Supply Chain Procurement: Navigating Challenges and Embracing Sustainability

As technology makes its way further into the way humanity exists even on a day-to-day basis, businesses are also adapting to the trend to transform their supply chains. Technology has been pivotal in transforming supply chains by upgrading all of its functions, including the procurement function. In this interview with Ms Pallavi Chaudhuri, Director – Procurement Services, Perfetti van Melle, we talk to her about the procurement transformation with the help of technological integration and what it means for supply chains in the present times.

Can you provide an account of your professional journey and the critical experiences that have shaped your career in supply chain and procurement across various sectors?

In my diverse career, I’ve gained extensive insights into procurement across various clients and industries. These roles demanded diverse domain knowledge and quick delivery under tight deadlines. Projects focused on enhancing core supply chain and procurement aspects, relying on robust process and data enablement.

In my early consulting days, I orchestrated the setup of a supply chain for a new manufacturing plant, collaborating with a raw material expert to identify $10 million in savings and reducing costs for a critical part by 75%. This experience underscored the importance of inter-departmental collaboration for cost reduction.

In another project, I facilitated workshops for an ice cream manufacturer, pinpointing cost-saving initiatives like specification optimization, process automation, and developing alternative suppliers. At Accenture, I established and managed a Shared-Service Center for Procurement of Professional Services, serving global clients and understanding the nuances of procurement outsourcing.

Within Perfetti, I engaged in cross-departmental projects involving Finance, R&D, Quality, Legal, IT, and Sales. These initiatives included implementing a global material budgeting and risk management process across 15 countries and designing material creation processes for raw and packaging materials. These experiences deepened my understanding of procurement’s pivotal role in optimizing financial and non-financial impacts.

In your role as the Procurement Services Director, what challenges do you come across in the ‘transformation’ of the supply chain and procurement processes across 15 countries, and how do you address them?

The biggest challenge I encounter in driving global transformations is the pre-existing processes, which are working on an auto-pilot mode, comfortably delivering the needs of local management. Any transformation encounters resistance to change, especially on the basis of ‘training needs for existing personnel’, ‘slower speed of delivery’, and ‘additional efforts required to imbibe new ways of working’. In many cases, Local teams perceive interventions only as activities through which global teams want to gather greater control while making it cumbersome for local operations.

To drive a successful transformation, a few prerequisites and activities are critical in my view. The process can broadly be split into 2 parts:

1. Design and alignment on global process/initiative: Implementation across countries, working with local operations while defining the global approach, it is critical that existing processes are broadly studied and the ‘As is’ and ‘To-be’ scenarios clearly articulated, along with the identified benefits. The overall business case must be strong, have buy-in from the global leadership across departments, and must have clarity on the timelines and effort requirements.

2. Once the global approach has been formalized, it is critical to bring the local leadership onboard before the roll-out is initiated. The local point of contact is then engaged to explain the ‘new’ process, within the context of the existing process, and provide training and handholding to implement the new process. Even after the roll-out is done, it is critical to review and govern the execution before the revised process is fully adopted by the local teams. During this period of adoption, there would be queries and challenges, which will need to be addressed by the global team within agreed timelines.

What kind of values do you see companies imbibing for sustainability in the supply chain?

From a supply chain perspective, companies are actively working on both the environmental and social aspects of sustainability. Central Sustainability Teams are being implemented, which are anchoring the organizational approach and commitment to sustainability targets.

From an environmental perspective, carbon and packaging footprint remain key focus areas. Companies are working with the Science Based Targets initiative (SBTi) to meet the goals of the Paris Agreement. While engineering teams are focused on internal energy efficiency (Scope 1&2), procurement is focusing on Scope 3 emissions, strongly supported by R&D.

With targets on Scope 3 as well as upcoming regulations, viz the EUDR (European Union Deforestation Regulation), companies need strong traceability across the supply chain to monitor progress towards commitments. Liming the packaging footprint through ‘reduce, reuse and recycle’ is another critical aspect demanding innovation internally and in collaboration with vendors. Plastic intensity is being measured and benchmarked internally and externally and novel solutions are being explored in collaboration with suppliers to deliver on targets.

Social sustainability, focusing on human rights, labor standards, and business ethics, is being monitored for compliance and regulatory requirements, both at manufacturing sites, as well as supplier premises.

This is an abridged version of the interview published in the November edition of the Logistics Insider Magazine. To read the full interview, click here.

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