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TOP 10 busiest ports in the world


Paul Alexander on the importance of inspiring a workforce BP primary signature Full-colour For uncoated paper, light background, CMYK Colour

HOSPITALITY PROCUREMENT Stéphane Masson, Marriott’s Senior VP of Global Procurement, speaks about overhauling the company’s supply chain operations

FOREWORD WELCOME TO THE October issue of Supply Chain Digital - what a bumper edition we have in store for you this month. As you’ll have no doubt already noticed, our cover star this month is none other than Stéphane Masson, Senior Vice President of Global Procurement at Marriott International. In an in-depth interview, he reveals the strategy behind changing the organisation’s supply chain strategy from being US-centric to globally focused. Turn to page 42 to read the interview in full. Continuing the ‘big interview’ theme this month, Supply Chain Digital sits down with Paul Alexander, Head of Indirect Procurement at BP, to get his thoughts on what constitutes a good leader in business. An old head in procurement, Alexander speaks illuminatingly on the importance of inspiring staff, and giving them the tools and resources to learn on the job. For more, turn to page 10 You will also find an interview with Pierre Francois Thaler, Chief Executive and Co-Founder of Ecovadis, which has carved out an important niche analysing the sustainability of companies’ supply chains. Our Top 10 this month looks at the world’s busiest container ports. Turn to page 34 to begin the countdown. And in this packed issue, we run the rule over a number of leading global businesses, including Woolworths, PCI Limited, BDP International, and Chassis Brakes. You can also follow us on Twitter Facebook and LinkedIn.

Enjoy the issue!






EcoVadis and the sustainable supply chain 4

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Top 10 busiest ports in the world


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Supply Chain Digital talks to Paul Alexander, Head of Indirect Procurement at BP, regarding his theories on what constitutes a successful lead Wr i t t e n b y S T U A R T H O D G E

PROFILE PAUL ALEXANDER IS an old head in procurement. He’s been at the forefront of the industry for over a decade now, firstly with British Airways, as its Head of Procurement, and now he’s Head of Indirect Procurement for EMEA with BP. Since undertaking his Master’s degree 20 years ago, Alexander has been a passionate believer that good leadership can very much be a difference maker as far as a business’s success is concerned. With that in mind, he has strived to implement a culture of learning and development at BP so that staff can enjoy themselves while realising their full potential. There is no doubt in Alexander’s mind that ensuring a happy workforce is absolutely vital in ensuring productivity, particularly within a business function as vital as procurement. He says: “My view is that inspiration and learning is really what people are turned on by these days and that’s what creates a successful team. Something that compounded my thinking was research by Zenger Folkman. They’ve written a couple of books, the first of which is called The Extraordinary Leader and their 12

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research is absolutely fascinating. “They’ve found many things in their studies and they’ve used very, very large sample groups to test their assumptions. They have found very clearly that the ability for leaders to inspire interest, and that the resource and sincerity you put into development and learning, are the things that will drive success. “I’m also immensely fortunate though because BP has a very clear approach to what good leadership is. It’s a very moral, very carefully considered and right-thinking way of doing things – it’s founded in trust and it’s founded in respect for people and driving excellence. So, for me, there’s a happy marriage there between what my own beliefs are, what the research says and what BP wants me to do as a leader.” Alexander is from what he describes as a “very ordinary, working-class heritage” and admits he has seen the very worst leadership traits demonstrated during some of the earlier jobs in his career. “When I think back over my career – and I’ve worked as an orderly, as a driver’s mate in HGVs, I’ve done all sorts of jobs – I’ve been victim

I N S P I R AT I O N - I T ’ S E S S E N T I A L !

Paul Alexander, Head of Indirect Procurement for EMEA with BP

“If I could crystallise everything that I'm saying about leadership into one word it would be: inspiration; and that absolutely applies in procurement“ 13

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annual spend of Alexander's EMEA procurement team to some appalling leadership in different organisations,” he explains. “Very autocratic, directorial people not explaining why they were telling you to do things… those days should be behind us. “I do believe in a knowledgebased economy and a productive economy. You need to have people who want to work for you and are motivated and want to succeed. “The research on millennials really underlines all of this,” he continues. “I think what they’re asking for is to be 16

October 2017

treated with respect, not to be hugely well rewarded, but to be sensibly and adequately rewarded, to be treated well and given the opportunity to learn and fulfill themselves. I think that’s what we all want. The difference now is that a lot of work has gone into listening to millennials who have a loud voice and I think and hope our workplace is evolving the way it needs to do for the benefit of us all. “Another thing I would point to is the work of Daniel Pink. What he says is three things really turn people on: autonomy, so freedom to do the job the way they want to do it; mastery, give them the support to excel at what

I N S P I R AT I O N - I T ’ S E S S E N T I A L !

they do and the other is purpose, so help them find a reason to do what they do. If I could crystallise everything that I’m saying about leadership into one word it would be: inspiration; and that absolutely applies in procurement. They can be the kind of people who turn up and place orders and do a commodity task, or they can be the people who save the company. “A good buyer is worth a fortune to a big business, they are precious, precious people.” Indeed, Alexander and his team will oversee a spend of something like $2.5bn in Europe, the Middle East and Africa, thus underlining how vital it is to ensure his buyers are at their best

performance-wise. But although it’s all very well saying what you need to do to make sure that the environment is conducive to optimising performance, how do you actually achieve it? It turns out that necessity was very much the mother of invention in this case, as some of Alexander’s best techniques were developed when the oil price crashed and wiped out BP’s training budget. “First of all, I think you need to 17


“People develop as leaders far more if you give them things that are ambiguous, things that they've not done before“


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actively demonstrate as a role model that you’re prepared to do this yourself, so you demonstrably take time,” he says. “I tell my team, for example, that I expect them to give up at least one day a month to do nothing but stand back, learn, think and develop. You know, 12 days a year with which to maintain and cultivate human capability is definitely worth the investment. “We all live in a world of constrained budgets for what you can spend on training, but my own view is that faceto-face training is the most effective. Alexander continues: “I always make sure that the money I spend is focused on a small number of key capabilities – in my world that’s really negotiation, sourcing and argumentation skills; that’s the kind of thing that marks us out and it’s very much in keeping with our strategy. “The really interesting thing, I think, is what happens when you’ve spent your training budget… or, as I found out a couple of years ago when the price of oil fell, when you have no training budget at all. That was a really, really interesting experience

and kind of a test for me because I wanted to keep inspiring and wanted to keep the team learning and developing, but I had no money to spend. So, I had another think and did a number of things, things which we still do and which I think have been fantastically successful. “I tapped people like the Armed Forces, people I know in procurement, politicians… and I invited them in as guest speakers. Apparently, if you go to Eton, what they do every year is get the boys to write to somebody and ask them to come in and speak, and that’s where I got the idea from. “BP is a well-regarded company and people will come and speak so immediately you get these great speakers who will come in and do what we call ‘lunch and learns’, so most weeks here we’ve got somebody coming in to talk to us about all sorts of subjects.” It’s not just about getting people to come in and talk though, it’s also about the staff getting out and about and doing new things, which develop their own abilities. Alexander’s team does everything from helping out at local schools to acting as mentors for new start-up businesses to aid their 19

PROFILE development and keep them on their toes. “The purpose is to get out of the bubble of oil and gas and BP,” he adds. “Deal with the rest of the world, do something, and mix with people you’re not familiar with. And do you know what? They love it! “People develop as leaders far more if you give them things that are ambiguous, things that they’ve not done before. It works so well, it costs us nothing and it enhances BP’s reputation, so what’s not to like?” But perhaps the most vital component of Alexander’s formula to keeping a happy workforce is also the most basic. He adds: “The last thing I’d say is: whatever you do, have a good time. A few years ago, the way I would run a team meeting would be a 30-page PowerPoint and then I’d give business updates and talk about performance and I’d watch as people would look at their fingernails, gaze out of the window and doze off. “Now what we do are competitions, we study things, look at external business dilemmas, we look at strategy material… there’s a lot of effort in engaging people. That’s a mix of learning and also, crucially, just having a good time. “My very strong belief is that when people come to work they should be able to have a good time and I don’t know why so many organisations struggle with that.” 20

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EcoVadis and the sustainable supply chain Pierre Francois Thaler, EcoVadis Chief Executive and Co-founder talks to Supply Chain Digital about the risks to sustainability in procurement practices‌ W r i t t e n b y M AT T S M I T H

TECHNOLOGY IMPLEMENTATION OF SUSTAINABLE procurement practices is growing as companies add both depth and scale, but these efforts may not be sufficient to protect against reputational risks from dodgy suppliers, according to a new report by specialist EcoVadis. The French firm has partnered with academic institution HEC Paris to produce the Sustainable Procurement Barometer. First published a decade ago, the study measures the evolution of sustainable procurement practices in global procurement organisations. The 2017 edition, the first since 2013, shows such practices – essentially using sustainable products from responsible suppliers – have now progressed into what Pierre Francois Thaler, EcoVadis Chief Executive and Co-founder, describes as adolescence, with many organisations expanding their programs to achieve a big increase in coverage. “What we’ve seen evolving is mainly the scale and the depth of what companies are doing,” said Thaler. “In terms of depth, companies 26

October 2017

are getting better at integrating this new dimension into their procurement processes so it’s now more part of the tendering and verification processes. “In terms of scale, you had examples of companies doing really good things but only on, say, 5% of their suppliers, while other companies would say ‘we are doing something, we are sending a code of conduct to our suppliers,’ but that was it.”

IMPLEMENTATION The research reveals a large gap between the leaders in sustainable procurement, which constitutes around a fifth of the top 500 global companies, and most other businesses, where implementation remains shallow. “If you take the top 5,000 companies in Europe and the US, what 50-70% do is really limited such as having a couple of suppliers signing questionnaires or a code of conduct, rather than really embedding it into their procurement processes,” says Thaler. Companies continue to cite cost savings, compliance, and


risk reduction as key priorities within procurement, although compliance has grown markedly in importance as regulations tighten. Similarly, pursuing sustainable procurement practices is driven by a desire to protect brand reputation, reduce risks and achieve compliance, according to report respondents. “Very few global corporations are doing it just for ethical objectives - most are doing it because it delivers significant cost savings or cost benefits,” says Thaler. “We work with a very large global FMCG [fast-moving consumer goods] company that had 70,000 suppliers, and they are using this CSR program to reduce this to 20,000. They’ve already generated more than $300mn in savings as a byproduct of this compliance exercise.” Historically, sustainable procurement or responsible sourcing focused on a company’s top 100 suppliers because that’s where 80% of savings could be found. But, as the report notes, applying sustainable procurement requirements to large-spend suppliers alone won’t protect against reputational risks. “A very small vendor where you

“Clients use our analysis to decide which suppliers they want to work with and to identify which suppliers need to improve if they want to remain in business” – Pierre Francois Thaler, EcoVadis Chief Executive and Co-Founder, EcoVadis




October 2017



spend only about a $100,000 a month, might end up, if something went wrong, damaging your brand much more than what will happen with IBM or Accenture where you spend $100mn,” Thaler claims. “You need to also focus on the long-tail suppliers, and that’s where it can become very costly – platforms like EcoVadis can monitor tens of thousands of vendors, which would be a huge effort if you had to do this with internal resources and your own auditing teams.”

“CREDIT” RATINGS Thaler describes EcoVadis as essentially a credit rating agency for sustainability information, operating a global cloud platform for its 30,000 customers, which include Nestlé, Heineken, Michelin, Johnson & Johnson and L’Oréal. EcoVadis collects and analyses data annually on suppliers across 150 purchasing categories and 110 countries, creating ratings and scorecards which are easy to understand for non-experts. Suppliers are judged on their sustainability performance, based on a broad definition that

includes health and safety, human rights, corruption and ethics. “Clients use our analyses to decide which suppliers they want to work with and to identify which suppliers need to improve if they want to remain in business,” says Thaler. The report shows a seachange in attitude among senior management when it comes to sustainable procurement – in 2013, a lack of board and executive support was cited by 50% of respondents as a major obstacle to implementing such practices, but by 2017 this had fallen to 24%. Now, though, 57% of respondents say the biggest hurdle is a lack of internal resources, implying that while companies are making positive noises regarding getting serious about sustainable procurement, this is not necessarily leading to action. Thaler observes a time lag for corporate policies to reach the front line, having worked with about 200 of the world’s top 1,000 organisations. “They are setting up training and are undertaking change management to make sure, for example, that project managers’ objectives aren’t 100% tied to savings, but are 29

“A very small vendor where you spend only about a $100,000 a month, might end up, if something went wrong, damaging your brand much more than what will happen with IBM or Accenture” – Pierre Francois Thaler, EcoVadis Chief Executive and Co-Founder, EcoVadis

also linked to taking sustainability into account,” says Thaler. “One of the mismatches in many companies is that they say they now have a corporate mandate for sustainable procurement, but at the same time the purchasing managers were 100% incentivised and 100% driven just to deliver short-term cost savings.” EcoVadis also surveyed suppliers to learn what they think of their customers’ sustainable procurement programs. Many complained that while customers were demanding 30

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EcoVadis analyses hundreds of differ

much more information, they were not following up on what was provided, also failing to offer adequate incentives for the suppliers to change. “It’s difficult to measure whether you’ve really covered risks. Some companies would say ‘we cover 80% of our spend’, but that 80% might just be from a large handful of suppliers with no risks,” says Thaler. “Others might say ‘we cover 80 percent of what we consider high risk suppliers’, but that’s a subjective exercise and they might only give ‘high risk’ to suppliers


rent procurement variables

that are very, very high risk.” Adopting sustainable procurement practices varies not just across industries, but within the same sectors. Among those Thaler cites as being the most progressive are FMCG, retail, pharmaceuticals and telecoms. The laggards include extractive industries, aerospace and defence, oil and gas. “Generally, industries that are more exposed to consumers will be first movers and then it will cascade down the value chain,” says Thaler. The EcoVadis study shows leaders

in sustainable procurement have increased revenue, but the jury is still out as to whether that reflects simply being better run companies or whether such practices do bolster the top line. “What nobody has been able to demonstrate so far is whether it’s correlation or causality,” adds Thaler. “Are they investing more in sustainability because they are more profitable companies or are they more profitable companies because of their investment in long-term shareholder value that sustainable procurement represents?” 31

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TOP 10

Top 10 busiest ports in the world


TOP 10



Tianjjn port is the largest port in Northern China and the main gateway to Beijing. In 2015, it had a TEU volume of 14.11mn; an increased volume of almost 2mn TEUs in two years. Formerly known as the Port of Tanggu, the port was originally opened in 1860, before being reopened as Tianjin in 1952. The port is currently operated by Tianjin Port Group.




Jebel Ali is situated in Dubai and, as of 2016, has a volume of 15.60m TEU. The port is operated by DP World UAE Region and is the largest port in the Middle East. The Operator holds over 78 marine terminals around the world, but Jebel Ali is its flagship. Jebel Ali connects with more than 140 ports globally.



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Guangzhou Harbour holds a volume of 17.22mn TEUs and is operated by Guangzhou Port Group Co Ltd; a state-owned company. Guangzhou is an ancient port, but the company itself was established in 2004. Guangzhou Harbour is the largest port in South China and reaches over 300 ports worldwide.




The port has been operating since 1892 and was renamed as Qingdao Port in 1987. As of the end of 2016, the operator Qingdao Port International CO Ltd operated 81 berths at the port, including 51 dedicated to a single type of cargo and 30 capable of handling metal ore, coal and general cargo. Qingdao port has a current volume of 17.47mn TEUs.


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Port of Busan is the largest port in South Korea and was opened in 1876. It has been operated by the Busan Port Authority at Busan Harbor for over a decade, and in 2015 it handled 19.45mn TEUs, making it the world’s sixth busiest container port by traffic.




The Port of Hong Kong, by Victoria Harbour, is a deep-water sea port operated by the Hong Kong Maritime and Port Board. It handled 20.07mn TEUs in 2015 and provides around 330 container liner services per week, connecting to around 470 ports across the world. The port mainly deals with manufactured products, but also handles some raw materials and passengers.


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Ningbo-Zhoushan Port has a long history: Ningbo Port was established as early as 738 and has always been one of China’s major seaports. In 2006, it was merged with the neighbouring Port of Zhoushan. The port is at the crossroads of the northsouth inland and coastal shipping route that lead to the important inland waterway to interior China. In 2015, the port handled 20.63mn TEUs.




The Port of Shenzhen is a collection of ports along the coastline of Shenzhen, which is 260km long. One of the busiest and fastest growing container ports in the world, it hosts 39 shipping companies with 131 international container routes. The port has 140 berths in total and in 2015 handled 24.20mn TEUs.


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The port of Singapore accounts for one seventh of the world’s container shipments and is also one of the world’s largest refrigerated container ports, connected to over 600 others around the world. The port also trans-ships a fifth of the world’s shipping containers. In 2015, the port handled 30.92mn TEUs.


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PORT OF SHANGHAI, CHINA The size of 470 football pitches, Shanghai port is said to have enabled China to become the world’s largest trading nation. Shanghai’s annual import and export trade makes up a quarter of China’s foreign trade in value. The port handled over 36.54mn TEUs in 2015. Opened as a treaty port in 1842, since 2003 the port has been managed by Shanghai International Port, which is a majority state-owned firm.



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PROCUREMENT 101 Stephane Masson, Marriot’s Senior VP of Global Procurement, speaks about overhauling the company’s supply chain operations Written by: Nell Walker Produced by: Denitra Price





he name ‘Marriott’ exemplifies the hospitality industry. It’s certainly among the first names that would spring to mind when considering hotels, and it has nine decades of expertise to thank for that level of prestige. Marriott International celebrates its 90th birthday this year, having established itself in Washington DC in 1927. Still a family-led business after all this time, Marriott’s current Executive Chairman – JW Marriott Jr. (Bill) – is the son of the company’s founder, J. Willard Marriott Sr. The latter was an entrepreneur who opened an A&W root beer stand at the age of 27 and swiftly expanded it into a thriving restaurant chain. By the time J. Willard Marriott died in 1985, the company operated over 1,400 restaurants as well as 143 hotels and resorts worldwide. Thanks to incredible expansion across these businesses, Marriott now controls over 6,000 properties in 110 nations, offering high-quality hospitality across most of the globe. Key to this level of success is supply chain operations – the process of ensuring consistent service across thousands of properties via the seamless acquisition and delivery of required products. Enter Senior Vice President of Global Procurement at Marriott International, Stéphane Masson. Masson has worked in procurement for over 24 years, beginning in European operations then relocating to the US as his role evolved into overseeing the global market Considering the age of the business, switching from region-specific operations to a global system is a relatively recent change. Masson explains how it began.


October 2017


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– Stéphane Masson, Senior VP of Global Procurement at Marriott International “Prior to 2001, Marriott operated procurement in a very US centric way. In 2001, the company decided to launch Avendra to support multiple companies, including Marriott’s procurement and hospitality supplies business in the Central and North American markets. At the same time,


October 2017

I was asked to put together and to lead a procurement organisation for the supply chain needs of Marriott outside of the US. So, for a period of time, we ran the two organisations in parallel – one for the US domestic market – Avendra – and one for the rest of the world, which was called


Marriott International Procurement. “In 2010, I was moved to the US in order to find a way to coordinate procurement by making sure that North America and the rest of the world could work together. That’s where we developed a global approach, resulting in a much efficient structure.” A challenge came with the realisation that running a business within a domestic market is very different than running the same business internationally. The United States is self-contained, making logistical operations relatively simple, but the introduction of an additional 100+ nations significantly complicates matters. “That’s where it was more challenging, to unify the process,” Masson explains. “But the positive side is that once it is achieved, you have a much better overview of what you’re doing, and can harmonise better for increased benefits to the customers, the hotels, and the owners. For instance, a lot of products are manufactured overseas. If you only do procurement in America,

you don’t have access to the major manufacturing facilities in the world – you mainly work through distributors. “One of the outcomes of this global focus was that Marriott strengthened access and contracting expertise. While there are a lot of challenges, there are much greater benefits in becoming more coordinated.” People power This system only works with a stable team of talented individuals. Masson acquires staff who are willing to undertake the kind of fast-paced tasks required by a mammoth organisation like Marriott, and these are people who end up staying with the renowned business for many years. Marriott has divided the globe in continents. Each of them have a Continent Procurement Organisation reporting to Masson and to the concerned Continent Operation Leader. Each continent is divided into clusters, meaning a group of hotels in a country, city, state, or region. Masson identifies the best possible procurement leader within this cluster to negotiate contracts.

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The cluster leaders report to Marriott’s continent procurement leaders, and they grow into their roles in order to ensure a seamless supply chain. “We support the growth of our people,” says Masson. “When we identify a person who is doing an amazing job, a person we believe can grow further, we promote them within our procurement structure. “Most of our people already come from the industry and understand the requirements of procurement. Our job is to develop them further to develop their skills and meet the needs of Marriott International.” Mergers and restructures With expertise, reputation, and a dedicated staff in place, Marriott is prepared to create new success stories. One of its most impressive successes has been the recent


October 2017

acquisition of Starwood Hotels, a group of 1,200 properties. The deal to merge was finalised in September 2016, and the two companies now operate under the same Marriott name. One would expect a deal of this size to cause some disruption, even to a hospitality giant like Marriott, but such was the level of preparation, the potential for difficulties were avoided. “What we tried to achieve has never been done before,” Masson explains. “At least on this scale. In the US, the Starwood integration went very smoothly – we had far many more hotels and a solid structure to absorb 600 or 700 hotels. Outside of the US, where procurement is more complex, the process was potentially more difficult. The integration of Starwood spurred us to divide



– Stéphane Masson, Senior VP of Global Procurement at Marriott International

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procurement into five work streams.” This restructure, was designed to make Marriott’s supply chain as manageable as possible. It is part of the company’s Procurement 2020 Vision. The goals are:

1. Ensuring supply chain continuity: “Number one was to

make sure the hotels can continue to order whatever they need to serve guests, meaning we had to put a number of steps behind the scenes to ensure this continuity,” says Masson.

2. Maintaining procurement support: “This is to make sure we maintain or improve the structure we already have.”

3. Mitigating risks: “Making

sure that any contracts we’re absorbing will reflect the new structure of the organisation, and will be globally applicable.”

4. Integrating procurement systems: “This is integrating the two procurement structures under one a single umbrella, so they operate as one.”

5. Implementing costsaving measures: “This focusses on promoting saving. As you can imagine when we are merging two major organisations, there is a high level of expectation that there will be savings. So we put in place the necessary processes to leverage as much as we can in order to create savings for the benefit of the hotels, the owners, and making sure that our guests benefit from improved quality and better products.”

This restructure will ensure that any future acquisitions Marriot inevitably makes will be a fluid, simplified process. According to Masson, the development of the 2020 Vision has been encouragingly received with anticipation of positive outcomes. “This was designed about 18 months ago, and we began to implement the integration in September of last year,” Masson says. “Step one, two, three, and four are almost complete. We are currently focused on the hotels and haven’t had a single disruption in the supply

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chain. We’ve also taken the best from each cluster team and created a new procurement organisation with them, and ensured that all the current agreements were in place before the Starwood merger. Now under a single format, as per the requirements of the brands, we work with and merge every line of procurement. This is almost complete for the North American market, so we’re now concentrating on delivering excellent service.” Masson is quick to point out that this success is far from a one-man show: “It’s not my work – it’s the work of the entire procurement structure and the people we have in the field. We’ve been extremely lucky to work with suppliers – partners, really – who have helped us to grow this process in a way that’s never been done before on this scale. “It really has been a team effort to get where we are today.” Technology Technology has been the axis on which Marriott’s transformation pivots. Any alteration to technology in an organization of this size can be

a mammoth task, and one which has to suit every segment throughout the world in order for it to work effectively. For Marriott, Masson says, the changes required for our supply chain are just common sense. “The technology has changed the way we contract dramatically, and also the way that the hotels work. The deployment of Procurement 2020, which is basically a sourcing-to-pay strategy, is not something revolutionary. We know what to contract and where to source products, but we were missing the critical information which needed to be added.” Marriott’s latest two-pronged attack includes a single platform for accounts payable, as well as a single platform for e-procurement. These streams work together so that the company negotiates a contract, uploads the contracting terms on the e-procurement platform, and when the goods reach the hotel, the invoice is paid automatically through the accounts payable system. A simple, effective process that ensures data that can be analysed and be

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transparent, enabling Marriott to better determine where commodities are needed, in real-time. “This technology has changed the way we approach our business,” Masson explains. “For example, everybody believed that bacon was the largest spend item in a hotel. That was the perception. The fact is, we have seen that tomatoes and mushrooms overall represent a greater spend than just bacon, and by having

access to this information – what the hotel really spends – you can change your strategy and behaviour. Right now, my team, in some markets, spends more time on tomatoes and mushrooms than trying to find new spend from bacon, because that’s where the most value can be found. “This helps us to rationalise and focus on what we really need

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– Name, Position

– Stéphane Masson, Senior VP of Global Procurement at Marriott International

to get for the benefit of improved efficiency across the organisation.” Marriott began using a centralised procurement structure, then moved to a decentralised one to make US-international business simpler, and now it uses a hybrid system which allows a much more flexible approach to procurement. The business centralises what makes sense to be centralised globally, and localises what makes sense to be procured locally from a business point of view. “We do not contract everything centrally,” says Masson. “We have

different layers of contracting support, so there is no overlap between deals. It’s whatever makes sense for a specific commodity. There is always a contract in place, but it must be in the best interest of the needs of the property. We take the best of both centralised and decentralised systems to form a workable hybrid.” A hybrid process This hybrid system, Marriott’s procurement vision, and the e-procurement process will all contribute to Marriott’s ambitious goal of reducing costs by $100mn. According to Masson, improved visibility, efficiencies, and contracting are helping the hotels to buy the right products, and the combination of this is allowing “synergy savings” to come through. “The merger with Starwood has accelerated these opportunities,” adds Masson. The Starwood acquisition has also meant Marriott must step up its game with regard to sustainability, something the business is always

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– Name, Position

– Stéphane Masson, Senior VP of Global Procurement at Marriott International

looking to improve. Sustainability and diversity in procurement are paramount to the business, and things which are embedded in its contracting requirements when choosing a vendor. “We’re always looking at how we can be “greener” within our supply chain,” Masson says. “Part of our e-procurement tool is allowing the hotels to identify which products are the ‘greenest’ products coming from diverse vendors. So it’s not just about finding the right product with the right vendor, but how we can educate and keep our hotels informed about what are the right products for their businesses.


October 2017

That’s why we are a step ahead.” For now, Marriott’s focus is that improved visibility is a critical component of the business. Having achieved a high level of maturity in contracting, Marriott is now able to explore new areas as a result of the sheer volume of data which is now accessible. “This is an exciting time for our organisation. We’re leading the hospitality market today, and we’re glad to be going through these acquisitions and mergers. Again, my team has done something that’s never been done before, and I am very proud of everything we’ve done so far.”


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IN-HOUSE TECH HAS REVAMPED ITS OPERATIONS Written by: Leila Hawkins Produced by: Denitra Price

Logistics organisation BDP was founded over 50 years ago. Over this time, one of the most dramatic changes it’s undergone has been its implementation of new, in-house technology


ogistics organisation BDP was founded over 50 years ago. Over this time, one of the most dramatic changes it’s undergone has been its implementation of new, in-house technology. Thanks to a team of around 200 programmers, BDP is not beholden to anybody outside of the business. “We’ve been on an upwards technology curve for the last 15 years,” says Gary Phelps, Senior Vice President of Global Air Freight. One important initiative has been SmartVu a tool that integrates all the company’s logistical operations around the globe. It can be tailor-made to the format customers require, whether that’s by containers, kilos, deliveries or pick-ups. Customers are trained to use the tool by staff in their region, and they can choose how they want this information delivered, whether it’s on a dashboard screen or by


October 2017

getting frequent real-time alerts to notify them of what is arriving, when, and of any potential issues. SmartVu is proprietary to BDP, whereas Phelps explains most competitors use third party systems. “It works great,” he says. “It allows customers who are procuring logistics services from us whether by air, ocean or ground to stay ahead of competitors.” Last year BDP became a member of Cargo IQ, a consortium of carriers, airlines and other freight forwarders from around the world who help with efficient forecasting for deliveries from door to door. Three years ago, the company began its Unit Load Device (ULD) program, enabling it to build its own pallets to streamline services, so a customer’s goods don’t get split into separate deliveries, making it possible for delivery times to be up to a day earlier,


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and reducing damages like scuffing, crushing, and damp. The programme is currently expanding, and Phelps says that most competitors don’t have a system like this in place because building the pallets would add an extra step to the process. A close-knit business Another key differentiator is that BDP is still a family-run organisation owned by four brothers, making for a more tightknit feel perhaps when compared

to its larger competitors. Throughout his extensive career in logistics, Phelps says this is the best company he’s ever worked for, citing less bureaucracy as one example. “BDP is a definite breath of fresh air. They want you to succeed and they want the customers to succeed. Maybe you can make more money and get more stock options, but it’s a 90-day grind [at other companies]. “Whereas here I get up every day, I love what I do, I love the customers I work with, and they

“I get up every day, I love what I do, I love the customers I work with, and they seem to love us back because they’re spending more of their hard-earned kilos with us, so that’s always a good sign” – Gary Phelps, Senior Vice President of Global Air Freight



October 2017


BDP team at Colombia Expologistica event seem to love us back because they’re spending more of their hard-earned kilos with us, so that’s always a good sign. “They have a choice, they can use their kilos with whoever they want but they’re choosing us over the competition.”

The freight market Phelps says the industry is hugely competitive. “There’s huge pressure on yields right now, you’ve got to find a balance where you save the customer money and still make money. When freights are priced too cheaply they just sit there and don’t move. You get what you pay for.” There is a constant up and down of supply and demand, Phelps says. “Right now, you’re seeing fewer freighters, some being retired in many cases from a passenger point of view, and also from a freight point of view, everybody’s moving into mini freighters. “We try to work with global carriers that have both capabilities, a limited fleet of freighters, and also with a large


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fleet of 350s or Boeing 777s. Then we leverage based on that and spend 80% of our funds with those carriers, and we meet with them every 90 days to put together dynamic pricing for people who want to play in the stock market. “For people who want to play longer, we put together block space agreements or soft block agreements to carriers saying you will deliver x number of kilos per week. It just depends what you’re looking for.” The biggest challenge is, and always will be forecasting. Phelps explains that just like hotels can never predict how many rooms

they will fill, the same applies to air freight. They might know what capacity there is, but there is no way of knowing if a truck will break down or a driver will get lost. “The market is very dynamic at the moment,” he says. “2018 will continue to be a space vs. rate scenario - I see continued pressure on the market for increased rates, I see that our larger competitors and larger contracts with customers are going to continue to see yield problems and, as long as the fuel stays where it’s at, the airlines are going to continue to increase their pricing by 15% next year. “It’s up to us as procurement

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professionals to find a way to mitigate that back to the customer.” Vision BDP has just opened its second European gateway in Frankfurt, alongside its existing one in Amsterdam. Additionally, it has Asian gateways in Hong Kong and Shanghai, and in the US it operates via airports in New York, Atlanta, Chicago, Houston, LA and Miami. “We have 12 lanes that we stick to and focus on,” Phelps says. “Those are the key lanes, and we know we can do things with those lanes, both from a procurement and from a logistics movement standpoint. We try to work with our air and ocean partners to make sure we see the visibility on savings so we can pass those on to our customers.” However BDP’s vision is not to vastly expand and become the biggest in the industry, but to provide the best logistics service for customers globally. As Phelps says, “we’re adding new logos to our portfolio constantly.

We don’t try to become too big too quick, we’re slow and methodical in what we’re doing to provide the best value and solutions for our customers. “We never like to say we’ll be the cheapest or the most expensive,” he continues. “We like to say we’re going to design what you’re looking to purchase.” By looking at customers’ individual logistics spend and model, BDP is reducing transit time to create savings for the customers, which additionally expands its wealth. In 2017 BDP has been up by 50% on air freight in terms of kilos, compared to the rest of the market which is at approximately 8%. “We’re working on our 2020 plan right now,” Phelps adds. “I can see a lot of good things from what we’ve done in the US, Europe and Asia. We have an excellent ocean and air freight plan in place to secure additional kilos and containers as we move forward.”


The Main contender Written by: Fran Roberts Produced by: Denitra Price

Main Street Renewal is a private company focused on buying, renovating, and leasing homes across the US. By taking a traditional supply chain approach to its operations, the company is building efficiencies in a highly competitive market


The beginnings Main Street Renewal buys and renovates homes before selling them in tranches to investors. Based in Austin, Texas, the company has branches in 19 cities, with more coming soon including Las Vegas, Phoenix, and Denver. What sets Main Street Renewal apart from its competitors is the standardised approach it takes to its properties. Of course, it wasn’t always this way. When Main Street Renewal entered the SFR industry in late 2012, the contractor mentality was standard across the renovate-to-rent platform. The practice consisted of obtaining multiple bids for a single project, and whoever came in the cheapest, was usually awarded the job. After the project was completed, the vendor would return to the pool for the next round of bidding with no guarantee of future work. Supply chain principles and processes remained obscure in an industry that had become comfortable with the status quo. With any successful business, sustainability lives and dies in the margins. Profit margin is the most


October 2017

discussed measure in the public space, but cost control is not the only factor that drives Main Street Renewal’s business model. Equal importance is placed on both quality of product and the ultimate margin, time. Cost, quality, and time form what Cavanaugh calls the triangle of success. Each key measure occupies a single corner of the triangle and is positioned at a 45 degree angle from one another as a reminder that if one side breaks symmetry, the triangle, as well as success, becomes skewed. In the early stages, Main Street Renewal had standardised materials (granite, carpet and paint, for example) at a set price to create a uniform aesthetic within their properties. However, with multiple different vendors cycling in and out of each house every time, quality became inconsistent and repair completion timelines extended. The Main Street Renewal team identified inefficiencies within the process and decided to break rank from the industry norm and pursue a different approach. With this deviation, a dedicated supply chain team was formed.


Senior Vice President of Supply Chain

MIKECAVANAUGH After years of fun working with great companies around the world, I took a chance to apply my experience to something truly unique, to think completely outside the box. That drive is what led me to Main Street Renewal, a Real Estate Developer and Property Manager focused on the Single-Family Residence (SFR). There are very few industries left where you can take an opportunity to implement change and best practices from other industries in a unique way. This is an industry that has not fully matured to have the norms and is full of potential. I get to tap into that potential on a daily basis, take what I have learned in other industries where I have experience like high-tech or consumer and apply it to how we not only renovate a home but how we interact with our investors, vendor partners and our residents.

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October 2017


Strength in partnership The Main Street Renewal team recognised the fundamental base of each business lies within the processes by which it operates, and at the most elementary level, the principles driving those processes are synonymous across all industries. Their team saw the potential of applying traditional supply chain methodology in a non-traditional setting. “A house is unique each and every time – you don’t necessarily know what you’re going to get with any particular house,” acknowledges Cavanaugh. “We’ve tried to think about it a bit differently. We’re going to bring every home we buy to a certain standard, so we’ve taken traditional supply chain principles of sourcing, strategic partnerships and demand forecasting and applied those into that construction environment.” A typical supply chain team oversees the development, production, and maintenance of a product and is no different within Main Street Renewal. The home and service are the end products with all contributors and

resources falling under a structured network, therefore, can benefit through specific supply chain processes. The first step was directly approaching distributors and suppliers using volume and exposure to negotiate pricing on raw materials. Main Street Renewal chose a single colour and grade of each product put in their homes as a way to not only reduce cost but also create consistency and a standard of quality across all markets. This has certainly provided advantages for Main Street Renewals in terms of pricing. “If you think about a manufacturing site taking all the parts and pulling them together, we’re doing the same thing. It’s the same part we use each and every time, so that’s given us the opportunity to really go deep inside of our supply chain and work directly with our distributors and suppliers on raw material pricing,” remarks Cavanaugh. Main Street Renewal’s vendor partners can buy directly from those suppliers and distributors at a nationally agreed upon rate. “That allows us additional cost focus inside and throughout the

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supply chain. We can start to now Partnering prowess optimise logistics routes and where Main Street Renewal very much sees different raw materials are located, its vendors as partners. “You won’t positioning, and where, how and hear us call our vendor partners what we buy,” Cavanaugh advises. contractors although predominantly With control over the material supply, the industry thinks about our vendor Main Street Renewal set out to partners as contractors,” streamline the ‘assembly Cavanaugh comments. process’ for their “The contractor products. Even mentality in the after providing whole building standardised industry is very materials at a much ‘you are below market my contractor cost, the for this job Main Street right here and – Mike Cavanaugh Renewal team when I go build Senior Vice President found repair that house next of Supply Chain timelines and to it, everybody’s quality standards going to have continued to fall below the opportunity to expectations. The deficiencies bid for that next job’.” were a direct result of the vendor Deviating from the industry standard selection process which made it can be risky, but Main Street Renewal possible that a different vendor could believed the best long term strategy work on every home within the MSR was to form partnerships with quality portfolio. By eliminating the contractor vendors in each market and have mentality, Main Street Renewal both parties agree to a set labour soon realised the benefit of forming and material pricing through one partnerships with quality vendors. statement of work that would apply to



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all properties within a given market. This resulted in the dissolution of the bidding process and reduced the vendor pool by a significant volume. The contracts with suppliers and distributors for the price of materials meant Main Street Renewal can renovate homes at an all-in cost that’s below market and their competitors. Agreeing to standardise pricing didn’t guarantee work as potential vendor partners needed to meet additional standards of quality and timelines to become a primary vendor. Once on-boarded, vendor partners needed to maintain those standards to continue receiving work. Main Street Renewal would fulfil its side of the relationship by providing volume, material price, and payment timelines with a reporting cadence implemented to provide feedback to vendors on both theirs and Main Street Renewal’s performance. Vendors were initially wary of the new process but warmed up quickly when they realised volume and material premiums could provide a steady income stream. The relationship between Main Street Renewal and its vendor partners is

a two-way street, encouraging both sides to perform to a high standard. “If we have a vendor whose performance starts to slip, we prefer to spend the time and invest in that vendor – to give them the opportunity to turn around, to share with them what’s going on, to give them ideas and tools and help them potentially perform better,” Cavanaugh explains. High standards Maintaining high standards is key to the success of Main Street Renewal clients, both investors and residents want to get the best value for their money. “When we walk through a house with an investor, it’s always worth hearing the feedback from their point of view, often it is this is a higher level of standard than what they were expecting,” states Cavanaugh. “That’s really attributed to the people who develop and support the processes we have throughout our entire supply chain, everyone focuses on delivering a Great House.” Quality is an important goal for the company, as Cavanaugh illustrates: “Every year we strive to hit a level of

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quality that exceeds the expectations from our customers. This is where our Great House mantra is derived from. We define what a Great House is with data from previous residents, input from our current residents and investors and designs from our parent company. These inputs create a standard that is higher than what you would expect allowing us to set the bar so unbelievably high in terms of quality. Often companies are afraid of setting a high bar but


October 2017

we would absolutely rather aim high and miss than aim low and achieve. We encourage people to develop, to push themselves beyond what they believe the normal barriers would be for them to achieve a higher level of success and so we spend the time to invest in people to develop.” Main Street Renewal recently attended a leadership conference to help its leaders get better. “When leaders get better we all win,” Cavanaugh explains. “We have approximately 405


Main Street Renewal - Your Home Leasing Partner

people at Main Street Renewal, monthly we have Lean Six Sigma lunchand-learn session that anybody in the company can sign up for, leadership series offered by our training and learning department and an Area Manager in Training programme. These programmes are just an inkling of what we do to invest in our people.” Process modernisation Lean Six Sigma has formed an

integral part of Main Street Renewal’s drive to always be looking for ways to work smarter. “We’ve taken Lean Six Sigma principles. This isn’t the rigorous often confused approach that forces structure, but the way of thinking about processes where you look at what you do differently, through the lens of how can we better profitably service our customers,” reveals Cavanaugh. “We’re using those Lean Six Sigma principles to give us tools

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that provide us a foundational way of thinking about how we do work, how we get work done every day.” One great example of how Main Street Renewal has integrated the Lean Six Sigma way of thinking into their business is through the Hoshin Kanri. Cavanaugh explains that: “We use Hoshin as a key driver of our business goals and strategic direction setting. We ensure through the Hoshin matrix that the results expected by our investors and residents are directly tied to our one- and three-year plans. In the typical business approach, there are always great ideas but too often those ideas outnumber resources. With the Hoshin matrix we ensure through alignment the priorities we all agreed on are the ones that are actively being worked on.” Increased competition As the US economy picks up – 209,000 jobs were added in July 2017 alone – Main Street Renewal is seeing an uptick in its business. “People are buying again and it’s a great time to invest in single-family housing. The trend that we’re seeing in the industry


October 2017


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is a lot more competition in the market and we’re approaching that by trying to become more efficient in not just how we buy homes but how we rehab homes,� Cavanaugh observes. With

the support of its vendor partners, things certainly look set to continue getting better for Main Street Renewal over the coming years.

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A lesson in leadership Kristy Knichel, President and CEO of Knichel Logistics, describes how she injected new life into her company by creating a streamlined business and a loyal workforce Written by Nell Walker Produced by Denitra Price



ew businesses come as family-orientated and dedicated to people as Knichel Logistics. Originally an intermodal marketing agent for a third party logistics company in 1997, the business took the expertise it had and formed its own logistics company in 2003. Fourteen years later, Knichel Logistics is in a position of prestige created by hard work and a love for people power, its loyal team led by President and CEO Kristy Knichel. Leaving college to work for her father, William, Kristy worked a variety of roles to ensure the smoothest possible running of the business; beginning as an intermodal dispatcher, she also worked in sales, finance, and HR. Soon after Knichel Logistics began, William was hospitalized, leaving his daughter to learn how to run the business on-the-job. “I just had to take the knowledge I had and get things done,” she explains. “I ran pretty much everything, working seven days a week to make sure everyone was doing their jobs. My role changed quickly – I learned what it meant to run a business.” In 2007, after four years of decreasing involvement from her father, Kristy became CEO. During this time, she had been training other managers to take over her previous roles, including the business’s intermodal arm, and getting the company more involved in truck brokerage. With sales and finance teams stable, Knichel Logistics began to experience massive growth, taking on a COO who – among others – helped Kristy to gain more confidence in her leadership.


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“I’m all about giving a chance to everybody.” – Kristy Knichel, President and CEO

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“Other companies

might have a tonne of money behind

them, but we find

ways to do the same things they can on a Kristy Knichel (CEO) with her brother William Knichel Jr (EVP), otherwise known as JR. 100

October 2017

smaller scale”

– Kristy Knichel, President and CEO


“I didn’t go to school for this, but I had lots of people around to help me and figure out what my role was, because I had been an operations person and it was tough for me to put that aside.” The support Kristy had within Knichel has sometimes been challenged by a lack thereof outside of it. She admits that, sometimes, customers and partners have shown unwilling to display the respect Kristy deserves simply due to her gender. However, her determination not to be marginalized has spurred her on to prove those naysayers wrong, and she is happier than ever to help create a diverse environment – both within Knichel and along the supply chain. “After 2010 was when I really started to find myself as CEO,” she explains, “and this is important, especially for a woman in this industry because it’s very male-dominated. Sometimes I’ll go to executive industry meetings and I’m the only woman in the room, and it can be intimidating at times, but I’ve pushed myself to get involved and talk to the men there. It’s been a challenge, but I felt I was up to that challenge.”

With a large portion of Kristy’s staff being female – 29 out of 42 – she is passionate about giving women opportunities they might not be given elsewhere. That being said, this choice is one borne of a desire for equality: “I’m all about giving a chance to everybody – men and women of all ethnicities. It’s crucial to me because I’ve had a really, really hard, rocky road to get where I’m at, and I don’t want other women to feel they have to go through that.” Follow the leader It is Kristy’s leadership skills, after all, that have created the close-knit, successful business Knichel is today. In her own words, she surrounds herself with people who are smarter than her, and places them where they are the most valuable. In an industry that typically has a high turnover of staff, Knichel boasts an average employee tenure of 10 or 11 years. Why? Because the business takes care of its employees. “When I took the business over from my father, my goal was to keep the employees happy and take care

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“I had to find out what my staff want to see and what would motivate them to stay - I’m a people-pleaser” – Kristy Knichel, President and CEO


October 2017

of them so that they stay,” Kristy explains. “Training people takes six months to a year, and I don’t have time to do that over and over again, so one of my first initiatives as CEO was to continue the company’s focus on employee engagement and retention. I had to find out what my staff want to see and what would motivate them to stay – I’m a people-pleaser.” Knichel takes part in Customer Service Week, buying gifts for staff, allowing them to play games and


JR Knichel, Kristy Knichel, and Jonathon Krystek flanked by the sales team in the conference room.

earn tickets to win prizes, offering free massages and activities – all designed to entertain and incentivize them. Kristy also promotes flexibility in the workplace, as many of her staff have children. Knichel even pays for gym membership, promoting healthy living with an extra-long lunch break for those taking time to exercise. Making employees feel heard and appreciated is core to the business, according to Kristy.

Digital devotion Knichel Logistics’s stable core team and slick working environment has enabled the business to earn numerous awards over the last few years, plus a positive status as a certified woman-owned company. All of this has given Knichel the best foundation, atop of which it has built up a reputation and the technological and sustainability expertise required to make it a

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strong competitor in the market. Knichel has cleverly shopped around for the software the business uses, with every choice designed to improve efficiency and streamline operations. For marketing, Knichel has been using a platform called HubSpot as of last year to manage its online content, as well as revamping its website and further developing its social media presence. For overall data visualisation and business

intelligence, Knichel utilises a software called Tableau. This system allows for large amounts of shipment and quote data to be analyzed graphically, which provides a different perspective when it comes to data interpretation. With the ability to keep a close eye on analytics, Knichel Logistics has been able to drive more business and chart its revenue growth, enabling it to see its successes in more detail. In order to enhance the operational

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effectiveness of its pricing department, Knichel partnered with Logistical Labs, utilising its LoadDex platform. This software is a consortium of various data sources that give users a quick snapshot of ballpark pricing per lane entered. “We’ve really tried to embrace tech as much as possible,” adds Sheila Weatherly, Director of Pricing. “We’re able to load monthly data of what shippers are seeing out there in the market on a contracting spot basis. Using LoadDex, the data is pulled into one place, and very little training is required to circumnavigate it. It’s made it possible for someone who has very little background in truckload – including my team because they were mainly intermodal in their background – to be able to quote relevant and accurate data in a timely manner.” Without LoadDex, the pricing team would have to go to several separate sources and then manually calculate the averages – obviously, this system has been a game-changer in regards to time. On the environmental front, Knichel is a SmartWay Transport Partner, which means that it employs specific

“Larger customers are noticing us now, and we can offer the kind of service you might not get from a bigger logistics provider” – Kristy Knichel, President and CEO

reporting functionality to organise its carrier data in an effort to create a clean supply chain, by using carriers that are compliant with the SmartWay program. Along with numerous other innovations, these technologies are helping to ensure Knichel Logistics can compete with industry giants. “There’s a lot we can do,” says Kristy. “Other companies might have a tonne of money behind them, but we find ways to do the same things they can on a smaller scale.”

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Kristy Knichel (CEO) and Jonathon Krystek (COO).

Customer service Customers are reaching out to Knichel Logistics wanting to be part of its unique dynamic. Knichel has a team to work with them – talking to them, emailing, and arranging visits – and something they appreciate about the business the most is honesty. “We have processes in place that our people have been trained on, and they need to follow them as far as informing customers of certain situations in a timely manner, so that the customers are happy,” Kristy explains. “It would surprise you how many big companies we’re competing with don’t do simple things like this, because they don’t have the time to personalise customer needs. Giving that extra touch to the customer – as well as treating our carriers well – is key.” Knichel’s determination has paid off. The company is being noticed by big names – notably, Walmart Direct – and this is feeding into Kristy’s desire to create a more diverse supply chain. She wants Knichel Logistics to become involved in many different fields, thus widening


A shot of the intermodal dispatch floor with Jonathon Krystek and Kristy Knichel the possibilities for its future. “I don’t want to grow too fast, but I think we can grow $5-10mn a year with this new focus on the diversity end of it,” says Knichel. “I have a goal to get my company to $100mn in the next six to 10 years. Larger customers are noticing us now, and we can offer the kind of service you might not get from a bigger logistics provider. They will get special attention from us, and they have the luxury of speaking to the same

person every time we communicate. “All companies have to be able to streamline things and become more efficient, and that includes listening to customers’ needs and providing what they need, if not more. When people ask why I’m successful, I say it’s because of my people. I’ve surrounded myself with better people than me, and taking care of them keeps them here. That has grown the business tremendously.”

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anging from the ceiling of Intermountain Healthcare’s Utah facility are bright banners with photos of patients, doctors and nurses. Among the towering shelves, pallets and forklifts, one of them reads, “Patient-centered.” It might seem incongruous, but it’s demonstrative of the company’s commitment to its core function: helping people live the healthiest lives possible. The $40mn, 327,000-square-foot space is home to the first health care distribution center certified by the Warehousing Education and Research Council (WERC). “WERC is a unifier among a vast, vast industry that knows no bounds across sectors,” said WERC CEO Michael Mikitka. “We compile reams of qualitative and quantitative research and translate them into meaningful baselines by which warehousing companies can measure their performance and define their success.” In addition to its vastness, the warehousing industry is surprisingly dynamic. Warehouses themselves

stay put, but everything they contain shifts in response to consumer trends and changes in how goods are moved around. For example, the push toward online transactions has retailers large and small exploring different ways to distribute. The push also pressures retailers to occupy more warehouse space than ever before, and in some cases, rely more heavily on third-party providers. And as warehouses grow, so to does the need for additional employees and more sophisticated systems. WERC, the only national association that represents warehouse and logistics professionals, helps companies stay ahead of these market curves. “The best tool in the kit of any warehouse operator is metrics,” says Mikitka. “One can only manage what they measure, so we provide evidence-based best practices and solutions that empower our members to make meaningful improvements.” Back in Utah at Intermountain Healthcare, the team was challenged with improving the organization’s value

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WA R E H O U S I N G E D U C AT I O N A N D R E S E A R C H C O U N C I L ( W E R C )

by reducing operating costs. Director of supply chain logistics, Gordon Slade, set out to bring the supply chain up from hospital basements, which they did in 2012 with the opening of the Kem C. Gardner Supply Chain Center. Dedicated to logistics, distribution and almost all related functions, the company created a central standardized foundation — not to mention, many efficiencies. What’s on the inside is what counts, though. With facility construction underway, the Intermountain team still had a lot of work to do in ensuring the operations were the best they could be to support better patient care. Enter WERC Attending his first WERC Annual Conference and Solutions Center, Slade realized how valuable the organization could be in helping them achieve their goals. “This was the group we needed to work with,” said Slade. “WERC’s resources enabled us to benchmark our performance against others outside the health sector. Our thinking was no longer boxed in.


October 2017

We had industry-wide knowledge from across the country pointing us to the best methodologies for warehousing and logistics.” Two years after opening its central facility, Intermountain elected to participate in WERC’s Warehouse Certification Program. Through independent, third-party audits, WERC certification assesses a warehouse facility’s capabilities and performance against industry standard grading methodology. But as Slade will attest, it gives participants something much more than an unbiased review. “The evaluation process tells us where we are today and what we need to work on tomorrow to continuously improve,” said Slade. “And in our world, improvements mean better health outcomes for patients.” WERC certification audits are completed by Steve Murray, principal consultant and chief researcher at Supply Chain Visions and WERC’s senior research associate and lead warehouse process auditor. In addition to a deep understanding of supply chain processes, technology and


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data integration, Murray brings to the process extensive experience in supplier/customer relationship management and team training. “Certification is very much an active and engaging process,” said Murray. “I make sure to connect directly and meaningfully with employees at all levels so that I can frame assessments with lived experience. Standards are only standard if they’re understood in the same way by everyone. Internal relations and communications are a significant factor in preventing disconnected processes.” Since the inception of the WERC certification program, Murray has completed more than 60 facility audits. With each one, WERC is pushing warehousing and logistics companies to raise the bar. Furthermore, audits generate first-hand, qualitative experience to inform WERC’s benchmarking and best practice guides, professional development offerings and key learning events — keeping them fresh and relevant. “We bring people outside their facilities to explore beyond the

numbers and data, to examine what others are doing in the industry,” said Mikitka. “We’re constantly spurring new standards and innovations.”

The largest exchange of warehousing know-how is WERC’s Annual Conference and Solutions Center. The next conference is May 6-9, 2018 in Charlotte, North Carolina. Do you have a product, service or technology with warehousing or logistics applications? Executives and managers attend WERC’s Annual Conference and Solutions Center in search of the latest innovations and tested innovations to improve their operation. As an exhibitor or sponsor, you’ll be in a prime position to make direct contact with warehousing professionals who have decision-making and purchasing power. Download WERC’s exhibitor and sponsor prospectus today at

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PCI: Electronics manufacturing made simple W R I T T E N B Y: DA L E B E N TO N P RO D U C E D B Y: C H A R LOT T E C L A R K E

PCI’s cell manufacturi


October 2017

ing division


Through a transformation programme taking things “back to basics”, PCI has positioned itself to ride the oncoming wave of digitisation


CI Limited (PCI) is an Electronics Manufacturing Serviced (EMS) company headquartered in Singapore. The company offers a comprehensive suite of services, extending to all points in the manufacturing outsourcing cycle. This comprises of design, manufacturing engineering, material sourcing and procurement, assembly, testing and logistics. From the launch of new products to improving the competitiveness of existing projects, PCI remains dedicated to enhancing value at every step of the supply chain. “We are a customer centric EMS company. Apart from design and manufacturing electronic products for our customers, we are also capable in managing the entire supply chain for the customer,” says Dominic Chan, Senior Vice President, Operations - PCI. The goal? To be the EMS partner of choice for companies that require a highly competent service, one that can meet their complex demands. A fully diversified company, PCI works with some of the leading businesses in a number of

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industry sectors, including industrial, commercial, consumer, automotive and medical. Customer complexity As the Senior Vice President of Operations, Chan is all too aware of those complex needs and, more importantly, how quickly they can change. “The electronics industry is so dynamic, and with that the supply chain demand is ever-evolving,” he says. “For me, that means that the supply chain and operations of the company have to be versatile and responsive, providing innovative solutions that can meet those changing and unique requirements.” It is this need to be agile, to be innovative and to be able to offer the right solution to the right


The year that PCI Limited was founded

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customer in the face of a changing customer expectation, that saw PCI embark on a transformative journey eight years ago, one that would “take things back to basics. This journey saw the company invest significantly into three key areas that would completely transform the its supply chain operations, enabling that agility and versatility. “We need to be able to respond rapidly to customer’s evolving needs and keep up with the pace of our industry. We needed to think big, but operate small,” says Chan. Through this investment, PCI

“The supply chain and operations of the company have to be versatile and responsive, providing innovative solutions that can met those changing and unique requirements” DOMINIC CHAN Senior VP Operations


October 2017

bolstered its workforce with training Programmes, equipping them with the right skillsets and to improve their work processes and problem-solving abilities. The company also identified what Chan describes as “technology enablers”, which saw the implementation of a new ERP system (SAP) and linking it with PCI’s Manufacturing Execution System (MES) in order to enable a far greater control of the production shop floor. “It allowed us to collect more data,” says Chan. “And with that we could improve our overall performance.” PCI also heavily invested in a system integration, one that revamped its entire quality system and certifying it to a number of standards, including ISO 9001 (Quality Management System (QMS), ISO 13485 (QMS for medical) and ISO/TS 16949 (QMS for automotive). This particular level of investment was rewarded, with PCI receiving the Singapore Quality Class, a business excellence mark issued by SPRING Singapore.


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A challenging landscape No transformation is without challenge, and to transform in the way that PCI has over the last eight years is certainly no exception. “The greatest challenge, really, is helping all the team members adapt to change,” says Chan. “We know that in our industry, the only constant is change. In each project implementation, we continue to pay attention to training. The key to mastering a specific skillset or capability within the organisation is to be able to learn, unlearn and relearn.” Amidst the quest for versatility and agility, PCI is supported by its supply partners. For Chan, in the eyes of the customer the supply chain is

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as strong as its weakest link, and the continuous challenge that PCI faces is identifying and working with the right partner who has the right capabilities for the company’s needs. “It’s important to know where our own strengths and weaknesses are, and to find the right supply partner who can complement us in the right way so that we can elevate on one another’s strength to offer the best value proposition for our customers,” says Chan. As one of the key areas for investment, technology has played a

“We know that in our industry, the only constant is change. In each project implementation, we continue to pay attention to training. The key to mastering a specific skillset or capability within the organisation is to be able to learn, unlearn and relearn” DOMINIC CHAN Senior VP Operations


October 2017

significant role in the transformation of PCI, and with the pace of technological change growing faster and faster, will continue to drive growth. “It’s important to keep abreast of the latest developing in technology innovation. IT gives us more options in approaching any kind of challenges that we may face,” says Chan. But as many companies innovate and implement new technologies, there can be the temptation to innovate for innovation’s sake. Chan, however, understands this changing landscape all too well. “Not all technology may be relevant,” he says. “It is more important to know what we need, and what the technology can offer, rather than to just be always ahead of the technology innovation curve.” Powered by people A major core value for the company is its people, and PCI goes to great lengths to secure the services of its skilled workforce long term, with a large portion of its staff being with the company for more than 10 years.


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The vision for the company is to continue to be the EMS partner of choice for OEM companies who are leaders in their own field” DOMINIC CHAN Senior VP Operations

“Each year, PCI has a long list of long service award recipients during our annual dinner and dance,” says Chan. “This is something that we at PCI are proud of. We have an open work culture which brings about sufficient trust amongst peers and management that everyone is working towards a common goal of continuous improvement.” While the company truly values the talent and the workforce already in its family, the company cannot ignore the future and the workforces of tomorrow. In Singapore, talent acquisition is a challenge for a number of manufacturing companies and so


October 2017


PCI works hard to attract the younger generations into a career in the industry. “We run a management trainee Programme to recruit and nurture fresh graduates with high potential. We give them a chance to participate in key projects together with more experienced colleagues, providing them access to senior management, while their career progression is being monitored by a mentor,” says Chan. Over the last 30 years, PCI has grown, continued to innovate and remain as a manufacturer of choice, but the company cannot rest on its laurels.

Chan speaks to the age of digitalisation, with electronics manufacturing outsourcing continuing to expand at a rapid rate, with PCI being well positioned and consisting of all the right capabilities and experience to ride this wave and propel it to greater heights. “The vision for the company is to continue to be the EMS partner of choice for OEM companies who are leaders in their own field,” he says. “This is achieved through a strong spirit in continuous improvement, and achieving excellence in all the strategic projects that we do.”

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CREATING A LASTING LEGACY IN S.A. Written by: Laura Mullan Produced by: Justin Brand



Offering high-quality products and an attentive shopping experience, Woolworths dominates the South African retail market. Head of Non-Trade Procurement, Yogan Naidu, explains how the company is embracing its corporate responsibility to grow sustainably and transform the country


oolworths is a household name in South Africa; a retail giant that has managed to maintain customer loyalty generation after generation. However, for Woolworths, being a market leader is about more than just their fiscal success: it’s about creating meaningful socioeconomic transformation in South Africa. Founded over 86 years ago, Woolworths has a deep history in South Africa, garnering long-lasting support from customers who have remained loyal to the brand for decades. Yogan Naidu, Head of NonTrade Procurement, cites the company’s rich heritage as the reason why it remains a market leader today. “At Woolworths, we really pride ourselves on our rich history. I think the South African market really identifies with that because it is quite a historic and emotional market. Our core values give us a competitive edge because you can really see the impact we have made in the country. So, for instance, we were among the first local retailers to provide our


October 2017


“Our core values give us a competitive edge because you can really see the impact we have made in the country” YOGAN NAIDU, HEAD OF NONTRADE PROCUREMENT


31k employees with benefits that weren’t offered by some of our competitors at the time such as a pension fund, medical aid and maternity leave. I think our customers really identify with that.” A shopping experience like no other Customer experience can make or break a brand, and it is a core value which is ingrained into the ethos of Woolworths. When designing a store, every minute


October 2017

The total number of staff in Woolworths’ SA workforce

detail is meticulously considered to ensure that it offers customers the ultimate shopping experience. “If you look at the way that our stores are designed you can see that it’s a really comfortable place to shop,” reflects Naidu. “In my opinion, it’s the little touches and the customer service which makes Woolworths a market


leader. So, for instance, something as simple as a grocery trolleys in one of our stores will be of a superior quality to that of our competitors. “Not only do we pride ourselves on our hygiene standards and highquality products, but we also make sure that we take care of you as a customer when you walk into one of our stores. We invest heavily in research and development and the renovation of our stores to ensure that the shopping experience is

enjoyable for the customer.” A visual brand Visual merchandising and design is a vital tool that is embedded into Woolworths’ DNA. Over the decades, the company has worked alongside leading suppliers to source innovative, market-leading displays which connect with their customers on an emotional and visual level. “At Woolworths, we really try to communicate with our customers,”

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“Not only do we pride ourselves on our hygiene standards and high-quality products, but we also make sure that we take care of you as a customer when you walk into one of our stores” YOGAN NAIDU, HEAD OF NON-TRADE PROCUREMENT says Naidu. “If you walk around one of our stores you’ll notice that with our packaging, store design, and visual merchandising, we really speak to our customers and inform them about issues that matter to us. So, for instance, when we talk about sustainability, we talk to customers about how much electricity we currently use and how this is provided by green energy. We make information publicly available in our store environment. “Our suppliers, such as Global Display, are integrated into the business and that’s how we capture the customer’s imagination and deliver the ultimate customer experience. For example, if you walk into a Woolworths store during Christmas season you’ll see that our stores really embrace the festivities.”

Attracting only the best expertise A smile at the checkout goes a long way in the world of retail and no one is more aware of this than market leader Woolworths. Naidu says that the company has a workforce of over 31,000 employees and that the pioneering leadership of the company is crucial to nurturing growth and inspiring productivity. “Zyda Rylands, CEO of Woolworths South Africa, is such an inspirational leader. This year she won the global Woman of the Year award at the World Retail Congress retail awards in Dubai and our employees really look up to this. She drives us to better ourselves in terms of sales, social responsibility and customer experience. “Similarly, in my career, a number of the people who have worked with me

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want to work with me again in the future and I think that’s what being a great leader is about - it’s about creating an impression on an individual’s life that stays with them forever. “Our CEO Zyda has a passion to help others in the country. She shares her knowledge when visiting schools and encourages young girls to pursue careers in business. I don’t think we do that enough as leaders of corporate entities, especially in South Africa.”

A greater responsibility Corporate responsibility is a pressing issue in the business world and it is a value which Naidu is fiercely passionate about. “As a company, we have such a responsibility to stimulate the local economy so we’ve got to get out there, encouraging students, encouraging young entrepreneurs to look beyond the challenges or difficulties that present themselves on paper. I’m very passionate about it and that’s what we

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“We are really keen to engage with black-owned business and black, woman-owned businesses. We want to explore opportunities with suppliers in the market and significantly improve how we support small business, create jobs, and transform the country” YOGAN NAIDU, HEAD OF NON-TRADE PROCUREMENT


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October 2017

need we to help elevate the country.” The challenge to be more responsible and sustainable is one which Woolworths embraces wholeheartedly with its proactive ‘Good Business Journey’. Launched over a decade ago, the bold plan hopes to make a difference in eight key areas: energy, water, waste, sustainable farming, ethical sourcing, transformation, social development and health and wellness. Achieving sustainability in a supply chain can’t be done overnight, but Naidu feels that the company is making significant strives to better South Africa as a country. Whether it’s saving 500bn litres of water or halving their energy impact by 2020, Naidu is confident that Woolworth’s is

leaving a lasting, positive impact in the country. “We feel a higher responsibility in the retail sector. We want to be ethical and sustainable whilst being a market leader,” notes Naidu. “We’ve even relocated sweets and chocolate away from the tills in a bid to tackle childhood obesity in the country.” Continually innovating Dominating the retail market for decades is an impressive feat, but for Naidu, the work doesn’t stop there. Innovation and continual growth are necessary for the retail giant to deliver its high-quality products and the ultimate customer experience. “I think Woolworths isn’t afraid to take leaps and to push boundaries

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1931 The year that Woolworths Holdings Limited (WHL) was established in the company,” explains Naidu. “That’s another characteristic of the business, we’re not afraid to challenge ourselves. We don’t just accept that we’re a market leader; we’re constantly researching and reinventing how we can optimise it and make it better.” An early adopter of technology, Woolworths was already using a computerised merchandising system by the early 1970s, and to this day the company continues to innovate in the sector and drive transformation. “I think people who are afraid of technology or don’t see the value of technology in business don’t understand where the world is going,” Naidu says. “If companies don’t keep reinventing themselves from a technology perspective somebody else is going to come along and


October 2017

Zyda Rylands, CEO


do it for them. Similarly, for a lot of companies nowadays, the supply base that you will have in 10 years’ time hasn’t even been invented yet. We embrace it as an organisation because not only does it create efficiency, it also gives you a global market reach that you never had before.” The road ahead As a retail giant, Woolworths has captured the hearts of the South African market. But with such visible successes, what is the company’s next move? For Naidu, the company

is determined to work to help grow, transform and develop their employees and suppliers in the belief that people are at the heart and foundation of their business. “We are really keen to engage with black-owned business and black, woman-owned businesses in particular,” concludes Naidu. “We want to explore opportunities with suppliers in the market and significantly improve how we support small business, create jobs, and transform the country. That’s our vision for Woolworths and that’s what I am really passionate about.”

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GE Bahrain: DELIVERING VITAL ENERGY SOLUTIONS Written by Catherine Rowell Produced by Heykel Ouni



With a rich, extensive history and a diversified portfolio, General Electric continues to go from strength to strength


stablished in the 19th century, General Electric (GE) continues to serve customers in a range of sectors, such as energy, transportation, aviation and healthcare. Acquiring a rich portfolio, the company successfully integrates hardware and software to enable customers to deliver positive economic and environmental impacts, whilst promoting sustainability, innovation and knowledge sharing throughout its operations. GE has produced multi-million-dollar cost reductions and savings for businesses globally, and expanded into Bahrain in the 1970s to support the inventory of company gas turbines. To this day, the company continues to deliver strong procurement and research services, with a focus on environmentally friendly solutions. Employing over 2,000 individuals within eight countries, GE in the


October 2017

Middle East has built a number of strategic partnerships to ensure quality service delivery to clients and stakeholders. With a focus on reduced emissions, the company has invested $20bn towards clean research and use of clean energy sources, investing approximately $200mn in Middle East localisation initiatives over the last two years. The region has now become home to the King Abdullah University of Science and Technology, an Energy Power Technology Center, an Advanced Research & Technology Center in Qatar Science & Technology Park, the ConocoPhillips & GE Global Water Sustainability Research Center, amongst others.

Clean energy GE’s focus on providing energy saving solutions links with the company’s launch of Ecomagination, described by GE Ecomagination Executive


GE in the Middle East has built a number of strategic partnerships to ensure quality service delivery to clients and stakeholders

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MENAISCO provide engineering, procurement and construction management “EPCM” services for power, O&G and infrastructural projects.

MENAISCO offer a wide range of intergrated plants operation & maintenance “O&M” services to improving cost, safety and reliability.



MENAISCO provide premier, valueadded to the CI, HGPI, MI and overhauling outage services for power and oil & gas customers.

The professional and multi- disciplinary approach of MENAISCO specialists has earned the respect of key players in the MENA region to become the preferred choice for leading industrial corporations.

POWER PLANT COMMISSIONING MENAISCO has long experience in commissioning different types of power plants i.e. thermal, simple cycle and combined cycle power plants.

STAFFING SOLUTIONS Our ability to execute projects and/or mobilise support within quality, time, budget and within the applicable regulatory framework has made us the preferred choice of industry leaders in the MENA region.

A pioneer firm headquartered in KSA; with its shareholders roots in business since 1965; provides comprehensive Field Engineering Solutions and Technical Services in MENA Region with extended services covering Urban Planning, Geomatics, multidiscipline engineering and manpower supply through its sister company AHCEC. Across a project life cycle , from construction , installation and commissioning to operations and maintenance MENAISCO has a successful track record mobilizing thousands of experienced technical talent across various regional O&G and Power Generation projects. Our strict commitment to Quality and HSE is our gateway for continued success and building partnerships with our valued clientele base.


Director Debora Frodl as “creating wind turbines in the region, which will innovations which make both be situated within nine wind farms. economic and environmental sense Additionally, the new wind farms for customers.” In the last 10 years, will become digital. Incorporating GE has amassed over $230bn in GE’s Predix cloud software, which revenue and reduced its emissions enables companies to analyse worldwide by 12 percent, with a goal large volumes of data through an to reduce this further by up to 20 integrated service, the turbines will percent. With an additional $10bn produce significant data analytics placed within research and and high-quality insights in realdevelopment operations, time, increasing overall GE continues to energy production and push the use of detection of any issues, renewables and has therefore reducing The number of put aside $13bn costs. Becoming a in energy assets employees at GE platform-as-a-service to develop this (PaaS), Predix also objective further. works with a number Consequently, of industrial apps, and approximately 40% of allows users to access electricity generated in the information, anytime, anywhere. Middle East is produced by wind GE’s success with wind energy power as a result of GE’s persistent has seen the company recently sign drive within the renewable sector. a cyber security agreement with The company has provided over Invenergy in the US to secure its a thousand turbines in the Middle fleet of turbines, becoming one of East, which will be further expanded the largest cybersecurity deals in through a recent agreement by GE history, totalling $13mn over 10 years. Renewable Energy and Fina Enerji in The implementation of GE’s Turkey. GE is set to provide 150 new digital platforms has enabled an


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overall increase in clean energy worldwide by up by up 20%. Juan M. de Bedout, CTO, GE Energy Connections Global research centre has said in whitepaper ‘The Digital Grid and the Environment’: “Our evolving portfolio of digital grid solutions provides new tools for our customers to run their systems more optimally, while at the same time improving their carbon footprint.” With increased productivity and efficiencies, over 90 products from GE’s portfolio have now been certified as energy efficient. Furthermore,


October 2017

throughout its operations in the Middle East, the company purifies 800mn litres of water for drinking, irrigation and various uses across the Middle East and North Africa region, with Water and Process Technology facilities situated located in Saudi Arabia, the UAE and Kuwait.

Transportation GE’s commitment to providing new, transformative solutions repeatedly impacts the logistics and distribution sector. Enabling companies to move goods with reduced fuel and


“Our evolving portfolio of digital grid solutions provides new tools for our customers to run their systems more optimally, while at the same time improving their carbon footprint”

emissions, Predix software is also incorporated, providing significant data analysis. The company also acquired cloud-based software ShipXpress in 2016 to support the company’s supply chain operations and services, improving shipping visibility within the rail supply chain. A Letter of Intent with the Ministry of Transportation (MoT) and Egyptian National Railways in the Middle East has also recently been signed by GE. The company will supply 100 GE ES30ACi Light Evolution Series Locomotives,

which will be used for passengers and freight, as well as a 15-year agreement for technical support. Totalling $575mn , the agreement has become the largest between the two parties, signifying GE’s dominance within the market. The figure also encompasses technical training aimed at improving the skills of local engineers and workers. Medhat Shousha, Chairman of Egyptian National Railways,

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‘We are looking forward to bringing the latest technologies to improve rail infrastructure in Egypt. Together with GE, we will work on enhancing the efficiency of rail transportation for both freight and passengers’


October 2017


commented: “We are looking forward to bringing the latest technologies to improve rail infrastructure in Egypt. Together with GE, we will work on enhancing the efficiency of rail transportation for both freight and passengers.” Utilising analytics to transform data into cost saving solutions and reduced emissions, GE’s aviation arm can utilise apps to analyse fuel consumption through Predix. Companies can also personalise flight routes, the overall weight of the aircraft and track its progress, in addition to detecting any potential issues. GE Aviation Service grown significantly in the Middle East, serving over 200 customers in more than 70 countries. With over 50mn passengers, there are approximately 2,000 GE jet engines which support airlines in the Middle East. The company even houses an Emirates Test Engine Facility in Dubai in order to cater for regional and international clientele.

Commitment to communities and staff With a manufacturing facility in Riyadh, Saudi Arabia, GE’s healthcare arm in the Middle East places a significant emphasis on staff development and training. With support and training centres situated in the region, over a thousand biomedical engineers have been trained by GE Healthcare in the last five years. Over 70% of hospitals have also adopted GE’s products and services, with a focus on providing high quality care and research development. The

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company’s venture Healthymagination will ensure significant investments within this area. With a number of growth opportunities in the Middle East, GE’s is investment in staff development and community work has provided an edge to the company’s operations. With a Graduate Management Program located in Bahrain, GE aims to develop talent in the region, and encourage staff to undertake voluntary work to support the local community. The company has even launched The Women’s Network, encouraging women to pursue and develop their professional talents and skills at the company. GE’s operations within the Middle East and worldwide are diverse, and will continue to thrive through significant investment and innovative technologies. Watch this space.


October 2017



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MOVING IN THE RIGHT DIRECTION Written by: Catherine Sturman Produced by: Richard Durrant

Purchasing and Supply Chain Vice President Cyrille Naux and his team discuss how the company’s growth and move from a regional to a global company have led to the transformation of Chassis Brakes International’s procurement and supply chain services


ith the projected level of car sales increasing year on year, the automotive industry has become an increasingly competitive sphere, with companies seeking to attract buyers after worldclass designs, builds and services. Since its establishment in 2012, Chassis Brakes International has been working to transform its procurement and supply chain services to become the best in the business, with the aim to expand operations globally. Manufacturing all forms of car braking systems with an international focus, Chassis Brakes International works in partnership with a large number of Original Equipment Manufacturers (OEMs) in AsiaPacific, the Americas, India and Europe. “There is no OEM on the globe which we are not working with,”


October 2017

explains Cyrille Naux, Purchasing and Supply Chain Vice President. “We are everywhere where customers need us.” The company’s growth has enabled the establishment of manufacturing facilities in India, China, Thailand, Europe, America and Mexico, with engineering services which have adopted a global presence to cater to service demands. With a global focus, Naux’s responsibilities incorporate the company’s buying, purchasing, procurement and supply chain operations. With three major roles within procurement and purchasing, Naux has appointed three directors: one for direct sourcing, one for indirect sourcing and one for procurement and digital activities. These individuals work with global category managers who coordinate


CYRILLE NAUX Purchasing and Supply Chain Vice President

AUTOMOTIVE FASTENING & PRECISION COMPONENTS SOLUTIONS Experts in the development and manufacture of precision fasteners, components and systems, specializing in sheet attachment solutions and process innovation by utilizing forging/forming plus precision secondary turning/machining operations. • Global footprint • Stick to product innovation and process innovation • High quality control standard

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and develop a global strategy, as well “The backbone of the strategy has as make key decisions surrounding been a review of the systems across the company’s global sourcing. all of our plants,” he comments. “That “Each global category manager includes sales and operations planning, has a global category buyer located master production schedules, in the regions where we are,” explains execution and control and how we Naux. “For example, a global category implement those to manager will have a global standards casting buyer across all of our sites located in the in order to ensure Americas, in consistency across Asia-Pacific, in the entire supply chain. NUMBER OF EMPLOYEES AT CHASSIS BRAKES India and in Europe, I have personally spent INTERNATIONAL and he will be driving at least a week at each all the decisions, of our 13 plants with one set up a strategy and team member to evaluate then they will organise current status and define a sourcing strategy and the action plan to close the various sourcing decisions.” gap with our best-in-class model previously defined. This Organisation transformation is ongoing and Since the beginning of 2016, the we can already see it benefitting company has spent considerable the business every single day.” time and effort implementing a new global supply chain strategy Integration made up of 28 separate initiatives, With an annual spend of £500mn according to Chassis Brakes in direct purchasing and £100mn in International’s Global Supply Chain indirect purchasing, Chassis Brakes Director, Wilfried Hermine. International’s global operations


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have increased in volume yearon-year. To provide consistency in service, the company upholds positive relationships with suppliers, ensuring it remains aware of any changes within its procurement and supply chain operations. Naux explains that the company invites its main suppliers to the Frankfurt Motor Show every two years, where it displays new products and shares the company strategy, enabling it to show suppliers how it can continue to create value. “We integrate them from the beginning,” he says. VIDEO: The Chassis Brakes International corporate video


October 2017

“We have been very clear in saying that Chassis Brakes International will double its turnover and consequently we will also double the spend and its purchasing volumes.” Going forward the company is looking to reduce the number of suppliers it maintains, but those who remain will have a far greater volume of business than they have had previously. By creating an open, direct stance surrounding company strategy, suppliers gain direct access to top management to discuss the strategy the company wishes to implement. Optimisation While the Chassis Brakes International’s brand name has only been around for a few years, the history of the company goes back to the 1930s, existing under different banners until 2012 when its activities were sold to KPS Capital Partners, LP. While that history has afforded the company formidable experience and expertise in the purchasing space, it also left a legacy of fragmentation, with a number of strategies

Fonderia di Torbole Fonderia di Torbole SPA, European leader in production of brake rotors and drums for OEM market, belonging to EF Group, the major Italian cast iron foundry group supplying quality castings to all the market sectors. With E.F. Automotive,Fond-Stamp and Pilenga Baldassarre Foundry is among the most modern and renewed European foundries, with quality assurance system accredited at the highest level, it is the ideal partner for co-design activities and subcontracting both for vehicle manufacturers to system suppliers.


“There is no OEM on the globe which we are not working with. We are everywhere where customers need us” CYRILLE NAUX Purchasing and Supply Chain Vice President

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implemented and then moth-balled as the business changed hands. “It left us with a fragmented supplier base worldwide,” says Erwan Quemener, Director of Global Sourcing, “and no real rationalisation of the supplier base. So we decided to rationalise this. The number of suppliers managed by my buyers was not sensible, and was actually risky for the business. It is not typically your big supplies that you work with on a weekly or even daily basis that cause the problems, but rather those smaller companies that you don’t work closely with that can affect the whole supply chain in cases where they cannot meet your demands. So, in a bid to mitigate risk and implement operational excellence, we decided that our focus would be our main suppliers, thus removing the tier C suppliers.” Chassis Brakes International parted ways with some 200 vendors - while that may seem hugely significant, the companies that were shed represented just 5% of the Group’s total spend, leaving the company’s small supply chain team to work

closely alongside the 15% of its suppliers that represent 80% of its spend. The plan is to employ a provider to deal with the myriad of manufacturers that make up the 5% of spend that had previously been so time consuming. “We are beginning that process this year, and it will save our buyers a lot of time and money,” says Quemener. Digital transformation Aligned with the company’s growth and expansion, Romain Laclaverie, Global Purchasing Digital Director, has been restructuring Chassis Brakes International’s procurement tools and services for the last two years. He is behind the set-up and the implementation of the company’s digital purchasing organisation and procurement centres. Responsible for master data, he explains: “Our people are really dedicated in managing transactional activities, cleaning up and making sure that all data are good and can be analysed by buyers to ensure informed decisions. You cannot

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make good decisions on a sourcing issue if data are not correctly managed.” This has therefore enabled the company to price accurately and maintain quality service. The company’s partnerships with major software companies such as SAP and IVALUA have enabled it to leverage the latest innovative solutions in terms of data management control and interactions with suppliers. This mind-set allowed the group to master its supplier database by connecting themselves directly to the Supplier Relationship Management tool to exchange essential data, content, legal documentation and spend analysis. “We are also doing contract management and working with the suppliers on this, thanks to the tool,” adds Laclaverie. In addition to this, Laclaverie is also behind the implementation of supplier scorecards. This tool, supported by BI solution QlikSense, imports information coming from various supports and sources to calculate a composite rating informing on supplier’s spend performance,


October 2017

quality management, supply chain and financial positions. Laclaverie explains: “Once we have compiled for one supplier all key performance information available into one tool, including last assessments, we are then able to make a rational decision about its future.” Positive employee mindset Naux stresses that moving from a regional organisation, to one which is global has been no easy feat. The company has encountered a number of challenges, as Naux explains the main challenges surrounding change management and how employees understand how they can become more involved: “We spend a lot of time with people, understanding how far they are from target processes and the need to adjust current requirements with a global mindset.” However, he adds confidently that, today, employees have a good understanding on how to remain connected, which is achieved through a number of workshops and trainings, with continuous improvement at the


Chassis Brakes International employees have a good understanding on how to remain connected, which is achieved through a number of workshops and trainings, with continuous improvement at the forefront of all company operations w w w. s u p p l y c h a i n d i g i t a l . c o m



“Within our company, agility and organisational excellence are really central to what we are doing everyday� CYRILLE NAUX Purchasing and Supply Chain Vice President

Chassis Brakes International has been serving the automotive sector since the 1930s through different brand names


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forefront of all company operations. Becoming a global organisation has no doubt been a rapid process for Chassis Brakes International, which Naux believes is the result of employee engagement, enabling the company to move towards key targets. “Within our company, agility and organisational excellence are really central to what we are doing everyday,” he says. Although the company’s global expansion and digital transformation are key, it puts the individual in the middle of all the key decisions. “We are a big company so need to adopt streamlined processes to ensure efficiency, which makes us faster with regards to customer requirements and an easy-to-workwith company. People like working with our Group due to this mindset.”

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Logistics Conference 2017 Canada’s annual thought leadership conference for all supply chain logistics professionals

Montreal, QC • October 25-27, 2017

Supplychain Digital magazine - October 2017  
Supplychain Digital magazine - October 2017