Supply Chain Digital – July 2019

Implementing a procurement strategy built to last

J ULY 2 0 1 9

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FOREWORD

W

elcome to the July edition Elsewhere in the magazine, we of Supply Chain Digital! interviewed Geodis as Phillipe Mahler, In our cover issue this month, we Chief Procurement Officer discussed spoke with Chris Foord, Chief Logistics how his company is utilising Officer at The Warehouse Group technology amidst a digital (TWG), who discussed the supply transformation. chain and logistics strategies Be sure to also check out driving the company’s our other in-depth features development into a true with Millennium Hotels omnichannel retailer. and Resorts, Service “Like many New Brunswick, Chris Foord , organisations, TWG has Lebanese American The Warehouse Group realised the competitive University and Barclays advantage of supply chain, Mauritius! from sourcing and distribution Lastly, this month’s top 10 through to the store and the customer,” article looks at the best waste says Foord. “Rather than simply being management strategies that can be a back-of-house transactional function, introduced into your supply chain to we are now seen as an efficient and reduce unused products. effective supply chain that enables a Would you like to be featured in competitive advantage in the wider the next magazine of Supply Chain organisation’s strategy.”

Digital? Get in touch at Our leadership interview features sean.galea-pace@bizclikmedia.com Mal Jones, Head of Sales of Gartner, to find out how the research and advisory Enjoy the issue! firm conducts business in Asia.

Sean Galea-Pace

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CONTENTS

12 THE WAREHOUSE GROUP: driving omnichannel retail through supply chain innovation

30 GARTNER:

operating with a customer-centric approach in the research and advisory sector

40 Transforming procurement data through AI at Sievo

56 CYBERSECURITY WITHIN THE SUPPLY CHAIN

HIGHJUMP:

LEVERAGING TECHNOLOGY TO SUSTAIN A COMPETITIVE ADVANTAGE IN THE SUPPLY CHAIN SECTOR

48

64 TOP 10

Waste Managements Strategies

80

Events & Associations

CONTENTS

86 Geodis

100 Service New Brunswick

128 Barclays Bank Mauritius

114 Lebanese American University

142 Pemex

12

THE WAREHOUSE GROUP: driving omnichannel retail through supply chain innovation WRITTEN BY

MARCUS LAWRENCE PRODUCED BY

STUART IRVING

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13

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T H E WA R E H O U S E G R O U P

Chris Foord, Chief Logistics Officer at The Warehouse Group, discusses the supply chain and logistics strategies that are driving the company’s development into a true omnichannel retailer

F

ounded by Sir Stephen Tindall in 1982, The Warehouse Group (TWG) has become New Zealand’s largest non-food retailer. Across

its laudable brand portfolio – comprised of The Warehouse, Noel Leeming, Warehouse Stationery, Torpedo7 and 1-Day – the Group operates over 250 14

stores throughout New Zealand while working towards creating a true omnichannel retail experience.

Chris Foord, Chief Logistics Officer at the company, is overseeing the ongoing evolution of its logistics and fulfilment functions; a role whose industry-wide importance continues to become a recognised core element of any successful modern business.

“Like many organisations, TWG has realised the competitive advantage of supply chain, from sourcing and distribution through to the store and the customer,” says Foord. “Rather than simply being a back-of-house transactional function, we are now seen as an efficient and effective supply chain that enables a competitive advantage in the wider organisation’s strategy.” Foord notes that this centralisation of the supply chain function within the overarching business strategy will become more entrenched as J U LY 2 0 1 9

$3bn

Approximate revenue (NZD)

1982

Year founded

12,000

Approximate number of employees

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15

T H E WA R E H O U S E G R O U P

“ Where there was a buffer between distribution and the customer via the in-store experience, there’s now a direct physical handover” — Chris Foord, Chief Logistics Officer, The Warehouse Group

16

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CLICK TO WATCH : ‘WELCOME TO RETAIL CAREERS AT THE WAREHOUSE GROUP’ 17 omnichannel retail continues to become

expanded its data science team to

an expectation in the industry. “Where

better leverage the latent insights of its

there used to be a buffer between

data sets, and already has a history of

logistics or distribution and the customer

implementing automation technologies

via the in-store experience, there’s now

that will continue through the worldwide

a very direct physical handover in terms

shift to Industry 4.0. “Many years ago,

of the delivery connection and interaction

when we built one of our larger distribu-

as we fulfil orders.”

tion centres, we included automation

The changing needs and expectations

within it that was then viewed as state-

of the customer, centred around speed,

of-the-art,” Foord explains. “That stood

convenience, choice and the infamous

us in great stead for a long time, and

last mile, have inspired a vast range of

we’re now looking at ways to make that

implemented solutions that drive in-

automation smarter to meet both our and

creased efficiency, sustainability and

the customer’s growing needs.” TWG is

customer satisfaction. TWG has recently

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its new warehouse management system,

decision-making based on real-time

developed by Manhattan Associates,

information and data, using interweaving

that is set to overhaul the efficiency of

capabilities to assign tasks based on the

its warehouse operations. “It’s going to

most productive and efficient route.”

significantly improve our distribution

Foord summarises the effect of these

and logistics centre capability, enabling

elements in the replacement of restrictive

efficiencies that will save north of

manual tasks with automated technol-

NZ$5mn each year,” enthuses Foord.

ogies. Robotic process automation (RPA)

“The new system will have three key

has been used to automate a range of

benefits for our operations: allowing us

manual tasks on the finance side, and

to have greater visibility of all of our

machine learning has been deployed to

different departments and tasks in the

regularly clean the firm’s master data to

operation; enabling dynamic organisation

maximise its value for generating insights.

of tasks and orders; and facilitating

“It’s freed up our team to do more w w w.suppl yc ha i ndi gi ta l. com

T H E WA R E H O U S E G R O U P

“ The owner’s mindset epitomises the transformation journey that we’re on” 20

— Chris Foord, Chief Logistics Officer, The Warehouse Group

value-added activity, and ensures that we

clarity of objectives, are offered regular

are more targeted and effective with our

feedback and coaching, and are

operations,” says Foord.

exposed to development opportunities

This mentality of harnessing technol-

to stretch their skills and grow.” TWG’s

ogy to benefit teams and drive efficien-

commitment to its people is matched by

cy is central to TWG’s people-led

its commitment to the environment, with

business ethos. “When you’re going

a sustainability strategy aimed at

through a transformation, you have to

reducing the company’s impact on the

drive a cultural shift as well,” says Foord.

environment and encouraging sustain-

“Our focus throughout has been to get

able behaviour in team members,

the culture right and thereby enable the

customers and suppliers. “Sustainability

transformational outcome. We have

has become a huge focus for the

been developing a performance culture

industry, and we are extremely proud to

where we ensure that people have

have recently announced that we are

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carbon neutral,” says Foord. In February 2019, TWG achieved the internationallyrecognised carboNZero certification, becoming the first large company in New Zealand and the third major retailer in the world to do so. “While we’re now carbon neutral, which is amazing, we’re not resting on our laurels. We’re continuing to implement more sustainable methods of shipping and domestic transportation. For example, maximising our container loads and, where feasible, partnering with shipping lines who have the more efficient vessels in this space.”

Serving as an umbrella for each of

E XE CU T I VE PRO FI LE

Chris Foord Chris Foord leads all aspects of Logistics and Fulfilment across The Warehouse Group, including The Warehouse, Warehouse Stationery, Torpedo 7 and Noel Leeming brands. Chris is a supply chain professional with strong international experience across the value chain in multinational retail, FMCG and commodity organisations. Chris joined The Group from Fonterra Co-operative Group Ltd, where he was the General Manager of Global Supply Chain Development.Prior to Fonterra, Chris played key roles in Logistics, planning, transportation and tech re-platforming at Sainsbury’s and Marks & Spencer UK. Chris has a Bachelor of Science (with Honours) from University of Durham UK.

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21

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these endeavours and successes, TWG has established a strategic sustainability plan to drive it towards the goal of being New Zealand’s most sustainable retailer.

The plan is based on three key pillars: product, planet and people. “From a supply chain and logistics point of view, we’re primarily focused on the products stream,” explains Foord. “For example, efficiencies in transportation and delivery as well as packaging. It’s about finding that balance between protecting the product from damage and meeting customer expectations whilst reducing unnecessary waste and/or plastic.”

23

Foord adds that, through its online fulfilment operations, TWG is currently transitioning away from plastic fillers

highlight. “It’s all about our people,” he

and protection to 100% recyclable, paper-

says. “The transformation has enabled

based products. TWG is also paying

and celebrated the owner’s mindset:

consistent attention to the development

people treating the business as if it’s

of electric vehicles (EVs), building on the

their own, looking after every dollar,

fact that the majority of vehicles in its

every cent, to ensure that we are creating

customer delivery fleet are hybrid. The

value for both the organisation and our

firm’s light vehicle fleet is incrementally

customers.” He adds that the process

shifting over to full-electric alternatives,

has also provided employees with the

with 30% of its vehicles in this class set

tools to develop and execute ideas at

to be replaced with EVs this year.

pace. “One thing our business has never

Of the key successes of the transfor-

lacked is good ideas,” says Foord, off-

mation, Foord doesn’t hesitate to

ering an example of the internal inno-

earmark the firm’s culture as a particular

vations that this culture has enabled. w w w.suppl yc ha i ndi gi ta l. com

T H E WA R E H O U S E G R O U P

24

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“ One thing our business has never lacked is good ideas” — Chris Foord, Chief Logistics Officer, The Warehouse Group

25

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“One of our team members saw an

spurred by a culture that encourages its

opportunity to improve our fulfilment

employees to not only think outside the

centre packing station. As packing

box but also take ownership of TWG’s

materials were stored in a number of dif-

successes and challenges. “The owner’s

ferent areas, processing an order was

mindset epitomises the transformation

time-consuming and inefficient. She

journey that we’re on,” says Foord.

designed a new packing station that

Championing the successes of its

keeps all the materials together, and her

digital and supply chain transformation

partner constructed a demo to test it

in a holistic, Group-wide sense, TWG’s

out. Through that, we’ve ended up with

2018 annual report featured elements

an incredibly ergonomically-designed

of integrated reporting to highlight the

packing station that has yielded an 8%

progress of its strategy as well as its

increase in the number of orders we

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can process.” This type of innovation,

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“ We’re now looking at ways to make our automation smarter to meet both our and the customer’s growing needs” — Chris Foord, Chief Logistics Officer, The Warehouse Group

29 beyond the financial details typical of

management system and then to

an annual report, TWG zeros in on the

optimise that across our network,” he

finer points of its transformation,

says. “As with many global retailers,

highlighting innovation, sustainability,

we’re moving towards a seamless

diversity, talent development and its

omnichannel experience, but we’re not

work within New Zealand communities.

quite there yet,” he says. “Our goal is to

In sum, its new reporting strategy

be able to serve our customers in

focuses on the factors that exemplify

whatever way they want, irrespective of

its people-led focus and ethos. Looking

how they choose to engage with us. It’s

forward, Foord sees nothing but a con-

about us being able to offer a suite of

tinuation of the bold and exciting strategy

channels that can sustainably deliver

that is leading the Group to success

on that promise.”

and the realisation of a next generation retail experience for its customers.

“The key next step for the Logistics function is to embed the new warehouse w w w.suppl yc ha i ndi gi ta l. com

P R O C U R E M E N T T R A N S F O R M AT I O N

30

GARTNER: operating with a customercentric approach in the research and advisory sector We sit down with Mal Jones, Head of APAC Sales at Gartner, to discuss how the research and advisory firm conducts business in Asia WRITTEN BY

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SEAN GALEA-PACE

31

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P R O C U R E M E N T T R A N S F O R M AT I O N

A

s a leading research and advisory company, Gartner operates with a firm customercentric approach and serves leaders of

every major function in all industries and market sectors. Offering expertise in supply chain management to executives across various enterprises, the global firm caters to more than 15,000 client organisations from 100 different countries worldwide.

Having worked for Gartner since January 2015 in roles including Business Development Director in Sydney, Australia and Director of APAC Supply Chain, Mal Jones is well-experienced in under-

32

standing the supply chain industry in Asia.

Originally emigrating to Australia from the UK in 2008, Mal moved onto work in Singapore in May 2017 and remains responsible for launching Gartner’s supply chain business across Asia.

Despite the task of negotiating challenging and diverse markets in Asia, Mal believes that there is a great opportunity for Gartner to experience growth and achieve success in the region. “It’s a different way of working here, and there are massive opportunities for us in Asia. We’re quite new in this region and have only been operating in this market for a few years. However, we’re one of the fastest growing divisions in the business and it’s a great place to be.”

As a company with $4bn in revenue and a member of the S&P 500 with clients in 73% of the J U LY 2 0 1 9

“ We’re quite new in this region and have only been operating in this market for a few years. However, we’re one of the fastest growing divisions in the business and it’s a great place to be” — Mal Jones, Head of Sales, Gartner

Global 500, Jones believes Gartner’s ability to consistently disrupt the consultancy industry enables it to stand out from its rivals. “We’re a retained partner for clients and work on an individual level. We work with chief supply chain officers and their direct reports, but our engagement is very practical, and we generate value through on the ground support through our research, toolkits, ongoing discussions with our industry experts (end to end coverage /cross industry) and peer connections,” explains Jones. “The change w w w.suppl yc ha i ndi gi ta l. com

33

P R O C U R E M E N T T R A N S F O R M AT I O N

CLICK TO WATCH : ‘RETHINKING CUSTOMER RELATIONSHIPS’ 34 management journey isn’t easy. It’s the

“Customer expectations of faster

individuals in the company who are

fulfilment and increased supply agility

driving it and often our clients tell us

continue to grow, driving significant

that building internal capability is one

challenges for businesses with rigid

of the hardest parts. If you get some-

legacy fulfilment networks to cost

body coming in and driving it for you;

effectively respond,” says Thomas

you’re not really building skills for the

O’Conner, Senior Research Director

medium and long term. Our aim is to

at Gartner. The key success factors

add short, medium- and long-term val-

that will ensure the sustainability of

ue for our clients over time. The world

strategic supply chain transformations

for customers is becoming increasingly

include active C-suite level engage-

challenging, as supply chain leaders

ment and sponsorship of supply chain

continue to try to balance, cost, cash

transformation initiatives. “There needs

and service priorities for their custom-

to be clear alignment with broader

ers and market segment.”

organisation goals and objectives,

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“ Our aim is to add short, medium and long-term value for our clients over time” — Mal Jones, Head of Sales, Gartner

including an understanding of the capabilities required to deliver and succeed in these objectives,” says James Lisica, Senior Director at Gartner.

“Our own research shows that 75% of digital supply chain projects fail to align with broader digital business strategies. It’s important there’s effective communication and change management skills within the supply chain that go beyond analysis and return on investment (ROI), instead focusing on employee engagement, 35

E XE CU T I VE PRO FI LE

Mal Jones Mal’s career to date has spanned over 20 years in the supply chain industry working in many different parts of the world including UK, EMEA, Australia and now Singapore.

Mal worked his way up through a variety of roles in operations, which led to a successful career in sales and currently leads Gartner’s supply chain business in Asia.

Through those 20 years working cross- industry, with some of the largest companies in the world, Mal has accrued a wealth of experience which he hopes he can add to through his time in Asia.

When not working , Mal enjoys spending time with his family, playing cricket and enjoying the odd single malt whisky!

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P R O C U R E M E N T T R A N S F O R M AT I O N

feelings and actions associated with the transformation.”

With a drive to build long-term, sustainable relationships with its clients, Gartner maintains a client retention rate of 90% in Asia, in addition to operating with a multi-year engagement and partnering with clients over three years as standard. “Supply chain transformation and building capabilities inside an organisation doesn’t happen overnight,” explains Jones.

“Our high retention rate is testament to 36

“ Our high retention rate is testament to the value that we can help our clients generate; they come back year over year and renew.

We really want to foster long-term partnerships by delivering value and ensuring we align” — Mal Jones, Head of Sales, Gartner

the value that we can help our clients generate; they come back year over year and renew. We really want to foster long-term partnerships by deliv-

and execution from those executives

ering value and ensuring we align with

and their teams running the supply

the business’ overall strategy. Our clients’

chain must be aligned because the

immediate supply chain priorities can

supply chain doesn’t operate in a bub-

sometimes change, but usually the

ble. Our job is to really understand

critical priorities that CEOs lay down

what’s happening in the business and

tend not be disrupted too dramatically.

then help our clients translate that into

For example, it might be that our clients

effective supply chain transformation

want to grow market share in Asia and

strategies and execution in the most

double their volumes, but our clients

efficient way.”

always want to make sure they’re de-

As the rise of technology necessi-

livering profitable growth to their

tates the digital transformation of

shareholders. The supply chain is criti-

companies worldwide, it has become

cal to delivering this and the strategies

progressively more important that

J U LY 2 0 1 9

through the noise and figure out which technology is appropriate at each stage of the journey. One person’s AI is another person’s attempt at transitioning away from spreadsheets.

Digitalisation can mean lots of different things to a range of different companies.”

Looking to the future, Jones has a clear idea of how success can be achieved long-term in the supply chain space. “The supply chain is one of the key levers for successful growth for a company,” notes Jones. “If you’re not transforming your supply chain and not continually looking at efficiencies and maturing the processes, you’re going Research & Advisory firms such as

to be going backwards versus your

Gartner move away from traditional

competition. CEOs know that they have

models and begin to leverage technol-

bright people in the organisation. They

ogy in new ways. “Today, our model

also know that they haven’t got time to

consists of operating in a digital

go and research best practice and

format in many ways,” explains Jones.

figure out the right things to do in the

“Gartner.com is where all of the

correct order. Therefore, there’s a role

research sits and we don’t fly experts

for partnerships with us to be able to

all around the world; we use technol-

help plug that gap and build that capa-

ogy to connect our clients to our

bility up. I would expect our double-digit

experts to have those conversations.

growth to continue into the future –

From the client’s perspective, digital

there’s no reason why not.”

transformation is coming at them at a rapid rate. Our job is to try and help cut w w w.suppl yc ha i ndi gi ta l. com

37

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PROCUREMENT INSIGHTS

40

Transforming procurement data through AI at Sievo Johan-Peter Teppala, CEO of Sievo, discusses the importance of leveraging procurement data to achieve results through the implementation of AI amid a significant digital transformation in the industry WRITTEN BY

J U LY 2 0 1 9

SE AN GA LE A-PACE

41

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PROCUREMENT INSIGHTS

B

y transforming procurement data from any source to generate real business value,

Sievo is widely considered a global leader

in procurement analytics.

With the impact of digital transformation becoming increasingly prominent during the past few years, Johan-Peter Teppala, CEO of Sievo, believes it’s important to think about how the implementation of technology can be strategic and used to a company’s advantage.

“In the last few years, there has been a lot of adoption of new technologies in procurement,” says Teppala. “There has been more open 42

discussions about how technology can help us move forward and how procurement has transitioned into becoming more strategic within the organisation rather than just being regarded as a tactical function.”

Having joined Sievo in 2006 as a Manager on Project Deployment before moving into roles such as Director of Project Delivery and Customer Support as well as Vice President of Operations, Teppala became CEO of the company in January 2017. Reflecting on his previous experience with the firm, Teppala says it has enabled him with a good understanding of how procurement has changed. “It’s been extremely interesting to see how procurement J U LY 2 0 1 9

43

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PROCUREMENT INSIGHTS

“ Procurement used to be seen as overly technical and not being very forward-thinking technology-wise.

Today, procurement teams are now very eager to discuss adopting new technology” 44

— Johan-Peter Teppala, CEO, Sievo

has evolved in terms of technology,” he explains. “Procurement used to be seen as overly technical and not very forward-thinking technology-wise.

Today, procurement teams are now very eager to discuss adopting new technology. We have to think about how we could augment and use technology to expand our capabilities rather than worry that technology will take our jobs away. It’s important we don’t see technology as a threat but consider technology as an advantage to move forward.”

With a great emphasis put on bringing valuable procurement data together through artificial intelligence (AI), Teppala understands the importance of operating with a datadriven approach and implementing technology in the right way to achieve results. “There is so much data at companies’ fingertips these days, such as different monitoring, trends, alternative views and risk information.

You need to get a handle on all of it.”

Through the introduction of AI, it has allowed companies to decrease the number of repetitive tasks and enable machine learning to speed operations

J U LY 2 0 1 9

CLICK TO WATCH : ‘DEUTSCHE TELEKOM WITH SIEVO’ 45

up. Teppala believes that by embracing the latest digital trends,

the results can be very powerful.”

Indeed, Sievo understands the

organisations have been able to

importance of leveraging Big Data

provide greater value to their supply

from third-party data sources and

chains. “Technology and AI will allow

introducing it into procurement

people to do more of the strategic

operations in order to compare

thinking and constructive labour tasks

procurement performances across

that benefit the value chain. However,

a range of industries. Through its

people are still needed to actually

collaboration with global firms such as

maintain the machines and AI to

Carlsberg, T-Mobile and Go Daddy in

ensure that everything’s always

the transformation of its procurement

running as it should be. With AI, you

data into procurement intelligence,

can do so many great things and as

the company remains well-versed

long as it’s not taking our jobs away,

in recognising the requirements of w w w.suppl yc ha i ndi gi ta l. com

PROCUREMENT INSIGHTS

46

different industries and the alternative

Sievo highlights the importance of

methods organisations take when

identifying and achieving world-class

adopting AI. Teppala believes there

performance with its data-focused

is value to be gained from observing

procurement benchmarks. Interestingly,

how other firms embrace AI and

Teppala compares the process of

considering how it could be utilised

leveraging the right data to preparing

to accelerate their own ventures.

for running a marathon. “I remember

“I believe companies tend to be more

practising for a marathon by myself and

open to looking at what’s happening

not knowing anything about how fast

in their industry and reacting to it.

the other people are running,” he

However, from a procurement angle,

explains. “When you run a marathon

you think about the different categories

and complete it in five hours, naturally

and how they’re industry specific.”

you’re happy. However, when

J U LY 2 0 1 9

$200bn+ Spend managed yearly

2003

Year founded

160+

Approximate number of employees 47

someone tells you that there are

“We’re beginning to see an increased

people able to do it in two hours then

number of applications where AI can

it forces you to think to yourself that

be used and achieving much more

there’s still lots of work to be done.

concrete results out of the AI.” With

By only reflecting on your own data

technology transformation showing

– you can only go so far. It’s important

no signs of slowing, it remains key

to always be aware of where you are

to implement software that will allow

compared to others.”

operations to drive forward without

While Teppala admits the future is impossible to predict, he affirms that

negating the need for humans.

Establishing a key balance is vital.

AI will continue to be an increasingly influential force at Sievo, and for procurement leaders across the globe. w w w.suppl yc ha i ndi gi ta l. com

LOGISTICS AND DISTRIBUTION

48

J U LY 2 0 1 9

HIGHJUMP:

LEVERAGING TECHNOLOGY TO SUSTAIN A COMPETITIVE ADVANTAGE IN THE SUPPLY CHAIN SECTOR Supply Chain Digital talks to David Houser, Senior Vice President of International Sales and Operations at HighJump, about how his company is utilising technology to drive its supply chain operations forward and operate with the customer in mind WRITTEN BY

SE AN GA LE A-PACE

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49

LOGISTICS AND DISTRIBUTION

W

ith customer demands in the supply chain sector evolving on an ongoing basis thanks to digital transformation,

companies worldwide are adopting new technologies in a bid to remain a leader in the field.

Specialising in managing supply chain solutions on a global scale, HighJump has integrated its proven solutions for the warehouse, transportation and logistics ecosystem with the help of emerging technologies. Leveraging advanced cloud technology, HighJump enables companies to ride the wave of data to achieve greater efficiency, uncover actionable insights and stay ahead of the curve.

50

Overseeing the sales and operations side on an international scale, David Houser believes his customers have evolved significantly since he first joined the company in 2011. “Technology is changing the world and it has defined the way we operate,” says Houser. “Never in the history of retail have we ever had so much data and real-time information available that we can quickly use to observe the latest trends. It isn’t good enough anymore to plan what the end of this season’s apparel might look like when you have the technology and the data to instantly know what tomorrow’s fashions will be. It’s unbelievable.”

Due to the rapid pace of innovation, companies have less time than ever before to appeal to potential customers and differentiate themselves from their competitors. With a customer-centric J U LY 2 0 1 9

51

“ T ECHNOLOGY IS CHANGING THE WORLD AND HAS DEFINED THE WAY WE OPERATE” — David Houser, Senior Vice President of International Sales and Operations, HighJump

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LOGISTICS AND DISTRIBUTION

“ ON AVERAGE, A CUSTOMER SPENDS 5 SECONDS ON A VENDOR’S WEBSITE BEFORE THEY DECIDE IF THEY’RE GOING TO STAY THERE” — David Houser, Senior Vice President of International Sales and Operations, HighJump 52

approach at the forefront of his

Deploying the right technology for

company’s strategy, Houser affirms

supply chain solutions could be key

that a clear understanding of custom-

to success in the industry. However,

ers’ demands is vital. “On average, a

Houser affirms that the biggest hurdle

customer spends 5 seconds on a

to overcome is the issue of interfaces

vendor’s website before they decide

and integrations. “The biggest chal-

if they’re going to stay there,” he says.

lenge isn’t just the implementation of

“That means there is very limited time

a supply chain solution, it also revolves

for a decision to be made on whether

around interfaces and integrations.

they want to do business with your

In this fast-paced technological world,

organisation. It’s critical you get it right.”

all technologies aren’t created equal.

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53

If you do some statistics on how many

But the question remains: how has

organisations are still running on a

technology and digitalisation changed

mainframe and on paper, you’d be

their businesses? These companies

very surprised.”

make between 55,000 and 80,000

Serving around 4,400 customers

pairs of shoes every day and have built

worldwide and operating in 78 different

this without the concept of e-com-

countries, HighJump is used to

merce,” explains Houser. “They soon

working closely with clients to deliver

began to look for a flexible, adaptable

the best service. “We work with some

supply chain solution that could deal

of the largest multi-channel foot

with their ever-growing hybrid of brick

apparel organisations in the world.

and mortar worldwide. This led to w w w.suppl yc ha i ndi gi ta l. com

LOGISTICS AND DISTRIBUTION

54

some of the largest shoe companies

experiencing a higher level of robotics,”

in the world selecting HighJump to be

he explains. “B means bigger data.

able to handle that new demand.”

There is a greater level of data pools,

Although unable to predict the future,

lakes and oceans and it’s important

HighJump prides itself on anticipating

that you’re able to harness that data

change to enable smarter, faster

correctly. C underscores the impor-

decisions. With Big Data considered

tance of cloud and how it will continue

acting as a key driver, there is now a

to be the way forward. While finally,

greater level of flexibility at users’

D is for device agnostic and the ability

fingertips to enable real-time decisions.

to communicate through a range of

Houser looks at the ABCD strategy,

different devices. I believe that over the

which he believes will be crucial for the

next couple of years, ABCD is going to

future. “The A stands for artificial,

become much more advanced and

automated and autonomous; through

mature while happening in a time-con-

vehicles and warehouses, we’re

strained fashion.”

“ W E WORK WITH SOME OF THE LARGEST MULTI-CHANNEL FOOT APPAREL RETAIL SHOE ORGANISATIONS IN THE WORLD BUT THE QUESTION REMAINS HOW HAS TECHNOLOGY AND DIGITALISATION CHANGED THEIR BUSINESSES?” — David Houser, Senior Vice President of International Sales and Operations, HighJump J U LY 2 0 1 9

CLICK TO WATCH : ‘HIGHJUMP: THE SUPPLY CHAIN OF THE FUTURE’ 55

“It’s important to establish real-time visibility into the supply chain,” concludes Houser. “The younger generation is demanding that these things run anywhere, at any time, on any device, and via the HTML5 technology we have, we have the ability to render that application on whatever device the end consumer would like to see it on.”.

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TECHNOLOGY

56

CYBERSECURITY WITHIN THE SUPPLY CHAIN Alan Calder, Chief Executive of GRC International plc, discusses the increasing issue of cybersecurity in the supply chain sector and how companies can counteract the threat to meet the challenge head-on WRITTEN BY

J U LY 2 0 1 9

A L AN CA LDER

57

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TECHNOLOGY

R

esearch from Ponemon Institute indicates that cybersecurity is a growing supply-chain challenge, with 56% of organisations reporting to

have had a breach that was caused by one of their

third-party vendors. As the supply chain becomes increasingly more connected through digital transformation, the exposure to potential cyberattack increases. There is, therefore, a critical need for organisations to effectively secure their supply chain ecosystems and mitigate risk as much as possible.

The supply chain is the backbone of an organisation 58

but just one broken link in the ever-complex supply chain can send shockwaves throughout the rest of the associated suppliers and potentially leave the entire operation exposed to attack.

A dynamic supply chain is essential in the modern industry, but each new supplier only adds to an organisation’s vulnerability in terms of security.

Following the Equifax hack, both Visa and MasterCard alerted that 200,000 credit cards may have been compromised as a direct result. Every thirdparty supplier along the Equifax supply chain was consequently exposed to increased risk. Equifax subsequently published a report following the data breach to raise awareness of threats caused by supply chain security. The report found that 32% of businesses don’t know where all of their third-party suppliers store personal data and 25% J U LY 2 0 1 9

“A DYNAMIC SUPPLY CHAIN IS ESSENTIAL IN THE MODERN INDUSTRY, BUT EACH NEW SUPPLIER ONLY ADDS TO AN ORGANISATION’S VULNERABILITY IN TERMS OF SECURITY” — Alan Calder, Chief Executive of GRC International plc

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59

TECHNOLOGY

“AS THE SUPPLY CHAIN BECOMES INCREASINGLY MORE CONNECTED THROUGH DIGITAL TRANSFORMATION, THE EXPOSURE TO POTENTIAL CYBERATTACK INCREASES” 60

— Alan Calder, Chief Executive of GRC International plc

J U LY 2 0 1 9

of businesses who have experienced a breach believe the third-party supplier would be accountable for the data breach response.

The Information Commissioner’s Office (ICO) is responsible for how GDPR is implemented and enforced in the UK. One of the core principles of why it was introduced into law was to provide greater transparency and visibility for data protection. When GDPR came into force in May 2018, it introduced compliance requirements that also extends to suppliers. The ICO states that if a third-party supplier

CLICK TO WATCH : ‘GRC ELEARNING: THE INSIDER THREAT’ 61 suffers a personal data breach involving

for every supplier, businesses can pro-

personal data controlled by another

actively limit their exposure to risk and

organisation, and it does not inform the

not just assume that each supplier’s

data controller of the incident promptly,

compliance policies will go far enough.

then they are putting the data controller

Data processing is prone to human

at risk of breaching their obligations

error and is subject to misinterpretation

under the GDPR. So, whilst organisa-

and rarely updated, therefore, data

tions may have internal GDPR compli-

quality checks and data flow mapping

ance policies in place, can the same

plays a crucial role in providing supply

be said for all of their suppliers?

chain and cybersecurity assurance.

It’s important for organisations to

The vetting of third-party suppliers

take control of security auditing, and

has become a much more arduous

understand what data suppliers hold

process as risks to security must be

on file, where it is stored and who has

thoroughly evaluated – and rightly so.

access to it. By following this process

Examples such as the attack on the w w w.suppl yc ha i ndi gi ta l. com

TECHNOLOGY

62

freeware utility CCleaner led to at least

daily occurrence in the media, more

18 other companies being targeted

organisations are viewing data breach-

in one campaign. Fortunately, on this

es and the protection of personal data

occasion, the attack was quickly exposed

as an important part of business risk.

and counteracted, but it still set a prec-

This is encouraging news, however,

edent for future supply chain attacks.

within a complex supply chain it is

Many organisations are now placing

possible that security can potentially

greater emphasis on internal cyberse-

be compromised by just one supplier

curity measures, as demonstrated by

that has left a hole in their defences.

the fact that cybersecurity and risk

While no organisation is immune from

management is second only to IT

cyberthreats, effective supplier man-

automation when it comes to priority

agement in terms of thoroughly screen-

initiatives that organisations are plan-

ing new suppliers, vetting practices and

ning to invest further in during 2019.

procedures, limiting access to data and

With high profile cyberattacks often a

undertaking frequent security auditing,

“IT’S IMPORTANT FOR ORGANISATIONS TO TAKE CONTROL OF SECURITY AUDITING, AND UNDERSTAND WHAT DATA SUPPLIERS HOLD ON FILE, WHERE IT IS STORED AND WHO HAS ACCESS TO IT” — Alan Calder, Chief Executive of GRC International plc

J U LY 2 0 1 9

can ensure that the compliance stand-

sector contracts and other critical

ard of the supplier meets the needs

industries, such as the financial ser-

of the organisation and mitigates risk.

vices sector. Certification to standards

Organisations should be diligent in

and schemes such as ISO 27001 and

verifying the security practices and

the UK Government-backed Cyber

procedures of third-party suppliers,

Essentials scheme allow organisations

vendors and partners in order to

to provide their suppliers with the as-

reduce threats and minimise risk.

surance that they have taken a base-

Independent certification to a frame-

line approach towards cybersecurity.

work such as the information security standard ISO 27001, the industry bestpractice for information security, is now becoming a more prevalent requirement for obtaining certain contracts, especially those involving public

63

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T O P 10

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J U LY 2 0 1 9

TOP 10

waste management strategies Ensuring efficient waste management strategies are in place has never been more important than it is today in the supply chain sector. Here are the top 10 waste management strategies that can be implemented in your supply chain to minimise unused products WRITTEN BY

CRAIG KNOWLES, MARKETING DIRECTOR FOR WWW.MARKETDOJO.COM

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65

T O P 10

66

10

Plan thoroughly

It may seem obvious but having an incredibly thorough plan in place, for every section of your supply chain, is important if businesses are to avoid unnecessary waste. It’s all well and good having a bare bones strategy but less is definitely not more if businesses want to ensure they’re minimising rubbish throughout their supply chain.

Keeping a tight ship in the office; monitoring inventory closely and keeping all suppliers regularly updated are a few factors companies need to keep on top of.

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67

09

Stockpiling products

Ordering in bulk and stockpiling products can be an amazing way to cut back on waste as well as saving money in the long run.

Businesses can use items that they have stockpiled in the future, minimising subsequent orders. Keeping accurate stock level information and checking this regularly will ensure businesses are not over-ordering.

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T O P 10

68

08

Localise bulk orders

As well as stockpiling, it’s also worth hiring local suppliers as this will help to reduce carbon emissions, transport costs and will aid in faster delivery time if businesses need something as a matter of urgency.

J U LY 2 0 1 9

Transform Procurement with Contract-Centric Sourcing Accelerate

www.icertis.com

Protect

Optimize

T O P 10

70

07

Waste audits

Companies can spend hours putting together a perfect plan but if they aren’t analysing where waste is coming from in their supply chain and just how much is being produced, then their waste production is likely to spiral out of control sooner or later. Ensuring staff know what they are looking for, are trained to safely handle waste material and that they sort waste by category are just a few ways to efficiently analyse waste produced within a company’s supply chain.

Take detailed notes and learn about any trends through these audits.

Information from this can be completely invaluable.

J U LY 2 0 1 9

71

06

Upcycling within a supply chain

Upcycling within a supply chain and re-using wasted materials for new, needed products is something all businesses should be looking into when attempting to dispose of unwanted goods. After undertaking their waste audit, companies can better understand which materials can be reused in each category which will hopefully enable businesses to save some pennies and waste at the same time.

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T O P 10

72

05

Improve Resource management

Every line of production should be examined to keep the waste of raw materials to a minimum. If a business notices that there are materials that can’t be recycled or reused, it would be ultimately profitable for them to redesign their product.

J U LY 2 0 1 9

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T O P 10

74

04

Go paperless

A simple way to keep waste to a minimum throughout your supply chain is to encourage everyone to go paperless and to use suppliers that do the same. Paper processes are old, outdated and can easily be lost. Working with paper also produces so much waste. In fact, in 2018, Gartner Inc. calculated that every office worker uses 10,000 sheets of paper in one year. This roughly equates to one whole tree per employee, per year. Making their supply chain digital is one of the best ways businesses can reduce their waste footprint.

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75

03

Reuse and recycle

Where applicable, companies should introduce a ‘reuse and recycle’ programme both in the office and amongst their customers. Starting initiatives such as this is a great way to get waste preventative measures rolled out in other areas of the business which will likely permeate to other departments and even suppliers.

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T O P 10

02

Ban single–use plastics

Single-use plastics will likely be one of the highest waste causing materials in a company’s supply chain and should be avoided at all costs. Not only will the waste have a neg-

76

ative effect on profits, but single-use plastic is devastating the earth due to how many dispose of it. It’s predicted that up to 90% of seabirds now have a form of microplastics inside of them and many of the fish we eat also contain the material. Businesses should evaluate their current plastic procurement and review what they believe to be ‘essential’ and what they do not. It’s also worth looking into using suppliers that avoid using this harmful material at all costs, instead opting for companies that look to use recyclable plastics or other alternatives like burlap.

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T O P 10

01

Collaborate with suppliers

Communication with suppliers should be as regular as possible to make certain that waste is kept to a minimum.

It’s incredibly challenging to keep a supply chain com-

78

pletely waste free, however, making small changes within your business, speaking to your suppliers frequently about possible innovations and changes in methods can make a huge amount of difference. If every business looked to do just half of these steps, then a real difference could be made, both financially (in the long run) and for the environment.

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

The biggest industry events and conferences WRITTEN BY SEAN GALEA-PACE from around the world

09–11 JULY

ProcureCon Asia [ SINGAPORE ] 80

Asia’s premier gathering for global and regional CPOs and Asian heads

11–12 JULY

Ovation: The World’s Most Exclusive and Renowned CPO Think Tank [ CHANTILLY, FRANCE ]

of procurement. Procurecon Asia

Created to look “far beyond the tradi-

2019 brings over 200 attendees and

tions of procurement”, Ovation looks to

more than 100 CPO’s and Heads of

the future of supply chain and the key

Procurement to access and explore

trends that will directly impact the

interactive case studies, broad discus-

group-level CPO. Over the course of

sion on industry challenges and

two days, 50 exclusively invited CPOs

trends and network with some of the

from around the world will attend work-

biggest names in the procurement

shops designed to drive divergent

space. Procurecon asks profession-

thinking, challenge and enlighten fellow

als in both direct and indirect

thought leaders and learn how to

procurement to ‘maximise learning

better harness the complexity of global

and optimise your organisation’s

supply networks and ecosystems in the

supply chain strategy.’

digital world.

J U LY 2 0 1 9

81

3-5 SEPTEMBER

Transport Compleet [ GORINCHEM, NETHERLANDS ] Now in its 15th year, the Transport

24–26 SEPTEMBER

Supply Chain & Logistics Summit and Expo 2019 [ HILTON ANTWERP, BELGIUM ]

Complete Gorinchem is a networking

The EMEA Supply Chain & Logistics

event which brings the entire road

Summit & Expo is one of the most

transport industry together.

established events of its kind in Europe.

Welcoming 12,000 visitors annually,

Now in its 21st year, it is a highlight in

the event will enable both international

the calendar where world-class organ-

and regional providers to showcase

isations meet to maximise efficiency

their latest products and solutions to

and minimise costs through supply

a professional audience.

chain strategies of the future.

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Supply Chain Efficiency Demands a World-Class Supplier.

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Our products are made from paperboard, a recyclable material and made from renewable resources. When you choose Graphic Packaging International, you’re making a sustainable choice for the environment and your business.

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01–03 OCT

Post-Expo 2019 [ AMSTERDAM, NETHERLANDS ] The three-day event at the beginning of

14–16 OCT

3PL & Supply Chain Summit: Europe [ BRUSSELS, BELGIUM ]

October will show off products such as

With 400 attendees and 70 leading

security solutions and safety products,

speakers in attendance, the Belgium

consultancy and management strate-

event is set to be full of interactive

gies, post-office counter solutions,

sessions such as coaching sessions,

automation, e-commerce technology

live interviews and 1-2-1 meetings.

and digital marketing in the Automotive,

Supply chain executives from a range

Logistics and Transportation industries.

of manufacturers, retailers and Con-

The event will play host to global visi-

sumer Packaged Goods are

tors and will be used as a platform to

expected to attend. The event will be

present new innovations and products

centered around four core themes

to a professional audience of business

which are: Agility, Visibility, Respon-

leaders and directors from the postal,

sive and Growth.

parcel and logistics industry.

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83

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

16–17 OCT

The Responsible Supply Chain Summit 2019 [ AMSTERDAM, NETHERLANDS ] Following its largest and most successful conference to-date, The esponsible 84

Supply Chain Summit is set to return in 2019, bringing together more than 250 CEOs and sustainability and supply

23–25 OCT

36th International Supply Chain Conference [ BERLIN, GERMANY ]

chain practitioners to discuss and

In one of Europe’s top an- nual business

shape the future of responsible supply

gatherings to discuss logistics and sup-

chains. Previous speakers include Ste-

ply chain managem-ent, the three-day

ven Stone, Chief Resources & Market

event brings industry leaders together to

Branch at the United Nations Environ-

tackle the current issues and future

ment, David De Schutter, Innovation &

themes in the supply chain manage-

Technology Officer for AB InBev and

ment sector. On average, the event

Joe Franses, Vice-President, Sustain-

attracts over 3,500 attendees from

ability at Coca-Cola. With speakers yet

over 40 countries, 120 speakers and

to be announced for 2019, it looks set

welcomes more than 200 exhibitors

to be another unmissable event on the

every year.

global calendar.

J U LY 2 0 1 9

26–27 NOV

Data, Intelligence & Technology Forum 2019 [ LONDON, UK ]

29–30 OCT

Robotics & Automation Exhibition 2019 [ COVENTRY, UK ]

The Data, Intelligence & Technology Forum is a two-day event focused on improving the end-to-end digital strategy for procurement professionals the

Spread across two days, the Robotics

world over. Attendees will break down

and Automation Conference provides

the challenge of talent acquisition and

attendees with free educational content

retention, as well as the changing skill

by industry experts and leading suppli-

sets required to be a procurement

ers. As the most in-depth programme

professional both today and in the

with fresh insights on the latest cutting-

future. With technology continuing to

edge technology, the event has

redefine the procurement landscape,

previously included speakers such as

peers will share examples of best

Andrew Southgate, General Manager of

practice and how to leverage data and

EMEA and Richard Foster, Robotics

technology to streamline and acceler-

Development Manager at DHL Supply

ate the digital transformation journey

Chain, UK & Ireland.

of procurement.

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85

86

TRANSFORMING SUPPLY CHAIN STRATEGIES AT GEODIS WRITTEN BY

SEAN GALEA-PACE PRODUCED BY

JUSTIN BRAND

J U LY 2 0 1 9

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GEODIS

Phillipe Mahler, Chief Procurement Officer of GEODIS, discusses how his company is utilising technology amidst a digital transformation

A

s businesses across the globe are impacted by digital transformation, companies in a diverse range of industries are tasked

with undergoing a technological change in order to accelerate processes. Phillipe Mahler, Chief Procurement Officer (CPO) of freight transportation and logistics firm GEODIS, understands the importance 88

of embracing technology in a bid to ease operations.

Since first joining GEODIS in January 2010 as High-Tech Key Accounts Director, Mahler worked in a variety of different roles, such as Corporate Market Director and Transformation Director, before moving into his current position as CPO in early 2013. Split into five different lines of business, GEODIS’ operations include Freight Forwarding, Distribution and Express, Road Transport, Contract Logistics and Supply Chain Optimisation (SCO) which manages its customers’ supply chain by offering end-to-end solutions, enabled by the company’s processes, systems, infrastructure and personnel. Heading up the operations and procurement division, Mahler recognises the value of utilising his experience in supply chain to help him succeed in his current role.

“My previous experience has allowed me to better J U LY 2 0 1 9

89

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GEODIS

“ Our mission is to solve and assemble resources,capabilities and technologies, and to better design the supply chain on behalf of our customers” — Phillipe Mahler CPO, GEODIS

understand the key drivers of the supply chain. After you’ve dealt with several customers and experienced different situations, you can take the time to innovate and begin to understand where the key areas are. I manage these key points very carefully because they’re either the points which are going to create difficulties in operations or the points which you can leverage to create value,” he says. “Our mission is to solve and assemble resources, capabilities and technologies, and to better design the supply chain on behalf of our

90

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CLICK TO WATCH : ‘GEODIS – WE LOGISTIC YOUR GROWTH’ 91 customers. We buy services, resources

happen in the next six months to two

and technologies from the market and

years. Forecasting is taking the data

from our sister lines of business or from

from the past and then leveraging all

any other logistics service provider. We

the data announcing the trends and

assemble these solutions to create an

looking at how the world will change,”

end to end network for our customers.”

he explains. “I believe one of the biggest

With the procurement function trans-

challenges is transitioning from human

forming on an ongoing basis, Mahler

negotiation into a business which

reflects how GEODIS is changing the

scientifically predicts where you should

way it conducts its business to coincide

go. It’s a huge challenge; it’s the leverag-

with the latest industry trends. “On an

ing of Big Data.”

increasing basis, procurement is becoming more of a science that is

INTRODUCING TECHNOLOGY

based on data. It’s based on being

With technology enabling GEODIS to

capable of forecasting what’s going to

make its processes simpler, Mahler

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93

reflects on how the procurement

scenario which helps decide where

process has been transformed by

you want to go and how you want to

digitalisation. “In the past, procurement

execute the processes.”

was a question of understanding where

With innovation considered a key

the data was and then deciding at what

priority at GEODIS, Mahler understands

price it could be bought from the market.

the importance of ensuring technology

It’s always been a question of simula-

is adopted for a specific purpose that

tion and has all been done manually using

will benefit the company’s operations

Excel,” he says. “These days, we’re

– and is not merely implemented for its

able to capture much more data because

own sake. “When we want to utilise

it’s all in one place and technology has

new technology, the first thing I always

allowed us to use machines that help

do is to have a discussion with a group

us make decisions. Using the machine,

of key users of the current platform

you can do a ‘what if’ in a machine

and we conduct an evaluation. We have w w w.suppl yc ha i ndi gi ta l. com

GEODIS

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“On an increasing basis, procurement is becoming more of a science that is based on data. It’s based on being capable of forecasting what’s going to happen in the next six months to two years” — Phillipe Mahler, CPO, GEODIS

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GEODIS

“ When you adapt, you’re already a follower.We don’t want to be followers; we want to be the leaders” — Phillipe Mahler, CPO, GEODIS

96

to ask ourselves what we can do with

results, we’ll then make a decision whe-

this current machine and how we can

ther we want to adopt this technology.”

implement new technology that will

GEODIS has been recognised as

enhance what we already have,” explains

a ‘Leader’ by information technology

Mahler. “We have to establish an

research and advisory firm Gartner in

immediate need and ask ourselves that

its May 2018 Magic Quadrant for Third-

if we use this technology, will it bring us

Party Logistics (3PL) worldwide, which

value today, tomorrow or in the future?

evaluates third-party logistics providers’

It’s important to think about where we

ability to be a preferred global provider.

want to be in two years’ time and

With the company conducting business

understand how what we’re doing now

in the US, India and Haiti, technology has

will fit into that. When you have an

enabled each individual team to commu-

immediate value, you have future

nicate immediately and has allowed daily

potential value and, based on these two

operations to be sped up significantly.

97

FORMING KEY PARTNERSHIPS

Some are very local, while some are

In order to achieve mutual success,

global and are capable of carrying

GEODIS has formed over 500 global

goods from Singapore to Mexico. We

partnerships. In particular, the firm has

really have all sizes of partnership.”

established a key relationship with the

The importance of establishing sign-

Commercial Relocation Network (CRN).

ificant relationships with other compa-

“Our collaboration with CRN has granted

nies to achieve mutual success is

us access to specialists everywhere in

therefore considered a top priority at

the US. Be it in California, Arkansas,

GEODIS. “Due to the way we operate

Seattle, New York or Miami, we have

our procurement activity, we’ve started

access to people who really know our

to move away from the customer/supplier

business and know what our specifics

relationship. We don’t think ‘I’m your

are – it’s very valuable to us,” says Mahler.

customer so you go and execute.’ Or ’I’m

“In general, we have lots of partners.

your supplier so you pay or I don’t w w w.suppl yc ha i ndi gi ta l. com

GEODIS

execute’. Those days are gone,” he says.

“Before beginning a partnership, it’s important to trust each other. You need to accept some level of transparency on the cost and what’s possible, as well as deciding what can and can’t be optimised. Once you’re there, you’re in a relationship which is completely different from a typical, traditional customer relationship because you’re together in the same boat, facing the same challenges and are both trying to create value for each company, as well as seeking 98

the best result for the final customer.”

FUTURE PLANS Looking to the future, Mahler is aiming to ensure GEODIS continues to lead the way and set trends in order to stay ahead of the competition. “We’re passionate about our business, have proven experience and possess a truly global presence. I believe those three things are what make us different from our rivals. It’s vital to have the best people working for us and investing in people is something we rank very highly at our company. We’re always on the lookout for new talent, as well as retaining what we already have through J U LY 2 0 1 9

99

providing our staff with the opportunity to progress, change position or relocate to another part of the world. Innovation, technology and the people are considered our three key pillars,” he says. “At SCO we benchmark our solutions, approach and IT tools, and consistently look at the external world to understand what’s coming. Adapting is a word from the past. When you adapt, you’re already a follower. We don’t want to be followers; we want to be the leaders.”

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Service New Brunswick: procurement as a business enabler WRITTEN BY

LAURA MULLAN PRODUCED BY

ARRON RAMPLING

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SERVICE NEW BRUNSWICK

With a winning procurement strategy underway, Renée Laforest, Vice President of the Finance and Strategic Procurement Division at SNB, highlights how the crown corporation is having a lasting impact on New Brunswick

102

W

hether registering land and property or receiving healthcare, the citizens of New Brunswick have definitely crossed

paths with Service New Brunswick (SNB), a crown corporation that provides almost all direct public services on behalf of the government. SNB’s regular clientele includes provincial and federal government agencies, municipalities, lawyers, surveyors, appraisers, realtors, financial institutions, utilities, engineers, consultants and more – this means the organization’s procurement team have a massive, yet vital, task on their hands.

Renée Laforest, Vice President of the Finance and Strategic Procurement division, highlights how SNB’s procurement function isn’t just about improving cost efficiency: it’s also about making meaningful change. “Service New Brunswick does strategic procurement for most of the government entities in the entire province including the health J U LY 2 0 1 9

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SERVICE NEW BRUNSWICK

“ We’re starting to have more conversations about value-based procurement, whereby the results are based on outcomes” — Renée Laforest, Vice President, Finance and Strategic Procurement Division, Service New Brunswick

sector,” she explains. “Five or six years ago there was an emphasis on cost, and the strategic procurement division was asked to find substantial savings for the government. Therefore, not unlike a lot of procurement teams, we shifted towards a category management strategy.” In essence, this involves clustering similar items that the company wants to buy under a single cost-effective deal. “We have achieved a significant amount of savings through this new strategy,” Laforest enthuses.

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CLICK TO WATCH : ‘RECENT ECONOMIC SUCCESSES’ 105 However, in the most recent chap-

has implemented a range of innovative

ters of the firm’s procurement journey,

procurement strategies but it seems,

it has shifted towards value-based

in a lot of cases, you can’t underesti-

procurement. This can perhaps be

mate the power of conversation and

best seen within the healthcare

understanding the product or service.

division, notes Laforest: “We’re starting

“We really consider our clients’ needs

to have more conversations about

and requirements when procuring

value-based procurement, whereby

goods and services for them,” Laforest

the results are based on outcomes.

notes. “It’s important that we have these

For example, when we purchase

in-depth conversations, particularly

insulin pumps for diabetes clients,

when it comes to services. If you’re

we’ll carefully look at the needs of

buying a service you may have more

our clients and ensure we meet their

complex needs and requirements,

demands rather than automatically

so this dialogue is critical.”

opting for the cheapest pump.” SNB

Procurement has proven to be at the w w w.suppl yc ha i ndi gi ta l. com

SERVICE NEW BRUNSWICK

106 bedrock of SNB’s operations, ensuring that the organization can deliver the vital government services needed to keep the region ticking along.

The function has a lasting impact on the people who provide government services, as well as an indirect impact on those who receive them. Yet, notably, the reverberations of SNB’s innovative procurement strategy can be felt by New Brunswick suppliers too.

“We’re trying to support New Brunswick suppliers to become prosperous so they can successfully bid to the government,” Laforest explains. “We’re J U LY 2 0 1 9

“ We are trying to support New Brunswick suppliers to become successful so that they can successfully bid to the government” — Renée Laforest, Vice President, Finance and Strategic Procurement Division, Service New Brunswick

trying to explain to them when we can

of technology supply contracts with

give preference to a local supplier

the Government of New Brunswick.

versus having an open tender, and why

“Currently, they hold four separate

we need to do that to support our New

multi-year contracts of supply for

Brunswick companies.” On top of this,

technology goods, including data centre

SNB has shown a flair for supplier

infrastructure and client computing

relationship management (SRM)

equipment,” explains Laforest. “All of

through in-depth conversations,

these contracts were awarded through

outreach programs and more. One

competitive open tenders and support

such company that has worked closely

SNB service delivery to three main parts

with SNB is IMP Solutions, who were

of government: core government

successful in winning a number

departments, education, healthcare.”

107

E XE CU T I VE PRO FI LE

Renée Laforest Laforest obtained her Bachelor of Business Administration from the Université de Moncton and is a CPA CGA with 29 years of experience in the civil service. She began her career as an internal auditor at the Office of the Comptroller, then as a treasury officer in accounting services. She then moved to the Department of Health and held various roles in financial services, including the Executive Director role, and also the Assistant Deputy Minister of Health Corporate Services where she was responsible for financial services, construction services, health analytics, procurement, emergency preparedness and business technology. Laforest joined Service New Brunswick in June 2017 as Vice President of Strategic rocurement, and become responsible for Financial Services in the Fall 2018.

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SERVICE NEW BRUNSWICK

108

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$266mn Approximate revenue

1990

Year founded

2,400

Approximate number of employees

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109

SERVICE NEW BRUNSWICK

Pulling back the curtain of complexity IMP Solutions is a leading “end to end” IT solutions company serving all of Atlantic Canada. As such, we work with a broad range of both public and private sector clients to provision, design, develop, implement, service and support IT solutions. This is accomplished through our various lines of business which include: Hardware/Software Fulfillment Professional Services Advanced Solutions (Networking and Cloud) Technical Services Managed Services

IMP Solutions is proud to be a strategic procurement partner for the Province of New Brunswick. Through competitively secured supply arrangements, IMP Solutions provides both data center (storage and server) and endpoint device (desktop, laptop and accessories) technology to meet the Province’s business needs.

Learn More +

“ I want to really add value for our clients so that they don’t see procurement as a roadblock but rather see it as a valueadding function” — Renée Laforest, Vice President, Finance and Strategic Procurement Division, Service New Brunswick 111 Any business leader will tell you

it to submit their proposals and we

that the procurement sector has been

do all our evaluations within the tool.

a stomping ground for innovation lately

It’s all automated and all our stakeholders

and this hasn’t gone amiss at SNB.

have found it beneficial.”

Laforest describes how the organiza-

Looking at the wider procurement

tion is in the midst of implementing

landscape, Laforest has seen an uptake

a new enterprise resource planning

in innovative procurement practices.

(ERP) system. “We are investing in a

This helps to encourage greater collabo-

new eERP solution for all of govern-

ration with vendors and promotes new

ment, so we need to replace the HR

ways of doing things. “I think the days of

management, financial, and procure-

listing endless requirements for procure-

ment and supply chain systems,” she

ment processes are in the past,” she

explains. This is further compounded

proposes. “In some instances, you may

by the group’s strategic sourcing

know that the business needs to buy

platform used for health sector

a blue chair that’s a particular height,

procurements, Bonfire. “Vendors use

for example, and that’s easy to do. w w w.suppl yc ha i ndi gi ta l. com

SERVICE NEW BRUNSWICK

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But when you’re not quite certain what the market has to offer then it’s important to have a process where procurement can be more open. For instance, you may say ‘I need a system to help me track health inspections’ and outline your requirements so vendors could bring forward unique suggestions. It’s fair and transparent and I think it brings about more successful outcomes.”

SNB’s procurement success is far from coincidental. The crown corporation has put its weight behind a multi-year procurement integration and it is already reaping the benefits for both the government and its citizens. In the upcoming years, Laforest asserts that SNB will continue to spearhead leading procurement practices so that stakeholders can see the function is not a hindrance but rather, an enabler.

“I want to really add value for our clients so that they don’t see procurement as a roadblock but rather see it as a value-adding function,” she affirms.

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113

114

LAU: transformation in the education sector WRITTEN BY

SEAN GALEA-PACE PRODUCED BY

ALEX BARRON

J U LY 2 0 1 9

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LEBANESE AMERICAN UNIVERSITY

Khalil Feghali, Senior Procurement Associate/Assistant Director of Procurement at LAU, discusses the supply chain strategies his organisation is implementing in order to achieve and sustain its success in Lebanon’s education sector

A

s a leading private higher education institution in Lebanon, Lebanese American University (LAU) is an organisation with

a rich past in the teaching of the next generation.

With seven schools and 20 centres and institutes 116

between its campuses in Beirut and Byblos, LAU welcomes more than 8,500 students from 78 different nationalities through its doors. Khalil Feghali, Senior Procurement Associate/Assistant Director of Procurement at LAU, believes his organisation has evolved significantly through the launch of its new buildings since he joined the Beirut campus in 2009. “The university has grown considerably since I first came on board; we’ve had four major capstone projects built, and our office has purchased all the furniture, furnishings and equipment for each of these buildings,” says Feghali. “In 2010, we introduced Frem Civic Centre in Byblos; 2013 saw the Gilbert and Rose-Marie Chagoury Health Sciences Centre open, in 2017, we unveiled the Engineering Laboratories and Research Centre and last year, the new Library J U LY 2 0 1 9

117

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LEBANESE AMERICAN UNIVERSITY

“ We have to stay at the top of our game and try to make the best use of the existing technology” — Khalil Feghali, Senior Procurement Associate/Assistant Director of Procurement of LAU

building, which is really a landmark building in terms of architecture and the environment, opened its doors for the first time too. The latest addition to Byblos campus is the new Central Administration building which is in its final stages towards completion.”

The university partnered with 39 pharmacies and 24 hospitals in Lebanon, including the Houston Methodist Hospital and four Walgreens sites in the US, in a bid to provide learning and experimental education opportunities to pharmacy students.

As such, the university maintains

118

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CLICK TO WATCH : ‘WHY CHOOSE LAU’ 119 partnerships with industry leaders and

he explains. “Now, having undergone

other sponsors as well as increasing

a rigorous procurement policy and

students’ educational and training

well-designed procurement procedures,

opportunities while opening up research

as well as the integrity and the exemplary

collaboration options for faculty

work ethic of its procurement staff, have

members. LAU operates with an

all enabled a significant contribution.

ambitious roadmap, aiming to position

Our reputation has accelerated as an

itself as the leading regional institution of

equal opportunity buyer that treats all

higher learning across the Middle East

bidders for supply contracts fairly and

and North Africa region. Feghali points

equally throughout the years.”

to the impact his organisation has had

With procurement vital to the growth of

on Lebanon’s education sector overall.

companies worldwide, Feghali observes

“A 2017 study showed that LAU

how procurement has become an

contributed $897mn into the country’s

important strategic function that

economy for the fiscal year 2015-2016,”

stands at the forefront of operations. w w w.suppl yc ha i ndi gi ta l. com

LEBANESE AMERICAN UNIVERSITY

120 “Our goals have been to contribute to

“Supply chain transformation

the achievement of the university’s

impacts all aspects of our procurement

objectives through three things,”

operations such as the degree of

affirms Feghali. “Firstly, we must get

cooperation and coordination with

the most in terms of value from the

internal customers, the quality of our

acquisition of goods and services.

relationships with suppliers, and the

Next, we must streamline the acquisi-

aligning of the employees behind the

tion process itself, which will enable

vision and ensuring they work collabo-

the reduction of costs and the opportu-

ratively to develop the critical role

nities for errors in it. Finally, we must

of partner with internal customers,”

control the expenditure of funds

he says. “The organisation has to

through ensuring compliance with the

continue evolving in order to improve

university’s procurement policy and

efficiency, achieve standardisation, and

procedures, with the budget and

for succession planning. Finally, process

with record keeping requirements.”

improvements will have to be imple-

J U LY 2 0 1 9

mented to enforce standardisation,

“Since we began using the system

achieve data integrity, facilitate perfor-

three years ago, lots of lessons have

mance measurement and communicate

been learned and we’ve consistently

the results, thereby enabling us to get

reviewed how we can make our

the most from the technology in place.”

services better,” says Feghali. “We could

Due to the way digital transforma-

improve the collection of data for the

tion is defining how all organisations

purpose of automating commodity

the world over conduct operations,

segmentation and portfolio analysis for

there has been a competitive drive

the goods and services we purchase.”

from a range of companies globally

Although leveraging new technol-

to introduce new technology quicker

ogy is largely considered a positive

than the competition. In the case of

change by businesses, the impor-

LAU, the university has implemented

tance of introducing software and

systems such as the Oracle iProcure-

processes that enhance its current

ment modules over the past few years.

offering can’t be overlooked.

E XE CU T I VE PRO FI LE

Khalil Feghali, Senior Procurement Associate / Assistant Director of Procurement Holder of an engineering degree, a MBA and ISM’s C.P.M.® (Certified Purchasing Manager) and CPSM® (Certified Professional in Supply Management) designations, Khalil Feghali has over 20 years of professional experience in procurement management in several industrial sectors including manufacturing, construction, oil & gas and higher education, both in Lebanon and abroad.

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121

LEBANESE AMERICAN UNIVERSITY

“ The recruitment of a director of procurement for both campuses is expected to give us a boost” 122

— Khalil Feghali, Senior Procurement Associate/Assistant Director of Procurement of LAU

J U LY 2 0 1 9

123

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“ Supply chain transformation impacts all aspects of our procurement operations” — Khalil Feghali, Senior Procurement Associate/Assistant Director of Procurement of LAU

“We’re delaying any introduction of new technology, in terms of spend analysis tools or contract management systems, because there’s a lot more we can do with the existing system,” explains Feghali. “Until we feel comfortable that we’ve achieved as much as we can with our current model, we can hold off on alternative options until later on. It’s important to work with internal customers to help change their perception of the procurement function here at LAU and convince them of the new value proposition that the procurement office can deliver.”

With innovation considered an important priority at LAU, the university launched the LAU Fouad Makhzoumi Innovation Centre, inaugurated in April 2019, with two pillars – entrepreneurship and academia – to be the hub for entrepreneurial innovation. The Centre will serve as an accelerator, and to enhance educational and training activities through regular international conferences, lecture series, scholarly workshops and international research to foster creativity and innovation.

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125

LEBANESE AMERICAN UNIVERSITY

and the upgrading of their skills,” says Feghali. “In 2017, a study indicated that, from 2011 to 2015, the amount spent on learning or training for employees was in the $30 millions figure. It’s vital to us.”

Looking to the future, Feghali has clear ideas of how procurement at LAU can continue to be successful in the future. “We have to stay at the top of our game and try to make the best use of the existing technology,” he says.

“The recruitment of a director of procurement for both campuses is expected to give us a boost in terms 126

of implementing the direction that we want to go in and which consists of laying the groundwork for the future transformation of the procurement function into a more strategic supply management operation. This starts with the implementation of processes for measuring and quantifying the existing situation so as to enable the devising of a departmental strategic plan for the subsequent period.”

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127

1924

Year founded

637

Full-time staff members

318

Full-time faculty

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128

Barclays Bank Mauritius: a digital transformation across the African financial sector WRITTEN BY

CATHERINE STURMAN PRODUCED BY

STUART IRVING

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B A R C L AY S B A N K M A U R I T I U S

Barclays Bank Mauritius is undergoing a significant supply chain transformation.Vinay Bachoonum, Head of Strategic Sourcing at Barclays Bank Mauritius, tells us how…

T

here is a significant need to rethink the way in which procurement engages with the supply chain, particularly in the

African banking sector. As financial organisations take a greater look at the products they procure, 130

their source of origin and the difference they can provide to customers, technology is also playing a leading role in enabling the procurement and supply chain to become better aligned and support businesses more effectively.

“Procurement should not be looked at in isolation, especially with technology taking the lead. This way of thinking in procurement has helped me to really make a difference instead of being in the back seat,” states Vinay Bachoonum, Head of Strategic Sourcing at Barclays Bank Mauritius. “The right procurement specialists and expertise is increasingly vital. As a procurement specialist on the island I have been active in making sure that we really make a difference. In this challenging environment we have technologies taking over exponentially.”

Noting that procurement has previously gained J U LY 2 0 1 9

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B A R C L AY S B A N K M A U R I T I U S

“ Procurement should not be looked at in isolation, especially with technology taking the lead” 132

— Vinay Bachoonum, Head of Strategic Sourcing Barclays Bank Mauritius

a negative perception, recent improvements in legislation surrounding anti-bribery and corruption laws across Africa have fully transformed the banking landscape in relation to public procurement. Undertaking independent review panels, where procurement decisions can be challenged, as well as bid openings in public sector procurement, as well as the online submission of bids has reignited conversations as to how procurement can better support the financial sector as it continues to be transformed through digitisation. “I think we should now be moving towards online actions and applying a consortium

J U LY 2 0 1 9

CLICK TO WATCH : ‘BARCLAYS COLOURS OF LIFE’ 133 approach to buying common goods for

unlike many other supply chain leaders,

the government, ensuring that we spend

his career has been one which has

more time on strategic procurement, for

been meticulously planned out,

example. When it comes to Barclays,

becoming a member of the Chartered

there has been significant improvement,”

Institute of Procurement and Supply

adds Bachoonum.

(CIPS) back in the early 2000s. With

Throughout his decade long tenure

the ambition to become a professional

at Barclays Bank Mauritius, Bachoonum

buyer and supply chain specialist, he

has witnessed the procurement industry

remarks that while many find this

shift from being reactive to an increasingly

position to be somewhat thorny, it is

proactive and agile division, ensuring

one which enables individuals to orbit

that businesses remain resilient amidst

within organisations and gain a greater

the ever-changing demands of its

understanding of the internal customer,

customers. However, against such

the external supply base and the

seachange, Bachoonum explains that

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

B A R C L AY S B A N K M A U R I T I U S

“It’s ensuring a balance between what

It is exciting and formed part of my

organisations are looking for and how

thought process when I wanted to build

to get things executed from the supplier

a career in supply chain management.”

community. The supply chain comes with procure, supply management, cost

DATA GENERATION

reductions, due diligence and negotia-

Throughout its procurement opera-

tion. If you look at the bigger picture in

tions, Barclays Bank Mauritius has

logistics and supply chain, it is a huge

worked to implement robust govern-

pipeline of value adding services so

ance around its buying processes, and

that it becomes very exciting,” he says.

has enhanced its privacy tools and

“The role touches every part of the

embedded new policies and standards.

economy, from logistics, distribution

Establishing a new way of buying and

and production, to manufacturing and

enforcing clear segregation between

fast-moving consumer goods (FMCG).

buying and the supply management

134

J U LY 2 0 1 9

functions has also provided a number

of goods and services in the near

of advantages in building strong

future at Barclays Bank Mauritius,”

relationships between teams.

says Bachoonum. “This has been

Additionally, from a technology

a gradual move. Being an island,

standpoint, accessing advanced

the level of sophistication and the

data analytics has seen the business

readiness of the supplier community

gain essential insight into various

is important. We should be pushing

trends in the market, where sophisti-

things that are aligned to the readi-

cated processes and electronic

ness and the culture that lies within

request (ERFx) solutions are now

the supplier base, which mainly

used not only for bidding but also

constitutes small to medium-sized

as a bidding solution.

organisations. However, we also work

“The system will also be used to execute E-auctions for certain types

with large multinationals for specific hardware and supplies.”

135

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CUSTOMISED SOLUTIONS By improving its spend management and analysis through technology, Barclays Bank Mauritius has taken a greater look at its suppliers in order to source ways to unlock greater efficiencies. “We are investing heavily in the right tools, making sure that we can extract data from the systems both from spend analysis perspective, but also from supply management perspective,” adds Bachoonum.

“Spend analysis is done on a monthly basis so that we can see whether we have any spend that is outside J U LY 2 0 1 9

the normal procure process. All data generated can be shared and we can show the factions where money is going. It’s important to have the relevant data to trigger the right decisions as to whether we outsource or bring solutions in-house.”

Such technological focus has also extended towards the company’s investment in a system which has enabled the creation of a central data repository, enabling automated reporting of high-quality regulatory

“ Being an island, the level of sophistication and the readiness of the supplier community is important” — Vinay Bachoonum, Head of Strategic Sourcing Barclays Bank Mauritius

data which is sent to the Central Bank.

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B A R C L AY S B A N K M A U R I T I U S

With all information remaining increasingly time sensitive, the system has reduced ongoing risks of fines and incorrect submissions and poor-quality data being sent. “We had to invest in a solution, where we went through a selection process. Nelito Systems proposed a solution and has ensured that we are able to capture the right data, in the right format and in an automatic manner to the regulator,” says Bachoonum.

“I’ve been heavily involved in the negotiation of the contract to ensure 138

the bank is protected in terms of key attributes and requirements. These solutions can then be used across the organisation. However, it is challenging in the sense that we are negotiating with a supplier that has credentials for delivering projects outside of the country, but not in the country,” he adds. “Due diligence was quite strong to ensure that they could build a customised solution, and we could also agree on expectations on both sides.”

SUPPLIER RELATIONS Procuring for a global bank with such a strong reputation as Barclays has no doubt led to increased pressures J U LY 2 0 1 9

across the procurement and supply chain. To counteract this, Bachoonum has sought to support its limited supply base across Mauritius and support them in remaining compliant within all regulations and standards.

“With regards to data privacy, for example, we need to educate suppliers.

I have been involved in influencing suppliers, looking at what this investment in processes would provide as a yield, which will enable them to deliver similar goods and services to other high level organisations. There is a need to implement a proper way of measuring performance, and if things go wrong how to easily recover,” explains Bachoonum. “Some suppliers felt it was over-engineering, but I presented it as an investment that would greatly improve the way they deliver.”

The business is continuing to grow in leaps and bounds, yet the company has revealed that it is set to become part of one of Africa’s largest diversified financial services group in 2020.

Decoupling from Barclays after a century will see the business become fully part of Absa Group, one of the largest financial institutions in South Africa, which will lead to further advantages for the business. w w w.suppl yc ha i ndi gi ta l. com

139

B A R C L AY S B A N K M A U R I T I U S

140

“ Nelito Systems proposed a solution and ensured that we are able to capture the right data, in the right format and in an automatic manner” — Vinay Bachoonum, Head of Strategic Sourcing Barclays Bank Mauritius

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“We’re very proud of the Barclays brand, and were aware that there would be a transition period,” notes Bachoonum. “It is a chance for us to become a regional bank instead of a global one. It’s a great opportunity for us to become a completely African driven bank. The business is very confident and is embracing the Absa brand. We need to create opportunities for our customers.”

Set to become a completely different franchise, the organisation remains passionate in reinforcing its strong roots within Mauritius. Bachoonum is incredibly positive on what the future holds for the organisation, where it will remain active on the main continent, look at new customer-led innovations, such as the mobile wallet, and explore further territories as part of its five-year plan.

“We want to really mark ourselves in the local market but also in the offshore market,” he concludes. “We have a plan, and we are moving steadily in the right direction to achieve our goals.”

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142

TRANSFROMING PROCUREMENT WITH PEMEX WRIT TEN BY

M ARÍA COBANO-CONDE PRODUCED BY

JAS SEN PINTADO

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P E M E X P R O C U R E M E N T I N T E R N AT I O N A L , I N C ( P P I )

CEO Salvador Escabedo explains how the procurement company is undergoing a significant transformation toward operational excellence

P

EMEX Procurement International, Inc. (PPI) began operating in 1994 as a company supplying Petróleos Mexicanos (PEMEX),

Mexico’s largest company. PEMEX, a company that since its creation in 1938 has not ceased to adjust itself to the market’s changes and to the country’s current political and social climate, formed PPI with the purpose of 144

establishing a closer presence in the international energy industry and developing a direct relationship with key suppliers. From 2017, PPI began a process of change that aims to reinforce the company’s operations based on three pillars: increasing operations, improving customer service, and strengthening the management of the business, which includes implementing an Integral Compliance System (Compliance). Salvador Escobedo gives us the keys to this transformation that began with his naming as CEO. With a successful career in the financial sector behind him, Escobedo has worked in financial integration projects for the least favored social sectors at the Ministry of Finance and Public Credit and at the Ministry of Social Development of the Mexican Government, as well as at the Mexican Institute of Social Security, an institution whose finances he helped to recover J U LY 2 0 1 9

145

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P E M E X P R O C U R E M E N T I N T E R N AT I O N A L , I N C ( P P I )

after finishing his masters in New York. In 2016, he joined PEMEX as Head of Procurement and Supply Strategy Coordination (CEPA), and he was responsible for creating strategies that elevated the efficiency and improving the transparency in the Company’s hiring processes. Moreover, he promoted the development of new technological tools to simplify the process and the elaboration of categories to supply strategically. This last position was precisely the one that provided him with the possibility of assuming his role at PPI in May 2017, giving him the opportunity to execute the strategies he implemented from CEPA in 2016.

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Since mid-2017, work has been done on the first pillar of change: increasing operations. When Escobedo arrived in 2017, PPI’s year’s operations on account and behalf of PEMEX and its Subsidiary Production Companies (EPSs), its largest client to date, closed at around $1bn. This year, the expectation is to close the year’s operations at $2.5 billion, accomplishing an increase of over 220%.

Nevertheless, the goal is not only to grow the year’s operations but also the savings capacity generated for PEMEX. In 2016, the savings capacity was of approximately $100mn. Escobedo estimates that in 2018, numbers close to $200mn will be reached, and that’s only considering PPI’s natural operations. When also considering the special projects implemented by PPI, such as hiring services for shallow-water exploratory J U LY 2 0 1 9

Regional Showcase, organized by the Energy Industries Council (EIC) in Houston, Texas. 26 July 2018

“ W E ARE 95% ABOVE IN MOST OF THE INDICATORS OF THE CUSTOMER SATISFACTION POLLS TAKEN

BY ALL THE COMPANIES WE WORK WITH” — Salvador Escobedo, CEO of PEMEX Procurement International

wells, which represented savings of $298.71mn, and the hiring of services for deep-water exploratory wells, which represented savings of $53.74mn, the sum of around $552mn in generated savings is accomplished for PEMEX through PPI. The objective of increasing operations as a means to promote revenue generation and cost reduction is established in the Business Plan 2017-2021. Moreover, PPI’s Board of Directors approved it. With this aim, Escobedo works on carrying out the transition into becoming the exclusive international buyer of PEMEX and its EPSs to make an incursion w w w.suppl yc ha i ndi gi ta l. com

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into the Mexican energy sector, looking

Gas that support strategic activities for

to form new partnerships and increas-

PEMEX’s operation. “When I arrived,

ing the portfolio of clients: “We would

we had around 50 contractual partner-

all win that way - PEMEX would win

ships. Today, we have close to 100.

as well as the new potential clients

These contracts allow us to have terms,

because this would help us to consoli-

conditions, and pre-established

date volumes and get better discounts.

services with the suppliers” - amongst

PPI would also win because it would

which there are leading international

have a greater operative level and

suppliers of well drilling, manufacturers

additional sources of revenue, which

of original equipment (turbomachines),

would have a positive impact on PEMEX

as well as the main companies

given the cost of the services provided

developing technology for the

by PPI would be reduced.”

exploration of oil fields, just to mention

The second aspect Escobedo is

a few - “and obviously, we want to

working on to reinforce this PEMEX

create a procurement and supply

subsidiary company is to improve the

process that is much faster and

efficiency and the quality of customer

efficient while always ensuring the

service. In that sense, on the one hand,

best conditions of the market for our

what has been done so far is to develop

clients,” adds Escobedo.

more contractual partnerships with different suppliers in the industry of Oil &

In 2017, an agile work dynamic that has allowed the maximization of

“LAST YEAR, PEMEX BEGAN IMPLEMENTING THE MOST AMBITIOUS DIGITALIZATION PROJECT OF ITS LAST 30 YEARS” — Salvador Escobedo, CEO of PEMEX Procurement International

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149

P E M E X P R O C U R E M E N T I N T E R N AT I O N A L , I N C ( P P I )

PEMEX’s short-term benefits has been achieved. In this administration, Salvador Escobedo was successful in implementing supply strategies through Acuerdos Referenciales (Referential Agreements). These instruments make the procurement process more efficient and are available at all times to every new supplier with the purpose of motivating competitiveness and transparency in the purchasing processes and ensuring they provide support to our clients’ needs in a timely manner.

In addition, polls have been implemented 150

to measure the degree of client satisfaction with PEMEX and its EPSs receiving services from us. The results have been quite flattering given that, on average, PPI is above 93% in every indicator, which reflects they’ve done a good job and that their clients are happy with their service.

The third pillar of the strategy behind PPI’s transformation has been the strengthening of its business management mainly through implementing an integral Compliance system, the most complete one of all the subsidiary companies in the PEMEX group, which is conformed by four pillars. The first pillar, which implied having the commitment of all PPI, was obtaining the ISO 9001 2015 recertification. The second pillar is the J U LY 2 0 1 9

$2bn

Approximate revenue

1994

Year founded

80

Approximate number of employees

L AT I N A M E R I C A

creation of an internal audit area; it’s PPI’s first year working with an internal auditor working directly with PEMEX’s internal audit area. The third pillar is the incorporation of Counselors that are independent to PPI’s Board of Directors, and they will provide the vision of conducting business in a wider and more impartial way. The fourth and last pillar is the design and implementation of an Internal Control System for which the mapping of every process was carried out.

This was done with the purpose of identifying every one of the risks and controlling them.

In addition, KPIs (Key Performance Indicators) were documented and/or elaborated, and they measure the efficiency of every one of said controls. “From the point of view of Compliance, we’ve implemented and set in motion a very robust and integral system trusting that it is the best system of its kind in all of PEMEX’s subsidiary companies,” Escobedo says.

Moreover, we’ve been successful in strengthening the company through training its staff. To this day, 75% of PPI’s staff in charge of procurement operations on account and behalf of PEMEX is certified in Purchasing and Supply Chain Management by the University of Houston. By the end of 2019, it’s expected that every employw w w.suppl yc ha i ndi gi ta l. com

151

P E M E X P R O C U R E M E N T I N T E R N AT I O N A L , I N C ( P P I )

P E ME X FA C T S

• In September 2018, PPI signed its first agreement with a company other than PEMEX • PPI was awarded the NBRI Circle of Excellence Award in its 75th edition

152

• PPI expects to close PEMEX’s year’s operations at $3 billion in 2018

ee carrying out procurement functions

important work in budget cutbacks,

at PPI will have this certification.

optimizing the use of resources, and

The three pillars that steered PPI’s

implementing austere measures, we

sailboat had a positive impact not only

got an operational utility of 10.1%.

in terms of the benefits generated for

In addition, the cash flow increased

PEMEX but also on PPI’s finances, as

by 20.5% during that same year. Both

Escobedo explains: “When I arrived

results represent important progress

in 2017, PPI’s financial statement for

from the financial point of view.”

the year 2016 showed that PPI had

Escobedo identifies the use of

operational losses of 35.4%. At the

technology and digitalization as one

close of 2017, after carrying out very

of the pillars that helped PPI to achieve

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153

its objectives successfully. In this

from the Contractual Partnerships

sense, PPI has strengthened its main

established with international suppliers

technological platform, HITEC (Highly

from the gas and oil sector.

Integrated Trade Engine Concept), an

The Mexican energy industry

ERP (Enterprise Resource Planning)

experienced difficult times given the

that allows having complete visibility

fluctuations in the market as a result

of the entire supply chain, which goes

of the energy reform that took place

from planning to the payment of assets

in Mexico in 2013 and to the current

and hired services. This technological

global hydrocarbons crisis. Before the

platform allows PPI to efficiently

energy reform, PEMEX was the only

manage the legal instruments derived

company that could work in the value w w w.suppl yc ha i ndi gi ta l. com

P E M E X P R O C U R E M E N T I N T E R N AT I O N A L , I N C ( P P I )

chain of oil in Mexico, from doing

efficiently. Given how the blocks have

exploration and exploitation to

been assigned through tenders, the

transforming and commercializing

companies with the most participation

crude oil and all its derivatives. Since

or that generate the most revenue to

the energy reform, the market has

the State are the ones that keep the

opened up, which is beneficial given

fields. That ensures that Mexico is the

the important level of investment that

big winner of these tenders and the big

will take place in the sector.

winner of the Reform,” mentioned

“Let’s keep in mind that PEMEX is

154

Escobedo. At the international level,

a large company; it’s emblematic and

big oil companies partner up to divide

strong, but it lacks the capacity to

the risks and costs of exploration and

explore every field existing in Mexico.

exploitation in high-risk fields. The

In this way, other companies can take

energy reform gives PEMEX the

part and participate in this process,

capacity to have partners and compa-

assuring Mexico that the exploitation

nies that help divide and diversify

of those fields will be carried out more

those risks and costs, working as

“WE ARE REACHING A GENERATED SAVINGS AMOUNT OF ALMOST $552 MILLION DOLLARS THROUGH PPI IN 2018” — Salvador Escobedo, CEO of PEMEX Procurement International

J U LY 2 0 1 9

an international production company

a wider scheme of services. By having

as a result.

PEMEX as its only client, given the

In some way, the energy reform

energy reform and the crude oil crisis,

allows PPI to have clients beyond

the significant decrease in operations

PEMEX and also to diversify its

affects PEMEX, but it affects PPI even

catalog of services. On 7 September,

more. Fortunately, this crisis is already

an agreement with a provider other

being overcome - the price of Mexican

than PEMEX was signed, which is

oil was above $72 per barrel all last

aligned with the Business Plan

week, which Escobedo considers

established in 2017 and will generate

“a price that is quite good�.

additional revenue.

PPI is also using the current hydrocarbons crisis to its favor and become a more solid company. The crisis

155

helped to determine the new line of work that looks for new clients and

From left to right: Humberto Porras, Heriberto Sillas, Salvador Escobedo, Carlos Elizalde, Gabriel Zamora w w w.suppl yc ha i ndi gi ta l. com

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