In the latest episode of ‘Dial P for Procurement,’ broadcast live on Tuesday 16 March, HICX CEO, Costas Xyloyiannis, joined co-hosts Kelly Barner (Buyers Meeting Point) and Scott Luton (Supply Chain Now), along with Quentin Roach, Senior Vice President, Supply Chain & Chief Procurement Officer at Mondelez International. They discussed changes in demand in the fast-moving consumer goods (FMCG) category, and how companies in this category are working with their suppliers and supply chains to adapt.
COVID-19 changes shopping patterns
Quentin Roach starts the main discussion by explaining how Mondelez has been able to respond effectively to changes in lockdown-related eating habits and shopping patterns due to the resiliency built into its supply chain, and across the commercial organization, which includes greater fluctuations in demand than seen before. Quentin notes that fluctuations have put a lot of pressure on both the external manufacturing partnership network and suppliers to manage these rolling demand spikes.
He believes one of the reasons for Mondelez’ success during this time has been due to the strong supplier relationships that they have, which has helped partners to grow their businesses during turbulent times. Quentin reveals that being able to provide support relies heavily on the data analytics capabilities that were already being put into place before the pandemic.
These have enabled them, for example, to monitor changes in demand signals and communicate these through to the supply side. This is combined, conversely, with supply signals and the ability to make adjustments from this direction as well. A combination of effective relationship management and data insights has made this possible.
Quentin explains, “The investments we made prior to the pandemic certainly paid off in terms of reliance on some really strong relationships – but also there was a big movement inside of the company, inside of the broader supply chain, and specifically inside of Procurement around data capabilities and the launch of new tools and capabilities for our people. So, those early-on investments, prior to the pandemic, certainly have paid dividends.”
Learning the lessons: Customer of choice
Responding, Costas points out, “We saw a lot of people caught out on missing the fundamentals. I can contrast that to customers of ours that had invested in digitalization. In many cases, there were questions flying around such as ‘who do I contact at my suppliers, do I know where they are delivering the goods from?’ Areas I refer to as tribal knowledge. But that’s not how to operate in today’s day and age. You’ve got to be fast – and that shouldn’t take hundreds of procurement professionals trying to figure out who to contact to have a view of what’s going on in the supply chain.”
Costas goes on to explain how the notion of ‘customer of choice’ has regained a renewed focus during the pandemic, which presents itself as less of an issue when there is abundant supply, but becomes increasingly problematic in a constrained supply environment. He describes how some enterprises are evaluating the concept of a supplier ‘net promoter score’ (NPS) equivalent that might ask something such as ‘In the event of constrained supply, would you prioritize me over someone else?’
Costas believes more still can be done in this area and that inspiration can be taken from similar programs in customer or employee experience.
Importance of speed of business
COVID-19 highlighted the requirement for companies to be able to move quickly. This could be in terms of onboarding new suppliers, or identifying an existing supplier that could ship goods from somewhere else, for example. However, extra speed must not be at the cost of circumventing necessary processes, such as compliance, as Costas explains: “Being able to add automation, so you have good data and can do things at scale, enables greater speed.”
Quentin describes the first step as being able to overcome initial questions of ‘How do you build the right data integrity?’ and ‘how do you build the trust in the data?’ which then subsequently opens up many opportunities for ongoing, continuous improvements. “It’s taking that data and having the right skill sets around analytics, and the right skill set to really move that data to help deliver insights – actionable insights – that we need to drive decision making.”
Quentin explains that much of the work taking place within the analytics team is focused on matching up demand signals and supply signals coming in from both sides, to determine how to work with the entire value stream, as part of an initiative entitled ‘From the shelf back to the field.’ Connecting information from the consumer perspective and then all the way back down the supply chain defines the data strategy.
Defining supplier experience management: Partnership excellence
Mondelez continues to be dedicated to its supplier partnership excellence approach, which was established before the pandemic, but that also served the organization extremely well during it. Quentin continues: “We had suppliers that stepped up in massive ways to partner with us and deal with the ambiguity and the volatility that we saw going into the pandemic and throughout.”
However, he adds, “It’s not just about the strategic and large relationships – we need to make ourselves customer of choice. So we need to make ‘doing business with Mondelez’ easier, more efficient and more effective every day. Are we putting in place the right technology interfaces with each other? Are we having the right communications? Even starting all the way back to being really clear about what our supplier expectations are.”
Quentin continues, “What we found throughout the pandemic was that we were able to work much faster, with much greater agility, cross-functionally, inside the company and in ways we didn’t think existed before the pandemic. That included being open to new suppliers, listening, driving innovation, driving sustainability and value creation. We found opportunities to bring new partners on board in really quick ways.”
A frictionless digital supplier experience
Costas comments on end-to-end the experience and cross functional interactions, explaining, “That is often forgotten when it comes to suppliers – and that is also where the friction comes from. It’s not just Procurement dealing with suppliers. There are a lot of other functions that will touch the supplier – before, after, and in consuming their services and materials – but you need to think end-to-end.”
One of the causes of friction can be, for example, having many systems. Costas clarifies, “You could have different systems for direct versus indirect, different systems around quality and compliance, different systems for sustainability and different systems for innovation.”
“There’s nothing wrong with that. Best-of-breed is here to stay. If you want great digital experiences, you do not go with a ‘one-size-fits-all’ as that does not deliver a great experience. Great experience comes with well thought through, specific use cases, which are tailored to that particular need. So, the need for great experiences means a need for many systems. However, these can now be made to work together. What we’re seeing is the emergence of a unified portal which is going to guide the experience.”
In the discussion, Costas gives some practical advice on how to improve the supplier experience.
In terms of onboarding, he advises, “Onboard end-to-end, not just for Procurement, or for quality, or for compliance, or for supply chain. Do it in a way which is ‘onboarding for the enterprise.’ That will speed up things for the organization, but it also decreases the friction.”
He advocates a single channel approach for communications, which he explains goes back to the idea of a central portal and communication point to drive better engagement in an efficient way. Or as Costas describes, “They don’t have to hear ten different messages from different functions.”
And finally, provide as much self-service as possible, a phenomenon also seen, of course, in the consumer space. Provide suppliers with the ability to change bank details, ask you for a tax exemption certificate, check the status of their invoices, or submit trade compliance information themselves. “You can do a lot to make their life very easy,” he adds.
Quentin, speaking from the Mondelez viewpoint, concludes that it also involves looking at supplier partners as “part of an integrated and interdependent network that ultimately serves the consumers that we have.” He continues, “This includes our internal manufacturing and supply capabilities, as well as our external ones, all the way back to understanding our sub-tier of suppliers and their capabilities, their connectivity, and ensuring that we’re efficiently doing business.” For Quentin, this means moving far beyond a procurement function to what he terms true supplier management and “a supplier engagement function.”