Forget the adage about dogs and tricks: you don't make it to your first 100 years in business without finding innovative ways to capitalize on opportunities and manage potential risks. After nine decades, food processing giant Grupo Nutresa pivoted its supplier negotiation process for complex categories by swapping basic spreadsheets and desktop tools for e-sourcing and optimization solutions.
With supply chains spanning 74 countries across five continents, the Colombia-headquartered conglomerate took on a range of procurement spend categories – including ocean transport, packaging, MRO, and marketing services – to assess if increasing competition could drive new savings and business efficiency.
During a Q&A style webcast co-presented by JOC/IHS Markit and Keelvar, members of Grupo Nutresa's strategic sourcing team engaged in a dialogue about their decade-long sourcing optimization journey and what they’ve achieved and learned by making the switch.
Here are some top takeaways from their presentation:
Optimizing Complex Categories
Grupo Nutresa began using strategic sourcing tools in 2012 and has seen savings of more than USD $175 million accumulate in the years since. As of 2019, the company had more than 12,000 active suppliers, and its 47 production plants require negotiation at various levels with those who align with its strict sustainability policies.
Since adopting strategic sourcing, the company has made significant strides in reducing inefficiencies along the supply chain.
"If you are using an Excel spreadsheet, you have to think about managing more than 10,000 files, rows and columns with spreadsheets from different suppliers, countries, and of course, different points of view," explained Grupo Nutresa Digital Procurement Leader, Carlos Peña.
Beginning with packaging – one of its largest and most complex spend categories due to the number of SKUs, factories, and suppliers involved – Grupo Nutresa saw initial savings of 20-25% by optimizing its flexible plastic spend. Across its eight business units, the company has continued to generate savings in this category of between 10-15% every three years by leveraging Keelvar's sourcing optimization tool.
Grupo Nutresa also successfully utilized Keelvar’s Sourcing Optimizer for other complex categories, including MRO, marketing, and logistics. Using it for its transport categories, the company has garnered savings of approximately 10% when renting trucks while also saving significant time using the tool for negotiating ocean freight logistics.
Sourcing Optimization or Basic E-Sourcing?
While leveraging Keelvar's Sourcing Optimizer to manage negotiation and award scenarios across categories that require decisions based on more than just the lowest price, Grupo Nutresa uses spreadsheets and e-sourcing solutions for simpler spends.
To identify which tools are best suited to prevent value leakage, the company created a roadmap of its e-sourcing spends that do not require optimization, relying on SAP Ariba for quick quotes, contract management, and supplier management.
Determining which is the most appropriate tool – auctions, RFQ spreadsheets, or Sourcing Optimization – to use for each spend category is an important consideration for Grupo Nutresa driven by factors including competition, SKUs, restrictions, and the allocation process.
For example, when negotiating its spend on computers (Grupo Nutresa negotiates more than 30,000 per year), auctions were deemed the most appropriate tool due to the low number of SKUs involved, and as allocation is based mainly on price.
To help drive adoption of Keelvar’s Sourcing Optimizer, Grupo Nutresa developed a matrix to encourage users to think strategically before selecting a tool for a particular spend category. (See image above.)
Internal Processes & Training
Since first introducing strategic sourcing, Grupo Nutresa has continuously trained 80 members of its procurement team, and today counts six of its 10 active users of the Keelvar sourcing optimization tool as experts.
Rather than imposing mandatory use, Grupo Nutresa focused on demonstrating the advantages of using Sourcing Optimizer, particularly for negotiators who felt that RFQ could be performed better using an Excel spreadsheet.
At first, said Carlos, "we wanted to understand why they were not adopting the tool as fast as we would like them to… So we asked them questions like, 'how many suppliers do you have? Is it a very competitive market between them and might you want to use the tool to make combinations of complex restrictions?'"
As a result of those training efforts, Grupo Nutresa will complete more than 100 sourcing events, about 40% of those being optimized with Keelvar’s solution.
Continuous Sourcing Improvement
Despite the disruptive effect COVID-19 has had on global supply chains, the change in consumer shopping behaviors has resulted in a surge in demand for Grupo Nutresa's packaged food products.
2020 has been a strong year for digital procurement at the company: to date, it has performed more than 100 RFI, RFP, auctions, and optimization processes that have generated potential savings worth USD $1.7 million, or 6-12% per event.
The next steps in Grupo Nutresa's sourcing optimization journey includes the plan to implement Keelvar's AI-enabled Sourcing Automation on its ocean freight category to bring more efficiency to the spot bidding and mini tenders processes. The company also plans to integrate SAP Ariba with Keelvar's Sourcing Optimizer platform to kick off optimization for qualifying events more seamlessly.
Keelvar greatly thanks the team at Grupo Nutresa for sharing their story in this webinar and for their ongoing relationship as a valued customer!