By Andy Beth Miller
Jean-Michel dos Remedios has been operating in a procurement role for years—in Europe, the Middle East, and in the United States—and as such, he has a wealth of varied experiences, which have provided him with a unique perspective on the function. He is the Senior Director of Sourcing and Supplier Development at Bel Brands USA, and when it comes to knowing what it takes to create successful and thriving procurement in a company, he has a lot to say on the topic. However, be prepared, as dos Remedios doesn’t mince words. In fact, when it comes to procurement, he gets right down to (better) business.
Dos Remedios will be the first to tell you that he sees one big part of his role as a Senior Director being a watchman of sorts, issuing a wake-up call to companies to not allow themselves to become complacent when it comes to the position that procurement holds in their organizations. “Too few fail to see procurement as a major player in the external and internal relationships, as well as in the P&L (profit and loss),” dos Remedios cautions. He then issues a sobering statistic, stating that, “Procurement activities actually represent 50-60% of all sales revenue in industrial companies.” And you can’t debate that blaring bottom line impact.
So, now that dos Remedios has our attention and we are realizing the vital value of procurement, we are left to wonder how our own organizations can be improved. The knowledgeable watchman (although the longer I interview him, the more I am beginning to imagine him in a caped crusader getup of some sort) then shares the key issues that he sees, before supplying a few proactive remedies.
Above all, dos Remedios believes that procurement is too often underused, or misused, therefore limiting its value and full potential within the company. He urges us to see procurement as having an ideal position between internal and external team members. By improving the sourcing culture of a company and increasing its maturity level, collaboration will be enhanced, thus producing extraordinary results.
”There is a reluctance to bring procurement into all conversations [decisions in a business], yet [they] can be so much more than only a
source of savings, providing things like Innovation, risk mitigation, sustainability, support on Merger and Acquisition, new business opportunities and more.
Now, all of this sounds well and good, but as to how to go about this feat of cooperative magic, I asked dos Remedios to patiently and simply break the process down into proactive steps that all companies can take. But, before we could dive into that, dos Remedios was gracious enough to point out some of the problem areas that prevent procurement from thriving. By bringing them to light and addressing each one, we can then shift our mindsets and move toward sustainable change.
Dos Remedios wastes no time in pointing out one huge problem, while also providing a disturbing statistic, stating that, “75-90% of procurement organizations are only operating at foundational capacity levels.” He attributes this subpar performance to three main things: immature processes, lack of integration with other departments, and a lack of automation. But, one might be wondering, as I was, how you go about gauging the level of maturity of your procurement department. Dos Remedios suggests asking these four main questions as a form of self-assessment in rating maturity levels:
1) Are We Innovative?
Use of cutting-edge technologies, such as AI, etc.
2) Are We Strategic?
Incorporation of SRM programs, business partner recognition, and sustainability programs
These first two questions, according to dos Remedios, reveal a higher level of maturity, while the following pair point to a lower maturity level, simply focusing on functionality:
3) Are We Operational?
Majority of actions only focused on cost savings
4) Are We Tactical?
Reactive versus proactive, operating on a need-only basis (survival mentality) ex. Sourcing on an order by order basis
Dos Remedios then provides us with further food for thought, voicing one other major reason that procurement is being paralyzed, or pigeon-holed, if you will, “There is a reluctance to bring procurement into all conversations [decisions in a business], yet [they] can be so much more than only a source of savings, providing things like innovation, risk mitigation, sustainability, support on Merger and Acquisition, new business opportunities and more.” After lamenting this limitation currently being placed on procurement in today’s industry, dos Remedios immediately follows with a strategic solution via a bold call to action. Specifically, he exhorts companies to focus on holistic collaboration as a core value, “It is vital that we adopt an unconditionally inclusive mentality.”
We are all in the same boat, on the same journey. So, how do we make it our procurement reality? Dos Remedios points immediately to the magical switch: management. Specifically, he calls our attention to the importance of management aligning its objectives across all functions, then focusing on five key factors, based on the ADKAR model developed by the founder of Prosci, Jeffery Hiatt, to implement this change within the organization:
of the need for change, and of the nature of that change
to support the change, and to participate and engage in the change
of how to change, and of how to implement new skills and behavior
to implement the change, and to demonstrate performance
to sustain the change, and to build a culture and competence around change
”Coming together is a beginning. Keeping together is progress. Working together is a success.- Henry Ford
It is often said that the only constant in life is change. In procurement’s case, at least according to Dos Remedios, the first step in successfully moving forward is to recognize that change is inevitable, to embrace it, and to simply start the journey by including procurement in more business decisions. Legendary businessmen and strategic giant Henry Ford perhaps said it best: “Coming together is a beginning. Keeping together is progress. Working together is a success.” This could indeed be seen as the Golden Rule to move the procurement organization forward.