Procurement in Practice — The top 10 lookouts of digital transformation at Britvic (Part 1)
Simon Mays is Transformation Director at Britvic Soft Drinks Limited. He, his team and partners have just completed a full end-to-end procurement digital transformation program. That means they’ve digitized the process from sourcing right through to paying suppliers. 2.5 years of hard work (9 months of which concerned with planning and compiling the business case) and plenty of upfront external benchmarking exercises have resulted in the final piece of the puzzle coming together — supplier invoicing. They are beginning to see results and currently on track to meet key upstream and downstream targets such as 85% spend under category strategy, 88% spend under contract, 17% reduction in suppliers, 20% reduction in invoices and to reduce average invoice processing days from 14 to 2.
Looking at the entire process from beginning to end, he has compiled a list of the “top 10 lookouts of transformation” to inform CPOs and other heads of procurement and supply who might be embarking on the same journey. In brief they are:
- Engage with stakeholders early on
- Be sure of your starting point so you can measure progress
- Take an honest look at your team’s existing talent and organizational structure
- Define and gain early buy-in for a Target Operating Model (TOM)
- Have a digital agenda but be aware it won’t fix everything
- Start change management early
- Be clear on three-way roles and responsibilities — client, SI partner and software partner
- Align procurement strategy with business strategic goals
- Get supplier data clean and in order early and dedicate resource to onboarding
- Develop a KPI dashboard with leading and lagging indicators
Before we explore some of the learnings from the program, let’s consider …
What was driving transformation at Britvic
In many procurement organizations, processes can stagnate over the years, which can lead to a growing lack of transparency and stakeholder engagement. In order to: better mitigate cost inflation; increase transparency and therefore trust (especially in reported savings) from senior stakeholders; move the focus from price to value-add through better governance; close gaps in working practices and generally align the function’s agenda with that of the wider business, Britvic undertook a revamp of the whole procurement strategy with a goal to becoming best-in-class among its peers.
Key to their transformation would be a comprehensive change management program focusing on people, governance, integrated processes and collaborative relationships, with the right technologies in place to support it.
Where do you start on a transformation journey?
Some organizations see ‘digitizing’ as the first step in their transformation — to find a SAP Ariba, a Jaggaer or a Coupa (to name but some), then have an IT team impose it upon a procurement team. Others take stock of everything before they put technology in place. And this was Britvic’s route. They recognized the need to get other things right before putting together a business case. Then they built the technology around the transformation rather than the other way around.
“What’s important to note,” Mays says, “is that the full program isn’t just about implementing a piece of technology or software, it’s about all the other operations and considerations that make up a full transformation agenda.”
So they embarked on the pre-requisites of a change program — reviewing the team structure and capabilities, creating a Target Operating Model (TOM) comprising ‘Centralised Group Procurement,’ Centre of Excellence, Shared Services and Local Procurement, reviewing governance and processes (including category management) and identified any weaknesses in both strategy and supporting technology. This also afforded them occasion to identify the capabilities of the S2P technology they would require to align with corporate digital goals.
At the beginning of the journey, the procurement function was classically structured in terms of directs and indirects. No one person oversaw the whole function at the time, so Mays used his transformation planning and team restructuring experience to lead the business case development.
“You can think of a business case in terms of phases of approval,” he explains. “For us, we began with very early engagement and creation of a framework for the project in late 2019, which included the approval to tender for a S2P system. Simultaneously, we took a deep look at existing team roles and structure (which resulted in some organizational changes and introduction of new roles, including the hire of a CPO to oversee Group Procurement), a four-month S2P tender process and a subsequent systems integration partner selection.
A strong piece of advice came from this experience: “Don’t under-estimate the time and effort you need to put in pre-business case — it underpins everything you do going forward.”
Chief learnings from a procurement transformation
Mays shares his standout lessons from the procurement change program with other heads of transformation.
“A clear and crucial priority, which I cannot emphasize enough, is to engage early,” he says. “And that means not just with the business but with the existing procurement team. We held workshops to trigger this. The first was a general energizing session for the transformation project, talking about why we are doing it, how we see the future and obtaining early input. In other workshops we looked in detail at roles and talent, governance, integrated processes, which is where technology came in, and collaboration. Via those workshops we developed a framework of thought pillars: four themes emerged to develop a business case and what the priorities should be.
“For the business case, it’s important to really think through everything that might need approval, from hiring the right support in terms of people and technology, to training and development, to creating a shared service or a center of excellence, and so on. It might take several months, but it’s worth putting in that time, otherwise the program will quickly fall over.”
Know your starting point and be realistic
“You need to know your starting point, so you have something to benchmark success against. We began by looking at key KPIs (both upstream and down, like spend under management, spend under contract, invoice processing days, and so on). An external professional services firm can help with that, and to help qualify the business case.
“We set the gap analysis, we could see where we were and what we needed to do to get to where we wanted to be, which was among the leaders in a fit-for-future procurement organization.
“Some of this we were able to quantify in monetary terms, like investing in category management training or in supporting technology to allow buyers to develop a three-year ‘business’ plan from which we could develop a pipeline of projects.
“Other parts of the business case are not so tangible and therefore more difficult to measure, like avoiding maverick spend and leakage. (We achieved that by setting KPIs for 18 to 24 months ahead, like days to process an invoice). It’s important to realize that success won’t be instantly measurable, you have to have a degree of patience.
“If you have a measurement process in place right at the start you can be very clear about where you are and what the end point needs to be.”
Take an honest look at your existing talent and organizational structure
“This was probably our biggest area of focus and the hardest, since much of it was being done remotely at the time. The entire training and recruitment project took much longer than we anticipated, we were doing it during a difficult time for the recruitment market and finding the right skills, especially for some of the new roles proved tricky. We were patient though in order to get the right person and placed a lot of emphasis on cultural fit and personality.
“We took a hard look at the existing team structure and talent to see what more was needed. For example, we had a traditional procurement set up of directs versus indirects, and while they talked to each other they sometimes operated quite differently. So the adoption of a category management approach became a priority for us. We quickly came to the conclusion that commodity risk management (CRM) — that might be commodities of resin, fuel and glass in our case — all contain a large risk element. We hadn’t previously looked in any depth at that, and realized it required someone with the right ‘markets’ background to support the category managers. We also realized that sustainability didn’t feature to any great extent in any of the procurement plans at the time.
“We used a skills matrix to identify any gaps in knowledge. This formed part of the proposal for training and development of the existing team. Key to training success was to go back to basics early on and bring the entire existing team up to the same level.
“I would advise: don’t be afraid to look internally at the quality of the team, don’t be afraid to make tough decisions, but do show that you care by investing in learning and development because it will pay off. There is always a lag between learning and development so the longer you leave it the longer it will take to see the benefit — engage early.”
In part 2 Mays shares his thoughts on:
The Target Operating Model
The technology selection
Three-way roles and responsibilities
Procurement strategy and strategic business goals
The importance of good supplier data
The KPI dashboard
And if you are looking for procurement services providers to help you with your 2022 transformation decisions, take a look at ourProcurement Services Market Directory.