Driving Global Adoption of Procurement Technology, A Cargill Approach

8/13/2019 Driving Global Adoption of Procurement Technology, A Cargill Approach

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Driving global adoption of

procurement technology

- A Cargill ApproachPresented by

Derek Batchlor

Global COE & Sourcing Operations Leader

Strategic Sourcing


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Agenda

1. Who is Cargill?

2. Sourcing transformation the catalyst for iAnalyze

3. Driving adoption

4. Early successes

5. Summary


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Who is Cargill?


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Who is Cargill

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We buy, process & distribute grain, oilseeds & other commodities to makers of food &

animal nutrition products. We also provide crop & livestock producers with products

& services.

We provide food & beverage manufacturers, foodservice companies & retailers withhigh-quality ingredients, meat & poultry products, and health-promoting ingredients& ingredient systems.

We provide our agricultural, food, financial & energy customers around the worldwith risk management & financial solutions.

We serve industrial users of energy, salt, starch & steel products. We also develop &

market sustainable products made from agricultural feedstocks.

We are an international producer of food, agricultural, financial

and industrial products & services. Founded in 1865, Cargill isprivately held & employs 142,000 people in 67 countries.

AGRICULTURAL

FOOD

FINANCIAL

INDUSTRIAL


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Cargill Video


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From our modest roots in the US Midwest,

Cargill has grown to be a global leader in food & agriculture

2012 FORTUNE 500

1. Exxon Mobil 452,926

2. Wal-Mart Stores 446,950

3. Chevron 245,621

4. ConocoPhillips 237,272

5. General Motors 150,276

6. General Electric 147,616

7. Berkshire Hathaway 143,688

8. Fannie Mae 137,451

12. Valero Energy 125,095

Cargill 119,4691

13. Bank of America Corp. 115,074

Revenues (U.S. $ millions)

1 . For fiscal year ended

May 31, 2011

Source: FORTUNEmagazine,July 23, 2012

Annual ranking of the

largest U.S. public

companies


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Sourcingtransformation the catalyst for iAnalyze


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In 2010 Cargil l embarked on a transformationof it s Global Procurement Function into a

Strategic Sourcing Function

The transformation focused on 3 areas of improvement:

1. Realigning and re-staffing the organization

2. Adopting a rigorous standard approach to category sourcing3. Implementing supporting tools, processes and technology tomake efforts more efficient and appropriately focused


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Cargill Strategic Sourcing

Organization

CPO

5 Category Leads(PM&S, CM&S,

Chemicals,Packaging,Ingredients

Global COE/Ops NA Busin esses

NA BSSTs

LA Business

LA BSSTs

EMEA Businesses

EMEA BSSTs

APAC Businesses

EMEA BSSTs

Because Cargills roughly $9 billion in indirect spend is

controlled by 75 independent Business Units it was

imperative that Strategic Sourcing closely manage BU

relationships. For this reason Strategic Sourcing was

organized first by Business Unit and second by category.


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Define theNeed

Research &Diagnostics

StrategyDevelop-

ment

StrategyImplement-ation

OngoingCategoryManage-

ment

*Define Needs

*Identify

Stakeholders

*

Establish Team

*Establish

Charter

*Internal

Research

External

Research Cost Modeling

*Hypothesis

Generation

Hypothesis

Testing

*Strategy

Development Implementatio

n Roadmap

*On-going

Value

Management

*Strategy

Refinement

*Marketing

Testing (RFx)

Structured

Negotiations

Operating

Model

Modifications

*Policy Changes

*Access to accurate spend date is

critical at many points in the process iAnalyze

Cargill Strategic Sourcing

Organization


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Process, Tools and Technology

As the organization was being transformed it was clear there were a few gaps in process,

tools and technology availability or use including:

Value Measurement in order to drive credibility a

robust value measurement tool & process was required

Supplier Database in order to allow decentralized

buyers to access strategic suppliers a comprehensive

supplier database was leveraged

eSourcing to make supplier selection and evaluation

more efficient an eSourcing tool was employed

Spend Analysis in order to define opportunities &prioritize projects iAnalyzewas selected & implemented


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Driving Adoption


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Setting the stage for broad adoptions

started well before iAnalyze was live

Cargills success in implementing was basedon 3 factors

Early and ongoing efforts on communication

and change management Open and complete transparency on project

decisions

Significant focus on training and supportstructures for end users


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Communication & change management

Focusing on communication and change management ensure all key stakeholders

understand the project and are appropriately managed through the change process

Cargill staffed a dedicated internal Change

Consultant to ensure change management

received the focus and priority it deserves

Additionally, a change network of team

members was created to gather and

address informal feedback such as rumor

mill and water cooler talk

Leadership was given specific talkingpoints and activities to support change

efforts


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Open & complete transparency on decisions

Given the complexity of Cargill numerous scope decisions had to be made to ensure

project timeline and budget. A core operating principle was to be completely transparentabout scope decisions & their rationale

One possible source of resistance

is credibility the tool may loose if

it is not comprehensive. Clearly

communicating scope decisions

can head off some resistance if

decisions are clearly explained

We analyzed source systems to

include in the final roll out and

communicated those decision

broadly to the organization

Ref Gap Business

unit(s) Estimating Assumptions Effort

Sizeof

Spend

Length

on

iAnalyse

Easeof

alternati

ves

Visibility

ofImpact

Category

Maturity

Overall

Value Scope

recommenda

tion

EMEA-1Spend Originating in SAP

(CROE)CROE In scope

EMEA-2Spend Originating in SAP

(CTS - EMEA)CTS In scope

GL-1Packaging/Ingredients

Detail in NISCAN In scope

GL-2Addressable Spend Filter

- Object Account Level All CSS involvement required to identify accounts In scope

GL-4Addressable Spend Filter

- Subsidiary Account AllSubstantial CSS effort required to identify the additional

addressable spend account subsidiary codes per BUIn scope

LA-1 JDE One WorldMexico,

Brazil,Assumption there might be some minor effort to bring all

data overIn scope

NA-3Item Description from

ASAP

Corn Milling,

CTS,Assumption: only item description sourced from ASAP,

no other preferred elementsIn scope

NA-2Packaging/Ingredients

Detail in Adage

DSO,

SpecialtyHigh BU effort required In scope

NA-5Spend Originating in

MaximoCAP

Assume the GL structure is sufficient for spend to be

categorisedDefer

AP-3 APAC CTS CTS Do not close

EMEA-3 Spend Originating in HT CAN Do not close

GL-3 P-Card Spend All Do not close

GL-5 Spend Originating in SAP(CFS)

CFS Do not close

LA-2 Spend Originating in FTSGOSC

BrazilDo not close

NA-1 CPP Detail in AgrosoftAgHorizons

CanadaDo not close

NA-4Spend Originating in SAP

(CTS - NA)CTS

This is hosted as the same location as CTS - EMEA

Two different instances - there might be opportunity to Do not close

LA-3 Spend Originating in SOTGOSC

Brazil


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Focus on training and support

Significant effort was put into training team members how to use the tool and extensivedocumentation was created as a repository for how the system works.

Several training sessions were offered both

in person and virtually

Teams travelled to each region to provide

face to face training during the roll out

process

A network of Super Users was created to

help end users better utilize the system


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1. Make clear the teams using the data own the data and play a key role in system

maintenance

2. Solicit input on system enhancements and communicate the disposition of inputs

After go live a few success factors will

ensure sustained adoption

3. Provide consistent and frequent updates

4. Provide ongoing training for new team members &

refresher for previously trained team members


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Early Successes


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Success Stories

A few early successes

Improved understanding of payment terms

Better spend categorization

Greater visibility of managed spend


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Payment Terms The opportunity

iAnalyze gave us visibility to the vast number of payment terms across our

varied businesses (in excess of 80 different terms) ranging from Due Upon

Receipt to Net 180 and everything in between.

iAnalyze also gave us the data needed to

calculate the working capital impact of moving

from less favorable to more favorable terms, if

we could move all suppliers with less favorable

terms to more favorable terms we could free up

about $200 million of working capital (best case)!


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Spend Categories;

What we found

Prior to implementing iAnalyze manual spend buildup indicatedapproximately $9 billion in annual indirect spend

iAnalyze confirmed the total indirect spend is $9 billion but where wethought we were spending the $9 billion turned out to be less accurate.For example, the spend in the following categories was significantly

greater than we thought (collectively they are ~ $180 million)

Lease and Rental Equip

Waste Disposal

Paint and Scaffolding


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Managed Spend iAnalyze improved

our understanding of managed spend

With iAnalyze in place we finally had a good idea of how much spend is strategicallymanaged. Now we can focus efforts to increase managed spend where the biggest

opportunities are!

PM&S CM&S PACKAGING

Un-Managed

Managed

55%

45%

43%

57%

11%

89%

21%

25%

75%

CHEMICALS

INGREDIENTS

79%


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Summary


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Summary

Setting the stage for broad based adoption starts during the implementation

process and is facilitated by:

1. Well executed project implementation

2. Laser focus on change management

3. Complete transparency in decisions made

4. Significant investment in training and support

After go Live keep the pedal to the metal:

1. Hold teams accountable for maintaining Their data

2. Make enhancement to the tool based on end user input

3. Keep end users well informed on the status and plans4. Provide ongoing access to training


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Questions


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Driving Global Adoption of Procurement Technology, A Cargill Approach

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