Digital Procurement –more important than ever?

Karin Hagen-Giererformer CPO SanofiMarch 2020

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Digital Procurement – more important than ever?

1. Procurement role & shift in focus and capabilities

2. Digital Procurement – the promise!

3. Value promise delivered?4. How to realise digital’s full

potential in Procurement?5. Conclusion

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Procurement’s role is changingHolistic value delivery is the future…

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Risk

Processes & Structure

Speed

Resources

Value

Procure to pay / Source to pay

Cost savings

Better responsiveness

On-time delivery, right quality

Building strategic capabilitiesReduction in operational Procurement

Efficient E2E Supply Chain management

Value beyond savings (innovation, sustainability…)

Full Supply Chain TransparencyAutomated processes

Supply secured during the entire contract life cycle

Focus on Partnering & SRMDivers group of talent

+10 – 20% in agility

Close to 100% rate

-20 – 40% FTEs

80%+ visibility

>+30% value add

Today… 2025

Source: *Kearney

Potential value*

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…requiring a shift in focus and capabilitiesProcurement leaders focus 65% of their team members on strategic initiatives*

Source: * Kearney – AEP 2019

Today… 2025

Wor

kloa

d Tactical Procurement

Operational Procurement

Tactical Procurement

Operational Procurement

Strategic Procurement

Strategic Procurement

Strategic Procurement

Act

iviti

es

Procurement leaders are aligned to invest in Talent and Technology*• Build divers talent (94%)• Leverage technology for risk

management (88%)• Leverage RPA (75%)• Leverage AI (53%)• Leverage Blockchain (36%)

Digitalisation - a key enabler to drive holistic valueImpact largely two-fold...

Doing things differently“Efficiency”

Doing new things“Effectiveness”

•New insights & informed decisions (Big Data & advanced Analytics)

•Digital collaboration tools

•Automated and accelerated completion of transactional tasks (RPA)

•Augmentation of high-value cognitive tasks, improving speed and productivity (AI)

•Blockchain

Additional fundsto invest in company growth or securing P&L

Enabling Technologies Business Value

Headroom to focus on strategic value creationPartnering with strategic suppliers for innovative and sustainable solutionsAccess to technology and capacity to increase competitive advantage

• Procurement digital strategy - standalone

• Many standalone initiatives & outcome unclear – no metrics

• Data quality issues – no “one source of truth”

• New “best of breed” solutions – how to connect & integrate

• Operating Model, organisation & talent – not aligned & not evolving

Digital Procurement – value promise delivering?… “digital for the sake of digital” - investments are not delivering visible impact

What to do differently to realise digital’s full Procurement potential? … specifically, when funding is tight

Data Architecture / Technology to priority to generate ”one source of truth”Key challenge to address – opt for modular approach to move forward with speed

Assess your operating model for opportunities to save cost & evolve organisation Automate - Self-service - Outsource; evolve organisation in line with outcomes of digitalisation program

Set clear outcomes and metrics - prioritise ruthlessly in line with business prioritiesCorporate and functional Digital Councils

Train / hire for digital skillsSecure digital talent that might become available

Align your digital strategy with the business strategy & integrated digital and IT strategy

Continuously assess your technology roadmap - procurement technology is evolving Single E2E procurement suite vs best-in class add-on solutions; yet to come - platform on which solutions connect

Data & Procurement Technology

Operating Model,

Org & Talent

Focus on enhancing

value

Always start with the user-journey in mindSet ambition - design - pilot - scale - embed

Run sprints, generate quick winsStorytelling to create buy-in

Digital mindset & funding to experimentRole-model mindset change across Procurement

Use MVP approach to avoid large upfront investment; prepare ground to scale quickly Involve business (on business case) and IT (on IT security issues) from the start

Establish a small, dedicated team empowered to take decisionsPractise “Bi-modal procurement”

Design solutions that deliver on a holistic set of needsApply Design

Thinking

Use Agile & MVP to scale

Team - digital mindset and

funding

How to do differently?…establish a digital way of working within Procurement

Digital Procurement – more important than ever!Critical to deliver business growth and P&L & cash• New financial value levers• Creates ”headroom” to partner with

suppliers, making them a true source of value

Short-term actions / during crisis• Rethink approach to digital

investments to ensure visible impact• Hire digital talent, potentially becoming

available• Prioritise new solutions delivering

immediate business impact i.e. securing supply, reducing cost.

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Questions

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