Becton Dickinson’s procurement operations transformed by technology
Today, the procurement operations at Becton Dickinson (BD) – the global medical technology company – are admired and respected across the industry spectrum, with collaboration and joined-up thinking from the company’s procurement teams driving forward the medical equipment giant which turned over more than $12bn in 2016.
But what you see today is the result of a near two-decade effort to make BD’s procurement functions best-in-class. The transformation began in 1999, a time when the company’s procurement was decentralized, fragmented and not perceived to be especially important in the grand scheme of all things BD. In total, BD’s core procurement team numbered four.
One of the first ambitions for the procurement function was developing effective category management and sourcing, as well as delivering demonstrable value to the business as a whole. That gave BD a base from which to build into what is now a truly global end-to-end procurement operation, with various skilled and knowledgeable teams – including source-to-pay, indirect, risk and supplier management to name a few – working together for the benefit of the wider company.
From a team of just four less than 20 years ago, BD’s present-day procurement function is home to more than 180 employees and growing, who work towards carefully planned three and five-year roadmaps. BD Global Procurement strives to continuously deliver the highest sustained value for the company by leveraging its full competitive supply base using highly effective and efficient systems and processes.
Critical to the success of BD’s overall procurement function is source-to-pay. Roger Ambrose is BD’s Senior Director for Global Source-to-Pay, and has been with the organisation since 1994, when he joined as its European Internal Audit Manager, before taking on responsibility for implementing SAP across the business. Since 2002, Ambrose took responsibility for global processing in Europe, before taking on his current role.
Originally a Chartered Accountant, Ambrose says: “As you move into the procurement space, you realise that actually paying the invoice is the least thing that you're really worried about from a procurement point of view. You want to be using the right suppliers, have the right supply base, get the right pricing, and have access to accurate analytics.”
Ambrose says that the changes made since 2002 are marked, with BD utilizing technology to drive its supply chain transformation. “If I think back to what I was doing in 2002, it's vastly different to what we're trying to do today because of technology, but also because of our maturity as a company. That maturity also shows itself up on what we're doing on the category side.
“I would say that is true particularly with indirect, but probably across the entire spectrum; our sourcing managers are much more knowledgeable about what goes on in their market sectors. Their job is to understand their category, and not just what BD wants out of it, but what we can then offer to our users and stakeholders, so that they can really leverage that and make more use of it.
“The challenge right now is there is so much information out there – how do you bring it all together in a way that is meaningful and easy to use, so that our expensive sourcing managers can spend their time using the data instead of collecting it? I think that's the journey that we're on. I think back to those early days, what we used to collect information from, all of our different systems and spreadsheets.
“It was very heavy workload just to put it all together in sensible categories, even assuming the data was correct. Then, we went over to the category managers who would look in their categories, and their job really was to manually cleanse the data and make judgements about supplier categories or look the reasons for increased spending.
“Over the last few years, what we have done is automate a lot of that work, and freed up our teams to use their time more effectively. We've eliminated a lot of the administration that's needed just to bring them together, and we have been pretty successful in building business rules that reflect the cleansing that the category managers did last time, and so they don't have to do it again. You can see there's a shift there from the cleansing, even the analytical work, to leveraging it and using it.”
Ambrose believes that there is now an opportunity to begin to build in technology – and automation in particular – when designing new procurement tools and systems. Giving the example of building a new vendor into master vendor list, he says: “We currently have a workflow process that goes through various approvals, and we have to collect a significant amount of data for that vendor for legal and regulatory purposes as well as a sourcing and category strategy purposes. A lot of this information is public and we have the opportunity to use AI to collect it for us.
“We can collect that information in, which not only speeds the transaction, but also probably provides more data than we could get on that supplier, that we can feedback into spend analytics and help our sourcing managers do their jobs.
“We have the opportunity to be really creative about thinking how we use suppliers in our environment, either to ease the transactions or provide information or identify a risk, or be proactive, such as recognising when a supplier is struggling and how can we help, or being able to identify whether one of our competitors has just signed a deal with them. It’s a really exciting time.”
Since being appointed as VP Procurement – Global Indirect in April 2014, Patrick Williams is credited with leading a large-scale transformation across the full breadth of the Indirect categories to utilize cross functional teams to develop category strategies that drive competitive advantage. The program was known internally as ‘ReCapture’, and is fully endorsed by BD's management committee.
Williams says the buying and engagement from senior management has been integral to the success of the initiative, describing it as “critical”. “The management committee is not something we had before,” he says. “The program is not just sponsored, but governed and controlled by those at the very highest level of the company. Teams also do not get to opt-out, so the scope of it stays consistent.”
Off the back of the program, Williams and the Indirect Procurement team have been able to build and implement five-year strategies across multiple channels, saving hundreds of millions of dollars for the organization in the process. Such has been the success, the ‘ReCapture’ name has fallen by the wayside – “it’s just the way we work now, indirect is very much on the company’s radar now,” says Williams.
“When I first joined BD, our ‘spend under source plan’, which is when you develop a strategy, actually write what we call a ‘source plan’, which is the official document that completely outlines the strategy I think was in the 20% range. We are now at 59% and climbing, so we are making excellent progress when it comes to developing strategies and implementing them.”
In the company’s journey to supply chain transformation, Williams says it has benefitted from taking a wide view of what strategies are working within the market sector, an approach which has led to the company exploring other business avenues.
“Essentially, we have the advantage of many companies have actually done some really great things that we can leverage. We can follow it, so it gives us that late-mover advantage of saying, ‘There is a model, somebody cut their teeth on it a little bit, and we can actually apply it and gain lots of advantage.’ A good example would be outsourcing, which BD has started to do more.
“There used be zero appetite for it; the philosophy was that our business extended to the fence at the end of our offices – the attitude is that we could do things better than anyone – which is obviously now not smart. So, this idea of outsourcing is an example where we're smartly doing certain things. We recently outsourced some IT and it drove tremendous value.”
On leveraging new technology – AI, machine learning, automation, et al – to drive BD’s procurement journey and transformation, Williams is unequivocal. “I am convinced that is the wave of our future across all of our categories, not just indirect – our focus on digital is laser.
“I've assigned members of our IT procurement team to develop strategies for their peers in departments such as IT, finance, legal, sales and marketing, plant indirect, etc. What we're asking them to do is pair up and look at digital opportunities where there's machinery involved and you can use technology to be smarter.
“We think on a long-term basis, we could drive hundreds of millions of dollars in the categories themselves by leveraging technology. We are looking at what we can get working on today, and what is perhaps in more of a concept stage that we need to develop to eventually make it usable.”
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Global R&D Procurement
Less than 12 months old, BD’s Global R&D Procurement division is headed up by Noelle Lee. She leads a global team of associates and that help drive sourcing strategies that supports BD’s innovation pipeline, enabling top-line growth and accelerated time to market. She says the division was created due to a recognition that as the importance of innovation grows, more dedicated R&D procurement will be needed to manage the rising spend.
Elaborating on the division’s remit, Lee comments: “It’s about getting as much value out of every dollar that we spend. The industry is going through a lot of change and innovation is being driven forward, so it’s really important for us to have established this R&D team. We want to become a really trusted partner of the business, and push real top line growth for the company.
“As an R&D team, we have to push the status quo when it comes to technology and how it can help the business. For example, there are now companies that can automate a function such as labelling, which in the past has been typically a manual job. So we are able to take that to the business with the argument that it will drive efficiency and take over from a function that was previously very labour intensive. This R&D team is taking these ideas and implementing them, which is very positive for BD.”
The expectation for the division is such that members of the team are required to have a broad breadth of experience across the procurement spectrum, so they speak the language of all stakeholders – liaising with IT in one instance, and then marketing the next, for example.
“It is essential that we are able to fully understand the challenges and targets of all of our stakeholders,” Lee comments. “We are being asked to connect the dots and drive change; we need to act as a change agent and to do that we have to be able to speak the language and get everybody on board with our ideas. BD has been very consistent in driving change, whether that’s across the entire organisation or in single functions, and we have to be an important part of that.”
In the months since it has been established, the R&D Procurement division has already introduced insight and perspective to the overall global procurement operation, and Lee says there are many more areas where it can push improvements and growth.
“We need to collaborate more with our preferred suppliers to really challenge them and drive innovation. We know what the business needs now and will need in the future and we need to challenge the supplier base to drive that and innovate with us. There is a lot more we can harness from our suppliers and that’s something we will look to do over the next three to five years.
“It’s also important that when we’re working in a global role, we understand how different approaches work for different territories, negotiating with suppliers is very different depending on where you are. A Japanese supplier is going to be very different from an American supplier, for example.”
Lee believes that the transformation being pursued by BD and the R&D procurement team will be vital in the overall effort to secure and develop the best new talent to the organisation.
“There is an opportunity for us to establish procurement as a hugely important driver for change in the business and that is only going to help attract and retain the best talent. I think many graduates don’t really understand procurement so we have to engage with them, communicate what procurement really is and the opportunities within the industry.”
BD has come a long way since the turn of the millennium. Where there was previously just a handful of procurement staff, there is now a highly competent and knowledgeable division comprising almost 200 professionals. Once perhaps considered a cautious, BD’s global procurement teams have fully embraced technology to drive both the procurement function and the wider company’s top-line performance. The company is now thinking about how it can utilize AI and machine learning, automation and further bleeding-edge technology to improve yet further.
Describing his goals for the future, Patrick Williams says: “I want BD to become best-in-class compared to our peers, the best-of-the-best.”. If BD continues its current trajectory, it would take a brave person to bet against the organization achieving exactly that.