Paul Joesbury, CPO at Chesapeake - Transforming procurement for improved effectiveness

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Paul Joesbury, CPO at Chesapeake spoke at the CPO Event September 2013

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Paul Joesbury, CPO at Chesapeake - Transforming procurement for improved effectiveness

  1. 1. 1 Transforming Procurement to improve Purchasing and Supply Chain Effectiveness - The Project Paul Joesbury CPO – Chesapeake Packaging Researcher – ASTON UNIVERSITY Ast on Un iv e r sit y
  2. 2. 2 What is the PEPPS Project • The PEPPS Project is a study into the key determinants of success in the transformation and development of Procurement organisations • It is a collaboration between academia and industry, and forms part of a DBA Programme undertaken by the lead researcher • It aims to determine an approach that allows the effective focussing of resources on specific activities that have a proven correlation to results • It will enable a root cause analysis and corrective actions to failing procurement transformations (Procurement Effectiveness in the Public and Private Sector) Ast on Un iv e r sit y
  3. 3. 3 Why this is important… • Procurement and supply chain effectiveness is critical to the long term viability of any organisation • Companies / Organisations often spend large amounts of money on Procurement Initiatives – is it spent wisely? • Public Sector organisations spend your taxes! – Spend inefficiency results in less money being available for activity that improves outcomes • Procurement and Supply Chain are (only now) becoming recognised for the potential contribution an effective programme can make – Why do we feel that we need to constantly justify our existence! • There are still too many programmes that don’t deliver to expectations – resulting in questions over the professions role in the organisation • World class procurement can deliver savings of between 6 – 10% on influencable spend Ast on Un iv e r sit y
  4. 4. 4 Background Research Method • Builds on activity and experience in different industries – Automotive (OEM + 1st tier) – Aerospace – Public Sector • Phase 3 and 4 – Longitudinal Study within Chesapeake Packaging • A “Mixed Methods” approach • Builds on research into team effectiveness:- – Cranfield, Loughborough & Aston Universities – TRW, GKN and Arup Industry Partners Phase 4 INTERVENTION Perform an Intervention Phase 5 ANALYSE / CONCLUDE Analyse and Confirm findings Phase 3 “AS-IS” ANALYSIS Determine the base level Phase 2 CONFIRM / DEVELOP THE MODEL Ensure correct elements have been included Phase 1 DEFINING SUCCESS Determine what constitutes successful procurement Ast on Un iv e r sit y
  5. 5. 5 Chesapeake Packaging - Company Overview • Global producer of specialty packaging • Sales ~ £500m • ~40 facilities worldwide: • European leader in paperboard packaging • 4,700 Employees • Private Equity backed – The Carlyle Group • Strategic Sourcing transformation programme Launched 2011 Ast on Un iv e r sit y
  6. 6. 6 The nature of Chesapeake's supply chain • Multiple customers, Multiple industry sectors, multiple customer delivery points (~4000) • 1.8 billion items supplied each year • 3,400 CSK products used every minute / every day • >2000 potential board combinations – (board is often customer specified) • ~9000 ink and varnish combinations Ast on Un iv e r sit y
  7. 7. 7 The Procurement Effectiveness Model Ast on Un iv e r sit y
  8. 8. 8 Compelling case Research Findings • A compelling “need” to make the change e.g. – Significant Funding issue – Threat of bankruptcy – Significant cash issue – A new way of working • Chief Executive active support – Active involvement and interest – A “must support” initiative Chesapeake example • Owners and new CEO had identified the need to transition from a “Traditional” to a “Strategic” purchasing and Supply-chain function • CEO personally involved in pushing the initiative forward Establishment of an “Executive Steering Committee” involving all key senior management Compelling Case Competency Effective Strategy Communication and Network Governance Ast on Un iv e r sit y
  9. 9. 9 Competency (of the organisation and people involved) Research Findings • Company and Individual • Key competencies identified :- – Drive for Excellence – Influence and Communication – Leadership and team-working – Concern for order and detail – Commercial intuition • Mental capability – Psychometric testing • Verbal reasoning / Numeric Reasoning • OPQ / Personality profiling Chesapeake example • Team established, Initial assessments performed • Assessment centre process adopted • Some people identified did not make the grade – fell out of the process • Changes made to category management team structure • Resultant team is relatively young and inexperienced (although with good potential) Compelling Case Competency Effective Strategy Communication and Network Governance
  10. 10. 10 Effective Strategy Relationship Management Peter Kraljic (1983) Steele and Court (1996) Customer View of Supplier Supplier View of Customer Compelling Case Competency Effective Strategy Communication and Network Governance LEVERAGE STRATEGIC ROUTINE BOTTLENECK BUSINESSIMPACT SUPPLY MARKET CHALLENGE GROWTH CORE NUISANCE EXPLOIT ACCOUNTATTR RELATIVE VALUE Ast on Un iv e r sit y
  11. 11. 11 Effective Strategy Total acquisition cost Compelling Case Competency Effective Strategy Communication and Network Governance Identification of Need / Demand planning / Spec Management End to end Supply-Chain Solution Make vs Buy Internal + associated cost of doing business Adapted From Lucas Aerospace Strategic Sourcing Programme “Boundary-less Procurement” Improve Specification Restructure Relationships Consolidate Spend Increase Com petition Restructure SupplyBase Reduce Consum ption Optimise Total Supply Chain Costs Reduce / Eliminate Transactions The Cost of Doing Business Dem andandSpecification Management SupplyBase Managem ent Reduce Total Life cycle / Ownership Costs Quality Cost Delivery Cash Innovation Ast on Un iv e r sit y
  12. 12. 12 Effective Strategy End to End Supply Chain Management Compelling Case Competency Effective Strategy Communication and Network Governance CustomerCustomer Supplier’sSupplier’s SupplierSupplier Goods & Services Knowledge Knowledge Data & Information DAYLIGHT HolisticII (H2) Upstream Category Management Downstream Category Management SupplierSupplier ReplenishmentReplenishment Supply AvailabilitySupply Availability Total Supply CostTotal Supply Cost Risk ManagementRisk Management InnovationInnovation Lifecycle CostLifecycle Cost Market DevelopmentMarket Development Problem SolvingProblem Solving Goods & Services Data & Information Ast on Un iv e r sit y
  13. 13. 13 Effective Strategy Integrated Supply Compelling Case Competency Effective Strategy Communication and Network Governance Ast on Un iv e r sit y CUSTOMER Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier Supplier
  14. 14. 14 Effective Strategy Integrated Supply Compelling Case Competency Effective Strategy Communication and Network Governance Ast on Un iv e r sit y Integrator Supplier Supplier Supplier Supplier Supplier SupplierSupplier Sub Supplier Sub Supplier Sub Supplier Sub Supplier Customer
  15. 15. 15 Communications and Network Research Findings • Clear objectives • Agreed process for the achievement of objectives • Informal network is powerful in terms of achievement of objectives • End to End supply - chain visibility • Effective Marketing – Although care on expectation management – Language in important • Ongoing stakeholder comms • Good Data is essential Chesapeake example • “Policy deployment plus” process implemented • Developed better links to customers (Daylight) • Implemented Sponsor / Mentor approach between category managers and senior exec team members • Quarterly Exec review of programme • Significant investment in Data Infrastructure Compelling Case Competency Effective Strategy Communication and Network Governance Ast on Un iv e r sit y
  16. 16. 16 Governance Research Findings • Programme requires a robust method of calculating savings that is independent of the procurement department – Improved credibility / reduced cynicism – Direct link to finance Chesapeake example • “White-Book” savings governance process implemented • More structured project management systems in place • Senior Finance manager assigned as programme controller • Monthly “White-book” reviews • Finance sign off on savings • Exec forum is a powerful support mechanism Compelling Case Competency Effective Strategy Communication and Network Governance Ast on Un iv e r sit y
  17. 17. 17 Summary 0 2 4 6 8 10 Compelling case Competency Effective Strategy Communications and Network Governance • Significant improvement to savings delivered • Significant improvement to the buy- in around the organisation • Significant improvements to Cash and Working capital • Significant improvement to procurement staff morale • Improved ability to meet customer requirements • More creative supply-chain solutions / Value add services • Better risk management • More focused and coordinated approach Procurement and supply chain have moved from being a business “bystander” to an integral part of the decision making process Ast on Un iv e r sit y
  18. 18. 18 Next Phase • Living TAC…..Integration of Group Technical and R+D functions within the activity • Procurement function development into a profit centre through the identification of additional value added services to its customer base – Purchase BPO for Packaging – Integrator Supplier concept – Category Management as a service Ast on Un iv e r sit y
  19. 19. 19 visit our website at: www.chesapeakecorp.com Thank – you If you want more details, or want to be part of the PEPPS project research then please e-mail me on :- joesburp@aston.ac.uk paul.joesbury@chesapeakecorp.com

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