Structured procurement
for better results

Three years ago, KWS began to introduce a new global and central procurement structure. You have been there from the beginning. How is the outcome so far?

An intensive period lies behind us in the procurement team. We were in the fortunate position that many colleagues introduced us in detail to the core business and the individual facets of the business units and functions. Our team used the time to understand in detail what, where and why we purchase worldwide and how we can effectively bundle purchasing volumes. In the largest procurement categories, we developed strategies that are in close coordination with BU and research colleagues. At the same time, our colleagues at the Global Transaction Center (GTC) succeeded in working with us to set up a central procurement system for non-production materials. As part of the GLOBE rollout in Europe and North America, we have now integrated all KWS locations between Tangent in the U.S. and Lipezk in Russia.

The core element of the new procurement structure is the Central Procurement Hub (CPH). How is the platform currently running?

KWS was one of the first SAP customers to use the Central Procurement Hub. We therefore had difficulties in the early stages that many of our colleagues experienced in the daily work routine. Together with SAP, however, we have succeeded in significantly improving the system and integrating new functions.

For example?

Especially the connection of catalogues from different suppliers makes the use fast and comfortable for most cases - especially for indirect materials. We were also able to shift some of the more complex elements of our procurement process away from the buyer. These tasks are now supported by our colleagues in the GTC. They know the system better and have created some of their own technical solutions to make workflows easier. However, we are still unable to map all purchasing processes in the system. We are therefore working on covering and simplifying further cases, also for production material and multiplier contracts. We are currently only succeeding in this in small steps, as we are rolling out the purchasing structure with GLOBE in other countries at the same time.

Your team is very actively insisting on adhering to processes and involving the procurement team at an early stage. What is the background?

We have already automated order processing to a considerable degree. Currently, half of our worldwide indirect procurement volume goes through CPH. Our goal is to further increase this share. What drives us is to avoid harmful consequences of purchasing activities outside our systems and processes. Because then KWS suffers! Our work strengthens compliance within the company and creates transparency. At the same time, we identify and exploit potential savings across team, BU and country boundaries. And we establish professional supplier management. For example, purchases without central ordering often lead to deviating payment targets with payment obligations that cannot be planned, the violation of framework agreements or the non-utilization of volume discounts. Our experience shows that we can always achieve a better result in a structured inquiry process moderated by the procurement department. This – sometimes additional – effort is worthwhile. There will always be deviations from the existing processes. However, they must remain the exception because they sometimes result in high process costs.

What are your next steps and goals in the further development of procurement?

We want to further digitalize and automate, reduce process costs and optimize our global supplier network. We also want to better understand how we can work closely with our suppliers to provide more targeted and accurate information about planned purchases and deliveries, and how we can more closely integrate our supply chains. This in turn reduces costs for suppliers and will therefore also help us. New agreements that bring us closer to the original manufacturers will also enable us to rethink logistical flows. Partnerships will also make it easier for us to better meet our due diligence obligations. Another very topical issue is, of course, sustainability. We are particularly concerned with the decarbonization of our supply chains, i.e. the reduction of CO2 beyond the borders of our company. In addition to the effect on the environment, we also see this as an opportunity to decisively influence our future costs. After all, around twenty percent of all purchases are already indirectly affected by a tax on CO2 - and the trend is rising. |