SRM
Supplier Relationships In Pharma – How Sanofi Are Reinventing Their Approach To SRM
December 2, 2020
Darragh Toolan
37 minutes

On Demand Webinar with Sanofi CPO Stephen Cobham

Full Webinar Transcript:

Speakers: Jenny Draper (Spend Matters), Stephen Cobham (Sanofi), Mark Perera (Vizibl)

JD:

Hi, everybody. Welcome to this webinar. I’m delighted to be hosting this panel discussion between Stephen and Mark around how Sanofi are reinventing their approach to supplier relationships. First of all, a couple of points of housekeeping. This is being recorded as a webinar. So for those of you that are not on and missed it, you’ll be able to have this as a catch-up, and second of all just for your information, you can forward along to all of your organisation as well. Um, second point, and very important for us, is that we are going to protect around 15 minutes at the end of this webinar so that you can ask questions using the Q&A widget, and we will get through as many of those as we can. So please do submit your questions during this webinar. So without further ado, I’m going to make a couple of introductions. First of all, myself, I’m Jenny and I am the Head of Client Services at Spend Matters, an organisation that really goes deep into Source to Pay technology. It is my pleasure to introduce you as well to Stephen Cobham and Mark Perera. So, Stephen would you give us just a brief introduction as to who you are?

SC:

Yes. So thanks Jenny and good morning or good afternoon to all of you. My name is Stephen Cobham, as Jenny was saying. Jenny was trying to guess where my accent is from and she failed. You’ll be hearing me for the next few minutes or so, and let’s see if you can figure out where I’m from. I think Mark probably knows by now, because we have a, I think a common football connection. But Jenny didn’t invite me here for football or to talk about accents. She asked me to come and talk a little bit about what we do in terms of supplier management in Sanofi. So for those of you who don’t know me well, I’ve actually been in the commercial side all my life. I’d be managing P and L’s, countries, regions, mostly in the pharmaceutical industry, and the beginning of last year I transitioned into procurement. So I come with a very strong business, what I would call a sales background, very much focused on the sell side of the business and transitioned into the buy side of the business, which is a very, very interesting career transition to make, which I have to say I’m very, very much enjoying. So relatively new to procurement, but not new to the corporate world, not new to how to navigate some of the challenges that large corporations have.

JD:

Anyone that can guess his accent needs to put it on the Q&A as well, we’ll have a prize for who guesses the accent! Mark, your turn. 

MP:

Yes, Mark Perera, I’m the CEO and founder of Vizibl. Also, I founded Procurement Leaders and actually that’s when I first met Jenny, some 16 years ago. Jenny was with one of the sponsors of that event – with James if I remember so – a few years ago. So yeah, founded Procurement Leaders. Before that I was a technologist and a coder – not a great coder in my younger years – but thoroughly found a passion for procurement back in 2003, 2004, and kind of committed my life to that with Procurement Leaders, which I exited last year. And the last five years have been building up Vizibl, a technology company really looking at this new category of Supplier Collaboration and Innovation. And the reason we started doing this is we, you know, the time we’re spending with human leaders and business leaders, there was just this unmet need to help companies scale the way they work with their suppliers, both the big ones and the emerging, in an effort for us to drive impact.

And that’s continued as we’ve built the technology. We did a lot of working with Sanofi actually, early days, and a group of about 10 pharma companies in terms of that customer discovery side and Vizibl comes out the back end of that. So we got into the Gartner Cool Vendors list this year, and got some great recognition from your almanac, and Procurement Leaders in the past year. So it’s been a great journey and I’ve loved collaborating with the procurement industry – with both Procurement Leaders, but also building Vizibl. So I’m on the journey with the function, and look forward to the next ten years as well. 

JD:

Nice one, that’s great! And I think the reason we set this webinar up really was – for me, the story of Sanofi, what you’re doing in supplier collaboration, and the interaction with Vizibl, it’s fascinating, and actually Stephen’s views are fascinating. So we wanted to just ask him a few questions about that, and I’m going to start with you Stephen if I may. Around your journey for supplier collaboration, what was the tipping point for you feeling the need to invest in a supplier collaboration platform?

SC:

Yeah. Well, first of all – Mark, I didn’t know that Sanofi were founding partners of Vizibl many years ago, so it’s always good to discover new things. So Jenny, what you’re asking is– actually, you know, it’s pretty obvious for everybody that is listening to this. The suppliers are obviously the lifeblood of procurement. But even if it’s pretty obvious to us, I can assure you, it’s not obvious to many people in large corporations – or small corporations. As I said to you, I was on the commercial side. I was on the sell side, not on the buy side and my focus (and the focus of most companies) is typically on growth: on the top line. So you get all these,  you know, “customer centric”,  “we put the customer at the centre of what we do” and all of these, um, growth- and customer-driven slogans that you get in, in all types of companies.

But very little time is actually spent on the buy side. And because I was coming from the commercial side, I was actually in a privileged situation to be able to have some discussions with senior commercial colleagues of mine and some of the EXCOM members of the company. And I tell this story because it’s a true story. It’s not fake. I’ve sat down with many business unit heads and senior leaders of commercial relatively informally, but have a little bit of fun with them also. So I sit down with them and I ask them candidly, you know, who are your top three customers? And of course most of them know (surprisingly, some struggled a bit with identifying their top three customers). They’ve probably not seen their customer in ages, but you know, they all talk customer, and it’s the thing to talk about. So then I flipped the sides and I said, can you name your top three suppliers? And again, these are very senior people in the organisation. And they drew a blank. So then I asked them, do you have an idea how much money you’re spending on your large suppliers? And, again, they draw a blank. So then I ask them, do you know how much value you’re getting for the amount of millions that you are paying to these suppliers? So by that time they get it, they say, look, I get it. I understand. I don’t really know what you’re talking about. I thought that was procurement’s responsibility, not mine – a typical response. Anything that has to do with suppliers is managed by somebody else, by procurement, but I’m the business guy – I just focus on sales. I focus on my customers and somebody else will take care of the rest of the business. How wrong that is.

Now that I’ve transitioned to the supplier side, I really feel that I’ve missed a trick or so – or many tricks – in my past by really not spending enough time understanding my supplier base, extracting value from that supplier base to help me drive growth. So you, you, you learn these things as you go. Again on the sales side, you get hosts of suppliers selling all kinds of platforms to better segment your customer base. You strategise around reach, and frequency of your customer calls, all of that. But when I joined procurement, I found that it was very different on our side, in terms of the way we segment, we talk about, and the tools that we have to manage our suppliers. They were very limited and rudimentary compared to what we have to manage our customers on the sell side. 

So it struck me that this is a big problem. Your strategy has got to be a play to win. But you need to know where to play, and clearly I think the way we were approaching our supplier relationships was very tactical, probably without the depth that we should be getting. And coming from the sell side, I realised rapidly that this is something I really wanted to change. So we quickly embarked on a journey. We set ourselves a roadmap in Sanofi to manage change in procurement. And one of those key levers of the roadmap was that we really need to tackle our approach to suppliers. We need to be much more strategic, but we need to be more collaborative. We need to be more open, we need to be humble and we need to bring them in. 

And, you know, one of the key observations when I was meeting suppliers early on is that this discussion tended to be very tactical – they were more focused on their responses to RFP. Questions that we were asking were also very operational; regarding risk management, or some scores on a supplier assessment grid, or challenging them on a couple of KPIs that we were monitoring. But really they were not discussions of any strategic impact. Maybe this happens to other people in procurement in other companies. But for me, this was clearly not satisfying. And early on we said: we need to change this dialogue. We need to be able to have much more robust dialogue where we can use their power, their knowledge, their knowledge of our competitors, of our marketplace, to help us grow. And not to just respond to RFPs as they were doing in the past.

So we created a lot of excitement internally within the company, because there’s two challenges that we fundamentally faced. Number one, right, as I said, was to get the outside in: to have a much more meaningful relationship with suppliers to connect to our strategies of growth. So I’m always focused on growth. That’s what I do. And that’s what I’ve been doing for all my life. And I believe that the supplier base, and through supplier innovation can help us drive growth. So that was the first thing I was focused on is: how do we bring the outside in? How do we bring ideas from suppliers, meaningful ideas that can help us drive the business. Secondly was: how do I get the business partners, senior leaders in the company, interested in what suppliers have to say? How can we showcase the value that suppliers have, so that we change the perception of the business leaders in the company that suppliers are [only] dealt with by procurement? How do we change that notion? 

Because ultimately it’s the users themselves. So at least my belief is that the users themselves are experts in their own domain. They are the ones that should be having the in-depth discussions with suppliers. Our job in procurement is to facilitate those contexts – is to be the connectors. But ultimately the users are the ones that are the specialists, and they should be really challenging suppliers. And as you start working with bringing ideas from the suppliers into the company, and you start creating more excitement and energy within our business leaders on the value of suppliers, you start to uncover things which are very often– you know, we’ve had suppliers that have been working with our business leaders for over five years, and they’ve never met. They’ve never met. And I’m talking big suppliers. I’m not talking the tail-end, you know, I’m talking suppliers where you’re spending 10, 20, 30 million. Never met because again, the relationship was transactional. So working on those two aspects of: how do we bring the outside in, in terms of procurement innovation and ideas from the suppliers; and how do we get our business partners more interested in what is out there – how do we leave our egos and our arrogance at the door to be able to listen intently to what suppliers have to say. So all of that culture mindset we brought into the organisation last year, and we’ve actually had quite a lot of fun with it, and I’ve really enjoyed the path. We’ve got some great results. We ran the first ever supplier day in the company. It was in the pre-COVID days, January 30, so pre-COVID, just about. But perfect timing, I loved it. Anyway, it was a phenomenal event and I’ll tell you one of the reasons it was a phenomenal event. We only had the top 20 suppliers, but we had CEOs of suppliers coming. It wasn’t key account managers, it was the top guys. And because we’d planned this in advance and we pre-marketed this event in the company, I was able to get not only the CEO of [Sanofi] to attend, but all of the executive committee of the company. And attending is not just shaking hands and being here for a few minutes; the CEO gave the opening speech, he spent two hours with all of the suppliers. The executive committee spent six hours of the day. The CEO had lunch with all of the participants.

And one of the beauties of it is that we had the suppliers pitch to us. We said, we really want to hear from you. We want to hear the outside in, tell us what we’re doing wrong. Tell us what we could be doing more, and tell us what additional share of [Sanofi’s] business you would want. And we had incumbents come in and pitch to us. We also had some challenger insurgents come in after them. So you created a very positive dynamic. It was a very friendly dynamic, but it was a business agenda. Out of that day, because you had all the executive committee members present and the CEO, you had an enormous amount of interest all across the business for what was happening. And we got many ideas. We’ve got three ideas out of each – in the end we had 67 ideas, innovations that came out of these top suppliers on what they could be doing differently, or what more business Sanofi could be doing. You know, January 29th, we had zero ideas, January 30th at 5 o’clock we had 67 ideas. It’s as simple as that, you know, organising the event and getting the excitement in the company took its time. We had some great people inside our organisation, helping us create that. That excitement and that huge event to this day is still iconic in the company. It’s probably– maybe it’s because it was one of the last events we had and then the lockdown came (!)– but it was an iconic event because to have the CEO so present. And not just present, he’s a true believer in the value of collaboration and partnerships. He was brilliant actually. So all these EXCOM followed, and we’ve been having a blast. 

We’ve been milking this event tremendously afterwards, but it’s just created a very different mindset and dynamic in the organisation. And what we said is we want to make this not just a one-time event, but want to make sure it’s part of a journey so that we don’t just leave it at that as a great day, January 30, and then we go back to our inboxes and business as usual, but that we actually created a journey. And this is where came across the need for a more systematic platform. We need a tool. We need technology to help us. And this is how we came across Mark’s company, because it was fit for purpose of what we were looking at, what we were needing. You know, it was the right time. We felt that now. Also because of COVID, we needed a technology platform to help us keep the connections going, keep the buzz, keep the noise, keep the energy, the excitement. And suppliers– currently, you know, my CEO was speaking to one of our largest, our number two, supplier on Monday, discussing new ideas and ways of doing things.

And I love that, but you suddenly have your CEO saying, hey, this guy has reached out to me. He’s got this. What can I say? What do you want me to say to him? And that fluidity of exchange with the external suppliers is phenomenal to see. We didn’t have that not that long ago. You’ve now created an ecosystem and environment where ideas are coming, and the value of suppliers is being much more recognised in the organisation, which is why we need a platform. We need some order, we can’t continue working with Excel. So thanks Mark for putting together this solution, which we’ve recently implemented.

JD:

Stephen, that’s a fascinating story and it kind of sounds like the impetus for a platform was driven by an event, a very important event for Sanofi. Did that help give you the business case? And particularly because the CEO was there to say, we need to translate those ideas and we need to follow through on these ideas and these relationships into a platform. Did that make your business case to the board, to invest in a piece of technology? Does that make it easier for you? And is that something that you would recommend as an approach for other people?

SC:

Yes, it did. The request wasn’t made out of the blue. It was part of, as I said, the noise that today we have in the company around procurement, you’ve got many initiatives in the company. Now we’re talking, you know, smart spend, we’ve got category councils, you’ve got the many senior leaders involved in many activities of procurement [like] meeting suppliers. So all of that positive momentum is needed to be able to argue the case for implementing a new solution or a tool. But I have to say Jenny, it’s more about asking for forgiveness and not for permission. This is the right thing to do. I clearly need to get value. I know what I’m doing. I’m not going to ask for people, for the board, if I can do this or not. I invest where I believe there is an opportunity, whether it’s business sense, where I can sense an ROI. I’m more preoccupied with implementing and getting the juice out of it than “how do I sell this” – “how do I do the PowerPoint and present a business case to the board of executives” in my case.

So, the rationale was clear. It makes a lot of sense; it’s a continuum of what we’re doing. We can’t work without digital tools and solutions. So it wasn’t a big drama for me. Because again, the company culture is now much more open to talking all things related to procurement, and supplier management, and supplier innovation and collaboration. So when that ecosystem is there things fall into place, it becomes much, much easier. So it really wasn’t difficult, but I wouldn’t recommend you just walk one day, walk into the office of your boss one day and say “Hey, look, I’ve got a new solution. I want to implement it”. You know, you’ve got to build the wider ecosystem and manage that way. And as I was saying to Mark the other day, it’s not just the tool, it’s the tool and the mindset. Both things together. It’s both sides of the coin, the tool and the mindset together will actually, I hope, bring significant value. So I’m counting on your tool, Mark, and our mindsets, [for] great results in ‘21.

JD:

And I think creating that ecosystem as well, just getting the suppliers on board to start with seemed a really great idea. I’m sorry, Mark. You were going to say–

MP:

Yeah, I’d reiterate what Stephen was saying. I think it’s the mindset. So you can’t just turn any technology on and expect it to change the world. I think what Stephen’s doing and what we’re seeing from other companies, but also progressive CPOs is [they’re] investing in the areas they’re looking to move into. So, as Stephen is saying, he’s looking at growth and the future. I think sometimes procurement leaders spent a lot of time investing in the past – the transactional part of the things that they do with their suppliers, and the governance side. They still need to do the cost and the risk management and everything else like that. But again, from what Stephen has said, it’s investing in the things that are right to do, but also where you’re going to get the return, and where it’s going to take the function and the company forward.

So that’s where you should be making sure a certain amount of your resource, a certain amount of your budget is to the strategic transformational journey that can help the business side, versus just the transactional side. But I’m not saying you shouldn’t do all the things procurement has done in the past, they still need to do [those], but sometimes that new PTP system is operationally good for the business, but it’s not really going to change the dial for the transformational journey of the organisation. So I think this is what we’re seeing from our customer base and and the prospects we’re talking to, is they’re looking to make that more strategic “above the waterline” programme where procurement really can have an impact on the business strategy – whether that’s the gross, the productivity, or the sustainability agenda (which we see more and more).

And that’s where we see the common trend, as with Stephen and at Sanofi, me as well. I think that might, that mindset piece is also key. We talk about net curiosity score, Stephen and myself. We’re a little bit obsessed by this acronym about getting people within the business to start really thinking of the relationships, but also where we can get impact from working with the current suppliers as new ones are really getting your curiosity score up, not just in the procurement team, but the business as well. And it’s fascinating. It’s nice to see these programmes coming through and working with leaders like Stephen and his team. And we were lucky enough to have the CFO on a call a couple of weeks ago with his leadership team and also getting that confirmation from the executive leadership. So, yes, we bring the technology, but we really like to be part of the change programme and, and bring a little bit outside in there, and how does that mindset come through? And there’s a journey that you’re on, a transformational journey, and our technology is a nice enabler for that as well. 

But, yeah I forgot, Stephen. I should have mentioned that we worked with the Sanofi team some five years ago and those other pharma companies to really do that customer discovery; part of understanding the problem – where the gaps were. And that’s how we started building from a PowerPoint to now, five years on, an enterprise solution around this. And we look forward to carrying on doing the R&D and taking it forward in the next 10 years as well. 

SC:

What do you say about the transactional pieces? Obviously you don’t minimise it. I call that [transactional element] “keeping the lights on”, versus “illuminating the future”. And you need both, but I want to spend more time on the future. How do we create those abilities to challenge, demand, to bring efficiencies, the harder nuts to crack with procurement and that you can’t do transactionally? You can’t do it by yourself. That’s where you need the true value of Supplier Collaboration and Innovation to come into play.

MP:

Yeah, I think what we’re also seeing as those companies that take the step as Sanofi have done, and our other customers, they’re also looking at their position in the ecosystem. So if you’re going to be the customer choice, or the innovation or partner of choice, you’re going to have that loyalty. They’re going to put that R&D around your organisation. And they can’t do that for every one of their customers within the pharma industry. So they are going to be selective where they put their best teams, where they put their best R&D, and where they put their efforts. So there is a first mover advantage for taking that position in the ecosystem, both with your big suppliers, but also your smaller ones. And I think that’s the exciting part of the journey with Sanofi, is not just working with our large suppliers, where our teams have been working together over the last few months, but how do we work with the emerging suppliers around some of the unmet needs and the opportunities to the organisations, and continuous improvement of capturing that as well.

And back to that point about the supplier days. What we have found in the past is that those supplier days are great platforms for getting the senior execs to align with the suppliers. But you also need to have the operating model, the processes to capture those ideas and make sure that the business stakeholders can then be accountable for giving feedback and ownership of those as they mature through the organisation, from idea, to approval, to scale. And the last thing you want to do is go and have a big event announcing and getting everyone aligned, and then not be able to be honest with them in terms of looking after those ideas and nurturing them as well. So, it’s a great way to do it, and I think supplier days are a great opportunity, especially in COVID now we’re finding more companies going digital on that– I’ll pitch my other company. I helped invest in a company called Supplyday.com who also help do those [supplier days] for companies who are trying to come up with those as well. They’re really interesting times, interesting topic there.

JD:

Too right! I just want to pause, because we’ve got a poll that we’re just going to push out now Darragh, if you don’t mind pushing out a little poll with a question for our participants. So if you wouldn’t mind answering that poll, and then that’s something that we’ll talk about once we get the results in: “What do you feel your main challenges are when it comes to supplier relationship programmes right now?”. If you can put your top ideas, that would be fantastic. Whilst we’re just waiting for that… Mark, I just wanted to ask as well in terms of Stephen’s experiences. And it sounds as if it’s the case is– Stephen’s experiences and where he came from, is that typical of the customer base and the prospect base that you’re working with in terms of his reasons for implementing such a collaborative platform?

MP:

Yeah, I think it comes from progressive procurement leaders, but also there needs to be that business need and business alignment as well. So we [also] have it coming from the technology side, you know, working in the telecom and tech space where it’s coming from the CTO in terms of really understanding the transformation that they’re doing with their big technology suppliers. So it’s a lot around the portfolio of their, let’s say their 2025 vision and of how they get their cross-functional teams and cross-company teams around those projects and those programmes to deliver on those as well. We’re seeing an increased part from the business around the sustainability side. So, you know, everyone’s making their Davos commitments. We have our ESG ratings and our UN SDGs, and we’re seeing sustainability and procurement working very closely, and sometimes the functions coming together.

So how do you actually deliver on those programmes and projects you do? It’s going to be with your current suppliers, and new ones, and there’s going to be new technologies coming through. So we’re seeing it from a sustainability side, a really strong pull at the moment. But it needs a progressive CPO, and it could be in pharma where R&D is a key focus in terms of the, you know, the transformation of R&D. It’s changed a lot over the last 10, 15 years. So there’s noise, normally a business driver around it as well, but procurement, I think, stepping up to this. And that’s where the progressive ones are doing it. I think there’s lots of people who talk about this to be honest, Jenny. So sometimes there’s a bit of cognitive dissonance that they had some consultants in there three, four years ago, and there were some PowerPoint slides and some Excel, and they’ve got an SRM programme and are all good.

Um, is there any measurable impact? Is there any business value to the strategy? It’s not really there. So people do need to, I think, challenge themselves in terms of, is that really fit for purpose? Are we investing in the technology and also the operating model? As Stephen said, this is not procurement as facilitators. The relationships are owned by the business, it’s their strategy we’re trying to support, and we need their mindset, their commitment to have that impact with the suppliers to drive the innovation and the productivity and the sustainability agendas together. So technology really helps that happen, to get everyone on the same page and drive that through. And then we can use the technology then to drive insight and future looks as well. So on the whole it is [typical], there’s noise, a clear business need. And I think where Stephen comes from, he comes from a commercial part. We’re very aligned with the growth strategy. So it’s slightly different with Stephen because of his background.

JD:

I couldn’t agree more on that. Just looking at these poll results, so hopefully people can see these on the screen. So again, the question was, “What do you feel are your main challenges when it comes to supplier relationship programmes?” Right now, 50% said articulating the value of better supplier relationships. Next closest was time and/or resource issues. And the next was [that it’s] not an executive- or board-level agenda. What do you think about that, Stephen? I’ll go to you. Is that what you would have expected?

SC:

I don’t know if it’s what I would have expected, but yeah ,I think it’s fair. You know, I go back to what I was saying earlier. I’ve got a very driven agenda on growth, but I’ll give the concrete example of our company because it may be applicable to others, but you see, we’ve got a new CEO and we’ve got a new strategy. The CEO outlined his strategy at the beginning of the year. And so one of my initial observations with my team in procurement is, okay, so the company’s got a new strategy. Do we have a new pattern of spend, or will we continue spending to support the old strategy? And the new strategy actually changed quite significantly. It wasn’t a tweak. It was a very significant change in strategy.

So how do you align your ducks to make sure that what you’re buying is supporting the new strategy and not legacy buying to support the old strategy that’s gone out of the window? And the immediate reaction is that we can’t change it because we are locked into contracts, and how long that is. So yes, we’ve changed it, because you play to win and you play for the future. You don’t play to live in the past. And this is where the supplier value comes in because suppliers were very quick to understand our change in strategy. At the supplier day Paul, our CEO, articulated again the new strategy to everybody. And they were very quick to come in with suggestions and ideas of how we could play in this new approach, new strategy. So that’s helped to revitalise how we’re operating with suppliers, and are we thinking more of transaction of the past, or are we thinking of illuminating the future and spending where we should, where we want to go.

And so I think supplier relationships and supplier collaboration in that context of change– you know, I’m using the example of a new strategy in the company. Maybe you guys, or other people, don’t have new strategies in the company, but in 30 days you’re going to have a new year for your company. So as you go into a new year 2021, what’s going to be different? Hopefully COVID will be different. There will be a vaccine, and we’ll all be fine, but, you know, it’s a good opportunity to rethink what you want to do differently in 2021 and probably enhancing the collaboration and ideas coming from suppliers, the way your company has been managing suppliers, is one way to go. Certainly it’s been our case; piggybacking on this new strategy that we have and making sure that we’re spending to support our new strategy and not the old one.

So that’s what I can share a specific case of – of ours in Sanofi. But I always say, I used to say to my guys in commercial in the old days, is that the new year is an opportunity to leave bad habits in the past and create something new. You’ve got to have two or three new things that you want to start. What are they? And it’s not inertia. It’s not continuity – that doesn’t do it. That takes care of it by itself. Your, my grandmother, can do continuity. What is new that you are going to activate starting at the beginning of the year. So Mark has some ideas that, uh, certainly on supplier collaboration could be, could definitely be one that’s [inaudible].

JD:

Yeah, and I think it’s really timely. I mean, coincidentally, we’re sort of nearing the end of this year and starting a new year, and I think that’s some pretty good advice for people as they come in to January ‘21. I’m conscious of time and I do want to get to questions. So I’m going to ask you both this. Mark, if you are, if there’s people on this webinar (and we have got lots of people on this webinar, we’ve got lots of questions to get through it) – are there some other foundation pieces of advice that you would say, if people are starting this, they’re trying to get investment and buy-in within the company to look at supplier collaboration technology, have you got some starters for them as to what they should be thinking about and how to get people on board?

MP:

Yeah. Well, I guess the programme– it’s looking at a spend number one, and maybe just a very quick segmentation of your key suppliers without spending two years trying to work out a segmentation model. But also going back to the point that Stephen mentioned: what’s the change and disruption in your organisation? I don’t think there’s any company that I’m speaking to that is not going through massive change at the moment, whether it’s the business model or the kind of trends in the organisation. So there’s huge change coming through and you need to do – you’re going to be a facilitator or not. So I talk about spend impact. We’ve had spend management for the last 20 years that we somehow understand the spend looking backwards, but we don’t really know what the impact of that spend is on our organisation going forward.

So I would look at your spend impact. If 80% of your spend goes externally, or 50%, that’s a lot of money. And how has that really been used to transform the organisation so “illuminating the future”? It’s finding the real programmes – I think it’s looking at those programmes that are going on in the organisation that are transformational. There could be sustainability in the FMCG space, getting new products out there. And how can your suppliers support those. In parallel to that, I think your top suppliers– your key stakeholders expect you to look after those big, big 10, or those big suppliers, the ones you spend a lot on. So there’s a tick in the box for governance in mind in the strategy there. But then how do you look at some of these transformational programmes,  and how can your suppliers support them? When you start unpicking that and looking that the business needs to be involved in it, and procurement and the facilitators, and we need, you know, to engage with the suppliers over an ongoing period, not just in the financial year where we’re running our D1s to D5s in terms of savings, but the pipeline will progress year on year and the multiple interactions, the, the need for technology comes out there. But it’s making sure that you’re illuminating the future in what you’re delivering as a procurement organisation. And then how does your team and the technology help you deliver that to the business. 

Excel and PowerPoint and SharePoint, zooming around on relationships and spending a month trying to come up with PowerPoint slides to tell you where you are for your quarterly business meeting, and then in between the quarterly business meetings, nothing happens, you can tell is not the way to drive impact. So how do you digitise these parts and really get strategic and think about these strategic interfaces that procurement actually delivers to the business.

And when you start looking at the impact of the spend with your suppliers, the big ones, but also the portfolio of projects you’re doing across the ecosystem, that’s really insightful. Now there may be duplication, there could be healthy duplication, or they’re making major gaps where we’re missing out on opportunities working with suppliers. How do we go and then source the innovation there as well. So I think it’s understanding your business. I would go back to your annual report, understand what your CEO is doing and read that through and through, and then look at the different business divisions and what they’re doing in there, and really look at what those big category stories could be within your organisation. Then you can start illuminating the future (I’m stealing that phase off Stephen there) and start getting curious about how your suppliers would do that.

I think talking about that narrative, not just talking about SRM, and “if we do good things with our suppliers, good things will happen”. I don’t think Stephen’s making that case, “we will do good things and good things will happen”. He’s saying that we are going to drive a clearer ROI with aligning our strategy, asking our suppliers to work with us, to help us deliver it. So understanding what your business strategy is, and then talking about those big category narratives, and transformations or business transformations is the way to build the business case for, for an SRM programme. And then scaling that to a supplier collaboration and innovation programme that goes across the organisation and is facilitated by procurement, but it’s owned by the business. The CEO should be able to talk about how they’re working with suppliers to drive competitive advantage. 

SC:
If I can add, there’s a fundamental shift that has happened that we can all take advantage of. Strategy used to be secretive in the past. You know, every company had their own strategy and we wouldn’t share it. Strategies are now more public. You discuss them openly, you know, so there’s nothing to hide. On the contrary: this is my strategy, this is my plan. Can you help me? You’ve still got a lot of companies that don’t do that, that are not sharing their strategy openly or not asking for help. And I think that’s probably a behaviour of the past, but in the day and age of connectivity and openness, transparency, transversality that we live in today, there’s an opportunity to actually glean much more value from the suppliers, understanding, supporting your own strategy on that journey. 

MP:

I’ll be quick because I know you want to get to the questions. We look at resilience. We’ve walked a lot about resilience a lot over the last nine months. But we’re talking about operational resilience. So that’s making sure we can keep the business running. If you look at the definition of strategic resilience, this is making sure that we can support the future strategy. And how do we do that? So this is creating the new supply chains, the new products and services that are driving that strategy. Not many people talk about strategic resilience, and that is where our suppliers can really support the business as well. So operational, yep, we need to deliver the business today. Strategic [by comparison] is how do we change for the future demand, the future needs of the business as well. So I think we should, as a procurement function, look at strategic resilience, which is linked to growth. It’s linked to all the strategic parts of the business as well.

JD:

So we’ve got three hashtags. We need to start trending. Now we’ve got #netcuriosityscore, we’ve got #illuminatingthefuture, and we’ve got #strategicresilience. I dare us to try to get some kind of trend going on one of those on LinkedIn or on Twitter. So I’m going to move to the questions, that was fantastic. And then I expect a good discussion again on the many questions. So for those of you whose questions we can’t get to, we will answer as many or all of them once this event has finished and we’ll get back to you via email. But if I go to a couple of the top questions here… question coming from Diane: “how do you measure the benefits and value that you get from supplier collaboration? It seems to be a continuing difficulty for organisations to crack.” Stephen. 

SC:

So I think it’s a good question. I think you just need the discipline of measurement. I used the example of supplier day, but you can extend beyond that. You know, we collected 67 initiatives. We filtered them, we processed them. We actually followed up on them and out of those 67, 35 are being implemented. They’re generating significant amounts of savings, annualised savings. You know, I can tell you over 40 million euros are coming from initiatives that, as I said, on January 29 we didn’t have, so it’s that discipline of counting, measuring initiatives that you get from suppliers. And then, what’s your conversion rate of initiatives to actual implementation. And today I said, we were close to 50% of conversion rate, which is not bad. So I think it’s that, ferocious discipline, [being] accountable for measuring what is actually coming in so that this doesn’t be a bigger nice party. But there needs to be measurements, there needs to be hard deliverables behind what you do. In our case, even with the rudimentary Excel, we were able to do it. Granted, it’s been a bit painful, and hopefully with this solution, the Vizibl platform going forward, it would be much easier to do. But that’s something that we talk about constantly is follow up on those initiatives that were picked up at supplier day. And that’s, that’s a good consistent discipline of measuring and keeping those measurements visible.

JD:

I suppose the follow up to that as well, and again for you, so this is a question from Sebastian: “how have the objectives of SRM within Sanofi changed and, or been reprioritized according to the ongoing developments of the pandemic crisis?”

SC:

So again, I think we’ve probably– we like to believe that we’ve leapfrogged from SRM to supplier collaboration and innovation, you know, give it a bit more of a progressive look and go beyond the classical metrics of SRS, which tend to be in my view a little bit static and operational. So bring in this dimension, what Mark was saying, the net curiosity score, bringing more of the strategic dimension to help us drive growth and to support our strategy. So that’s a clear discipline that is visible all across the management of the organisation. If anything, I would say, you know, [compared to] the old SRM, the new supplier collaboration and innovation has taken a bigger weight in our roadmap of 2020, particularly after the supply day and all the involvement and initiatives and technology platforms that we’re bringing in. I can’t measure, I can’t say it’s gone from good to very good, but it is trending in that direction. It’s being much more visible. And if you look at the results that procurement is delivering today, you know, we’re going to be delivering best results in 2020. And it’s a function of many things, but one of them definitely is this collaboration and different management of suppliers. 

JD:

I’ve got a follow on question, but I’m going to ask this one to you, Mark, from Nick: “what’s the biggest impact of collaborating versus competing with your suppliers that you would expect?”

MP:

Well, I think competing or negotiating hard, um… I think you’ll get there. You might get the savings, but it doesn’t mean that you’re going to be the customer of choice and drive the value. And also the collaborative cost savings. I think if you’re a collaborative in your nature and you can work together around reducing costs within your suppliers’ cost base as well there’s opportunity of that, rather than just the negotiated side. 

Plus, the ability to tap into their R&D to help solve unmet needs and opportunities. And I think that’s the openness that you have of companies that are taking their strategies out there and sharing with their suppliers. You know, you might, they might be delivering commoditized services now where their margin is going to be lower, and that’s going to reduce it. You’re showing them what the future is and they can move the R&D, they can start developing new products and services, it’s going to be better margins for them, because it’s going to drive you more competitive growth for your business. 

So just driving purely on savings is there. And I think I’d also question what’s the cost of the cost savings sometimes. If you’re not getting the service, you’re not getting the products, you’re not getting the quality that your business needs for their growth agenda, what is the cost of the cost savings? So there’s a certain level of cost savings that is not healthy. And then are they really giving you the best service to your organisation? So it’s tapping into a new dynamic. 

Just on those KPIs is a great report by McKinsey called the S curve. So just search supplier management S curve McKinsey. You’ll find a report from a few years ago from an ISM event. And they break down the outcomes or the impact of a supplier collaboration programme into productivity and performance improvements, and collaborative cost savings. So what’s coming out of those supplier days, but also the impact on top line growth as well. And that goes into more detail on that. So it’s another good report to read on that side as well.

JD:

That’s brilliant. So many questions coming in. So I’m going to pick one from Eric here: “from a value perspective, how would you estimate value generated from smart supplier collaboration versus traditional so-called procurement value savings?” Stephen, I’ll ask that one to you. 

SC:

So you see in the scale of savings [that] the negotiation, the commercial lever, tends to be the lower rung on the latter. But through supplier innovation and collaboration, you can really address the demand management aspect, if it’s bringing efficiency into your processes, changing your processes to create more value. So you go way beyond just the commercial negotiation, the basic economic level, which people normally focus on. True collaboration is about helping you change your processes. I’ll give you an example. 

One of our large suppliers in the industrial affairs space, they actually produce a product for ourselves and for our competitor. They’re a single source supplier, and they’ve come back to us now recently. And they said, you know, we produce, we do exactly the same process. It’s a process they do for our product, and they do exactly the same process for our key competitors. Exactly the same process. The difference is that we were [being charged] 30% more. And the reason for that is that [we had asked] for extra specification steps that [our] competitor hadn’t. 

That would never have happened in the past where a supplier would come and say, you’re over specifying a request. You can normalise your specification and you can reduce the cost of that element of process. That actually happens. And that to me, is a good sign of the healthiness of a relationship of collaboration. And actually our company was able to take that feedback and make the change. In the past, we probably would have said we’re not interested, we’re different, and these are our standards, and you do it as we say. Now with this new approach, we’re more open, more humble as an organisation.

And that’s a clear example of a supplier who wouldn’t have normally stepped forward, or made that recommendation to us that you can despecify to a certain point and this process would cost you less. And it wouldn’t compromise quality at all because your competitor’s exactly the same. Those are the levers that you will not find through negotiation, just commercial discussions. It’s the managing demand. It’s the re-specifying, it’s the managing your internal processes more efficiently that comes with the collaboration, the ideation of suppliers, they can help you get better in your doing so.

JD:

Totally agree. I’m going to ask one more question again to you, Stephen, because I think whilst we’ve got you, let’s squeeze all of the value out of you. So from [audience member]: very inspiring first of all, “how do you lead change within the procurement teams from a more tactical process to more [strategic] approach to this new vision? How do you do that internally with the procurement team?”

SC:

So that’s my secret sauce, Jenny. 

JD:

Yeah?! You buy them chocolates?

SC:

There are things you share, there are things that are proprietary. But now we’ve, as I said earlier, we’ve got a roadmap, a very clear roadmap that we laid out at the beginning of last year. It’s a three-year roadmap, which is very focused on five levels that we want to focus on. And I won’t go through the levels, but obviously one of them is managing our supplier base much more strategically and to drive growth. The first level was all around repositioning the function. It’s reinstilling a belief that we do is of tremendous value to the company. It goes beyond just keeping the lights on, again, going back to– I won’t use your phrase, your new phrase, Mark– of illuminating the future, but it’s about that thinking; the value that we bring to the organisation. Because it’s all very nice to put new products out there, but if you don’t have the supply that actually will not happen. 

So how do you reposition the function in the eyes of our own people, of our own buyers, of our own employees, and how do you reposition the function in the eyes of our business partners, the people that we interact with? So there was a whole culture shift that occurred right at the beginning of last year. And it continues; you don’t turn culture on and off, it continues, but it was the beginning of the journey. How we did it, you know, what were the signs and symbols, that’s tactical and it’s probably a subject of a different webinar. But there’s a lot of signs and symbols that you can implement to drive cultural change. And that’s what was particularly needed in our organisation at that point of time, you know, horses for courses, different organisations have different needs. That was my diagnostic assessment at the point when I joined procurement, that there was a need to recover that feeling of the raison d’etre. And that was level number one in this roadmap of five clear levels that we’ve been activating since.

MP:

There’s a great book, Jenny, called Illuminate by, someone called Nancy Duarte. So I’ve been a big fan of her worker over the last few years. Some of the words you mentioned, Stephen, resonate in the book as well. But if you read Illuminate, it talks about how you do change management. It talks about the leap of faith you need to take with your team, some of the challenges you have on that journey, and how you overcome those, and then how you continue the transformation as well. So really recommend reading Illuminate, it’s a great one on change management, and I think it really relates to procurement and how you can use those tools in terms of the change that our company’s going through.

JD:

We’ve got so many hashtags to follow up on here on LinkedIn. My final question I think we could all go including the participants. You’ve all stayed strong because I think it’s such an interesting story, but we have to end it in a minute. But my final question, Stephen, is tell us where you’re from? Where is that accent from? A few guesses? We have had a few guesses online. I’m not sure if anybody’s correct, but do let me know, let us all know. 

SC:

So you see, Mark picked it up rapidly because he’s a Liverpool fan, and I’m from the country of one of their most notorious goal scorers, Luis Suarez. There you go: Uruguay. Thank you very much. 

JD:

There you go, Uruguay! You’re a Liverpool fan Mark? That’s my neck of the woods. So we’ve got a slide up now, everybody in terms of how to contact Mark, how to contact Vizibl, so please get in touch. We’ll be answering as many questions as we can that we haven’t done already. I hope you found it really illuminating because I have done, I truly was fascinated and I think the rest of the audience whilst they’ve stayed with us. Stephen, thank you so much for your time, we love hearing your story. I think it’s inspirational for people starting out in this area. It’s a really strong compelling argument as to why we should go down this path, so thank you so much for sharing your ideas, and your story, and your time as well. And Mark, as ever, thank you for your insights, and you know, we look forward to what happens next with this. But I think it’s caused a lot of discussion amongst everyone listening. So thank you very much, thanks to everyone listening. Take care, speak soon, bye!

Head of Global Solutions @ Vizibl
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