Supply Chain

Transformation...

...a Change Process

Gerry Tominey

CPO ABF

CIPS Southern Africa Pan African Conference

• What is case for change?

• Who are the agents of change?

• Is Procurement any different to the rest of the business?

• My own recent experience of managing change

• What I think we should take away

The case for change

• The traditional and constant case

– “Cost down, profit up”

– Supply Chain Agility

• The developing case

– Environmental

– Ethical

– Risk

Who are the agents of change?

• We all play a role in delivering the hierarchy of needs

Service

Cost

Innovation

Quality/Regulatory

Assurance of Supply

Business

requirements

Is Procurement any different?

• Dr John Kotter established, over 30 years of research, that

70% of all major change efforts in organisations fail!

• What is our collective experience?

Step 1. Acting with Urgency

• Examine market and competitive realities

• Identify and discuss crises, potential crises or major

opportunities

© 2010 Kotter International

2. Developing the Guiding Coalition

• Assemble a group with enough power to lead the change

effort

• Encourage the group to work as a team

© 2010 Kotter International

3. Developing a Change Vision

• Create a vision to help direct the change effort

• Develop strategies for achieving that vision

© 2010 Kotter International

4. Communicating the Vision Buy-in

• Use every vehicle possible to communicate the new vision

and strategies

• Teach new behaviours by the example of the Guiding

Coalition

© 2010 Kotter International

5. Empowering Broad-based Action

• Remove obstacles to change

• Change systems or structures that seriously undermine the

vision

• Encourage the risk-taking and non traditional ideas,

activities, and actions

© 2010 Kotter International

6. Generating Short Term Wins

• Plan for visible performance improvements

• Create those improvements

• Recognise and reward employees involved in the

improvements

© 2010 Kotter International

7. Don’t Let Up

• Use increased credibility to change systems, structures

and policies that don't fit the vision

• Hire, promote, and develop employees who can implement

the vision

• Reinvigorate the process with new projects, themes, and

change agents

© 2010 Kotter International

8. Make Change Stick

• Articulate the connections between the new behaviours

and organizational success

• Develop the means to ensure leadership development and

succession

© 2010 Kotter International

Associated British Foods plc

Associated British Foods is a diversified international food, ingredients andretail group with sales of £10.2 billion and 97,000 employees in 44 countries

Global presence

Sugar

Co-productsSugar, China

Sugar, southern AfricaSugar, Europe

Ingredients

Meat and dairy

Herbs and spices

Bread, baked goods and cereals

Vegetable oils

Hot beverages, sugar and

sweetenersWorld foods

Group at a glance:

9 Divisions, 50 Business Units

Grocery

Speciality ingredientsYeast and bakery ingredients

RetailPrimark and Penneys

Agriculture Acquisition of raw materialsAnimal feed

UK China

• Twin financial goals:

- Sustainable real profits growth

- Long-term cash generation

• Focus energies on market segments where we can establish strong, sustainable

leadership positions

• Grow organically and by acquisition in complementary activities

• Achieve high levels of operating efficiency

• Operate through a focused divisional structure in which each business:

- has an influential market position

- has sufficient scale to attract highest quality management

- has differentiated features for leveraging added value

- has potential for sustained revenue and profit growth or cash flow

Corporate objectives

Operating model & expectations

• Business model remains unchanged:

– individual businesses responsible for their own performance &

profitability

• Individual companies should gain an unfair advantage from being a

part of ABF

– Eg lowest input costs compared to competitors

• Primary focus should be to deliver for one’s own business but we

should also look across the ABF divisions to identify where we can

collaborate and deliver more

– To the benefit of your own business

– To the benefit of other businesses

• The benefits of centralised procurement, without centralised

procurement

Getting it right for ABF BusinessesHow ABF central team and divisional teams work together

• Identifying the appropriate value levers to the ABF operating model:

– Developing best in class procurement processes in businesses

– Providing access to better deals, resources, tools and information

– Coordinating the network on prioritised opportunities

• ABF cross-divisional procurement model:

Prime Focus is on activity within Divisions

•Are their ambitions sufficiently stretching

•Are they linked in to the big strategic supply issues

•How’s their capability – what resource do they need

from outside their division?

•How are they tracking

Secondary focus is on the overlaps between 2

Divisions

•Can we identify the opportunity or threat?

•Are the Divisions aligned – resource, priority etc

•Is there an effective way of working?

•Can we track progress?

•What additional resource do they need?

Secondary focus is on the overlaps between 3+

Divisions

•Can we identify the opportunity or threat?

•Are the Divisions aligned – resource, priority etc

•Is there an effective way of working?

•Can we track progress?

•What additional resource do they need?

People Synergies

Commercial Synergies

Process Synergies

Balanced Scorecards

Cost

Risk

Quality

Service

Innovation

Talent

CorporateResponsibility

Business NeedsExcellence in the development and implementation of sourcing

strategiesSourcing Methodology

Achieve maximum benefits form Critical supplier relationshipsSupplier Development

Appropriate deployment of eSourcing solutions to optimise efficiency and business benefits

Technology

Maximise the benefits of cross divisional sourcing collaborationSourcing Collaboration

Sourcing ethically and in support of ABF / business sustainability objectives

Corporate Responsibility

Sourcing from appropriate locations (suppliers) to ensure lowest total cost of ownership

Low Cost CountrySourcing

Provide access to internal & external data and analysis to support decision making

Knowledge Management

Procurement staff across ABF are well networked and informed on functional activity

Communication

Develop the talent pool through functional training & development and succession management

People

Minimise risks exposed through contracting with third partiesRisk Management

Our Response Our Objectives

Procurement Framework

Procurements activities and priorities must be aligned to business requirements and expectations, which differ between divisions –and sometimes within divisions.

Our objectives in each of these areas should be aspirational yet be appropriate to the individual requirements of each division.

Procurement Methodologies – change based