Procurement in Practice recap: Being the CPO — the view from the top (Part 2)
As we explained in part 1 of Being the CPO, we are running a roundup of the feature-length interviews we’ve conducted so far during our foray into the everyday life of the CPO. We talked to (and will continue to speak with) the heads of procurement from industries as diverse as Eastern European public sector rail, US third-sector humanitarian organizations, UK academic press, and large, well-known private corporations from all over the world. Their stories differ in many ways — about their CPO journey, their transformation and ESG efforts, their talent or supply issues, their role and relationships, their daily challenges — but they all have something in common. Each CPO is not only delighted, but feels it imperative, that CPOs share their experiences with other procurement professionals to learn from each other.
As one long-term CPO explained his reasoning for sharing:
“So that they don’t have to step into the same holes I’ve already stepped in.” (Tom Nash, The American Red Cross)
With this in mind, we’ve spoken candidly with numerous senior procurement professionals, and we’ve amassed some open and honest commentary for our readers.
CPOs share their learnings
Norbert Dean, VP, Strategic Sourcing, Supply Chain and Site Services, Carnival Cruise Line
Norbert Dean is VP, Strategic Sourcing, Supply Chain and Site Services at Carnival Cruise Line (CCL), the largest cruise line in the world in terms of guests carried. In this industry, one can only imagine the logistical requirements of sourcing for, and delivering to, a vast and ever-moving target. It takes preparedness and, of course, experience. He was happy to share some of his experiences and advice with us: having come from a senior procurement background at both SeaWorld Parks & Entertainment and The Walt Disney Company, he was no stranger to sourcing for a vast and diverse range of goods and services.
“It was like sourcing for a whole city,” he told us. “The diversity of products included anything from hamburgers to fine wine to electronics to high-end shows and entertainment.”
Replicating this within the cruise industry, where the delivery destination is literally constantly on the move, brings up a whole range of unique challenges.
“It’s a tricky business,” he says. “When it comes to delivery times for all goods and services, they must be on time, because when the ship leaves, it leaves. There is no room for lateness. If a supplier requests a day’s, or even an hour’s grace, the answer has to be ‘no’ because the ship won’t be there. A hotel or warehouse will be, but a ship won’t. So when I tell a supplier I need items by a certain time, I really mean I need them by that time. The alternative to a missed deadline means utilizing another option, and that of course could be expensive and environmentally unfriendly, especially given that we have many ships at different ports all over the world, from The Bahamas, to Europe to Australia.”
This brings up all sorts of questions, not least who holds the inventory, and, importantly, who bears the cost if delivery times are missed. According to our Chief Research Officer, Pierre Mitchell, this is all down to good supplier and contract management, getting the right agreements in place at the right time, and solving the cost-versus-cash dilemma. Read his view on “on-time delivery and cost versus cash — a two-sided quandary.”
Read Norbert Dean’s fascinating account of sourcing for seafaring here: Procurement in Practice — Handling unique sourcing complexities at Carnival Cruise Line
Peter Tasev, Senior Vice President of Procure to Pay, Deutsche Telekom Services Europe
Like many large organizations, in recent years Deutsche Telekom Services Europe has turned its attention to technology to help improve effectiveness, efficiency and customer experience, and to boost the firm’s agility and resilience for the future.
Peter Tasev, Senior Vice President of Procure to Pay, recognized the need for a standardized accounting process across the group. This was the beginning of what turned into the construction of a centralized platform, standardized master data and standardized processes across the whole procure-to-pay ecosystem. It has been a long journey to systematically increase the scope and scale of the program across all departments, but has now changed the way business is done throughout shared services.
He talked to us about the drivers for change, the challenges he and his team faced during the P2P transformation, the triumphs and the learnings.
“When we think about drivers for change, clearly reducing costs is always a number-one priority,” he told us. “But we were equally interested in increasing quality through higher automation rates and therefore lower manual interactions. So the elimination of manual transactional tasks was the motivation for introducing new technology, cleaning up our data and standardizing processes. In order to achieve that, we put all functions with transactional-based activities into one shared services centre in order to manage them stringently; this meant tactical sourcing, AP and payment services would belong under one big umbrella responsible for the P2P of the entire global group.”
“We did this because, in our opinion, the transactional flow between these three areas belong closely together, and we wanted continuity across what had been siloed business units. If you only optimize procurement then you get inefficiencies in accounting and banking and payments …”
Peter was very open about their main challenges, one of which — people.
“The challenge here of course is introducing new technology to an existing workforce and getting them onboard with it. We firmly believe in upskilling our people, not replacing them, so that they can take on more value-adding tasks as automation takes over. We learnt that it’s enough to bring in just a couple of new people to help spread that mindset, because we believe it’s crucial that our people welcome this change, rather than have it forced upon them, and can then help identify the use cases where it should be employed. It’s also more beneficial to nurture talent in-house, rather than have consultants who will leave after nine months and take that knowledge with them.”
Read more about why he believes people to be the single-biggest factor in transformation success and what he did to nurture it: DTSE — People are key to transforming digital processes.
Simon Crump, Head of Supply Chain Operations at Cambridge University Press
The publishing industry, like all industries in recent years, has seen huge shifts in technology to help them operate, particularly within the supply chain. Often thought of as part of the analogue-based age of the dusty printing press, the industry and the supply chain that surrounds it has moved on: books have shifted to digital, inkjet has paved the way for shorter print runs that are closer to the location of sale, and print on demand has seen extended use.
As (at time of print) Head of Supply Chain Operations at Cambridge University Press (UK) and previously Publishing Services Manager at Elsevier (MA US), Simon Crump faced the challenges of running geographically dispersed production and supply chain operations. He understands the challenges of keeping to budget, driving management teams, allocating people and resource to large projects, all while navigating risk — subjects all procurement and supply professionals are familiar with. So we asked him about his learnings and what he foresees as the biggest challenges for supply chain professionals in the publishing industry.
He had some very sound advice related not only to the importance of understanding your supply chain, but of understanding how your supply chain affects other markets too.
“The COVID crisis put much pressure on the paper supply chain, as with other commodities. In the UK and Europe, however, we also have Brexit to consider. Printers have to be sure they have usable paper stocks at the ready — you can imagine the vast amounts of paper a printer gets through — and getting paper into the country is a big consideration. So printers are stocking up now, and the price of paper for books has gone up and continues to climb. Alongside that, we have the raw material cost of pulp escalating as demand for packaging has risen exponentially. People have been doing much more online shopping than ever before and that has driven the need for packaging. It’s no wonder the pulp industry can make far more money out of packaging than out of supplying paper. So changing demands on the industry (like newspaper and magazine print in decline and packaging on the up) affect your ability to source what you need when you need it. This is all about understanding not just your own market, but other affected markets, and how they impact your supply chain.”
Even when you understand your own market really well, as you go down through the layers of your supply chain, you find all the other markets with demands on the same source. So, we asked him, what considerations should you be addressing with your suppliers?
Read his first-hand learnings and his recommendations here: Procurement in Practice — ‘It’s always the people at the end of the supply chain that get squeezed’
Spend Matters is grateful to Norbert Dean and Carnival Cruise Line, Peter Tasev and DTSE, and Simon Crump, SGC Publishing Consultants Ltd., for their candid and helpful insight. Look out for more CPO stories in the rest of our series: Procurement in Practice.
AP/I2P EPRO P2P03/24/2020
AP/I2P EPRO P2P03/24/2020