In the final part of my conversation with Uniliever's CPO Marc Engel, we turned to how the company is deploying technologies and third-party resources (e.g., auditing firms) across its supplier management/performance management initiatives. I was curious if these investments had met expectations and whether it was best to keep the expertise and team in-house or work with third parties for supplier auditing, development, etc.? Marc suggested that Unilever works with a number of auditing firms and technology providers including Ariba for "all spend related systems," Spend Radar, and others. From an auditing perspective, Achilles provides an integrated solution for supplier on-boarding, initial audits, checks and approvals.
In more general supplier auditing, Unilever works with such firms as SGS and Intertek in the quality and CSR areas. Unilever has co-founded an organization, the Supplier Ethical Data Exchange (sedex.org.uk), which is "essentially a platform with 20/25 members" for auditing in developing markets. The notion is to share each other's data in different regions, saving both buying organizations and suppliers time and hassle. For example, if you're in Vietnam, you don't need to get CSR-audited five times. "Every company who does audits publishes these on the membership side," Marc suggests. The audit firms working on behalf of these companies also have access to the data and don't have to repeat audits, which makes the process that much less cumbersome and has helped to standardize things.
Sedex.org is a supplier-paid model, yet it's one that is effective because "the supplier pays once and not twenty times." Here, Marc observes that "the really interesting thing is that if a supplier does not have to pay 20 times, then you're making real progress in making the burden/cost [of supplier-paid models] palatable" for all participants.
The final topic in our supplier management dialogue was centered on commodity management. I wanted to learn whether Unilever's broader supplier management initiatives included multi-tier sourcing strategies that could jointly help the company and it suppliers (e.g., commodity demand aggregation, commodity hedging, etc.)? Marc shared that in the commodity hedging area, "there is one central team for Unilever which aggregates demand." This group "rolls up demand into a risk position and then manages the hedging strategies." Unlike other areas within procurement, this group is outside of any one geographic operation -- its team members are based in Switzerland and Singapore.
From a technology perspective, Unilever is in the early days of rolling out a commodity management platform from Triple Point Technologies that interfaces directly with its SAP system (they've just installed the system and gone live with a limited deployment). The technology is starting to enable Unilever to upload demand aggregation data for more effective hedging that was difficult and time consuming with spreadsheets. Triple Point "is replacing this manual process."
Spend Matters would like to thank Marc Engel for taking the time to speak on a broad ranging set of supplier management related initiatives.
- Jason Busch