Webinar Notes: Excellence in Purchasing Indirect Categories

This week’s featured webinar had an interesting premise – for the first time this year, My Purchasing Center and ProcureCon Indirect have partnered to sponsor the Excellence in Purchasing Indirect Categories (EPIC) Awards competition – EPIC for short. This week’s webinar recognized the finalists for their achievements in indirect spend procurement by having them present.

Three companies, Amway, Kellogg, and the Dana-Farber Cancer Institute shared information on their organization’s journey through goal setting, team management, and results. The winner will be announced at ProcureCon Indirect East next month. Buyers Meeting Point wishes all of the finalists the best of luck, and looks forward to finding out who the judges select.

It is always fascinating to get a glimpse of the way things are for procurement groups in different companies and industries. Each presenter made one standout point that was particularly interesting and applies across all industries, and gives us something to consider and aim for in our own pursuit of excellence in either direct or indirect categories.

Know the Minds of your Audience and Work with Them

Dana-Farber Cancer Institute: John P. Willi, Senior Director, Supply Chain Management

In describing what DFCI went through to build out their pipeline of projects, prioritize efforts, and present results, Willi made the comment that because of the need to be analytical and evidence driven in medical research, the teams he presented to were comfortable with the data-heavy spend analysis work his team did. While that is great for him and his team, it raises the question of whether a procurement professional is successful in a given industry because he or she is familiar sourcing the categories and suppliers that represent the majority of the spend or because they understand how the leaders in those companies think.

Willi does have direct spend responsibility as well, and perhaps this is what allowed him to tap into that understanding to present to his executives in a way that they would be best positioned to see the benefit of his recommendations. Every industry requires professionals to excel in different ways, and those differences are bound to rely on some common strengths in the professionals drawn to those industries. Whether direct or indirect spend is the focus, taking time to consider your audience will pay dividends in the short and long run.

Take Advantage of ‘Turnover’ Opportunities to Increase Spend Under Management

Amway: Charen Buyce, Manager, Indirect Global Procurement

At Amway, the indirect purchasing organization grew out of the direct spend buying team. Initially, they were focused on traditional categories of spend such as IT, MRO and capital equipment. As the COO saw the success they were having, he raised the possibility of having the indirect team work with more areas of the organization, including marketing, travel, events planning, human resources and transportation. While the COO had the right idea, and it was a great opportunity for indirect procurement and the company as a whole, it is easy to see why the operational owners of those categories might not be thrilled to be added to the pool of addressable spend.

Buyce commented that there had recently been a change in the Chief Marketing Officer (or CMO) and that the new person in that role had had positive experiences working with procurement teams in other companies. She proved a willing partner and was one of the first and most successful groups to work with indirect procurement as they branched out. Marketing is a notoriously difficult category to get into. Taking advantage of this ‘turnover’ opportunity allowed Buyce and her team access to the spend while also helping the new CMO put her mark on how marketing was managed. Moving forward, there is no reason to think that marketing spend at Amway will not be put through procurement’s processes. Watching for changes in leadership and taking the opportunity to work with new staff members allows procurement to build bridges and increase spend under management at the same time.

Ask the Tough Questions and be Decisive About Change

Kellogg: Brian Bancroft, Senior Director, Procurement

The transformation of indirect procurement at Kellogg was never intended to be a long-term effort. In 2007, they worked aggressively with a third party service provider to bring $5B in spend under management. When, by 2010, they had met their savings targets they started going through the planned process of disbanding the effort. But someone had the foresight to ask whether that was the right course of action. Had they accomplished all that was possible with their indirect spend?

Kellogg made the decision to continue on working with their indirect spend, but not without making significant changes to the program. Because of the commanding role the third party had taken, Kellogg needed to build their internal capabilities. They had also prioritized savings in their award decisions, which maximized results but hurt their internal relationships and reputation. Starting in 2010, they worked to rebrand the indirect procurement organization internally, revisit their priorities, and bring in the talent required to make it all possible.