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Marc Engel, CPO of consumer goods giant Unilever, took to the stage at the World Procurement Congress to talk about how he has created the ‘headroom’ in his function to allow for true strategic procurement.
This is where procurement can get down to the nitty-gritty, while also continuing to deliver value back to the business.
“Innovation is everything”, said Engel in front of a packed house at the Park Lane Hotel in London. When you are operating in a fast-paced industry with 90,000 suppliers and some 2 billion customers buying your products every day, he noted, you have no choice. You either innovate or you get left behind.
So how has the company attempted to achieve this?
Engel explained that there are three strategic levers that the company has used:
- Organisational design and processes.
- Operating model
This journey saw the team spilt into three sections. These were made up of ‘materials’, known more widely in the industry and category managers, ‘cluster’, which sit in the local geographies and ‘category’.
Each different section is given responsibility over certain stages of the seven stage sourcing process. ‘Materials’ have control of steps one through to five, focussing mainly on buying. Cluster have control of stages six and seven where they are implementing what buyers are doing in their local areas and ‘category’ are implementing all this throughout the sourcing process.
On top of this, Unilever has also established four new entities across the world, made up of procurement people, which has allowed spend to become more centralised and have also changed their purchase-to-pay system to a source-to-pay where IBM have taken control all purchase orders.
This has freed up buying resources to actually do strategic procurement and, according to Engel, is giving the procurement team the headroom to actually help deliver value back to the business.