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Emptoris - Creating a Buzz

Read this Procurement Leaders article to learn how Supplier Lifecycle Management solutions foster greater communication and trust between buyers and suppliers to achieve true value.

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Emptoris - Creating a Buzz

  1. 1. creating a buzz If planned and implemented properly, most agree that formal SRM programmes bring significant performance benefits to the wider business – others would argue that it is already part of procurement best practice, writes David Rae “I’ve got to confess to being slightly potential benefits that a formal SRM saw some very significant streamlining sceptical,” said Adrian Turner programme could deliver. opportunities in terms of taking cost out of during a recent roundtable debate Mark Hughes, group procurement our joint supply chains. Working together in London on supplier relationship director of Premier Foods, the UK’s over a three-year period we managed to management (SRM). largest food company, is certainly do that. British Sugar managed to grow As the head of European corporate an advocate. Having established a its sales to us and we managed to take procurement at Apple his comments programme some years ago, Premier cost out of our joint supply chain.” raised a few eyebrows. After all, if now has a formal SRM arrangement But what exactly is SRM? Is it, as there’s one organisation in the world with nine of its most strategic suppliers. Turner suggests, simply a “collective you would expect to be enthusiastic “We started quite early on with our SRM noun” for best practice already widely about the opportunities in its supply programme… out of 5,500 suppliers used, or something more sophisticated? chain, it would be Apple. today, we’ve got nine. But we’ve found it “If everyone right now were to write down what they thought SRM was, we’d We’ve come up with a collective noun to describe what have 10 different answers,” said Martin Berr-Sorokin, senior vice president and the majority of us do in regards to best practice anyway general manager of supplier lifecycle management at Emptoris. “It’s really Happily, Turner isn’t sceptical about difficult to grow that anymore,” he said. about the relationship – and the working with suppliers – rather, he The fact that Hughes has found it relationship has a lot to do with supplier believes SRM is a bit of a buzzword. so difficult is not surprising – formal lifecycle management (SLM), managing “The reality is that we do a lot of this SRM programmes take a lot of work the supplier from the phase in to the already,” he said. “The scepticism for me and resource if done properly. But when business to the phase out.” comes from the fact that we’ve come up successful, they can have a fundamental This distinction between SLM and with a collective noun to describe what and positive impact on the business. SRM is an interesting one, with the the vast majority of us do in regards to former gaining traction. In simple best practice anyway.” Sweet success terms, SLM is the managing of a Whether this is true is open to Hughes offered one example of a positive supplier through the entire lifecycle debate – recent research carried out by result that was directly attributable to of its involvement with a company, Procurement Leaders revealed that 96% its SRM programme. “British Sugar and includes supplier identification, of procurement professionals plan to supplied us with a relatively small performance management as well as increase their SRM activities over the amount of our overall sugar,” he said. SRM. Parts of SLM are naturally next 12 months; while the majority of “It wanted to grow that and we saw relevant to the entire supply base. participants at this Emptoris-sponsored security of supply as very important in SRM, on the other hand, is event seemed enthusiastic about the a changing [regulatory] regime. We also a methodology whereby a buying Portraits: Julian Cornish-Trestrail adrian turner guy allen graham chalmers alessandro Spadini Jason norris Jon Lowther european head of Former VP, global Director, global Purchasing associate Head of procurement Head of procurement corporate procurement procurement category management director iMS eDF energy development apple Fujitsu Unisys Barilla associated British Foods48 procurementleaders
  2. 2. roundtable supplier relationship management organisation employs a set of techniques brands had made sure that it taps Twinings brand employs a procurement to drive performance management into supplier innovation. “With our innovation manager, who sits within and collaboration with a group of Twinings brand, the packaging is a the marketing function and whose job pre-determined strategic suppliers. much bigger cost driver than the actual it is to deliver predominantly packaging The segregation of those suppliers is a tea,” he explained. “Making sure innovations to the marketing team. And crucial part of the process and four widely that [consumer] perception and your this is a growing trend – Unilever also accepted benefits are targeted – reduced command on shelf is at the forefront is employs a number of scouts who are cost, reduced risk, improved service levels critical. It has worked with its carton tasked with identifying innovations in and/or quality and greater innovation. supplier to look at ways in which it the supply base. Jon Lowther, head of procurement can reduce cost as well as bring new For others, a formal SRM programme development at Associated British innovation in terms of design.” has provided benefits in areas other Foods, explained how one of his Lowther went on to explain how the than innovation; such as allowing CPOs to push through decisions that may not have ordinarily been possible. “A company that everyone moaned about and continued to fail, gave us cause to bring in the managing director,” explained Guy Allen,Justin Pennington Martin Berr-Sorokin Nick Jenkinson Mark Hughes former vice president, Mark HollisonDirector, global supply Director of procurement Senior VP and general Head of procurement Group procurement global procurementchain strategy Napp Pharmaceuticals manager of SLM, Daily Mail & General director at Fujitsu. “ThreeDell Holdings Emptoris Trust Premier Foods months later, it continued to fail procurementleaders 49
  3. 3. roundtable supplier relationship management and now it no longer has any business to be good negotiators, to be financial then transparency is fundamental to with us. When we took that to the CEO, gurus, to be market strategists, to be that,” said Lowther. “If you turn it on its we were able to justify paying a bit more commodity experts,” he said. “Innovation head and you’re a supplier, who are you to get a much better supply.” is solicited through dialogue and if going to take all your great ideas to? It While the four benefits of SRM are you’re not asking the right questions, or has to be someone who is receptive and, widely accepted, Alessandro Spadini, if the people being put in those positions then, will do something with it.” purchasing associate director, IMS at don’t have the right level of knowledge, Dell’s Pennington said he invites his Barilla, and owner of his organisation’s then that will stifle opportunity.” suppliers to get involved in strategy recently launched SRM programme, formulation. “Part of the SRM concept is believes there is a fifth pillar – or Character building about sharing some of that visibility and at least, a significant additional Graham Chalmers, director of global treating them as an equal partner,” he by-product. “One of the targets we have category management at Unisys, said. “So, sharing some of your strategic is to enhance the level of knowledge meanwhile, argued that a few more plans, working with them as if they’re and effectiveness of our internal people extrovert procurement professionals part of the company.” on how they can manage innovation, add value to the supply chain and take You can’t have the CEO or the sales director care of risk management,” he said. “Working also on the internal aspect is saying, ‘What’s this SRM thing that’s going on? part of SRM.” Spadini’s point is a valid one and would probably help. “It’s almost as if However, Lowther also reiterated the attendees went on to discuss the talent the communication skills need to be importance of executive support and requirements of those in purchasing developed, because procurement, has a how getting the full weight of senior who are either managing SRM or act as tendency to be a little inwards looking,” management behind the SRM vision the conduit between the buyer and those he said. “A little more sales and was a key requirement. “One of the key strategic suppliers in the programme. marketing skills would go a long way.” things is around internal stakeholders,” And Justin Pennington, director of Along with having the right people, he said. “It’s not even about getting to the global supply chain strategy at Dell, participants talked about the need to be suppliers, it’s about making sure you’ve expressed concerns about whether the open with suppliers and to treat them as got your stakeholder group lined up demands that SRM presents can be met. true partners. “If you want to get to an behind you. You can’t have the CEO or the “We are asking our procurement people optimal position across the supply chain, sales director saying, ‘What’s this SRM50 procurementleaders
  4. 4. roundtable supplier relationship managementthing that’s going on?’ Their engagement trundling off in another direction.” range of issues were discussed in critical.” Allen, on the other hand, highlighted It was clear that they saw the potential It was a point supported by Mark the limitations of the methodology, as in SRM – but they also recognised theHollison, director of procurement at the power in supplier/buyer relationships potential difficulties, challenges andNapp Pharmaceuticals. “If you’re able to doesn’t always lie with the buying risks involved. If entered into withexplain in a manner that everyone in the organisation. “If I were to look at our top- clear expectations, the right peoplebusiness buys into, then your advocates 20 suppliers that were there when I joined and the full support of the businessaren’t just the people in procurement [Fujitsu, more than five years ago], 15 of and supply base, it could reap huge– it’s everybody,” he said, before going those are probably still there,” he said. rewards in terms of cost reduction,on to explain how he has developed the “It’s unlikely that I could move them, new innovations, risk management andstrapline VIP (value, innovate, protect) because they are the type of suppliers our quality push the procurement brand into the customers want us to buy from.” But other benefits also arise, includingbusiness. “It seems to work, and has the ability to look through the eyes of theengaged the business very well.” Universal appeal supplier community. “One piece of our Naturally, discussion around the Meanwhile, Premier Food’s Hughes software is to measure the performancetable was predominantly focused on described how not all suppliers will be of the supplier,” said Emptoris’ Berr-the benefits of developing SRM and the interested in getting involved – despite Sorokin. “But our customers said thatdemands and requirements of doing being selected as being strategic they also want to be measured byso. However, there was also significant and worthy of investment. “One of suppliers – they want a reverse ratingtime spent on the risks and limitations our packaging suppliers to our Bisto and want to know where their strengthsof it – after all, it’s a huge commitment brand – so absolutely crucial – we saw and weaknesses are.”of time and resource and it’s crucial that as a strategic supplier,” he said. “But And this is one of the main benefitsit is all well spent. actually, they weren’t interested and of SRM and SLM – it fosters greater “One of the problems I have with SRM we removed them from our formal SRM communication and trust betweenis that they become defined programmes programme after just a year.” buyers and suppliers. And from thisin their own right and start to take This latest Procurement Leaders type of relationship, true value canon a life of their own with staff, with roundtable, was a lively affair. The be achieved.agendas and benchmarks,” said Apple’s subject matter and mix of participantsTurner. “Before you know it, the ensured that the discussion was both To comment, email editor@procurementleaders.combusiness has gone one way and SRM is informative and challenging; and a wide procurementleaders 51