TRANSFORMING THE PROCUREMENT FUNCTIONSourcing and Procurement EMEA, first joined Zurich in 2012, the...

TRANSFORMING THE PROCUREMENT

FUNCTION

Jaime Paiva, Regional Head of Sourcing and Procurement EMEA, shares how Zurich Insurance has transformed its Sourcing and Procurement function from an order taker to a recognised business partner

Zurich Insurance HOW PROCUREMENT IS SET UP TO DELIVER BUSINESS OBJECTIVES, TODAY AND TOMORROW

WRITTEN BY

AMBER DONOVAN-STEVENS PRODUCED BY

JUSTIN BRAND

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n many large organisations,

the sourcing and procurement

function is often overlooked.

At Zurich Insurance, however, sourcing and

procurement is becoming a driving force for

innovation, customer value and sustainability,

while playing a key role in enabling the

business to fulfil its strategic objectives.

When Jaime Paiva, Regional Head of

Sourcing and Procurement EMEA, first

joined Zurich in 2012, the company was

in the midst of outsourcing its procurement

function. He explains: “The retained procure-

ment organisation was down-sized and

predominantly responsible for managing

the service delivery from our BPO partner.

The model with the BPO was based on the

services being delivered out of hubs and so we

lost the proximity to our internal stakeholders.”

However, by the end of 2016, the procure-

ment team at Zurich started a full review of

the model. “Zurich was about to start a new

strategic cycle and we wanted to ensure we

were prepared to support our new objec-

tives,” recalls Paiva. Zurich’s Sourcing and

Procurement leadership team decided to

enhance the function’s capabilities in order

to provide more support to the local business

I

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Z U R I C H I N S U R A N C E G R O U P

— Jaime Paiva, Regional Head of Sourcing & Procurement EMEA, Zurich

“ Our vision is for our procurement practices to drive positive societal, environmental and ethical outcomes”

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units as part of the new strategy. “We

did not want to give up the learnings

and successes that the outsourcing

model gave us, but we knew from dis-

cussions with our internal stakeholders

that they were expecting more than

cost-cutting; they wanted improved

capabilities,” says Paiva.

To meet these expectations and to

position the function more strategically

within the organisation, Zurich started

to build its sourcing and contracting

capabilities internally. “Our goal was

to offer better services closer to our

internal stakeholders, with people that

would understand their needs and be

able to provide specialist knowledge,”

says Paiva. “Ultimately, we wanted to

have our own resources focused where

they were needed and give the business

the necessary agility to make decisions

according to their needs.”

THE TRANSITION TO IN-HOUSE PROCUREMENT:

“As we started discussing our plans

with our business stakeholders,

we identified recurring ‘pain points’

CLICK TO WATCH: ‘ZURICH INNOVATION CHAMPIONSHIP 2020’06

O C T O B E R 2 0 1 9


https://youtu.be/RvKkEfyuEa4

regarding the outsourced model.” Paiva

goes on to list the most frequent ones:

• The BPO had limited understanding

of the insurance industry and business

needs from Zurich.

• Excessive handovers for end-to-end

sourcing and contracting lifecycles.

• Lack of dedicated human resources

from the BPO.

To measure customer satisfaction,

the Sourcing and Procurement function

also introduced the Net Promoter Score

methodology (NPS) to gather immedi-

ate and specific feedback from internal

stakeholders. “It’s very rewarding to

see how our customer satisfaction

measurement has evolved since early

2016, increasing from a score of -22

to +74 in 2019,” says Paiva. From the

previous operational model, Zurich

kept the Procure-to-Pay (P2P) lifecycle

outsourced. “We contracted Genpact

for operational procurement and

accounts payable for a slightly-altered,

cost effective Procure-to-Pay (P2P)

lifecycle. Zurich also worked on

improving the relationship with the

BPO partner. “The partnership with

Genpact allows us to focus on strate-

gic or business critical topics instead

of having resources burned with oper-

ational or tactical aspects of the

EXECUTIVE PROFILE

Jaime Paiva

Jaime Paiva heads Sourcing and Procurement for the

EMEA region at the insurance giant Zurich. Paiva is

a seasoned sourcing leader with extensive experience

in direct and indirect sourcing, as well as procurement

operations. Before joining Zurich Insurance, Paiva held

different leadership roles with multinationals such as

Siemens and Nokia in Latin America, Europe

or globally. Originally from Brazil, he’s

been living in Germany since 2007.

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https://www.linkedin.com/in/jaimehpaiva/



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…like Zurich.

Global insurer Zurich worked with KPMG member firms to transform its procurement processes. Central to the success of our collaborative approach was a three-day, interactive ‘U-Collaborate’ project launch event. This meeting established core design principles and challenges, so everybody involved was up to speed with the key aims of the program that still steer it today.

Stop planning for today. Start getting future-ready.These five steps could help make your procurement transformation a success.

1. Know what success meansEveryone has a different view of success – whether that’s increased efficiency or improved customer experience. It’s important to have a common vision of the business outcomes that are wanted.

2. Flex to political and business changeProcurement is becoming more complex – thanks to greater regulation, political change, and rising consumer expectations. The temptation is to avoid change and simply cut costs. That misses a big opportunity to modernize procurement and use that change to drive business value.

Imagine if your organization could deliver...

US risk management and insurance services company saw the following results.3

Discover how you can benefit from KPMG Powered Procurement.kpmg.com/poweredenterprise

© 2019 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

1 KPMG Powered Procurement Advisory – Case Study, 2018 2 KPMG unlock-potential-of-procurement.pdf3 KPMG Point of View Paper ‘Stop holding back. Start tackling five common obstacles.’4 Global CEO Outlook Survey, KPMG International 2018 5 Harvey Nash/KPMG CIO Survey, KPMG International 2018

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“ U-Collaborate was a tremendous success. It quickly brought everybody involved up to speed and aligned on some principles that still steer the programme today”

Source-to-Pay (S2P) lifecycle in a cost-

efficient way.”

TRANSITION TO A NEW IT PLATFORM:Zurich were using an outdated P2P

platform. This platform was implemented

in eight different countries more than

a decade previously and was custom-

ised locally. “In 2017, we ran a bench-

mark and the conclusion was the

maintenance of our P2P platform was

very complex and expensive. The

customisations went so far that they

hindered getting accurate MI on some

very basic levels and spend analysis

for our category strategies,” says Paiva.

Zurich analysed the marketplace and

selected Coupa, predominantly for its

user-friendly interface. To compliment

this new P2P platform, Zurich also

partnered with KPMG to assist with

the design and implementation of

Coupa in 2017. “It was important for

us to have access to best practices

from other organisations as well as

the technical expertise to help during

the multi-year transition to Coupa,

and they offered that through KPMG’s

Powered Procurement assets and

tools,” says Paiva.

Zurich initially focused on deploying

the sourcing and contracting modules,

phasing out the P2P and employee

expenses modules in early 2018.

“Moving from an on-premise system

to a cloud-based solution required

alignment on some fundamental

principles,” recalls Paiva.

In January 2018, KPMG hosted

a 3-day event in London called

‘U-Collaborate’ designed to increase

understanding of the platform, share

and agree on core design principles,


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http://coupainspire.com



and to address design and programme

challenges. “U-Collaborate was a tre-

mendous success. It quickly brought

everybody involved up to speed and

aligned us on some principles that still

steer the programme today.”

Some of the key principles agreed

upon at U-Collaborate included:

• The internal customer and employee

experience is paramount to the design.

• The entirety of the company would

function under one standardised design.

• No customisation of technology:

‘Adopt not Adapt’.

• The platform must be fit for purpose

across all business units.

“The success of U-Collaborate con-

firmed the need for excellent change

management and communication

strategies,” says Paiva, “Changing an

IT platform for indirect spend impacts

the full organisation and our supply

base. To add to this challenge, our end

users have been using the same pro-

cesses and tools for over 10 years,

and were accustomed to a high degree

of customisation and functionality. We

appreciate how difficult it is for end users

to migrate to a SaaS application and the

need to adopt new ways of working.”

The UK was the first country to

implement Coupa, which went live in

November 2018, followed by Switzerland

in May 2019. Spain and Italy are

scheduled to migrate to Coupa in

early 2020, along with North America,

Germany and Austria later in that year.

“Coupa is the Group’s standard platform

for S2P and employee expenses and

we’re expecting the work to continue

for some time after the original coun-

tries in this rollout are completed.”

THE CONTINUATION OF THE JOURNEY:“We’ve set the building blocks for the

function to play a much more important

role in enabling the business to fulfil its

strategic objectives, evolving to a place

where procurement is recognised

internally as a driver of the company

agenda.” Evidence of this materialising

is the role that the procurement team

plays in relation to Zurich’s sustainabil-

ity agenda. In April 2019, the company

announced its aspiration to be known

as one of the most sustainable busi-

nesses in the world. It followed this

up in June by becoming the first insurer

to sign up to the United Nations’

business pledge to limit the global

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temperature’s rise to 1.5°C above pre-

industrial levels. Then, it set a new

Operational Sustainability target to

drastically reduce paper and plastic

consumption, while also committing

to use 100% renewable power in its

global operations by the end of 2022.

In early 2016, Zurich UK became

the first insurance company to sign


“ We did not want to give up the learnings and successes that the outsourcing model gave us, but we knew from discussions with our internal stakeholders that they were expecting more than cost-cutting; they wanted improved capabilities”

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$51.6bn

1872

54,000+

Approximate revenue

Year founded

number of employees14

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up to Social Enterprise UK’s ‘Buy

Social Corporate Challenge’, which

committed 10 large UK companies

from diverse industries to increase

their spend with social enterprise firms.

The ‘Buy Social’ ethos is completely

aligned with Zurich’s Purpose and

Values. Since then, Zurich has been

working directly with organisations

like Wildhearts, a stationary producer

which uses its profits to fund micro-

loans in the developing world and

entrepreneurial training in UK schools;

Ninety, an innovation consultancy that

gives 90% of its distributable profits

back to charity; and From Babies with

Love, a promotional items provider

that gives 100% of its profit to orphaned

and abandoned children around

the world.

“It’s important to clarify that social

enterprises are not charities, but

companies with primarily social objec-

tives whose surpluses are principally

reinvested in the business or in the

community, rather than being driven

by the need to maximise profit for

shareholders and owners,” says Paiva.

“Most of the companies we work

with are providing career development

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opportunities to people who otherwise

have limited prospects for formal

employment or reinvesting a substan-

tial part of their profits into social initia-

tives or charity.” Zurich’s goal is to

embed this practice in the way it does

business with its supply base and its

supplier’s suppliers. “We have a com-

mitment to ensure fair business oppor-

tunities and, in our experience, this is

what these companies are asking us

for. They don’t want special treatment,

just the chance to prove their value,

quality and ability to compete on equal

terms with profit-oriented companies,”

adds Paiva. “Our vision is for our pro-

curement practices to drive positive

societal, environmental and ethical

outcomes, while playing a key role

as an enabler of Zurich’s objectives.

It will do this by making sustainability

one of the key criteria in our sourcing

decision making process.”

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https://www.linkedin.com/company/zurich-insurance-company-ltd/

https://www.youtube.com/user/zurichglobal

https://www.zurich.com

https://twitter.com/Zurich

https://www.instagram.com/zurichinsurance/



www.zurich.com

TRANSFORMING THE PROCUREMENT FUNCTIONSourcing and Procurement EMEA, first joined Zurich in 2012, the...

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Transcript of TRANSFORMING THE PROCUREMENT FUNCTIONSourcing and Procurement EMEA, first joined Zurich in 2012, the...