Inside the Executive Suite with Jose Varela, CPO of 3M: Cognitive Computing Pointing the Way Forward

Jose Varela, vice president of global sourcing for 3M, took the time to chat with Spend Matters about how one of the global industrial leaders in innovation sees the challenging sourcing and risk landscape both today and into the future. (ICYMI, here’s Part 1.)

What’s clear is how the maturity of the overall organization and the forward-thinking nature in 3M’s DNA result in streamlined collaboration, both internally and with the company’s myriad suppliers — more than 100,000 around the world.

But how is Varela’s organization using technology — procurement tech and otherwise — to compete with the big boys in 2017 and beyond? And how hard does he have to work to prove the value his procurement organization provides to his boss?

Here’s the conclusion of our chat with Varela.

Spend Matters: I'm curious about the technology that enables you guys and your suppliers to work more closely together. Specifically, what type of role does procurement technology play in achieving your organization’s goals on that front?

Jose Varela: We are in the middle of deploying a new ERP. For basically 100 years, we’ve had different systems in different patches around the world, and three or four years ago we embarked on probably one of the biggest projects in our history, which we call Business Transformation, to not only globalize our processes but also to deploy a new ERP solution. So finally, we will have global data [across all organizations], but for procurement, we'll have where we buy, what we buy, at what price we buy, who our preferred suppliers are, who our suppliers with the [strongest reviews] and most innovations are, etc. We also have centralized teams of experts called Centers of Expertise in the U.S., Panama, Switzerland, and Singapore. In the case of sourcing, they now understand the suppliers and have regional and global data. We have seen very impressive savings just because of leveraging the relationship with the best suppliers. That’s number one.

Number two, if we need to keep the savings, we need to have better information. It's very easy in B2C, right? If I want a beautiful pair of purple socks, I go to Amazon or 20 other consumer sites and can get them right away. Or if I want a vinyl copy of the Beatles’ White Album, I can find it immediately. From a raw materials procurement point of view, there is a lot of information out there but it's totally disorganized. That's why we're investing in cognitive computing. We are considering many companies — I'm sure you hear about IBM’s Watson and all the companies’ solutions. But that raw material role is really complex for 3M to organize. So we want to understand who's buying, at what price, which companies are growing, which are having financial distress, which ones are probably are affected by the strikes in Philippines so we can understand the ramifications for the supply chain. Today we are just getting started.

SM: How exactly are you utilizing (or plan to utilize) elements of AI or IoT to your advantage?

JV: If we need to buy a special additive today, we go to the same supplier that we’ve been going to for probably the last 50 years. That works, but if we need to develop a new product that needs a better variation of this additive, we want to track down the [research] papers coming out of the top universities that are related to that technology.

Or, if we need a new sensor to measure human stress, we need to understand what is being written within the technology [brain trusts] in Japan, for example. That's what cognitive computing will help us with. And with our lab, obviously while respecting the intellectual property of our partners or our potential suppliers, we can move faster in developing new products. Sometimes you need to look toward the medical field, leading universities or startups in Silicon Valley. That's the new frontier that we are moving towards.

SM: OK, Jose, we read and write all the time about the ways in which procurement organizations can be working toward unlocking greater value, not only for themselves but for the broader business. As far as proving procurement’s value, do you find that you have to work hard to do that within your company’s c-suite? Or do you think it’s easier at 3M than at some other firms?

JV: I think it's easy. I don't know if it's easier than other companies, but about 15 years ago, we did a good job creating the basis of procurement policy at the company. Every dollar that we spend in the company has to be managed by the sourcing organization.

From supplier contracts, to negotiations, to working with our customers as a team, I think our company understands the role of sourcing. It's a lot of fun. I have spent most of my career selling 3M products, not buying for 3M, and I'm getting a lot of fun out of this job. Procurement’s value within 3M — I will continue to grow that.

Share on Procurious

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.