Key Points
  • Our client, GlobalFoundries, found that their procurement operating model relied on category managers to perform too many operational activities. The inefficiencies led to missed opportunities for value creation and alignment and a vicious circle of frustration.
  • For maximum value creation, the procurement organization needs to have an operating model that allows for project execution based on the strategies that are co-created with stakeholders.
  • Updating the procurement operating model allows the team to focus the most time on strategic value creation activities like stakeholder engagement, category planning, supplier innovation, and business alignment.

This summer…, I had the pleasure of sharing the stage with one of our clients, Vish Srinivasan- Head of Procurement Singapore, China and Capital Equipment at GlobalFoundries. We had a joint mission: educate our peers about the benefits of rethinking the procurement operating model and provide a tangible example of what is possible.

Vish was fresh off a test pilot program that transformed the semi-conductor giant’s three legacy systems from high-touch to low-touch through automation. He explained how GlobalFoundries came to outgrow its procurement process as they evolved from a spin-off of Advanced Micro Devices (AMD) and grew into a powerhouse semiconductor foundry with manufacturing operations around the globe. He knew it was time for a change.

“We're actually an amalgamation of three different companies. We each had our own processes, policies and procedures and protocols. So, this amalgamation of processes means that, world-wide, we have 35 different types of PO’s in our system. Each one of those POs has people, sometimes multiple people assigned to execute them.” Vish started off by introducing the complexity of his procurement ecosystem.

“How can I streamline this process into something where I can count the number of ‘touches’ on one hand?” Vish asked. The most limiting factor in the process was that each task was being handled multiple times.

“I sat with my team, and said I want to be the poster child in my industry, in everything from customer satisfaction, cycle time, accuracy, and compliance. So, we imagined that we had a completely clean slate, we said to WNS-Denali: Tell us what’s possible.”

The company recognized that transactional and tactical activities placed on the team was decreasing their focus on the strategic mission and initiatives. "Most organizations spend 20% of their available time on strategy, the very top of the pyramid. We capture value when we automate procure-to-pay. We transform that transactional time into time that is available for strategic work,” concluded Vish.

 

Your Procurement Journey

 

This is not a new message for me and WNS-Denali, I have spent the past decade working hands-on with clients to evolve my position on the best and most optimized operating model for procurement. Our recommendation to GlobalFoundries contained three key elements:

  1. The Operating Model: For maximum value creation, a procurement organization needs to have an operating model that allows for project execution based on the strategies that are co-created with stakeholders. This operating model must call for separating project execution from strategic planning to upend the pyramid and enable the direct team members to focus on the high-value strategic activities.

  2. We believe in a category-driven end-to-end value chain for procurement. Category management is the single most strategic way to create and capture value. It’s how you build reach, meaning effective relationships with stakeholders. Invest in building an ecosystem for strong category management foundation and support team members to reach their full potential.

  3. Enriching the ecosystem: A common thread amongst the “poster children” in our industry is that they recognize the value of external support. Build and leverage the power of a multi-faceted ecosystem to support the team and provide them with access to methodology, knowledge, tools, technology and expertise.

You can boil every procurement organization’s goals down to these things:

First, increase reach. Reach is your access to all the spending and supplier decisions; your mandate is to influence those decisions in the best way possible.

Second, assess how effective you’re being at creating value. Not all value simply equates to savings, so we talk about sustainability, risk and growth.

Third, drive efficiency, we all have limited resources, procurement needs to do things faster, and cheaper

And the fourth, according to Vish, is delight: “I sincerely believe as we go live soon, this is going to change the face of how GlobalFoundries, globally is going to interact with the suppliers and internal stakeholders when it comes to our procurement operations, we are going to delight them. That's the goal."

About the Author

Alpar Kamber
Corporate Executive Vice President & Head Procurement Services

Alpar Kamber Alpar Kamber is the Head of Procurement Services at WNS. He was the Founder and CEO of Denali Sourcing Services (now a part of WNS), a next-generation procurement services provider that enabled procurement organizations to influence more spend, and execute more effectively and efficiently. Prior to Denali, Alpar developed his cross-industry expertise in procurement value chain while in management positions at Ariba, FreeMarkets, Diamond Technology Partners and E&Y. He holds an MBA degree from the Tepper Business School of Carnegie Mellon University.

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