Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach...

45
London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential Giles Breault Sammy Rashed

Transcript of Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach...

Page 1: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

London, UK

September 2016

Beyond Procurement -Evolving the function to reach it’s full potential

Gi les Breaul t

Sammy Rashed

Page 2: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

2

Personal BackgroundMore than two decades transforming and leading global

organizat ions

5 6 12

1990 1995

7 8 3 8

Centralization &

Re-engineering

Global Category

Management

Demand

Management

Offshoring &

Outsourcing

Integrated

Productivity &

Business Services

2000 2005 2010 2013

Beyond

Procurement

Next-level

Productivity

Get the

buy right

GILES BREAULT

SAMMY RASHED

Page 3: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

3

Research & Publications

Through our global Academic network with leading institutions, seek to understand,

evaluate, publish, and present findings related to top options by industry & geography on

how Procurement can help businesses drive greater company-wide productivity

Advisory

Work with few companies at Sr.

Exec. Level to develop & deploy

next-level productivity strategy

Transformation blueprint to grow

organizational readiness and

Procurement capabilities

Intense, pragmatic and output-

focused, drawing from

experience, practice & research

Centered around personal

relationships, and guidance /

coaching

Industry Think Tanks

Gathering small groups of

Procurement executives (12-15)

in a single industrial sector

Balanced group of peers,

thought leaders, practitioners,

academicians and advisors

Three 1-day sessions to

Assess, Analyze, and Solve a

key question facing industry

Aim to share innovative content,

develop concrete solutions, and

build a close community

Learning Conferences

Standard or tailored-content

programs covering both

strategy and implementation

Open enrolment (100–150

pers.) or in-house (~25 pers.)

learning conferences

Topics include: Better-Selling to

Pharma, Business Productivity,

Global Business Services and

LEAN for Procurement

Executive Coaching for high-

caliber talent

Our unique offeringStrategy & guidance for break-through results in cost optimization

Page 4: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

4

Our customersEstablished presence in Pharma and CH / DE markets

Banking Pharma

Consulting & Recruiting

FMCG Specialty

Page 5: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

5

Procurement at a Crossroad

The Beyond Procurement Global Study

2013 The Productivity Think Tank is Introduced

2014 Think Tank - Innovation Sourcing

2015 Think Tank - Procurement as Productivity Engine

2016 Think Tank - The New Skills/Capabilities of Procurement

Closing Thoughts / Q&A / Staying in Touch

Presentation Overview

Page 6: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

6

Procurement at a Crossroad

The Beyond Procurement Global Study

2013 The Productivity Think Tank is Introduced

2014 Think Tank - Innovation Sourcing

2015 Think Tank - Procurement as Productivity Engine

2016 Think Tank - The New Skills/Capabilities of Procurement

Closing Thoughts / Q&A / Staying in Touch

Page 7: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

7

“We just can’t seem to escape

this without recognising that what we want to achieve is a

route to lower costs, not only a route to lower prices”

“Of course we need to measure

the performance of our most important suppliers, but this

“crowds out” a much more important dialogue”

“Our processes do not

encourage suppliers to evaluate us as customers of choice

who actively are seeking innovation and co-created value”

“Our own buyers often have

neither the time nor the knowledge to manage a deeper

discussion with our most important suppliers”

Why are value based relationships so

difficult for large organizations?

Focus on Cost Savings -

Metrics management –

Control vs. Collaboration –

No Priority / No time –

Page 8: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

8

Pharma Industry Focus Procurement

v 1.0 Drugs Opera t iona l mandate

v 2.0 Por t fo l io d ivers i f icat ion Ro le expands to inc lude con t inuous sav ings

requ i rement + leve rag ing company -wide spend

v 3.0 Measures outcomes + ent rants

f rom other indust r ies

Requ i res the sea rch f o r co -c reated va lue tha t

d i rec t ly impacts the pa t ien t expe r ience

Re-es tab l ish

regiona l / loca l

Procurement

presence

More marke t

f ac ing – t ap

in to suppl ie r

innovat ion

s t reams

Par t i cu la r

focus on IT as

techno logy

moves f rom

in f ras t ruc tu re

to de l ive ry

compan ion

Swi t ch f ocus

f rom cos t -

op t im iza t ion to

innovat ion

More

cons idera t ion

f o r supply

base sources

o f c r ises

Reach

Comprehensiv

e R isk Mgmt

t h rough the f u l l

va lue cha in

Invo lve up-

f ront i n

dec is ion -

mak ing

Master and

manage

outsourced

vo lume

Leve rage to

dr ive

innovat ion

Broader

product iv i ty

i n i t ia t ives

Move f rom cos t

e f f i c iency to

l ess tang ib le

outcomes

Crea te new

sources o f

va lue

The Role of Procurement is Changing in

Important Ways

Manage

reputation r iskMore

outsourcing

Greater category

expertise

New

measurements

More customer

focused

*Source:

2014

Page 9: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

9

Broad theme: Move f rom Category Management to

Value co-creat ion

Not on ly one so lut ion… need to pr ior i t ize opt ions

along two d imensions: performance and feasibi l i ty

Key changes in responsibility and positioningProcurement needs can no longer cont inue or grow

Historical process

Spend penetration

Process compliance

Tactical negotiation with suppliers

Short-term savings

Reactive stand-alone role

Concentrated on back-end

Current direction

Spend optimization

Process efficiency

Driving demand mgmt with users

Multi-year productivity plan

X-functional project leadership

Early decision involvement

Page 10: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

10

Procurement at a Crossroad

The Beyond Procurement Global Study

2013 The Productivity Think Tank is Introduced

2014 Think Tank - Innovation Sourcing

2015 Think Tank - Procurement as Productivity Engine

2016 Think Tank - The New Skills/Capabilities of Procurement

Closing Thoughts / Q&A / Staying in Touch

Page 11: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

11

Evolution of Procurement and its driversProcurement's past success can l imi t future contr ibut ion

Goals

Key

levers

Traditional purchasing

Strategic procurement

Spend

Optimization

What's Next?

▪ Pay right price &

ensure compliance

▪ Optimize costs/value

generation across

businesses

▪ Generate savings

▪ Generate higher

returns per dollar

spend

▪ Centralized process

▪ Local / tactical buying

▪ Process

I

II

IIIIV

• SRM as Value Creation

• Innovation Sourcing

• Total Cost-Base

Management

• Global Business Services

• Comprehensive Risk

management

• Take over operational

activities

• Next Level ”Collaborative

Buying”

• Internal Consultant/

Project Managers

• Embed function into

business

• Top Line Contributor10

▪ Demand Mgmt

▪ Process Mgmt

▪ Internal

▪ Category Mgmt

▪ Aggregate volume

▪ External

Process &

Systems

Skills

Acceptance

1

2

3

4

5

6

7

8

9

Top options identified

Path to master the productivity /cost challenge

© 2 0 1 2 T h e Be yo n d G r o u p AG

INN

OV

AT

ION

PR

OD

UC

TIV

ITY

GR

OW

TH

Focus

Hurdle

2013

2014

2015

Page 12: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

12

0

8

Take ove r

opera t ions15

Comp. R isk Mgmt

G loba l Bus .

Se rv i ces58

To ta l Cos t -Base

Mgmt57

Sourc ing innova t ion 87

Top-L ine

Con t r ibu to r50

Embed Func t ion

in to bus19

Extended SRM 13

In t . consu l tan t /PM 44

Next -Leve l Co l lab .

Buy ing

0

0

18

38

48

88

40

27

58

34

1 Based on implementation priority and return performance

2 Total Cost Base Management

Evaluating growth optionsSurvey resul ts – Performance scale

The newcomer

Extended SRM shows the highest

increase in importance. An

average return of ~5% ist

expected from this option

The veteran

Continuing to deliver high returns

of ~5%, participants still highly

value GBS, but do not expect

further implementation efforts

The champions

Both options Sourcing Innovation

and TCBM2 rank amongst the

highest in terms of implementation

priority as well as actual /

expected return (ranging from 4 –

5 %); today as well as in the

future1

Today Future

Four main productivity options to

pursueSurvey outcome: Importance ratingSurvey

▪ >100

participants

from various

industries

and functions

(procurement,

finance, and

other business

stakeholders)

▪ Across

Europe, North

America, and

Asia

Options with highest return

expectation in Pharma Industry

Page 13: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

13

Identified “Top Ten Options”For Procurement to dr ive company-wide product iv i ty, and

beyond

Board

AgendaInnovation Productivity Growth

SUPPLIER BUYER CUSTOMERWho

Beyond

Procurement

Options

Innovation

Sourcing2

SRM as value

creation9

Total Cost-

Base

Management

Global

business

services

Comprehen-

sive risk

management

3

4

5

Take over

operational

activities

“Next level”

collaborative

buying

Internal consulting /Project management

Embed

function into

business

6

8

10

7

Top-line

contributor1

Page 14: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

14

2

3

4

2 3 4

Top-Line contributor

Collaborative Buying

Total Cost-Based Mgmt

Embed function

Ext. SRM

Internal Consulting

Sourcing Innovation

Take over operations

Risk Management

GBS

1

2

3

4

5

6

7

8

9

10

Org.readiness

Capabil ity profic iency

2

4

5

1

6

7

8

9

10

3

Evaluating growth optionsChanges in 2013 Pharma resul ts

vs . 2012 Global Survey resu l ts – Feasib i l i ty

78

44

6

1

9

5

2

3

X X

10

Deemed more feasible:

• Sourcing Innovation

• Total Cost-Base Mgmt

• SRM as value-creation

Page 15: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

15

1

2

3

4

5

1 2 3 4 5 1 2 3 4 5Capabil ity profic iency

2 x 2 by function

Procurement COO/CEO

FinanceBusiness stakeholder

Undecided?

We need

more

Needs

convincing

Stay

focused!

Top-Line contributor

Embed function

Ext. SRM

Internal Consulting

Collaborative Buying

Take over operations

Risk Management

GBS

Total Cost-Based Mgmt

Sourcing Innovation

1

2

3

4

5Org.readiness

Page 16: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

16

Procurement at a Crossroad

The Beyond Procurement Global Study

2013 The Productivity Think Tank is Introduced

2014 Think Tank - Innovation Sourcing

2015 Think Tank - Procurement as Productivity Engine

2016 Think Tank - The New Skills/Capabilities of Procurement

Closing Thoughts / Q&A / Staying in Touch

Page 17: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

17

Session 1 - May

PiP Think Tank overviewThree 1-day sessions, each with dist inct purpose and outcome

Focus: ASSESS

Understand the role and

impact of Innovation

Sourcing through case-

studies (int & ext to

Pharma)

Build on Trading

Relationship Mgmt

methodology to generate

innovation output

Identify Procurement

challenges to better

broker vendor innovation

Session 2 - Jul

Focus: EXPLORE

• Explore existing

Innovation models and

identify best for

Procurement in Pharma

• Get practical examples of

successful application

from Vendor and

Customer perspective

• Map internal mechanism

within Buying

organizations for driving

Innovation Sourcing

Session 3 - Oct

Focus: SOLVE

Develop effective

approach to drive

Innovation Sourcing,

Identify, build & obtain

unique capabilities

Procurement will require

to successfully lead

Elaborate required

governance model to

ensure promising ideas

are visible, supported,

and implemented

Host:Host:Host:

2013

Page 18: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

18

2013 “Productivity in Pharma” think tankAiming to move Procurement f rom “Contro l ler to Orchestrator”

Participants Academia & Partners

Smal l group of invi ted senior bus iness leaders f rom Procurement

Part ic ipants f rom large / medium / smal l s ize Pharma companies

Ser ies of three 1 -day workshops focusing on lead quest ion:

“What are the key challenges & opportunities in the healthcare

sector and pharmaceutical industry, and how to address by better

leveraging the unique capabil it ies within our supply base”

Page 19: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

19

“We just can’t seem to escape

this without recognising that what we want to achieve is a

route to lower costs, not only a route to lower prices”

“Of course we need to measure

the performance of our most important suppliers, but this

“crowds out” a much more important dialogue”

“Our processes do not

encourage suppliers to evaluate us as customers of choice

who actively are seeking innovation and co-created value”

“Our own buyers often have

neither the time nor the knowledge to manage a deeper

discussion with our most important suppliers”

Why are value based relationships so

difficult for large organizations?

Focus on Cost Savings -

Metrics management –

Control vs. Collaboration –

No Priority / No time –

Page 20: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

20

1. SRM is broken Measurement / KPIs are limited (focus on Perf. Mgmt, Risk Mgmt, and Cost

savings)

Systems aren’t adequate to move further

Intelligence needed to access higher-level needs, and visibility into Supply-Base capability

Limited acceptance from business to move beyond savings & compliance

Insufficient capabilities within Procurement to step-up

SRM needs to help manage complexity and drive it out of the value chain

SRM is a cross-functional commercial activity, balancing risk, innovation, and market opportunities

1. Healthcare trends wi l l have signif icant impact on Pharma industry

1. This threat can be an opportunity for Procurement to di fferently leverage i t ’s supply base Procurement needs to move from "controller” to “orchestrator ” by building coalition

across value-chain

SRM has potential to influence EVA, not only reduce COGS, through value co -creation across entire supply chain

Can’t directly address identified issues

2013 Summary of Conclusions

Page 21: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

21

Trading Relationship Management (TRM) Canvas©

Opportuni ty to t r igger the spark of innovation and create

tangible value v is ib le to customers

Supplier Buyer Customer

23

4 5

1

6

UnderstandTranslateSeek & Share

CommunicateSelect & ImplementAssess

Value generation© 2 0 1 3 T h e B e y o n d G r o u p A G

Page 22: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

22

Procurement at a Crossroad

The Beyond Procurement Global Study

2013 The Productivity Think Tank is Introduced

2014 Think Tank - Innovation Sourcing

2015 Think Tank - Procurement as Productivity Engine

2016 Think Tank - The New Skills/Capabilities of Procurement

Closing Thoughts / Q&A / Staying in Touch

Page 23: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

23

“Productivity in Pharma” think tank2014 ser ies: Helping Procurement dr ive Innovation Sourc ing

Members Partners

Sma l l g roup o f i nv i t ed s r. bus iness leaders f rom Procurement

Par t i c ipan ts f rom la rge /medium/smal l s i ze Pha rma compan ies

Ser ies o f t h ree 1 -day workshops f ocus ing on lead ques t ion :

ENJOIN PARTNERS

Se

rie

sD

ay

Co

ntr

ibu

tor

s

Ac

ad

em

ia

“How can Procurement strike the spark of innovation from

suppliers, nurture it, and help carry it from idea to realization”

Page 24: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

24

Why Innovation Sourcing isn’t working?

Page 25: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

25

Anecdotal survey among CPO’s reveal5 basic t ruths about Innovation Sourcing

© 2013 The Beyond Group AG

The ability to interact with suppliers allowing for the collaborative discovery,

development and use of novel ideas in processes or products that create an

enhanced value proposition for both parties

Sourcing Innovation – What is it?

- yet there are common truths we can extract. Some conclusions:There is a great deal of literature/experience available but no absolute way of defining an

approach

• Buyer/Supplier

strategies differ

• Know what type of

innovation to look

for: S-C-T-D

• Make sure you are

solving a real need

(PULL not PUSH)

• Share your strategy

& expectations with

right suppliers

• Focused Search

• Use of appropriate

tools

• Portals

• Fairs

• Crowd Sourcing

• Collaborative

• Methodology e.g.

W-F-G-M model

• Do not over

regulate

1- Random is Not

Acceptable

3- Champion the

Process

• Systemic Facilitation

• Have mandate!

• Communicate with

internal stakeholders

• Communicate with

suppliers – process

& expectations

• Visible Program

• Senior Level

Involvement

4- Manage

Expectations

• Protection of

Intellectual

Property

• Profit Sharing

approach

• Close the loop

• Supplier

• Customers

• Internal

• Clear visible &

objective process

2- Strategic

Landscape5- Talent

• Recognize new

talent needs

• Develop new role

profiles

• Recruit from

leading

organizations

• Talent and

progression for

highest qualified

only

Page 26: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

26

TRM Maturity Assessment ©

Reaching highest matur i ty level wi l l require new capabi l i t ies ,

posi t ioning Procurement as an Innovation enabler

UnderstandTranslateSeek & Share

CommunicateSelect & ImplementAssess

1

2

3

1

2

3

1

2

1

2

1

2

1

2 Customer Satisfaction

Basic needs met

Future Growth

Volume/Commodity

Performance Mgmt.

Risk Management

Optimize cost & budget

Compliant Process

Savings Targets

KPIs reported

Know expressed needs

Transaction focused

3

3

3

3 Enhanced Cust. Value

Collaborative Search

Value-Creation Proposal

Value Engineering

Systemic Facilitation

Identify unmet needs

© 2 0 1 3 T h e B e y o n d G r o u p A G

Page 27: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

27

TRM Canvas©

Best pract ice tools from PiP Think Tanks

Outsourc in

g PartnerCrow d

Sourc ingOutsourc ing

Par tner

Open

Innovat ion

Decommo-

d i t i ze

Bus iness

Mode l Canvas

“Voice o f

Pat ient”

Al ign w i th Key

Acc . Mgmt

“Be a t the

tab le”

Game

Theory

Procurement

Branding

Innovat ion

Fa i rs

Organizat ion

Mandate

Review

System

How to

Contro l?

How to Te l l?Innovat ion

Por ta ls

Page 28: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

28

Procurement at a Crossroad

The Beyond Procurement Global Study

2013 The Productivity Think Tank is Introduced

2014 Think Tank - Innovation Sourcing

2015 Think Tank - Procurement as Productivity Engine

2016 Think Tank - The New Skills/Capabilities of Procurement

Closing Thoughts / Q&A / Staying in Touch

Page 29: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

29

“Productivity in Pharma” think tank2015 ser ies: Transforming Procurement into the Productiv i ty Engine

Members Partners

Sma l l g roup o f i nv i t ed s r. bus iness leaders f rom Procurement

Par t i c ipan ts f rom la rge /medium/smal l s i ze Pha rma compan ies

Ser ies o f t h ree 1 -day workshops f ocus ing on lead ques t ion :

“How can we equip Procurement to become

the recognized Productivity engine of the organization”

Se

rie

sD

ay

Co

ntr

ibu

tor

s

Ac

ad

em

ia

Page 30: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

30

Productivity in PharmaTarget output for 2015 ser ies

1. MEASUREMENT : How to frame Procurement’s

value proposit ion, f i t in business planning,

and demonstrate what we do has an impact?

2. SKILLS : What skills are needed that enable

better partnering internally and externally,

managing projects as a Trusted advisor?

3. STRUCTURE which includes Procurement “basics”

as well as “beyond”, but which?

4. MANDATE : Define a clear mandate around

expectations, our responsibil i ty, and logical l imits

Page 31: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

31 3

1

Four ways of reducing cost in organizations

External

Price

Internal

Structure

Third Party Spend

Activities & Footprint

Organization Fixed Costs

Buy Less

Price

Traditional

Category

Management and

negotiations,

Supplier

Consolidation &

Selection etc.

Demand

Management

Business to

identify “essen-

tials” and reduce

spend at the

source

Structure

Further consolidate

and streamline back

office functions

(Transformation of

Finance, HR,

Communications,

Legal, etc.)

Fixed Costs

Structured global

effort to reduce

commercial and

administrative

offices,

Manufacturing and

Development site

footprint

Demand

Page 32: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

32

Some leadsWhat capabi l i t ies are needed to dr ive maximum product iv i ty?

Quick wins

What’s needed

+ design the

right process

Pick the right

delivery model Lead cross-

functional

teams

Knowledge

is key

LEAN / Six-

Sigma

Data &

Intelligenc

e

Page 33: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

33

New capabilities are needed beyond CatManFor Procurement to dr ive enterpr ise -wide Product iv i ty

Off-shoring &

Outsourcing

© 2012 The Beyond Group AG

Project Management

Manages all costs,

both internal and

external

Integrates all

productivity

enablers with robust

project management

Offers end-to-end

process, with

sequenced delivery

Analytics & Intelligence

1) Get the process right

(don’t ship & fix)

2) Identify the right

delivery

3) Manage Demand

and get the buy right

Page 34: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

34

Procurement at a Crossroad

The Beyond Procurement Global Study

2013 The Productivity Think Tank is Introduced

2014 Think Tank - Innovation Sourcing

2015 Think Tank - Procurement as Productivity Engine

2016 Think Tank - The New Skills/Capabilities of Procurement

Closing Thoughts / Q&A / Staying in Touch

Page 35: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

35

Supplier Organization Customer

UnderstandTranslateSeek & Share

CommunicateSelect & ImplementAssess

Where we began the 2016 seriesNew Posi t ions and Ski l ls

Cross-

functional

Integrator

Business

Partner

Al l iance

Manager

• Big Picture

• Risk Mgmt & Scenarios

• Engagement and

Communication

• Ambassador Skills &

Conflict management

• Project Management skills

• Influencing skills

• Business case development

• Change Management

• Credibility through

performance

• Alignment and Structure

• Intrapreneurial skills

• Game changer capability

• Credible experience – earn

your right to be at the table

• Consultation skills

Page 36: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

36

Corporations wi l l become more dependent on their external network

The role of procurement wi l l s ignif icantly change into a much smaller

highly strategic organization

I t is focused on creating entrepreneurial value with suppliers and

increasingly with customers

Routine tasks wi l l mostly be transferred to Global Business Services

organization (GBS)

As a consequence business partnering wi l l become a key to success

for procurement

The ski l ls of procurement professionals wi l l have to change

The Business Partner wi l l master a broad span of competencies, be

passionately engaged beyond procurement…

…and require the necessary environment to succeed

Burning Platform for Business PartnershipExcerpts from Givaudan CPO presentat ion on Day 1

Background

Impact

Page 37: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

37

Combine customer / category ro les

where natural f i t

Raise expectat ions, de l iver and

secure ro le

Al ign wi th bus iness s t ructure

No paral le l s t rategy, s ing le

a l igned approach

Becoming a recognized Business PartnerDon’t manage processes to meet funct ional object ives, manage relat ionships to meet business strategy

MANDATE & STRUCTURE KNOWLEDGE

SKILLS LANGUAGE & COMMUNICATION

End- to-end knowledge (e.g.

regulatory to commercial )

Credible bus iness exper t ise

Business St rategy & Planning Cyc le

External Market t rends

Engage wel l and manage

re la t ionships

Open, Agi le

Analyt ics & ins ights

Vis ionary, In t rapreneur,

and game changer

Keep i t s imple

Lis ten more than ta lk

Learn and use bus iness language

Demonstrate rea l va lue and focus on

contr ibut ion, not per formance

Page 38: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

38

Becoming a “Connector”Growing need for Procurement to be a stronger network

manager

Why so important?

Procurement is uniquely positioned within the

organization. Some clear opportunities:

Increasingly tasked with “bringing the outside in”

Communications between and even within

departments not always solid

Need for for standardization and harmonization

across all functions

No natural owner for cross-functional Project

Management

Connectors

People with special gift for bringing the world

together.

Know lots and different kinds of people

They are curious, self-confident, sociable

and have high energy

Page 39: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

39

Procurement as Alliance ManagerHow to to become accepted and recognized

1. OBJECTIVES &

INCENTIVES

2. MINDSET

Go beyond financial objectives

1. Mutual objectives for both sides (e.g. savings and profi tabi l i ty) , closer to corporate goals

2. Progress milestones against 3-5 year journey (evaluate 1-5 level, incl . relat ionship)

3. Impact on P&L (overal l , not incremental)

ACTION : ident i fy a paint -point (not too large) and f ix i t through the al l iance (which canvt be solved by ourselves) as f i rs t proof of concept (answer f rom mgmt must be: where e lse can th is be appl ied)

Not just from Procurement but also the entire

organization

1. Be seen as having good commercial awareness ( incl. what real drivers are)

2. Connector mental i ty, stop managing the your personal interest and manage to the mutual outcome

3. Leadership, courage to think difference

ACTION: select a p i lo t to demonstrate, and put a l l resources at i t to be successful

Page 40: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

40

3. SKILLS

4. PROCESS &

SYSTEMS

Alliance Management is team effort, and

Procurement can take a leadership role

1. Communication

2. Emotional Intel l igence (bui lds on connector mental i ty)

3. Project Management

4. + Strategic Planning

ACTION: assess your peers

1. Qual i ty Management Something l ike SRM abi l i ty to evaluate qual i ty AM

2. Lifecycle Management

3. System that acts as repository to manage al l iances

ACTION: start conversat ion so process at buying and se l l ing is a l igned

Procurement as Alliance ManagerHow to to become accepted and recognized

Page 41: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

41

The CPO of the future: a complete business person”You must lead with your head, heart hands … and guts” J F B a r i l , C o n n e c t i ng P a r t n e rs

Heart

Wants value for all partners

Perceived as principled and

trustworthy

Hands

Credible Experience

Finance and Legal

Knowledge

Industry 4.0 Cognizant

Guts!

Strong Advocate

Unafraid of manageable risks

Manages Conflicts

Don’t ask for permission

Head

Understands the totality of the

business

CEO of own business

Page 42: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

42

Procurement at a Crossroad

The Beyond Procurement Global Study

2013 The Productivity Think Tank is Introduced

2014 Think Tank - Innovation Sourcing

2015 Think Tank - Procurement as Productivity Engine

2016 Think Tank - The New Skills/Capabilities of Procurement

Closing Thoughts / Q&A / Staying in Touch

Page 43: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

43

Staying engaged with the Beyond GroupA few ways of contr ibut ing to and benef i t ing from our work

Monthly series building on topic of

Entrepreneurship

Applying current research and work to

the function, helping Procurement

become “the Corporate Intrapreneur” https://www.procurementleaders.com/blog/my-blog--guest-

blog/beyond-procurement-the-corporate-intrapreneur--595433

Blog series

Three 1-day sessions starting

November 2016 New Jersey, USA

Topic “Procurement as the Orchestrator

of Value-Creation and Sourcing

Innovation”

Three 1 ½ -day sessions starting May

2017 in Basel, CH

Theme: “Creating EFFICIENCY and

AGILITY in Procurement to unleash it's

full value-creation potential”

Page 44: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering

44

“Skate to where

the puck is going

– not where it is”

- Wayne Gretzky

Huge opportunities to do more…and bui ld a solut ion to tomorrow’s problems

Page 45: Beyond Procurement · London, UK September 2016 Beyond Procurement - Evolving the function to reach it’s full potential ... 5 6 12 1990 1995 7 8 3 8 Centralization & Re-engineering