Supply Chain Digital magazine — October 2018

Eyeing long-term growth across the supply chain

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WELCOME

W

elcome to this month’s issue of Supply Chain Digital magazine.

“How prepared companies are to embrace digital change is partly dictated by the dynamics of the industry they work in,” says John Caltabiano, VP of Supply Chain Management at manufacturing services leader Jabil.

The company is currently enabling digital transformation within both its own operations, and those of its global customers. In an exclusive interview for this month’s cover feature, Caltabiano tells James Henderson what kind of challenges and opportunities this entails.

We also speak to Chris Kerchner, CEO of supply chain collaboration platform Slync, about how the startup is already making a global splash after less than two years in operation.

Our technology feature this month outlines how procurement software can enable innovation as a driving force for business excellence, with insight from Ivalua’s Chief Marketing Officer, Alex Saric.

October also sees exclusive video content alongside our interview with mining giant Goldcorp; our breakdown of Gartner’s top 10 high-tech supply chains; and of course an update on the most important industry events to attend in the coming months.

Don’t forget to check out our other company profiles on Deloitte UK, SCT Group and Mellanox Technologies.

Enjoy the issue!

Olivia Minnock.

Olivia Minnock@bizclikmedia.com

w w w. s u p p l y c h a i n d i g i t a l . c o m

05

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CONTENTS

12

38 FROM PERIPHERY TO DRIVING FORCE Procurement tech is enabling innovation

Jabil pushing 48 forward digital transformations

High-tech supply chains

28 Slync – changing the supply chain paradigm

60 Events & Associations w w w.suppl yc ha i ndi gi ta l. com

07

CONTENTS

64 Safilo Group

Eyeing long-term growth across the supply chain

08

96 Driving supply chain transfor– mations OCTOBER 2018

84 SCT LOGISTICS:

Transparency and a commitment to service through digitisation

110 Uniper redefined procurement to provide operational excellence for the energy customer 09

146 126

Driving a Supply Chain revolution at Goldcorp

MELLANOX TECHNOLOGIES: EMPOWERMENT THROUGH PROCUREMENT w w w.suppl yc ha i ndi gi ta l. com

Empower every person and every organization on the planet to achieve more.

Microsoft Enterprise Services Enable every organization to become a digital business

d

Mitsubishi Fuso Truck and Bus Connected X by Microsoft AI & MR

12

OCTOBER 2018

ASIA

Jabil pushing forward digital transformations

w w w. s u p p l y c h a i n d i g i t a l . c o m

13

JABIL

$19bn

Approximate revenue (2017)

1966

Year founded

180,000 14

Approximate number of employees

MANUFACTURING SERVICES LEADER JABIL IS ENABLING DIGITAL TRANSFORMATIONS, BOTH WITHIN ITS OWN ORGANISATION AND FOR ITS CUSTOMERS WORLDWIDE WRIT TEN BY

JA MES HENDERSON PRODUCED BY

CHARLOT TE CL ARK E

O

rganisations around the

world are embarking on company-wide transfor-

mations, embracing a future de-

fined by technology. But Jabil – a manufacturing services leader employing approximately 180,000 people – finds itself in the unique position of driving both its internal digital transformation, as well as leading transformative efforts on behalf of some of the biggest

OCTOBER 2018

ASIA

15

and best-known brands in the world.

Jabil categorises the role it plays in

sively complex supply chains. We partner with these companies to streamline

its customers’ digital transformations

supply chain orchestration while helping

into three sections, says John Caltabi-

them reduce cost and risk.

ano, VP of Supply Chain Management.

“The second category of customers

“We’re a manufacturing services provider

are those going through a transforma-

so we support diverse customers across

tion due to market disruptions. They

a variety of markets with different digital

may be going through divestitures or

transformation needs. You can group

acquisitions. They also may be facing

these customers into three general

major changes in their industry sector,

categories. In one category are large

which requires them to reshape how

multinational organizations with mas-

they operate. These organizations look w w w. s u p p l y c h a i n d i g i t a l . c o m

JABIL

to us for thought leadership, market benchmarking and product proof of concept support. It’s a very collaborative approach.

“Then you have a third kind: customers that are really up-and-coming and don’t have to rectify historical issues. They can concentrate on what they’re good at and say to Jabil, ‘I want you to run my supply chain’.

Their perception is that they’re not going to invest in those capabilities, when we can do it for them.”

At the same time, Jabil is transforming how it runs its own supply chains, and is 16

implementing a digital initiative around the platforms it utilises to deliver its services, signalling a move towards cloud-based infrastructure. The size of the business – over 100 factories in 29 counties, hundreds of customers and a supply chain of 17,000 companies – means the transformation is one of real scale.

New technologies have already transformed how Jabil operates from a procurement perspective, says Caltabiano. “The size of our company means we have hundreds of contract negotiations going on at any one time. It’s critically important for us to expedite report generation, quickly produce analytics, drive rapid negotiations and produce results that help our customOCTOBER 2018

ASIA

17

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JABIL

“ I F YOU’RE BUILDING PRODUCTS DESIGNED 15YEARS AGO WITH A SUPPLY CHAIN THAT WAS IMPLEMENTED 15 YEARS AGO, IT’S HARD TO TRANSFORM YOURSELF” — John Caltabiano, VP of supply chain management

ers achieve better business outcomes.

“With our digital platforms and tools, we now utilise, data and analytics are available in real time, so we can start negotiations at any time. We can deploy pricing as soon as negotiations are completed, which changes the whole dynamic of time-fenced events. We now can change the conversation with suppliers very quickly based on our analytics and actionable insights.”

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ASIA

CLICK TO WATCH : ‘JABIL COMPANY OVERVIEW’ 19

Working with so many companies in

After all, if you’re building a product

locations across the globe gives Jabil a

designed 15 years ago with a supply

better perspective than most when

chain that was implemented 15 years

speaking about industry sectors keen

ago, it’s hard to transform how you

to embrace disruption and digitisation.

operate because of long-term invest-

It is Caltabiano’s belief that companies

ments and legacy operations.

in the markets that are being most

“To an extent, how prepared compa-

significantly disrupted – notably by IoT

nies are to embrace the change is partly

– are ‘moving the fastest’.

dictated by the dynamics of the industry

“I think the regulated businesses are the slowest,” he observes. “Regulated

they work in.”

When it comes to Jabil’s own digital

products tend to have lengthy life

transformation, the company is on a fast

cycles, which makes it difficult to change

track, analysing how new technology

the way you run their supply chains.

can speed the myriad transactions that w w w. s u p p l y c h a i n d i g i t a l . c o m

JABIL

“ WITH THE DIGITAL PLATFORMS AND THE DIGITAL TOOLS WE NOW UTILISE, DATA AND ANALYTICS ARE AVAILABLE REALTIME, SO WE CAN DO NEGOTIATIONS ANYTIME WE WANT” 20

— John Caltabiano, VP of supply chain management

OCTOBER 2018

ASIA

21

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JABIL

“ W E HAVE TO THINK DIFFERENTLY BECAUSE IT IS A NEW GENERATION OF PEOPLE WE’RE HIRING. YOU HAVE TO THINK ABOUT WHAT’S INTERESTING TO THEM” — John Caltabiano, VP of supply chain management

take place every day. “We have, in my division, 1,500 buyers, so I’m buying over 350,000 parts on a quarterly basis,” says Caltabiano.

“That’s very transactional and repetitive and there is certainly the opportunity for part of that decision-making process to be accelerated and streamlined through digitisation, automation and analytics.”

Jabil believes that by automating some of the more transactional responsibilities, the prospect of a career in manufacturing and supply chain operations will become even more attractive to emerging young talent.

22

EXECUTIVE PROFILE

John Caltabiano is Vice President , Global Supply Chain at Jabil and is responsible for all Materials and Customer Supply Chain Solutions for the company’s Engineered Solution Group Division. He is responsible for driving supply chain strategies for all of ESG’s Businesses. Prior to this role, John was Vice President of Global Sourcing where he was responsible for World Wide Commodity Management, Sourcing, Centralized Procurement and Supplier Development covering a spend of over $12 Billion. With more than 30 years of supply chain experience, John recently returned to St. Petersburg, Fla., following a three-year assignment in Singapore.

OCTOBER 2018

S U P P LY C H A I N

23

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JABIL

“People who come into the workforce don’t want to sit at a desk and place orders.

A machine could do that. We have to think differently because it is a new generation of people we’re hiring. You have to think about what’s interesting to them.

“We recruit new college grads out of supply chain curriculums, from some of the top schools, and they can bring a lot of talent to the manufacturing sector. What we can do is attract them with our digital tools.

They want to dive into it and they’re exactly the kind of people we want because to take 24

this forward, you have to have practitioners.

“We can’t go back to the old way, because they will come in and only think about the new way. A benefit of the transformation has to be bringing in the talent that knows how to use these tools and think differently about their work.”

OCTOBER 2018

ASIA

25

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LEADERSHIP

Slync – changing the supply chain paradigm 28

Supply Chain Digital speaks with Chris Kirchner, CEO of supply chain collaboration platform Slync, to get the lowdown on the startup that is making its mark all over the world WRITTEN BY

JA MES HENDERSON

29

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LEADERSHIP

A

s so often seems the case, it was exasperation that acted as the catalyst for a company – in this case Slync

– to be conceived. Chris Kirchner was the Senior VP of Sales & Marketing for a label converter supplying several large automotive and manufacturing businesses in Asia, meaning a lot of product was being shipped into locations as far afield as Cebu, Hong Kong and Shenzhen.

It was a source of constant annoyance, says Kirchner. “I became really frustrated with some of the software that we had to use.

We were using eight different systems to en30

able our customers to buy from us, because we had to make sure it worked with their ERP or procurement software,” he recalls. “Then when we actually shipped the product, dealing with customs and freight forwarders. The experience motivated Kirchner to scour the market for better software solutions, only to find there were none. He remembers thinking: “Okay, somebody needs to do something here”, and adds: “I’ve always had a tendency towards entrepreneurship, so I thought ‘I’m going to build it’ – but I’m not a software guy.”

He turned to Raj Patel, who at the time was a Senior Director, Einstein AI for Saleforce, with whom he had implemented the Einstein AI technology initiative for his previous employer. “I gave him a call to ask if he could recomOCTOBER 2018

“ The media hype is huge, but the reality is that we’re a long way from blockchain and the like being used in a widespread manner” — Chris Kirchner, CEO of Slync

The Slync platform shows complete transparency of the important supply chain data that is relevant to you mend anybody who would want to start

Kircher says that the company

a software company and he called

has gone from ‘zero to 100’ very quickly

me back a few days later and said, ‘you

since, with expansion into Europe, Latin

know what? This is something I’ve been

America and Asia. Specifically, Slync’s

thinking about myself – let’s do it’.”

platform integrates information and data

The duo employed an engineer

from a host of sources – email, Excel,

and spent last summer talking to sup-

legacy systems, partner programmes,

ply chain leaders; picking their brains

internal IT systems – and offers com-

about the challenges and opportuni-

panies better visibility of their data, AI

ties they faced in their daily opera-

driven insights, automated workflows,

tions and asking what they would like

and ‘exception management’ tools.

to see built into a software solution.

The mention of email and Excel may

They followed up by building the soft-

sound like an overly basic starting point,

ware and joining an SAP incubator.

but for all the talk of next-generation w w w.suppl yc ha i ndi gi ta l. com

31

LEADERSHIP

technology, Kirchner says that the ma-

a company can truly collaborate in a far

jority of companies are attempting to

more efficient manner. We’ve gained

work from the most rudimentary busi-

a huge amount of traction in this space,

ness systems.

which has nothing to do with technolo-

“The media hype is huge, but the reality is that we’re a long way from

Once data streams are amalgamat-

blockchain and the like being used in

ed and digitised, Slync’s platform uses

a widespread manner – companies might

predictive analytics and AI to produce

say differently but it’s just not true.”

predictive ETAs and exceptions using

“What we’ve seen with our customers is that their operating system of record for most businesses is Microsoft Excel, 32

gies like blockchain.”

data history, and information such as trade lane trends.

“We’re really flipping companies on

which means that their needs from a

their heads by using predictive analyt-

software point of view are much lower

ics or using AI to generate workflows,”

than the latest and greatest cutting-

says Kirchner. “Companies are able

edge technology.

to see if target shipment dates are ac-

“So, we’ve shifted our focus slightly:

ceptable – a day either side of a date is

our starting point is to get all of this

okay, but not anything more than that

information out of spreadsheets and

– so it is enabling them to act a lot faster

email, so that multiple companies or

and react if they see a problem looming.

even separate business units within

That sort of capability, as well as things

“ It’s AI that’s going to be the leading technology, because it is going to drive Robotic Process Automation, general workflow and digitisation” — Chris Kirchner, CEO of Slync OCTOBER 2018

like streamlining manual workflows within warehouses, has become a real sweet spot for us and that’s where we believe the future of collaboration is.”

The needs of business, says Kirchner, are changing at breakneck speed, driven by companies like Amazon pushing the envelope when it comes to fulfilment times. “That brings with it a pressure that has sparked a real appetite for change, and I believe that we’re going to see some incredible innovation

Chris Kirchner, Co-founder and CEO of Slync.

in this space over the next five years.”

Asked what technology is going to have the biggest impact over that time frame, Kircher doesn’t miss a beat: “AI. It’s AI that’s going to be the leading technology, because it is going to drive Robotic Process Automation, general workflow and digitisation.

“IoT certainly has a place, but it can create date for data’s sake, and the last thing companies need more of is data. It’s a lot more important that companies use the data they already have in a more effective and efficient way, a way that helps them make informed decisions.

That’s where AI comes into its own.

Rajanv Patel, Co-founder and CTO of Slync.

“In most cases, AI isn’t going to replace humans; it’s going to make them more efficient. Instead of duplicating tasks and assigning employees with menial tasks, AI will free them up to perform more valuable w w w.suppl yc ha i ndi gi ta l. com

33

LEADERSHIP

34

“ AI will free up to staff to perform more valuable tasks. We know that AI can be utilised to perform some baseline tasks in 10 minutes, which 10 years ago would take a human two hours.”

— Chris Kirchner, CEO of Slync tasks. We know that AI can be utilised to perform some baseline tasks in 10 minutes, which 10 years ago would

ble. Based on projections and business

take a human two hours.”

cases, we can save this company nine

Kirchner cites the example of a cus-

digits a year, which is a very significant

tomer that has cut a two-hour adminis-

number for a freight forwarder – it’s a

trative process around shipping to just

20% increase in their income.”

three to four minutes, a figure he ad-

With his focus very much on the next

mits he first thought must be an error.

stage of Slync’s development, Kirchner

“We’ve run pilots on this and the ef-

recently added two high-profile figures

ficiencies you can create when you

to his executive team in the form of

leverage software effectively in a paper-

Samuel Israel, the former regional CEO

based environment are really remarka-

of DHL Global Forwarding, and Nikos

OCTOBER 2018

35

Papageorgiou, a supply chain digitisation

I’ve been alive! He’s been a c-level ex-

and transformation expert from Deloitte.

ecutive for some of the biggest names

Israel was appointed to the position of Global Logistics Leader, while Papageor-

in freight forwarding.

“Having them on board is a privilege

giou was been named Vice President of

for me and helps us deliver services that

Customer Success.

our customers need, which is what it’s all

“I’m firmly of the adage of never being

about. I think it speaks to our technology

the smartest guy in the room, so having

and what we are trying to do as a busi-

a guy like Samuel at Slync is invaluable.

ness that we are an attractive proposition

He’ll probably kill me for saying this but

for these people, who all want to dedicate

he’s been in this business longer than

their time and talents to our mission.” w w w.suppl yc ha i ndi gi ta l. com

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TECHNOLOGY

38

FROM PERIPHERY TO DRIVING FORCE WRITTEN BY

OCTOBER 2018

A LE X SARIC, CHIEF MARKETING OFFICER, IVALUA

Procurement tech is enabling innovation Companies should be looking to procurement technology to put them ahead in the race to innovation excellence

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39

TECHNOLOGY

40

I

n the face of increasing pressure to

In this highly-demanding land-

meet rising customer expectations,

scape, organisations need to turn to

the need for organisations to inno-

their procurement teams to accelerate

vate quickly has never been greater.

Customers are typically expecting

innovation and ensure new product launches are aligned with business

you to deliver the “next big thing”,

priorities. But a traditional and rigid

which is resulting in product lifecycles

approach to procurement simply won’t

shrinking and technology continuing to

work. Instead, organisations need a

advance rapidly. However, this demand

more agile approach which taps into

for innovation is impacting the success

a key source of innovation; the organi-

of rolling out new products, with Gartner

sation’s supply base.

detailing that 40% of product launches fail to achieve business goals.

OCTOBER 2018

However, this shift won’t happen overnight, and organisations must

“ In this highly demanding landscape, organisations need to turn to their procurement teams to accelerate innovation” — A LE X SARIC, Chief Marketing Officer, Ivalua

adapt over time to become smarter

However, there are significant poten-

when it comes to procuring goods and

tial trade-offs with such a focus. In

services. This is always about finding a

cases where the supplier evaluation

balance – for example, Google prefers

is incomplete, or the team fails to

to diversify its suppliers as much as

include available data such as perfor-

possible, selectively working with

mance or risks in the supply decision,

only those who can provide innova-

the company puts their NPI launch at

tive products that will work for them.

risk. Some examples of supply issues

But this approach isn’t universal.

include suppliers lacking the necessary capital for equipment, a history

Focusing on cost causes problems

of late deliveries and poor-quality

Too often when creating a product,

with a material or a technically

costs play the deciding factor when

demanding manufacturing process.

selecting suppliers to provide compo-

processes, as well as inexperience

Furthermore, a cost focus creates

nents and services. It’s assumed that

pressure on the margins of those

all well–ranked suppliers are equally

suppliers winning a bid. This may help

capable of meeting the New Product

bolster overall profitability of the final

Introduction (NPI) project requirements.

product, but it also reduces an organi-

At times, this plan can work out fine.

sation’s desirability of a customer. In w w w.suppl yc ha i ndi gi ta l. com

41

TECHNOLOGY

42

“ Google prefers to diversify its suppliers as much as possible, selectively working with only those who can provide innovative products that will work for them” — A LE X SARIC, Chief Marketing Officer, Ivalua

times of crisis, other customers will likely be prioritised, increasing risk of supply shortages. Similarly, suppliers are more likely to share precious IP that can create a competitive advantage with more profitable and hence important customers. Organisations must look beyond cost to foster innovation from their supply chain.

A data-driven approach This is where smart procurement technology can help. Using cloud-based data aggregation and analytics, organisations can uncover a treasure trove of potential innovation within their supply chain, which can give procurement leaders a huge influence on the company’s bottom line and product roadmap.

Suppliers possess deep industry expertise and can introduce creative ideas to improve the end-product.

This can lead to an increased potential in profitability for both companies as they work together to achieve their business objectives.

Rolls Royce is a famous example of this, by collaborating with more than 18,000 suppliers and racking up a total spend of over £7bn each year, the company leveraged its suppliers’ knowledge of engine technology to become a key innovative force in a wide range of markets from aerospace to maritime.

OCTOBER 2018

CLICK TO WATCH : #LOVEPROCUREMENT ALEX SARIC

As such, procurement should treat

Collaboration is key

supplier engagement and selection

Taking a data-driven approach to

as an opportunity to foster innovation,

procurement can also help manage

incentivising suppliers who are willing

suppliers effectively throughout the

to work with you to solve problems

course of the relationship, utilising

together and create new products and

insights to ensure firms can get

services that can help the end user.

maximum value from these relation-

By collaborating with key suppliers

ships. Organisations can do this by

to discuss the manufacturability of

constantly assessing the supply

early design concepts, organisations

chain against a myriad of factors

can build design revisions and assess

from fluctuating costs to regional

supplier capabilities, all while keeping

risks, identifying key areas where

a close eye on the projected bill

both parties can work together to

of material.

innovate quickly and solve problems. w w w.suppl yc ha i ndi gi ta l. com

43

TECHNOLOGY

For example, flexible workflows and digitisation of the process will keep everyone on the same page in near-real time, allowing for faster decision making as organisations work with their suppliers to highlight areas for improvement, or how to meet upcoming local regulations.

This relationship can regularly produce differentiated product offerings and give procurement teams an opportunity to help drive continued product support and profitability. One example of this is extending “innovation initiatives” to suppliers, encourag44

ing them to make recommendations on how to reduce the weight of a component or suggesting how a supplier’s intellectual property (IP) can be included in a new product to enhance its value proposition. General Motors frequently calls out suppliers who have excelled or collaborated with GM to produce innovative technologies through its supplier programme,

“ General Motors frequently calls out suppliers who have excelled or collaborated with GM to produce innovative technologies” — A LE X SARIC, Chief Marketing Officer, Ivalua

OCTOBER 2018

45

promoting innovation and incentivising

This smarter approach puts procure-

suppliers to share their latest break-

ment leaders in prime position to steer

through technologies.

the course of an organisation’s innovation. This results in faster develop-

Playing the long game

ment of new products which wouldn’t

The fact is, while cost cutting is important,

otherwise be possible, resulting in a

organisations must ensure they can do

shorter time-to-market. Procurement

it in a sustainable manner that doesn’t

can do more than just cut costs - it has

threaten innovation or a supplier’s finan-

become a major driving force behind

cial wellbeing. The adoption of smart pro-

innovation, capable of delivering NPI

curement technology provides access to

in a sustainable manner and enabling

supplier insights, advice and technology,

greater collaboration with suppliers

giving organisations a way to work more

that will lead to greater profitability

collaboratively with their supply base.

and better future relationships. w w w.suppl yc ha i ndi gi ta l. com

22nd - 23rd October, 2018 Rosh Rayhaan by Rotana | Riyadh | K About the conference: As the Gulf region aims for a larger role in the global logistics market, which is estimated to be worth $15.5 trillion by 2024.

Saudi Arabia is upping its own logistics game and becoming a tough competitor to Dubai. According to reports, Saudi and UAE are considered the most attractive target market for logistics investment. In April 2016, Saudi Arabia announced its Vision 2030 and under this plan, the country will reduce its dependence on oil by 2020. Pending this Saudi Arabia will soon be a "global player" on the world’s investment stage. We, at Bricsa Consulting, are bringing to you the 3rd Annual Saudi Freight & Logistics conference in Riyadh, Saudi Arabia which will be hosted on 22nd & 23rd October, 2018 and shall address the current opportunities as well as challenges in the freight-logistics-transportation sector in the Kingdom.

For further information mail to

Kingdom of Saudi Arabia Key Highlights • Development initiatives in the region • Establishing the Kingdom as key logistics hub • Benchmark and hear from the best in the business • Strategies related to ports, customs, freight and transportation sector • Gaining valuable insights on freight transportation projects in the Kingdom ASSOCIATE PARTNERS

Aamal Group ARAB ECONOMIC & BUSINESS GROUP

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o mital@bricsaconsulting.com

RAILWAY PRO

T O P 10

High-tech supply chains

48

In this month’s Top 10, we run down the world’s most high– tech supply chains, as ranked

by Gartner’s annual list WRITTEN BY

OCTOBER 2018

JAMES HENDERSON

49

w w w. s u p p l y c h a i n d i g i t a l . c o m

T O P 10

Seagate Of Seagate, Gartner said: “Seagate slipped in the high-tech ranking on

Qualcomm

50

the tail of an 8% decline in three-year weighted-average revenue growth,

Giving an overview of Qualcomm,

driven largely by sustained weakness

the Gartner report says the following:

in the PC market and a shift toward

“Holding its position in the ninth spot for

higher-capacity/lower-unit volume

another year is Qualcomm, a leading

drives. In response, the storage leader

developer of advanced wireless technol-

is leveraging its best practices in supply

ogies, products and services. Leveraging

chain management to continually

its fabless chip design business strategy,

improve operational performance. His-

Qualcomm’s three-year weighted 11.8%

torically, Seagate’s supply chain has

ROA rivals the performance of Apple’s

successfully leveraged cross-func-

renowned supply chain. As part of its

tional tiger teams to drive operational

M&A strategy, Qualcomm’s intent to

and innovative excellence in areas such

acquire NXP — a leader in automotive

as design for cost, quality and end-to-

and security markets — evidences its

end planning. It continues to employ

focus on growing its scale and compet-

those same tried-and-true practices to

itiveness. Once complete, this deal not

simultaneously improve effectiveness

only allows Qualcomm to meet custom-

and remove redundancy in its tools and

er’s demands for integrated products,

processes as well as mitigate risk in its

but also provides the opportunity to

supply chain.”

join NXP’s investments in integrated

www.seagate.com

device manufacturing with Qualcomm’s network of external manufacturing partners — thereby strengthening its sourcing influence and negotiations.”

www.qualcomm.com OCTOBER 2018

Samsung The consumer electronics giant fell from third to seventh in the rankings, due in no small part to the myriad issues it faced with its Note products, which caused it to temporarily stop pro-

Huawei

duction and sales. The report noted: “Through its efforts in enhancing prod-

The Chinese multinational moved up

uct assurance processes,

|a place from its 2016 spot, with Gartner

implementing preventive measures to

saying: “Maintaining strategic focus on

avoid manufacturing escapes and miti-

digital breakthroughs provided the net-

gate sourcing risk, it’s clear Samsung’s

working and telecommunications titan

primary focus on repairing its reputa-

strong revenue growth and impressive

tion and restoring consumer trust is

ROA from its smart vertically integrated

working.” It will be hoping its upcoming

factories.” The company was praised

Galaxy 10 range will boost its standing

for its increasing emphasis on sustain-

in the 2018 report.

ability as part of its supply chain

www.samsung.com

management, with Gartner noting that the company is refining its solutions by developing its competencies for designing more energy-efficient products, implementing its circular economy strategy to minimize the environmental impact of its smartphones and, working in close collaboration with suppliers, reduce carbon emission and conflict minerals across its global supply chain.

www.huawei.com w w w. s u p p l y c h a i n d i g i t a l . c o m

51

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October 29 - 30, 2018 | Fort Worth, TX

ave and extra 25% with code PMRO18SCD. egister at procureconmro.com

T O P 10

HPE On November 1, 2015, after 76 years of innovation, the printing and personal systems divisions became a standalone business as HP Inc., with servers, storage, networking and services forming Hewlett-Packard Enterprise (HPE). Such has been the seamless transition to what is now HP Inc., it is testament to the multifaceted and hugely complex work carried out by a company-wide crossfunctional team that the business, and 54

Lenovo

therefore customers, have suffered no disruption. In fact, the company’s global

Having acquired IBM’s PC and x86

market position has actually strength-

server division and the Motorola Mobil-

ened over the course of the past year.

ity division of Google, Lenovo comes

www.hpe.com/uk/en/home.html

in for praise from the Gartner report for embarking on “a journey to revamp its supply chain – making an essential shift from a product-centric to a customer-centric approach. Using structured and unstructured data to obtain customer insights coupled with investments in visibility and risk management tools, Lenovo has extended its goal for perfect order fulfilment into a full demand-driven transformation.”

www.lenovo.com/gb/en/ OCTOBER 2018

Intel As one of the world’s largest suppliers of computer chips, Intel relies on its innovative supply chain. The company is praised in the Gartner report for aligning its supply chain with increasingly important customer expectations, such as predicting demand and inventory positioning. Of Intel, the Canadian

Nokia

association, Supply Chain Insights, says: “When it comes to supply chain

“Nokia has changed,” exclaims the

excellence, Intel is a well-known leader.

Gartner report. “Now a better disci-

The company has aggressively driven

plined company with a more robust

supply chain improvements despite

portfolio and opportunities for expan-

being four to five levels back in the sup-

sion, Nokia is no longer satisfied with

ply chain. Known for their innovations

just running a successful supply chain

in analytics and talent development,

focused on execution and cost manage-

the Intel team has focused on building

ment. At the same time, it is elevating the

dynamic capabilities.”

organisation’s entrepreneurship in scal-

www.intel.com

ing supply chain innovation.” It is quite the endorsement. Last month, Nokia announced that it had securing €500n in funding from the European Investment Bank to support its research and development of 5G technology, with the loan backed under the European Fund for Strategic Investments.

www.nokia.com w w w. s u p p l y c h a i n d i g i t a l . c o m

55

T O P 10

56

Cisco The multinational technology conglomerate’s supply chain comes in for high praise, with Cisco demonstrating “many of attributes of a company at the pinnacle of what Gartner’s defines as Stage Five supply chain maturity”. They include: orchestration of ecosystems of partners driven by joint creation and capture of value; relentless pursuit of innovative technologies to support networkbased analytics and integrated, fact-based decision making; and a strategy that incorporates the voice of the customer and risk management for the right balance of profitability and sustainability.

https://newsroom.cisco.com OCTOBER 2018

Apple Heading the list is technology giant Apple, headquartered in Cupertino, California. Gartner’s report recognises Apple as a ‘Master’ in this category, placing it comfortably ahead of its competition. It continues: “Apple arguably maintains one of the best managed supply chains in the industry — delivering 16% ROA and 60.4 Inventory Turns in 2017.”

Apple has huge negotiating power when it comes to its supply chain, and is adept at finding the balance between quality and cost, while implementing strict conditions that its suppliers must adhere to.

www.apple.com 57

w w w. s u p p l y c h a i n d i g i t a l . c o m

W R W EG W IS .C T LO ER U N D O EX W PO FO A R SI Y A OU .C R O M FR /B E IZ E T CL IC IK KE -M T ED : IA

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EVENTS & A S S O C I AT I O N S

The biggest industry events and conferences WRITTEN BY JAMES HENDERSON from around the world

10 OCTOBER

60

02–04 OCTOBER

10th Cool Logistics Global Conference

SAP Ariba Procurement Summit Day [ LONDON, UK ] Disruptive trends in technology are

[ ANTWERP, BELGIUM ]

changing the function as we know it

The 10th anniversary Cool Logistics

today. Procurement is fast evolving

Global Conference & Exhibition provides

into a more strategic and value-gen-

a fantastic opportunity to connect per-

erating function. Through dynamic

ishable cargo owners with cold chain

speakers, engaging storytelling,

logistics and transport professionals

insightful knowledge sharing, and

from around the world to assess key

plenty of networking activities, you

market trends and operational best

will learn about Procurement Evolution.

practice for the international move-

You will also have the opportunity to

ment of chilled and frozen cargoes

join real-time breakout sessions

by air, land and sea.

led by our experts.

Click to view website

Click to view website

OCTOBER 2018

15–17 OCTOBER

MHI Annual Conference [ FLORIDA, USA ]

10-11 OCTOBER

Sixth Annual Procurement Strategy Summit

MHI Annual Conference will focus on key themes identified by the US Roadmap for Material Handling & Logistics

[ ABU DHABI, UAE ]

and the MHI Annual Industry Report

The new age procurement profession-

including:

als are building their procurement

• Industry 4.0

proficiency to handle the dynamic and

• Building the Future Supply Chain

volatile market. They are now taking

Workforce

data driven decisions and are building

• The Current and Future State of

sustainable business models by bring-

Distribution Center Technology

ing out deeper collaboration with suppliers with the help of technology.

Click to view website

• Marketing in the Supply Chain Industry

Click to view website

w w w.suppl yc ha i ndi gi ta l. com

61

EVENTS & A S S O C I AT I O N S

22–23 OCTOBER

62

29–30 OCTOBER

3rd Annual Saudi Freight & Logistics 2018

ProcureCon MRO

[ RIYADH, SAUDI ARABIA ]

ProcureCon MRO (Maintenance,

Sea freight movement has majorly

Repair, Operations) is the only event

dominated the market for Logistics in

dedicated event dedicated to pro-

Saudi Arabia. The increase in the trade

curement and sourcing for the MRO

scenario in the country has attributed

category. Join 150+ practitioners for

to the increase in the percentage share

a collaborative discussion on how

of sea freight. The rising import and

to move MRO into the 21st century.

export value from other countries has

ProcureCon MRO will arm practition-

triggered the demand for sea freight in

ers with strategies to modernise

Kingdom. The total container port traf-

MRO spend, gain more spend under

fic at Saudi Arabia port is 6,326,861

management, reduce POs and sup-

TEU as per a report published in

pliers, and benchmark against other

October 2017, 6 months back.

companies.

Click to view website

Click to view website

OCTOBER 2018

[ HILTON FORTH WORTH, TX ]

31 OCTOBER

CIPS SM Awards [ LONDON, UK ]

26-28 NOVEMBER

of this year’s judges, and winner of the

Supply Chain Management Strategies Summit

‘Procurement and Supply Manage-

[ BERLIN, GERMANY ]

ment professional of the year 2016’,

The 2018 line-up features the very best supply chain executives from world-class organisations. They will discuss their own experience and provide advice on areas such as; The latest supply chain management technologies and innovations, agile customer-centric supply planning and optimisation strategies, transparency, control and synchronisation across all manufacturing and supply chain operations, including production, quality, labour, maintenance and material flows.

Click to view website

Chris Bell FCIPS, Commercial Director – City of London Corporation, one

will chair the day while presenters from the various winning organisations will deliver case studies.

• Digitization, cybersecurity and being able to use and collate data to improve strategy • Managing risks such as security of supply and socially responsible procurement • Collaborative partnerships with suppliers and contract negotiation • Upskilling procurement teams and bringing functions together

Click to view website

w w w.suppl yc ha i ndi gi ta l. com

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64

DELIVERING QUALITY RESULTS THROUGH SUPPLY CHAIN DISRUPTION WRIT TEN BY

CATHERINE S TURM AN PRODUCED BY

CHARLOT TE CL ARK E

OCTOBER 2018

ASIA

65

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SAFILO GROUP

Nearing the end of its procurement strategy 2020, Director for Sourcing for Asia and APAC, Jorge Gonzalez, discusses how the business continues to go from strength to strength

A

ppealing to all ages and demographics, the global eyewear market is undergoing considerable growth. Set to exceed $165bn by 2026,

optical companies and those specialising in eyewear will 66

need to transform traditional business models behind the scenes in order to cater towards increased demands.

From the purchase of designer sunglasses, to the improvement of everyday vision, 99% of all frames worldwide are produced in Italy, China and wider Asia, creating significant opportunities for eyewear creator, Safilo Group.

Famed for its extraordinary designs and propriety brands, such as Carrera and Polaroid, as well as its licensed brands, BOSS, Tommy Hilfiger, Kate Spade, Marc Jacobs and more, the group has become the second largest eyewear company in the world.

Safilo is a frontrunner in the global distribution of premium sunglasses, optical frames and sports eyewear, bringing the latest design and manufacturing capabilities.

Housing a number of its factories in Italy, its sourcing activities are mainly undertaken in China and Japan, OCTOBER 2018

ASIA

67

“ We source a large share of what we sell with partner companies, instead of with our own direct manufacturing. The sourcing team is extremely well recognised, as it is a key source of innovation” — Jorge Gonzalez, Director of Sourcing in Asia and APAC

w w w. s u p p l y c h a i n d i g i t a l . c o m

Imagination enriched by precision Who are HuaQiang?

Huaqiang is a precision metal component solution provider to mainly optical, but also watch, luxury accessory, medical and electronic industries. Through 35 years of experiences and constant reinvestments in production, HuaQiang is able to use precision to help its customers realise its widest imaginations and design.

We have offices in Shenzhen, Wenzhou and Veneto, Italy, whilst our HQ and production plants are in Yuhuan, China.

How has the business changed over the years?

Through almost 35 years of history, we started off by suppling metal component to the lowest segments of the eyewear manufacturing business. Until 15 years ago, when most of our domestic competitors started to invest in rapid booming and profitable real estate market, HuaQiang decided take bold steps to invest in a total production upgrade by acquiring two fully automated production lines from Japan.

Contact us on Phone:+86 576 8990 9199 Email: marketing@hqopt.com

We have been able to gain the trust of world’s two leading eyewear manufactures including Safilo, Luxottica, De Rigo and Essilor and have become one of the top four eyewear metal components suppliers in the world.

Basically, we help our customers to create added value by putting ourselves into our customer’s shoes.

Please outline HuaQiang’s business model

Whilst being an industrial leader in self-developed machinery in China, we also maintain industry’s highest level of investment in our Human Resources. One of the most effective ways is to acquire talented people from other industry leaders. Some of our brightest colleagues were recruited from Volkswagen and Bosch.

Our business models can be seen as two folds. For most of our customers, we ship our components directly to their plants, usually in Italy, China, Japan and Bazile. We are their first-tier supplier. This is referred as “Direct sales” in HQ and accounts 70% of our annual sales.

Other customers that are brand or retail owners that do not have internal manufacturing capabilities, we supply to their frame producers. This accounts 30% of our annual sales.

What technologies does the company utilise across its operations?

We have been investing in new technologies, especially in 5-axis CNC machines. We also have a machinery workshop to develop and build all our machines for standard products, as well as utilising pressing, computer numerical control (CNC), metal injection moulding (MIM), laser cutting and more.

How do you ensure strong relationships with customers and suppliers?

We have selected a number of qualified candidates with the potential and willingness to grow. We have shared market information and production knowhow, and internalised the fundamentals, such as moulding and surface treatments so supplier risks are mitigated.

Safilo, for example has an extensive brand portfolio, and is an industrial leader in quality and design. The business always challenges us to realise the wildest design ideas.

The transformation of centralisation in procurement in recent years has also allowed HuaQiang not only to tap into business with Safilo, but also with its OEM suppliers.

Safilo has been our most educative customer, which has allowed us not only to develop in terms of management, but has also opened us to further market opportunities.

What about the training and development of workers?

Our technical team routinely attend machinery and moulding exhibitions worldwide, and we also have established partnerships with a training firms for management training across all management levels.

A personal development fund is also announced to all employees on yearly basis.

What sets HuaQiang apart from the competition?

The most crucial one is our dedication in both catalogue and custom-made products. In catalogue business, some are self-developed, but others can be standardised. By continuous investment in automation, R&D, and production management for catalogue products, we are more efficient than ever.

When developing a new metal frame, a customer need to decide to which extend they will internalise the product.

Our commitment in both product types enables us to be the ultimate metal solution provider to eyewear industry.

We shipped 40mn pairs of catalogue products and 15mn pairs of custom made products in 2017, where we produce approximately 90,000 pairs per day.

As a company that has deep roots in this industry for 35 years, we were able to capture new customers whilst maintaining good service level to existing ones which makes the first half of 2018 the best one we ever had.

How does HuaQiang help its customer such as Safilo to deliver special eyewear?

Each time when we receive a drawing or a new idea, instead of going directly into product development, it is our instinct to look deep and try to understand the logic behind this design and all possible solutions to accomplish it.

If such design is intent to be perfect in moving mechanism, we will suggest the most precise process to make sure the assembled product runs smooth like silk.

If such design is intent to be perfect in aesthetics, we will introduce the right surface treatments to make it shine.

Dunno Huang Director of foreign & indirect sales, HuaQiang Optical

SAFILO GROUP

“ It is a matter of looking at the performance of that factory in somewhere like China and how it will impact our customers in countries such as Spain or Brazil, highlighting the relationship between market and supply” — Jorge Gonzalez, Director of Sourcing in Asia and APAC

70

where its frames are distributed worldwide.

“From a supply chain perspective, we don’t have a strong segmentation by region, but more on a functional basis. However, sourcing is much more Asia focused, which is why we have a strong team in Hong Kong,” explains Jorge Gonzalez, Director of Sourcing in Asia and APAC. “We source a large share of what we sell with partner companies, instead of with our own direct manufacturing. The sourcing team is extremely well recognized, as it is a key source of innovation.

EXCEPTIONAL COLLABORATION Working across a number of supply chain functions for close to 20 years, Gonzalez OCTOBER 2018

ASIA

joined the business in 2016 taking over from Andrea Grassini who then became Global Sourcing Director. Grassini has been instrumental within the group’s procurement and supply chain transformation, and has taken the business’ procurement and supply chain capabilities to the next level.

“Previously, the interface between design and sourcing was happening much more downstream in the process. Now, the way we work opens up more opportunities,” he explains.

“When you have your own factories, it’s much more difficult to keep in touch with the market, so we keep in touch through our network of suppliers.

“Instead of having one location, we have over 30. We don’t manage the production directly, but we operate like a factory, with production managers, scheduling and planning. Instead of production orders we use purchase orders, but it is similar. It’s part of our success.”

Working alongside designers in Italy, New York and China, Gonzalez and his team work in sync with both designers and suppliers, passing on innovative design concepts which can be mass produced, placing particular emphasis on building mutually positive supplier relationships in the process.

“We are like a revolving door, with suppliers on one hand and designers on the other, in w w w. s u p p l y c h a i n d i g i t a l . c o m

71

visotticacomotec.com

Continuous improvement.

Founded in 2003, Jin Yu Plastic Products Co Ltd is a dynamic and leading manufacturer of Cellulose Acetate Sheets in China with offices in Asia and Europe.

www.jinyuplastic.com Jin Yu is on Facebook Instagram Wechat

ASIA

“ Our differentiator is that we go to their factories and seek to add value by highlighting opportunities for improvement in every factory — Jorge Gonzalez, Director of Sourcing in Asia and APAC

lean and six sigma methodologies was a key turning point.”

BUILDING TEAM RESILIENCE As new materials, textures, colours and finishes, as well as types of lenses, continue to flood the market, Gonzalez and his team have remained adaptable against ongoing market volatility.

With over a thousand new products each year, each member of the team plays a key role: Product develop-

order to produce prototypes, concepts

ment and engineering teams manage

and drawings. There is also an engineer-

all 1000 models from prototyping to

ing team, each housing over 15 years’

mass production readiness; the quality

experience, which is why our sourcing

manager ensures that all are manufac-

is world-class,” adds Gonzalez.

tured to high standards, whilst the pro-

“Appointing a number of individuals

duction manager remains responsible

with a background in manufacturing

for the procurement-to-pay process

has also helped our suppliers, as many

and delivery performance.

organisations won’t have the manpower

Additionally, one team is strategically

or the expertise to go deep into their

working with suppliers and gaining a

operations. They just want to negotiate

greater understanding of costings, the

the price and then leave things be. Our

bill of materials, and overhead percent-

differentiator is that we go to their

ages. Its sourcing house has illustrated

factories and seek to add value by

how a healthy manufacturing company

highlighting opportunities for improve-

should operate by creating a dedicated

ment in every factory,” he continues.

area for its purchasing operations and

“We have the background and the expertise. Manufacturing together with

giving its sourcing house greater autonomy. w w w. s u p p l y c h a i n d i g i t a l . c o m

73

SAFILO GROUP

“I see myself as an enabler

examples to the table. We also

and facilitator. Each team is

brought the team to the facto-

given targets where they make

ries, to the suppliers, showing

the required choices and are

real examples of how we can

held accountable. They decide

be even better.

which projects they will run with

“It takes a while to embed

and the activities they believe

this kind of culture of fighting

the business should be under-

for every single opportunity.

taking,” explains Gonzalez.

The automotive industry had

The sourcing house is routinely encouraged to embrace

to do it in the ‘80s and we are having to do it now.”

new ways of working, particusign new styles to suppliers and

PROCUREMENT JOURNEY

balance capacity, as it contin-

Presently undergoing its

ues to transform from regional,

six-year accelerated procure-

isolated, “do-it-all” units, to

ment strategy, which is set to

global, category-focused pro-

complete in 2020, Safilo will

curement clusters to address

seek to balance its production

global spend by category while

and sourcing activities, in order

driving accountability for qual-

to deliver outstanding results

ity and delivery.

in five key areas: availability,

larly in areas such as how to as74

“The question is ‘why bother to do better if we are already

delivery, cost, partnerships and innovation.

doing very well?’ Trying to moti-

“With net inflation, we are

vate workers in this way was an

trying to accomplish around

internal challenge which we had

low single digits sourcing effi-

to overcome,” notes Gonzalez.

ciency year on year, which with

“We looked at other industries in order to bring some OCTOBER 2018

inflation is a high single or even double-digit improvement es-

ASIA

75

SAFILO GROUP

76

“We have a manufacturing mindset and experience with lean and six sigma methodology.

We do not just negotiate prices, but go deep into our suppliers’ production processes” — Jorge Gonzalez, Director of Sourcing in Asia and APAC pecially in countries like China,” says

product development, the purchase-

Gonzalez.

to-pay process and supplier and

“That is the driver towards all other

relationship management, Safilo looks

choices that are situated in quality and

at supplier production and scheduling,

lead time in production. All of this is

collaborating with suppliers across the

geared to removing defects and waste,

whole manufacturing process.

which will help us achieve purchasing ef-

“Having a manufacturing mindset

ficiency, not by reducing the profit of our

and experience with lean and six sigma

partners but by improving the processes.”

methodology. We do not just negotiate

Focusing on three main engines: OCTOBER 2018

prices, but go deep into our suppliers’

ASIA

77

production processes,” he says.

“We look at their situation, their overheads, undertake a profit and

they are not able or willing to work to continuously improve quality and process and remove waste cost.”

loss (P&L) analysis and then give them a hint of where to look for opportunities.

SUPPLIER GROWTH

Partners are defined in addition to by

With increased pressures as a result

performance, by the level of collaboration

of the exchange rate with the dollar, as

we obtain during these conversations. At

well as Chinese inflation, the company’s

the end by natural selection suppliers will

relationship with its suppliers has been

end up being dropped and renewed if

completely disrupted. w w w. s u p p l y c h a i n d i g i t a l . c o m

SAFILO GROUP

“In the past, cost was not so important.

Every supplier had the notion that if they do a reasonable job then they will receive a certain amount of business the following year.

We have therefore had to bring suppliers back to five KPI areas - compliance, social responsibility, quality, delivery performance, cost, and a ‘softer’ area of whether they are easy to do business with,” explains Gonzalez.

“We have had to become very disciplined in making sure that new business and the growth of the supplier is 100% linked to this.”

Introducing best in class management 78

€1.04bn Approximate revenue

1934 Year founded

practices, Safilo works with suppliers to create a yearly joint business plan (JBP), undertaking quarterly reviews, as well as visiting suppliers at their own locations to reach as many layers as possible.

“I personally take the time to meet with the people, with my team and go all the way across the shop floor to understand the issues, work with them and do some problem solving together.

“It is a matter of looking at the performance of that factory in somewhere like China and how it will impact our customers in countries such as Spain or Brazil, highlighting the relationship between market and supply.”

By running a number of quality assurance programmes, the sourcing house has also OCTOBER 2018

8000+ Approximate number of employees

ASIA

undertaken a range of projects with suppliers to tackle long-standing issues.

“Each year, KPIs are expanded further to provide new challenges for suppliers, whether it is through capacity or lead times.

For example, last year, our KPI in delivery performance is at 95-97%,” notes Gonzalez.

“We have three seasonal collections per year - in January, April and August - and each year we have removed one week off the lead time. Since 2016, we have cut off three weeks in terms of lead time. However, we need to maintain the same quality and service level, as well as reduce costs.

“We need to be faster and remove waste,” he adds. “We cannot do things the same way that we were doing before, so that forces us internally as well as our suppliers to review current processes, not just production but end to end. For example, lengthy and manual interfaces meant that a purchase order would move from office to the supplier in days, now it takes hours,” he continues.

Soon to renew its 2020 vision following on from the appointment of its new CEO this year, Safilo will aim to further transform the business to uphold its 100% track record on delivery.

Adopting lean deployment programmes to reduce lead times and shrink costs with w w w. s u p p l y c h a i n d i g i t a l . c o m

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SAFILO GROUP

80

OCTOBER 2018

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C OMPA N Y FA C T S

• The global eyewear market is set to exceed $165bn by 2026 • Safilo Group is the second largest eyewear company in the world.

• Safilo houses a number of its factories in Italy, whilst its sourcing activities are mainly undertaken in China and Japan • Strategically working with suppliers and gain a greater understanding of costings, the bill of materials and overhead percentages, its sourcing house illustrates how a healthy manufacturing company should operate • The sourcing house is routinely encouraged to embrace new ways of working, particularly in areas such as how to assign new styles to suppliers and balance capacity 99% of all frames worldwide are produced in Italy, China and wider Asia •Focusing on three main engines: product development, the purchase to pay process and supplier and relationship management, Safilo collaborates with suppliers across the whole manufacturing process • Safilo works with suppliers to create a yearly joint business plan ( JBP), undertaking quarterly reviews, as well as visiting suppliers at their own locations • Soon to renew its 2020 vision following on from the appointment of its new CEO this year, Safilo will aim to further transform the business by looking for new opportunities

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SAFILO GROUP

82

OCTOBER 2018

ASIA

year-on-year positive procurement efficiencies despite various challenges, Safilo’s unique team, deep knowledge of products and exceptional focus on quality has fully transformed the business.

Implementing data-driven, six sigma problem-solving solutions to tackle quality issues, its dedicated team has delivered the best quality, delivery and cost from the start to support its manufacturing partners, as well as putting forth best-in-the-business engineers and materials experts.

“With the ability to automate produc-

“ Since 2016, we have cut off three weeks in terms of lead time. However, we need to maintain the same quality and service level, as well as reduce costs”

— Jorge Gonzalez, Director of Sourcing in Asia and APAC

tion processes, we are open to new supply markets – this is one area of

ment underway on how to remove any

focus for us. Looking at Asia, we want

solvent based elements, so cleaner

to become less China dependent and

processes and the introduction of

be more diversified on the supply

increased bio-materials will definitely

market,” notes Gonzalez.

be a trend for the future,” he concludes.

The business is also set on embed-

“In sourcing, we will be able to

ding greener technologies and pro-

change much faster than any other

cesses to fully disrupt the traditional

internal factory because we are able

eyewear industry.

to leverage our suppliers’ world class

“Some of the materials that we use

expertise.”

are the same as 50 years ago, like cellulose acetate. Now there are new technologies for cellulose acetate, such as new formulations. There is investw w w. s u p p l y c h a i n d i g i t a l . c o m

83

84

ASIA

SCT LOGISTICS:

Transparency and a commitment to service through digitisation WRIT TEN BY

OLIVIA MINNOCK PRODUCED BY

ANDY TURNER

w w w.suppl yc ha i ndi gi ta l. com

85

SCT GROUP

SCT GROUP’S CIO SEAN ATCHINSON DISCUSSES HOW THE COMPANY’S JOURNEY TO DIGITISATION IS MAKING IT EASIER TO CARRY CARGO THROUGHOUT AUSTRALIA

W

ith 3,934km between Perth

joined by Sean Atchinson, a CIO

and Sydney, transporting

determined to bring technology to the

cargo across Australia is

fore and make digitisation instrumental

no mean feat.

Since 1974, SCT Group has been providing an alternative logistics

solution where options were previously 86

in fulfilling SCT’s aim to provide open, transparent and efficient service across Australia.

“Our growth has been achieved

few, and has grown to be the most

through a very focused approach to

efficient independent freight service

the business. In addition, more recently

in the country. Providing rail and road

there are only two major players in the

services hauling dry freight, refriger-

rail freight space: Pacific National and

ated and bulk cargo, the business

SCT,” Atchinson explains, praising

prides itself on openness and transpar-

Smith’s initial foresight in challenging

ency. It is also a company that, despite

the status quo of the nationalised rail

its substantial size and reach, cares

industry. SCT now provides logistics

about every single customer from the

services across the country and has

smallest business on its books to

a number of inland ports serviced next

world-renowned retailers like Aldi and

to mainline freight railways. In the past

Woolworths.

two years, SCT has opened two new

Founded by Peter Smith, SCT is still very much a family affair, with Peter’s sons Geoff and Glenn on the board of

inland ports: at Bromelton, Queensland and Wodonga, Victoria.

“We are predominately one of the

directors and the founder himself

largest freight movers East-West, from

maintaining a keen eye on operations

Sydney all the way to Perth, transport-

as chairman. In 2015, the Smiths were

ing freight that contains white goods,

OCTOBER 2018

ASIA

“That journey of transformation through a technology platform is now starting to pay dividends to the business, and year on year I’m successfully taking costs out of the IT business” — Sean Atchinson, SCT CIO

w w w.suppl yc ha i ndi gi ta l. com

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SCT GROUP

88

“ I work with all staff – if we’re rolling out a new technology, we’re on the warehouse floor with them.We understand what they’re doing, how they’re using it and what they need to use it for” — Sean Atchinson, SCT CIO

OCTOBER 2018

ASIA

as well as foodstuffs from dry all the way down to -24 degrees.” SCT moves all this and more across the length and breadth of Australia with a commitment to making logistics faster, easier and more efficient.

From previously having a focus on road line haul that required two drivers to move it across the country, the business can now move a 1.8km train hauling 5,500 tonnes of freight across Australia in three days, all in one journey. In addition, the 300m-long Bromelton warehouse allows a train to run straight through it with no shunting required, so containers can be removed and wagons unloaded as smoothly as possible.

“In the three-and-a-half years I’ve been with the company, there’s been so much growth,” Atchinson reflects. However, it hasn’t all been smooth sailing. Atchinson joined the company six months after it had gone live with its new SAP environment – a vital digital solution for many businesses, but one which SCT needed the CIO’s help to implement properly. “They were actually talking about getting rid of it: they’d had a very tough go-live and were relying on consultants to support the business for a number of months post go-live. There were major issues throughout the systemic processing of customers’ orders to invoicing.”

Despite these teething issues, Atchinson w w w.suppl yc ha i ndi gi ta l. com

89

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ASIA

CLICK TO WATCH: SCT BROMELTON LAUNCH VIDEO 91 had worked with SAP solutions through-

business, and year-on-year, I’m

out his career and wasn’t willing to give

successfully taking costs out of the IT

up on the world-renowned ERP

business.” Far from cutting corners or

platform just yet. “The transformation

laying off staff, these savings have

could have gone belly up, but working

been made simply by changing the

with some key support organisations,

way SCT operates.

as well as staff and executives right

“We’ve in-sourced our support rather

up to Peter Smith, we’ve kept SAP and

that outsourcing,” Atchinson explains.

turned the whole environment around.”

“We’ve also renegotiated with core

Fast forward to today, and proper,

partners and gone into new commer-

collaborative development of the

cial contracts which have allowed us to

platform is actually saving the firm

save money by utilising the technology

money. “That journey of transforma-

better than we previously have. For a

tion through a technology platform is

CIO, it’s a rare opportunity to come in

now starting to pay dividends to the

where something’s failing and be able w w w.suppl yc ha i ndi gi ta l. com

SCT GROUP

to turn it around.”

Through Atchinson’s work and senior leadership support, technology has been successfully brought to the fore of SCT and

1974 Year founded

is embraced as a driver – almost literally – of the logistics giant’s growth. “We’ve recently introduced new technology in all of our trucks which allows us to do electronic work diaries for our drivers and fatigue management.

Drivers can now control their breaks without having to go through the paperwork.” In addition, technology is used to allow trucks and deliveries to be tracked more effectively and SCT is looking to move electronic 92

delivery and pickup management onto a new platform which will integrate better into cabs and carry all the information necessary for a fleet, using a single SIM card per vehicle. “The ability to have a single SIM that controls the phone, telematics and tablets in our trucks will have paid for itself within three years just through telco savings,” Atchinson enthuses.

As well as making life easier for staff, a customer reporting platform has been introduced to bolster SCT’s commitment to service. “We’ve rolled out a customer reporting portal which allows our customers to track all the movements of their freight. We notify them when we’re going to pick up and they can see it online in a report to the time that it has been delivered, as well as being provided OCTOBER 2018

1,000+ Approximate number of employees

ASIA

with proof of delivery.” Atchinson

transparency of data,” says Atchinson.

explains that all this is done in almost

“It’s there at their fingertips, allowing our

real time – or around four seconds

account executives and customers to

behind our core platform.

talk in exactly the same language.

Now, looking to trade electronically with national customers in the B2B space, SCT is also developing a B2B

We’re looking at exactly the same pieces of information.”

A common worry related to automa-

template based on GS1 – the global

tion is that the human touch will be lost

developer of business standards for

but Atchinson is keen to point out that

communication such as barcoding.

this won’t be the case for SCT. “We

“We’ve worked very closely with GS1

haven’t removed the account execs.

and also our members within that

The customer can do self-service and

environment.”

still have face-to-face contact. SCT

One of the most important things to

prides itself on this. This relationship is

ask of any digital transformation is what

absolutely key for Peter – that’s how he

it will mean for the customers involved.

built the business and that mentality

“It’s tracking; it’s all of their history; it’s

still exists today. We still have that very w w w.suppl yc ha i ndi gi ta l. com

93

SCT GROUP

94

personal approach, but technology

they’re doing, how they’re using it and

is an enabler to allow transparency

what they need to use it for. Feedback

between customers, account execs

from those at the forefront of what has

and account managers.”

been rolled out is critical to any

In terms of finding the right digital solution to help SCT grow, transparency with both staff and vendors is key.

success that a technology platform provides to the business.”

In the coming years, growth at SCT

“We run roundtables regularly,” says

is set to take many forms across its

Atchinson. “It’s very consultative. I work

divisions from property and rail to solution

with all staff – if we’re rolling out a new

enablement. “We’re looking to remove

technology, we’re on the warehouse

a lot of the manual steps and provide

floor with them. We understand what

technology that supports growth and

OCTOBER 2018

ASIA

“We still have that very personal approach, but technology is an enabler to allow transparency between customers, account execs and account managers” — Sean Atchinson, SCT CIO

95

supports a mission with our customers

ache) to an integral driver of growth

to provide further transparency on their

and service excellence for the company.

end-to-end moving of freight. My focuses

“Now, if I speak to the board it’s about

right now are expanding IoT across our

what we’re going to do next. It’s about

transportation methods – movement into

looking forward,” he concludes. We

cloud is key. As we grow, our technology

want to build on what we’ve got. We’ve

platform will allow us to upscale, pretty

got sustainability, we’ve got perfor-

seamlessly, our hardware.”

mance, we are enabling our business.

It’s clear that even throughout

“The conversation has completely

Atchinson’s own journey at SCT Group,

changed. It’s not about ‘time to throw

technology has gone from being an

it out’, it’s about ‘we want to do this

add-on (and indeed at times a head-

with our business’.” w w w.suppl yc ha i ndi gi ta l. com

96

Driving supply chain transfor– mations WRIT TEN BY

JA MES HENDERSON PRODUCED BY

RICHARD DURR ANT

OCTOBER 2018

EUROPE

97

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DELOITTE

Deloitte’s supply chain practice is helping companies across Europe implement critical supply chain transformation and digitisation programmes

T

he role of supply chains is changing at breakneck speed, driven by a worldwide business movement

towards digitisation. Companies of all sizes are attempting to transform their supply chain and procurement functions, with varying 98

degrees of success.

And while the arguments for digital transformations seem to have struck a chord with executives, implementation is not happening as quickly as one might have expected.

A recent industry study found that while 83% of respondents believe digital transformation will be impactful, only 5% of respondents have highly automated processes.

With such a discrepancy between aspiration and execution, companies are increasingly turning to global supply chain practices to help them devise a pathway to effective supply chain transformation and digitisation, with Deloitte being a prime example.

Key to this pathway, says Dr Stijn-Pieter van Houten, Director Supply Chain Strategy OCTOBER 2018

Stijn-Pieter (front) and Arjan (back)

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99

2016

Year of North Western Europe integration

30,000 Employees

London Headquarters

w w w. s u p p l y c h a i n d i g i t a l . c o m

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& Operations for Deloitte NW Europe,

tailored products that suit their needs.

is changing the perception of FMCG

Further, established retailers are

businesses about how effective

being pressurized by e.g. ecommerce,

supply chains operate.

discounters and convenience channels.

“Companies often still pursue a ‘one

The result of these trends is that increas-

size fits all’ approach when it comes to

ingly different types of products are

supply chain where the way they plan,

coming to the market and that increas-

produce and distribute their products all

ingly the service levels demanded from

follows the same pattern from a supply

FMCG companies are becoming more

chain and even technology perspective,”

stringent. So, it makes sense for FMCG

he comments.

supply chains to move to a model

“But what we are seeing increasingly

whereby different (virtual) supply

is consumers are becoming more

chains are created and managed for

demanding, and they want to have more

distinct groups of products and/or 101

E X E C U T I V E P R OF IL E

Dr Stijn-Pieter van Houten “SP” is a Director at Deloitte Consulting in the Supply Chain Strategy service line of Deloitte’s Strategy and Operations Practice since February 2018. He has been working for over 11+ years with primarily Consumer Products clients in developing and delivering competitive supply chains in terms of cost, operating models and (digital) innovation.

His experience is focused on leading Supply Chain work in the areas of: • SC Strategy & Transformations • Operating Model Development • Supply Chain and Integrated Business Planning • Customer Centric SC Design

w w w. s u p p l y c h a i n d i g i t a l . c o m

DELOITTE

customers. Organisations will have to ensure that their supply chains become more differentiated and adapt them to changing customer (and consumer) demands, while managing their cost to reach the right profit levels.” Besides differentiation, part of a successful future setup also requires supply chains to be truly synchronized from and end-to-end perspective.

What seems clear though is that for all the talk of collaboration, there are still stark disconnects between supply chain functions such as demand planning, warehousing, logistics and customer service, all of which 102

have often their own separate set of targets driving particular behaviours and outcomes.

This is then besides the lack of integration between commercial, finance, innovation and supply chain. The lack of end-to-end planning and synchronisation, says van Houten, is hampering the supply chains of even some of the world’s largest organisations.

Analytics and increased supply chain visibility are also central to the supply chain transformation blueprint, he adds. “We know that the market place is volatile, so companies need to be aware of trends and changing customer demands. Products can very quickly become popular and gain traction cross social media, so companies need to have the insights & foresights (“sense” and OCTOBER 2018

“ For supply chain we have a specific digital experience where we show the impact of technological disruptions and emerging trends” — Arjan de Witt, Manager at Deloitte Consulting

EUROPE

CLICK TO WATCH : ‘LET’S DO THIS – MAKE YOUR IMPACT WITH DELOITTE’ 103 capabilities that enable them to move quickly (“respond”) when that happens.

In an increasingly crowded and competitive market place, Deloitte’s clients are asking for non-traditional services in a bid to remain successful and be customer centric, according to Arjan de Witt, Manager at Deloitte Consulting.

“Across all of our projects, our clients are consistently asking us to help them adapt to this new world and advise them on new ways of working. In years gone by, a client would just want to see a presentation but now we’re providing them with proof of concepts or run pilot programmes with them.

Our clients recognise that change is going w w w. s u p p l y c h a i n d i g i t a l . c o m

DELOITTE

104

on, and expect us to inform them what

As part of the journey to under-

that means for them as a business.

standing the ‘art of the possible,’

For us it means that we have to work

Deloitte leverages its ‘Digital Garages’

very closely with our partners and

– with a new one soon to be opened

leverage our eco-system to really

in Amsterdam. “These are really

provide our clients with a competitive

energetic, start-up like, environments

edge. What we have proven we can

where we take our clients and hold

do is bring fresh insights that inspire

discussions about the different digital

them – we help them to understand

building blocks, how they fit together

‘the art of the possible’.”

and how they should operate in our

OCTOBER 2018

EUROPE

“ What we have proven we can do is bring fresh insights that inspire them – we help them to understand ‘the art of the possible’” — Arjan de Witt, Manager at Deloitte Consulting

105

clients’ companies,” says de Witt.

“For supply chain we have a specific supply chain digital experience where we also show the impact of technological disruptions, emerging trends and what you can do to adopt them in your supply chain and organisation. We do this by creating a serious game environment where we really want to not only showcase the technologies but w w w. s u p p l y c h a i n d i g i t a l . c o m

DELOITTE

also give them subjects to think through.

We’re working in collaboration with our eco-system of partners to make the experience as valuable as it can be.”

But for any transformation to work, companies must ensure that their employees are prepared to embrace the ‘change journey,’ says van Houten.

“You can put in as many tools and new processes as you want, but if you don’t change the people, if you don’t change their behaviour and the way they look at their business then it’s never going to work on 106

the mid- to long term. Ultimately, we train our clients’ people to change their businesses so they work end-to-end with their customer in mind. You have to really look at a business end-to-end and ask how do day-to-day activities and decisions impact the customer and consumer at the end of the supply chain?

“It’s also really important that companies encourage collaboration across all of their departments in an effort to really break down silos and business functions. That’s the best way to think about what is best for customers and develop the optimum organisational setup to sustain and improve a segmented way of working across function, while delivering the right services in a profitable way.”

OCTOBER 2018

EUROPE

“ Supply chains have to become more flexible and adapt to changing consumer and customer demands at an increasingly faster pace” — Dr Stijn-Pieter van Houten, Director Supply Chain Strategy & Operations for Deloitte NW Europe

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DELOITTE

108

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“This means that organisations free up time from day-to-day routine work OCTOBER 2018

EUROPE

CLICK TO WATCH : ‘HOW WOULD YOU PLAN YOUR BEST TRADE PROMOTION EVER’

to instead focus on interacting

Besides these immediate benefits

strategically and tactically with their

for the commercial function, solutions

customers. In these interactions, the

like VisualFabriq are increasingly

AI-driven scenario planning further

becoming the forefront of customer

supports the account managers by

centric, synchronised supply chain

creating direct insight into a full range

setups driving better customer service

of options and showing the volume

and higher profit margins via tailored

and financial pros and cons in detail

supply chain responses.

with a much higher level of reliability than traditional estimations. It shows these outcomes both from the point of the manufacturer and the retailer, optimising for the choice for win/win scenarios.” w w w. s u p p l y c h a i n d i g i t a l . c o m

109

110

Uniper redefined procurement to provide operational excellence for the energy customer WRIT TEN BY

DA LE BENTON PRODUCED BY

RICHARD DURR ANT

OCTOBER 2018

EUROPE

111

Photo © Uniper w w w. s u p p l y c h a i n d i g i t a l . c o m

UNIPER

Through an extensive transformation of its procurement operations, Uniper can answer tomorrow’s questions today. We speak to Uniper’s Susanne Thöle, Director of Procurement, Spot Buy and Indirect and Philip Höchstödter, VP Spot Buy/Operational Procurement…

A

procurement function can be defined by two key components: the customer and the supplier.

How an organisation, through its procurement

process, engages and works with those two factors is crucial.

112

The procurement industry is transforming as more and more organisations begin to recognise that what has been historically seen as a support function is now becoming far more aligned to the core business strategy, enabling growth through efficiencies and innovation. However, Uniper, a leading international energy company, realised this at a very early stage and has already prepared for the future by implementing a large-scale transformation of its procurement and supply chain process.

Ultimately, procurement is about engagement with the suppliers and engagement with the customers or end users in order to deliver the best possible service to both parties. Uniper, tackled the challenge by asking one simple question: what is it that suppliers and customers really want? We speak to Uniper’s Philip Höchstödter, VP Spot Buy/Operational Procurement and Susanne Thöle, Director of Procurement, Spot Buy and Indirect.

OCTOBER 2018

Photo © Uniper

EUROPE

113

C OMPA N Y FA C T S

Uniper is a leading international energy company with operations in more than 40 countries and around 12,000 employees.

Uniper’s business is to provide a reliable supply of energy and related services. Its main operations include power generation in Europe and Russia and global energy trading. Its headquarters are in Dßsseldorf, Germany.

w w w. s u p p l y c h a i n d i g i t a l . c o m

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SAP aims to support companies with solutions that streamline working processes and allow employees to concentrate on the important work that not only makes their businesses run better, but improves the world around them. Together, SAP Ariba and SAP Fieldglass, provide a set of cloud-based source-to-pay solutions that companies can use to manage all of their spend – from direct and indirect materials to contingent labor – from end to end in a simple, compliant, contextual and conscious manner. SAP Ariba covers the procurement side of things – so everything from sourcing and orders through invoicing and payment.

And SAP Fieldglass helps to manage contingent labor and SOW (Statement of Work)-related activities. The key here is that the solutions are fully integrated. Procurement is not a discrete activity that can be performed in silos, but a connected one. And the solutions used to drive it need to be too. With SAP Ariba and SAP Fieldglass, companies can seamlessly connect their procurement systems and the people and processes used to drive them and manage everything through a single interface. And they can gain the transparency and insights needed to make better buying decisions that positively impact their business.

SAP Ariba is unique in the market with regards to its breadth and depth. With more than 3.4 million companies transacting more than $2.1 trillion on an annual basis, the Ariba Network is the largest business network on the planet. And when you combine this scale with our cloud-based source-to-settle applications that have been ranked as market leading by the likes of Gartner, Forrester and IDC, and use them alongside things like SAP S/4HANA, you can very quickly unlock real value.

How do these solutions integrate into a company’s IT landscape?

Most Chief Procurement Officers (CPOs) are looking for ways to manage goods and services in a more simple, consumer-like way. But the process still has to be compliant and fully integrated. Our approach is to natively integrate SAP Ariba and SAP Fieldglass into SAP S/4HANA as well as other ERP solutions. With S/4HANA as their core, companies can master massive amounts of data digitally in real time, enable instant insight and predictive analytics to guide critical decision making and eliminate risk. With the integration of solutions from SAP Ariba and SAP Fieldglass, they can extend this simplicity, power and speed outside their four walls and collaborate with customers, partners and suppliers in new and innovative ways that transform the supply chain. No business is an

Marcell Vollmer Chief Digital Officer (SAP Ariba) island. To make things go in today’s global economy, businesses need to work with thousands of suppliers, partners and customers across supply chains that have become increasingly complex. With the integration of S/4HANA and SAP Ariba and SAP Fieldglass, companies can simplify this process, connecting with all of their partners and managing all of their procurement activities in one place. They can share forecasts and sales to facilitate better planning. They can gain visibility into potential risks and mitigate them before they cause any disruptions.

What are the specific challenges for the energy sector and why do companies such as Uniper choose SAP to tackle them?

Energy companies face challenges unlike most other companies in that every day, millions of people depend on them to power their lives. They must be able to consistently deliver with a high degree of reliability and maintain the integrity of their supply to keep pace with growing demand.

They also have to contend with new players entering the market and keep up with the dizzying pace of innovation that all companies face in today’s digital economy where things that used to take months can now be done in hours and even minutes. And in many organizations, procurement is leading the charge on all of this. Uniper is a great example of a company that saw the sign of the times and started to drive their digital transformation. Under the visionary leadership of CPO Jan Taschenberger, Uniper is building an exceptional procurement organization with an integrated and highly automated source-to-pay process.

The main challenge with most digitization projects is getting people on board with them. You can have the best solution in the world. But unless your employees use it, it won’t deliver any value. And I think Uniper saw out of the gate that with SAP, they could create a consumer-simple, yet enterprise-strong process that would meet their people where they were at and bring them along in the journey at the pace they want to go.

UNIPER

CLICK TO WATCH : ‘UNIPER IS UNIQUE (2018)’ 116 “Ultimately, customers want speedy execution and seamless interaction,” says Susanne Thöle. “The way we achieve that is through understanding the market and identifying opportunities to enable cost savings, or technologies that can accelerate that. We then look at our engagement with existing suppliers and how we approach new suppliers.”

This journey started back in 2016 with Uniper looking at how it can create far greater supplier relationship management, incentivising suppliers to unlock more value and potential within those relationships.

OCTOBER 2018

“ We attend bootcamps, workshops and training talks to ultimately find easier, better solutions to reduce complexity. The idea was to exercise methodologies that we had learned previously to solve issues in our day-to-day business” — Susanne Thöle,Director Procurement, Spot Buy and Indirect for Uniper

EUROPE

For Thöle, this starts from within and

innovative ideas to the business. We

Uniper develops their Operational

are looking at where we are as a fun-

Excellence capabilities to challenge the

ction in the business, challenging the

status quo, to look at the company’s

status quo and finding new pragmatism.”

workforce and continuously strive for

Ultimately, the Operational Excellence

ways to improve and approach new

project epitomises the entire transfor-

or existing challenges with fresh ideas

mation and growth journey of Uniper’s

and more innovative approaches.

procurement as it answers a demand

“We attend bootcamps, workshops

identified by Thöle. As an international

and training talks to ultimately find

company, serving customers all around

easier, better solutions to reduce comp-

the world, Uniper needs to have a level

lexity. The idea was to exercise method-

of proactivity, reactivity and, most

ologies that we had learned previously

importantly, flexibility.

to solve issues in our day-to-day busi-

Thöle believes that by continuously supporting staff in developing their tal-

ness,” Thöle says.

“For me, it’s been a real game changer

ents and skills through targeted KPIs,

as it has helped foster a culture of uncon-

personal development strategies and of

ventional thinking, bringing fresh and

course by valuing their staff and their

E X E C U T I V E P R OF IL E

Susanne Thöle Susanne has spent nearly all her professional life in procurement functions in the pharmaceutical, automotive and energy sector. Before starting at Uniper, she was responsible with her team for setting the frame, ensuring compliance and harmonizing the tools for the procurement function of E.ON.

w w w. s u p p l y c h a i n d i g i t a l . c o m

117

UNIPER

capabilities, Uniper possesses a work-

We put our staff on a path where they

force that is extremely focused and

get the right insight and the perfect

knowledgeable.

training to take into supplier engage-

“Growing and empowering my team is my focus here. Backing up the dec-

ments and bring back innovations and learnings into our business.”

Another important aspect of striving

isions of my colleagues and providing flexibility in the daily work are important

for excellence with a team is the appre-

cornerstones of providing a work envir-

ciation of diversity Thöle thinks.

“At Uniper we drive a diversity initiative

onment that motivates my team to strive

118

for success. We have developed a very

that puts emphasis on the opportuni-

solid framework to challenge our empl-

ties that pluralities bring which I highly

oyees and enable their development so

support. I see a big value in a diverse

that they can understand exactly what

workforce and also in an inclusive culture,

their strengths are and where they can

because obviously: the happier our peo-

continue to push their capabilities,” she

ple feel in their teams, the more value

says. “What it also does is help us

they are able to bring to Uniper.

Part of the development plan, and

concentrate on the things that matter.

We can focus on areas of improvement

a cornerstone of the company’s transfor-

or development that will drive true value.

mation, is digitisation and technology.

E X E C U T I V E P R OF IL E

Philip Höchstödter Philip has worked in different functions like Controlling, IT and Organizational Development for different companies before he joined Procurement in 2011. All these organizations were undergoing large strategic transformations, so the common theme of his career was acting as a Transformation Manager from different functional perspectives. Today he is responsible for the groupwide operational Procurement of Uniper and drives procurement digitisation.

OCTOBER 2018

Photo © Falk Gustav Frassa

EUROPE

Technology is redefining industry sectors

Procurement, has experienced first-

all over the world, with more and more

hand the need to adapt to technology

businesses investing heavily into tech-

and to bring a new innovative approach

nology to embrace the digitally enabled

to the business.

customer and marketplace.

Uniper’s approach to continuously

“When looking to implement technologies like Robotic Process Automation

developing its workforce extends into

(RPA), naturally it is met with some

the digitisation sphere and Philip

scepticism because people feel their

Höchstödter, VP Spot Buy/Operational

role or their work is becoming redun-

119

Photo © Uniper

w w w. s u p p l y c h a i n d i g i t a l . c o m

UNIPER

120

OCTOBER 2018

EUROPE

“What we learned very quickly was that if we applied new technologies to repetitive and somehow boring tasks, those fears were allayed and actually people started appreciating and embracing new technologies, because it makes their lives easier” — Philip Höchstödter, VP Spot Buy/Operational Procurement

Photo © Uniper

w w w. s u p p l y c h a i n d i g i t a l . c o m

121

UNIPER

122

Photo © Uniper

dant,” he says. “What we learned very

framework provided by our IT colleagues

quickly was that if we applied new

to ensure the right prioritization. Today

technologies to repetitive and some-

our virtual workforce consisting of

how boring tasks, those fears were

robots and a chatbot supported by A.I.

allayed and actually people started

is a well perceived standard and a fully

appreciating and embracing new

integrated part of our processes. These

technologies, because it makes their

technologies among others have ena-

lives easier.”

bled us and our staff to focus on higher

“Soon we were receiving so many ideas and ways that people felt we

value tasks,” Höchstödter says.

Another key way in which Uniper

could continue to push further that

is embracing technology is through

we had to use a proper assessment

data management which in turn allows

OCTOBER 2018

EUROPE

the company to better serve its customer base. Through its very nature, the procurement function needs to know

8.2 bcm

Gas storage capacity

and understand the demand, the market and the suppliers to deliver insights to the business and capitalise on the market.

Höchstödter points out that the procurement team has to accurately capture supplier data, contract data, material master data and operational process data, but more importantly the company has to be able to extract value from it, because all future analysis and development

2016

Year founded

12,000

Approximate number of employees

strategies within procurement are built from this data.

Working in an integrated environ-

123 ACD solution provide us with incredible amounts of operational data,” says

ment is key to enable these activities.

Höchstödter. “When communicating

So, in addition Uniper decided to renew

with our requesters or a supplier, we

their Procurement platform to SAP

pool the information we receive and

ARIBA until the end of 2018 to create

can now use that information to target

a new and user-friendly experience for

the key areas where we can develop

their requesters, their suppliers and

and we can do it far quicker and more

their purchasers. This will reduce the

effective than ever before.”

administrative effort and workload con-

As a procurement function, Susanne

siderably. In parallel SAP Fieldglass

Thöle recognises that it can only be

has been implemented as a contingen-

successful and can only achieve any

cy workforce solution, which provides

real growth with a strong network of

additional process stability.

suppliers and key partners like SAP.

“Our systems like SAP ARIBA or SAP Fieldglass, our chatbot and our

“Procurement is a strategic function and, simply put, we’re trying to improve w w w. s u p p l y c h a i n d i g i t a l . c o m

UNIPER

the profitability of the company, so our

from German energy provider E.ON,

key to this is our supplier relationship

Uniper can already point to consider-

management,” she says.

able successes and cost efficiencies

“We are very clear on who our strategic partners are, how we identify them, and that we really put effort into developing

that represent the company and its procurement heading in the right direction.

Eyes inevitably turn to the future: with

these relationships and grow the

technological advancements and an

business together.”

ever-changing market and customer

Having started this transformational journey back in 2016, after the split

124

OCTOBER 2018

demands, procurement will continue to evolve further and Uniper will stay agile

EUROPE

to be ready for the challenges of

“And we will continue to work with our

tomorrow so it can keep shaping the

supplier base and our customer base

energy world.

and use that knowledge to help solve

For Thöle though, the future challeng-

the questions of the future.”

es will be tackled by greater collaboration with the customers and the suppliers of today. “Procurement has brought and will continue to bring innovation, new solutions and cost savings and efficiencies to Uniper,” she says.

125

Photo © Uniper

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126

EUROPE

MELLANOX TECHNOLOGIES: EMPOWERMENT THROUGH PROCUREMENT WRIT TEN BY

DA LE BENTON PRODUCED BY

HE Y K EL OUNI

w w w. s u p p l y c h a i n d i g i t a l . c o m

127

MELLANOX TECHNOLOGIES

Through a vision of continuous improvement, Mellanox Technologies places procurement at its heart

I

n the procurement space, having a strong relationship internally with the wider business is proving

just as crucial as establishing a strong relationship with suppliers. Over the past decade there has been a paradigm shift 128

that has seen procurement move away from its traditional “support” function role as it becomes far more aligned to business strategy. Nowhere is this more apparent than Mellanox Technologies, a leading supplier of end-to-end interconnect solutions. Over the last few years Mellanox Technologies has gone to great lengths to ensure that its customer facing teams are fully supported by an efficient and robust procurement function.

“At Mellanox, procurement has a very special place,” says Oshri Cohen, Vice President of Purchasing and Logistics. “Procurement is involved at the very beginning of a project, through mass production and right OCTOBER 2018

EUROPE

“ We are providing support throughout a product lifecycle and so what we are doing is overseeing product cost and deliverability from top to bottom” — Oshri Cohen, Vice President of Purchasing and Logistics.

129

w w w. s u p p l y c h a i n d i g i t a l . c o m

MELLANOX TECHNOLOGIES

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EUROPE

CLICK TO WATCH: MELLANOX TECHNOLGIES OVERVIEW 131

up until the product’s end of life. We are providing support all throughout a

the best people from within.

“The fact that I had the chance to

product lifecycle and so what we are

touch almost every operation issue

doing is overseeing product cost and

by myself, provided me the chance

deliverability from top to bottom.”

to learn a lot and prepared me very well

Oshri first joined Mellanox in 2007

to the role I’m holding today. When you

as an NPI Manager. Over the years

know, theoretically, what the right thing

his role evolved as he took on more

to do is and you’re connected to your

procurement responsibility before

organisational DNA, then your chances

taking on his current role in 2012. He

to take the right decision and do the

feels that this experience of growing

right implementation are very high,” he

within the company and developing a

says. “Luckily, I grew up inside Mellanox

strong procurement team is a testa-

and so did my great team. I think that

ment to Mellanox and its ability to grow

this is a winning formula to succeed.” w w w. s u p p l y c h a i n d i g i t a l . c o m

MELLANOX TECHNOLOGIES

Through his career with Mellanox he has seen first-hand this shift in understanding what procurement can deliver

That is a short-term activity,” he says.

“Procurement today is responsibile to

to a business. He feels that now more

establish a strong enough supply chain

than ever before a good strong procure-

to enable company growth and even

ment function that is aligned to the right

bring added value to the company’s

vendors can be the key difference; not

customers. These values can be game

only in delivering success but staying

changers, as customers are exposing

ahead of competitors.

themselves less to commitments but

“Traditional procurement was centred around taking care of orders

132

and essentially focusing on shortages.

still demanding complete times.”

“I think procurement has a main role

“Procurement today is a responsibility to establish a strong enough supply chain to enable company growth and even bring added value to the company’s customers” — Oshri Cohen, Vice President of Purchasing and Logistics.

OCTOBER 2018

EUROPE

of making sure that we are enabling

Mellanox to grow and to invest into

business on our end, while also

spaces it might not have done otherwise.

protecting the company from over exposure.”

As Oshri notes, the market have

“Customers are getting smarter and have access to greater information and technology,” says Oshri. “This allows

changed and are continuously chang-

them to compare better and to under-

ing as procurement continues to evolve.

stand where their investments could

The company prides itself on how it can

and should be made. If an organisation

continue to provide creative solutions

or a business intends to grow and

to meet the evolving demands.

intends to be better than its competitors,

It is this approach that has allowed

then it has to continue to find ways to

133

w w w. s u p p l y c h a i n d i g i t a l . c o m

MELLANOX TECHNOLOGIES

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135

become better and better and listening

this data to gain a better understand-

to customers is key to doing that.�

ing of those customers and suppliers

The technology conversation in procurement is defined more and

and a better insight into how Mellanox can grow and improve.

more by data and data analysis. With a supplier and customer base from all

SUCCESS THROUGH COLLABORATION

over the world, Mellanox has access

Vital to this understanding is collabora-

to incredible amounts of data and

tion between the procurement function

information. Through technology

and the wider Mellanox business.

solutions, Oshri and his team can use

Oshri is incredibly proud of the unique w w w. s u p p l y c h a i n d i g i t a l . c o m

MELLANOX TECHNOLOGIES

EUROPE

137

collaboration that procurement has

talk the same language and achieve

with the design team as it allows the

the corporate goals we get.”

two teams to create a roadmap to

For Oshri, the key to enabling

achieving greater cost savings while

success for Mellanox lies in fostering

enabling efficiencies together.

and developing collaborative relation-

“Collaboration is a must to achieve our goals,” he says. “We stay aligned

ships across the business.

“Procurement can be proactive or

in front of the HW team, around the

reactive. Working with HW teams, we

same targets of quality, cost and avail-

are getting involved at the very early

ability. This enables both groups to

stages of the product design process. w w w. s u p p l y c h a i n d i g i t a l . c o m

MELLANOX TECHNOLOGIES

proactive in eliminating potential

CHANGING TECHNOLOGIES AND CHANGING CUSTOMERS

supply chain risks,” he says.

A particular challenge for companies

This allows procurement to be

“It makes our supply chain stronger

in any sector embracing this techno-

and more robust. Once the products

logical innovation is understanding

are moving to mass production, opera-

the right technologies to implement.

tions are able to support those prod-

In the quest to outweigh competitors,

ucts without any special issues

one could be forgiven for investing in

or surprises.”

technologies for the sake of keeping

138

OCTOBER 2018

EUROPE

“We know our customers are measuring us and so we constantly look to better understand how we are perceived, this leads to continuous improvement” — Oshri Cohen, Vice President of Purchasing and Logistics.

up, rather than investing smartly.

This is a challenge that Oshri recognises, but he understands that the most important part of the Mellanox equation is the customer. Through this understanding, Mellanox continuously challenges itself against a series of KPIs that are defined by the customer which allows the company to be more focused moving forward.

“We know our customers are measuring us and so we constantly look to better understand how we are perceived,” he says. “This leads to continuous improvement. Even from a technology perspective, we implement technologies and look at how it is received by customers.

We are constantly evaluating ourw w w. s u p p l y c h a i n d i g i t a l . c o m

139

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WE SUPPORT OUR COSTUMERS GROWTH

EUROPE

CLICK TO WATCH: MELLANOX WORLD END 141

selves to ensure we are delivering

does its customer base. For him, Mel-

value to our customers.”

lanox could not succeed without them.

But how does Mellanox establish and

SUPPLIER NETWORK

foster relationships with key suppliers

A defining component of what Oshri

in order to continue to bring value to

strives to achieve with Mellanox is

Mellanox and its customers, while also

that strong and robust supply chain

growing and developing the suppliers

network. A procurement function can

themselves?

have all the best tools at its disposal, but

“We prefer to find partners that can

it’s all for nothing if there isn’t a supplier

provide us real added values in terms

network in place.

of technology, supply chain and quality

Oshri understands this and approach-

and we invest in those partner relation-

es Mellanox’s supplier network with the

ships as if they were our customers,”

same level of care and attention as he

says Oshri. w w w. s u p p l y c h a i n d i g i t a l . c o m

MELLANOX TECHNOLOGIES

142

“We should enable Mellanox to penetrate the new markets it aims to.

We should allow the company to compete by keep suggesting short lead times, competitive prices and best quality products ” — Oshri Cohen, Vice President of Purchasing and Logistics.

OCTOBER 2018

EUROPE

143

“The strongest partners we have,

firmly believes that trust is devel-

are the ones we experienced some

oped through transparency and

difficulties with and we had to

communication.

manage a few crises. Real partners

“Very similar to marriage, such

are not only being measured when

relationships need to be maintained,”

the business is perfect and blooming.

he says. “Along the way we must keep

The painful hours are the ones to

transparent in order to hear and say

expose the real partners.”

our observations, so in case any

Key to fostering these relationships is establishing trust and Oshri

adjustments need to be done, we will know about it and act accordingly.” w w w. s u p p l y c h a i n d i g i t a l . c o m

MELLANOX TECHNOLOGIES

“ We prefer to find partners that can provide us real added values in terms of technology, supply chain and quality and we invest in those partner relationships as if they were our customers” — Oshri Cohen, Vice President of Purchasing and Logistics.

EUROPE

145

THE FUTURE OF MELLANOX

positioned in the core of the business,

As part of its entire DNA, Mellanox

but there is always place to improve.”

will continuously strive to improve in

he says.

order to better serve its customers.

“We should enable Mellanox to pen-

Oshri is proud of where the company’s

etrate the new markets it aims to. We

procurement function is in terms of its

should allow the company to compete

alignment with the core business strat-

by keep suggesting short lead times,

egy, but even he himself approaches

competitive prices and best quality

each day with a means of improving.

products. Procurement is one of the

The company is looking to break into

key groups to enable such plan.”

new markets and Oshri believes that it cannot even begin to think about doing this, without this continuous improvement approach to procurement.

“Mellanox’s procurement is well w w w. s u p p l y c h a i n d i g i t a l . c o m

146

NORTH AMERICA

Driving a Supply Chain revolution at Goldcorp

WRIT TEN BY

JA MES HENDERSON PRODUCED BY

GLEN WHITE

147

GOLDCORP

Rishi Ghuldu has spearheaded a Supply Chain transformation over the last 18 months at Goldcorp, backed by the company’s senior management

G 148

oldcorp set an ambitious target as part of its 20-20-20 strategy; which meant to increase production by 20%, reduce

cost by 20% and increase its reserve base by 20%. To support this important goal for the Company, Rishi Ghuldu, Goldcorp’s Vice President of Supply Chain & Asset Management, sat down with the company’s Chief Operating Officer, Todd White, to discuss how the company’s Supply Chain was performing and at what pace it was maturing. There was a realisation that while progress was being made, the trajectory of change was not where it needed to be. Ghuldu and White decided that Goldcorp needed to demonstrate real change in a matter of months, rather than years or even decades.

The decision was made to push the accelerator and challenge the Supply Chain and Procurement function to quickly prove its value to the business, allowing it to emerge from a back-office OCTOBER 2018

The Goldcorp team

NORTH AMERICA

149

function to a team with a voice at the company’s top table. In Ghuldu’s own words: “We really wanted to catapult ourselves forward.” A deep dive into the company’s Supply Chain function was undertaken, as well as a close study of successful Supply Chain transformations both within mining and other sectors.

“We mapped out where mining is

From left, Goldcorp’s Ivan Mullany (SVP Technical Services) Rishi Ghuldu and Todd White, (EVP & COO)

relative to other industries in terms of Supply Chain maturity, and we felt it was lagging. Each of our mine sites were doing their own thing, which was often w w w.suppl yc ha i ndi gi ta l. com

GOLDCORP

CLICK TO WATCH : ‘GOLDCORP TEAM TESTIMONIALS — SUPPLY CHAIN DIGITAL TRANSFORMATION 150 correct, but we were certainly miss-

every day. Getting the change approved

ing out on a number of opportunities.

involved conversations with Goldcorp’s

We took the decision to centralise our

investment committee, Mine Manag-

Supply Chain enabling us to leverage

ers and the Executive team. It was so

our portfolio strength – this was really

important to get our team to under-

vital to our transformation.”

stand the thinking behind the move. We

Goldcorp is a company that is pre-

pinpointed to some early wins and were

dominantly decentralised so a great

able to build momentum and support

deal of work went into building the

for the transformation.” Ghuldu and his

business case to centralise the Supply

team studied how other companies had

Chain function.

turned their Supply Chain and Procure-

“Technically, the decision to migrate

ment functions from a largely lethargic

the function is not too difficult,” he says.

function to one that added tangible

“But the company’s Supply Chain

value. The key was found to be a fun-

touches thousands of our employees

damental change in attitude.

OCTOBER 2018

NORTH AMERICA

“To be successful, we had to be candid about our capability of doing

to be an industry leader – we’re not gunning for second place.”

this ourselves, so we took our ego out

“We took the decision to go ‘all-in’,

of the equation. We realised that there

so each of our sites is in the process

were companies around the world we

of being converted to the new model.

could build partnerships with that are

It’s a lot of change in a short amount

very skilled at what they do – we under-

of time but it’s been communicated in

stand that we can’t do it all ourselves.

a clear and consistent fashion and we

We believe that by forming this part-

completely believe there is value in do-

nership, we have been able to achieve

ing it this way rather than over a longer,

in 18 months what companies going at it

phased period of time.”

alone might take seven or eight years

Ghuldu is keen to stress that under

to achieve. That’s enabled us to over-

the new model, it is the planning of the

take some of our competition. We want

Supply Chain that is centralised, with

E X E C U T I V E P R OF IL E

Rishi Ghuldu Rishi Ghuldu is currently Vice President, Supply Chain & Asset Management at Goldcorp Inc. Rishi’s expertise includes formulation and implementation of enterprise Business Improvement strategy, global supply chain management, asset management, change management, and merger integrations. Prior to joining Goldcorp, Rishi led Barrick’s Business Improvement function and worked with the Supply Chain group to launch Barrick’s Supplier Development Program.

Rishi started his career in the automotive industry and holds a Manufacturing Engineering degree from McMaster University and an Executive MBA jointly offered by Kellogg-Schulich (Northwestern/York University) School of Business. w w w.suppl yc ha i ndi gi ta l. com

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“ We have been team meets regularly with senior manable to achieve agement, corporate and finance to in 18 months talk about the potential spend over the next 12-24-month period, and define what companies sourcing opportunities. From there, a going at it alone decision is made about whether an opportunity exists for a single site, a might take seven regional opportunity – taking in three or eight years to four mines or a global opportunity.

“We then report back to the operato achieve” the individual sites overseeing the ex-

ecution. Specifically, the Supply Chain

tions, because that’s where most of

our purchasing takes place. To a large extent, we’re able to provide what each site is going to target in terms of spend,

— Rishi Ghuldu, Vice President of Supply Chain & Asset Management

and what their respective savings

picture and of the supplier base, which

targets are going to be for the follow-

greatly impacts how the negotiation

ing year and the year after. Sites know

takes place and how we are able to

their goals and what opportunities they

drive results.”

can leverage,” Ghuldu comments.

The transformation has also been

“As we were designing our future state, we wanted to avoid creating the

built on access to market intelligence,

best Supply Chain in the world but rather

with professionals communicating

the best Supply Chain for Golddcorp;

regularly with Goldcorp about global

thus not aiming for functional excel-

trends, commodity performance and

lence but for business excellence.”

how foreign exchange rates might impact a project or an initiative.

The transformation has truly increased the spotlight on the company’s Supply

“When we are sitting across from

Chain planning and execution, in turn

our suppliers, we are now equipped

making the function an integral part of

with more knowledge of the broader

Goldcorp’s wider goals. w w w.suppl yc ha i ndi gi ta l. com

153

GOLDCORP

“ We want to be an industry leader — we’re not gunning for second place” — Rishi Ghuldu, Vice President of Supply Chain & Asset Management

154

board, the auditors and the market, we have to deliver on our plans. The transformation is really helping our business become more competitive and sustainable, while lowering costs.”

A case in point is a 40% improvement in the time it takes for a purchase requisition to be converted into an issued purchase order. According to Ghuldu, that has been achieved by standardising processes and rolling out success-

“Prior to this transformation, we had

ful initiatives from one site across all of

some targets within the Supply Chain

its mines. It is a more consistent, higher

function that were generally fairly

level of service, leading to improved

low; without a lot of questioning around the targets or ac-

confidence from clients, he says.

Working through cross func-

countability for realisation of

tional teams on the sourcing

those targets. Supply Chain

front, Goldcorp has been able

was not an integral part of the

to achieve significant savings through competitive bids

overall planning process.

that have resulted in

Because of this transformation, our per-

locked-in savings that

formance numbers

are in the tens of

are now significant

millions of dollars.

enough that Supply

The company

Chain is an impor-

has also been able

tant part of the

to provide growth

operations budget.”

Because of this critical focus from the OCTOBER 2018

— Fernando Carrascal, Director, Global Procurement

opportunities for its professionals, says Ghuldu: “We are

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CLICK TO WATCH : ‘RISHI GHULDU VICE PRESIDENT — SUPPLY CHAIN & ASSET MANAGEMENT AT GOLDCORP 155 starting to operate as a more cohesive

successful collaboration between;

global team, and provided expanded

Operations, Asset Management, IT, Fi-

roles for our Supply Chain staff, wheth-

nance and HR teams within Goldcorp.”

er that’s the site leaders who are now

Despite such a successful transition,

managing offshore teams or global

Ghuldu is still looking to the future, still

category managers taking on addition-

looking for opportunities to improve.

al categories. We have more resources

Part of that effort is integrating cut-

at our discretion than we have had be-

ting-edge technology into the Supply

fore, which means more opportunities

Chain function.

that we can realize.”

Ghuldu recognises that Supply Chain

“We’ve been able to put foundational processes in place and started to gener-

is but one spoke of a larger wheel at

ate results, so we can look forward. The

Goldcorp and is keen to highlight the

thing I believe is going to be the next,

whole value chain of its Supply Chain

call it, Supply Chain disruption in our

maturity. “It is a reflection of the hugely

business is how we do demand planning. w w w.suppl yc ha i ndi gi ta l. com

GOLDCORP

156

£3.42bn Approximate revenue

1994

Year founded

14,094

Number of employees (2017)

OCTOBER 2018

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“The transformation is really helping the business become more competitive and sustainable, while lowering costs” — Rishi Ghuldu, Vice President of Supply Chain & Asset Management

w w w.suppl yc ha i ndi gi ta l. com

157

GOLDCORP

“ We could not have done this without the overarching support from our senior leaders” — Rishi Ghuldu, Vice President of Supply Chain & Asset Management

158 So, it’s about integrating the planning of Operations, Asset Management and Supply Chain, and doing so in a real-time manner,” Ghuldu comments.

“We can utilize technologies such as condition monitoring and end-to-end

becomes more of a check, rather than to generate a demand plan.”

visibility of our Supply Chain, which

“There have been critical lessons

helps us understand what parts you

along the way,” he says. “Acknowledg-

need, what parts are sourced, lead

ing our gaps and taking accountability

times for delivery of parts . Before

for areas where things should have

even realising that a part is needed,

been done better is the only way we

the system has identified the pattern

can improve going forward. Humility

because we have an algorithm in place

goes a long way.”

to be able to detect certain conditions that are lining up. Human intervention OCTOBER 2018

Ghuldu couldn’t have achieved what he has without one core component,

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159

From left, Fernando Carrascal, Amy Hu and Rishi Ghuldu his team. “To undertake such a chal-

The exciting question for the business

lenging task, we could not have done

– if not its competition – is if so much

this without the overarching support

can be accomplished in 18 months,

from our senior leaders and as well

what could be achieved over the coming

as standout performances from the

five years?

Supply Chain team members. This transformation has provided a great platform for our Supply Chain team to rise to the occasion and demonstrate not only functional expertise but also leadership.” w w w.suppl yc ha i ndi gi ta l. com