2. Background:
New Leadership Sets Procurement Group On A Journey To World Class Status
Erste Group is one of the largest financial Three years prior to
services providers in Central and Eastern Europe. this writing, US-born
Its core activities include serving the financial proc urement
needs of private individuals and providing executive Robert
advisory services and support for corporate Semethy was brought
clients in financing, investment and access to on board as the
international capital markets, public sector Managing Director
funding and interbank market operations. and, later, Chief
Procurement Officer
Erste Group Procurement is a discrete entity of Erste Group
established to manage all external spend for all Procurement. He
majority owned entities within Erste Group. Its describes his work Robert Semethy
mission is to efficiently satisfy demand while at with the organization Chief Procurement Officer
the same time aiming for cost reduction and as a “journey.”
sustainable savings across the whole group.
Like most procurement organizations, Erste Where was Erste Group Procurement’s
Group Procurement had done a fairly good job headed? It was taking them to world class
at fulfilling its mission, but there was room for status as a procurement organization. This case
improvement. No one could have fairly study describes the steps in this journey to
described Erste Group Procurement as being world class procurement and how the Next
“world class” a few years ago, yet achieving Level Purchasing Association and its Senior
world class procurement performance was Professional in Supply Management® (SPSM®)
certainly a goal. Certification played a role in an impressive
procurement transformation.
A Rough Start
When Mr. Semethy entered the Erste Group One of those obstacles to success was related
Procurement organization, he made several to the lack of standardization in terminology
observations about its operations. Some were among the teams in the different regions in
good, some were not. As a seasoned veteran of which Erste Group Procurement operates. “A
procurement, having enjoyed successful stints in lot of our problems stemmed around
leading the procurement departments of communication and semantics,” Mr. Semethy
companies like Mattson Technology, Flextronics recalls. “Even though we were attempting to
International, and Solectron, he couldn’t help communicate in English, our jargon was
but notice some obstacles that were preventing different.”
the Erste Group Procurement organization from
reaching its potential. While, on the surface, lack of terminology
2

3. standardization sounds minor, it prevented the lot to prove.
subgroups within the organization from
adopting standardized best practices that could As an example of the high demands and little
produce optimal results. Different subgroups faith that the business units had in Erste Group
were doing things “their own way” instead of Procurement, service level agreements were put
“the best way” and this lack of unity across the in place as a means of holding the procurement
organization stood in the way of making organization accountable to their responsibilities.
progress. One of the aspects of the service level
agreements was the requirement that the
Another obstacle to success was internal procurement organization prove that they
customer resistance. As a separate entity, Erste employ a qualified staff. From this alone, it is
Group Procurement originally felt like an easy to see that the trust level was not optimal,
“outsider” to the Erste Group business units. making for a challenging situation in which to
Essentially, the procurement organization had perform.
no credibility with the business units and had a
The Transformation
While the challenges faced by his new Semethy’s mantra was “don’t assume anything”
organization were steep, Mr. Semethy was regardless of any staff member’s years of
undaunted by them. He set the vision for the experience. He was keenly aware of the value of
journey to include adopting procurement best training everyone on all relevant topics to ensure
practices, changing the culture of the that no latent gaps in skill levels remained after
organization, and enabling his staff to possess training.
the training and qualifications that would
placate internal customers who doubted the As a component of Erste Group Procurement’s
capabilities of the procurement team. professional development initiative, certification
was extremely important. With the procurement
In terms of that last point regarding training and organization positioned as a service provider to
qualifications, Erste Group Procurement the business units, “we are sometimes requested
selected the Next Level Purchasing Association to provide proof of training and certifications of
to provide its Senior Professional in Supply our employees,” Mr. Semethy said.
Management® Program to the staff members in
pursuit of each staff member earning the In this environment, it is obvious that nothing
prestigious and globally-recognized SPSM® short of stellar customer service is acceptable. If
Certification. When asked what made the there were procurement disappointments,
organization seek out additional training, Mr. internal customers might rally to wrest control of
Semethy was emphatic about his desire to procurement activities related to their own
ensure that every staff member was brought up business units. As such, accomplishing
to a base level of skills and knowledge. certification early in the transformation was
desired, not just to enable the implementation of
While some organizations are perhaps overly best practices but also to manage perception
meticulous at picking and choosing the right among internal customers.
combination of courses for each individual, Mr.
3

4. “Everyone thinks they of high degrees of competency and to say to
can do purchasing,” business units who believe they are best suited
jokes Jorg Strauss, to m aking pro c ure m ent decis io ns
Country Manager for independently, “Look, we are certified here.
Erste Group There is a minimum standard of quality [that
Procurement Austria. we meet] and processes we know about,” he
But having a says.
procurement
certification enables So, Erste Group Procurement’ staff members
members of Erste eagerly began working on, and completing, the
Group Procurement Senior Professional in Supply Management®
to provide assurance Program.
Jorg Strauss
Country Manager
Where The Journey Has Led
Not long after enrolling staff members in the
Senior Professional in Supply Management® Team Unity: As mentioned earlier, one of the
Program, Erste Group Procurement started barriers to achieving consistently good
seeing improvements in the results they were performance was the lack of standardization in
delivering for the business. In discussing the terminology and techniques employed by Erste
methods of measuring performance, Mr. Group Procurement. The SPSM® Certification
Semethy said that Erste Group Procurement helped Mr. Semethy address this issue and he
“went from a very ambiguous methodology [in says that “everybody is talking the same
the previous year] and measurement to now a language” and the team has “aligned our
very rigorous one” in the current year and that jargon.” But beyond the team unity brought
results are “better this year, as our team has about by such standardization, Mr. Strauss also
done more and more training.” notes that achievement of the SPSM®
Certification has made the team more of a
At the time of this writing, over 50 Erste productive, close-knit group that he refers to as
Procurement Group staff members have a “community.” He expresses that all of the
earned the SPSM® Certification. In addition, employees who have earned the SPSM®
the organization has implemented many of the Certification “really feel a part of the
practices covered in the SPSM® Certification community.” Mr. Semethy was somewhat
curriculum, including eSourcing, supplier surprised at the unexpected pride that has
performance reviews, and the latest galvanized his team in the wake of their success
procurement key performance indicators. The in earning their SPSM® Certifications. He
positive effects of the SPSM® Certification were shares that the engraved awards that the Next
seen in many ways that contributed to those Level Purchasing Association sends to those
improved results. Mr. Semethy and Mr. Strauss who earn the SPSM® Certification “are all over
cited four specific areas where the impact of every single office” as each SPSM®-certified
the SPSM® Certification was felt:
4

5. employee “proudly displays it” and “they brag “When we started implementing it, it was
about their scores” to which Mr. Strauss adds much, much easier because we did not have to
that SPSM®-Certified employees are often so convince the people” that it was a valid idea,
excited by their achievement that they “update Mr. Strauss says. Instead, he paraphrases the
their LinkedIn profiles right away!” reaction of the team as “We heard in the
SPSM® it’s world standard – let’s do it!”
Filled Skill Gaps: Early on, Mr. Semethy had a Supplier business reviews are another best
strong preference against allowing certain practice taught in the Senior Professional in
members to opt out of certain training Supply Management® Program that Erste
opportunities based on their experience or Group Procurement integrated into its
perceived skill levels. That turned out to be a repertoire. Leveraging eSourcing and holding
smart decision. As a result of this train- supplier business reviews, and securing the
everyone-on-everything approach, “we now associated benefits, were “never done before,
have a base that everybody has in the so I look at those as areas where the SPSM®
organization, from our top buyers down to our very much assisted us in getting [new
entry-level buyers,” according to Mr. Semethy. procurement methods] culturalized in our
Mr. Strauss elaborates that the Next Level organization,” says Mr. Semethy. For getting
Purchasing Association training helped the the team primed to try procurement
team get past assumptions of skill levels that techniques that had not been attempted
previously served to limit the professional before, Mr. Semethy said that the SPSM®
development to which they would expose material “helped us a lot to show the people
themselves. He said that team members who there’s a world outside,” to which Mr. Strauss
originally felt strong in a topic and assumed adds that “I think it really broke some ice.” In
that there would be “no news in the training” summarizing how the Erste Group Procurement
on a subject, ended up being pleasantly leadership team leveraged the Senior
surprised and making admissions like “Wow! I Professional in Supply Management® Program,
never thought about [that]! Very good!” In Mr. Strauss says that “We have seen SPSM® as
summarizing the effect of the SPSM® a change management tool…to support the
Certification on skill levels, Mr. Strauss states people to go on the journey to get to world-
that “it really filled some gaps.” class procurement [and] supporting the whole
change process within our company.”
Change Management: Going from any starting
point to world-class procurement requires Credibility With Internal Customers: Finally,
adopting new tools and techniques. Of course, Erste Group Procurement has achieved the long
such adoption qualifies as “change” and, -sought-after credibility with its internal
naturally, people can be resistant to change. customers. The dramatic skills improvement of
However, participation in the Senior the team members has not gone unnoticed.
Professional in Supply Management® Program Internal customers “know that we’ve done the
helped to eradicate such resistance among the training, they know that our folks have passed,”
Erste Group Procurement team. As an reports Mr. Semethy. “It has gained us
example, Mr. Strauss recalls a rather friction- credibility where, two years ago, we did not
free experience in getting the team to use an have credibility.” Obviously, that credibility has
eSourcing tool where, previously, leadership led to cooperation and cooperation has led to
may have felt reluctance from the team. better results for the company

6. Why The SPSM® Worked So Well For The Journey
From the results discussed in this case study, it is us get a lot of folks through the program.”
obvious that the content of the Senior Asked the same question, Mr. Strauss cited
Professional in Supply Management® Program three components of the program that worked
was right on target for helping a procurement particularly well. The first component was the
team go from a respectable starting point to kickoff web conference that the Next Level
world-class status. However, content alone was Purchasing Association conducts, at no
not the only reason Erste Group Procurement additional charge, for its larger clients. “When
was successful at leading such a large team [Next Level Purchasing Association personnel]
through a rigorous educational program. were all in the web conference and explained to
Functionality and service mattered also. our people, ‘What is the aim [of] it?’ and how to
use it, broke the ice,” he says. Secondly, he says
When asked what he liked most about the that the Next Level Purchasing Association’s
Senior Professional in Supply Management® online classroom is “really easy to use.” Finally,
Program, Mr. Semethy replied “Other than the he likes that each Next Level Purchasing
content, the fact that it was online and Association online course incorporates “a mix of
[employees] could do it on their free time…or media” including audio clips, video summaries,
here at work” was helpful. “There wasn’t a lot hands-on exercises, and more.
of travel involved,” he said. “That really helped
The Journey Continues
Erste Group Procurement has made impressive leadership necessary to implement continuous
progress in its transformation. In just a few improvements, both in terms of refining the
short years, it has gone from an organization processes in use today and keeping an eye on
with few standardized processes and little new practices that may emerge. And they have
credibility with its internal customers to an an enthusiastic team, willing to embrace new
organization that is implementing the latest ideas and ready to work hard at driving even
procurement best practices, achieving better performance.
measurably better results, and delighting its
internal customers. However, the journey is not The Erste Group Procurement journey is
over. continuing and that journey gets better with
each step.
Mr. Semethy and Mr. Strauss are supplying the
Are you ready to transform your purchasing department into a center of excellence and achieve results like Erste
Group Procurement? Contact the Next Level Purchasing Association today to schedule a complimentary SPSM ®
Certification Strategy Session. In that session, we will explore what your purchasing department needs in order to
move forward towards achieving even greater results in cost savings, productivity, and risk mitigation. You can reach
the Next Level Purchasing Association by calling +1-412-294-1991 or by email at: busdev@nextlevelpurchasing.com.