Unilever Foundry (part 2) – Lessons & Ideas For Procurement Functions?

Yesterday we featured part 1 of our discussion around the session at ProcureCon Marketing led by Jeremy Basset, head of the Unilever Foundry. The Foundry links innovative start-ups (in technology and other sectors) with Unilever brand managers who are looking to use new ideas and solutions to improve their marketing performance.

It is a fascinating initiative that appears to be working well. As the Foundry website says;  “Partner with Unilever brands and functions to help solve some exciting business challenges. You can pilot your solution with us, build a solution at a Hack event, share your creative work, share your ideas”.

So all good stuff, but after the session, we got thinking. At its heart, what does The Foundry do? We might summarise it like this.

The Foundry finds and sets up commercial arrangements with generally small / young organisations who can supply services and products to Unilever with the aim of driving competitive advantage.

Does that role sound familiar? It should do, because that is what most of us would define as a procurement task! Isn’t that what procurement functions do, or should do anyway? Finding innovative suppliers, linking them up with the right internal stakeholders and budget holders, working out appropriate commercial arrangements for mutual benefit … that certainly sounds like procurement to me.

But clearly, this is not positioned as a procurement venture at Unilever. And the role of procurement in terms of the Foundry is to stay out of the way until the parties are ready to enter a long-term arrangement; so at the interesting initial stages, the procurement function is side-lined (that’s not a criticism of Unilever by the way, we can absolutely see why that is the case).

The point really is that this is exactly the sort of initiative procurement functions and leaders should be considering. We should have expertise in researching and engaging with markets and innovative suppliers, linking specifications and requirements to what the market can offer, constructing commercial deals that incentivise smaller firms, capturing innovative ideas and IP before our competitors, developing strategic partnerships that bring competitive advantage… you will have heard all those things discussed at many procurement conferences over the years.

So why isn’t procurement coming up with and implementing ideas like The Foundry?

As far as we can tell from our bit of research, it was Jeremy Basset (who led the session at ProcureCon) who came up with the idea after working as Director of Unilever's New Businesses Unit, responsible for starting businesses within Unilever. So there is some logic there, but equally, procurement is more connected with the outside world than pretty much any other function in most businesses, so there is no reason why we can’t take the lead.

And of course it might not be just innovative firms in the marketing arena that are interesting – the focus may well vary for different organisations. But the principle of having a structured process like Unilever’s to find and engage with innovative businesses who can help our organisations must be highly transferable, and we think procurement functions might want to be the people doing the transferring.

It’s worth noting that Unilever does also invest directly. “Unilever Ventures invests in opportunities that are of strategic relevance to Unilever, including digital marketing, digital media, and eCommerce. Unilever Ventures would consider investing in relevant companies who are participating in The Unilever Foundry's Mentorship or Pilot Project programs”.

So potentially there is a venture capital type play here as well as the aspect of finding innovative suppliers. The Foundry has only been going two years and is still rolling out in different geographies, so it is probably too early to assess the results (certainly in terms of longer term investments) but it is another interesting angle.

Meanwhile, too many procurement functions and too many marketing services category managers are still stuck with a principal objective and measure that talks about cost savings and unit cost reduction. How much better would it be if the same person had an objective for 2016 that said, “move to pilot stage with five innovative new suppliers who provide tangible competitive advantage to our marketing programme”?

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