DSM made its global indirect procurement more sustainable using SAP Business Network and SAP Ariba. We can draw five lessons from this that are valuable to anyone looking to transform their procurement organization in a sustainable way.
DSM’s sustainability goals are ambitious, to say the least. The company embraced a purpose-driven, performance-driven strategy to make a positive contribution to people, the planet and society. Key goals include an accelerated transformation towards a NetZero economy, fair deals with suppliers and enough healthy food for all.
These goals will not be achieved by themselves. One of DSM’s action items was the transformation of its global indirect procurement business. Not without reason: without sustainable, efficient indirect procurement, DSM’s end products are not sustainable either. Let alone that these efforts are properly quantifiable. Those who do not do business with sustainable partners are not themselves doing sustainable business.
With its ‘buy.SMART’ program, DSM wants to digitize and automate purchasing transactions so that it could not only realize cost savings. For example, it is important for DSM that the costs of indirect goods and services match the procurement policy for the sustainability and diversity of suppliers.
Here are the five lessons you can learn from DSM’s procurement transformation:
1. Make use of a business network
To realize the buy.SMART vision, DSM integrated the SAP Business Network with an upstream source-to-contract process. The company did this by using SAP Ariba Sourcing, SAP Ariba Contracts, SAP Ariba Supplier Lifecycle and Performance, and SAP Ariba Supplier Risk. DSM chose the SAP Ariba procurement system for the downstream procure-to-pay process.
The advantages of this set-up around the SAP Business Network are countless. You will find suitable trading partners in your supply chain much faster, including suppliers, (logistics) service providers, asset operators and maintenance contractors. Thanks to automation, you can perform many tasks more efficiently or even automate them completely. In addition, you benefit from higher visibility into all processes in your supply chain. Is a supplier having delivery problems? Then an alternative is easier and faster available, which promotes your resilience.
“Thanks to SAP Ariba, DSM has strengthened supplier collaboration, improved the user experience for all participants, automated the transaction flow and significantly reduced errors,” says Andries Feikema, Global Director Procurement Digitalization & Transformation at DSM.
2. Make use of independent sustainability assessments
Of course, a business partner in the business network can claim that it operates sustainably or that their products meet sustainability standards. It is better to have this determined by a neutral party. DSM uses EcoVadis for this. This independent organization assesses and ranks companies in terms of environmental responsibility, ethical treatment of employees and other practices.
DSM linked SAP Ariba to EcoVadis for this. In this way, the company can easily qualify suppliers from Ariba based on specific sustainability criteria. The company is currently expanding this sustainability assessment to give its procurement professionals even more insight into its partners and who it does business with.
“Sustainability is in DSM’s DNA. It therefore plays a big role for our purchasing organization. It is an important element in the selection of our suppliers, and we test this directly in the SAP Ariba solution. It is important that we have the right Selecting suppliers. to do business with is directly embedded in our process design,” says Feikema.
3. Make the pilot in the most challenging market
Piloting a procurement solution in a simple market may seem attractive. However, it is not necessarily the best solution. DSM even chose a different strategy: start with the most difficult market. That way, you’ll be sure to remove any potential dents early.
DSM piloted the new procurement system in the region with the most complex tax system: Brazil. Thanks to this approach, the company learned a lot about the processes and the solution and made the rest of the global rollout much easier.
4. Standardize where possible
Because the pilot immediately delivered process efficiencies, DSM applied the process design in all other countries. The only changes that could be made to the standardized design were related to fiscal or local regulations. Thanks to this standardization, procurement processes are more or less the same all over the world. This not only accelerated the rollout, but also made the entire process more transparent and efficient.
5. Don’t forget change management
The implementation of new technologies and processes is of course crucial. However, these changes must ‘land’ with all employees involved. Without their adoption of the innovations, all investment efforts are hardly worth anything.
DSM supported the project with great attention to change management. For example, DSM created an expert desk as a global permanent function tasked with supplier activation, sourcing support and contract implementation. DSM also established a global team of 270 champions to improve adoption and guide users through the use of the new procurement processes, both upstream and downstream. These promoters speak the local language and were on hand to explain the changes and provide training to end users.
“We have made communication, training and change management part of the program management. We have not approached our program as the implementation of a tool, but as a real business transformation. The users are central to the success of our transformation program,” concludes Feikema.
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