describe a need embedding these principles; then, all the system will need to serve this need as described, without ‘negotiations’ in the process.”

This re-emphasises the need for a sustainability mindset at the beginning of any design process (no matter if it is the design of a product, service or business model) having and aligning to ESG goals in mind – from 100

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“ I am a big believer of the impact the environment has on you as an individual” EIRINI ETOIMOU

HEAD OF CORPORATE SUSTAINABILITY & SUPPLY CHAIN DEVELOPMENT AT SELLAFIELD LTD

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here we begin to paint a picture of how the different stages look with mindset being the vital first step that educates further processes.

“The person or teams to decide that we need this product, service, building, for example, must have the sustainability mindset in order to begin writing the specification in that way”, Etoimou says, and she continues: “the list is long, but incredibly rewarding: emissions, energy, materials, lifecycle value, impact on the communities, supply chain transparency, among others. It becomes exciting when we look at the numbers. Those who will seriously and strategically integrate sustainability in

their businesses, in their projects, they will experience positive financial performance and long-lasting savings.

“I appreciate that numbers matter, but at the same time, for a successful sustainable transformation, we need to invest in the human capital, as this will support and contribute to our social value, competitive advantage, and reputation.

“We are currently working on a number of environmental and socio-economic areas, such as compliance, data, energy & water, carbon management, travel, transport, natural capital, good health & wellbeing, built environment, engineering and climate procurementmag.com

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“ We are seeking commitment, not perfection” EIRINI ETOIMOU

HEAD OF CORPORATE SUSTAINABILITY & SUPPLY CHAIN DEVELOPMENT AT SELLAFIELD LTD

adaptation among others. But, in parallel, our priority is investment in sustainability integration. For this reason, we built a new engagement plan to make our people feel that everyone has a role, and everything counts. Within this structured approach, focusing on the same goal, everyone will have the opportunity to initiate, influence, and inspire their social or professional circle.”

It is acknowledged as well that sustainability at this stage does not mean the same for every single person. “It is part of our engagement plan to achieve this minimum level of common understanding, the understanding of the ‘so what’, ‘why’ we need to care, and ‘how’ we can care meaningfully,” she explains.

Etoimou aims this strategy for integrating sustainability into Sellafield Ltd that will likely trigger deliverables through collaboration.

Centring sustainability in the heart of every business decision and culture, organisations can look at sustainability as a characteristic of their business rather than an industry or status or buzzword, meaningful actions can be taken to change the way they approach the subject and begin to consider the bigger picture and the long-lasting results.

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THE FUTURE OF IN PROCUREME The hype-cycle for the use of artificial intelligence (AI) in procurement solutions is nothing short of extraordinary WRITTEN BY: NEIL PERRY

F AI ENT

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echnology providers are racing to implement AI capabilities into their offers to make procurement smarter, more efficient, and find otherwise hidden solutions.

With the explosion of AI technology and implementation in recent months, it opens up questions about what the future uses are in procurement practice, and the potential for further progress.

How has AI in procurement technology changed the industry?

Speaking to Procurement Magazine at SAP Spent Connect, Muhammad Alam, President and Chief Product Officer of SAP Intelligent Spend and Business Network, explored how the arrival of AI infused products like its Spend Control Tower are impacting the industry. He believes it is creating an immediate improvement in visibility and insight: “Control Tower allows customers to take the data that cuts across from travel and expense, indirect and direct spend, and bring that together into a unified model.”

He adds: “We apply AI on top of it and then have out of the box dashboards with critical insights that they can then take action from either within the Control Tower, or in the contextual apps that are feeding the data. It allows them to actually get a full view of what is happening, which we think is pretty phenomenal. ”One criticism of digitisation is that many manual processes have been mirrored using new technologies, meaning there is no seismic leap forward.

“Until recently, a lot of the ‘new tech’ in procurement has been around improving the current process with workflow automation or providing a slicker interface,” procurementmag.com

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Muhammad Alam TITLE: PRESIDENT & CHIEF PRODUCT OFFICER, INTELLIGENT SPEND AND BUSINESS NETWORK COMPANY: SAP Alam joined SAP from Microsoft as President and Chief Product Officer for Intelligent Spend and Business Network.

He leads the engineering and design teams focused on procurement in SAP Ariba solutions and SAP S/4HANA, travel and expense solutions in the SAP Concur portfolio, its external workforce solution in the SAP Fieldglass portfolio, as well as SAP Business Network.

says Kevin Frechette, CEO and co-founder of autonomous sourcing solution Fairmarkit.

He adds: “Today, with AI and GenAI on a vertical climb of innovation, procurement can now go back to the whiteboard and rethink how we can deliver better business results more efficiently.

This is changing the game when it comes to procurement moving from a cost centre to competitive differentiator.”

The technology has also delivered specific selling points, such as a focus on a specific industry or priority. Danish AI startup Responsibly is a platform that helps companies automatically evaluate, report and take action on how sustainable their suppliers are and its founder, Thomas Buch Andersson, believes procurement is ripe for AI-led transformation. procurementmag.com

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He says: “The scale of supplier interactions, amount of data involved, and complexity of negotiation processes have defaulted a lot of procurement work to human interactions. That’s not necessarily bad, but due to the amount of suppliers, it leaves a lot of inefficiencies and lost opportunities as procurement simply doesn’t have the resources. It’s great at interpreting and understanding dirty data and complex human interactions, which means it’s suddenly feasible to digitise aspects of procurement that were never possible before.”

AI in procurement: who will be left behind?

With the pace of innovation increasing, Kevin Frechette believes there is a real possibility that some organisations could get left behind, both technologically and culturally, if they don’t explore the uses of AI in procurement. “Companies that are embracing AI and GenAI in pockets, running experiments and making it part of the fabric of their culture will be at the forefront of those who will be able to safely and effectively leverage the newest tech as it comes out,” he explains, adding: “Companies that resist it and downplay it will start creating a cultural adoption gap that will differentiate the have and have-not companies of tomorrow.”

AI and mastering procurement data The amount of data that procurement teams have to filter and understand is growing rapidly, and this is where solutions like Responsibly feel they have an opportunity to leverage the potential of AI to help companies make more sustainable decisions with their purchasing.

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“ AI helps us automatically work at scale with today’s reality of messy unstructured data” THOMAS BUCH ANDERSSON FOUNDER & CEO, RESPONSIBLY

TECHNOLOGY

“Suppliers are drowning in data requests which makes it difficult for buyers to obtain information in the first place,” says Thomas Buch Andersson. “AI helps us automatically work at scale with today’s reality of messy unstructured data – like we suddenly had a human dedicated to each and every supplier. AI can be used to find saving opportunities, analyse massive amounts of data, and connect it in new ways not possible previously to identify how to optimise.” He adds: “With AI, we’ll be able to

Thomas Buch Andersson TITLE: FOUNDER & CEO COMPANY: RESPONSIBLY Andersson is founder and CEO of Danish based sustainable procurement platform Responsibly. He is a serial entrepreneur and was recently nominated for EY’s ‘Entrepreneur of the Year’ award, and last year the Danish startup won the ‘European Supply Chain Startup Contest’.

Muhammad Alam on Spend Control Tower at SAP Spend Connect WATCH NOW

significantly reduce the cost for the supplier to verify their sustainability credentials and automatically guide them to achieve better results – levelling the playing field for competing on sustainability credentials.”

Seeing through the hype and into the future Leading research advisory and strategic consultancy The Hackett Group has conducted research into the impact and potential of AI in procurement. Nic Walden is its Associate Principal, UK and Europe, and Practice Leader for Procurement Advisory and has a balanced view on the future potential for the technology. “Our research 110

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indicates that sourcing managers and buyers view digital technology, including AI and Gen AI, as the primary driver of transformative change in procurement,” he says. “However, in my opinion, I would rank data and insights as the top factor, followed by digital technologies” Walden says it is continuing to monitor the influence on procurement, as technology vendors enhance their platforms with automation and insight capabilities using both AI and true GenAI. While its research has suggested that AI will deliver back-office cost savings in the future, he also foresees other potential

TECHNOLOGY

“This architecture has been a long time making for us, so we’re really excited to actually announce it now to the customers” MUHAMMAD ALAM

PRESIDENT & CHIEF PRODUCT OFFICER, INTELLIGENT SPEND AND BUSINESS NETWORK SAP

benefits to procurement teams. “To better understand the potential benefits, it helps to consider Hackett research regarding notable use case examples, Walden says. “Sourcing managers and buyers believe that improving market intelligence and insights present the greatest opportunities, followed by contract management and bid optimisation. It is noteworthy that buyer-supplier negotiations, a core procurement area, possess high engagement and impact potential, with some viable vendor tools already available on the market.”

He goes on to argue that although there are significant benefits in terms of speed

Nic Walden TITLE: ASSOCIATE PRINCIPAL, UK & EUROPE PRACTICE LEADER, PROCUREMENT ADVISORY COMPANY: THE HACKETT GROUP Walden is a Senior Advisor in The Hackett Group’s Procurement Advisory membership program where he works continuously with senior executives of the world’s leading companies to provide top quartile performance insights, research and networking.

Kevin Frechette

TITLE: CO-FOUNDER & CEO COMPANY: FAIRMARKIT Frechette is the CEO and Co-Founder of Fairmarkit, the autonomous sourcing platform. His current focus is on exploring the possibilities for AI and automation across procurement and supply chain processes, most recently Generative AI. He notably has led Fairmarkit to being ranked 159th fastest growing company in America by Inc5000.

and quality and repetition, there are still reservations about reliability. “There have been instances where generative AI (GenAI) bots have provided fabricated answers, data points, and research references,” adds Walden. “This was evident in a case involving a lawyer using a GPT bot for legal research,leading to potential disbarment.”

The value of human experience Kevin Frechette from Fairmarkit agrees there needs to be a responsible balance between the use of AI and the input of human expertise, as AI can’t yet solve all challenges.

TECHNOLOGY

“Companies that resist it and downplay it will start creating a cultural adoption gap that will differentiate the have and havenot companies of tomorrow” KEVIN FRECHETTE

C0-FOUNDER & CEO, FAIRMARKIT

“Organisations should look at the use case’s possible risk, holistic potential impact, and the desired output of the AI/ GenAI application. If it’s low risk, controlled impact, and you’re looking for AI/GenAI to do 80% of the work and then have humans complete the final 20% and act on it, then you’re probably looking at the right area to start experimenting,” says Frenchette. “If you want a magical silver bullet to do everything perfectly, prepare to be disappointed.”

It will increasingly open up new opportunities that would be beyond the abilities of even the most experienced

human operators according to Thomas Buch Andersson from Responsibly.

“AI can be used to find saving opportunities, analyse massive amounts of data, and connect it in new ways not possible previously to identify how to optimise,” he said.

“To provide a non-procurement example, the team behind DeepMind spent a year setting up their models to find out how to optimise the energy consumption of Google’s data centres. By being able to review huge amounts of data real time, they could find significant optimisation opportunities that a leading team of experts were never able to.”

Laying the foundations for an AI future The common attitude from those working on the evolution of AI and GenAI technology is that we are only beginning to scratch the surface of what is possible in procurement with more intelligent platforms. The work being done now is laying the groundwork for the future of AI will help to usher in the next generation of smart technology.

As Muhammad Alam from SAP explains, its new platforms are the foundation for how procurement technology will evolve in the future.

“This architecture has been a long time making for us, so we’re really excited to actually announce it now to the customers,” he said, but his excitement for what comes next with the platforms now being created is even greater.

“I think organisations today will get a tremendous amount of value from it, our excitement and our roadmap and our vision for it is actually much longer than the runway we’ve covered.” procurementmag.com

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PROCUR CRUCIA IN A CIR ECON Procurement teams sit at the heart of a business strategy to transition from a linear to a circular economy WRITTEN BY: NEIL PERRY

REMENT’S AL ROLE RCULAR NOMY

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o achieve a true transition to a circular economy, a business needs to engage all parts of the organisation, to eliminate waste, circulate materials and assist in regenerating nature.

The Ellen MacArthur Foundation (EMF) is a non-profit organisation that works with some of the world’s biggest companies to build awareness, education, research and best practice around promoting the circular economy, in order to tackle some of the biggest challenges of our time, including climate change, biodiversity loss, waste and pollution.

Increasingly based on renewable energy, a circular economy is driven by design to eliminate waste, circulate products and materials, and regenerate nature, to create resilience and prosperity for business, the environment, and people.

The role of the Ellen MacArthur Foundation “This transition requires systemic change,

radical innovation, and global collaboration,” says Andres Oliva Lozano, a Senior Research Analyst at the Ellen MacArthur Foundation (EMF). “To achieve our goal, we have brought together businesses, governments, other charities and academia to create the world’s leading circular economy network.”

To do this, the foundation produces research, resources, and tools to explore, develop and support solutions that can help everyone realise a circular transformation.

Its vision is an economic system that’s better for people, business, and nature.

The blockers for circular economies There are many challenges for procurement and supply chain managers who are attempting to increase the sustainability credentials of their organisations, whilst still holding a competitive business advantage and strong returns. Cindy Venho, who is a Project Manager at EMF, believes they can also be held back from achieving circular economy

Five key procurement strategies for a circular economy • Providing training to and resources for procurement teams on the circular economy and its implications for their jobs.

• Incorporating circular economy criteria into supplier negotiations, proposals and agreements to ensure suppliers are providing circular inputs and adopting circular processes. The circular economy procurement framework provides an overview of the intervention points organisations can use to make their

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purchasing choices more circular and engage their suppliers in conversations and collaborative circular partnerships.

• Educating and financially supporting suppliers on their transition to a circular economy.

• Piloting and scaling circular initiatives with willing suppliers.

• Collaborating across functions like design, marketing, and logistics to align on circular goals.

2004-2005

Ellen MacArthur becomes the fastest solo sailor to circumnavigate the globe

2010

Ellen MacArthur Foundation launched

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SUSTAINABILITY

Andres Oliva Lozano TITLE: SENIOR RESEARCH ANALYST COMPANY: ELLEN MACARTHUR FOUNDATION Andres Oliva Lozano is a Senior Research Analyst at the Ellen MacArthur Foundation. His work focuses on supporting companies to accelerate their transition to the circular economy through the creation of insights, resources and collaboration on cross-sectoral projects.

The main focus of his research revolves around the link between the circular economy and supply chain management as a critical piece to delivering nature-positive business outcomes.

principles because of out-dated business systems.

“Some of the main challenges supply chain and procurement teams face are legacy team structures and incentives, IT systems and metrics optimised for linear models, high levels of opacity across the supply chain and low visibility on product or material composition and circulation opportunities,” saysVenho.It also requires a radical change in how procurement and supply chain collaborate with other areas of the business.

She adds: “Supply chain teams will need to work more closely with internal teams like product design – to ensure products are made from safe and available circular inputs and can circulate within the supply chain – and external actors like customers – which procurementmag.com

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may become suppliers of used products and components, bypassing the need for new extraction and production.”

How procurement can drive a circular economy To try and deliver value in a circular economy, it is important for companies to be bold enough to evaluate business models, supply chain and product designs.

These three elements are essential in a circular economy strategy, but it requires strong leadership to ensure that they are effectively delivered.

“The role of circular supply chain and procurement teams in operationalising and scaling such initiatives are becoming ever-more apparent,” says Lozano.

The role is crucial as supply chain and procurement teams manage the flow or materials through an organisation, so they are regularly the cornerstone of any circular economy plan within a company.

“All of this is managed by supply chain leaders – from the purchase, moving, processing and tracking to the invoicing,” says Lozano. “The skills and knowledge of supply chain leaders are required to transition from linear to circular ways of managing such flows.”

As procurement teams are actionoriented, they have the power to turn a business strategy into something that becomes part of the fabric of a company culture.

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RENEWABLES FLOW MANAGEMENT

FARMING/ COLLECTION1 REGENERATION

BIOCHEMICAL FEEDSTOCK

BIOGAS

ANAEROBIC DIGESTION EXTRACTION OF BIOCHEMICAL FEEDSTOCK2

1 Hunting and fishing 2 Can take both post-harvest and post-consumer waste as an input

SUSTAINABILITY

FINITE MATERIALS STOCK MANAGEMENT

RENEWABLES

RECYCLE

SHARE

REFURBISH/ REMANUFACTURE REUSE/REDISTRIBUTE MAINTAIN/PROLONG

CASCADES SOURCE Ellen MacArthur Foundation Circular economy diagram (Feb 2019) www.ellenmacarthurfoundation.org Drawing based on Braungart & McDonough, Cradle to Cradle (C2C)

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“ This transition requires systemic change, radical innovation, and global collaboration” ANDRES OLIVA LOZANO

SENIOR RESEARCH ANALYST, ELLEN MACARTHUR FOUNDATION

“They use their problem-solving and system orchestrating skills to turn high-level business strategies into daily operations, improve procedures, and bridge siloed teams,” Lozano says. “This enables them to operationalise circular economy ambitions and create the resilient, net-zero supply chains of tomorrow.”

Given their connections to other stakeholders, such as suppliers, customers, and policymakers, supply chain leaders influence decisions and behaviours across the system and can play a catalysing role in advancing the circular economy transition.

SUSTAINABILITY

Explaining the Circular Economy and How Society Can Re-think Progress WATCH NOW

Circular economy pioneers The EMF pairs with companies, academics, charities and governments to further the conversation of circular economy. The likes of Amazon, Danone, Gucci, Nestle, Visa, Coca Cola and Unilever are among its strategic partner network, and it works closely with this group to support them in becoming circular pioneers, with the potential to set the direction in their respective sectors.

“We believe businesses play a crucial role in shifting the system,” explains Venho.

“We recognise that currently many

businesses are part of the problem, but given their capacity to innovate and ability to drive change quickly and at scale in global markets, they also need to be part of the solution.”

Key drivers for change The Foundation identifies business as the key driver for change, as it can be the force that leads economies away from a ‘take-make-waste’ system towards one that is circular and sustainable.

Lozano believes that the key focus area for business is product design, and the procurementmag.com

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relationships that it has with procurement and supply chain teams, as innovation solutions lie upstream before the waste and pollution is generated in the first place.

“In our Jeans Redesign project, we brought together more than 100 organisations from across the jeans supply chain to redesign 1.5 million pairs of jeans to be more durable, easier to recycle, have more transparent sourcing, and made using safe materials and processes,” says Lozano.

Cindy Venho TITLE: PROJECT MANAGER COMPANY: ELLEN MACARTHUR FOUNDATION Cindy Venho is a Project Manager at the Ellen MacArthur Foundation. She works with business, academia and policymakers to manage the creation of content that helps propel companies further along in their circular economy transformation journey.

She has experience in researching circular opportunities and their impacts across a breadth of industries such as food, fashion and the built environment, and has worked on projects looking at the effects of circularity on various topics like biodiversity, supply chains, Covid-recovery packages and biomaterials.

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November 2023

SUSTAINABILITY

“Some of the main challenges supply chain and procurement teams face are legacy team structures and incentives” CINDY VENHO

PROJECT MANAGER, ELLEN MACARTHUR FOUNDATION

Procurement strategies and future legislation With more companies adopting circular economy principles to create value and help tackle global environmental challenges, there is clearly more progress that can be made in the coming years.

There are ongoing negotiations for a UN treaty to end plastic pollution, and circular economy is a key topic in the European Green Deal, but Venho thinks procurement teams have a vital role to play alongside legislation.

“Supply chain and procurement professionals can use their overview and control of material flows and their positions of influence within the system to accelerate the ongoing shift from fragile and polluting linear supply chains to resilient and regenerative circular supply chains,” she explains.

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