We covered day one at Ivalua NOW Paris pretty thoroughly in two previous articles, so now a brief round-up of some day two highlights. The audience held up remarkably well after our after-hours tour of the Louvre the night before, with pretty much a full house again for Frank Lheureux, General Manager EMEA for the firm. He kicked off the morning with some inspiration, as he told us that “machines don’t have emotions, so they cannot replace humans. And the challenges of today won’t be solved by yesterdays solutions – we have to be inventive, find new ways, be creative”. That is what will stop us being displaced by the machines!
Then, back to Ivalua news. There were plenty of blue-chip new customers last year, he told us, including L’Oréal, Ikea, and Capgemini. He emphasised the partner network – from KPMG, Capgemini and other giants to regional players such as OptiBuy in Poland and eastern Europe. There are 200 certified consultants in EMEA, and all projects in Europe last year were primed by partners – there is very strong partner culture and ecosystem. (I spoke to a few partners off the record at the event and they are genuinely positive about working with Ivalua).
Ivalua is also launching a Technology Partner Programme to get closer to and more integrated with firms such as Ecovadis, to enable data to be integrated between platforms, to “augment and enrich the Ivalua product for customers”. Pace is another key goal. The new quick deployment methodology enables clients to get best practice P2P in just 12 weeks, minimizing time to value. That offering has built in best practices but is also a solution that “grows with you”. Industry-focused solutions are coming soon too – manufacturing in May, financial services and healthcare Q3.
Duncan Jones from Forester then presented on “Executing a Successful Procurement Transformation”. Forester and Ivalua collaborated on a recent survey of procurement executives, and one finding from Jones was that most firms “don’t realise how far they lag behind the leaders”. The gap is widening between leaders and laggards. But interestingly, firms are deluding themselves – 65% of those surveyed self-assessed themselves as “advanced purchasing organisations” while the objective analysis suggests that the true figure was more like 16%!
To create competitive advantage, advanced purchasing organisations are focusing more on risk, time to market, and CSR – and somewhat less on costs. The best are also (not surprisingly) more likely to be using specialist tools – either multiple products or procurement suites, rather than just ERP or home-grown tools.
He also talked about Forester’s vision of “intelligent platforms and their ecosystems”, but just one final point for now, which is Jones’ comment that to succeed “you need vendors (solution providers) who are open to a lot of external data and information sources”. It’s hard to do justice to such a content-packed session in a limited space and time, so do look out for more on that survey.
We then had two very good but different customer sessions. You can’t get much further apart than automotive braking systems and cosmetics in terms of products, but actually at the heart of the sessions from Chassis Brake and L’Oréal there were some common themes.
Chassis Brake International is one of the largest global manufacturers of braking solutions, with 5500 staff, €1 billion euros annual revenues, and 23 sites in 16 countries. Around 80% of the firm’s cost base is purchasing costs, so they really have to get this right! Back in 2015, with 12000 suppliers, less than 30% PO coverage, and indirect spend largely uncontrolled, a procurement transformation programme was commenced. Three years later – and with Ivalua technology supporting the programme of course – supplier numbers are down to under 5000, purchasing processes are fully digitised, and there is 99% compliance to a “no purchase order no pay” approach. Very impressive, and there was plenty of good advice from the team during the session.
L’Oréal is …well, you know L’Oréal! Their programme was all around sourcing, again using Ivalua as the source-to-contract platform, as the cosmetics firm introduced a standardised but flexible global approach to that area. Being a superb marketing organisation, it is perhaps no surprise that the programme was professionally branded as “MySourcing” and we saw a very high-quality video made to promote the programme internally.
The aims were;
- Sourcing process harmonization and best practice sharing
- Transparency and legibility towards suppliers
- Auditability and traceability
- Unique, integrated and digitized solution
L’Oréal has also integrated several risk and CSR tools into the platform, seeing this as an integral part of the sourcing decision making process. The programme kicked off in October 2017, and all the “direct” purchasing communities are on-board now, with indirects to be completed later this year – an impressive achievement in a firm with some 750 purchasing staff.
So, two somewhat different case studies – but we saw some underlying common threads here, and indeed in the other customer sessions at the event. Here are our take-aways, five tips to consider if you are getting into any sort of procurement transformation programme. We may come back to these in more detail at a future date!
Top level buy-in is key – Board level support is vital.
Communicate, Communicate, Communicate – with suppliers as well as internally.
Design your processes ahead of choosing tools and technology (but don’t tailor and customize technology unnecessarily).
Run the programme professionally – with proper project and programme management disciplines.
Committed people are vital – every transformation lead we heard from at IvaluaNow had a visible passion and commitment for what they were doing.
And remember transformation takes years, not months. You need initial vision, strategic thinking and analysis, but as time goes by, qualities such as energy, tenacity and resilience from the change leaders is just as important – in fact, probably more so.
Author: Peter Smith, Managing Director at Procurement Excellence Ltd. Until recently also Managing Editor, Spend Matters UK/Europe.