srm barometer 2011 a time of baro 2011_sw011… · lisbon, washington d.c. , etc.), and are also...

SRM Barometer 2011

A TIME OFOPPORTUNITIES?

CSC

2

Opinions expressed by contributors are their own. Reproduction in whole or in

part without written permission is strictly prohibited.

© Copyright CSC 2012. All rights reserved.

3

CSC IN TOUCH WITH CURRENT TRENDS

Within the framework of its I.D.E.A.S program (Inspiration, Debate, Executive, Annual Surveys). CSC carries out a number of “barometers” every year to analyze trends and perspectives from key roles within the boardroom (human resources, finance, IT, procurement…) at the European or global level. Each of these studies, carried out with the assistance of independent survey institutions (IFOP and TNS Sofres), involve the participation of hundreds of managers from large businesses and public administrations. The results of these studies are revealed during high level events, organized in different cities (Paris, Madrid, Barcelona, Milan, Brussels, Lisbon, Washington D.C. , etc.), and are also relayed by partners from the media and from academia (universities and elite business schools).

4

SRM Barometer 2011


5

TABLE OF CONTENTS

SUMMARy

11 PAgE 9

30. guIDO AMENDOLA. Procurement and Logistics Manager - Poste Mobile32. CLAIRE BRABEC-LAgRANgE. Member of the Exec uti ve Commite, Procurement Director - GDF SUEZ34. STEFANO CIuRLI. Supply Chain & Real Estate Director - Telecom Italia36. LAuRENT COChEREAu. Procurement Director - Allianz France38. MARC DuvAL. Senior vP, responsible for global Procurement - Technip40. FRANCISCO JAvIER JIMéNEz. Operations director - TecniToys42. CARL LANDuyDT. head of global Purchasing - Aperam44. DIEgO PEDROLI. Senior Director Procurement Europe - OSRAM AG46. DIDIER PuISSOChET. Procurement Director - Réunica group

13 PAgE 29TESTIMONIAlS

PAgE 17RESUlTS

12

6

THE SRM BAROMETER IS A STUDy UNDERTAKEN FOR THE THIRD yEAR By CSC, IN COOPERATION WITH TNS SOFRES MARKET RESEARCH INSTITUTE. IT IS BASED ON A QUANTITATIVE ANAlySIS OF THE TRENDS AND OUTlOOK FOR PROCUREMENT DIRECTORS, BASED ON A REPRESENTATIVE SAMPlE OF MAJOR EUROPEAN AND NORTH AMERICAN COMPANIES.

7

SRM BAROMETER A globAl STUDYA TIME OF OPPORTUNITIES?

PROCEDURE AnD METhODOlOGy

The third edition of the SRM Barometer was carried out in cooperation with the TNS Sofres market research institute, based on a sample of procurement directors working for European and North American companies employing over 1,000 employees. These directors were interviewed about the position, concerns, performance and outlook for procurement departments.

InTERvIEw METhOD

The questionnaire was administered by the TNS Sofres market research institute, in accordance with the CATI method (Computer Assisted Telephone Interview), from July to September 2011.

TARGET AnD SAMPlInG

Private and semi-public companies

• With a minimum of 1,000 employees• Located in the united States, France, germany, great Britain,

Italy, Spain, Belgium and Portugal.

160 managers were questioned (no detailed criteria were applied regarding activity sector or company size). These managers represent the following target positions:

• Procurement director/manager

In the end, the sample was adjusted to ensure its representativeness for all companies in the industries targeted having at least 1,000 employees.

9

1SUMMARySRM BAROMETER 2011


10

SRM BAROMETER2011

SUmmArY

Trends and outlook for Procurement Departments

ThE 2011 SRM BAROMETER REvEALS A PROCuREMENT FuNCTION ThAT IS CONTINuINg ITS TRANSFORMATION. PROCuREMENT hAS RETAINED ITS DuAL ROLE, A guARANTOR OF FALLINg COSTS FOR INTERNAL CLIENTS, AND A guARDIAN OF ThE INTERESTS OF REQuISITIONERS WhERE SuPPLIERS ARE CONCERNED. AFTER A SERIES OF CRISES, IT SEEMS REASONABLE TO EXPECT PROCuREMENT DEPARTMENTS TO TAKE A STEP BACK IN RELATION TO OPERATIONAL DEPARTMENTS, AND TO FOCuS MORE ON FORECASTINg OvER ThE MEDIuM TERM.

11

hOw hAvE SUPPly ChAInS BEEn BUIlT UP OvER TIME?

For roughly thirty years, companies have been forced to reduce their costs in order to withstand ever greater competition. They have continuously developed their production methods and have applied three major principles in this regard. Firstly, just-in-time management, which allows companies to reduce inventory costs by producing products in function of demand. Secondly, the globalisation of supply chains, which enables companies to reduce procurement costs by buying at the lowest price anywhere in the world. And lastly, component standardisation, which yields significant economies of scale as businesses use the same component for millions of products.

whAT ARE ThE lIMITS OF ThESE PRInCIPlES?

These three doctrines have demonstrated their limits in recent years.The first warning came in late 2009 when the Japanese carmaker Toyota, a paragon of industrial performance, was forced to recall more than 9 million vehicles worldwide on account of problems linked to faulty accelerator pedals, caused by a component supplied by a subcontractor.

The second warning came on March 20th, 2010, when an Icelandic volcano started to spit out thick plumes of ash which paralysed all European air traffic for several days. Everyone then realised just how many components are shipped by air from one continent to another. It forced a temporary shutdown of car manufacturer BMW's American plant in Spartanburg, as a third of the parts used by this site are shipped from germany by air.

The third warning was related to the tsunami in Japan on March 11th, 2011, that caused production delays and logistics problems across the globe. In the automotive, aeronautics, electronics, telecoms, chemicals, electrical goods, and defence industries among others, companies either closed plants or slowed down production due to a lack of parts received from subcontractors. The disaster in Japan highlighted the interdependency of companies waiting for spare parts from all over the world. PSA, which was being supplied with air-flow meters by hitachi, was forced to slow the rate of production at several of its assembly sites.

Japanese manufacturers have been the pioneers of more efficient and less costly supply chains. however, in the wake of these events just-in-time production systems with zero inventory, which exercise a constant pressure on suppliers for innovative and less expensive components, have been called into question. Disruptions to deliveries of manufactured products paralyse the downstream production chains.

AS A RESUlT OF RECEnT EvEnTS, COMPAnIES ARE InCREASInGly wIllInG TO REASSESS ThEIR MODUS OPERAnDI. whEn A SInGlE FUnCTIOn MAnAGES UP TO 80% OF ThE REvEnUES OF ThE BUSInESS, EXISTInG hABITS nEED TO BE QUESTIOnED.

Recent events have confirmed that supply chains are becoming longer and more fragile, with an increased risk of disruption to the procurement process. Anticipating the risk of failure means first of all questioning whether there should be a single source of supply, or several.

12

whAT ARE ThE lESSOnS lEARnED FROM A lACK OF ORGAnISATIOn?

The disaster in Japan occurred at a time when many manufacturers were considering their organisational structures. until then, one of the cornerstones of globalisation was low transportation costs. In the current turbulence, companies have realised that in addition to costs, certain risks have been underestimated at times. The first lesson from the recent crisis relates to poor intelligence on partners.

The Japanese tsunami showed that many companies did not have a clear view of their supplier network. They know their direct partners but not always their supplier's supplier. Even now, numerous companies still did not know the details of their supply chain. 76% of procurement directors consider supplier relationships to be a priority action point. Companies now have to analyse vulnerabilities thereof and take the measures required to limit them. What components are used? At what point in the production chain? Who supplies them? What are the alternatives?

The second lesson relates to the increased risk of procurement disruptions. Recent events have confirmed that production chains are becoming longer and more fragile and that there is an increased risk of disruptions to the purchasing process. Anticipating the risk of failure means first of all to question whether there should be a single source of supply or several.

The third lesson relates to the trade-off between tough negotiations on prices and guarantees on security. In the first instance, volume is used to drive good prices. In the second, security of supply is prioritised. The series of different crises has resulted in security of supply becoming one of the main priorities for procurement departments, sometimes even more important than cost reduction.

however, several macroeconomic developments - sometimes contradictory - which change the state of affairs should also be considered. First of all, differences in the cost of labour are narrowing as wages in emerging countries rise, particularly in India and China. At the current rate, emerging countries could lose their main asset of low labour costs by 2017, according to the calculations of economist Patrick Artus.

Transportation costs will also increase with the inevitable rise in energy prices. governments could also end up taking coercive measures to protect the environment, such as placing penalties on air freight.

Setting up local operations would then take place in the name of efficiency and global solidarity. At the same time, consumption is shifting at great speed towards emerging markets, which also argues in favour of companies wishing to set up operations in these areas rather than Europe or North America.

Finally, the volatility of the currency markets encourages businesses to produce where they sell to avoid being squeezed by sharp currency appreciation. Manufacturers know that European production is no longer competitive once the euro rises above uSD 1.20. A euro worth uSD 1.40 means the prices of European businesses are 25% higher than those of their competitors.

Until now, one of the cornerstones of globalisation has been the low cost of transportation. But with the current turbulence, companies realise that in addition to cost, certain risks have at times been underestimated.

whAT ARE ThE COnSEQUEnCES OF A lACK OF ORGAnISATIOn?

Is the tsunami in Japan likely to call into question the doctrines that have brought about such improvement in industrial competitiveness? Can we slow down logistics flows and reconsider the demand for zero lead time? Is there a threat to just-in-time? Do we need to overhaul the industrial organisation of companies from top to bottom? Should inventories be built up such that they are capable of absorbing the effects of industrial paralysis? Do the production sites located in Asia need to be relocated closer to the end consumer?

In reality, it would seem difficult to go back on the changes that have marked these past few years. In international competition where advances are required throughout the entire value chain, competitiveness rests on the extended enterprise.

The entire organisation of industry is built around breaking up value chains and locating each link where the price is best. Companies call upon suppliers from all over the globe in order to lower their costs and optimise their efficiency.

Supply chains are becoming more and more international and complex. globalisation is a fact and general interdependence between businesses worldwide the world is now a reality.

Any radical change to the strategy of just-in-time would come at too high a cost to companies. In addition, the majority of Japanese corporate groups restarted their business activities more quickly than predicted by initial estimates. With their low inventories, companies were able to immediately identify the components which were going to run out and work on this with their suppliers. Their responsiveness shows that they were not so badly prepared.

13

ThE TSUnAMI In JAPAn CAUSED PRODUCTIOn DElAyS AnD lOGISTICS PROBlEMS ACROSS ThE EnTIRE GlOBE. In ThE AUTOMOTIvE, AEROnAUTICS, ElECTROnICS, TElECOMS, ChEMICAlS, ElECTRICAl APPlIAnCE AnD DEFEnCE InDUSTRIES AMOnG OThERS, COMPAnIES ClOSED PlAnTS OR SlOwED DOwn PRODUCTIOn, DUE TO A lACK OF PARTS COMInG FROM SUBCOnTRACTORS.

14

IMPROvInG RISK MAnAGEMEnT

Just like economic and political crises, natural and ecological disasters have demonstrated that no company is safe from the consequences of these types of event on its procurement activities. The 2008 crisis raised buyers’ awareness that the key risk is in procurement. Numerous suppliers disappeared and replacements had to be found that were capable of making up for the interruptions in supply.

62% of procurement directors list risk management as one of their priorities. The dependence on international supply chains supposes that companies best know the risks associated with this situation, whether in terms of quality, security, lead times or legal matters. Robust risk forecasting is a key factor of competitiveness. Procurement departments must identify potential problems in order to predict difficulties and mitigate any failures before the supplier disappears.

One of the practices implemented is dual sourcing to reduce the probability of encountering procurement difficulties. Another way to limit risk is the creation of long-term partnerships with suppliers based on transparency and consistency. Suppliers are monitored via quality analyses, financial analyses, audits and dashboards. This allows any failures that occur to be recorded, whether related to budgets, delivery lead times, quality or security. This allows the qualitative elements of the supply chain to be taken into account more effectively.Nevertheless, many companies are still attracted to low cost countries. In early 2011, 44% of companies polled told the hEC Procurement

OF PROCuREMENT DIRECTORS LIST RISK MANAgEMENT AS ONE OF ThEIR PRIORITIES

62 %

The procurement function is continuing with its transformation. Procurement has retained its dual role, as a guarantor of falling costs for internal clients, and as a guardian of the interests of requisitioners where suppliers are concerned

15

group that they aimed to increase their sourcing from low cost countries. Despite the increase in the cost of transportation and labour, only 8% of businesses questioned wanted to stabilise or decrease the portion of their procurement from emerging markets.

whAT DOES ThE FUTURE hOlD FOR ThE PROCUREMEnT FUnCTIOn?

The procurement function is continuing with its transformation. Procurement has retained its dual role, as a guarantor of falling costs for internal clients, and as a guardian of the interests of requisitioners where suppliers are concerned. After a series of crises, it seems reasonable to expect procurement departments to take a step back in relation to operational departments, and to focus more on forecasting over the medium term. Some managers already consider that procurement departments need no longer collect one euro after another in order to demonstrate their added value. Their performance should be evaluated using the yardstick of the competitive advantage that they provide to the company. This presupposes that the sales force and

hOw CAn PROCUREMEnT InFORMATIOn SySTEMS BE USED TO OPTIMUM EFFECT?

Technological developments have profoundly changed the most advanced purchasing functions. In order to increase competitiveness, procurement functions first tried to increase the added value of their subcontractors. They optimised and digitised their processes and then collaborated with their suppliers. On the one hand, digital technologies are disruptive, delivering breakthroughs which challenge business models: improvements in the quality and the speed of product design, reduced procurement costs, reduced lead times for processing files, etc. On the other, collaborative projects play a role in improving transparency and responsiveness between buyers and suppliers. Procurement departments are transforming their partner networks into participative ecosystems that include suppliers. Collaborative tools enable better monitoring of procurement processes by having all internal clients work on a single system and by sharing working methods and tools with suppliers. Finally, risk management rests on a robust information system that makes it possible to monitor a group of suppliers and to identify those that can take over in the event of a failure. All the data captured must be mapped and categorised in accordance with its economic, political and environmental nature. Consistent tracking and updating of this database saves time, even if it does not enable a source of supply to be replaced from one day to the next.

OF PROCuREMENT DIRECTORS STATE ThAT ThE uSE AND EFFICIENCy OF PROCuREMENT INFORMATION SySTEMS ARE CENTRAL ChALLENgES FOR IMPROvINg ThE PROCuREMENT FuNCTION'S CONTRIBuTION TO BuSINESS PERFORMANCE.

73 %

procurement function work together. The real questions can then be addressed. how can relationships with strategic suppliers be strengthened? how should they be defined? how should the business best equip itself in order to meet management and reporting requirements?

Some corporations have taken the idea to the point of making agreements with their competitors for improved procurement, or bringing certain activities back into the company, taking over subcontractors or making sustainable development a real driver of performance. This is the case for example for France Telecom and Deutsche Telekom, both of which decided to bring their procurement departments closer together with the aim of saving 10% on their equipment purchases.

Recent events have led to numerous assumptions being questioned in many companies. When a single function manages up to 80% of the revenues of the business, existing habits need to be questioned

17

2RESUlTSSRM BAROMETER 2011


18

SAMPlE STRUCTURE

PERMAnEnT STAFF

In terms of the total sample of 160 companies surveyed (80 in Europe and 80 in the united States), 53% of companies have staff of between 1,000 and 3,000 employees. There are more companies with 10,000 employees in the united States: 24% compared to 11% in Europe.

BREAKDOwn By COUnTRy

The breakdown by country is balanced between both continents (Europe and North America) and is similar to that in 2010.

ACTIvITy SECTORS

The majority of companies surveyed are in the services sector.

From 1,000 to 2,999 employees

53 %


22 %


8 %

10,000 employees and more

17 %

USA50 %

Belgium2 %

United Kingdom8 %

Italy11 %

France11 %

Spain8 %

Germany8 %

Portugal2 %

Construction

9 %

Transportation

7 % Distribution

12 %

Industry

14 %

Services

60 %

19

DESCRIPTION OF THE PROCUREMENT DEPARTMENT

TO whOM DOES ThE PROCUREMEnT FUnCTIOn REPORT?

Over half of procurement departments report to finance (the CFO) or to general management. The proportion of procurement departments that report to general management is on the rise, implying that the economic climate has given greater strategic importance to the procurement function. The same is true for those reporting to the finance department.

DOES PROCUREMEnT hAvE A SEAT On ThE BOARD?

The procurement department is increasingly involved in the strategic decision making process within the company, and is tending towards becoming a completely separate decision making function.

Financial management

29 %

Industrial management

6 %

Supply chain management

16 %

Other management

22 %

General management

27 %

Do not knowNoYes

1 %

52 %

47 %

SRM BAROMETER 2011

20

DESCRIPTION OF THE PROCUREMENT DEPARTMENT

whAT lEvEl OF MATURITy wOUlD yOU ASCRIBE TO ThE PROCUREMEnT FUnCTIOn In yOUR COMPAny?

Overall the level of maturity is high. In 37% of American companies, it is evaluated as very high (45% in the uSA in 2010), in contrast with European companies where it is roughly 18% (identical to 2010). Only a few companies assess the maturity of their procurement function as "low".

whAT IS ThE PROCUREMEnT COvERAGE In yOUR COMPAny?

More than 65% of those surveyed estimate that the procurement coverage in their company is over 50%. The results are fairly similar across both continents (48% of European companies state that they have achieved over 70% procurement coverage compared to 41% of American companies).

Very high

30 %

High

46 %

Medium

22 %

Low

2 %

Over 70 %45 %

Less than 50 %22 %

Do not know9 %

From 50% to 70 %25 %

21

CHAllENGES FACING THE PROCUREMENT FUNCTION IN THE CURRENT ECONOMIC ClIMATE

whAT DRIvERS DO yOU USE TO AChIEvE yOUR OBJECTIvES?

Companies still rely on drivers geared towards managing supplier relationships to achieve their objectives. Running cost-killing projects, third on the list of priorities in 2010, has become the top priority in 2011. In view of recent events and disruptions to global supply chains, risk management has emerged as an important driver this year. Procurement is genuinely at the heart of the requisitioner / buyer / supplier triangle.

FEElInG ABOUT ThE lEvEl OF COvERAGE

Referring to the previous question, given that the existing level of coverage is satisfactory there is either a lack of ambition to improve the procurement coverage or a lack of know-how. The companies that consider this coverage to be "very satisfactory" are twice as numerous in the united States (41% compared to 21% in Europe).

Very satisfactory31 %

Fairly satisfactory10 %

Do not know5 %

Satisfactory51 %

Insufficient3 %

5 - Very important

4 - Important

3 - Medium importance

2 - Low importance

1 - Not at all important

Top 2 (5+4)

Reorganising the procurement function

Creating an overall business plan

Investing in innovation

Using new information technology

Deploying a sustainable procurement policy

Risk management

Optimising relationships with requisitioners

Managing the supplier relationship

Running cost-killing projects76 %

76 %

64 %

62 %

60 %

58 %

54 %

49 %

40 %

SRM BAROMETER 2011

22


whAT ARE yOUR KEy PERFORMAnCE InDICATORS FOR PROCUREMEnT?

Customer satisfaction is still considered the main procurement performance indicator. Supplier evaluation is ranked second in the list of key indicators despite being eighth in 2010. In view of the increased level of supplier risk in 2010 and 2011, companies are prioritising supplier risk management by way of supplier evaluation. The supplier and the requisitioner have become essential players.

0 20 40 60 80 100

No indicators defined

Level of procurement practices

ROI of the procurement function

Procurement coverage

Gains made

Volumetric analysis

Supplier evaluation

Internal customer satisfaction 83 %

73 %

72 %

55 %

4 %

72 %

65 %

59 %

whAT ARE yOUR PRIORITIES In TERMS OF TOOlS?

Cloud computing - mostly unknown in 2009 and 2010, particularly in Europe - is listed a priority in terms of tools for 17% of companies in 2010. In the united States, 25% of companies consider it to be one of the priorities compared to 10% in Europe. This year e-procurement (76%) has given way to e-sourcing (81%), which was in third place in 2010.

0 20 40 60 80 100

Cloud Computing

Procurement and/or purchasing decision support

Procurement performance measurement

Electronic invoicing

Intranet – online community

E-procurement

E-sourcing 81 %

76 %

67 %

57 %

54 %

42 %

17 %

23

whAT ARE ThE DRIvERS OF PERFORMAnCE FOR ThE PROCUREMEnT FUnCTIOn?

The best driver of performance for the procurement function remains information systems. The view is similar across both continents. Training is ranked in third place (second in 2010), giving way to the development of procurement support functions which moves into second place this year.

5 - Very important

4 - Important

3 - Medium importance

2 - Low importance

1 - Not at all important

Top 2 (5+4)

Variable compensation for buyers

Buyer mobility in the procurement portfolio

Training

Development of procurement support functions

Use of information systems

73 %

62 %

58 %

49 %

32 %

hAvE yOU AlREADy MODEllED yOUR PROCUREMEnT PROCESSES?

The multiplicity of processes, players, and tools is the source of dysfunctions which erode procurement performance. The solutions to be considered when responding to this problem require modelling the procurement processes and flows. Modelling enables procurement departments to see the big picture and to have a vision of the drivers linked to the development of the function. 62% of companies have already modelled their procurement processes.

Do not knowNoYes

4 %

34 %

62 %

SRM BAROMETER 2011

24


whAT RESOURCES ARE USED TO OPTIMISE ThIS RElATIOnShIP?

The resource most often mentioned for optimising the relationship of buyers with their internal customers is internal communication (94%). A positive development was observed for collaborative tools within the function as shared procurement platforms (43%) and social networks (21%) are listed as the resources for enabling optimisation of the customer relationship..

0 20 40 60 80 100

Do not know

Others

Social networks

Shared procurement platform

Periodic progress meetings

Internal communication 94 %

74 %

43 %

21 %

8 %

1 %

hOw DO yOU vIEw yOUR RElATIOnShIP wITh yOUR InTERnAl CUSTOMERS?

Customer satisfaction is still considered the key indicator for monitoring procurement performance. Companies have mixed feelings regarding their relationship with internal customers: 41% of American companies surveyed view it as "very satisfactory" compared to just 14% in Europe.

Very satisfactory

27 %

Unsatisfactory

1 %Do not know

1 %

Fairly satisfactory

19 %

Satisfactory

52 %

25

EVAlUATION OF SUPPlIER RElATIONSHIPS

hOw hAvE yOUR RElATIOnShIPS wITh SUPPlIERS ChAnGED FOllOwInG ThE CRISIS PERIOD?

The use of SRM (Supplier Relationship Management) to improve procurement operations has become a major trend following the crisis. As a result, increased frequency of meetings and reinforced collaboration with suppliers are high priorities in 2011. At the same time, companies remain concerned about the financial health of their suppliers. 61% of them admit to being more stringent in monitoring suppliers’ financial well-being. Collaborative working methods are being developed with requisitioners, and even more so with suppliers. There is a real need for transparency, especially as regards the risks associated with the relationship. In times of economic turbulence, anticipating matters is necessary to prevent any disruption to the production chain.

DO yOU CATEGORISE yOUR SUPPlIERS ACCORDInG TO STAnDARD AnD wEIGhTED CRITERIA FOR SUSTAInABlE DEvElOPMEnT?

The number of companies that categorise their suppliers according to standard and weighted criteria for sustainable development has increased slightly compared to the previous year. In 2011, approximately one company in two practices this type of categorisation. however, the practice is more widespread in Europe than in the united States (58% compared to 37%).

0 10 20 30 40 50 60 70 80

Others

No change

Initiatives to support suppliers in difficulty

Increased collaboration with suppliers

Stricter monitoring of financial health

Increased frequency of meetings 62 %

61 %

59 %

28 %

10 %

3 %

Yes48 %

No48 %

Do not know

4 %

SRM BAROMETER 2011

26

EVAlUATION OF SUPPlIER RElATIONSHIPS

whAT ARE ThE DRIvERS FOR OPTIMISInG SUPPlIER RElATIOnShIPS?

Regulatory constraints seem to be the best driver for bringing buyers and suppliers closer together for 65% of the companies surveyed. This aspect has become increasingly important, rising from fourth position in 2009 to second position in 2010. Partnerships, ranked first in 2010, remain within the top 3 drivers. Optimisation and management of the supplier base has not changed position from year to year. however, optimisation and management are not based on the same criteria: in Europe they are centred on monitoring the supplier base whereas in the united States there is greater emphasis on collaboration with suppliers.

5- Very important

4- Important

3- Medium importance

2- Low importance

1- Not at all important

Top 2 (5+4)

Plan for the development of supplier maturity

Supplier base optimisation and oversight

Use of a collaborative procurement/purchasing platform

Innovation, co-development, shared inventory management

Sustainable development and corresponding sourcing

Implementation of partnerships

Regular auditing & benchmarking

Regulatory constraints65 %

63 %

61 %

47 %

45 %

44 %

41 %

35 %

27

SRM BAROMETER 2011

29

3TESTIMONIAlSSRM BAROMETER 2011


30

"PROCUREMENT’S ROlE WIll SHIFT FROM ONE OF A SUPPORT FUNCTION TO BUSINESS FACIlITATOR, AND THUS NO lONGER BE JUST A COST CENTRE BUT RATHER AN ORGANISATION CAPABlE OF MAKING A MAJOR CONTRIBUTION TO VAlUE CREATION."

31

GUIDO AMENDOlAPROCuREMENT AND LOgISTICS MANAgER POSTEMOBIlE

SpEEd- TO-mARkET iS CRiTiCAL FOR iTALiAN BASEd mOBiLE NETwORk OpERATOR pOSTEmOBiLE AS ThEy ARE wORkiNg iN A highLy COmpETiTivE mARkET. hOw CAN impROvEd pROCUREmENT hELp?

hOw hAS OPERATIOnAl RISK MAnAGEMEnT BEEn DEvElOPED wIThIn ThE SUPPly ChAIn?

At PosteMobile, risk management has been developed based on two approaches. The first is more traditional, involving the systematic monitoring of vendors based on various financial and managerial indicators, which allows us to expedite the process of supplier qualification, evaluation, selection, and reward where appropriate. The second is of a more contractual nature, designed with the aim of sharing with our clients not only our business objectives, but also part of the overall risk and the risk management tools with which to monitor it. The ultimate goal is to establish beneficial, lasting partnerships that guarantee sustainable growth for the company. whAT IMPACT hAvE PROJECTS BASED On COllABORATIvE PlATFORMS hAD On PROCUREMEnT?

Certainly a positive impact, considering that one of the main causes of project failure is related to a poor understanding of initial requirements and/or needs appraisal. This can be done more effectively by using collaborative platforms, ensuring that the definition of requirements is shared upstream, while supplier evaluation and selection are streamlined further down the line. Today, procurement can no longer act as a mere filter between these two links in the value chain, but must be capable of laying down contractual conditions that facilitate effective collaboration between internal clients and vendors. With this in mind, PosteMobile has invested resources in e-sourcing and e-bidding tools. Through the Posteprocurement website, for example, we have access to a unique database for exchanging information both with our internal teams and with external suppliers during the sourcing process, ensuring near-perfect transparency.

wIThIn yOUR ORGAnISATIOn, hOw ARE yOU USInG nEw TEChnOlOGIES TO IMPROvE PROCUREMEnT PERFORMAnCE?

By using the full potential of online collaboration tools. E-sourcing and e-bidding, which we use widely and very successfully, allow us to work simultaneously on multiple projects, improve operational and production performance, reduce costs and accelerate time-to-market. This last aspect is fundamental for a company such as PosteMobile, which operates in a highly competitive market. At the moment, we are thinking about implementing innovative benchmarking activities - including through forums - to map our most strategic purchases.

hOw DO yOU SEE CUSTOMER RElATIOnShIPS EvOlvInG In ThE nEAR FUTURE?

Relationships with internal clients will evolve with the extension of procurement coverage throughout the company. Procurement’s role will shift from one of a support function to business facilitator, and thus no longer be just a cost centre but rather an organisation capable of making a major contribution to value creation. however, this transformation will only occur if we learn how to work in synergy with operational departments of the business, by integrating know-how from suppliers into our company. As regards external clients, I believe tools such as e-procurement, which ensures we continuously optimise our supplier selection processes, will have a positive impact on the perception of quality by the end consumer. If our products get to market more rapidly, and are of higher quality, the consumer will be the first to benefit.

TESTIMOnIAlS

32

"COllABORATIVE TOOlS ARE DRIVERS FOR A TRANSVERSE APPROACH. PROCUREMENT DEPARTMENTS, WHOSE ESSENCE IS TO FAVOUR THE MUlTIFUNCTIONAl, MUST lEAD THE WAy IN THEIR DEVElOPMENT. "

33

TESTIMOnIAlS

ClAIRE BRABEC-lAGRANGE MEMBER OF ThE EXECuTIvE COMMITTEE, PROCuREMENT DIRECTOR GDF SUEZ

CURRENTLy ThE FOCUS iS ON OpERATiONAL pERFORmANCE, SyNERgiES ANd RiSk mANAgEmENT: A TRANSFORmATiON pLAN dESigNEd TO REALiSE ThE AmBiTiOUS OBjECTivES OF ThE pROCUREmENT dEpARTmENT OF A dECENTRALiSEd gROUp wiTh LOCATiONS ALL OvER ThE wORLd.

whAT PRACTICAl DEvElOPMEnTS hAvE ThERE BEEn In RISK MAnAGEMEnT In ThE SUPPly ChAIn?

The structural and economic evolution of the past years has had a profound and lasting impact on the procurement function. The explosion of demand (in particular from emerging markets such as Asia, India and Brazil), the financial crisis, and even more recently the Fukushima catastrophe, have repositioned the issue of availability and access to resources within the risk map of the business. Supplier management is more than ever before a strategic challenge that requires attention at the highest level, and possibly even major investments.

At gDF SuEz, the procurement function is positioned at the level of the Executive Committee and is recognised as a key element of the group’s operational performance, and as the department responsible for ensuring that our suppliers respect the requirements of our businesses in terms of safety and sustainable development.

hAS yOUR RElATIOnShIP wITh yOUR SUPPlIERS ChAnGED?

Even if reducing the number of suppliers is not an end in itself, it is important to rationalise the supplier group, if only to be able to really manage these relationships and improve operational efficiency. For critical and strategic purchasing, it’s important to be able to select high performance suppliers, in good financial health, and more generally to be able to identify the risks inherent to the relationship, in order to manage them. For example, regarding safety/security, which is crucial for our businesses in the energy and environmental sectors: does the supplier have adequate capabilities in terms of prevention and ensuring the safety of people and assets? It there a geopolitical or geostrategic threat linked to the production sites that could result in a lasting disruption in deliveries? how best to support our small and medium sized suppliers in mastering these risks? how to preserve the local industrial base necessary for our highly dispersed activities? The procurement function has an important role to play in maintaining vigilance in these matters.

whAT IMPACT hAvE COllABORATIvE PROJECTS hAD On ThE PROCUREMEnT FUnCTIOn?

In a vast and decentralised group like gDF SuEz, the challenge to boosting operational performance is to reinforce synergies and share best practices, to encourage the use of common resources and the creation of networks at all levels: operational, functional and by country. Promoting a transverse approach, and working in project mode with multifunctional and geographically dispersed teams, means reinforcing the use of collaborative tools. The deployment thereof, driven by the functions and line of business, has to be an integral part of the roadmap of the various operational entities. Collaborative tools are drivers for a transverse approach. Procurement departments, whose essence is to favour the multifunctional, must lead the way in their development. It’s a determining factor for the agility and responsiveness of our function, and it’s crucial that we fully integrate these tools.

hOw ARE PROCUREMEnT DIRECTORS USInG TEChnOlOGy TO IMPROvE ThEIR PERFORMAnCE?

Improving procurement performance, whether financial or operational, implies first being able to measure it. And measuring performance requires a well-designed information system (IS), in other words one which integrates the various functions in the company, simplifying the work of operational staff while acting as a decision support tool for management. And this IS needs to be built on robust and shared databases.

In this context, the use of technology is indeed a driver of efficiency for information systems. But above all procurement departments need to play their role within project management, to help define and implement the IS for the business such that essential data is captured at its source and that its integrity is maintained throughout the transverse processes within the company. It can be observed however that many ERP systems have been designed from a purely financial or production management perspective, and thus don’t really respond to all the needs of procurement departments in terms of performance management and decision support.

34

"WE BElIEVE A MODERN SUPPly CHAIN FUNCTION MUST USE All THE TECHNOlOGICAl INSTRUMENTS AVAIlABlE TO FACIlITATE AND ACCElERATE BUSINESS PROCESSES AND TO IMPROVE THE AVAIlABIlITy OF INFORMATION."

35

STEFANO CIURlISuPPLy ChAIN & REAL ESTATE DIRECTOR TElECOM ITAlIA

FOR TELECOm iTALiA, USiNg NEw TEChNOLOgiES givES RiSE TO OppORTUNiTiES TO OpTimiSE BUSiNESS pERFORmANCE ANd mANAgEmENT. ThE SUppLy ChAiN FUNCTiON hAS LEd NUmEROUS AppROAChES TO impROviNg pROCESSES ANd TEChNOLOgiCAL iNNOvATiON.

hOw hAS OPERATIOnAl RISK MAnAGEMEnT BEEn DEvElOPED wIThIn ThE SUPPly ChAIn?

At gruppo Telecom Italia, all procurement activities are regulated by a purchase process control system based on key principles, such as centralisation of purchasing processes, division of roles among requesting and purchasing departments, transparency in affairs with internal clients and suppliers, continuous purchase monitoring, and offsetting of budget expenses. The application of such principles is guaranteed by e-procurement tools, which facilitate the comprehensive tracing of purchase documents, from receipt of the purchase order through to the issuing of the contract/order. These activities are constantly monitored using internal instruments (monthly progress reports and quarterly KPI reports) and through company-wide control activities (SOX controls). We have also implemented a supplier control system (comprised of qualification, incoming goods quality and vendor rating) with the aim of systematically evaluating supplier risk, relating it to the rating of individual vendors, and to the procurement markets on which they operate.

whAT IMPACT hAvE PROJECTS BASED On COllABORATIvE PlATFORMS hAD On PROCUREMEnT AnD/OR lOGISTICS?

The supply chain management function has invested heavily in the use of collaborative platforms, both internally - providing access to specific e-procurement instruments - and externally, creating a supplier portal through which we manage purchase orders and facilitate the exchange of information between the group, suppliers and partners. With the launch of the new vendorshub, we have enhanced the functionality of the old portal by integrating social networking tools, offering the possibility to manage dedicated collaborative areas, and the ability to share and accept purchase orders online. We believe a modern supply chain function must use all the technological instruments available to facilitate and accelerate business processes and to improve the availability of information to the multiple players involved.

wIThIn yOUR ORGAnISATIOn, hOw ARE yOU USInG nEw TEChnOlOGIES TO IMPROvE ThE PERFORMAnCE OF PROCUREMEnT AnD/OR lOGISTICS?

For Telecom Italia, using new technologies gives us the opportunity to optimise business performance and management. In this sense, the supply chain function has led numerous approaches to improving processes and technological innovation, through the use of social networking platforms, tendering systems with online bids and procurement document management workflows, and business intelligence packages for monitoring performance. Additionally, we have recently started to integrate and simplify information systems dedicated to e-procurement tasks, which has allowed us to fully trace purchase documents and to implement the paperless management of the company and of document archiving.

hOw DO yOU SEE RElATIOnShIPS wITh CUSTOMERS (BOTh DIRECT AnD EnD COnSUMERS) EvOlvInG In ThE nEAR FUTURE?

I am a firm believer in the "closer to the business" approach, which involves greater integration with internal clients, including during planning and performance monitoring, as well as the adoption of a new classification system for procurement markets. This will allow the supply chain function to expand its role, becoming a vital component in defining needs and expenditure volumes, and in carrying out cost-benefit analyses throughout the entire procurement process.

TESTIMOnIAlS

36

"MANAGEMENT COUNTS ON US FOR SUPPORT IN DEVElOPING THE BUSINESS."

37

lAURENT COCHEREAU PROCuREMENT DIRECTOR AllIAnZ FRAnCE

By ExTENdiNg iTS COvERAgE TO iNCLUdE pROdUCTiON pROCUREmENT, ThE pROCUREmENT dEpARTmENT OF ThE FRENCh SUBSidiARy OF ThE ALLiANz gROUp hAS SiNCE 2010 SECUREd A pOSiTiON AT ThE hEART OF ThE gROUp’S BUSiNESS. iT hAS hAd TO FUNdAmENTALLy REThiNk iTS ORgANiSATiON iN ORdER TO TAkE ON iTS NEw ASSigNmENTS.

whAT IS ThE SIZE OF AllIAnZ In FRAnCE?

With almost EuR 12 billion in revenue and 11,800 employees, we’re the largest subsidiary outside of germany of the world leader in asset and liability insurance. The procurement function was created in 1998, and has 32 staff between the ages of 22 and 60. Paradoxically, here in France the maturity of our department is greater than that in germany, where the group procurement function was only created in 2009. hOw DOES ThIS MATURITy MAnIFEST ITSElF?

By the fact that today our objectives are no longer expressed only in terms of savings to be realised. Those goals are no longer really relevant, given that in the three last years we have easily achieved them in a sustainable manner. Management now expects us to improve the quality of procurement processes and partnerships. Furthermore, since the summer we now report directly every three months to the executive committee: on savings realised, on the extent to which various departments adhere to procurement processes, and on key indicators – a genuine dashboard for the company’s key expenditures. Management counts on our support to develop the business, and considers us as the lynchpin of its strategy.

CAn yOU EXPlAIn TO US whAT MADE ThIS ChAnGE POSSIBlE?

In 2010, we started to apply our methods (a real series of processes, with procurement as a project) to technical insurance procurement (or production procurement) which had up until then been carried out by technical departments (the claims department, for example). The amounts involved are considerable given that these purchases represent two thirds of the total procurement value, which is roughly EuR 3.5 billion. So we quadrupled our procurement coverage. Most importantly, we now have a direct impact on the business and the margin realised by being involved in transforming business processes in cooperation with the technical departments.

whAT COnSEQUEnCES DID ThIS hAvE On yOUR ORGAnISATIOn?

In addition to the “general expenses” and IT departments, we created a new one for purchasing related to insurance (fire, accidents & miscellaneous risks, health and life). We had to discover new markets, such as negotiation with the garages and automobile assessors, for example. We have very limited competence in these areas and are currently building it up, thanks in particular to our cooperation with the claims department. We’ve also taken advantage of this reorganisation to put in place a department that brings together procurement for IT and consulting services, given that information systems have become an indispensable part of all the company’s projects.

wERE ThERE OThER ElEMEnTS ThAT STEERED ThIS REORGAnISATIOn?

In addition to the departments already mentioned, we also created a sort of “incubator” to welcome new staff members who have never worked in procurement before, regardless whether they’re internal transfers or young graduates. The goal is that they spend two and a half years becoming thoroughly familiar with the various procurement operations and categories, while being coached by a procurement manager. We also professionalised our approach by categorising dossiers in function of their greater or less strategic nature instead of simply processing them as they come. That was indispensable for generating more visibility for our activity, actions and results at executive committee level.

TESTIMOnIAlS

38

"MOVING BEyOND THE BASIC ClIENT-SUPPlIER RElATIONSHIP. "

39

MARC DUVAl SENIOR vP, RESPONSIBLE FOR gLOBAL PROCuREMENT TEChnIP

wORLd LEAdER iN pROjECT mANAgEmENT, ENgiNEERiNg ANd CONSTRUCTiON FOR ThE ENERgy iNdUSTRy, TEChNip dEvOTES A gREAT dEAL OF ATTENTiON TO BOTh iTS SUppLiER ANd CLiENT RELATiONShipS iN ORdER TO pROpOSE iNNOvATivE ANd TAiLOR-mAdE SOLUTiONS whiLE REmAiNiNg COmpETiTivE.

whAT POSITIOn DOES GlOBAl PROCUREMEnT hAvE wIThIn TEChnIP?

There are 25,000 employees in the group, 1,000 of which work just for procurement. We have an annual purchasing volume of EuR 2.5 billion, sourced from among 15,000 suppliers, of which 1,500 are regular. In addition to managing this procurement volume, the department has a pivotal position between engineering and construction. These three businesses work on a taskforce basis on all the projects running in our 48 operational centres worldwide.

whAT RISKS IS yOUR SUPPly ChAIn EXPOSED TO, AnD hOw DO yOU MAnAGE ThEM?

As each project generates on average 300 orders, the smallest delay at one of our suppliers can put our commitments to meet deadlines at risk. So we have to organise ourselves such that we monitor these risks at every stage of the supplier relationship. until the order has been placed, that’s the responsibility of the buyers. Once the order is underway, it’s up to the people managing the order to make sure they get the right information from our partners, among others. And after the order has been delivered, the inspectors that ensure everything goes right at their end in terms of quality.

whAT hAS BEEn yOUR GOAl SInCE yOU ARRIvED In 2010?

In an environment which has become hyper-competitive since 2007, the group has formed alliances and has focused on high value added solutions. It has also committed to improving its competitiveness, in particular by optimising the performance of its procurement, which can represent up to 50% of a project’s value. To reduce our costs we have developed framework agreements with our main suppliers and put in place a high value procurement operation in Asia.

hOw ARE yOU MAKInG USE OF nEw TEChnOlOGIES?

To improve our performance, we make use of new tools that enable us to share best practices in real time, or “design to cost” tools that allow us to promote a culture of cost control throughout the group, including in the design phase. Furthermore, our e-procurement platform is continuously improved in order to meet users’ needs in terms of user-friendliness and interactivity - in particular for new users. however, although information systems in general enable us to monitor, manage and forecast our performance, fundamentally it is thanks rather to the quality of our relationships that we’re able to really understand the needs of our clients and suppliers.

hOw DO yOU AnTICIPATE ThOSE nEEDS, In COnCRETE TERMS?

With our regular suppliers of materials with very high added value, we share information about our respective constraints and try to develop innovative solutions together. With our clients we also want to move beyond the strict client-supplier relationship and try to progress toward win-win partnerships. Whether national or international, oil companies in particular increasingly need technical support, and we provide it to them by running projects that we develop together.

TESTIMOnIAlS

40

"WE’RE NOT JUST READy FOR A CRISIS – WE CAN AlSO HANDlE AN EARTHQUAKE. "

41

.OPERATIONS DIRECTOR TECnITOyS

FOUNdEd iN 1998, TECNiTOyS iS A SpANiSh COmpANy, BASEd iN BARCELONA. iT dESigNS, mANUFACTURES ANd SELLS TOyS UNdER ThE SCALExTRiC BRANd, ThE wORLd’S LEAdiNg pROdUCER OF miNiATURE RACETRACkS FOR ELECTRiC RACE CARS. SCALExTRiC iS CURRENTLy ThE mARkET LEAdER iN SpAiN wiTh A mARkET ShARE OF OvER 70%. TECNiTOyS ExpORTS iTS pROdUCTS ACROSS FivE CONTiNENTS ANd hAS A SUBSidiARy iN hONg kONg.

hOw hAvE yOU DEvElOPED yOUR RISK MAnAGEMEnT PRACTICES?

To put things into context, the crisis did not in any way change how we function, nor the way in which the company creates products. It is true that as a result of the crisis, both purchasing and sales fell, as it did in most companies. however, the company kept its production process intact, albeit running at a slower rhythm, but without interruption. As regards managing supplier risk, Tecnitoys has always had strategies in place to minimise it. For instance, we’ve always forced ourselves to work with several suppliers for each one of our products. We don’t want to play a central role at any given supplier, because we don’t want them to depend entirely upon our business. Nor is it our goal on the other hand to represent only a minor share of their business – we want to maintain our negotiation capability. We want to be important, but still maintain our decision-making freedom. you have to bear in mind that our suppliers in turn work with other suppliers, who supply them with the raw materials needed to produce the various pieces of a Scalextric set, our flagship product. By keeping a close eye on the suppliers at the end of the chain gives us peace of mind as regards the whole process. In essence, our strategy hasn’t changed. We’re not just ready for a crisis – we can also handle an earthquake! And that’s the case thanks to the diversity of our suppliers, who are able to provide us with an identical service with a comparable level of quality.

whAT IMPACT DID ThE CRISIS hAvE On yOUR SUPPlIER RElATIOnShIPS?

In function of our needs, the diversity of our products leads to quite distinct relationships with our suppliers. Traditionally, we work with products available from catalogues and a range of new products. For products available from catalogues, we run production on a continuous basis, without a schedule and in function of inventory rotation. For our range of new products, we put in place a specific manufacturing process based on sales forecasts. In fact, the market can’t handle excess inventory that we release. We noticed a major change during the crisis: the continuous production process lasted longer as a result of the slowdown in sales.

hOw DO yOU EXPECT yOUR CUSTOMER RElATIOnShIPS TO DEvElOP?

We don’t expect any significant changes, especially as sales volumes have fallen in Spain. We manufacture in function of the sales we generate, and our customers buy our products in function of sales forecasts. Basically it’s a chain. The large distribution companies continue to operate normally without any real novelty, but the crisis has affected family owned businesses. Only one factor has changed, and we have noticed it: the particular attention given to orders. Distributors try to adjust their inventory levels so they don’t end up with excess stock. Customers try to increase time between orders to be sure of selling the inventory before they buy it, which slows down the entire chain of production, distribution, etc.

hOw ARE yOU USInG nEw TEChnOlOGIES?

Four years ago we put in place the Navision programme, focused mainly on the company’s sales and accounting systems. It was indispensable for the business. This programme was also deployed within other departments in order to obtain relevant and high quality reporting, and to obtain data on our sales activity that enables us to adjust our purchasing volumes. On the other hand, with the rise of the internet, email or Skype, we were able to significantly improve the quality of our relationships with our customers and suppliers. For example, these technological advances enabled us to do business very easily with our suppliers based in China. These tools make it possible to constantly keep an eye on our activities and monitor every department.

FRANCISCO JAVIER JIMéNEz

TESTIMOnIAlS

42

"THE JOB GOES BEyOND JUST THE PROCUREMENT PROCESS."

43

CARl lANDUyDThEAD OF gLOBAL PuRChASINg APERAM

ThE FORmER SUBSidiARy OF ARCELORmiTTAL BECAmE iNdEpENdENT LAST jANUARy, BUT CONTiNUES TO mAiNTAiN CLOSE LiNkS wiTh ThE pROCUREmENT CENTRE OF ThE giANT STEELmAkER. iT iS CURRENTLy REiNFORCiNg iTS OwN TEAmS TO REdUCE iTS TCO By USd 150 miLLiON wiThiN FivE yEARS.

TEll US A BIT ABOUT APERAM AnD ITS PROCUREMEnT ORGAnISATIOn.

Aperam is a spin-off of ArcelorMittal. Our business includes the activities linked to stainless steel, highly specialised alloys with high nickel content and a part of the group’s electrical steel activities. We have production sites in France, Belgium and Brazil. Our central team consists of eight people who come directly from the procurement departments for strategic raw materials (nickel, chrome, molybdenum, and stainless steel scrap) at ArcelorMittal. For non-strategic raw materials we have signed a 2-year renewable agreement with the group’s procurement centre. In addition, each site has a local procurement team.

IS ThIS A TEMPORARy SITUATIOn whIlE wAITInG TO BECOME FUlly InDEPEnDEnT?

We’re preparing ourselves for becoming more independent, but there are scale economies that mean we will want to maintain this relationship. We want to continue to benefit from the purchasing power of ArcelorMittal, which represents about uSD 50 billion versus 4.5 billion for Aperam (based on 2010 figures). In addition, we want our corporate structure to be as light as possible, so we keep teams on site which are specialised in certain purchasing categories that they handle for all the others.

whAT ARE yOUR OBJECTIvES FOR ThE yEARS AhEAD?

We want to reduce our TCO by uSD 150 million within five years, 90% of which we want to achieve in the coming two years. This will depend on the organisation and reinforcing of our teams on site. until the spin-off, they were in charge of implementing the framework agreements of the ArcelorMittal procurement centre. Now they have to be able to challenge the buyers of that centre. We’ve also just launched - in cooperation with CSC - a people review programme to check that we have the competences required.

hAS ThE RECEnT ECOnOMIC TURBUlEnCE MADE yOU ChAnGE yOUR METhODS?

Our industry is one of the most volatile, and the crisis showed us the drawback of overly constraining contractual terms and conditions: fixed volumes, long-term prices, periods that are too long… We now prefer shorter, more flexible contracts that allow for changes in volume during the quarter, subject to a commitment to market share for the supplier. We also make sure we vary the period of the contracts to ensure we get competitive prices and have greater flexibility. This makes the job more complicated, as it goes beyond just the procurement process itself.

ARE ThE nEw TOOlS PROvInG hElPFUl?

The education necessary for both suppliers and internal parties for these new practices intensifies relationships and interaction. We have to be in permanent contact with production, planning, supply chain management, etc. It’s a new world in which you need to be equipped with efficient collaborative tools. With those that google has on offer and that we are currently adopting, we’ll have a solution in the cloud that will enable us to work on dossiers in real time from all our sites. As a result we’ll save time and money, in particular on the travel budget.

TESTIMOnIAlS

44

"THE PROxIMITy OF PROCUREMENT TO INTERNAl ClIENTS IS ESSENTIAl IN ORDER TO FUlly UNDERSTAND THEIR ExPECTATIONS AND NEEDS."

45

DIEGO PEDROlISENIOR DIRECTOR PROCuREMENT EuROPE OSRAM AG

OSRAm iS ONE OF ThE TwO LEAdiNg LighT mANUFACTURERS iN ThE wORLd SUppLyiNg CUSTOmERS iN 150 COUNTRiES wORLdwidE FROm iTS 44 pROdUCTiON SiTES iN 16 COUNTRiES. hOw dOES ThE pROCUREmENT FUNCTiON hELp dRivE BUSiNESS RESULTS?

hOw hAvE yOU IMPlEMEnTED OPERATIOnAl RISK MAnAGEMEnT wIThIn ThE SUPPly ChAIn?

At OSRAM, supplier risk management takes two approaches: on the one hand, there is the continuous credit monitoring of economically and/or financially "critical" suppliers, implemented centrally by the procurement department with the support of an external provider. Alongside that, we use a specific tool developed internally and managed by various experts and managers from procurement, which allows us to manage supply risk from a strategic and operational procurement perspective.

whAT IMPACT hAvE PROJECTS BASED On COllABORATIvE PlATFORMS hAD On PROCUREMEnT?

For years at OSRAM, we’ve implemented and consolidated internal collaboration platforms, with the widespread development of SAP ERP functionality on each continent. We are also expanding into numerous countries the adoption and use of SAP SRM through e-catalogue buying for the purchase, from preferred suppliers, of IT and office equipment, spare parts, and tools for industrial use. This enabled us to greatly reduce the lead times inherent to the procurement process, both internal and external.

Together with our preferred suppliers and those which fall into the e-catalogue buying category, we have set up EDI or WebEDI collaboration initiatives to exchange information and data on purchase orders and invoices. here too there has been a clear improvement in procurement lead times.

hOw DO yOU SEE CUSTOMER RElATIOnShIPS EvOlvInG In ThE nEAR FUTURE?

Relationships with internal clients (stakeholders) in regard to procurement will become increasingly important, with a view to improving company results and processes in general. The proximity of procurement to internal clients is essential in order to fully understand their expectations and needs. Internal clients will be increasingly involved in strategic purchasing decisions, until they ultimately become accountable for them, leaving procurement with the functional responsibility.

hOw ARE yOU USInG nEw TEChnOlOGIES TO IMPROvE PROCUREMEnT PERFORMAnCE?

New technologies have improved and continue to significantly improve procurement performance in terms of results, lead times in the process, internal and external control, and transparency of volumes purchased. These technologies allow us not only to improve business results in relation to our supplier base, but also to continuously monitor the performance of internal users in the procurement process, and of procurement buyers and managers themselves through performance dashboards.

TESTIMOnIAlS

46

"THE PROCUREMENT DEPARTMENT WAS RAPIDly ABlE TO DEMONSTRATE ITS ADDED VAlUE."

47

DIDIER PUISSOCHETPROCuREMENT DIRECTOR RéUnICA GROUP

SET Up Six yEARS AgO, ThE pROCUREmENT dEpARTmENT AT RéUNiCA hAS SiNCE ThEN BEEN vERy SUCCESSFUL iN CONviNCiNg ThE dEpARTmENTS iT SERvES OF ThE RELEvANCE OF iTS mEThOdS ANd iTS ABiLiTy TO CREATE AddEd vALUE. wiTh SOCiAL RESpONSiBiLiTy AS ONE OF iTS CORE vALUES, ThE pROCUREmENT dEpARTmENT OF ThiS mAjOR pLAyER iN ThE iNSURANCE, COmpLEmENTARy pENSiON ANd SOCiAL pROTECTiON SECTOR pLACES ThE EmphASiS ON SUSTAiNABLE SOURCiNg.

TEll US A BIT ABOUT RéUnICA AnD ITS PROCUREMEnT DEPARTMEnT

Réunica is a social protection group which employs 2,700 people and is active in three areas: individual insurance, complementary pension, and social action (advice and support in case of sickness, handicap, redundancy, etc.). The procurement department of the Réunica group and its IT subsidiary sources roughly EuR 120 million worth of goods and services (of which EuR 70 million is IT related) from 1,000 suppliers.

hOw IS ThE PROCUREMEnT DEPARTMEnT STRUCTURED?

The procurement department is part of the finance department, and was created fairly recently – not only at Réunica but also within other groups active in the social protection sector. As of 2000, increasing concentration in the sector highlighted the strategic importance of controlling expenditure within social protection providers. This in turn led the new procurement directors of these groups to form an association in which they could work together and share ideas, the CAPS (Club for Social Protection Procurement - Club Achat de la Protection Sociale) of which I am the president. however, our procurement departments have not all reached the same level of maturity. They vary in terms of both their procurement scope and the resources available to them.

AnD whAT STAGE hAvE yOU REAChED AT RéUnICA?

Our procurement coverage is now at 60% of group expenditure. We still have to explore several areas and further develop our information systems: tools for reporting and budget management, and accounting interfaces. We’ve made a lot of progress in six years: calling on the procurement department has now become a reflex for our internal clients. We’ve succeeded in demonstrating our added value: support in defining requirements, legal risk management and supplier relationship management. Today our professionalism is fully recognised and we work in partnership with our client departments.

whAT ARE yOUR OBJECTIvES FOR ThE FUTURE, AnD whAT RESOURCES ARE AvAIlABlE FOR yOU TO AChIEvE ThEM?

Our objective is to reduce expenditure at group level by 5% annually. We also want to increase our procurement coverage, and are currently focusing on recruitment and training expenditure in the hR department. Over the long term, we intend to upgrade our information systems to optimise the management of Réunica’s expenditures.

whAT SETS yOU APART FROM A FOR-PROFIT BUSInESS?

Our organisational identity pushes us to prioritise the development of some areas more than others. We’re very aware of our social responsibility, and in 2010, with the support of general management, we put in place a sustainable procurement policy. This has a very concrete influence on the way we work with our suppliers, who have accepted our sustainable procurement charter. Our buyers are in tune with our sustainable procurement policy, and use a specific approach to the procurement process on a daily basis: sustainable development criteria, eco-labelled products, promotion of professional activities for handicapped workers, etc. We have a strong ambition to increase our proportion of sustainable procurement, and that ambition is a distinguishing factor.

TESTIMOnIAlS

49

SRM Barometer 2011


51

SRM Barometer 2011


CSC

Designed and produced by CSC’s South and West Region Marketing & Communications department.© 2012 CSC. All rights reserved.

About CSC

The mission of CSC is to be a global leader in providing technology-enabled business solutions and services.With the broadest range of capabilities, CSC offers clients the solutions they need to manage complexity, focus on core businesses, collaborate with partners and clients and improve operations CSC makes a special point of understanding its clients and provides experts with real-world experience to work with them. CSC is vendor independent, delivering solutions that best meet each client’s unique requirements.

For 50 years, clients in industries and governments worldwide have trusted CSC with their business process and information systems outsourcing, systems integration and consulting needs.

The company trades on the New york Stock Exchange under the symbol “CSC.”

CSC

REGIONAL HEADQUARTERS

Immeuble Balzac10, place des vosges92072 Paris-la Défense Cedex+33 1 55 70 70 70

BelgiumCorporate villageLeonardo Da vincilaan 31935 zaventem+32 2 714 71 11

FranceImmeuble Balzac10, place des vosges92072 Paris-la Défense Cedex+33 1 55707070

Axe Liberté14, place de la Coupole94227 Charenton+33 1 43 53 57 57

AéropôleBâtiment 5,2e étage5, avenue Albert-Durand31700 Blagnac+33 5 67 69 89 00

luxembourg12D Impasse DrosbachL-1882 LuxembourgTel: +352.24.83.42.60

PortugalLagoas Park, Edifício 12740-264 Porto Salvo+351 21 00 40 800

ItalyCentro Direzionale MilanofioriStrada 3, Palazzo B120090 Assago (MI)+39 0257775.1

via Paolo di Dono 7300142 Roma+39 06 515061

via San Crispino 2835129 Padova+39 049 6983111

Strada Pianezza 28910151 Torino+39 011 4904768

SpainAv. Diagonal, 545 Planta 608029 Barcelona+ 34 93 493 09 00

C/ Pedro Teixeira, 8 - 5ª PlantaEdificio Iberia Mart I28020 Madrid +34 91 555 35 00

CSC Asturias IT Service Centervalle de Tamón, s/n33469 – Avilés+34 985 12 41 01

CSC HEADQUARTERS

The Americas3170 Fairview Park DriveFalls Church, vA. 22042united States+1 703 876 1000

Europe, Middle East,AfricaRoyal PavilionWellesley RoadAldershot,hampshire gu11 1Pzunited Kingdom+44 (0)1252 534000

Australia26 Talavera RoadMacquarie Park, NSW 2113Australia+61 (0) 29034 3000

Asia20 Anson Road #11-01 Twenty Anson Singapore 079912 +65 6221 9095

srm barometer 2011 a time of baro 2011_sw011… · lisbon, washington d.c. , etc.), and are also...

Documents