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Q1 - 2019


Cooperative Ecosystems:


How to Incorporate Sustainable Purchasing into Your Procurement Strategy



Power your digital future: Talent, Technology & Innovation March 14-15, 2019 | Eden Roc, Miami, USA

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expert speakers & facilitators




Editor-In-Chief Andy Beth Miller

Design Naomi Catalina

Writers Ronald Hedley Andy Beth Miller

Outside Contributor Serge Milman, Sourcing Advisors Group

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Fast on the heels of the holiday season, the theme of giving and receiving seems an apropos segue to our current issue. While we’ve undoubtedly just enjoyed getting showered with gifts from loved ones, now “tis’ the season” to take stock of our many blessings, equally focusing our attentions on giving back. Our current contributors, all of whom are experts in the field of procurement, have similar mindsets when approaching their life’s work. And, while the world of procurement undoubtedly tends to focus upon the “getting” end of the spectrum (the literal dictionary definition highlights the words “acquiring” and “obtaining” after all), these four masterminds offer a handful of unique perspectives on procurement that will open your eyes to see that, even within your work of acquiring, there is plenty of room for giving back and investing. In fact, both your company’s—and your own— well-being depends on it. Join us as Director of Procurement Gretchen Moe explains how sustainable purchasing can make not only your corporate world, but the entire planet thrive. Then dive into the world of strategic sourcing, as Serge Milman shares 10 tips that will help you know exactly where to invest your time and resources to get optimum results. Following that, buy a ticket to transcend the procurement world, as Barry Kull discusses cooperative ecosystems. We even get some words of wisdom from a representative from Mars (the corporation, not the planet) via an interview with Shachi Rai Gupta. We hope you enjoy this issue, our 2019 gift to you.

This publication is intended to provide accurate, authoritative, and detailed information in regard to the subject matter covered. All written materials are disseminated with the understanding that the publisher is not engaged in rendering legal advice or other professional services. Under no circumstance should the

Sincerely, Andy Beth Miller

information contained herein be relied upon as legal advice, as it is designed to be a source of information only. ProcureRising strongly encourages the use of qualified attorneys or other qualified experts with regard to the subject matter covered. As the publication does not guarantee the accuracy of the information, it is therefore not liable.



Cooperative Ecosystems:


Barry Kull is Associate Director of Category ManagementProcurement at Novo Nordisk. I recently sat down with him to discuss cooperative ecosystems. Surprisingly, our conversation evolved into a transcendental exploration of the personal growth one experiences when living life to the fullest. Don’t worry, though, we did get around to talking about cooperative ecosystems.



Kull is an avid reader, who exudes an eclectic wisdom gleaned from his many experiences. “Life is a journey, and my personal journey right now is about understanding myself and growth and expansion, my thought patterns and process, really activating different parts of my brain and body. It feels awesome,” said Kull. Kull was a history major at Pennsylvania State University, and his love of history has not dwindled. Some of his favorite historical reads are 1776 by David McCullough, Empire of the Summer Moon by S C. Gwynn, and The Greatest: My Own Story by Muhammad Ali and Richard Durham. Kull stated, “What gets me about Ali was his tenacity, his toughness. He was an elegant person. He could go from beating Sonny Liston to poetry, to thinking about his influence on current events and society.” Kull recently completed reading Change By Design by Tim Brown and Barry Tapp. “It’s along the theme of creative destruction, engineering, and turning a need into a demand.” The book has influenced Kull’s vision of procurement. “I look at positive or creative disruption, or creative destruction, if you will. If you have a process or a way of working, sometimes you need to blow it up and put it back together. A lot of times, you find opportunity there,” said Kull.

Natural Selection Kull has not always been so in tune with his world and the people in it. His personal evolution, coupled with his professional development, has led him to developing and promoting the idea of cooperative ecosystems within a supply chain. As such, Kull divides his career and personal journey into three parts.

Part 1. Early Career “When I started out, one of the first procurement tools I learned about was the Request for Proposal (RFP). I was very focused on using the RFP to drive the best price. It was all about savings. I would pound suppliers with a two-by-four. I would do my research. I would pit them against each other. I would make myself uncomfortable and push my skill set beyond what I thought was possible, all to get the best price.”

Part 2. Mid-Career “The middle part of my career was more [centered] around procurement processes, really understanding technology, and starting to understand people and their business objectives. And that evolved into where I am today.”

Part 3. The Present “I’m really understanding people and their motivations. What are their thought processes and why are they taking certain actions as it relates to their objectives? What are their solutions? I try not to think like a procurement person, but, rather, like a marketer and as a business person. My goal is to increase market share, revenue, and profitability. In the context of negotiating with suppliers, I try to understand how, from reading a lot of psychology books, why a certain person might say something or hold back information during a negotiation. And, as I am understanding that, I can really understand how to build the best solution for the business,” said Kull.



“A man who views the world the same at 50 as he did at 20 has wasted 30 years of his life.” -Muhammad Ali Kull has a holistic understanding of the bottom line. He stated, “The best solution isn’t always about the lowest price. I try to bring in the best supplier with the best capabilities because that combination will bring more long-term value than the lowest cost supplier. That’s part of the evolution of the ecosystem. That’s what I have been saying for the past five years, ‘Savings will come.’ My CPO or CMO, might ask, ‘How much are we going to save?’ “I will give an estimate, but I will always surround that estimate with, ‘Savings will come. They will be what they will be.’ Kind of a Buddhist approach. ‘It will be what it will be. Don’t put any attachment to this number.’ Of course, I must have a tangible result in the end, but I have learned that there can be many different paths to savings.” “A man who views the world the same at 50 as he did at 20 has wasted 30 years of his life.” -Muhammad Ali

Cooperative Ecosystem It was time to ask Kull the essential question: “What is a procurement cooperative ecosystem?” Kull responded, “A cooperative ecosystem is a combination of different partners or suppliers that bring their own set of values to the table. The partners and suppliers then work together to solve a specific problem or to create an opportunity.” In the context of launching a new pharmaceutical brand, the following is Kull’s (paraphrased) list of potential partners and suppliers that might be part of a brand viable ecosystem:



Media partner: A company that leverages media, such as TV, print, or digital, across dozens of clients to assure that the pricing and quality are optimized. Analytics: This is the company that has the intellectual capital, a set of algorithms, which they utilize to help companies, such as Novo Nordisk, understand how they’re investment in media has affected their sales. Advertising campaign: When a company is launching a new brand, they’re going to need new, creative campaigns to help communicate the brand value and differentiate opposite competitors. Medical communications firm: Novo Nordisk utilizes a medical communications agency to help them better communicate therapeutic value to physicians. Other ecosystem partners: A new brand will use a whole host of other suppliers across print, logistics, meeting companies, and others. Kull understands the importance of getting it right. He said, “Bringing a new therapy to market takes years and a massive effort to plan the development, launch, and distribution seamlessly. Think about it, even if your organization is fortunate enough to develop a meaningful therapy that adds value to the patients, you then need to move the product from factory to distributor. So, more and more, because of evolving technology, such as AI, robotics, and big data methodologies, and because of integration, manufacturers need to get information quickly, and it must be accurate. The ecosystem needs to be rock solid. It truly needs to be a cooperative. Cooperation starts with selecting the right supplier who is aligned to your values.”

A Personal Story “How do you find the right supplier for Novo Nordisk?” I asked Kull, who responded with a story. “When I was going through the recruitment process [at Novo Nordisk], my youngest son was diagnosed with type 1 diabetes. After we found out, I was scheduled for my next round of interviews, where I was to meet with the CFO and

other executive leaders. Walking into our meeting, I was apprehensive about bringing up my son’s diagnosis, but the conversation went such that the opportunity to talk about it presented itself. And I am so glad it did. When I mentioned my son’s diagnosis, the CFO’s body language and energy absolutely changed. He leaned into the conversation and was genuinely curious about my son. He told me how Novo Nordisk addresses challenges that adolescent type 1’s encounter. And, for me, that was a strong signal that these people [executives at Novo Nordisk] care. This culture cares. And that is something that I found to be consistent throughout the rest of my interview discussions, as well as when I joined the company, and [it] still is today. It is a very strong, positive culture.”

“A cooperative ecosystem is a combination of different partners or suppliers that bring their own of set of values to the table. The partners and suppliers then work together to solve a specific problem or to create an opportunity.”

It is obvious that Kull cares deeply about Novo Nordisk and is proud to represent them. Kull stated, “I feel grateful every day that I get to work in a place where I get to learn more about my son’s disease. By understanding that disease state that is in my house every day, I understand the greater patient population. I can empathize more, another human quality. And that is something that [exists] throughout the organization.”

can address the problem along the entire value chain. He believes that, “We need to drive the performance of those right partners throughout the relationship from day one; day one starts with issuing the RFP.”

Kull is looking for similar values in his suppliers. “I don’t expect suppliers to care about diabetes as much as I do, or as much as Novo Nordisk does, but I expect them to understand why we care so much. I expect them to be there with us and to anticipate. I want them to lead us. I want them to come to us with ideas. I want them to push our thinking, so that the culture is super strong.” Kull continued, “That leads to innovation. We partner with suppliers, not only to deliver something, but to help pave the way and to put light into our innovation path. It’s a twoway street. Innovation is not easy. The supplier needs to be a fast follower and keep pace with us.”

The Evolving Ecosystem

According to Kull, it is constantly evolving. “In our sourcing process, it is something that we look at as we evaluate potential partners as well as current partners. Not only do we need to understand if they are effective, but are they good people with strong ethics? Do they understand our mission? Are they going to be long-term partners? Ecosystems evolve and morph. Are potential partners going to be flexible and understanding when things change?”

The Billboard Kull likes to listen to podcasts, including Sam Harris, The Art of Procurement, and Tim Ferris. At the end of his podcast, Ferris asks his listeners to create their own mission statements, asking, “If you had a billboard, what would it say?” If Barry Kull had a billboard, he would write in big, bold, letters, “Do more than you think you can. Be more creative than you think you are.”

Kull believes that procurement professionals need to move from simply understanding and repeating the requirements as part of a sourcing process to understanding the business problem. He believes that procurement professionals must make sure that the right partners are in place, who




Ways to Improve Your Strategic Sourcing Results By Serge Milman

Procurement and Strategic Sourcing teams continue to struggle to meet their primary Management Business Objective, which for the vast majority is directly related to generating cost reduction.

Vendor spending for the vast majority of Fortune 500 firms is increasing in line, and for many, faster-than revenue growth, suggesting that sourcing efforts are not generating bottom-line results. The performance of sourcing programs of Fortune 2000 firms is even less impressive. As noted by one industry expert, “The best most Procurement departments can say today is that they’re keeping the lights on.” Based on dozens of strategic sourcing advisory engagements with firms across industry sectors, the following 10 principles are the primary contributors for generating 15 to 20 percent savings:

1. Consolidate Spend Data Across the Enterprise Peter Drucker is famously quoted as saying, “You cannot improve what you cannot measure.” Never have truer



words been spoken, and they apply in spades to the world of strategic sourcing. Understanding the totality of vendor spend across geographies and business units provides insight into potential opportunities for greater efficiency and effectiveness. Consolidating data across different ERPs, pcard, travel and other data systems exposes unique value creating levers, often much to the surprise of procurement leadership and business stakeholders alike.

2. Categorize Spend to Sourcing Needs, Instead of Only Using ERP Hierarchy

In most cases, ERP spend categorization is ineffective for strategic sourcing purposes. While spend categorization is a difficult and often intensive effort, the investment yields enormous ROI. Categorizing spend based on sourceable categories presents consolidation opportunities to build scale for sourcing efficiency, which is essential to creating meaningful bottom-line results.

3. Enhance Detailed Spend Data, Including Data Cleansing and Enrichment

Vendor spend data for most—if not all—firms is dirty and incomplete. Data cleansing includes simple things, like normalizing vendor name structure, associating vendors to their parent organization, normalizing various date fields, currencies, cost centers, GL accounts, among others. More involved—yet still essential—activities include enriching invoice-level data with unique product information, quantity, unit price and other fees and charges to determine what is purchased, how many units are purchased, and for what price each unit is purchased.

4. Update or Develop Business Requirements and Specifications

Business requirements for products and services are an essential input into the sourcing process. Defining discrete specifications for products, services, and external resource

capabilities enables product/service consolidation within and across business units, as well as communication of streamlined requirements to the vendor community. Unambiguous business requirements eliminate, or at least minimize, the uncertainty and risk premium charged by vendors, and also aid in managing demand, including the elimination of over-spec’ing.

5. Collaborate with Business Units to Define Future Spend

Strategic sourcing is a forward-looking process, meaning that we source spend based on future demand, rather than on history. Yet, forecasting is typically uncertain, and many business units prefer to avoid the activity. Nevertheless, procurement, in collaboration with each business unit, should use historical spend patterns as a fact-based tool to develop a (non-binding) three to five year forecast for each product/service type to establish purchasing power scale which is one of the key value drivers.



6. Solidify Alignment with Stakeholders by Defining Goals and Objectives

In addition to developing business requirements and defining future spend, procurement should define specific goals and objectives for each business unit to increase alignment and ensure that the sourcing effort is equally valued by the parties. Above and beyond savings (that is, enabling BUs to do more with less), it is important to define other factors that are important to stakeholders. These factors should then be converted into business requirements, terms and conditions (T&Cs), and/or vendor screening criteria.



7. Identify and Engage with Challenger Vendors

The ultimate goal of RFPs is to create pricing, including SLAs and T&Cs, transparency and validate vendor capabilities given specific business requirements. Achieving these goals almost always requires creating a competitive landscape consisting of incumbent and challenger vendors. Challenger vendors should include second-tier vendors, regional providers, and emerging vendors, many of whom will be effective in providing unique product and service insights, offering non-traditional business models, and providing pricing transparency.

8. Develop RFP(s)

Ideally, an RFP should represent each defined spend category, while offering vendors the flexibility to bid on all or part of the demand. RFPs (other than the legalese and overview sections) should be tailored to each product category, including: • Business requirements • Disaggregated product/service pricing • Alternative pricing models • KPIs and SLAs with specific performance requirements • Incentive and penalty structures related to SLAs • Key terms & conditions

9. Embed Improvement Incentives and Monitoring Mechanisms into the Contract

The RFP(s), negotiations, and vendor contract should be focused on creating alignment in the near-term and longterm. Given that vendors and procurement are each focused on maximizing value for themselves, the inherent conflict and friction cannot be avoided. Thus, creating incentives for vendors to do the right thing is essential for both the near-term and long-term viability of the relationship. Moreover, continuous improvements and the incentive structure should be quantifiable, measurable, reportable and actionable to ensure that it is meaningful and valuable for the buying organization.

10. Negotiate Based on Data and Facts Versus Emotion

The days of “squeezing” a few percentage points out of vendors via strong arm tactics, relationship longevity, or the firm’s marquee name are long-gone. Most vendors are astute negotiators, and in most cases, they have far more information and insight about the buyers’ needs and market realities than most buyers. This information asymmetry can only be corrected using the above-described approach. Applying the above principles will create actionable insight by which procurement can leverage its scale and optimize

its purchasing. ----------------------------------------------About the author: Serge Milman is a Partner of Sourcing Advisors Group (, a Strategic Sourcing advisory firm that works with F2000 firms to accelerate and increase value creation, averaging 15%-20% savings across a portfolio of spend categories on a guaranteed basis. Milman has over 20 years of experience in operational efficiency, including procurement enhancement and strategic sourcing.



How to Incorporate

Sustainable Purchasing

into Your Procurement Strategy By Andy Beth Miller Gretchen Moe knows about wellness, and running. In fact, as Director of Procurement for New York Road Runners, Inc., you could say that Moe has made the state of wellbeing her business. These days, Moe makes it a point to incorporate sustainable purchasing within her procurement business strategy, the wellness of her company being the ultimate goal. For Moe, taking a holistic approach is the only way to go. She explains how ‘winning’ in her niche of the procurement game is really about reinventing the way we look at the bottom line, making it less about every penny saved and more about the big picture. “For me, it’s about making sustainability a significant part of the evaluating criteria. It’s not likely to be the least expensive option you find during sourcing or when it is a focus in a service contract proposal. So, you really need to make sure you’re weighing the long-term goals against the shorter term,” said Moe. While she sympathizes with those who have a bit of sticker shock when comparing prices, she urges us to push past that initial price tag. “It’s usually the pricing factor that trips people up – especially when they have to make the case to upper management, who often focus primarily on the bottom line and turn around on ROI. I’m lucky to work for a company that thinks holistically about purchasing,” she said. But, what if your company isn’t “there” yet, and like us, might need some convincing? “I think it’s important, early on, to communicate the goal [and importance] of focusing on sustainable purchasing. It doesn’t have to be a one note message, but be clear about


your priorities. It’s also going to look differently based on the category of spend you are working with. You might be in a chemical factory or a high fashion retail industry – sustainability will look differently across those areas. Make it your goal to seek out solutions that will work for yours,” she advised. I asked Moe why sustainable purchasing is so important to a company’s success. She didn’t mince words: “At this point, I’m not sure I even think of [sustainable purchasing] as a means to a company’s success – it’s simply the right thing to do. I do think that the economics of sustainability are critically important. We’re going to see a huge expansion in the industry of environmentally-aware solutions. But again, it’s the right thing to do, the forward-thinking thing to do, and if you’re not thinking about it now, you’re way behind the curve.” As Moe is talking, I can’t help but think of the popular—and to-the-point—brand slogan of Nike. “Just Do It!” they say (with an exclamation point!). Moe would definitely agree. We asked Moe for some surefire pointers to do just that… well, you get what we mean… The following are five surprisingly simple ways to take that first step: 1) 2) 3) 4) 5)

Think creatively Look for best practices within and outside your own industry Be open-minded to new ideas Think long term, then re-evaluate goals and target spending Be an ambassador

When asked to elaborate on being an ambassador, Moe simply stated that means to “figure out what it will take to get other people on board with your plan.” And then, you guessed it, Just Do It. Her excitement about her job and the passion that she has for procurement is palpable as we speak, so I have to ask Moe just how she first became interested in the procurement industry. She answered readily, “I fell into it quite by accident twenty years ago at a large pharmaceutical company, and it turned into something I felt comfortable doing. It’s the opposite of sales. I would be a disaster at sales!” As I listened to her answer and heard the laughter in her voice, I had to chuckle to myself. She may not think that she would be great at sales, but she had sure sold me on this idea—in just a half-hour interview. But, as she seems to maybe not know that yet (who can read minds?), she

offered some encouraging advice on how to navigate any hiccups along the way. “With any burgeoning industry, not every ‘great new idea’ is going to work out just as you expected. But you learn from your mistakes and move on. Take the time to test things out as much as you can in advance, and keep up with the tons of material available out there on the subject,” she said. Moe then crosses the finish line of this interview, and wins by a mile, with just one quote: “Fred Lebow once said that ‘Training is like putting money in a bank. You deposit money, then you can take it out.’ I think that’s true of a procurement focus on sustainability. You’re putting a deposit down on the health of the world. Surely that’s a comparable goal for any company whose focus is on the health of everyone in it.” Surely.

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A Bohemian Nerd’s take on Personal and leading Procurement Transformational Change By Ronald Hedley and Shachi Rai Gupta

I begin by asking Shachi Rai Gupta what transformation means to her, and she starts off by saying, “I define transformation as a process of conscious evolution. The pursuit of growth and evolution is a common theme, which is deeply embedded in my personal and professional journey so far.” Shachi, a self-proclaimed Bohemian nerd, brings with her a blend of business technical skills. As a strategic program and transformation leader, for the past 13+ years, she has spearheaded multiple global scale programs, business intelligence/ analytics platforms from ideation, implementation to adoption across decentralized matrix landscapes across multiple domains in CPG, agribusiness and food production companies.

has helped me develop the prowess to have an end-toend view of cross-functional data, processes, systems and middleware integrations.”

been fortunate in having had an exceptional African, Asian, and American odyssey, spending a third of my life in each continent, where the rich, diverse exposure and experience has equipped me with a unique open-minded and open-willed perspective.”

She then points her praise to a holistic approach on the subject. “The practice of proactively thinking of and covering all routine, alternate and exceptional scenarios, user experiences and interactions have enabled me to holistically and effectively lead product/program development, which consider the entire value chain with the user at the center. The digital transformation initiatives I drive are based in design thinking, hyper-collaborative teams, analytics and agile development, where development is iterative, evolutionary, and focused on incremental improvement and flexibility.”

Shachi currently serves as the Senior Global Director: Commercial Business and Digital Transformation at Mars, Inc. She sees a connection between her life and work experiences. The key is transformation. She adds, “When I talk about transformation, I feel that having a breadth of varied experiences gives you a lot of perspective. It also makes you very receptive to new ideas, assimilating them and picking and choosing what fits and what doesn’t.”

“Balance,” she says, “is another key driver. When leading any transformation or change, you need to build your left and right brain skill sets. As a change and implementation program leader, one needs to have paradoxical skills, where at one end you are a visionary, and at the other, you are grounded enough to transform that vision into a reality. You need to be detail oriented, logical, and adept at finding patterns and connecting the dots.”

On educational background and foundation, she goes on to say, “I consider myself a business technologist, and I am a big supporter of STEM as foundational education. Strong roots in STEM education, as well as my initial grounding in the discipline of building use cases and co-writing programs,

She continues, “At the same time, you need to have inherent EQ skills to lead change, form an authentic connection with influencers/stakeholders, and articulate/communicate value-add win-win propositions. I believe that strong stakeholder and team relationships are fundamentally

With regards to her personal life journey, she says, ”I have


trust driven through authenticity, credibility, reliability and conscious awareness of the me (my purpose), us (team purpose), and it (bigger/company purpose).” She goes on to say, “The fallacy of any functional transformation, evolution or growth is to expect a linear path. Our job as transformational leaders is to know it isn’t, hold true to our vision, have agility and lead our teams through the non-linear growth.” Shachi points to the real crux of the matter. “People are at the heart of it all and leadership, to me, is focused on being collaborative, inclusive, transparent, empathetic and empowering. Throughout the course of my career, I have managed multiple cross-regional and cross-functional teams, where I have tried to build a balanced, nurturing, and empowering work culture, which encourages free thought and brainstorming, while aiming to create a challenging, detail-driven, and mentally-stimulating growth-conducive environment.” She gives a personal example to help drive this point home. “I am a big believer in having clarity about your ‘whys?’ On the personal transformation side, I did something recently which is not mainstream; I chose to take a ‘conscious pause.’ My mom had been diagnosed with cancer in 2016, and though she has fully recovered, I came out of the experience with an epiphany, a need to de-layer and to figure out my ‘whys’ and the direction where my life was headed. I chose to return home to India for six months.” She goes on to explain the impact that this decision had. “I had deliberately not planned any additional travel, and my intent was to go back to basics and get to the core of what my drivers are. I would wake up in the morning and NOT look at my cell phone, which had been so tied to my work. I loved it because I was able to remove all the noise. My ‘why’ was about finding joy in every moment. I had shifts where I asked myself the all-important questions: How do I stay in the present moment? How do I come from a place of abundance instead of fear? How do I stay authentic, listen and [remain] connected to my center, always letting my inner compass guide me?” Shachi has now been back to work for six months, and she remains introspective. She says, “I need to be authentic and courageous because the kind of work I do is about forging

genuine, authentic connections, not about forming those relationships just for the sake of it. That doesn’t sit well with me.” On the subject of procurement transformation, she says, “Our function is evolving, where we are shifting to create a hyper-collaborative environment in close partnership with the business stakeholders, supply chain, R&D and our suppliers. The key transformation themes for me are as follows: • • •


“There needs to be a proactive shift of attention and energy from a siloed/narrow focus, to an end-to-end view internally, and to cutting edge best practices and technologies externally. Coupled with a deep understanding of the current organizational ecosystem, objectives, cultures and matrix, the most important step is to marry the

possibilities with the organizational reality. My focus is to drive business and digital transformation through the lens of improving overall functional effectiveness, efficiency, user experience and insights.” As we conclude, she shares a favorite quote from Maya Angelou, which she has adopted as her mantra for staying on course: “Do your best until you know better. And once you know better, do better!”







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