Kristian Saksida, Solvay CPO – Keynote at ProcureCon Europe

We will be featuring the highlights from the recent ProcureCon Berlin event here over the next couple of weeks. We will start today with “Lessons Learned Delivering Savings During a Complex Transformation Journey at Solvay”, from Kristian Saksida, the Chief Procurement Officer at chemicals giant, Solvay.

He was one of quite a high proportion of speakers who is not a lifetime procurement professional. He was in Finance at the firm (CFO for one division) and in 2014 was asked to take on the €9 billion annual spend, with €1.5 billion tied up in inventories and €1.3 billion in  payables.

His focus has been on value creation, and “GBU centricity” – being close to the internal customers. His first quote that made us sit up was this;  “I didn’t listen to procurement talking about their performance when I was in finance. You have to speak the same language as business. Businesses are measured on EBITDA impact and cash, so we must be the same page”.

So his focus has been very much on actions that drive real measurable improvement to those hard financial metrics . We’ll come back to that later, but unit cost reduction was very much a focus for procurement.  However, he clearly is not a one-dimensional cost-cutter. He put in place a “single point of contact” within procurement for each business.  (I did this at NatWest in 1998 so it is not a new idea, but it is a good one). Procurement agreed a plan of action with each business – “real value comes from collaborative projects”.

There has also been an impressive focus on training and skills – he launched a supply chain excellence team, then a purchasing excellence team and a Purchasing Academy, with very detailed training programmes.

The approach CSR issues had an interesting twist – what he called “every buyer, every visit”. Every conversation with a supplier must include some element of sustainability, safety, or CSR etc. And every conversation must be captured and reviewed. We can’t help wonder if this leads to a “tick box” mentality – a 30 minute conversation with a supplier then at the end “oh, by the way, please be safe”! The devil is in the detail in terms of what real value is coming from the programme, but we applaud the sentiment.

As befits a finance man, a lot of effort has gone into harmonising payments terms. There were no less than 1300 different contractual models!  That is down to 20 different Ts&Cs now, and there is a supplier financing programme, put in place with JP Morgan. We can’t judge whether that is best in class of course - we’re not convinced the big banks are the best partners for that sort of programme to be honest.

Moving on to category management, 50% of spend is now covered by the formal process. A team of 6 is  focused on the background analysis, and covers a spend of €3 billion each year. Saksida was very open – he talked about “what would we do differently” next time. “Communicate more, don’t overwhelm people, allocate resources to value, focus on quick execution rather than perfection, use data analytics, give people credit for success, but tackle low performance quickly”. He was very strong on having a “high performing environment and setting the bar high”.  All excellent advice!

His critical success factors included setting a clear vision for success and clear objectives, then cascading and explaining the mandate for change. He came back to talking the language of business partners, and “communicate, communicate, communicate”.

He came over as a realistic and modest man – “we overachieved against target – but in some ways that means we just did not understand the opportunity properly”!   Now procurement is updating the  roadmap – and “including disruptive elements in the new roadmap to create positive tension in the organisation, to challenge internal targets”. (We would have liked to ask him more about those disruptive elements to be honest). The ambition is to move to being a best in class organisation in terms of total value creation and return on investment from the function.

We were worried early in his presentation that the focus on EBITDA was leading procurement down a pure cost-cutting route, but most of what Saksida said suggested that his vision is indeed broader than that. Overall, this was certainly one of the most impressive practitioner sessions at ProcureCon.

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