SABMiller Procurement CIPS, Zug Speaker...SABMiller Procurement Transformation CIPS March 2015 20 No major change in headcount numbers, resource mix very different Central Organisation
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Transforming Procurement in a Decentralized FTSE Top 10 Company
SABMiller ProcurementCIPS, Zug
March 2015
© SABMiller 2014 2SABMiller Procurement Transformation CIPS March 2015
SpeakersSpeakersSpeakersSpeakers
Katharina Stenholm, CEO
• Joined SABMiller Procurement as VP Brewing Raw Materials in April 2010, from the Polttimo Group where she was CEO.
• VP Business Transformation in SABMiller Procurement from 2013 -2014, appointed CEO in Nov 2014.
• Katharina has a PHD in Biotechnology and Applied Biochemistry.
Jim Ridgwick MCIPS, Global Head of Capability & Procurement Excellence
• Joined SABMiller Procurement in March 2011, from Deloitte’s Supply Chain & Procurement Management Consultancy practice in London and Shanghai where he was a Senior Manager.
• He is driving Procurement Excellence across SABMiller’s Procurement function and notably through its Transformation programme.
© SABMiller 2014
Have you heard of SABMiller?Have you heard of SABMiller?Have you heard of SABMiller?Have you heard of SABMiller?
2nd largest brewer 2nd largest brewer 2nd largest brewer 2nd largest brewer in in in in a market which has seen consolidation among key playersa market which has seen consolidation among key playersa market which has seen consolidation among key playersa market which has seen consolidation among key players
3SABMiller Procurement Transformation CIPS March 2015
2003 2013
© SABMiller 2014
Which one of these beers is from SABMiller?Which one of these beers is from SABMiller?Which one of these beers is from SABMiller?Which one of these beers is from SABMiller?
4
As the name suggests, ("Urquell" in German or "Prazdroj" in Czech both mean "the ancient source")
Pilsner Urquell is the original pilsner and first pale lager beer.
It was immensely successful – nine out of ten beers produced and consumed in the world are derived from the original Pilsen beer.
SABMiller Procurement Transformation CIPS March 2015
© SABMiller 2014
Which are the bestWhich are the bestWhich are the bestWhich are the best----selling 5 beer brands of the world?selling 5 beer brands of the world?selling 5 beer brands of the world?selling 5 beer brands of the world?
5
1.
103m hl
2.
53m hl
3.
51m hl
4.
44m hl
5.
41m hl
SABMiller Procurement Transformation CIPS March 2015
© SABMiller Internal Use / Confidential / Secret
3333rdrdrdrd Party SpendParty SpendParty SpendParty Spend
Brewing Materials
+ Sustainability
Malt & BarleyHops
Process MaterialsAdjuncts
SugarFiltration
Stabilisation
Packaging Materials
Glass BottlesCans
PlasticsClosuresLabels
SecondaryTertiary
Supply Chain & Logistics
FreightFleet
EquipmentParts
Site ServicesCivil
Warehousing
Marketing & Business Services
MediaAgency Fees
POS MatsConsultancy
TravelNetworks
Hardware / Software
© SABMiller 2014
AgendaAgendaAgendaAgenda
7SABMiller Procurement Transformation CIPS March 2015
Local & decentralised!
Transforming Procurement
A deeper look
Learnings
What’s next…..
© SABMiller 2014
Who we areWho we areWho we areWho we are
• Group revenue of $27 billion
• >70% of profit from developing economies
• 95% of lager volumes from No. 1 or 2 market share positions
• SABMiller brews over 200 beer brands in more than 75 countries around the world.
• 70,000 employees
• Strategic partnerships with The Coca-Cola Company: joint venture with Molson Coors in the US
8SABMiller Procurement Transformation CIPS March 2015
© SABMiller 2014
Becoming a global brewerBecoming a global brewerBecoming a global brewerBecoming a global brewer
9SABMiller Procurement Transformation CIPS March 2015
1895 2012
© SABMiller 2014
Group Strategy from 2009Group Strategy from 2009Group Strategy from 2009Group Strategy from 2009
SABMiller Procurement Transformation CIPS March 2015
© SABMiller 2014
Procurement was also decentralisedProcurement was also decentralisedProcurement was also decentralisedProcurement was also decentralised
11
Glo
ba
lR
eg
ion
al
Loca
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Where we started 2009
R R R
Limited collaboration across
regions
Very limited sourcing above
market
• As with all functions, each country had their own Procurement team
• Sizes varied from a couple to over 60 people
• There were no global procurement roles
• Councils were established to collaborate above country and above region
SABMiller Procurement Transformation CIPS March 2015
© SABMiller 2014
AgendaAgendaAgendaAgenda
12SABMiller Procurement Transformation CIPS March 2015
Local & decentralised!
Transforming Procurement
A deeper look
Learnings
What’s next…..
© SABMiller 2014
Transforming Procurement….Transforming Procurement….Transforming Procurement….Transforming Procurement….
13SABMiller Procurement Transformation CIPS March 2015
The challenge faced …..the solution ….how we did it
• Supply markets globalising
• Competitive threat
• Ineffective collaboration above
country
Significant lost opportunity
20
10
-20
12
20
13
-20
15
© SABMiller 2014
….the solution….the solution….the solution….the solution
14
• “Trinity Procurement” established• Focus on strategic sourcing• Location selected was Zug with regional satellites• At its peak it was 80 global category managers and
~10 regional category managers in in each regionGlobal
Global & Regional
Sourcing teams
R R R R
Glo
ba
lR
eg
ion
al
Loca
l
Early successes:
� Pathfinder function in SABMiller to leverage global skill
and scale
� Put Procurement on the map
� Significantly exceeded financial benefits targets from
building great teams
� Procurement’s role in the Sustainability agenda
established
Establish a strategic procurement unit in SwitzerlandEstablish a strategic procurement unit in SwitzerlandEstablish a strategic procurement unit in SwitzerlandEstablish a strategic procurement unit in Switzerland
SABMiller Procurement Transformation CIPS March 2015
© SABMiller 2014
…how we did it…how we did it…how we did it…how we did it
15
Capability highlightsCapability highlightsCapability highlightsCapability highlights
2010 2011 2012 2013 2014 2015
Strategy
People
Process
Technology
Strategic Sourcing
Ways of Working
Supplier
Accreditation
Value realisation
tracker
Sievo Benefit
Forecasting
100Cat Mgrs
400 Suppliers
Benefits
Methodology
KPI
framework
Commercial
Value Levers
Category
Strategies
developed
1
SABMiller Procurement Transformation CIPS March 2015
© SABMiller 2014
Transforming Procurement….Transforming Procurement….Transforming Procurement….Transforming Procurement….
16SABMiller Procurement Transformation CIPS March 2015
The challenge faced …..the solution ….how we did it
• Supply markets globalising
• Competitive threat
• Ineffective collaboration above
country
Significant lost opportunity
20
10
-20
12
20
13
-20
15
• Could get money on the
table but harder to get
money in the bank!
• Successful for big direct
spend, less traction with
fragmented indirects
• Inefficient and duplicated
transactional procurement
• Distance from country
customers
© SABMiller 2014
….the solution….the solution….the solution….the solution
17
Transform Procurement into a globally integrated functionTransform Procurement into a globally integrated functionTransform Procurement into a globally integrated functionTransform Procurement into a globally integrated function
One Globally Integrated Function
One Globally Integrated Function
Glo
ba
lR
eg
ion
al
Loca
l
“Trinity” before Northstar2012
Today2015+
Global
Global & Regional
Sourcing teams
Global Sourcing
R R R R
Global POC Network
Buy-Sell
R R R R
• All Procurement headcount reporting into a CPO
• Operational and strategic procurement brought together
• Transactional elements industrialised into operations centres (POCs)
• Buy Sell capability to increase transparency and centralise risk
SABMiller Procurement Transformation CIPS March 2015
© SABMiller 2014
…how we did it…how we did it…how we did it…how we did it
18
Capability highlightsCapability highlightsCapability highlightsCapability highlights
2010 2011 2012 2013 2014 2015
Strategy
People
Process
Technology
650+
Strategic Sourcing
Ways of Working
Procurement
Handbook
Supplier
Accreditation
POCs in place
Global Procurement Policy
P2P Policy
Value realisation
tracker
Sievo Benefit
Forecasting
CombineNet and Ariba
Sourcing & ContractsGlobal ERP template
100Cat Mgrs Total
Process and Technical
Value Levers
400 Suppliers
100k Suppliers
Benefits
Methodology
Procurement Portal
New roles
defined
Regional
Heads in
place
Reporting
line to CPO
KPI
framework
Spend under
Procurement
Management
accelerated
Commercial
Value Levers
Category
Migration
defined
Category
Strategies
developed
1 2
SABMiller Procurement Transformation CIPS March 2015
© SABMiller 2014
AgendaAgendaAgendaAgenda
19SABMiller Procurement Transformation CIPS March 2015
Local & decentralised!
Transforming Procurement
A deeper look
Learnings
What’s next…..
© SABMiller 2014
Organisation structureOrganisation structureOrganisation structureOrganisation structure
20SABMiller Procurement Transformation CIPS March 2015
No major change in headcount numbers, resource mix very differentNo major change in headcount numbers, resource mix very differentNo major change in headcount numbers, resource mix very differentNo major change in headcount numbers, resource mix very different
Central Organisation
(Zug)
Regional / Country Organisation
Global Head of
Procurement
VP Packaging
VP Brewing Materials
VP Supply Chain & Logistics
Group Head of Supply
Chain & HR
Europe
Head of
Procurement
Region Supply Chain /
Finance Director
Strategic Procurement Organisation
Regional Operational Procurement
VP Marketing & Business
Services
LatAm
Head of
Procurement
Africa
Head of
Procurement
AsiaPac
Head of
Procurement
Head of HR
Country Procurement Support
Capability Development and
Support Functions
Country
Procurement
Support
Proc Ops Centre
Regional/Local
Category
Management
Reg Op ProcurementCap Dev &
Support
VP Finance & Operations
Global Business
Services (GBS)
Sourcing Support
© SABMiller 2014
Procurement Operations CentresProcurement Operations CentresProcurement Operations CentresProcurement Operations Centres: : : : Transactional Core of the new Global Procurement Model
Reporting and
Compliance to
Policies
Spot Buys
Contract
Enablement (e.g.
Catalogues)
• Free capacity in strategic teams
• Full visibility and control of every
purchasing transaction
• Enabled with Category Manager’s
instructions
Transforming ProcurementTransforming ProcurementTransforming ProcurementTransforming Procurement
SABMiller Procurement Transformation CIPS March 2015
21
© SABMiller 2014
Competency upliftCompetency upliftCompetency upliftCompetency uplift
22SABMiller Procurement Transformation CIPS March 2015
We embarked on a major training programme across our We embarked on a major training programme across our We embarked on a major training programme across our We embarked on a major training programme across our 666655550000+ + + + employeesemployeesemployeesemployees
Org. Design
Job Roles
Competency Framework
Training Curriculum
Training Modules
Train the Trainer
Roll-out
Strategic Procurement:
In Country Procurement:
• 16 modules ~ 4 days ~ 676 total days of training
delivered
• 17 modules ~ 4.5 days ~ 1368 total days of training
delivered
Operational Procurement:
• 18 modules ~ 5 days ~ 560 total days of training
delivered
© SABMiller 2014
Key enablersKey enablersKey enablersKey enablers
23SABMiller Procurement Transformation CIPS March 2015
Major building blocks of the new operating model Major building blocks of the new operating model Major building blocks of the new operating model Major building blocks of the new operating model includedincludedincludedincluded
Procurement Handbook
Knowledge Centre
Global Procurement Policy
“How to buy” Portal
Consistent ways of
working
Knowledge & best
practice sharing
Procurement mandate
Customer experience
© SABMiller 2014
AgendaAgendaAgendaAgenda
24SABMiller Procurement Transformation CIPS March 2015
Local & decentralised!
Transforming Procurement
A deeper look
Learnings
What’s next…..
© SABMiller 2014
Procurement Transformation can be done at speed, butthere are several hard requirements to be metbeforehand:
• High calibre transformation team under trusted business leader
• Early, focused and frequent stakeholder engagement from ExCom down to Country MD/FD to create strong sponsorship in region
• Clear vision around Spend under Management and Benefit delivery
• Use consultants selectively. Use the transformation programme to build in-house capability.
• Manage the design process tightly and have a Design Authority in place to deal with and change requests.
The rewards outpace the investment by far.
25
Change Management approachChange Management approachChange Management approachChange Management approachKeep close to your stakeholdersKeep close to your stakeholdersKeep close to your stakeholdersKeep close to your stakeholders
SABMiller Procurement Transformation CIPS March 2015
© SABMiller 2014
AgendaAgendaAgendaAgenda
26SABMiller Procurement Transformation CIPS March 2015
Local & decentralised!
Transforming Procurement
A deeper look
Learnings
What’s next…..
© SABMiller 2014 27
Capability development beyond the transformation Capability development beyond the transformation Capability development beyond the transformation Capability development beyond the transformation programmeprogrammeprogrammeprogramme
SABMiller Procurement Transformation CIPS March 2015
© SABMiller 2014 28
Capability build is the critical bridge between strategy Capability build is the critical bridge between strategy Capability build is the critical bridge between strategy Capability build is the critical bridge between strategy and performance and performance and performance and performance
SABMiller Procurement Transformation CIPS March 2015
Cap
ability
Deliver
ed
YearF10- F14 F15 – F16 F17 – F20
Trinity Procurement & Country Teams
Globally Integrated Procurement
Procurement Excellence
Buy-Sell Piloting & Scale-up
Op. Centres (POCs) & Global
Procurement Policy (GPP) rolled-out
Supplier Management Ways of WorkingStrategic Sourcing Ways of Working
High proportion of Spend
Transacted through Buy-Sell
Comprehensive Supplier Partnering
Programme
Centre-Led Sourcing Model
Seamless Source-to-Pay Service
Demand Management (through
Closed Loop Value Realisation)
Ways of Working with the Business Procurement Business Partnering Business Integration with Joint Goals
Cash & Cost FocusTotal Value Focus
(Innovation, Sustainability, Quality, Capacity, Risk, Service, TCO)
© SABMiller 2014
Thanks for listening!Thanks for listening!Thanks for listening!Thanks for listening!Any questions?Any questions?Any questions?Any questions?
29SABMiller Procurement Transformation CIPS March 2015
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