The results of a global procurement transformation – a use case!

Introduction

Last week part 1 of the global procurement transformation was published with focus on the pre-phase and first year of the transformation.

AIE company led the transformation in a hands-on, shoulder to shoulder manner with the business units and functional leaders involved. The whole transformation team was a colleague interim manager, a high potential of the company, strongly supported by members of the leadership team, the board and people in procurement.

Overall results, both financially and non-financially, in the first year exceeded expectations, which helped to create trust and confidence in the function and the transformation.

This week’s post is about the second year of transformation and the final results.

Transformation focus in the second year

Early in the second year of the program the decision was made to move to a global procurement organisation. This was part of a wider strategy and governance discussion. A business case was submitted to set up a global procurement organisation and a proposal for its geographic location. These were approved by the board and leadership team at the end of Q1 2018. A small project team with HR, management leadership and AIE company was set up to make the global procurement organisation happen in the chosen location.

Further the contracting and implementation of a procurement system infrastructure, a Contract-to-Pay system fitting to the already contracted Source-to-Contract software was decided for. This was based on the preparation (design and business case) done in 2017 and early 2018.

Meanwhile category management initiatives accelerated covering a substantial part of the international spend. The ones started in the first year started to yield and result in larger framework contracts.

All this happening on top of the initiatives running from year one: performance management on a monthly basis, executing the procurement self-assessment for the second time and to monitor overall progress of the transformation, updating roadmaps and implementing the initiatives in the country purchase plans, ongoing category initiatives in a number of selected areas.

System landscape: Source to Contract and Contract to Pay

Many activities were initiated in 2018 to progress the implementation and use of the Source to Contract system. The quality of the realised spend database was improved and reporting of spend data moved to a monthly frequency (from quarterly). Supplier life cycle, contract life cycle and e-sourcing were made available to all BU’s. Some already used the these actively. Vendor masterdata were defined as part of the structural implementation of the supplier life cycle module and future contract-to-pay system. Supplier and creation of supplier master data was connected to the usage of the e-sourcing module. New suppliers were onboarded to make a start with harmonisation and enriching supplier master data. Contract management and contract master data were formulated for later implementation. The new procurement organisation had master data management within the function as no centralised business services and data management was in place yet.

For the contract-to-pay system, the design of purchase channels and a plan for implementation was created. Tenders and negotiations resulted to the choice and the related integrator support, mid 2018.  This gave a 6 months preparation after contracting to realise a detailed design for a go-live in selected pilots early 2019.

Setting up the global team and recruitment program

Evaluation of different locations on a multitude of criteria resulted in the decision to locate Procurement in one of the larger business units. Jointly with HR and a global recruitment company a recruitment program was set up to assure diversity in all aspects. In Q2 a tender was sent out to a number of recruitment companies to support the realisation of the global procurement organisation during the summer months before the end of the year. Scope was to recruit #15 vacancies with:

• global procurement director,
• global category managers
• a procurement excellence team with business intelligence, contract management, high level functional excellence managers and a master data department (decided to keep in Procurement)
• two heads of procurement in two different countries.

Further the organisation would be strengthened locally with another 8 people in 2018 on top of the 22 already hired in 2017.

After approval of the plan by the Management Board a novel recruitment campaign was initiated to support the right image building for procurement in June 2018. At the core of the campaign was an employer value proposition and different recruitment channels such as linkedin, personnel networks, wechat and the channels of the recruitment company. Within 3 months 60 specialised procurement professionals were selected from a much larger number by initial screening on personal presentation in a call, resume content, renumeration wishes, diversity and mobility. All candidates were interviewed minimum 2 times after which 15 finally were appointed. The new organisation started end of 2018.

Transformation wisdom?

• Top management commitment and them having a professional stake in the transformation is essential
• Reaching out and connecting to other functions, building internal alliances with mutual benefits is key
• Baselining and creating a roadmap will help to validate the ‘need’ and ‘direction’
  
  

  

• Make sure the transformation delivers business results (financial and non-financial) for BU leaders
• The function as ‘change agent’ is okay, with strong support of the people in the function,  but be aware not run miles ahead of the pact
• Working on results and securing enablers need to go hand in hand to sustain the change
• People make the difference.
• System development, digitization is key
• Emphasize communication and a clear value proposition, formal and especially informal.
• Make the function attractive. Ability to attract diversity mirrors the attractiveness of the function.