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February 2018



Enhanced data and analytics



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HELLO AND WELCOME to the February issue of Supply Chain Digital – the must-read publication for supply chain and procurement professionals the world over. As usual, we have a packed issue for you this month, with Avaya’s supply chain transformation story adorning the cover. It’s a piece nobody working in the industry will want to miss. Also featured as part of our digital reports this month is Abu Dhabi’s Department for Culture and Tourism. In an eye-opening interview we speak to the Procurement Department Director, Walled Al Saeedi, who explains how procurement is being utilised to honour the Emirate’s rich history, while also embracing a bright future. Elsewhere, Supply Chain Digital examines the importance of ensuring supply chains are diversified. While the obvious benefits include costs and efficiencies, companies are also benefitting from sustainability and reputational advantages. And in this month’s top 10, we put some of the world’s largest and most valuable supply chains under the microscope. As always, you can join the conversation on Twitter, Facebook and LinkedIn (where we have a brand-new group for you to enjoy – join our community today).

Enjoy the issue!




The Department of Culture and Tourism PROCUREMENT INSIGHTS


Diversifying the supply chain 4

February 2018




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Shining the light on Abu Dhabi’s tourism industry


Waleed Saeed Al Saeedi Director of Procurement Department

Following the completion of the Louvre Abu Dhabi, the Department of Culture and Tourism - Abu Dhabi looks to preserve the region’s heritage, while embracing its future


stablished in October 2012, the Abu Dhabi Department of Culture and Tourism (DCT) was founded with a core value; to build a tourism industry in the region and to ensure the survival of the emirate’s culture and heritage. It is a core value achieved through the creation of infrastructure across three key sectors: tourism, culture and national library. But for Waleed Saeed Al Saeedi, Procurement Department Director, the true value that the DCT can provide for Abu Dhabi stretches beyond three simple categories. “An organisation adds value in financial, social, reputation and other ways,” says Al Saeedi. “We ensure the survival of the emirate’s heritage through tangible means, such as the preservation of buildings, but also intangible ways such as poetry and even heritage performances.” The DCT operate in accordance to, and fully supports, the Abu Dhabi Economic Vision 2030. The vision was designed to guide the Emirate of Abu Dhabi’s growth and development,

enabling the region to become a secure and confident society that aims to develop a competitive, sustainable and globally open economy. The growth of the federation Born in the late 1970s, Al Saeedi has “lived” the modern history of the UAE, he himself being the same age as the federation. Over the course of his career, Al Saeedi has seen first-hand the evolution and growth of Abu Dhabi. Throughout his career, Al Saeed spent time as a civil engineer and contract engineering before moving into senior procurement roles. During his early career, this exposed Al Saeedi to the procurement function, understanding its significance and its impact on financial operations but also the key role it plays ultimately in the success, and failure, of an organisation. Most significantly, during his time at the Emirates Nuclear Energy Corporation (ENEC) Al Saeedi was presented with a unique opportunity to build a procurement function from the ground up.

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Horse riding in the Al Ain Oasis


The year that the Department of Culture & Tourism was founded 18

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“It is not often that someone has the opportunity to build a department in effect, help build an industry,” he says. “At ENEC there were managers and specialists from all over the world, all committed to the project and all experts. This gave me, and other UAE nationals, exposure to processes, methods, technologies and best practices that would have been difficult to acquire in a more mature, settled industry.” After 18 years working in procurement in the energy sector and achieving FCIPS certification and developing his procurement competency, Al Saeedi was presented with a new opportunity and a new challenge with DCT. “DCT presented an opportunity to be involved in significant government initiatives – for the non-oil, or post-energy economy,” he says. “DCT had just been formed out of the merger of Abu Dhabi Tourism Authority and Abu Dhabi Culture and Heritage Department, so there was the challenge of building a new procurement function in what was really a new organisation.” The key role of tourism The tourism industry has been identified as a critical component of this vision and Al Saeedi is all too aware of the key role that DCT will play in developing and enabling this industry. “Tourism impacts the emirate on a visible scale,

Experiencing the ancient history of the Jebel Hafeet Tombs

through attractions such as water parks, the Louvre Abu Dhabi, Qasr Al Hosn, the Al Ain Museum and others,” he says. “But it’s not enough to have interesting sites alone. We need ports for cruise ships, roads, hotels, medical services. Building all this creates growth opportunities for local firms, jobs for people and opens the door for international partnerships.” “As Abu Dhabi grows, so does the nation.” In its ambition to preserve the heritage of Abu Dhabi, Al Saeedi is keen to stress that it is important to

understand that culture is not limited to the past. The Abu Dhabi government places great emphasis on proactive, modern cultural programmes and since its establishment, DCT is leading the development of what Al Saeedi describes as a “different kind of economy”. “It’s one that is knowledge intensive, internationally connected and involved with the rest of the world on a very different platform than say that of the energy sector,” he says. “It will require new skills and resources, but most of all, a new kind of people.”

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Visiting the site of the Al Jahili Fort


February 2018

We ensure the survival of the emirate’s heritage through tangible means, such as the preservation of buildings, but also intangible ways such as poetry and even heritage performances

Waleed Al Saeedi, Director of Procurement Department

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D E PA R T M E N T O F C U LT U R E & T O U R I S M – A B U D H A B I

The Louvre Abu Dhabi: Procurement prowess In November 2017, on the Saadiyat Island Cultural District in Abu Dhabi, the doors were opened at the Louvre Abu Dhabi, a museum that was designed to “house the aesthetic expressions of different civilisation and cultures, from the most ancient to the best in contemporary artworks”. Described as a “gift to the world”, the Louvre Abu Dhabi encapsulates the vision of DCT, a celebration of the old and the new that brings together cultures from all around the world.

The Visitors’ Centre at the site of the Qasr Al Muwaji Fort 24

February 2018

“It should be seen not as something for Abu Dhabi or the UAE, but something that we have, which we want everyone to come and enjoy, and learn from,” says Al Saeedi. Built as part of a partnership between the Abu Dhabi and French governments, the Louvre represents a first of sorts. France and UAE have a long history of partnerships in the energy, defence and retail sectors, but the Louvre is one of the first, and certainly the largest, in the culture and tourism industry. But it is not merely a tourist

attraction. “Of course, the Louvre, other museums we have worked on as well as other historic sites will provide tourist attractions, they have already and will continue to enable other tangible benefits,” says Al Saeedi. “They will have a profound effect on the local economy and not simply tourist revenue. To a certain extent, they will create a new economy, as an industry or business sector cannot operate without an adequately resourced supply base, including people, facilities and infrastructure.”

Supply chain and a changing nation The Louvre Abu Dhabi represents one of many large-scale projects that the DCT has and will continue to deliver across the region and as Procurement Director, working with international partners, contractors and suppliers, Al Saeedi knows all too well the challenges that come with promise in delivering projects of such magnitude. DCT is also working on two more museums in Abu Dhabi as well as major heritage site restorations and upgrades, such as

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D E PA R T M E N T O F C U LT U R E & T O U R I S M – A B U D H A B I

Louvre Abu Dhabi, on the Saadiyat Island Cultural District in Abu Dhabi


February 2018

O  f course, the Louvre, other museums we have worked on as well as other historic sites will provide tourist attractions, they have already and will continue to enable other tangible benefits Waleed Al Saeedi Director of Procurement Department

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Qasr Al Hosn and the restoration of historic fonts in Al Ain. For Al Saeedi, the challenge was in the locality. “Abu Dhabi’s supply chain is different from those in many other countries. First, because in some cases, very little of what we need is produced or created here, it has to be imported,” he says. “We are a small country, the local economy cannot always support a full-time population of castle restoration specialists, symphony orchestras or book cataloguers, for example.” As a nation historically of consumers, procurement in Abu Dhabi has often favoured importing materials, expertise and equipment from outside of the country and this is common across not only Abu Dhabi but the wider UAE. But, as Al Saeedi points to, as Abu Dhabi continues to grow economically and a steady demand begins to build, this will change. Working on projects with partners from all around the world does bring with it an inescapable challenge surrounding communication and logistics. DCT’s partner

networks spans Asia, South Africa, Europe and North America and so projects and programmes are dependent on the successful working with these suppliers. “Supply chains are not pipelines such as what are used for oil,” he says. “Materials and goods cannot be pumped smoothly and so each stage needs to be managed.” At the start of any project, the procurement function of DCT approaches the whole process as part of an integrated team to manage the multiple stages and elements of the process. This involves working with those partners and understanding their objectives and, importantly, their capabilities. Critical communication An important aspect for Al Saeedi is to establish and capture milestones and work packages, allowing him and his team to configure the process internally so that DCT has the necessary resources available through to handover. “In a large project, these milestones include the design phase in which

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D E PA R T M E N T O F C U LT U R E & T O U R I S M – A B U D H A B I

there can be many iterations, development and construction, right through to pre-handover, commissioning and delivery,” he says. “What we then do is build lists of requirements and schedules, identify lead times and risk levels and work with the project team to establish the procurement plan.” This is where that communication component is key and DCT has utilised a procurement dashboard for performance planning and tracking, allowing it and end users to see into the cycle status, PO status, spending and supplier Teamwork has been central to recent internal project success at DCT

engagement. This dashboard, allows DCT to access what Al Saeedi calls as the “most used functionality” in a project – status updates. “What we have now is the first stage in eventual automation of procurement and supply management. It will free up our people for more value adding work and a more strategic focus,” he says. “The dashboard is really about information sharing to support executive teamwork and decision making. A great deal of the time and effort in managing procurement and supply for a large project is in working directly with suppliers and

Al Saeedi and a member of the procurement team

end users to achieve understanding and a negotiated win-win outcome. Thus, managing large scale procurements is as much about networking and relationships as it is about transactional tasks.” Achieving procurement value Having a forensic knowledge of the supplier landscape is an essential quality for any procurement leader, with Al Saeedi aware of how a reliable and cost-effective supply chain can make a huge difference to an organisation.

Ultimately, it comes down to covering all bases in order to do the best possible deal for the business - in his case DCT. “One area where all procurement functions can face issues is achieving value for the organisation,” he adds. “Our role is not only to supply, but to do so on the best possible terms. To do this, we have to know our markets and supplier costs, standard payment terms and best practices. “For example, a bidder for restoring old books submits his commercial proposal: it is lower than the four

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D E PA R T M E N T O F C U LT U R E & T O U R I S M – A B U D H A B I


February 2018

W  hat we have now is the first stage in eventual automation of procurement and supply management. It will free up our people for more value-adding work and a more strategic focus Waleed Al Saeedi Director of Procurement Department

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D E PA R T M E N T O F C U LT U R E & T O U R I S M – A B U D H A B I

other bidders, but whether it is best value is another question. “ “We have to know market prices, and we have to have at least a general conception of the bidder’s costs and breakdown, so that we can negotiate from a position of strength and knowledge.” While commercial viability is vital, Al Saeedi believes there are a multitude of considerations to take into account before any final contracts are struck. “The bidder with the lowest price may not be one that the end users prefer, because of some technical aspects of the service that they Al Saeedi midpresentation


February 2018

are proposing,” he explains. “Our job then is to question, challenge and understand enough of the technical nature of the purchase as well as the commercial terms, raw materials costs and other inputs. “This is not always easy for common items; it requires considerable agility and resourcefulness when it is something new, particularly something that we may only buy once every few years.” Powered by partnerships Supplier relationships are

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essential to DCT. Abu Dhabi depends on global trade networks. DCT’s mission, as Al Saeedi notes, is to bring the world to Abu Dhabi, and to create ways in which Abu Dhabi can engage the rest of the world. “There is a strong focus for us on delivering to global standards, whether they be art, entertainment, the built environment or intangibles such as poetry and heritage performance,” says Al Saeedi. “We are fortunate to have one of the

most varied and interesting supplier communities. Because many of our local vendors have their own overseas suppliers and local subcontractors, the chain has many layers.” The growing importance of the procurement function Over the course of his career, Al Saeedi has seen the growth of the region, the industry and with it the growth of the influence of the procurement function. Al Saeedi believes that now, as

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W  e feel we

must preserve our heritage for future generations by simultaneously embracing those future generations

Waleed Al Saeedi Director of Procurement Department Abu Dhabi’s skyline

the industry becomes more and more mature, transparent and robust, organisations such as DCT need to go beyond technology. A key objective of DCT and the Abu Dhabi Government has been the support and enablement of SMEs in the region. “Technology will enable us to identify, register and include SMEs, something that we cannot do today without enlarging our headcount – it is very hard to do it efficiently,” he


February 2018

says. “Imagine the possibilities if all government entities can cooperate in this initiative; the SME sector will be able to access public procurement and we can build mutually beneficial supply partnerships.” “But possibly the largest influence we can have is in the transparency of public procurement, ethical compliance and sustainability because of the way in which information can be studied, compared and used to drive policy agendas

D E PA R T M E N T O F C U LT U R E & T O U R I S M – A B U D H A B I

through the supply chain.” The increasing influence of Abu Dhabi In such a short space of time, the DCT has become an integral part in the Abu Dhabi Vision 2030. As the region continues to grow, Al Saeedi calls back to his earlier point, that culture is not limited to the past. “We are a young country, but in the same breath we are ancient,” he says. “Our history, culture and way

of life are all much older than the federation. As we continue to deliver these projects and grow the region, we are creating opportunities, jobs and international partnerships. “We feel we must preserve our heritage for future generations by simultaneously embracing those future generations.”

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Diversifying the supply chain Written by LE I L A H AW K I N S

Diversifying the supply chain is of the utmost importance to ensuring the greatest possible choice of goods and services. The most obvious advantages are cost and efficiency, but it also comes down to sustainability and, ultimately, reputation‌

PROCUREMENT INSIGHTS ‘Kering’s report specifically addresses the potential risk to the security, operations and assets of a company as a consequence of climate change’

SUPPLYING FROM LARGE organisations has many benefits, as these usually have a greater worldwide reach and legal advantages, including in most cases, the lesser likelihood of folding. However, there are increasing advantages to sourcing from smaller and mediumsized enterprises as many industry insiders highlight the advantages to a diversification of the supply chain. 40

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So, what are the advantages of utilising SMEs over the larger enterprises. Well, SMEs can offer efficiency at a local level, as working with businesses closer to home can improve the speed of the supply process. Additionally, small companies often provide more innovative services as they bid to stand out from their competitors. Using a number of SMEs rather than one single company also

has potential advantages as the risk is spread. For instance, sometimes a usually solid supplier might no longer be dependable through no fault of their own, in cases of natural disasters – hurricanes, earthquakes or floods – or the increasing effect of cyberattacks, political unrest and economic instability. A spread across geographies is also advantageous should a natural disaster occur.

Kering’s report specifically addresses the potential risk to the security, operations and assets of a company as a consequence of climate change. “Extreme weather events resulting from climate change can impede manufacturing operations and disrupt and delay the transportation of raw materials and finished products. Extreme weather can also affect the livelihood and mobility of people, which 41

PROCUREMENT INSIGHTS could increase workforce instability in operations and supply chains and impinge on consumers’ access to retail stores. The companies that build resilience into their supply chains will be best positioned for success and growth as they will have an adaptive advantage in the face of change and volatility.” It’s important to engage with companies of all sizes, as well as working with companies based in different locations in case of issues like physical disasters. Not that you have to eliminate big business completely, as engaging with different sized businesses also has its rewards. Puneet Saxena, Group Vice President, Supply Chain Planning at JDA Software: “Supply chains face many challenges in today’s global and volatile economy. Increasing outside pressure from the likes of omnichannel retailing, political upheaval and even extreme bouts of weather mean businesses have to deal with increased risk and uncertainty, placing pressure on overall profitability and growth. To overcome these pressures the supply chain must not only be resilient, but also increasingly diverse. Companies need to evaluate their overall sourcing strategy and supply chain network 42

February 2018

‘The companies that build resilience into their supply chains will be best positioned for success and growth as they will have an adaptive advantage in the face of change and volatility’

design, while diversifying their sources of supply. This approach to supply chain diversity will ensure that organisations have multiple options and can determine the right balance between near-shore and off-shore manufacturing. For example, by having a carefully planned ‘portfolio’ of suppliers and resources, companies can spread their risk, mitigating the impact that social, political and geographic incidents could have on raw material price and availability.� Increased competition and profits More choice within the supply chain also means a greater opportunity to analyse cost, location, and the range of goods available when you come to selecting the ones that works best. A diverse supply chain can also encourage competition between suppliers to drive down prices. A study by the Hackett Group found that those with a diverse supply chain had lower overall operating costs and spent 20% less on buying. This of course leads to a higher ROI, by being able to offer more competitive prices, improving quality of service, and leading to satisfied customers. At a local level, it also increases spend and promotes employment by boosting economies. 43

PROCUREMENT INSIGHTS Diverse human talent It is equally important for the suppliers to be diverse themselves. Multinational IT organisation HP is committed to empower employees in its supply chain from what it terms the most vulnerable groups, such as people from minority backgrounds, women, students, and foreign migrant workers. LinkedIn recently published a report – surveying 9,000 business leaders – on how diversity within the workforce can increase productivity. ‘Global Recruiting Trends 2018’ stated: “In the MENA region, diversity has evolved to be the biggest game-changer and most embraced trend with over half of companies are already tackling it head-on. According to the report, 80% of talent acquisition leaders and hiring managers say that diversity is the top trend affecting how they hire, with companies prioritizing diversity – gender, race, ethnicity, age, education, etc to improve culture and boost financial performance, as they are increasingly realizing that diverse teams are more productive, more innovative, and more engaged.” HP states that diversity is imperative for good business. “We invest in improving representation by minorities 44

February 2018

and women within our supply chain and encourage diversity in suppliers’ own workforces,” it said. “Just like our employees, diverse suppliers bring unique experiences and perspectives that strengthen our business, support innovation in our supply chain, and enhance local economies.” How to adopt diversity HP is encouraging small businesses and companies owned by minority individuals to compete for its business. It has a specific department – the Global Supplier Diversity Office – to oversee programmes that recruit and support suppliers. To grow its business with these suppliers, HP is developing a programme in the US that provides training, business matchmaking, and community engagement events with its larger suppliers. In the future, it is planning to drive more business to these companies as well as organisations supporting black empowerment in South Africa. Sustainable supply chains Seeking suppliers with sustainable operations is increasingly important too, particularly in the face of climate

change. According to the Carbon Disclosure Project, a UK-based non-profit that helps companies to uncover their environmental impact, around 50% of the average corporation’s carbon emissions come from its supply chain. Luxury goods group Kering produced a report with consultancy

firm Business for Social Responsibility (BSR), in which it outlines the importance of sustainable suppliers and supply chain transparency. In the report Marie-Claire Daveu, Kering’s Chief Sustainability Officer and Head of International Institutional Affairs, claimed that for large multinational businesses like Kering, the supply 45


chain is critical to develop climate resilience both through emissions reduction and adaptive approaches. While this is an example of a large, global organisation, the same principle applies to others, and a clear strategy is necessary in order to gain and guide new suppliers. A visible supply chain There is a growing trend in making 46

February 2018

‘(HP) has a specific department – the Global Supplier Diversity Office – to oversee programmes that recruit and support suppliers’

the details of supplier diversification programmes more visible and there is already a legal requirement to have a standardised paper trail when diversifying the chain and transferring contracts. It’s also important for the supply chains to be transparent, to mitigate risk and for good business practice, as it helps to establish the organisation’s reputation when it comes to attracting customers.

Additionally, the process should be easy so there are minimal barriers and subsequent bureaucracy. Many buyers are already breaking their contracts into smaller parts to simplify them for smaller suppliers to take on. Networking with other organisations and trade bodies that represent relevant industries is also important. Talking to suppliers regarding expectations is key. In the case of Kering, to source the materials it needs to produce its apparel, it maps its supply chains against climate change risks, set targets with its supplier base partners and stakeholders, and monitors its impact. Older supply partners are part of the process too, as usually they will still be a part of the supply chain and should be kept informed should the chain expand. While this may seem like a difficult task at first, the benefits in terms of savings, social responsibility, and ROI are invaluable, which is why more and more organisations are going down this path of a much more diversified supply chain. 47

Modern Railways and the route to boosted growth in Eastern Africa How the current wave of modern railway construction in Africa might impact business opportunities in the area by promoting smoother, faster and cheaper logistics Written by SHEM OIRERE



Rail freight has been proven to reduce logistics costs in Africa

KENYA, ETHIOPIA AND Djibouti are set to cut down container transportation costs by as much as 50% and improve operations at the ports of Mombasa and Djibouti respectively, with the launch of freight cargo services on their newly completed standard gauge railway (SGR) lines. Transportation of containers and general cargo from the two ports to the landlocked countries of Ethiopia, Uganda, Rwanda, South Sudan and parts of Democratic Republic of Congo is not only expected to be much faster, safer and more efficient, 50

February 2018

but also substantially contribute to reduction in carbon emissions from the thousands of trucks currently used in moving exports and imports. In Kenya for example, the launch of the 472km SGR line linking the Port of Mombasa to the country’s capital Nairobi in June 2017 has proved a game changer for shippers and also other logistics stakeholders in Eastern Africa. This is because it now costs $500, an equivalent of 50% less to transport a 20ft container (TEU) from the port to Nairobi’s newly launched Nairobi Inland Container Depot (ICD). The SGR line, which cost $3.8bn to

construct in 42 months with 90% financing from China ExportImport Bank, has been allocated 40% of the entire Mombasa port and expanded the capacity to move containers and general cargo from the site, which is the biggest port in Eastern Africa. The port serves the landlocked countries of Uganda, Rwanda, Burundi and parts of eastern Democratic Republic of Congo. The new SGR line, which has an axle loading of 25 tonnes compared to 16 tonnes for the century-old metre gauge line, will serve freight trains with

‘The freight train service is expected to reduce the cost of doing business in East Africa because it will bring down the charges for transporting a TEU or 20-tonne container’ 51

LOGISTICS & DISTRIBUTION a capacity of 4,000 tonnes compared to the current 1,000-tonne trains. With the launch of the SGR line, which has been built by China Road and Bridges Corporation as part of China’s ‘One belt, One Road’ initiative, the frequent congestion at the port of Mombasa is expected to ease as cargo and containers would now be cleared much faster. “The commissioning of the freight train service anticipates a significant improvement in cargo off-take from the Port of Mombasa to the Nairobi Inland Container Depot,” says Catherine Mturi-Wairi, Managing Director of Kenya Ports Authority, which operates the Port of Mombasa. Equally, transfer of most bulk cargo to the SGR will markedly decongest the roads.” The modernised $212mn Nairobi Inland Container Depot, which was opened for business on December 16, has an expanded annual capacity of 450,000 TEUs, up from the previous 180,000 TEUs. Mombasa’s annual cargo throughput is estimated to have grown by 5.7% annually for the last five years to 27.36mn tonnes in 2016, up from the 21.92mn recorded in 2012. During the same period, container 52

February 2018

traffic grew by 4.8% to 1.09mn TEUs in 2016 from the 903,463 TEUs recorded in 2012. “This growth was significantly supported by Uganda destined cargo which grew by 7.1% over the same period,” adds Mturi-Wairi. Kenya’s President Uhuru Kenyatta, who opened the Nairobi ICD, says: “The high speed, high capacity and efficient SGR network will serve as an important link between the port of Mombasa and the Nairobi Inland Container Depot. “The new SGR line will enable the evacuation of cargo directly from the port of Mombasa for clearance at the Nairobi Inland Container Depot.” The freight train service is expected to reduce the cost of doing business in East Africa as it will bring down the charges for transporting a TEU or 20-tonne container. “It currently costs $1,200 to ship a 20-tonne container from Japan to the Port of Mombasa – yet it costs $2,500 to move the same container from the port to Uganda’s capital Kampala and it could be as expensive as $4,500 to Rwanda’s capital Kigali,” Kenyatta explains. The period of time taken to transport

Larger trains are a way of making rail freight transport even more efficient

cargo between Mombasa and Nairobi has been reduced from 12 hours to four hours with accruing benefits expected to trickle to businesses in landlocked Uganda, Rwanda, Burundi and DRC when the line is finally extended to these countries. Already construction is under way for the first stretch of the 375km ‘phase two’ line from Kenya’s capital Nairobi to Malaba, a town on the Kenya/ Uganda border. This first stretch, also known as Phase 2A, will link Nairobi and Naivasha town that lies 120km to the northwest of the capital. At Naivasha, Kenya is developing one of the most modern industrial zones next to Africa’s largest geothermal power generation complex of Olkaria.

To woo more investors to the industrial zone, Kenya has announced subsidised electricity tariffs and the power connection will be direct to Olkaria to avert possible supply disruptions. In addition, manufacturers of apparel will be allowed access to steam at Olkaria as an incentive. More advantages from the launch of SGR freight service trains are expected for businesses in Ethiopia and Djibouti with the recent completion and operationalization of the 784km Addis Ababa-Djibouti Port electrified railway line. Djibouti handles up to 90% of Ethiopia’s trade and the launch of the modern SGR, the first modern electrified railway line in Eastern 53



February 2018

Africa, is expected to increase the efficiency and cargo/container volumes to and from Ethiopia. After Ethiopia achieved the notoriety of being the fastest-growing economy in Eastern Africa and Horn of Africa region, container volumes through Djibouti have increased from 176,453 in 2002 to 854,851 in 2014 according to Djibouti Ports and Free Zones Authority, the port’s operator. In 2014, Ethiopia ordered 32 freight trains for the $4bn SGR line, for which construction commenced in 2013 and was completed in 2016 to ease movement of goods to and from the country to the Djibouti port. This new electrified SGR line is likely to significantly reduce the current 1,500 trucks that move cargo/containers daily to and from Addis Ababa and Djibouti, thus saving on transport costs, reducing carbon emissions and shortening the period it takes to move goods on the corridor from three and half days to 10 hours. Ethiopia Railways Corporation, the country’s railway operator, anticipates 6-7mn tonnes of cargo in the first year of the SGR operation. China Railway Group and China Civil Engineering Construction Corporation

have won a six-year contract to operate the new railway line that will see freight trains move 3,500 tonnes to and from Addis Ababa. Ethiopia, which is expected to achieve gross domestic product growth of 8.3% in 2017 compared to the global average growth of 2.7% for the same year, is constructing in phases the other SGR networks to connect to the neighboring countries of Kenya, South Sudan and Uganda, providing a link to the ports of Tadjoura in Djibouti, and Mombasa in Kenya. Already the government of Ethiopia has awarded Turkish firm Yapi Merkezi, Chinese contractor China Communications Construction Company, and Overseas Infrastructure Alliance of India the contract for the construction of Awash, on the way between Addis Ababa and Djibouti, to Mekelle, a project that is expected online by the end of 2018. Kenya, Ethiopia and Djibouti could soon turn into the region’s preferred business destination with the efficiency in the movement of exports and imports and the associated cheaper logistics costs which support the anticipated economic growth in each of these countries. 55


How can enhanced data and analytics optimise your supply chain? As the digitisation of supply chains becomes ever more the norm, we asked the experts how to manage big data and deliver actionable insights across all sectors Writ ten by DAN BRIGHTMORE


HE TSUNAMI OF big data created by the Internet of Things (IoT) demands that companies employ intelligent data management techniques to separate the wheat from the chaff, or find the ‘good data’. Adding to the fact that 90% of the world’s data has been created in the last few years alone, it’s vital that businesses grasp meaningful insight from data and analytics – but what key areas should 58

February 2018

“Companies that fail to adopt a smarter IoT by processing data automatically are likely to get swallowed up by the data monster that is surely to come” – Daniel Newman, founding partner of Futurum Research and CEO of Broadsuite Media Group

be focusses on for best results, and how could this enhance the backbone of your company, the supply chain?

EMBRACE MACHINE LEARNING With IoT set to exponentially increase the amount of available data as billions of devices activate and connect online, companies will need to turn to machine learning. Daniel Newman, founding partner of Futurum

Research and CEO of Broadsuite Media Group, warns it will be simply too much for humans to handle alone. Machine learning can eliminate data junk and “keep data lakes clean and consistent”, even when it comes to unstructured historical data, he says. Newman also notes that the technology’s ability to recognise patterns can help users to better understand customers and their 59


“The worst decision you can make is to  do nothing. It’s important for companies to act right now because the lifeblood  of these companies is at stake” – Shawn Lane, Senior Vice President of Sales and Marketing, E2open

decision-making, ultimately helping you to gain more of their business. He adds: “Machine learning helps take most of the bias out of decision making by presenting information based on factual data trends”, but warns that artificial intelligence is not itself bias free as it was created by humans whose judgement and logic are still important parts of data processing. The overall goal should be to improve decision making with 60

February 2018

the real-time harvesting of valuable data through machine learning to allowing companies to make instant changes based on harvesting real insight from big data to enable actionable supply chain visibility. Can a business see into its supply chain and predict what’s going to happen tomorrow, next month or next year? Harnessing this vision can help companies predict where goods are going to be, compress cycle times

and get smart about their business. Newman concludes: “Companies that fail to adopt a smarter IoT by processing data automatically are likely to get swallowed up by the data monster that is surely to come.”

RECRUIT AND UPSKILL WISELY A recent report by Accenture stresses the importance of having the right people involved in supply chain management in your organisation to deliver the data driven decisionmaking Newman describes. “Supply chains can essentially jump the digital evolution curve by adopting a networked supply model of operation enabled with advanced analytics instead of following a more conventional progression based on legacy enterprise resource planning and supply chain management systems. As organisations integrate big data analytics strategies into their operations, they will need to update their talent strategy, including upskilling and hiring, or contracting, talent to leverage the power of analytics,” asserts the report. Accenture stresses that using

analytics to automate more routine supply chain decision-making related tasks will help free up existing resources in house to upskill talent to “focus on higher value-added business tasks”. Additionally, automating the ingestion of massive amounts of data from myriad sources across the supply chain will lead to increased operational efficiency.

LEVERAGE PREDICTIVE ANALYTICS Extending out from just mining existing data, predictive analytics seeks to extract information from current data sets in order to forecast future probabilities with an acceptable level of reliability, including a few alternative scenarios and risk assessment. “Being in logistics, it’s crucial to help upstream and downstream partners grow,” maintains Danny Halim, Vice President of Global WholesaleDistribution and 3PL Industry Strategy at JDA. “This could be as simple as providing consumer sentiment, down to the assortment insights in the case of the retail industry, as well as seasonality patterns and consumption forecasts,” he adds. 61


As a provider of third party logistics (3PL), JDA’s clients include the likes of DHL, Asda, Coca-Cola and General Electric. JDA recently aligned with KPMG to meet the needs of those companies rapidly accelerating their digital supply chain transformations. The alliance provides manufacturers and distributors with high-impact, demand-driven planning and execution solutions 62

February 2018

to look to the future and solve the quest for competitive advantage. “In the case of industrial procurement, suppliers need to plan months out – however many retailers and distributors aren’t advanced enough to support this,” reckons Halim. “Big data and predictive analytics can help suppliers plan their businesses beyond the next order horizon, and extend this planning

all the way out to 12-18 months. They can do this without taking too many risks by providing insight into the downstream customer demand and buying behaviour. Providing better visibility helps customers run their businesses better and suppliers to grow their businesses.”

DATA IS ONLY AS GOOD AS THE QUESTIONS YOU ASK Dr. Catarina Sismeiro is an associate professor at Imperial College Business School on the Executive MBA programme and both the Business Analytics and Strategic Marketing Masters programmes. She argues that many businesses have adopted a twin-speed approach to analytics. Complex algorithms are used to boost operational efficiency, cut costs and track customer behaviour, but only a select few are using what they learn to drive strategic direction. No matter how advanced your IT infrastructure, your data will not deliver a ready-made solution unless you embrace the technology and ask a specific question. “The main issues are a lack of

data-centric culture, not enough willingness to rely on algorithms or data analytics for strategic insights, and the absence of a strategic plan for data-driven insights, especially at the top level,” she explains. “Although the evolution for a datacentric approach at operational levels started long ago, pushed by the need to improve efficiency due to fierce competition, changes at the top strategic level have been slower.” To help transform data into business decisions, and apply this to real-life problems like supply chain management, you should start preparing the pain points in your supply chain that you want to gain insights into before you even start the data gathering process. Based on your company’s strategy, budget, goals and target customers prepare a set of questions that will smoothly walk you through the data analysis and help you arrive at relevant insights. Growing businesses should consider sweating existing data before splashing out on new insights. According to Sismeiro, internal data is often surprisingly rich and it’s free. 63


In many cases, companies just need to organise, integrate, and ensure data is stored for easy access. “In the supply chain many assumptions are made,” says Fab Brasca, Vice President of Solutions Strategy at JDA, offering an answer to the dilemma identified by Sismeiro. “We use averages to determine lead times and try to model transportation issues, factoring in many constraints, but integrating with a predictive analytics solution which not only allows you to understand where things are in your supply chain but where they could be. This intelligence can then be used to not only react, but proactively respond and manage disruption.”

JOIN THE WAVE OF DIGITAL DISRUPTION Shawn Lane is Senior Vice President of Sales and Marketing at E2open – an end-to-end supply chain company providing software solution tools around supply chain planning, execution, collaboration and connectivity. He agrees that rather than being an added extra, digitising the supply chain is the only way to 64

February 2018

keep up with big business. “Activist investors and the rise of Amazon. com are forcing companies to change the way they behave. Companies are terrified, and know they need to perform better. They need to have higher customer performance at lower cost and they’re struggling to figure out where to get those productivity improvements.” E2open works in partnership with Capgemini – a global leader in consulting, technology and outsourcing – delivering E2net (the largest direct materials network in the world, managing $250bn worth of spend from some of the biggest companies in the world). Focused on software-as-a-service (SaaS) supply chain, E2open aims to deliver the best value at the most reasonable cost. The niche they occupy in the market highlights the need for larger companies like Capgemini to seek out and partner with agile disruptors who can innovate their offering. For supply chain leaders, Lane warns: “The worst decision you can make is to do nothing. It’s important for companies to act right

‘JDA recently aligned with KPMG to meet the needs of those companies rapidly accelerating their digital supply chain transformations’

now because the lifeblood of these companies is at stake. More and more companies are going bankrupt because they are failing to be efficient and productive in their markets. And there’s a lot of trepidation in the market right now – the private equity effect in CPG (consumer packaged goods), the regulatory effect in pharmaceutical, and the market depression in high

tech. But if companies can step back, what they realise is that during times of change there are tremendous amounts of opportunities. Investing in change, new techniques and approaches is best done in times of transition. Coming out of these difficult markets, there will be winners and there will be losers.”


Top 10 Biggest supply chains


Supply Chain Digital has taken a look at Gartner’s favourite supply chains (Top 25 Supply Chains, 2017), finding out which companies have seen their top-notch supply chain management literally pay off with the biggest revenue figures

T O P 10



Placing ninth on Gartner’s criteria list and 10th by sales revenue is toiletryproduction company Colgate-Palmolive. Forbes determines the company’s sales revenue to be $15.2bn, with a market cap of $64.9bn. Founded in New York City in 1806 by William Colgate as a soap and candle business, it now employs 36,700 people according to Forbes. Its operations are split in two sections: Pet Nutrition, and Oral, Personal, and Home Care. It places 472nd on Forbes’ “The World’s Biggest Public Companies” list and 55th on Forbes’ “World’s Best Employers”. According to its company website, its global brands reach over 200 countries. Benzinga reports that Colgate-Palmolive is set to outperform in 2018, as researcher Caroline Levy elevated the company’s stock value from “Neutral” to “Outperform”.



February 2018

“According to Industry Week, 99% of the coffee Starbucks uses is ethically sourced”




Starbucks is an American-based coffeehouse chain and globally-recognised brand. According to Forbes, it brings in $21.67bn in sales, with a market cap of $84.6bn. Founded in Seattle in 1971 as a single coffeehouse, it now operates with 245,000 employees and 22,519 stores across the world. It places 370th on Forbes’ “World’s Biggest Public Companies” and 10th on Gartner’s “Top 25 Supply Chains 2017”. According to Industry Week, 99% of the coffee Starbucks uses is ethically sourced. CNBC reports that Starbucks has not recently reached Wall Street estimates with regards to revenue as a result of decreased foot traffic and customers spending longer in-store. However, Starbucks has unveiled plans to open standalone Princi, an Italian bakery which will allow the company to access the lunch food market, for 2018. Industry Week reports that the company has announced an intention to open up to 12,000 more stores in the near future. 69

T O P 10

H&M $22.67bn

Founded in Stockholm, Sweden in 1947 by Erling Persson, H&M (Hennes & Mauritz) is a clothing, accessory, footwear and cosmetics store chain. According to Forbes, it employs 114,586 people, bringing in a sales revenue of $22.67bn, with a market cap of $39.9bn. It places 506th on Forbes’ “World’s Biggest Public Companies”, ninth on Forbes’ “Top Ten Retailers to Work For”, and fifth on Gartner’s “Top 25 Supply Chains 2017”. According to Industry Week, it scores a perfect 10 on Gartner’s Corporate Social Responsibility (CSR), expanding its online and offline operations as well as bringing technological advances and automation into its distribution centres. According to the company website, the target growth is 10-15% per year in local currencies. 2018 will see Ukraine and Uruguay joining the H&M business, as well as the first standalone H&M Home storefront.


“H&M scores a perfect 10 on Gartner’s Corporate Social Responsibility (CSR), expanding its online and offline operations as well as bringing technological advances and automation into its distribution centres”


February 2018


McDonald’s $24.62bn

McDonald’s was set up by Raymond Albert Kroc in 1955, ultimately becoming the fast-food giant it is today. Success was rapid: by 1958 McDonald’s had sold its 100 millionth hamburger. Forbes places its sales revenue at $24.62bn, with a market cap of $106.4bn. With headquarters in Oak Brook, Illinois, it has over 36,000 restaurants in over 100 countries. With 375,000 employees, it is placed 215th on Forbes’ “The World’s Biggest Public Companies”, and second on Gartner’s “Top 25 Supply Companies 2017”. According to Industry Week, McDonald’s inventory turns far surpass all other companies: an average of 174.5 compared to the next-closest Samsung at 15.1 turns. Industry Week calls it the world’s largest restaurant supply chain, and it is seventh on Forbes’ “World’s Most Powerful Brands”. According to Reuters, McDonald’s will unveil a new dollar menu in 2018, which will intensify its current price war with competitors like Taco Bell and Dunkin’ Donuts. 71

T O P 10

“According to the company website, Inditex intends to expands its sustainable brands in 2018, having recently begun with Oysho We are the Change and Zara Join Life”


Inditex $25.74bn

Inditex is a Spanish clothing manufacturer, known for its Zara clothing stores. Founded by Amancio Ortega Gaona in 1963, it now oversees a wide range of known clothing brands including Zara, Zara Home, Pull & Bear, Bershka, Stradivarius, and Massimo Dutti. It brings in $25.74bn in sales, with a market cap of $112.1bn, according to Forbes. It employs 162,450 people, making 276th place on Forbes’ “The World’s Biggest Public Companies”. In 2015 it hit the 7,000 storefronts milestone by opening a branch in Hawaii. Currently it operates 7,504 stores, with 162,450 employees. It places third on Gartner’s “Top 25 Supply Chains 2017”. According to Industry Week, it also scored a perfect 10 on Gartner’s CSR. According to the company website, Inditex intends to expands its sustainable brands in 2018, having recently begun with Oysho We are the Change and Zara Join Life. 72

February 2018




Nike is a sports lifestyle and footwear company. It was started in 1964 by Philip H Knight and William Jay Bowerman. Forbes places its sales revenue at $33.82bn, with a market cap of $91.2bn. It places eighth on Gartner’s “Top 25 Supply Chains 2017”, gaining such recognition “the old fashioned-way: strong financial performance”, according to Industry Week. With 70,700 employees, it is 249th on Forbes’ “The World’s Biggest Public Companies”. GQ recently published a report on a 2018 upgrade Nike intends for an existing brand of shoes, rating them positively. 73

T O P 10

Cisco Systems


Cisco Systems is a company involved in the information technology and communications industry. Forbes places its sales revenue at $48.57bn, with a market cap of $165.1bn. The company was founded in 1984 by Sandra Lerner and Leonard Bosack, now employing 73,700 people. It places 58th on Forbes’ “World’s Biggest Public Companies”, 15th on Forbes’ “World’s Most Valuable Brands”, and fourth on Gartner’s “Top 25 Supply Chains 2017”. According to Industry Week, its role as a supplier is helped by efforts in the areas of logistics and energy efficiency. Business Insider reports a 4% increase in its stock value after a report of high revenue numbers come the first quarter of 2018.



February 2018

“According to Industry Week, Unilever is one of the “pioneers” in practices regarding to the sustainability of supply chains, with nine European hubs in charge of the movement of all goods”


Unilever $58.31bn

Unilever takes the number one spot on Gartner’s “Top 25 Supply Chains 2017”. Founded in 1929, it is a massive producer and marketer of nutrition, personal care, and hygiene goods. According to Industry Week, it is one of the “pioneers” in practices regarding to the sustainability of supply chains, with nine European hubs in charge of the movement of all goods. According to Forbes, it makes $58.31bn in sales, with a market cap of $143.9bn. It has 400 brands in 190 countries, its products reaching 2.5bn people at any given time. Its plans for 2018 include investing further in Mexico, as according to an official company statement, Mexico is a strategically relevant location for Unilever’s future as a company. 75

T O P 10


Intel $59.93bn

Intel is an American computer product and technology corporation. Forbes places its sales revenue at $59.39bn, with a market cap of $170.3bn. It places sixth on Gartner’s “Top 25 Supply Chains 2017”. According to Industry Week, the company currently has plans to produce more powerful and smaller PC-powering chips. It is 54th on Forbes’ “The World’s Biggest Public Companies”, and takes the top spot on Forbes’ “Just Companies”, which outlines “America’s best corporate citizens”. Founded in 1968, it now employs 106,000 people and has invested $300mn in improving diversity opportunities in the workspace. According to Forbes, Intel could be facing a difficult 2018 due to rivalry from competitor AMD.


February 2018

Nestlé $90.82bn

Set up in Switzerland in 1866, nutrition and wellness company Nestlé now reaches 191 countries with more than 2,000 brands. Forbes places its sales revenue at $90.82bn, with a market cap of $229.5bn. It places seventh on Gartner’s “Top 25 Supply Chains 2017” and 34th on Forbes’ “The World’s Industry Week, it scores a prefect 10 on Gartner’s CSR scale, and rates well due to its use of technology to boost its efforts as a supplier. According to Food Business News, sales in 2017 were flat compared to the previous year’s, leading to plans to potentially sell its US confectionary unit in early 2018.


“Nestlé scores a perfect 10 on Gartner’s CSR scale, and rates well due to its use of technology to boost its efforts as a supplier”


E V E N T S & A S S O C I AT I O N S

Events The biggest and best events and conferences from around the world‌ Writ te n by AN D R E W WOO DS

E V E N T S & A S S O C I AT I O N S

Live Americas draws in big-name speakers

Live Americas 2018

Miami, USA 4–8 February

SCM World is a cross-industry community of the world’s leading supply chain practitioners, working together to advance the profession of supply chain management. The event features world class speakers from leading supply chain organisations from different stages of digitisation from companies such as Kimberly-Clark, Amazon, Levi Strauss and Proctor & Gamble. 80

February 2018

ProcureCon 2018

Amelia Island, Florida, USA 20–22 February ProcureCon will feature 40 CPOs and 80 game-changing speakers from companies such as Microsoft, Siemens and Lowes. Attendees are invited to network throughout the three days of an extensive agenda covering all aspects of procurement. ProcureCon events are an inclusive experience: You’re encouraged to interact and network with everyone and anyone at the conference, at any time during the event. There are a multitude of interactive session formats during the event, in both large and small groups, because you don’t want to be talked at eight hours a day for three days. It’s your conference, and you’re encouraged to customise your agenda and experience as you’d like.

CPO/CSCO Awards Winners 2018 Review tbc 23 February

The Global Logistics Excellence Awards puts a spotlight on the heroes of the sector who have risen in spite of challenges whether managing logistics operations within the enterprise or as 3PL players. The Award Show will identify shortlist and bring to the forefront individuals, organisations and projects that have created excellence in the domain of logistics.


15 – 16 March 2018 Singapore EXPO

Go Global. Deliver Local. Asia’s Largest Conference & Exhibition for Retail, eCommerce, Logistics and Parcel Industries

From O2O, connected retail commerce to retail 360; redesign fulfilment for ondemand delivery to urban logistics and smart logistics; we will cover it all. These brands have signed up for LMFAsia 2018. Register now to meet them! Anje, Akamai Technologies, Detrack, DHL eCommerce, Hangzhou Dongcheng Electronic Co, Hakovo, Kerry Logistics, iCommerce, LEVerne, Logistics Worldwide Express, Love Bonito, Mitsui Banking Corporation, Open Port, Park N Parcel, Procter & Gamble, ShenZhen ZHILAI SCI and Tech Co, ShopJJ, Ralali, UCL, Tokyo Fashion Singapore, TYT Corporation, Unilever Asia, United Parcel Services, Sumitomo, Yingen Batik, 13rushes, 65drones, and more.

Key Speakers

Janette Toral

E-Commerce Advocate, Digital Influencer DigitalFilipino

Bryan See Toh Chief Executive Officer Park N Parcel

Key Highlights „ 100 speakers, 4 tracks, 2 Roundtables „ 100 exhibitors & 3,500 sqm „ 2,500 professionals

„ NEW Demo Zone on material handling equipment and warehousing solutions „ NEW Retail and Marketplace Pavilion

„ FREE eCommerce Seminars „ 4 Workshops on taxation, B2B eCommerce, cross-border shipping …and more

Jeffrey Siy Co-Founder

SAVE 27%

Arne Jeroschewski CEO and Founder Parcel Perform


Contact Us at Takayuki Akahodani Join us #LMFAsia #LMFConnect @LMFAsia

Founder & CEO Hakovo

Sultan Joson

Managing Director Cloud Logic

Last Mile Fulfilment Asia Group Last Mile Fulfilment Asia


February 2018

ProcureCon 2018

Amelia Island, Florida, USA 20–22 February ProcureCon will feature 40 CPOs and 80 game-changing speakers from companies such as Microsoft, Siemens and Lowes. Attendees are invited to network throughout the three days of an extensive agenda covering all aspects of procurement. ProcureCon events are an inclusive experience: You’re encouraged to interact and network with everyone and anyone at the conference, at any time during the event. There are a multitude of interactive session formats during the event, in both large and small groups, because you don’t want to be talked at eight hours a day for three days. It’s your conference, and you’re encouraged to customise your agenda and experience as you’d like.

CPO/CSCO Awards Winners 2018 Review tbc 23 February

The Global Logistics Excellence Awards puts a spotlight on the heroes of the sector who have risen in spite of challenges whether managing logistics operations within the enterprise or as 3PL players. The Award Show will identify shortlist and bring to the forefront individuals, organisations and projects that have created excellence in the domain of logistics.


E V E N T S & A S S O C I AT I O N S

LogiMAT 2018 - 16th International Trade Fair for Intralogistics Solutions and Process Management Stuttgart Trade Fair Centre, Germany 13–15 March Between 13 and 15 February 2018 international exhibitors and decision-makers from industry, trade and the service sector will be coming together at the exhibition centre at Stuttgart Airport to find new business partners. LogiMAT will focus on innovative products, solutions and systems for procurement, warehouse, production and distribution logistics. International trade visitors from over 60 countries. Full-service suppliers, niche operators, start-ups and established global players – the exhibitors at this show – come here to meet customers at eye level.


Nashville, USA - Institute for Supply Management 6–9 May ISM2018 is the ‘must-attend professional development conference of the year’. With sessions developed by industry leaders, ISM2018 is the only supply management conference developed by practitioners for practitioners. Guest speakers will include Mitt Romney CEO Bain Capital), Arianna Huffington (Huffington Post) and John Rossman (ex Amazon).


February 2018



Exclusive Guide to Winning Omnichannel Supply Chain in Retail


February 2018

Last year’s Annual World Procurement Congress

5th Annual World Procurement Congress London

Intercontinental London, The O2, London, UK 16–17 May

Agile Procurement: Thriving Through Disruption will include guests include 50 senior procurement professionals, plus 100+ speakers – from companies such as Adidas, Avril and Shell –discussing digital procurement, cyber security, talent recruitment, upskilling and retention. ‘World Procurement Congress has established itself as the foremost global gathering for senior procurement professionals. Nowhere else will you gain the global insight and access to a more senior network of peers and authoritative content…’ congress/world-procurement-congress


E V E N T S & A S S O C I AT I O N S

9th Annual North American Supply Chain Summit The Westin Peachtree Plaza, Atlanta, USA 5-7 June

The event features 50+ keynote speakers from companies such as Coca Cola, Nike, IBM and Schneider talking about the new wave of disruptive digital technologies is transforming processes for businesses and their customers. Discover how leading companies are capitalising on digital trends to update their business strategy, create sentient supply chains and empower the workforce of the future. Organisers have also created dedicated tracks and sessions that address how organisations are driving the responsible business agenda, bringing together experts from sustainability, communications, procurement and innovation departments as well as investors, NGOs, governmental bodies and academics.

Gartner Supply Chain Executive Conference London 23–25 September

Gartner Supply Chain Executive Conference is the world’s most important gathering of supply chain leaders, discussing how disruptions large and small confront today’s supply chains on a daily basis and how ‘organisational survival depends on the ability to anticipate, adapt, and transform supply chains to deliver reliability and performance’. 88

February 2018


Š 2017 Accenture. All rights reserved.


Build next generation platforms

Develop and launch new services

Create real-time operations

Accenture helps communication service providers to align their business objectives with technology capabilities, transform their operating models and engage a wider digital ecosystem to capture the promise of the pervasive network. See how at

CSCMP EDGE 2018 Nashville, USA 30 Sept–3 Oct

Discover over 100 forward-thinking sessions covering real world strategies implemented to maximize and transform supply chains and learn from some of the brightest academics and practitioners in supply chain today. ‘The Council of Supply Chain Management Professionals (CSCMP) hosts the must-attend supply chain event of the year — CSCMP’s Annual Global Conference, EDGE.’ From leading-edge content to cutting-edge supply chain solutions, EDGE reflects the unparalleled resources CSCMP offers today and symbolises our unwavering commitment to supply chain in the future

CIPS UK Conference

Queen Elizabeth II Conference Centre, London 31 October The CIPS UK Conference will be a chance to explore the changing procurement and supply landscape – whilst providing insights, training, lively debates, and experiencesharing on the current procurement challenges such as integration, alignment and risk-management. cips-uk-conference-2018



Written by Fran Roberts Produced by Denitra Price


Benji Green (Left) and Fred Hayes (Right)

AVAYA IS A RECOGNISED INNOVATOR IN BUSINESS COMMUNICATIONS. THE COMPANY ALSO APPLIES INNOVATION TO ITS OWN PROCESSES, INCLUDING AN IMPRESSIVE TRANSFORMATION OF ITS SUPPLY CHAIN OPERATIONS IN RECENT YEARS “Over the time I’ve been here, there’s been a radical transformation in our supply chain across many areas. Today, we are a best in class supply chain on all 11 metrics that we benchmark against externally.” These are the words of Benji Green, Avaya’s Senior Director, Integrated Supply Chain Planning & Operations. “It’s been an amazing transformation,” he continues. “I feel very lucky to have been part of it, but also proud to have had a hand in driving it.” 96

February 2018

As a global leader in delivering superior communications experiences, Avaya provides the most complete portfolio of software and services for multi-touch contact centre and unified communications offered on premise, in the cloud, or as a hybrid. Today’s digital world centres on communications enablement, and no other company is better positioned to do this than Avaya. As such, the company needs to constantly transform and improve to maintain its leading position. Avaya’s supply chain transformation to best-in-class has been a global, multi-year strategic initiative based on targeted investments in people, processes and partnerships directed towards a clear vision to be the very best. Fred Hayes, Senior Vice President of Supply Chain, clearly defines its vision to “Exceed employee and customer expectations while fuelling profitable growth.” This vision drives every decision the team makes. IN THE BEGINNING Avaya’s supply chain has not always been industry-leading, far from it. “In the beginning, it was tough,” says Green. “12-hour days, hair

on fire supply constraints, excess inventory, completely manual processes, imbalanced supplier terms and conditions, poor cash to cash. You name it, it was bad. It was hard to imagine becoming best-in-class at the time.” Nine years ago, Avaya’s supply chain was considered one of the biggest obstacles to companywide performance. Hayes recalls: “Just to give you an example, at one point before I had started, the Chief Executive Officer at that time in an all hands meeting apparently made some reference to Avaya having the worst in class supply chain on the planet.” There was a long way to go to reach the best-in-class vision and Fred knew it began with the team. Avaya needed world class talent, with the right attitude, immersed in the right culture to deliver world class results, and this became Fred’s first priority. TALENT AND CULTURE Avaya began by making substantial investments to attract, train, and retain the best and brightest candidates. The talented team at Avaya was built and developed over several years and it w w w. s u p p l y c h a i n d i g i t a l . c o m



At Kinaxis®, we’re doing what no other company can. We’re helping some of the world’s largest enterprises revolutionize their supply chain planning with RapidResponse®, the industry’s only cloud-based concurrent planning solution. But don’t just take our word for it. Explore Avaya’s journey of supply chain transformation in this case study published by Aberdeen Group. DOWNLOAD AVAYA CASE STUDY


started when Avaya hired Jim Chirico as COO. “He began the process, first hiring Fred Hayes as Head of Supply Chain. We targeted proven talent outside of the telecommunications industry that had the functional expertise and leadership to transform the culture and organisation. I was part of that initial team that was recruited to help lead the transformation,” reflects Green. Over the first year, Fred built an entirely new supply chain leadership team, each hired for specific expertise. “We completely overhauled the team, from logistics and warehousing to order management, to planning, to procurement. Each leadership hire was a critical part of the transformation strategy,” describes Hayes. The new leadership team embraced the vision and the mandate to become best-in-class. In turn, each leader made a commitment to drive cultural transformation for their team across all levels. This has been fundamental to driving the business forward. “It is about having the right attitude, the attitude of empowerment for the employee, the expectation of delivering continuous transformation, delivering on commitments, delivering 100

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results,” notes Green. “That includes leadership that is willing to take risks, that supports and promotes taking risks, is not afraid of making a change to improve the business.” To make sure the right attitude and culture permeates the organisation, Avaya leverages a robust HR talent management program, top to bottom, as well as an employee engagement process. For Avaya, the performance management system is a critical way to create a culture that engages employees and attracts people who will contribute to the team’s success. Avaya sets clear expectations and rewards the high performers. Employee compensation, bonuses and opportunities for promotion are all tied to robust and clearly defined performance metrics. Green summarises: “What that does, by definition, is retain high performers and drives everybody to better and better results. “The flipside of this type of culture is that we also consistently let go of our lowest performers. We give significantly larger bonuses to the highest performing employees, we give no bonuses to low performing employees,


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Avaya Oceana intelligent software tracks and analyses behavior, enhancing the customer experience and the lowest performers typically will be worked out within a year. What that does, by definition, it retains high performers and drives everybody to better and better performance.” Employee engagement is another key to culture development as it’s one of the single best predictors of employee retention and productivity. “We actually use an employee engagement survey, which is a crossindustry survey that measures the employee engagement across four key variables. Our employee engagement has gone up 60% over the last six

years. They are happier because the culture is very clear, the expectations are very well defined,” observes Green. A final piece of the talent puzzle has been Avaya’s university engagement program, created to attract and quickly develop young talent. “We have a strong new graduate program. We bring in fresh talent out of a top university system and put them through a multi-year, multi-position, multi-organisational rotation program,” states Green. “We’re bringing in new talent with academic pedigree. Most of them w w w. s u p p l y c h a i n d i g i t a l . c o m



have come in already Lean Six Sigma trained and certified through a green belt program. We’re immediately throwing them into the rotation program, immediately requiring them to do projects. You start with every new employee driving that culture.” With the right team and culture, Avaya began to transform. “What will happen, in my experience, in that type of culture and that type of environment, is you will naturally build very systemic processes that constantly improve and reinforces the behavior.” MANAGEMENT SYSTEMS Hayes and the new leadership team began to create a robust management system obsessed with achieving best-in-class standards. At the management systems’ core are continuous improvement, metric management, and globalisation. Stemming directly from and reinforcing the supply chain culture, the leadership team developed multiple continuous improvement programs. As an example, Avaya’s supply chain has a formal project management office with Lean Six Sigma black belt certified project managers, prioritising and 104

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driving the biggest and most important opportunities. Frank Carbone, Director of Supply Chain Strategy and business lead for the Project Management Office, says: “This dedicated team of supply chain architects, senior program managers and data management experts have helped deliver the ‘key game changers’ for our supply chain. The team’s focus is to drive positive change every day. Their leadership, expertise, collaboration, passion and drive champion a continuous improvement culture at Avaya.” “Additionally, we have an ongoing Lean Six Sigma training program that is available to any employee who wants to submit their name to it and has a project they can prove has a clear return on investment and is warranted for the company. That’s good for the employee and good for the company,” Green observes. “Continuous improvement is a culture and a process.” Metric management leverages the HR performance management process to ensure every employee’s individual objectives are successfully tied to the organisational, and that company objectives and are clearly

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defined and measurable. It answers two fundamental questions: Are the employees’ objectives meaningful to the organisations’ objective? And, can the company measure the organisational objectives to ensure it delivers best-in-class? “We very clearly define our objectives at the start of every year and we very consistently measure each of those objectives,” Green explains. “I have a customer satisfaction metric for on-time ship. I don’t look at it once a quarter or

once a month – I look at it every single week. Not only what it was last week, but what I think it’s going to be for the next three weeks. It’s a very micro and robust focus on the objective that’s disseminated to all the employees, from the part-time employees all the way up to the CEO. They’re all linked to company objectives,” Green details. The Avaya supply chain measures and reports over 100 metrics, each discretely aligned with four pillars: customer satisfaction, employee


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Avaya Unified Communications seamlessly integrates across multiple devices, on the go or in the office satisfaction, cash to cash and supply chain expense. By rigorously tracking these metrics, Avaya is confident it is on track to realise its vision. Globalisation is a simple idea organise and streamline distributed organisations and processes into easier, centralised, more automated workflows managed by the best talent globally. “The benefits are huge. It reduces headcount. It reduces redundancy. It recognises talent. It drives process efficiency. It takes the best of each sub-process to create 108

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the ‘best’ process applied globally,” states Green. Avaya’s supply chain reorganised into global teams focused on core processes: a global demand and supply planning team, a global logistics team and a global strategic procurement team. “We streamlined and flattened the organisation, reduced headcount, improved accountability, and expanded responsibility for our top talent. Simultaneously we collapsed disparate processes into one best-in-class process.” One notable example is Avaya’s


implementation and expansion of RapidResponse (RR), a Gartnerrecognised magic quadrant tool from Kinaxis for supply chain planning and collaboration. Over a five-year period, Avaya migrated its business processes onto the single platform. It was initially used only for supplier communication, before being expanded to include supply planning, demand planning, inventory planning, inbound and outbound logistics planning, procurement spend analysis, POS analytics and much more. “We do everything from daily supply assurance and revenue risk to strategic product transitions on rapid response,” explains Green. Central to globalisation, RR allowed for extensive automation of non-value added work, standardisation of processes across multiple MRP instances, products portfolios, and regional variations. The tool, properly managed, has globalised Avaya’s planning and operations processes and organisation and helped deliver dramatic improvements and sustainable performance. STRATEGIC PARTNERSHIPS “I think the third piece of the puzzle

has been our consistent and persistent systemic strategy to really align our strategic supply base,” Green notes. In every area, from procurement to manufacturing, to software and service providers, Avaya has reduced the supply base, leveraging global providers and invested in longer term relationships with industry expertise. Green explains: “We consolidated the manufacturing environment across a couple of really key suppliers – Wistron and Flextronics – for large volume contract manufacturing. We’ve leveraged Avnet’s in-region capabilities with their global reach for our more complicated, higher costs, build-toorder portfolio. We’ve also centralised around some key component suppliers like DSPG for chips and Tianma for LCDs, as examples.” These close relationships allow Avaya to have much better working relationships, including dedicated teams to work with each supplier for day to day operations, accelerating decisions and tighter operational controls. Both improve manufacturing readiness, quality control, allocation and freight decisions, build prioritisation and more. In logistics and warehousing, Avaya w w w. s u p p l y c h a i n d i g i t a l . c o m



has partnered with a few key providers as well, investing IT and resources to enhance and automate processes while reducing costs and consolidating spend. CEVA Logistics and Crane World Wide are contracted global logistics providers with close working relationships. Avaya gets controlled rates and predictable availability while suppliers get consistent, predictable volume and revenue. Choice Logistics has managed the majority of Avaya’s 180 maintenance locations for over 10 years, providing small stocking locations, warehousing, and final

mile delivery. Similarly, Geis has provided provisioning and maintenance warehousing and fulfilment. Avaya has leveraged Geis’ WMS expertise to automate replenishment, order fulfilment, export documentation, and more for all of Avaya’s Europe, Middle East, and Africa operations. Similarly, Avaya has partnered with the best-in-class software and services providers including for CRM, Baxter for maintenance planning, Coupa for spend management, Luxoft and Mera for outsourced engineering and research

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February 2018

and development, and Sutherland for low cost, outsourced, but high skilled managed labor. Sutherland has also been a critical software provider, integrating solutions with Avaya’s ERP for the very complicated reverse logistics tracking space. Such relationships are invaluable to Avaya. “We outsource more and more to functional expertise and we’ve consolidated and built strategic relationships with those supply partners. You develop relationships built on trust that maximise results for both parties,”

observes Green. “Suppliers have been happier with us because they also see the value created through strategic long-term partnerships.” DELIVERING SUCCESS “There is an absolute focus on delivering success,” Green continues. “For us, success is best-in-class and we knew that from day one. There is very intense focus on the metrics, understanding what we had to do to our expense structure, to our people structure, to our customer satisfaction metric to make sure we were delivering

“WE’RE ACTUALLY SPENDING A LOT OF OUR TIME DRIVING THE CULTURAL AND OPERATIONAL SUCCESS WE’VE HAD IN SUPPLY CHAIN TO OTHER ORGANISATIONS” – Benji Green, Senior Director, Integrated Supply Chain Planning, Avaya 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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best-in-class to both our customers and our employees and fuelling profitable growth.” Avaya’s supply chain has delivered undeniable results. Recently recognised by Aberdeen, Avaya exceeded industry benchmark best-in-class performance on all 11 metrics it tracks externally. The company has reduced supply chain expense by $125mn per year, equivalent to a 50% reduction, and driving down expense to only 3.8% of revenue versus 4.4%. Similarly, Avaya has reduced its cash tied up in net inventory by 94% to $181mn. That’s resulted in a 224% improvement in inventory turns from 5.8 up to 13.0 turns. Simultaneously, customer satisfaction and on-time shipments are at a record best, with 97% on-time in 2017 compared to 78% in 2010. This has driven optimal revenue recognition, cash to cash cycle, and reduced quarter end and weekly average unshipped hardware revenue by 95% to less than 0.5% of revenue. Avaya’s supply chain transformation is well documented with tremendous results to move from ‘worst-in-class’

to best-in-class. It’s been achieved by a great team immersed in the right culture, delivering continuous process improvements, and leveraging strategic partnerships. Not surprisingly, the Avaya leadership team has more transformation planned for the future. “With a very large data company like ours, global standardisation continues to be an absolute mandate,” Green acknowledges. “We have opportunities to push this efficiency model and partnership model across the rest of the company. We’re actually spending a lot of our time driving the cultural and operational success we’ve had in supply chain to other organisations. That’s a pretty unusual story if you’ve got a supply chain team that’s helping shape the rest of your company in very cool, strategic ways.”

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A STREAMLINED SUPPLY CHAIN With its streamlined, innovative supply chain, ZTE USA is forging a new path in the telecommunications market. By transforming its customer experience, the US subsidiary is turning the mobile industry on its head and ushering in a new decade of innovation Written by Laura Mullan Produced by Denitra Price



nce unknown outside of China, ZTE turned its attention to the USA in 1998, carving out a market share on the continent. Fast-forward two decades, and the mobile behemoth is now a household name, growing to become the fourth-largest smartphone supplier in the US. The success of ZTE USA has been legendary in the telecommunications industry and, thanks to its resourceful supply chain, it seems that the company is set to continue on this upward trajectory. Kevin Finerty, SVP of Supply Chain and Quality at ZTE USA, says that the company’s ethos has been integral to its success. “ZTE positions itself as a telecommunications company that offers premium quality at an affordable price,” notes Finerty. “That’s where we want to make our mark in the US market and that’s where, quite frankly, we have already been making a mark. “We’re one of the top patent holders year-on-year, especially when it comes to Long-Term Evolution (LTE) and 5G technology, and we have


February 2018

a very clear vision of how we fit in the industry ecosystem,” he adds. “But we have bigger aspirations than just succeeding in our niche – we’d like to expand further. We are currently the fourth largest original equipment manufacturer (OEM) in the market and we’re aiming to become the third largest.”


SVP of Supply Chain and Quality at ZTE USA

As the Senior Vice President of Supply Chain and Quality for ZTE USA, Mr. Finerty is responsible for ensuring the supply of quality products to US and Canadian wireless carriers. He and his team manage the dayto-day supply operations as well as coordinate directly with both ZTE and customer teams in China.


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Driving efficiency in its supply chain Renowned for its technological ingenuity, ZTE USA’s strategy of offering innovative, quality products at mid-tier prices has helped the company gain a foothold in the US market. Finerty says that this pioneering mindset has also applied to the subsidiary’s supply chain function where digitization strategies are helping to streamline operations. By implementing a collaborative, planning, forecasting, and replenishment (CPFR) method and using the Oracle-based product

Demantra, the US subsidiary is using data analytics to promote greater integration, visibility, and cooperation between its partner’s supply chains. In doing so, ZTE USA hopes to transform its intricate supply network. “Ultimately, it comes down to communication with the customer and having a weekly discussion about the company’s forecast, replenishment plans, demands, and supply chain system,” notes Finerty. “Getting data about our supply function isn’t as hard as it may seem. Our customers are typically willing to share their data because they

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“Data visualization is really helping us to drive efficiencies in our

supply chain” – Kevin Finerty, SVP of Supply Chain and Quality at ZTE USA

want to know what our supply chain looks like,” he adds. “By using our new systems, such as Demantra, we communicate this data back to China which allows ZTE to have clearer communication around what the customers’ demands are now and what they are going to be in the future.” Data and analytics Like many technologically advanced companies, big data is playing a significant role in the way ZTE USA does business. Having this data is

one thing, says Finerty, but taking it to a new level where you can digitize it and visualize it is another crucial part of the company’s transformation. “Data visualization is really helping us to drive efficiencies in our supply chain and we are working closely with companies such as Tableau to achieve that,” says Finerty. “It helps our sales team look at the region, product, market or carrier, and see what’s doing well and where we need to focus our marketing, promotion and supply chain operations. “Our leaders in China are continually spearheading new innovations for the corporation, but if I take a step back from that and see what we can really achieve right now from a supply chain perspective, it’s about having the most

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February 2018



up-to-date information to help us meet our customer’s needs,” he says. “We can see what’s happening in real-time and prepare for changes in the supply chain and that’s very advantageous.” Dual distribution center strategy This strategy is helping to accelerate the company’s growth however, ZTE USA is not only interested in digital transformations, it is also transforming its operations by implementing a dual distribution center strategy in the US. This tactic is helping ZTE USA

quicken its distribution times, reduce costs and deliver more directly to its customers through the ZTE USA’s website or through retailers like Amazon and Newegg. “It’s great for us to be able to ship directly to the consumer,” notes Finerty. “Yet, in other instances, it might make more sense to work with one of our partners to get the best value for the dollar. In this way, the dual distribution center is really helping us to make our operations more cost-effective, depending on the business type.”

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Undoubtedly, ZTE USA has experienced exponential growth. However, despite the pressing challenges of a growing supply chain and brand name, ZTE USA has remarkably achieved this success without extra manpower. “ZTE volumes in the US have grown over 70% in terms of units delivered from 2016 to 2017, but we’ve done it with the same amount of people,” notes Finerty. “If you’re managing your business in the right away and you have the systems in place to do that, you don’t necessarily need more people to ship more pallets. You just need better preparation, better communication and better planning.” Global Footprint The company’s burgeoning size has not only been advantageous for its bottom line, it has also helped ZTE USA develop strategic partnerships thanks to its growing brand. “I think we have great opportunities to leverage just the sheer size of ZTE,” reflects Finerty. “We have a lot of established supply relationships so when we go to the table to meet

with companies - whether it’s somebody stateside or a global brand - that relationship is already established and I’d say that’s really one of the big positives.” Whilst the company’s immense size can be valuable, it also poses its challenges. “We can have some communication challenges, in terms of finding out if there are supply issues,” says Finerty. “For instance, the overall cultural differences between China and the US can also present some complications. It’s really incumbent upon the US team to learn how the Chinese teams operate and how it’s best to communicate with our counterparts in Asia. I think for those of us, like myself, who have been here several years, we’re still learning, but we are progressing well. I think that’s valuable from a talent perspective for ZTE USA.” By utilizing its digital tools and data, ZTE USA has taken an intuitive approach to its supply chain, delivering purchase orders early if possible and supplying surplus stock during promotion periods. “If you’re always presenting how you

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can help, eventually suppliers will figure out that you’re the company that they can rely on when they need help,” Finerty notes.

“We are currently the fourth largest original equipment manufacturer (OEM) in the market and we’re aiming to become the third largest” – Kevin Finerty, SVP of Supply Chain and Quality at ZTE USA 126

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Upcoming challenges ZTE USA has seen record successes, but Finerty doesn’t underestimate the challenges that lie ahead. His team is exploring how the company can retain consumers and get them to stick with the ZTE brand, and how they can harness the potential of the Internet of Things (IoT). From a supply chain perspective however, perhaps one of the company’s biggest hurdles is keeping up with material supply. When there’s a shortage of a particular chip or LCD component, it can disrupt the supply chain. As a result, Finerty and his team work closely with procurement to keep ahead of any issues and prepare for them. The other biggest challenge facing ZTE USA? Finerty believes it is SKU proliferation. Catering to both major and small mobile carriers in the US, ZTE’s customers often request a unique product. This may seem like an innocuous challenge but it has


a profound effect on under its belt, what Employees at the product line. “Even does the future ZTE USA though the internals might hold for ZTE USA? be 90% identical, everyone “A major part of our threewants a unique SKU,” comments year planning has been focusing Finerty. “Because of SKU proliferation, on that the end-user experience,” we have to prepare and manufacture reflects Finerty. “How can we touch products on different lines and them a little bit more directly? How that’s one of the main challenges can we understand what they’re we are facing at the moment. I feeling about the overall product think perhaps as ZTE grows and experience? It’s going to be a switch shows its value there may be some of our mindset from a carrier-focused opportunity for some standardized company to a more customer-focused products across carriers.” one. It doesn’t mean that we’re going Armed with an efficient supply chain to walk away from being the best and rigorous expansion plan, ZTE provider and supplier we can be for USA has become a well-recognized the carriers - it means we’re going name in the US in the short space of to take it up another level to really 10 years. But with such successes understand that customer mindset.”

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FLOWSERVE 2.0 AND THE JOURNEY TO SUPPLY CHAIN TRANSFORMATION Flowserve provides products and solutions that solve global problems. Now it’s transforming its supply chain capabilities as it sets out the route for Flowserve 2.0 Written by John O’Hanlon Produced by Denitra Price



pace is a premium commodity on a floating production, storage and offloading unit (FPSO). Offshore oil and gas is a key market for Flowserve, which leads the world when it comes to flow control, but outside that industry it’s not always understood what a critical role pumps, valves and actuators play on a production platform, nor the amount of room these take up on an oil rig. “The most expensive real estate in the world is the back of an offshore platform,” says Ronaldo Marques, Vice President – Supply Chain, and he should know, having over a 25-year career led strategic procurement and supply chain for some of the most recognised O&G companies. These include Texaco, Chevron, and most recently Shell, where he was responsible for an annual spend of $9bn. He joined Flowserve in April 2017, attracted by the opportunity to make a real difference in a company that recognised the need to integrate its supply chain operations and bring this vital aspect of the business into the heart of its strategic decision making.


February 2018

Let’s look again at the FPSO example. Pumps and valves are the core of the equipment, but the smart part of the installation is the actuator which controls the flow. More than a million of Flowserve’s Limitorque division actuators have been installed around the world, and some have been in operation for more than 50 years. Their ruggedness and reliability are legendary. Recently a client constructing a new FPSO found there was not enough space on the platform to accommodate the large conventional actuator selected to operate it. The Flowserve design allowed construction of the FPSO to proceed according to the originally planned layouts, with no need for costly and invasive redesign. It also ended up saving around 2,000 kg (4,400 lb) in weight. Usually, production modules on FPSOs are installed in close proximity, explains Marques. “Because FPSOs carry refinery-grade heavy equipment on a marine vessel, managing weight translates directly into savings in capital expenditure. Lowering weight by just one ton (2,200 lb) can result in construction


Ronaldo Marques

Vice President - Supply Chain at Flowserve

“THE MOST EXPENSIVE REAL ESTATE IN THE WORLD IS THE BACK OF AN OFFSHORE PLATFORM” w w w. s u p p l y c h a i n d i g i t a l . c o m



WORKING IN TIGHT SPACES The effort to custom design an actuator to work within tight space and weight restrictions demonstrates the capability of Limitorque to respond to critical customer needs, with unique and efficient solutions that combine technical excellence with economic practicality. The customengineered ‘Margherita’ solution revealed itself to be sufficiently innovative for immediate patenting, providing a new turnkey actuator solution where size and weight are critical considerations


February 2018


savings of $30,000 to $50,000.” This result had everything to do with supply chain management, he points out. Not supply chain alone, but in alignment with engineering and suppliers. It’s quoted because it represents clearly the value proposition offered by Flowserve. “Because we work with engineering we save a whole lot on materials,” says Marques. When he joined Flowserve, at the same time as its new CEO and President R Scott Rowe to whom he reports direct, the global organisation was very fragmented. With 17,000 employees at 254 locations in 55 countries, and four major business platforms each under its own President , procurement was being carried out on a local, or at best national basis. There were some very good pockets of excellence but there was clearly a huge opportunity to be seized. He and Rowe were of one mind, that integration across the business could yield huge benefits, and noticeably better outcomes for its customers. Their plan has been to deliver strategic change through

supply chain transformation. Marques’ enthusiasm for this task is boundless. “The important thing is that we are aligning ourselves with the business. As we transform our supply chain and integrate across all platforms and business segments globally, we will simplify processes and save a lot of money. We will eliminate waste from double handling, simplify processes and procedures, standardise, then automate big time. We need to refocus the local and global organisation, work with robust leadership teams, and our human capabilities worldwide.” The job of rationalising the supplier base has already been started over the last 10 months, reducing their number but working with these in a more collaborative way. “Until now we’ve approached our suppliers from the inside-out, so to speak – we tell them what to do, sometimes not in a very collaborative way. We are going to change that to an outside-in, aligning people, processes and technology with our key suppliers to create value in a flexible strategic supply chain. We are going to deploy

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tools and systems to enable the supply chain data and then drive the accuracy and analytics, with a mindset of continuous improvement and the ruthless elimination of manual process.” This is not reinventing the wheel, and he admits that eliminating duplicate activities, identifying and sharing best practices and encouraging the local teams to own these continuous improvements may look simple. But in a complex global organisation it takes time to roll out these ideas. This plan was endorsed by the top leadership team from the get-go, and the roadmap to global supply chain alignment by 2020, the road to Flowserve 2.0, was an early outcome. “The most exciting thing is that nine months down the line we have full endorsement from every leader from corporate HR, IT, finance and so on, and also from the platform presidents of every division. It is no longer a supply chain plan: it is their plan – a Flowserve corporation plan. That is critical.” The value proposition is so powerful, he adds, that it has been bought into by the entire business. “Flowserve 2.0 is the turnaround of Flowserve and my job as part of the leadership is to transform Flowserve’s supply chain so it’s the most admired and competitive in the entire industrial manufacturing industry.” The company already has a powerful suite of tools. The basic supply management system comes from a trusted partner, Zycus, with whom Flowserve has been collaboratively rolling out modules to the


global sites. “We are leveraging that technology, which will give us valuable visibility, data storage, data analytics and the like. We have plenty of data within the company but what is it telling us? We partner with Zycus to drive improvements on top of the data whether elimination, simplification, standardisation, supplier rationalisation or renegotiation.� Flowserve also uses Zycus for contract management. There is


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nothing simple about writing and executing strong, favorable and risk-minimising legal contracts with suppliers. Many parties need to be involved, and the complexities multiply rapidly when contracting at enterprise levels – across locations, strategic business units (which are often distinct legal entities) and across global regions and sovereign borders. The iContract system smooths out these complexities. Over the last six


“WE ARE NOT DRIVING AN INITIATIVE, WE ARE DRIVING A FULL SERVICE STRATEGY” – Ronaldo Marques, Vice President – Supply Chain, Flowserve


months Marques has visited every one of the company’s manufacturing sites in China, India, Europe and Australia to explain and facilitate the learning needed to get these systems working in an integrated way. Another good example of a vendor that assists integration and the taming of raw data to assist decision making is Mihlfeld & Associates (M&A), which makes sense of the huge bulk of logistics data that’s available. “We have more than a million logistics invoices a year so we work with M&A on technology to audit, analyse and pay these invoices – and we continuously improve on that,” Marques adds. The plan is delivering. Flowserve


2.0 is on its way. 2017 targets were reached with two months to spare. “We are not driving an initiative, we are driving a full service strategy. We are driving cross-platform change in areas like indirect spend and logistics. We listened to the business leaders and the VPs, sales and operations people and the plant managers, and we adapted our plans to drive their plants. What’s not to like? On top of that we layered in the corporate initiatives, the cross platform initiatives and then the roadmap that I presented, together with the whole strategy, to the board. They gave us full and unanimous support.” A major win for strategic sourcing was a drive to rationalise the global payroll. 46 countries were served by 38 different suppliers and internal HR resources, so consolidation was a must. The plan had been to make phased changes, with Europe, the Middle East and Africa sorted out over two years and Latin America following in 2019. “I got the guys together, and said why don’t we do this all at once?” Marques adds. The result was unbelievable, enabling not


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only all the business requirements but also introducing automation, AI and other available technologies using a very disciplined process. Impacting 15,000 employees, HR is now consolidated in one supplier, one system. The implementation is going to be 80% complete in 2018, saving 30% on the projected cost.” He is already working on how to reduce the cost to serve for the other corporate functions by similar margins, with direct impact on the bottom line.

So, Flowserve is well on its way to becoming a data-driven business, a business with growth on its agenda. The supply chain plan will not be different from the corporate plan. At a recent Flowserve ‘summit’ of 100 leaders, the supply chain alignment story was delivered by the President. “We drew up the presentation together,” says Marques. “I don’t need to talk about supply chain because the business is talking about supply chain. This is Nirvana.”

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Driving transformation at the DVLA Written by Fran Roberts Produced by Richard Durrant

The Driver and Vehicle Licensing Agency (DVLA) is an executive agency, sponsored by the UK’s Department for Transport. Located in Swansea for over 50 years, the agency is now in the middle of an exciting IT transformation programme


ver the years the DVLA has embraced modern technology, moving many of its services online. For example, driving licences can be applied for or details amended online, rather than using a paper form. Such digital transformation continues to this day through the DVLA Strategic Plan 2017 to 2020, which lists both moving to more agile and cloud based services, alongside online processes for notifying a medical condition, in its priorities. “DVLA spends over £300mn a year on goods and services. It spends a lot more on goods and services than it does on staff, which is unusual in the public sector,”


February 2018

advises Andrew Falvey, Commercial Director. “My team manages around 300 contracts – about 250 of which are IT contracts, along with 2,500 data sharing contracts and 250 agreements with other government bodies. The biggest category we have in terms of spend is IT. “We’ve got 15 fully MCIPS qualified staff and another 20 staff being trained to this level at the moment. Overall we have about 68 staff in commercial roles in my Directorate.” MISSION CRITICAL With 45mn driver records stored in its systems, IT is fundamental to the DVLA. “They are mission critical,” Falvey comments. “If our systems


Andrew Falvey Commercial Director

Andrew Falvey joined DVLA in 2010 as Head of Commercial Services, moving to become Assistant Director (Commercial) in 2012. He became Commercial Director in May 2015

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Ricoh partners with the DVLA to deliver digital transformation. The Ricoh Commercial & Industrial Printing Team has been a long term partner of the DVLA Output Services Group. Thirty years ago we were the provider of high-speed mainframe printers, today we are a systems integrator and technology enabler providing workflow solutions that have underpinned and evolved with the DVLA operation for almost 20 years. Ricoh (formerly InfoPrint Solutions) was at the forefront of the drive in the UK to turn the Gartner Automated Document Factory concept into a practical reality. DVLA was among our first customers to embrace both the concept and the Ricoh approach. Our earliest workflow implementation successfully focussed on the secure production of DVLA’s array of paper-based products. The tracking of data, logical pages, physical pages, documents and envelopes all ensured that driving licences and tax discs were accurately delivered to the intended recipient. When the DVLA introduced its new photo card driving licence, a highly competitive tender process showed that it made clear sense to build on the system already in place – evolution, not revolution. The security, reliability and availability of the system was already proven. What needed to be proved next were scalability and flexibility. The system

was extended to provide DVLA with two unique capabilities: a secure stock control system and a new class of output device – a laser engraver. Every UK Driving Licence has a unique identifier built into it during the base card manufacturing process and the enhanced system tracks every card through the manufacturing process: booking cards into and out of a secure vault; matching a driver to a unique card number; engraving data and image onto each card; matching the finished licence with the correct paper carrier prior to enveloping; providing an audit trail for every card for every step of the process and finally feeding other DFT systems with any necessary production data. Having set the benchmark for secure licence production, the Output Solutions Group was confidently able to use the same technology to offer additional services both within the DVLA and externally to other Government departments. Consequent evolutions have seen the introduction of other digital technologies on the same workflow platform. Smart Tachograph cards and Biometric Residency Permits both now emerge from the same production system and both contain a chip for encoded personalised information. Secure card production is now a key offering for DVLA.

In meeting stringent Home Office requirements for tracking and audit for the Biometric Residency Permit, the DVLA production facility has shown itself equipped to meet the demands of even the most exacting customers. The recent migration to Ricoh’s latest generation of workflow software has positioned the DVLA ready for another decade and for the adoption of other new digital technologies. Building on tried and trusted technology, Ricoh Process Director is the result of over 20 years of research and development into workflow and process automation. There is no doubt that other physical products produced by OSG will evolve to include more digital content and Ricoh Process Director will continue to be the core enabler that facilitates the expansion of digital, but in a secure and managed way. Ricoh is delighted that the strong and close partnership with the DVLA is now set to move into a fourth decade. We look forward to continuing to work together to design, develop and deploy solutions that handle the complexities of mission critical communication in a fast changing world. Ricoh and DVLA share a passion for excellence and innovation and that shared passion has been the cornerstone of our partnership and our joint success.

Target provides DVLA award winning Direct Debit solution for vehicle tax payments in just eighteen weeks Target designed and implemented a solution for The DVLA that enables consumers to pay their vehicle tax by Direct Debit. Three years on, the service has been used by more than 17 million drivers to set up 40 million Direct Debit mandates and has collected over £5bn in revenue, including £156m in a single day. Reliable as well as popular, it has been an important element of DVLA’s ongoing “Simpler, Better, Safer” strategy and helped DVLA increase its digital take-up. In 2016, Target secured a new contract to continue to manage the system for a further two years. Simple, quick and efficient: since the DVLA launched its online vehicle tax renewal service in 2006, it has become recognised as an exemplar amongst the public sector web services; and helped position DVLA as pioneers of government digital transformation. 17 million users Just 18 weeks after Target was brought in, the solution went live and was met by huge demand. The reliability of the solution, added to its simplicity from the user perspective, has meant that Direct Debit has become a preferred payment method for over 17 million customers.

The solution A secure online system, interfacing with BACS; and the provision of a contact centre solution serviced by DVLA agents. The results • 17 million customers have paid by Direct Debit • £5bn worth of Direct Debits collected – including £156m on a single day in 2017 • 24x7x365 service availability • High levels of customer satisfaction

Rohan Gye, Vehicles Service Manager, DVLA commented: “From the user perspective, Direct Debit has been a major success for us, we want to make paying vehicle tax as simple and convenient as possible in a way that suits them. With the support of Target we are pleased to offer millions of motorists the choice of paying vehicle tax by Direct Debit in annual, six monthly or monthly instalments”

The DVLA’s collection service is now one of the largest in the country in terms of both the number of customers and the revenue generated. Savings and satisfaction As well as the benefits to customers, the service has also helped the DVLA meet other financial and strategic targets such as increasing digital take-up. Target has continued to work closely with the DVLA to optimise and continuously improve the service. That combination of innovation and service helped the solution win Best Online Payments Solution (Consumer) at the 2016 Payments Awards.

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at DVLA go down then about 4,000 long-term supply contracts with IT people stop work, so availability suppliers. We’ve also got a very big is huge, resilience is massive. cloud transformation programme Supporting that is very important. going on as well,” explains Falvey. The challenge we’ve got is the age of our IT systems, they are dated legacy MAJOR MILESTONES systems. We’re six months into a The move away from big IT contracts transformation programme to move has been a major change for the away from these legacy systems, DVLA in recent years. “One of the and to totally re-engineer major milestones for DVLA and re-architect our has been insourcing our IT IT. Supporting function, which was back DVLA SPENDS that is a massive in 2015. We insourced priority for our IT over 300 people, commercial team.” which followed the As the largest end of a long-standing A YEAR ON GOODS category within the IT contract. That created AND SERVICES commercial directorate, a great deal of work for around 25 employees the commercial team, in are entirely dedicated to IT. The terms of novating and insourcing all DVLA has moved away from big IT the contracts that were part of the contracts. It has some enterprise outsourced contract,” Falvey advises. agreements with companies like IBM “We ran a commercial project and Oracle, but the vast majority for 18 months to do that, and of its IT contracts now are two successfully managed to insource years in length, which is following or novate around 180 contracts. GDS (Government Digital Service) I think the perception was that guidelines. “We’re moving, as when we insourced we’d have much as we can, into open source fewer IT contracts, but of course to get away from being locked into when you insource you’re


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suddenly in charge of all aspects of IT. Therefore, everything – from licences, support and maintenance, hardware, software, resourcing, contracting – comes in-house. So, that’s been a big change for us in the last couple of years.” For this project, the team won the award for the Best Public Procurement Project in 2016 at the CIPS (Chartered Institute of Procurement & Supply) Supply Management Awards, and the GO Award for Best Contract Management Initiative in 2015/16. BEST IN CLASS This is not the only area in which the DVLA has won an award recently. The agency won the Skills Award at the 2017 Civil Service Awards for its CLASS programme. “I’m very committed to learning and development, and we’ve been running for the last couple of years a programme for upskilling and developing our staff. We call it CLASS, which is an acronym for ‘commercial leadership and skills support’. The CLASS programme’s


February 2018

been very successful,” states Falvey. “We’ve got staff doing professional exams with CIPS, and we’ve developed our CLASS programme, which aims to complement formal CIPS training and includes practical learning modules and workbased projects. We’ve also got a mentoring programme, which is more informal, and staff take-up of this has been excellent.” As with the IT contracts, CLASS is run entirely in-house by the DVLA. “We have done that all ourselves, that’s why we’re very proud of it, because it was devised, developed and designed by my staff, working with colleagues around DVLA,” Falvey explains. A GROW-YOUR-OWN PHILOSOPHY For people living in southwest Wales, the home of the DVLA, employment opportunities are often challenging to come by. Indeed, according to StatsWales, Swansea has an employment rate of 67.9%, making it within the bottom three areas within Wales. As such, staff tend to


stay with an employer for a number of years, making it even more important that the Agency invests in its employees and encourages continuous training and professional development. “We’ve very much got a grow-your-own philosophy. We do advertise jobs externally and we have brought in some external people but it’s relatively light. The great majority of our people have been developed and trained, and come through the ranks. I think that reflects the employment situation around here. There aren’t a lot of qualified procurement professionals around, and the ones who are, are working for other bodies and not necessarily able or willing to move,” Falvey advises. The DVLA employs over 5,000 people and is one of the largest employers in the region. “I’ve been here the last seven years, and we’ve

Working at the DVLA


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February 2018


lost very few staff. I think we’ve lost about three, maybe four professional, qualified staff in the last seven years, one of whom has come back to us, which is interesting. We’re adopting very much a grow-your-own, develop our own philosophy,” Falvey adds. Optimising operations A further significant project undertaken by DVLA Commercial has been around category management. “We completed a project over six months, called

Optimise, and that realigned our category management and restructured our teams to make sure that we were geared up to support the business. That’s been quite a big change,” Falvey comments. “We’ve run category management for some time, but this was updating it and refreshing it, and making our resource planning sharper, so that we’re better geared up for the inevitable peaks and troughs that go with the work. We’re

“If our systems at DVLA go down then about 4,000 people stop work, so availability is huge, resilience is massive” – Andrew Falvey, Commercial Director



also involving senior colleagues more, which is improving internal business relationships.” Optimise, too, was a project where the staff at the DVLA took full control and ran it in-house. “I’m really proud that my staff have managed to do these things with little or no external support. I think that’s part of what makes the improvements even more significant, that we haven’t brought in armies of consultants, or teams of contractors to help us, we’ve done this ourselves,” Falvey says. A SIGNIFICANT INCOME GENERATOR Whilst the registration and licensing of both drivers and vehicles is what the DVLA is best known for, DVLA Commercial is involved in a much wider array of activities. “We undertake selling of our services. DVLA offers services to other parts of government. We produce cards for the Home Office for example. We also produce cards used by the freight industry. We undertake printing for other parts of government – we’re doing printing for GDS Notify, for example,” Falvey observes. “I’ve got a small team that handles where DVLA offers its services across government, or to other public bodies.” Personalised registrations are another area in which DVLA Commercial is involved. “We sell registration marks, which is an unusual activity in government. We’ve got a commercial website and I’ve got a small team that manages that as well, and that brings in about £100mn a year, so


February 2018

Registration and licensing of both drivers and vehicles is what the DVLA is best known for


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Outside DVLA’s main HQ in Swansea


February 2018

it’s a significant income generator,” states Falvey. That money goes to the Treasury, not to the DVLA. “It’s another interesting aspect of commercial activity at DVLA, which is one of the reasons I wanted to join, to be honest, because it’s never less than interesting,” continues Falvey. “When you talk to people, they assume that we’re the driving licence people, and we are, and you get your vehicle log book as people call it, the V5, from us as well. But as you can imagine, behind that there’s a lot of contracting, and a lot of goods and services to be procured.” SOLID DELIVERY Naturally, the ongoing transformation programme will be a key focus for the DVLA over the next few years, and the Agency has a strong sense of direction looking ahead. “It’s going to

take us a couple more years until we get to where we really want to be. But we’ve got a roadmap for where we want to go, and we want to become a multi-channel business, and I think we’re well on the way. I think what DVLA’s done in the last couple of years is start to build a reputation as one of the more solid delivery parts of government,” Falvey concludes.

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Written by Laura Mullan Produced by Charlotte Clarke 157

With its infamous motto “be your way,” Burger King is renowned for its commitment to customer choice. Now expanding its grasp on the Indian market, the fast food giant reveals how its supply chain is helping to satisfy the nation’s appetite for taste, quality, and affordability


s one of the most recognisable brands in the world, Burger King is a company that needs little introduction. Every day, more than 11mn customers sink their teeth into the burger chain’s menu and now, thanks to its ambitious expansion plan, the company is expanding its reach in India. Embarking on a mission to become the nation’s leading fast food restaurant, Burger King India has strived to optimise its supply chain, drive innovation, and uphold its core values of taste, quality and affordability. The Florida-based burger chain has made a splash in over 100 countries across the globe. However, this isn’t a matter of taking the brand’s American success and duplicating it abroad, explains Chief Marketing Officer, Kapil Grover. Rather, the company’s entire strategy, brand, and


February 2018

menu have had to be tailored to fit the unique tastes of the Indian market. A unique market “Quick service restaurants (QSR’s) operate differently in the western world than they do in India,” explains Grover. “In the western world, QSR’s are focused more on the idea of convenience and so a large number of the consumptions happens via drive-thrus but in India, it’s more about the experience and the aspirational qualities of the brand. “Our overall vision is to be the leading QSR in the country, and we want to achieve that by offering the besttasting burgers, made with highest quality ingredients, offered at the most affordable prices,” he adds. It is an upward trajectory that tells the story of Burger King India. The fastfood giant launched its first restaurant


Kapil Grover, Chief Marketing Officer

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in November 2014 and, since then, it has carefully handpicked more and more metropolitan locations. Rapid growth “The response to our first 10 locations was fantastic. Our menu was well received, our experience was seen to be amazing, and that gave us the confidence to scale up. Now we are perhaps one of the fastest growing companies to launch 100 stores in the Indian QSR market,” notes Grover. Optimistic about the company’s growth, Sandeep Dey, Chief Supply Chain Officer at Burger King India, says that the brand’s franchise growth has offered more opportunities than challenges. “Our overall business philosophy has always been to grow deeper rather than grow wider; to strengthen our existing markets rather than

entering new cities,” explains Dey. “That philosophy is actually helping us to leverage the supply chain cost and make it much more efficient. “When we open a new store in a new city, the initial distribution cost is slightly higher, because we are not utilising the full potential of the warehouses and delivery trucks, for example,” Dey says. “However, when we open five or six stores in that region, the overall distribution cost will go down significantly and the stores will start becoming much more profitable. Therefore, scalability is driving profitability and vice versa.” Transforming the menu Making a mark in the Indian market was no easy feat; it involved adapting the Burger King brand, and specifically its menu, for an Indian market. Locally designed and blind tasted by


February 2018


15,000 Number of restaurants operated at Burger King in approximately 100 countries and U.S. territories

11mn Number of guests that visit Burger King restaurants across the world each day


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local customers, Burger King India developed around 18 unique burgers for the Indian market that cannot be purchased anywhere else in the world. “India is a very different market compared to anywhere else in the world in terms of the country’s taste palate and unique vegetarian preference. Over 50% of the population here is vegetarian, so we couldn’t take the international menu and apply it here. It had to be completely redesigned. “Then we had to adapt our supply

chain to be able to manage that level of complexity, because although it offers unparalleled variety to the consumer, it also has to offer consistency in taste and quality.” Vendor partnerships Menu innovation has been integral to Burger King India’s success. Grover says that this is largely due to the brand’s vendors and processes such as the supplier-led innovation programme (SLIP), whereby

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vendors are given the opportunity to innovate new menu options. “Our vendor partners really demonstrate a huge amount of agility, flexibility, and high speed to market when launching new products,” observes Dey. “The kind of collaborative effort they have demonstrated has been phenomenal. They have an equal conviction to the Burger King brand as our team and I think that’s so important.” Sandeep Dey Chief Supply Chain Officer

Quality, taste and value are the fundamentals at Burger King India and balancing these conflicting priorities is perhaps one of the biggest challenges facing the company today. Cost leadership By optimising the company’s distribution cost and leveraging shared services and infrastructure, Dey and his team are driving down transportation costs. Combined with the company’s relevant brand and flexibility in its supply chain, this has proven to be a recipe for success. “Our supply chain has played a tremendous role in helping set up Burger King as a brand in the Indian market,” asserts Dey. “To be able to find high-quality vendors who can deliver consistent quality at competitive costs has been challenging and a lot of effort has gone into the supply chain to ensure we can deliver our complex menu, but I think that has been the real trick which has helped us succeed in this market. We have developed a strong back end that can support our diverse, complex menu and which can fulfil our consumers’ needs.”

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February 2018


Lean team Although they boast an intricate supply chain, Burger King India operates with an extremely lean team. By outsourcing everyday non-value-adding work to specialised logistic companies, Dey and his team focus on what matters - meaningful, value-adding, strategic work that truly makes a difference to both customers and employees alike. “Fundamentally, our organisation is based on three key pillars - hard work, hunger, and humility,” says Grover. “When we’re hiring talent, we hire those who actually believe in those core values. We provide them with enormous opportunities to demonstrate this in their day-to-day work life. They are culturally aligned, they’re getting tremendous job satisfaction because they could see the value they’re bringing to the table and making a meaningful contribution to the organisation’s growth.”

burger chain isn’t complacent about the work that lies ahead. Working alongside its vendors, Burger King India has created a meticulous plan to invest in R&D, system processes, and people capability; to create capacity ahead of time through new and improved technologies and to retain cost leadership. In doing so, it hopes to cement its position as the nation’s top fast-food chain. “This category has huge potential, and we have just scraped the surface” observes Grover. “Lifestyles in India are evolving rapidly, especially in metropolitan cities. Income levels are growing, Millennials and Gen-Z consumers are driving consumption and are much more open to Western experiences. There is a lot of opportunity to drive penetration, a lot of opportunity to drive frequency with our consumer cohort, and that’s why we are extremely bullish about the future.”

Huge potential As the brand has penetrated the Indian market, Burger King India has seen success after success - however, the

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Driving the Chinese e-commerce market Written by Catherine Sturman Produced by Charlotte Clarke


In order to remain competitive in the emerging e-commerce market, Staples has worked to transform its service delivery within the Chinese market


ince the 1980s, Staples has been fondly renowned as a professional office supplier for corporate businesses and those who have a passion for stationery. However, not one to shy away from growing trends and emerging markets, the company has worked to overhaul its service delivery to become a complete ‘one stop shop’ for local governments, Fortune 500 enterprises, SMEs and local businesses. Staples, a Fortune 500 business itself, has grown exponentially in China, with ambitions to further cement its presence within the e-commerce market. With the growth of new, disruptive technologies and increased competition, long-standing businesses continue to face a number of challenges. Substantial increases in customer demand and quality of


February 2018

products have seen customers no longer content with waiting up to five days to receive an item. Now, customers expect to have the ability to receive items the very next day, delivered free of charge or at minimal cost. This evolving market has consequently led Staples to adapt its service operations in alignment with increased consumer demand. Entering the Chinese market back in 2004, the company has strenuously worked to diversify its service portfolio to appeal to the local marketplace. However, stark differences within consumer preferences has impacted its operations significantly. Whilst the US market encompasses a number of physical stores to enable consumers to fully browse and purchase office supplies of choice, China has closed all of its brick-and-mortar stores, where the Chinese government has


Staples delivery service


Staples VIP Card

placed significant investment. Competitive edge Driving business growth has been central to Staples’ success within China. Adopting new categories and solutions for its corporate customers, the business has worked to strengthen its supply chain network and its relationship with suppliers through adopting reactive supply chain management processes. This has incorporated the re-evaluation and amendment of pricing structures to remain competitive, whilst investing


February 2018

in new technologies to guarantee the delivery of a service model which remains fully customer-centric. This approach has also filtered into the ongoing development of its staff, where employees have been given advanced knowledge and training surrounding products on offer, in addition to an awareness surrounding corporate expectations to deliver exceptional customer service. Boosting morale Focused on driving down costs, without losing the quality related


to its products or service capabilities across its e-commerce platform, Staples has established five new warehouses in 2016 alone within the country to cater to increased demand. New technologies and improvements have also been implemented to further streamline this process. Overhauling its picking process, for example, has allowed the company to reduce potential bottlenecks within its internal sourcing operations, but has also improved the productivity and efficiencies of its staff. Building relationships with forward thinking, local suppliers has been essential to the growth of Staples in China, where it has partnered with those who utilise customer-centric technologies, such as GPS tracking. This has enabled consumers to gain greater

2004 The year that Staples launched in China Staples branded products

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‘ Staples’ use of technology, alongside its commitment to its customers and strong partnerships with its suppliers will see it further expand and penetrate new markets across China in the future’

visibility and trace of products when they leave the warehouse. Furthermore, providing a personalised, efficient and tailored service has seen its suppliers not only deliver office items, such as paper, ink and toner, but also install these items for customers. Future growth Whilst the company has traditionally focused solely on office supply, Staples has become a complete, one-stopshop in office solutions. Although it is not immune to local challenges in China, Staples has worked to overhaul

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$800MN Annual revenue for Staples (US dollars)



February 2018

We are pioneers who have built state-of-the-art water production facilities across China at our eight premium quality water sources, in order to satisfy the growing demand by consumers who are choosing to drink healthy water as a preference. Investment in modernisation means we also are confident of having great distribution channels possible, to provide our products to all parts of China through our significant and efficient logistics network.


Staples employees its work environment to appeal to a younger workforce and encourage the growth of its personnel. This has enabled the business to gain a greater understanding as to what its workers want long-term in order to sustain its advantage over its competitors and, in turn, sustain its growth rate. It is clear that the growth of e-commerce and the implementation of new, integrated technologies in China will lead to the rise of aggressive consumer demand within both the

B2B and B2C market. With further consolidation, competition is set to ramp up, with larger companies entering the B2B arena. Nonetheless, Staples’ use of technology, alongside its commitment to its customers and strong partnerships with its suppliers will see it further expand and penetrate new markets across China in the future.

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Narrowing thegulf in healthcare procurement Written by Fran Roberts Produced by Heykel Ouni

2016 marked the 40th anniversary of the first meeting of the Gulf Health Council, in Riyadh, Saudi Arabia. Today, regular meetings are held to discuss the health issues of concern in the states. Part of the Council is Gulf Joint Procurement programme, which ensures the standardisation of the medicines directory and medical supplies of all specialities across the GCC


he Gulf Health Council is a regional technical specialised organisation with its membership restricted only to the Cooperation Council States, plus Yemen. Within this organisation sits Gulf Joint Procurement programme. “The Council enjoys a legal impartiality and financial and administrative independence,” advises Fatthi Alkathiry, Director at Gulf Joint Procurement. The Health Council of the GCC aims to develop cooperation and coordination among member states in the preventive, curative and rehabilitative health fields, as well as other mutually beneficial activities. The idea of the joint procurement for medicine began in February


February 2018

1976, when the Ministers of Health of the GCC states requested that the Council form a technical committee among the states. The committee’s main objective was to study the possibility of member states benefiting from direct control, like the processes in Saudi Arabia and Kuwait. A second key objective was to standardise the purchase of certain medicines. “The set objective at that time was to study the development of a unified system for the registration and control of medicines and the development of a guide for medicines in the GCC states,” Alkathiry explains. “The Gulf Health Council for Joint Procurement seeks to standardise the directory


Fatthi Alkathiry Director

A leading Procurement Director, currently working with in Gulf Joint Procurement for Gulf Health Council, Mr Fatthi AlKathiry focuses on developing the vision, mission and operational plans for Gulf Joint Procurement. Providing leadership, strategic planning and assurance for procurement administration, AlKathiry acts as the vendor management partner for all the business units, ensuring all relationships are strategically, culturally, and ethically aligned with GHC’s mission and values. Throughout his career with GHC, AlKathiry has continuously enhanced the organisation’s sourcing, procurement and performance management capabilities by attracting public and private hospitals to become participants in Joint Procurement. With a proven ability to develop, maintain and execute procurement policies, Al Kathiry consistently supports the Joint Procurement mission and meets the stakeholder requirements, facilitating a seamless implementation and adoption of solutions.

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“The Gulf Health Council for Joint Procurement seeks to standardise the directory of pharmaceutical devices and medical supplies throughout the Gulf Joint Procurement programme” –Fatthi Alkathiry, Director, Gulf Joint Procurement


February 2018


of pharmaceutical devices and medical supplies throughout the Gulf Joint Procurement programme, with the controls in place across the GCC member states.”

High-quality medicines With vast potential to impact the lives of others, the Gulf Health Council takes very seriously putting the interests of citizens in the Gulf countries above all considerations. With a growing population in the region, healthcare is set to become even more important. The GCC healthcare market is projected to grow at a 12.1% compound annual growth rate (CAGR) from an estimated US$40.3bn in 2015 to US$71.3bn in 2020, according to Alpen Capital. “The mission of the Gulf Joint Procurement programme is the development of a unified directory for medicines and medical supplies for all specialities, and the provision of high-quality medicines, medical supplies and devices to member states and participating hospitals, to the right location, at the right

time, and from the manufacturers registered with the Central Registration Programme, at fair prices. The ambition of Gulf Joint Procurement programme is to be the benchmark in the provision of standardised procurement services, based on global procurement standards,” reveals Alkathiry. In order to adhere to global procurement standards, Gulf Joint Procurement programme coordinates the process of selection, standards specification, and quantity of pharmaceuticals, medical supplies, and equipment required by Ministers of Health in member states, as well as standardising the preparation of tenders.

Ensuring safety The most prominent services that indicate the extent of progress and modernisation in a country are those services that concentrate on sustained health welfare and safety of the people. To this end, Gulf Joint Procurement programme ensures that all of the medicines it procures meet the highest safety

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THROUGH MUTUAL PARTNERSHIP AND HONEST DIALOGUE, WE CAN FIND SOLUTIONS THAT BETTER SERVE PATIENTS. Learn more at 1. World Health Organization. 10 facts on ageing and the life course. Accessed September 17, 2015. *Organisation for Economic Co-operation and Development 2. World Health Organization. Tracking universal health coverage. Accessed September 17, 2015. 3. Porter E. A world of rising health care costs. New York Times: Economix blog. Accessed September 17, 2015.

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standards. “We supervise the process of receiving samples and ensure the safety of their use, storage and preparation during the tender stage,” states Alkathiry. The tendering services offered by Gulf Joint Procurement programme are possibly the most integral ones to the success of achieving its mission. “We receive tender documents, and source and prepare schedules of comparison between tenders. Also, we plan, coordinate and prepare meetings of the joint procurement committees,” reveals Alkathiry. “We follow-up on the recommendations of the executive committee and decisions issued by these committees and coordinate with the member states as to the combined quantities required. Finally, we announce the results of the purchase decision and recommendations, and we receive, verify and study complaints and objections concerning tenders, and refer to the supplementary commentaries.”

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February 2018




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Fatthi Alkathiry, Director, Gulf Joint Procurement, taking part on a discussion panel for a healthcare forum the most important factor in the procurement process. “The most important reasons for the success of Gulf Joint Procurement programme is committing to the time of tendering over the next 40 years. The whole tendering process takes around four months, starting from the directory updating meeting and preparation for tender until the tentative notice of award,” explains Alkathiry. “This attracted several bodies, other than the health ministries in the member states, to apply for participation in the Gulf Joint Procurement programme.”

Upgrading the health sector In order to achieve such success, Gulf Joint Procurement programme collaborates with a number of other key players. “Our partners are the ministries of health in the GCC. We have six countries there – Saudi Arabia, Kuwait, United Arab Emirates, Oman, Bahrain, and Qatar. They are members of the Gulf Health Council. Also, we have more than 20 public hospitals like King Fahad Medical City, King Faisal Specialist Hospital in Riyadh, and King Abdullah Medical City in Mecca,” states Alkathiry.

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Fatthi Alkathiry, Director, Gulf Joint Procurement “All suppliers from our programme are our partners also. We have about 18 categories of materials. “The mission of the Health Council is to promote and upgrade the health sector in member states by providing constructive initiatives and responding to the regional and global health issues. We challenge and support the decision-making process, and the health policies with the aim to strengthen the cooperation and integration between the member states, the health sector and among


February 2018

that, achieve the Council objectives. Its values are accountability, professional leadership, continuous development, evidencebased decisions, creativity and innovations, quality, cooperation and coordination, integrity and ethics.” Such partnerships and values have been key to the success of Gulf Joint Procurement programme. “I think we’re not successful without three main key factors – coordination, collaboration and integration,” Alkathiry comments. “Without these

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three main factors, the 40-year old Gulf Joint Procurement programme would not be successful.”

Encouraging innovation Out of 50 employees within the Health Council, seven employees are serving in the Gulf Joint Procurement programme. Alkathiry strives hard to attract and retain the best staff to ensure the continued success of Gulf Joint Procurement programme. “I create a workspace where every employee is engaged by the work they do and inspired by who they work for. Without good staff you will not achieve your goal. The management structure achieves this by encouraging everyone to innovate. “It doesn’t have to be earthshattering. It can be a small change, but innovation equals improvement. Innovation must streamline, must enhance, must endure. Innovating our business by looking for ways to reduce expense, speeding up or streamlining processes, improving customer interactions and experience, making our products or services better. Innovation drives business, so if you don’t encourage 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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your people to innovate, you are wasting your resources, I believe.”

Automation for the people Such innovation is central to Gulf Joint Procurement’s future plans. “I’m working now with my team to automate our processes. There are plans in the future, to implement a new system for the Gulf Joint Procurement programme. Currently we have requirement to automate our process, and link with the GCC countries and the suppliers to make quotations align, and to organise everything historically. The second thing - there are plans for expansion of the service procurement to market our services to the private hospitals to join in our programme,” Alkathiry concludes.

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VALUE-BASED HEALTHCARE THROUGH STRATEGIC PROCUREMENT By driving efficiency in its supply chain, utilising data analytics, and truly understanding its services, Service New Brunswick is delivering value-based, high-quality goods and services to the healthcare system for the province of New Brunswick, Canada Written by Laura Mullan Produced by Denitra Price


Ann Dolan Executive Director of Strategic Procurement, for Service New Brunswick Health services

Ann is an experienced healthcare supply chain leader, an executive with over 27 years health procurement experience across shared services and group purchasing sectors. Ann has a deep understanding and knowledge of public procurement. She is known for her integrity, dedication and energy she brings to every project


February 2018



rocurement can be a challenging discipline. There’s an increasing pressure to reduce costs and achieve savings, the continuous challenge of sustaining supplier relationships, and the need to keep up-to-date, accurate data. However, when tasked with purchasing the goods and services for an entire province’s healthcare services, the pressure increases tenfold. With more than 27 years of experience in the sector under her belt, this is the job that’s in the capable hands of Ann Dolan, Executive Director of Strategic Procurement for Service New Brunswick Health Services. Providing the procurement of goods and services within healthcare for the Canadian province, Service New Brunswick is a crown corporation that has transformed its strategic procurement function in recent years. Value-based procurement The corporation (previously FacilicorpNB) was instructed by the government to achieve savings of $20 million. Of this amount, between CA$14 and CA$16mn was to come from supply chain initiatives in the healthcare sector. “It was a real challenge,” admits Dolan. “For us, it was important to understand the needs of the client - the clinician or physician – and so we asked them ‘what is it that you need in your practice to treat a patient?’” Dolan says. “We asked them ‘what are some of the things you’re doing now that you don’t want to lose sight of? What are some of the improvements you’d like to see?’

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“Only when you understand the business of the client, can you start to understand their needs, their wants, and why they ask for certain things,” she adds. “Our category management methodology really helped us with this but, more importantly, I think in procurement you have to be curious. You have to ask a lot of questions, understand what the product or service does, and you have to know if it provides value to the clients or not.”


Data analytics Like many organisations, Service New Brunswick tapped into the potential of data analytics to help with its cost-saving measures. The shared services group creatively used Microsoft Excel, its Access database, and its current financial systems, to extract and analyse data about its procurement strategy. To this end, Service New Brunswick could then clearly see what its clients were buying, which regions had the best contracts, and whether it

– Ann Dolan, Executive Director of Strategic Procurement for Service New Brunswick Health Services

could get products at the same price province-wide. “When you have the data, the story tells itself,” notes Dolan. “You don’t have to be the persuader. Then we essentially looked at the low hanging fruit and asked ourselves ‘can we extend this cost-effective contract? Can we commit a certain volume to get a better deal from our suppliers?’ “Then we brought in a consultant to help us make further savings,” she says. “This helped us move towards a competitive procurement process that we hoped would show not only savings, but efficiencies, changes

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in practice that would have a better value for the patients of the province.” Providing meaningful healthcare Although it was a mammoth task, Dolan and her team successfully achieved these savings by taking a market-driven approach to procurement. But when Service New Brunswick is responsible for the goods and services needed to support the healthcare of around 750,000 people, how did the group balance the need to drive efficiency


February 2018

with the need to provide meaningful, high-quality products and services? “That’s the million-dollar-question,” Dolan says. “I think the way we achieve that is through our market research. It’s important that we’re aware of our operations from a public accountability perspective, from the perspective of the client, from the perspective of the supplier, and from the perspective of the patient.” Operational transformation In 2015, the government announced that it would merge four shared service

“WHEN YOU HAVE THE DATA, THE STORY TELLS ITSELF” – Ann Dolan, Executive Director of Strategic Procurement for Service New Brunswick Health Services.

entities to create one larger shared services organization that would provide high quality, safe, and efficient services throughout the province. This meant that non-health related shared services such as accounts payable, payroll, copying services, procurement, information technology, human resources for internal government, shared services for healthcare, laundry, supply chain, clinical engineering, and the provincial entity that manages customer services centres to the public would be merged. However, despite this

transformation, the corporation’s meaningful ethos remains to this day. Over the past three years, Service New Brunswick has seen further changes to how it does business. It implemented a category management methodology, separating the strategic part of procurement from the transactional part. “The reason for that move was that it allowed us to align ourselves with how the clients are organised. That way, we could have people dedicated to that portfolio, where they could really get to understand the business and

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needs of the client,” explains Dolan. “We’ve just conducted our strategic planning session as an organisation and our 2022 vision is ‘excellence in service delivery,’” notes Dolan. “Essentially, this means that our mission is to provide high quality, innovative services for customers with a focus on value for all New Brunswickers.” Developing supplier relationships To achieve its ambitious aim, Service New Brunswick has worked diligently to sustain its supplier relationships. The group has migrated from the traditional yet restricted request for proposal (RFP) process to the more flexible negotiated request for proposal process. Through this system, suppliers may put forward Best and Final Offers (known as BAFO) whereby suppliers can bounce ideas back and forth. This provides suppliers the chance to present what could be a forwardthinking proposal to the corporation. “We are moving towards another evolution of procurement, whereby it


February 2018


Full team training day on Strategic Procurement

is more value-based and less focused on price,” observes Dolan. “We have developed strong relationships with our suppliers - companies such as Medtronic, Johnson & Johnson and Baxter. These are global, international companies and they really benefit from working with us because we’re able to pilot things and we can do this fairly quickly. Then our suppliers can use that template and apply it to other customers and clients in other provinces or countries. In that way,

I think we’re progressive because sometimes the relationships that we’ve built allow us to be on the leading edge of new technology and healthcare practices.” Adapting to challenges Working closely with suppliers is not only about forging long-lasting relationships, it’s also about preparing for potential crises. In today’s everchanging climate, natural disasters are increasing in devastation and

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frequency and this can play havoc with governmental supply chains. “The last one that affected our supply chain was Hurricane Maria which devastated Puerto Rico,” remembers Dolan. “Four or five of our large suppliers had manufacturing plants there and so suddenly this posed a major issue to the supply chain. Therefore, we have to be ready

to address any natural disasters that may happen and which, I think, are going to become more and more frequent. We have to be able to utilise the data and analytics effectively. We need team members who have good interpersonal skills who can talk to people, get to the heart of the problem very quickly, and who can find a solution.”


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February 2018


“WE ARE MOVING TOWARDS ANOTHER EVOLUTION OF PROCUREMENT, WHEREBY IT IS MORE VALUE-BASED AND LESS FOCUSED ON PRICE” – Ann Dolan, Executive Director of Strategic Procurement for Service New Brunswick Health Services. By driving efficiency in its supply chain, utilising data analytics, and truly understanding the meaning behind its products and services, Service New Brunswick has dealt with its supply chain transformation in its stride. In doing so, it continues to deliver value-based, high-quality healthcare goods and services for the province of New Brunswick. “In all this change, we have to find balance,” reflects Dolan. “Sometimes it can be hard but one of the main

things that keeps us motivated is that we know that for everything that we do, there’s a patient at the end of that transaction. That patient could be one of our family members or one of our friends. Our core mission is to provide high quality, innovative services for customers with a focus on value for all New Brunswickers. So, when someone says, ‘thank you very much’, that’s what keeps us going during the hard times – knowing that we’re helping New Brunswickers.”

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Quebec and Ontario’s


Written by Fran Roberts Produced by Glen White

With more than 105 locations, Dicom Transportation Group has the largest and fastest private shipping network in Quebec and Ontario. Currently celebrating its golden anniversary, the company is turning to technology to boost efficiency and drive productivity


ounded in 1968 after Canada Post went on strike, Dicom took advantage of this situation to establish itself as a leading player in the parcel delivery sector. The business then expanded into less than truckload (LTL) services, but what has been key to the company’s ongoing success and longevity? “We have a great group of people working at Dicom. I think the other big thing is our customised solutions,” observes Kirk Serjeantson, CIO. “We really go out of our way to give the customer something different than what the bigger organisations or some of our competitors would give, just because they’re not as flexible in how they approach business. The other is the proud Canadian reputation that we’ve built over the last 50 years.” Exponential expansion One of the majors that has contributed to Dicom’s success is the combination of services that the company offers to its clients. “Typically, what other companies do is they have a strong parcel background like we did, and then they go to less than truckload, they open up separate facilities with


February 2018

separate technology,” Serjeantson states. “They almost create a separate company. Instead, what we did was we made sure that our technology and our real estate were all one, so that all the parcel and LTL product is in the same building, managed by the same team, and then it’s managed by the same technology as well.” From there, Dicom expanded into


logistics, servicing large international companies to help deliver their freight across Canada. “That grew fairly exponentially, just on the quality of service and the innovation we were providing. Then we got into truckload, and ultimately in 2014 we were purchased by Wind Point Partners, where we expanded into the US to take that model that was successful

in Canada. Our service expanded more doing final mile deliveries as well as other logistical and truckload services,” explains Serjeantson. A smart platform With a combined area of nearly 20mn sq km, Canada and the US is a formidable service area for any business. “Technology plays a big role,

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Kirk Serjeantson CIO

Kirk Serjeantson joined Dicom as Chief Information Officer in September 2014 after spending the majority of his career in the transportation IT field. Prior to Dicom, he held several CIO and IT leadership positions including Director of Technology Development at Purolator. Prior to Purolator, Serjeantson was the National Operations Systems Manager at Loomis Courier Service. as visibility on parcels and making sure we know where everything is at the right time is crucial. Partner integration is also big, because obviously you can’t cover every point in Canada all the time, or the US, so we make sure that if we partner with someone, our systems are communicating with each other very succinctly and


February 2018

effectively,” advises Serjeantson. “We have what we call our smart4 platform. That has been the focus of our technology for the last couple of years. It’s broken into four things – a new shipping system, which is smart4 shipping, a new tracking system, which is smart4 tracking, smart4 mobility, which is



a new mobile program, and smart4 integration, which is our integration platform that connects everything together, including our customers.” Operating efficiently Technology is revolutionising industries across the globe and transportation is no different. “The quote that I tell everyone is that the battle for transportation would be lost and won on the field of technology. I just think it’s going to be, it doesn’t matter how cheap you are. People are going to want a certain level of service, and technology might drive some cost savings that can be

passed back to the customer. I think it’ll be that sort of loop of ‘here’s the value I’m giving you, oh, and I can work on my cost better because I’m more efficient’,” Serjeantson states. “We’re using internet of things and gamification which are working together. We’ve got telematics in our trucks, which connect into our backend. We’ve got information from our backend connecting to that, and we’ve got driver inputs coming from mobile devices. All this is working together to make our operations more efficient, as well as to inspire the drivers to work a little harder through incentive programmes.”

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Higher productivity doing,” comments Serjeantson. As a holder of four patents, technology “If you sign an account with a and innovation are clearly company, and it is three floors at the core of Dicom’s up and you’ve got to wait operations. “We’re for an elevator, why getting into wearables should that costing now, and we model be the same released our first as someone where was founded in smartwatch for you go and drop a both the driver and package off on the for our customers first floor very quickly? this year, as well as It helps us gauge the some pretty innovative drivers, and it helps the customer apps to help them drivers, too. They know how manage their data a bit better. The quickly they’re moving. They’re ownerwearable tech is one of our patents. operators, so they want to get in and Giving the driver a watch, we can get out. Now we can track better how cover the steps, we can understand they are facilitating their deliveries what type of deliveries they are so that it’s profitable for them.”


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February 2018


Watch utilisation also makes the operation more efficient for clients. “They can store their signature on that watch so when the driver comes in, it connects to the driver’s phone, it says the driver’s here, he’s got five packages. Instead of walking across the room, I can look over to the driver that I’ve been working with for years and go, ‘yep, there’s five packages.’”

Serjeantson explains. “They can just tap their watch, it’ll send their signature to the driver and the driver can leave. Both the customer and driver’s productivity are much higher.” Later this year, Dicom will also release a smartphone app where clients can store a signature and tap to send to the driver when their delivery arrives.

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Driving excitement Having been in business for half a century, Dicom certainly shows no signs of slowing down. “We’re going to expand our footprint in the US and Canada – keep growing and taking those services and putting them in more places,” Serjeantson states. “I think also tighter integration with some of our partners to ensure that even if we don’t have a Dicom truck, per se, in

an area, we’re partnered with someone who can get that freight there with the same level of quality that we do. “We’re going to continue to innovate. We’re not so big that it’s hard to turn the ship, but we’re not so small that we can’t invest in cool technology. We’re in that sweet spot. We’re going to continue to create new and exciting solutions with the hope that we can drive excitement in the industry.”

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Supply Chain Digital magazine - February 2018