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While many procurement teams are still grappling with when and how to use e-sourcing solutions, there are some industry leaders who have mastered best practice and are reaping the ROI benefits across many categories. Colombian food manufacturing giant Grupo Nutresa is just that company.
They recently shared in a session during the DPW virtual conference their robust use of two e-sourcing solutions side-by-side to tackle as large a range of spends as possible: Keelvar's Sourcing Optimizer, deployed in 2016 initially for complex packaging (and since expanded to more categories), and SAP Ariba for handling more routine, simpler spends.
Grupo Nutresa's team members shared four key takeaways from their sourcing transformation and modernization journey that should be helpful to other sourcing teams considering the same:
- Understand Your Spend Categories and Find Solutions To Match
With most spends initially supported through the Office suite, Grupo Nutresa started thinking about ways to improve global sourcing strategy in 2012 to uncover new savings and discover tools that could better support the company’s range of spend categories. This led to the development of a procurement modernization road map: in the view of Grupo Nutresa’s Digital Procurement Leader, Carlos Peña, understanding the requirements of different spend categories is the first step an organization needs to take when thinking about modernizing sourcing processes.
“You need to understand what kind of competition you have, the number of suppliers that you have in any given category, and you need to understand the complexity,” he explained.
While Keelvar’s Sourcing Optimizer was selected as the optimization tool of choice, in 2018 Grupo Nutresa’s digital procurement journey took a step further when the company looked to Ariba Suite to find new savings, plug value leakage, and boost process efficiency in non-direct categories.
A key deciding factor was the ability for Keelvar to be directly integrated with SAP Ariba to meet the needs of more complex spends where price and non-price bid elements are considerations for the award.
“It was very important to integrate Keelvar with SAP Ariba,” explained Carlos.
“If any given category has complexity [or] if the negotiator requires an optimizer, he can choose to use Keelvar. Or if it's something pretty simple, he can use sourcing on SAP Ariba.”
- Develop Internal Guidance for Sourcing Solution Best Practice
To help sourcing teams better understand when is the best time to use optimization vs. e-auctions, Grupo Nutresa Digital Procurement Specialist Maria Fernanda Velasquez said they developed a matrix to encourage users to think strategically before selecting which tool for a particular spend category:
For example, when negotiating its spend on items with a low number of SKUs and where supplier awarding was based on lowest price, e-auctions in SAP Ariba were deemed the most appropriate tool. By comparison, packaging is one of the food company’s largest spends with many variables, making it ideal for sourcing optimization.
“[Packaging] is a very complex category because we have more than 40 factories spread from Latin America to Texas in the US,” said Carlos. “And we have a lot of suppliers, a lot of factories, and more than 1000 references for SKUs.”
- Invest In Team Training to Encourage E-Sourcing Tool Adoption
Widespread tool adoption is integral to a procurement function’s successful digital transformation. For this reason, Grupo Nutresa has invested heavily in staff training and in finding new ways to drive tool adoption among team members. This applies not only to Keelvar’s optimizer tool and SAP Ariba, but to any procurement digital solution the company has embedded into their processes.
A big part of ensuring Sourcing Optimizer’s successful adoption across spend categories was to show the significant savings it could help teams uncover. And another key step was to not make the tool mandatory, but instead, focus on communicating the many advantages and successes being gained through its use – particularly for team members who felt that RFQs could be performed better using legacy tools and spreadsheets.
“We used Keelvar as an option for packaging categories first and we were not using it as a mandatory tool for the negotiators, and for the teams,” explained Carlos. “The promise of savings [using the tool] since the beginning was very important for us to gain adoption – and that promise was very well fulfilled since the first event.”
Carlos explained that once similar savings to the first event (around 20% to 25%) were achieved in subsequent events, “everyone was interested in using the tool.”
“So, we did not have to think of it as mandatory. We just kept receiving questions and requests from the people to use Keelvar in different kinds of categories,” he added.
- Continually Look To Improve Sourcing Processes
Given the numerous complexities sourcing teams are facing today, Grupo Nutresa is constantly looking ahead at new ways to boost their strategic sourcing success.
“We are actually thinking about implementing a [Sourcing Automation] Bot that can do the mini tenders that we are running right now, given the international situation that everyone is facing with containers,” noted Carlos.
“We also want to build a healthy procurement organization from a metrics and KPI point of view: We are implementing 10 global KPIs, and we are preparing ourselves to benchmark this organization every semester with best practices and other organizations that we compare ourselves to,” he added.
Thanks to the team at Grupo Nutresa for sharing their story and for their ongoing relationship as a valued customer.