Paul Morrison
Hello and welcome to Retail and Consumer Pulse brought to you by WNS. In this series, we explore how retail and consumer goods companies are working smarter and innovating in this ever-changing market. And to help us, each episode features an industry expert or leader sharing views on what it really takes to succeed. My name is Paul Morrison, and I lead the WNS retail and consumer practice in Europe.
For today's session, procurement success in consumer goods, I'm delighted to be joined by Daniel Wilson, Head of Indirect Procurement for Philips in EMEA and CIS, based out of Amsterdam. Hi Dan, thanks for joining us.
Wilson, Daniel
Hi, Paul. Good morning, and thank you for having me.
Paul Morrison
You're very welcome. And before we dive in, just to flag, Dan has had a long and successful career in procurement at the heart of a number of major CPGs and manufacturers, including Unilever, Teva, Adidas and currently Philips. Over the years, he's driven many transformations in procurement, and in the process, has developed strong views on what works and what doesn't. And just before we do start on our topic, I should flag your latest role, Dan. You volunteer as a board member at BC Apollo Basketball in Amsterdam. Perhaps you could just tell us how you got that particular gig.
Wilson, Daniel
Yeah, thanks. It's a great segway because actually it's one of the things that I've really become passionate about through my career, which is sports. I have a 13-year old and a 15-year old son and daughter, and both are part of the club. And I just saw a great opportunity to help sort of bring the club to a new level of marketing and promotion and just tremendous opportunity and a role came up to join the board. I was excited to be nominated this past September for a three-year term. It's a volunteer role. But what's really exciting is there's just so much potential. And so I head up their marketing and sponsorship organization and we're constantly looking for new partners, new opportunities to bring the club forward.
Paul Morrison
Excellent, excellent. Well.
We best turn to your day job. When you're not in the world of basketball, let's turn to your journey, in fact, in procurement over the last many years. And perhaps maybe, you could just quickly take us through your journey in procurement in the CPG space over the years. Thanks, Dan.
Wilson, Daniel
I mean, you know, I consider myself to be very fortunate. Over the last 20 years, I've built a career around procurement and procurement transformations. I've been very fortunate to play a role, whether as an individual contributor or as a leader for five procurement transformations. So we talk about people, processes and technologies and driving an active change in the indirect space. I've been fortunate to work for Unilever, where we started, our first collaboration, Paul, during your time at Alsbridge and a massive extensive program called “Five ones” and taking a look at the entire purchase-to-pay organization and cycle, Teva Pharmaceuticals, Adidas and most recently at Philips.
And so, a lot of the work involved has been around coming in and driving the change narrative. I'm, first and foremost, a change agent, and I'm obviously hired to come in and drive change. I've had the opportunity to re-look at operating models, tech platforms and yeah, sometimes difficult decisions are made around people and processes and the need for change, but all with the view of driving the organization forward and really making procurement or indirect procurement a true business partner.
We're talking about influencing. It's been in the indirect space and selling the value of indirect procurement, which after 20 years still leads me to believe there are still some challenges with the role of indirect procurement.
Paul Morrison
Mm hmm.
A lot on the plate there that's making that P&L impact, but you're still pushing the value and acting as an advisor across the business on many fronts. It seems that there's a lot on the plate of the procurement leader and manager. And when I step back and look at, you know, across those sorts of organizations, procurement in consumer goods, it strikes me that it probably is one of the toughest places to do procurement given the complexity of the industry. Perhaps you could give us your thoughts on what's different about procurement in the consumer goods space?
Wilson, Daniel
Coming from Philips, for example. I mean, we associate Philips with being a consumer goods company, but an actual fact, it has shifted away from consumer goods and into medical devices. So it becomes far more regulated by the FDA, which drives tremendous amount of complexity.
And so supply chain becomes and it still is the big topic right pre-COVID, post-COVID. The changing nature of the planet - in terms of sustainability, and how we're sourcing raw materials, new sources of materials as well, and so, you look at the world scene today in terms of the ongoing but unfortunate wars that are taking place. Also lots of supply chain disruptions.
So that requires a different way of working. It requires a different mindset in terms of how we address supply chains and where we're sourcing ingredients or where we're actually sourcing our products or components from. And so you start to understand, hey, is there a need for a centralization or decentralization of an operating model? How is that sort of linked into the business?
And a business shifting from horizontal operating models to two different verticals, and even within an organization, you know consumer goods and medical devices is two different ways of working. You've got one that is heavily brand-focused and very focused on driving marketing, and the other one is very focused on compliance and driving quality control, etc. So, even within the CPG space, branding is very very different, right?
Paul Morrison
Absolutely. And those brands are complex and varied and the buyers are very different. I guess your buyers are hospitals and medical institutions on the one hand and consumers for other parts of the business. So it's this huge diversity, I guess is, maybe the keyword for this whole sector.
Wilson, Daniel
Yeah. And in terms of how you're engaging with stakeholders, right? So marketing spend, for example, it is so critical. And for example, in these sort of consumer goods focus, in Adidas for example, I mean the brand recognition is self-explanatory, right? You're buying a lifestyle.
You know, buying toothbrushes as well is, you know, there's so much competition, there's so many different manufacturers. How do you differentiate yourself? So, the way you make these marketing investments are very different to exactly what you're saying. How do you market and sell to hospitals, right? When you're selling your products, MRI devices, etc., are you really focusing on a sort of a comprehensive package that involves devices, machines, room setups, facilities? So, it's very different in terms of how you're selling to the business and even margins, right? Very different.
Paul Morrison
Hmm.
So we've set up, you've got a tall order here really in terms of what procurement needs to achieve. There's the role of a trusted advisor. There's the imperative to drive P&L improvement. Then, we have the complexity of the environment and stakeholders. So the question that moves to you know how, how in your experience and how in the market do you see this getting answered? And we have to start, of course, in this day and age, with technology.
To what extent is technology, in particular AI, making easier to deliver procurement in a consumer goods-related sector?
Or is it making it harder? I guess I'll sort of kick off in a sense with just a fact. In a podcast too recently, we touched on the areas of supply management and did a whole session on within that specific area the different, different use cases. But looking across the end-to-end life cycle of procurement, the range of use cases and examples is really impressive and staggering. How advanced technology and, AI in particular, is changing what's possible?
This is obviously building on decades of investment technology. But if we look at things like demand forecasting and the AI investments there of PepsiCo or Unilever, supplier identification and market analysis, companies like Mondelez investing in that space, Bosch, in contract negotiation, negotiation chatbots.
You know, and so on through purchase orders, order fulfillment, performance management, risk management, the number of use cases is massive, I would say and is starting to change how procurement looks at what can be done. I don't know what your perspective is on how technology is making the job of procurement better.
Wilson, Daniel
Yeah, it's really interesting, right? If I come back to P&L in terms of procurement’s role, right, it's still the forefront of any organization. We're still being asked to drive P&L improvements, but more and more are being asked to drive innovation, which is - how do we keep suppliers relevant, how do we continue to validate, how do we continue to bring the outside in.
And the next point beyond that is how are you leveraging AI and technology for those particular topics. And I think you hit that nail on the head with use cases. In my career over the last 20 some odd years, I've been just used to driving, you know, Coupa Smart, GEP or even an Ariba deployment. And that's all we ever thought about was the source-to-pay systems. Now you have these entire ecosystems and these very much niche products, right - sales chatbots for negotiations.
Paul Morrison
Hmm.
Wilson, Daniel
And so you're now being asked to identify these niche products that serve the business to test in a sandbox environment and to deploy or to leverage. Does it work or does it not work for an organization? And so the reality is AI is here. The automation is here. The tools are here. And I think, in order for procurement to really continue to drive the P&L impact storyline, to continue to innovate, to continue to bring new ideas from the outside and leveraging the supply base, we need all these different tools.
We need to leverage them. We need to work much smarter and faster. I still feel procurement gets bogged down in administrative and operational tasks, and we really need to focus on that innovation, supplier relationship management and just that partnership concept. This is the way you differentiate yourselves from the industry.
Paul Morrison
And that's challenge then of managing this multitude of partners, that is increasingly important. It's ever more important for you and your role to do that or is it something that's shared across the business. Whose job is it to manage this ecosystem?
Wilson, Daniel
I think you know it's the biggest question, does IT manage the ecosystem or does procurement? And of course, a lot of these tools are business-centric, but they're also procurement-centric, and I think what I've always felt or believed in or adopted is if there's a benefit to the entire organization and not a particular business, then the focus really should be ownership on procurement, right? And the conversation around business is, yeah, but that's a procurement tool, right? Or that's a procurement process.
Paul Morrison
Mm hmm.
Wilson, Daniel
I just need you to deliver XY and Z. How you do it? I leave it with procurement. So naturally, it becomes a procurement topic discussion and I'm OK with it. I like to be in the driver's seat. I want to be driving the discussion, and I want to be the owner of these tools and products. And so for example, within Philips, we implemented Keelvar. We've been processing, you know, for air, land, freight, sea, everything, you know, complex amount of lanes and data. And we felt that we really needed to automate and use AI to do better sourcing.
Paul Morrison
Mm hmm.
Wilson, Daniel
This became very prominent during the supply chain or COVID challenge, the Panama challenge, when one big freighter got stuck in the Suez Canal. And so you're sort of forced to move at a speed that is just no longer humanly possible when you just have no choice but to leverage these tools. And so, again, it's about moving away from the tactical things. It's about focusing on the right things and using AI or automation to facilitate and to speed up, the value that we bring to the organization because they always want everything more faster than, you know, yesterday.
Paul Morrison
Yeah, absolutely. But that resonates and that's something that you know fits with the work that we at WNS do. We're procurement service providers, and we also provide technology, and we recognize that landscape around some of the major multi-decade investments that have been made around JAGGAER, Ariba, Coupa and so on. And the remaining importance is to recognize the proliferation of tools and increasing quality of tools that are available and we can't WNS peer and CPO track amongst them just to plug that briefly, but we recognize the challenge of curating the tools that are put forward and used by an organization. But where they really connect well as in your example, they can have, you know, a really massive example, a massive benefit. So that's interesting to hear your perspective and if we sort of step back from this growing maturity in the marketplace, you know what can be done, what can be improved through automation and AI.
What's your view on the make versus buy question? Is there now a role for making and creating your own technology as an organization like a Philips or a Unilever, or is it all about buying now?
Wilson, Daniel
Yeah, there are so many tools and processes, and again, I think to the example of where I'm currently working. When you're in an FDA regulated environment, there's tremendous amount of process that you need to follow to comply with external organizations. And so, the question is, can third-party tools actually address that complexity?
And in some cases, the answer is no. And I know at Philips, we do a lot of our own making in terms of small tools. For example, we have a chatbot service that allows us to check an invoice status and it's open to the World Wide Web. Anyone can log in to Philips and go - what's the status of my invoice? And we've created the right sort of cybersecurity protections and everything, but it's a really cool, simple tool that anyone or any supplier at any point in time can do that.
I don't know if there is a tool in the marketplace to be able to buy that, so we've created it. And I think making it is still relevant because I still think that organizations who want to have a competitive advantage still would like to have certain things done in-house. And therefore, you create these tech teams, these centers of excellence or business process teams that again create small tools, implement the ability to drive and implement and be more agile as present.
When you start talking about third-party tools, you're talking about connectivity, tech, approval processes through IT that could be sometimes complicated and lengthy. What impact does that have on ERPs, ecosystems, et cetera? So sometimes for just pure speed and agility, you actually want to make something. I do see an argument for buying in this case of, well, you know, maybe in the CPG space, there is less complexity, less parameters around FDA.
And again, it just makes sense because some of the new tools that are coming in place, beyond your source-to-pay platforms, whether it's around sourcing, risk management, autonomous negotiations, category management and category strategies, there are some really proven tools in the marketplace that are plug and play, stand alone in the cloud, off you go that are there to be leveraged. And so I see a market for both.
Paul Morrison
Yeah, I think that's spot on. I think it's connected to the point earlier around the diversity of businesses and customers.
In the business across the industry, different types of consumer, different types of offering and model and different types of strategy and, you know, we see make and buy being used by different organizations and succeeding in both is always a complicated trade-off between control effectively on one side and you know access to external capability on the other. And I guess when we turn to if the focus up till now, the conversation has been around products and technology.
If we focus on more on services, whether that's things like, you know, back office or contact center work or whatever it might be, what's the role of providing these services internally through a shared services or GBS model or going to the market and taking outsourcing or BPM/BPO from the market. There's a make or buy question in there, and I guess as a company that's in the business of business processes like WNS, you won't be surprised. Cards on the table, we see a strong future.
And the ongoing importance of getting services from an expert third party, our view is really the long term trend is of continuing steady growth of ±10% year on year which is on the base of a very big number is significant growth. We feel our clients get value, and we feel as well that the whole area of services in a function like, procurement is maturing. There is more insight available. There is an expectation that providers can provide more in terms of outcome, more in terms of infusing a service with technology, and making use of harnessing data and analytics in a new, powerful way. So, we would see the future for procurement services in CPGs as strong. I don't know what your perspective over the past years, across the industry, do you see make or buy going one particular way for procurement?
Wilson, Daniel
Across my career, it's the last major organizations that I worked for. It's a little bit for too forward and too against. What do I mean by that is I've seen two examples where outsourcing was prominent.
There was a need for new capabilities.
There was a need for not making significant investments in-house but to let a BPO player, who's experienced in doing these types of transformations and outsourcings over and over again put the hands or put the capabilities and the ownership in their hands.
And I've seen the other opposite right, which is hey, no, we believe in investing in the future, we believe in investing in our own people in our own brand, and we will create our own shared services center and run them like a professional BPO. We will hire people from the BPO marketplace, we will hire people who've built GBS centers, et cetera.
So, I still think outsourcing is still prominent. I'm a big believer in outsourcing, but it has to be for the right objectives. And a few times, I've seen not the right objectives. Again, headcount focus, we need to reduce head count by 10%. Well, let's outsource, right? But all you're doing is you're moving head counts around artificially, and potentially, you could be increasing when you start to look at services. So I think it's about getting the objectives right. Why are we doing this? Yeah, what are we trying to fix?
I see too many times where all our processes are a mess. It's too complex. We'll outsource it because it will be far more simplified, and yet I see examples whereby it's not simplified because the customer's saying we need this and this and that and this and that, and you're just adding the complexity back into a new tool or a new platform from an outsource provider. So again, I've seen both.
And in both have worked.
Well, and in some cases, I think both have failed.
All because the right objectives were not laid out, and sometimes it's a cultural, organizational cultural thing where you say not sure this company was right for us. And so again, why you're outsourcing, you know the values and beliefs of an organization where you're both going in terms of the future direction. You've got to ask a lot of these questions.
Paul Morrison
Yeah.
Wilson, Daniel
Right, the capabilities and the tools and the investments are there, but why are we really doing this, sometimes I feel is missing. But again, I share that sentiment. I think you know outsourcing probably goes in waves in-house, outsource, and so it's very cyclical.
Paul Morrison
Yes.
Yeah.
I think that's well said. I think the point around getting the objectives and the direction is right, and I think expectations of buyers of procurement services have rightly changed and become elevated. And as we were talking around in the first part of the conversation, the environment is more complex, there is more regulation, there are more expectations and obligations to perform against.
For example, ESG, targets and requirements, so the bar is higher.
And for the right partnership, then I think there is good work to be done. Good opportunity! But yeah, it's not a panacea.
Wilson, Daniel
But and you've really, I mean we didn't talk about ESG and the sustainability piece, which again I think is so important, right? Look at what's happening in the world and the planet and you know, do we really understand, what sustainability means and doing things in a sustainable way, and what you start to see is it's very complex. It can't be a tick box exercise. You can't just have procurement contracts that have a clause in there that says, you know, sustainability.
What does that really mean? What is the cost of implementing it? And you're starting to see organization saying, hey, look, we love all this sustainability stuff, but it's actually costing us more money. So what's the trade-off? So again, shareholders who are saying, yeah, we all embrace sustainability, but the bottom line is it's costing us more money. So it's a huge, huge topic.
Paul Morrison
Yes.
Wilson, Daniel
That really needs exploring, and I think that's the future we need to look into. And again, there are great tools, processes around that, but it's a fundamental cultural question and purpose and leadership question that we have to ask ourselves. So very interesting how this will evolve.
Paul Morrison
Hmm.
It's a really big one. I definitely agree with the view, and it seems to me that in the consumer retail broader manufacturing sector, we've moved or moving from a period in which the vision, the direction has been set to a quite you know a period of how to implement that, you know what the implementation gap between a vision and running effective monitoring, reporting, analysis against the whole stack of ESG requirements is, yeah, it's complex, it's fast-changing, and has super high compliance requirements. So there's some big questions I think linked to our early conversation.
There are some great technology and analytics approaches that are being used to bridge that implementation gap. But you know lots to be done and maybe we'll come back to that in a future discussion.
But time is one again today, so I have to draw a close to our chat. So, many thanks, Dan. Really enjoyed our discussion, and hopefully see you at the next Apollo game.
Wilson, Daniel
Yeah, Paul, thank you very much. Really appreciate it. And if you are in Amsterdam, then I'll let you know when the next basketball game is.
Paul Morrison
Yeah.
Wilson, Daniel
So, once again, thanks for this opportunity. It's been a great podcast.
And I look forward to the next.
Paul Morrison
Thanks to our listeners for joining Retail and Consumer Pulse today. If you've enjoyed the show, please do like and follow us and stay tuned for our next episode. Thanks and goodbye.