Patrick Hopkins, Director of Procurement, Coke Consolidated (Coke), just took the stage at Coupa Inspire to discuss his organization’s indirect procurement transformation. Patrick was blunt in assessing the situation he inherited before implementing a new indirect procurement capability at Coke. His team had no visibility into indirect spending details, and half of all indirect spend was put on credit/purchasing cards (the irony here is that cards can actually give you decent reporting detail, after the fact, but of course they’re never a substitute for a broader indirect procurement system).
They could not come up with a solid number around how much they were spending on an annualized basis. This is despite the fact that Coke had an eProcurement solution in place that was settled against a ghost card, not to mention a separate T&E system, among others. In total, Coke had six different order/payment process systems - and limited visibility into which organizations it was doing business with, including “non-established” suppliers.
Some of these specific challenges included working on handshakes/verbal commitments, late and duplicate payment issues, use of non-standard and non-approved materials, and uninsured liabilities based on contracts and MSAs. Patrick noted, “Coke had non-insured contractors on site, which proved extremely costly to the company in the past.” Further, many in the organization spent significant time “shopping prior to buying,” adding greater inefficiency into the procurement mix.
In its indirect procurement transformation, Coke obviously had a lot to address. Specific activities and investments would focus on three areas: supply base rationalization, demand management and rationalization (for SKU-based items and services) and automating processes. You can pretty much guess the benefits Coke articulated around supply base consolidation and SKU standardization: greater volume to fewer suppliers results in lower mark-ups, rebates, incentives, reduced inventory, better performance/quality, more favorable MSAs, terms, certification/compliance (e.g., insurance), etc.
For process automation, Coke’s goal fell within the typical indirect procurement idealized box: enhanced productivity (for both employees and suppliers) through automation, savings capture, etc. The automation adage Coke followed with P2P and related initiatives is almost as good as Coke marketing jingles: simplify, eliminate, combine. It seems simple, but it’s not; we’ll explore this as our reporting on Coke’s experience continues!
One example is a Grainger kiosk Coke uses (see below). Coke has recently deployed “a handful of these” in five manufacturing plants. Grainger stocks the items with standard materials such as personal protective equipment, gloves and tools. Depending on the employee’s responsibility, they have access to certain items but not others. For example, a line operator might have access to the gloves but not drill bits.
Grainger Kiosk. Source: Coke Consolidated, Coupa INSPIRE Keynote
All the individual needs to do is swipe their ID badge to access item. Yet the kiosk also controls the frequency that an individual can access materials. As a result, Coke is “issuing items far less often than we used to and we’re not relying on a store room attendant” for the same activities as before.
Stay tuned as our coverage of the Coke keynote continues!