New frontiers in Procurement - digital transformation, talent and supplier collaboration

How procurement can leverage new skills and talent outside their normal framework

Episode highlights

The key to effective procurement transformation
Procurement's involvement in orchestrating transformation
Adopting versus mandating technology
Using engineering problem solving skills in procurement
Procurement's role in commercial strategy

Posted by: ZivioReading time: 81 minutes

With Rony Moura, Deployment Manager, BAT

00:00:00 - From the F1 to manufacturing to procurement
00:05:40 - The key to effective procurement transformation
00:10:20 - Procurement's involvement in orchestrating transformation
00:15:05 - Adopting versus mandating technology
00:24:20 - Using engineering problem solving skills in procurement
00:31:00 - Relationship skills in building trust with suppliers
00:44:00 - True strategic supplier relationships
00:54:15 - Procurement's role in commercial strategy
01:05:00 - Leveraging diversity of talent in procurement


Jonny Dunning:   
0:00       So, Rony, we made it. 

Rony Moura:       0:03       Finally! 

Jonny Dunning:   0:04       A little bit of chaos in London today with cheap strikes, but we have been walking around town. Nothing gets in the way for us.

Rony Moura:       0:14       Exactly. And it’s not very good weather, but good enough for us to enjoy the city. 

Jonny Dunning:   0:23       Well we were just talking about earlier when we were grabbing a coffee. So, formal introduction, Rony Moura, you work at British American Tobacco at the moment. And let’s just talk a little bit about your experience in the industry, although not all of it has been in procurement. And that’s one of the things that I think is really interesting, and I am keen to talk to you about in more detail during our conversation today is the talent side of procurement and how that’s changing. And I was at a procure tech event recently, where talent was one of the key discussion tracks where it was basically saying like, digital procurement or procurement technology has accelerated with a lot in a graph going like that, has matured, has grown and has become more sophisticated. Whereas actually procurement talent, their ability to, or their sophistication has stayed fairly flat. And so talent is one of the things I want to talk about with you shortly, in terms of people coming from different areas. So that’s one aspect, the other aspects of things like supply, collaboration and digital transformation. But going back to how you got into the industry, it wasn’t a start in procurement.

Rony Moura:       1:32       Yeah, so I had this dream of being an F1 driver, and I really wanted to work in the motorsport area. So I started to compete professionally in Brazil. 

Jonny Dunning:   1:47       Wow! 

Rony Moura:       1:48       And it took me five or six years to realize that actually, it’s a very, very expensive sport. And especially back in Brazil, although we have [Unclear] and some other great drivers, it is actually a very difficult environment for you to progress in that career. So I decided to work around and to be an engineer, trying to work in those automotive companies, if I can. And I started studying Mechanical Engineering, started in Brazil, I did my masters in France. And it was in 2008, when it was my time to do an internship. And I was in France. And I thought, “Great, I am in France, I will try to apply to one of these automotive companies in France,” but 2008 was when we had this huge economic recession, and nobody was hiring anyone. So I went back to Brazil with my diploma. And I got the chance of joining BAT in this management trainee program, which is quite a coincidence, because the tobacco industry has very good relationship with I think the Formula 1. 

Jonny Dunning:   3:15       Yeah, absolutely. 

Rony Moura:       3:16       Today, I think I see more F1 cars than I would ever imagine in my professional life. But anyways, so that’s when I joined BAT. Yeah, so with this engineering background, so I started in 2010. In the factory in Brazil, I worked in multiple departments inside of the factory. When the factory manager at that time, who is now a friend at a sort of an informal mentor, he asked me to go to the procurement department so I can get some more commercial exposure and negotiation skills. So I went to procurement, it was something for me to stay there for two years and move back to manufacturing. But then I was still in Brazil, I got this opportunity to move to the headquarters in London, and work in the procurement department here in London, purchasing machinery for our factories. That’s when I then moved to London, with my wife, and I have been here for five years now. And it’s been amazing. The work in procurement, the different experiences I managed to have in my personal and professional life.

Jonny Dunning:   4:38       That’s pretty cool. So going back to the original dream of a career and F1 I mean, it’s like such a small percentage of people that make it through to the top level of motorsport. From everything you hear, it’s like, cost is one of the major barriers to it. Did you start off in like karting and then get into the like the move up the formulas or you said, you are racing profession at one point. 

Rony Moura:       5:00       Yes, exactly. So I managed to compete. And in some of the national competitions, karting competitions in Brazil, when I say that it was because of the money, it’s because in my head, I will not convince myself that it was not because of talent. But could have been either, I don’t know. But yeah, so I started to compete in Brazil, and that was my life for many years. But it is a very tough environment, because you need to have all the skills, on top of that you need to be at the right place. And it’s very difficult. The championship and the whole environment in Brazil, it’s very difficult for you to actually succeed, you need to come to Europe or to the US and progress in your career.

Jonny Dunning:   5:50       Yeah, it’s quite interesting seeing that alongside your interest in the engineering side of it, because I think Formula One driving is about driving talent, obviously. But it’s also about working with the team to develop the best car. And it sits alongside engineering and the kind of analytical technical approach very nicely. So it’s interesting to see that. So now, obviously, within the procurement role at BAT that’s moved along. We first met when I saw you talking about some of the transformational stuff that’s been going on within procurement at BAT. And I was really impressed by what you were saying, just in the in the sense that you were very open about it. And it was just very straightforward in terms of what are the problems, how you have been addressing them. One of the questions I wanted to ask you was about when you look at digital transformation, within procurement, there’s so many different factors that can either act as a barrier or can help it become something that’s really valuable to the organization. Do you have any thoughts on what you see as the kind of key areas that make that digital procurement transformation effective?

Rony Moura:       7:04       Yeah, well, first of all, I think you use the keyboard, which is effectiveness, yeah, you can only be effective, if you compare that with an objective. And what I have seen in many procurement conversations with colleagues from other industries, is that sometimes there is this need to digitalize everything, but actually, people, they don’t really know why they are doing that. And it’s important to have a good understanding of what you are trying to solve. Because if you don’t, then you will be purchasing and digitalizing some areas of your department. And you are actually creating more complexity, because people will need to work in that specific platform. And they will not really be resolving any of the issues that your organization is facing. So it’s very important for procurement people to have a good understanding of what they are trying to achieve.

Jonny Dunning:   8:05       Yeah, and it’s interesting, I have had various conversations recently that keep driving towards this idea of having the objective of that being clear, and, aligning with the strategy of the organization. And, as I have said in the past, I still think that’s a problem that a lot of organizations wrestle with in terms of having a clear strategy, communicating it effectively. But like you say, if people are just digitalising a process, for the sake of the fact they are sort of thinking, it’s crazy that we are doing this manually, or we need to be more efficient. If there isn’t a background thought, then a you can digitalize a bad process. And then you just end up with digital chaos. But also, if that doesn’t align with the objectives of the organization, not only could it potentially be a transformation, that’s not effective. But also, I guess, if it doesn’t align with the objectives of the business, the business case, is it maybe not going to get through to do the transformation anyway? Yeah,

Rony Moura:       9:01       I see procurement. We have three different angles we can explore in this digitalization area. The first one is the internal procurement, the internal processes of procurement to make procurement more effective, and to transform the transactional part of procurement. So by using numbers in a more effective way and reaching more quickly, the insights you want to have so this is one aspect of why we should digitalize procurement. The second one is related to stakeholders. We need to have the ability of communicating properly with stakeholders and communication not only one way, both ways, so how do you exchange information to support the business to make the right decisions at the right time and we have a very important role in this decision making because lots of things related to suppliers or from the commercial aspect or legal aspects, they pass through procurement and we orchestrate different areas inside procurement. So this is the second aspect. The third aspect is the supplier part. We also need to communicate and to exchange information with suppliers. But we need to make sure that we are working in a continuous improvement environment with them. So there are multiple reasons why we should digitalize procurement. But we need to understand exactly what we want to achieve, is that transactional efficiency that we want to improve? Is because we want to better communicate with our stakeholders or is that because we want to perform continuous improvement and improvement plans in general with the supplier? And from there, you will be able to understand which are the right tools, and then you go to suppliers, service suppliers, and you will start to negotiate with them to make sure that they are not delivering at the right cost. But the right solution is crucial.

Jonny Dunning:   11:13     Yeah, that’s really interesting, I think, a point you made there about procurement acting in a role to orchestrate. It’s very clear to me kind of just looking at it from a certain extent outside perspective, to see there’s so much information flowing into procurement from within the business. And there’s so much information flowing into procurement with outside the business, but also procurement as a function interface with so many different parts of the organization, whether it’s the front end, on the commercial side, on the back end, kind of operational side and finance, there’s so many touch points with procurement. Obviously, it can vary depending on what the organization is actually doing, how much the suppliers form part of your front end, how much your supply chain is part of your commercial offering versus a slightly different setup. But it really just sits in a very central position, you have access to a lot of information, and your appoint that a big junction that a lot of things go through. Do you think that that is something that is recognized enough within organizations?

Rony Moura:       12:21     I think so. But it will depend on how strategic procurement is in your organization. Procurement is there to definitely deliver savings and cost reduction. But it’s not only that, right? As you mentioned, we are as strategic as we can be, but that depends on how you position yourself facing suppliers facing stakeholders and the rest of the organization. Are you a trusted partner internally and externally to influence in the decisions? Or are you there just work in a transactional way supporting the business from the cost perspective? Both ways are valid depends on how big the organization is on how mature the organization is. But it’s important to understand that procurement can be very strategic. And it depends on how efficient your processes and your mindset is facing the challenges of the business.

Jonny Dunning:   13:32     Yeah, and you also mentioned, communication was a significant part of when you are dealing with stakeholders, when you are dealing with suppliers. And it’s almost how well have procurement positioned themselves within the organization. So to be strategic, you need to be doing the right things that make the outputs of your function strategic. But also, it’s almost like a marketing exercise or communications exercise with the different departments within your organization, and also with your suppliers. And it’s interesting that you, you put that emphasis on communication, because I think that’s a really important part of it, that sometimes can maybe get missed out a little bit, maybe,

Rony Moura:       14:09     Absolutely. And that’s why it’s also important for us to have this diverse environment within procurement. You have people working in procurement, with my background, for example, engineering. I have met biologists working in procurement, scientists, people from finance from supply chain, you have all different backgrounds, because at the end, you need to have the ability to negotiate, but you also need to have the ability to communicate and depending on the audience, depending on the stakeholder, you will have the right people to communicate with that interface. That’s why it’s so important for us to be diverse, but of course to have the necessary skills to lead and orchestrate all of this interaction inside of the organization and we have supplies as well.

Jonny Dunning:   14:55     Yeah, definitely. I find that angle really interesting around the On a diversity of skills and background and approach, within procurement, especially as procurement is transforming very rapidly, and the kind of requirements for people coming into procurement and may be changing. But the fundamental things are always going to be there, you need to be able to communicate, you need to be able to negotiate, you need people skills, but ultimately you need to be a problem solver. And, you know, things like, for example, data and analytic skills becoming more and more important, but that’s not everything. But it’s definitely going on a journey. And I think that’s talking to you about it, I was like, “This is actually a really good example of, of where procurement talent is going because of the opportunities to bring in people who weren’t originally from procurement, we have got different backgrounds, their approach is going to be very different.” So we will come on to that a little bit more in a minute, but just going back to the kind of digital transformation. So we talked about transforming the transactional side of it, as one point, the stakeholder conversation and then the supplier conversation. So if you look at technology adoption, as part of that digital transformation, what do you see as the key factors that enable an organization to get the value that they need out of bringing in technology and procurement?

Rony Moura:       16:20     Well, once you establish the target, you know exactly what we are trying to solve, I think it’s crucial for you to have a good change management plan in place. Because I have seen some great initiatives failing, because adoption was an issue with a certain software or a new process we wanted to establish. So it is important to make sure you have the adoption within the organization, not only in procurement, because ultimately, as we mentioned before, if we are orchestrating interaction, we need to make sure that we have the adoption, not only in the procurement department, but we have stakeholders as well. Because ultimately, you are managing processes, but you are generating information for informed decisions to the business. So it is important to make sure this adoption. And the second thing, which is also very important is for the procurement people responsible for sourcing certain software or service to really understand and to wear the shoes of the end users, even if the end user is inside of the organization. But it is very important to understand how close the softer will be to the heart of the procurement or to the stakeholder user.

Jonny Dunning:   17:47     To kind of comes down to user journey as part of it. But just one thing I want to quickly touch on before I forget it, is you are talking about adoption there. I was talking to an organization the other day had a really interesting conversation where they were talking about very high levels of adoption of the technology using a procurement process. And I have seen that it’s quite interesting. And I asked the question, I said, “Is it mandated?” Yes, it was mandated. What’s your view on that in terms...? I guess, it kind of depends on the culture of the organization to a certain extent, whether you are mandating to say, you cannot procure x or y or you cannot procure anything unless you go through the system? Do you have any particular views on that?

Rony Moura:       18:23     Well, there is no problem for something for a new process to be mandated, as long as the leadership team has spent some good time thinking about what is the solution, bringing in terms of added value to the organization, because when you mandate something, is because you probably want to have this standardization across the function. And it’s valid. But it’s also important to have an understanding, if by mandating something, you are not bringing the complexity and forcing people to use something that will actually not add the expected value, or only add some additional steps that will become bureaucracy and not necessarily problem solving. So there is no problem to standardize, but it is important for whoever is implementing the initiative to make sure that the solution fits the purpose of the initiative.

Jonny Dunning:   19:39     Yeah, I mean, ultimately, you don’t want to make people’s lives worse. So you might bring in a platform and it might give you more visibility and control. But if all the stakeholders it’s creating a nightmare, that’s not going to be good for the overall objective of the organization. So I get that I agree with you, and any views on the kind of single platform versus kind of like integrated type solutions?

Rony Moura:       20:04     Yeah, I think today is, is consensus that you cannot have a single platform to solve all your very issues. Because you have different problems from different areas. And it might be related to supply chain, it might be related to r&d might be related to finance or something from inside procurement, or legal etcetera. So one big platform to solve everything you might have a duck that can fly, can swim, can walk, but it’s not the best in any of those. So what is important is for you to have platforms that are able to communicate between themselves and integrate and exchange the necessary information for decision makers to pick up that information and decide. So I think that’s the most important part, when we are talking about different software’s and different platforms. I know and I have this kind of conversation very frequently, as soon as we start to implement a new software, people will come and say, “Okay, so there is another software for us to work.” But actually, if you go back to what we discussed before, if you were genuinely solving a problem, and you are able to communicate that through this specific software or a new process, it will actually simplify the life of your stakeholder, for example, the adoption will be higher. And you will also in case you are able to integrate this software, with all the software’s, you are actually making everyone’s life easier. So it is very important for software’s today to have the ability to integrate a feature.

Jonny Dunning:   21:44     Yeah, I love the analogy of a duck. It’s brilliant. Where I live, there’s some lakes near my house. And I quite often go for a walk with my dog and my children and, I will say, ducks are pretty good, they can they have mastered the air, they mastered the land, they have mastered the water. But like you say, you could be a generalist, but you might not be able create the best possible value in a specific area. So, I think that’s a really good analogy. But also just talking about tying it together, I think these days is there’s quite a heavy focus, and rightly so on just user experience. Because in our lives, we use different applications on our phones, for example, but it’s all tied into an operating system that makes it easy to transition in. Or if you look at like, I don’t know, a Google account that allows you to sign into other things nice and easily. I think the same is very much true of a procurement technology stack. And a broader technology stack within an organization. There’s an amazing amount you can do with single sign on. And, just tying into an organization’s two factor authentication for security and maybe white labeling. So ultimately, if people are using different systems, it shouldn’t feel like they are shifting systems, it should just feel like they are going into a different screen of a solution. But also, as you said, if you are tying it into the objectives of the organization, then everyone should buy into that and understand where it’s driving towards. But also, if you are showing them the value that they personally, specifically will receive from it. Adoption is going to be a lot easier.

Rony Moura:       23:19     Absolutely. Yeah. And it goes back to that discussion about the difference between sourcing goods and services. When you are sourcing a platform or software, you have a unique selling point, that software is specialized in something that you cannot have through all the sources or suppliers. So it’s important for you to have the strongest possible software to solve that specific problem. And then if you are able to integrate, that’s how you will make the user experience the best possible. And ultimately, you facilitate the life of everyone in procurement and stakeholders, and even suppliers as well. So this, I think, very important to always have in mind.

Jonny Dunning:   24:09     Yeah, I think we will come on to it in a bit. But I think the supplier side of that sometimes gets kind of forgotten. And in some ways, it’s the most important part of it. So, yeah, I have got a couple of questions for you on the supply side of it shortly. But that’s really interesting. I think that ties into the digital transformation journey and how to make it effective. All of these things tie together. And, obviously, the technology can go across the kind of three core areas that you mentioned, obviously, the most important thing to automate is the things that should be automated, the transactional activity that it makes sense to automate, and then that allows procurement teams to have a more strategic and engaged role looking at more sophisticated areas of their role and deeper insights, but it’s going to affect stakeholders, is going to affect suppliers kind of goes across all three of them. So that kind of covers off that angle. I want to go back to your engineering background. Because that really does quite fascinate me. So what would you describe as like, if you are an engineer, what are your key attributes? You are going to be analytical, what do you think are the kind of key? 

Rony Moura:       25:24     Well, I am a very analytical person. Yes, I am very pragmatic. and problem solving is something that you will develop through time naturally. Because basically, you start with simple equations, at the end of the day you are designing, it doesn’t matter and airplane or car, or anything. So engineering is something that helps you to get multiple factors of an equation or have a problem, and group it in a way that you see a logical solution from it. And I think, from the procurement perspective, it has helped me a lot to deal with complex problems within the organization. Because as we mentioned before, if we want to be strategic, we need to act strategically. It’s not only having the seat on the table, but to act and influence. And for you to position like that. You need to be able to deal with multiple sources of information. As we mentioned before, if procurement is there to orchestrate, it means that you be having inputs from all the different areas plus supplier as well. So I think the engineering, it matches a lot. I think engineers should definitely be encouraged to join procurement, at least for a while to experience that. But it’s not only the engineering part, for example, scientists, they will also have a very pragmatic approach, they will be very keen to apply processes and see step by step. The different stages of procurement from sourcing, to negotiating, to actually closing the deal and the after sales as well. So I see, the beauty of procurement is actually to have this diversity, and different minds thinking from different aspects. Because I also think that we only have engineers in procurement, procurement will not work.

Jonny Dunning:   27:42     I think that’s true for any organization, in any department to a certain extent. And it’s just like, you need that... If you just have everybody thinking exactly the same way, you are just missing out on everything else. So I totally agree with you. I think it’s quite interesting. I can see clearly how someone from an engineering background can come in and solve or help solve these really complex problems exist within procurement, particularly with things like a digital transformation. That’s a lot of inputs and outputs, a lot of different variables to consider. It is almost like; it is equation effectively.

Rony Moura:       28:13     Absolutely. And I have been through this journey of implementing SRM solutions with our strategic partners. And it is exactly like that. When you when you start the journey, you think, “Okay, so manage relationship with my suppliers, that’s fine, I will basically try to reduce the amount of emails and PowerPoint decks with them.” But then you will start to discuss about other aspects of the relationship such as KPIs, such as the contracts, and the legal implications of the deals that you have made two or three years ago with new projects that are coming in. And there are some other nuances as well, that are part of the relationship that you don’t realize they exist until you are at that moment of sourcing a software to solve your problems, you actually discover that you have more problems that you first imagined. And it’s important for any software provider to make sure again, the user experience in this case, both the supplier and the customer, are fulfilled, because it goes back to communication, it goes back to efficiency, but you need to take all of those points of the relationship and this is very important. Otherwise, you might be solving the problem of reducing the amount of mail but not necessarily you will be solving the problem of improving the relationship with specialists strategic partners, because if you think strategic partners, they are actually part of your business, right? Because if you have contract manufacturers and they are actually manufacturing your product, it’s your product coming from a factory that, that is not yours. If they are not part of your strategy, if you don’t have joint business plan, if they don’t share the same vision as you do a few, it means that you are not as connected as you should be. And if you want to have that orchestrated through a software, the software should be robust enough to fulfill this demand of exchanging information and organizing the interaction between multiple parties.

Jonny Dunning:   30:48     Yeah, creating that alignment. And it’s very interesting, because there’s the problem solving side of that there’s the architecture, of how that works, for example, in a software interface, and what that process looks like. But on the other side of it, there’s the pure relationship angle, where the people having these relationships, and I think that’s an area where, for example, if you look at a scientific methodology, or an engineering approach, it’s very much kind of metrics, logic and reasoning based towards the decision and it’s very pragmatic, it’s very much streamlined around efficiencies, etc. And so for example, if you are from an engineering or scientific background, you are probably gonna be pretty good at that. You can be thinking that sort of way. But then the other side of it, and I am not saying that all of this has to be like, super fluffy. But there is the relationship side of it, where people coming from maybe slightly different backgrounds can help with that relationship side of it, whether it’s internally with stakeholders, or externally with suppliers, had a really interesting conversation with Simon Gil from Proximate recently. And, and he was talking exactly about that, I wouldn’t do him justice to try and remember it, but his definition of what factors create trust, we are very much around authenticity, doing what you will say you will do, being there when you need to be in, all these sorts of things. So again, it kind of ties back to this diversity that you need people from different angles. You need to look at the metrics and the facts, and the processes, and the more clearly defined scientific and almost mechanical type of approach to it. But also, there’s the relationship side. So it’s interesting for me to see, you have clearly got the ability to do that relationship side as well. But I think that’s where the different backgrounds come in, isn’t it? Because within procurement, you are gonna have different people who have got different abilities. So someone from an engineering background, who maybe isn’t that comfortable with the relationship side of things might find that part of it a bit more difficult.

Rony Moura:       32:47     Yeah. But even that relationship part, you can also try and have good progress in making it as tangible as possible. Yeah, you can do that through service, you can do that, through meetings that are focused to discuss relationship. And you might have feedback that will surprise you, that you were not expecting, if you didn’t stop to discuss with your interfaces with your suppliers about it. So what we are doing at BAT is actually something similar to that, yeah, we are trying to make things that are known as non-tangible to tangible and we are trying to measure as much as we can, and we are actually having big success, because we are piloting with some strategic suppliers. And when you open this communication channel to them, for us to discuss relationship, the feedback that you receive, and it doesn’t need to be anonymous, you can just go there and then ask the person, “What do you think about the relationship?” And of course, you have questions, what do you think about the relationship with this area? And what do you think about our effectiveness to exchange information and other aspects as well? And the feedback that you receive, they are actually actionable. And this is what we are also trying to do as orchestrators inside of the organization. So yes, I do think that there are some parts that are based on the feeling. But even those, if you have the right methodology, and I am thinking now with my engineering mindset, if you have the right methodology, you are also able to measure that.

Jonny Dunning:   34:35     Yeah, like you say, if you don’t stop and ask the question, the conversation is never gonna happen. And I feel like, if you imagine from a suppliers point of view, they are just going through quarterly business reviews and where, maybe they are getting bit beaten up, and there’s pressures on organizations and that pressure flows down to the suppliers. And then maybe at the end of a two-hour meeting there might be like, 10 minutes of like, “What innovation have you got for me?”

Rony Moura:       35:03     Yeah, and this is actually a great point. QBRs and drumbeats with suppliers. And innovation is something is a great example. If you go to QBRs, and everything you do is discuss the results of the previous three months, it’s very unlikely that you discuss about innovation, because you will be firefighting, and you will be discussing about the issues of the last week or the last month. So you will not discuss about innovation, and it’s very unlikely that you discuss about the relationship, although I am pretty sure that all suppliers will have something to say about the relationship. And when I am talking about relationship, it’s not only the relationship between different areas, in for example, procurement or operations or r&d with the supplier. I am talking about, for example, lost my...

Jonny Dunning:   36:06     So, in the relationship, you break down the relationship. That relationship works on a level of dealing with different parts of procurement. But do you think there’s a specific personal side to it as well?

Rony Moura:       36:19     Yes. And on top of the personal side, you might also hear from the supplier about opportunities where you see your organization, which is also something that we don’t necessarily do very frequently. So talking about relationship is not talking about problems and things we need to solve, but actually talk about opportunities. And if you have a strategic supplier, and you are doing it well, it means that the supplier, they feel like they are part of your organization, they are true partners. We should listen to them about the opportunities they see for the business as well. So this is another element that will come when we discuss about relationship with strategic suppliers.

Jonny Dunning:   37:07     Yes, so that’s another thing that I kind of see happening all the time is just the amount of feedback that procurement can be party to, from suppliers talking about what’s happening in your own organization. So for example, if you look at a project or a supplier relationship, and if the organization actually makes time, and sets aside a structure to have that relationship conversation, then you might find that there are things within your organization that are blocking that supplier from delivering the best potential value. And if you are open to listening to that, then that’s potentially a huge value to you as an organization.

Rony Moura:       37:44     Absolutely. And then the next part is, how will you action against that? Because one thing is, okay, so now, I am open to hear from you about opportunities and about the relationship in general. And they will definitely come back with a huge list that is now in your hands. So what are you going to do that? And that’s when you build trust with your suppliers. If you go back and think within your organization and say, “Look, these are the problems that they see. And these are the opportunities,” if you don’t do anything, you will start to lose trust, again, with your strategic supplier. So you need to go back, you need to think about it, if it’s a genuine opportunity or a problem you need to solve, you need to make sure that they are addressed because that’s when you build trust. And that’s also when you start to make your strategic suppliers customers have choice. Because at the end, it doesn’t matter if you are a bigger organization and very important to your supplier. Ultimately, they have the choice of prioritizing you or not.

Jonny Dunning:   38:56     I was going to ask that actually, I was making a note there to say how much competition is there for suppliers? And obviously, it depends what area of the supply chain that organization is in, what their specialist area is? But is that something you have to genuinely think about?

Rony Moura:       39:10     Yeah, because it’s not only about having the supplier choosing to provide you the goods or not. We are talking about another element, which is how much effort and energy and resources they are spending towards your organization. So if you purchase goods, for example, and they have an r&d department, how many people do they have developing and thinking about your product, and how much time they are spending to make your product more efficient or less costly or with higher quality? So you only know that if you are giving them the confidence that the relationship is a long term relationship, is a strategic relationship and both sides can invest on each other, for the benefit of both organizations towards one big vision, that will be a shared vision. Of course, ultimately, we want to sell more products, we want to sell products at the lowest possible cost. But resources, they are limited, not only from the customer side, from the supplier side as well. So if you have a trusted relationship, you have good collaboration with your suppliers, if they trust and you are a customer of choice, you will be able to enable more resources towards your organization, which is what you need to have.

Jonny Dunning:   40:44     So we talk about, this concept that you bring up of like this true supplier partnership. Do you think that’s something that can apply to all organizations in all sectors? Or do you think that there’s maybe more emphasis on that in, for example, more of a manufacturing type setup?

Rony Moura:       41:05     Well, I think it’s valid for organizations in all industries in different ways. Yeah, definitely, when you have contract manufacturers, manufacturing your product, this is something that is essential. But it goes back to services as well. So if you imagine that you have a supplier that is supporting you are providing services to your product that is related to technology. At the end of the day, you have an end user, you have your own customer or consumer. And the closest your supplier is to your strategy, to your organization, more synergy you have, more opportunities you will be able to identify. So I think as long as you have suppliers, and I think all organizations, they have their suppliers, you want to be as close as possible with your strategic suppliers and make them part of yours. But yes, from the operation side, this is something that is negotiable, you need to have your strategic suppliers very close to you, because ultimately, that’s your product that is going to the market and competing with your competitors.

Jonny Dunning:   42:29     Yeah, that makes a lot of sense to me. And it brings you back to a conversation I had with Naveen Amin, from WSP. So they are a large engineering consultancy. And if they are working on a massive engineering project, they will have strategic suppliers that are providing services. But WSP, what they are giving to their customers is a service. So those suppliers are fundamentally part of that service, which is interesting. So therefore, their direct spend, will be mainly on services, whereas their indirect spend might be like buying laptops and things like that. So, it kind of, as you say, applies in all areas. Ultimately, it’s about what’s the end result? What’s the end product? Who’s the end customer? It all ties back, really to the central point of strategic objectives. It’s so simple. But it’s so easy to not get it right.

Rony Moura:       43:23     Yeah. And the focus at the end of the day is on who will be the user of whatever you are supplying, right? It can be service, it can be good, you will need to understand your user for you to generate a good user experience. And you will not be able to do that alone. Organizations today, they cannot survive alone. They need suppliers, they need the supply chain. And there must be synergies and opportunities coming from those relationships. Yeah, otherwise, you just not be competitive enough. You might have a great idea. But if you don’t have your chain of suppliers supporting you in that idea, you might be lacking resources or possibilities in the future that will make you less competitive in your market. There is no choice. You need to be close to your suppliers. Because ultimately, that’s one big organization. Supplying goods and services to your consumers.

Jonny Dunning:   44:29     Yeah, it’s an extended organization, isn’t it? 

Rony Moura:       44:31     Yes. 

Jonny Dunning:   44:32     I feel like when you look at, that kind of true supplier partnership and measuring that. I feel like that’s likely to be more mature in the procurement of goods and materials than it is in services. Because one of the things that you mentioned earlier was about intangibles. And I just feel like in the way that services, the intrinsic nature of a service. It’s harder to define. It’s harder to capture and measure. It’s going to change and flex, depending on the delivery of that service and factors that are affecting it. Whereas goods are a little bit more good materials, in the sense of I am not saying they are not complex because they are. But in terms of when you are bought, you kind of know what it is. It’s much more definite.

Rony Moura:       45:17     Yeah, I see the difference between both, to me is very clear, right. So if you have goods, you have specification, you want your suppliers to supply your goods, as specified and your specification can be very strict, your specification can be a bit loose in some aspects, but ultimately, you want your supplier or suppliers to deliver what you have specified. And on that you can monitor and measure through KPIs and do that on a monthly basis on a weekly basis, on a daily basis, depending on the product, on the goods that you are purchasing. Or the service side, the unique selling point that is differentiating suppliers is actually the product and the service that is being supplied. So when you have suppliers supplying goods, their unique selling point is how efficient they will be to supply you the goods that you specify. When you have services, their unique selling point is, the good itself. So the way they will differentiate between orders is how robust this solution is to orders. So ultimately, the solution will be different for the same problem statement that you have. So and that goes back to procurement. It’s a huge responsibility for the procurement people that are sourcing services, because they need to be sort of experts in what they are purchasing. Because they will be developing together with the supplier that solution, that might come from different ways. So my problem is, I need to provide a better user experience to my consumer. User experience can come from different ways. And you might have different solutions in front of you. So the procurement people, they will need to understand sufficiently not only the solution, but also the problem statement. We are in the shoes of your end user. So they can develop together if the service supplier, that solution to the business. Yeah, so there are different approaches, depending if you are sourcing from direct, let’s say or from indirect and services.

Jonny Dunning:   47:42     Yeah, that’s really interesting, I think it comes back to defining what the outcome is that you want to get from it, understanding as you put it, the problem statement. So I think with procurement, when it comes to services, in some ways, I would agree with you that they need to have a level of expertise, for example of the managing a particular category, then they need to have expertise in that category. But when it comes down to the real specifics, sometimes you will find that procure is not possible for procurement of expertise in the area. And maybe it’s not even possible for the buyer to have expertise in that area. But the supplier certainly will. So procurement can have a really interesting role in terms of managing and facilitating that collaboration, which needs to happen exactly as you say. So procurement are always going to be able to guide the buyer on the in terms of their requirements, the structure and the content, and the focus of that. And they need to understand what is the right outcome here? Mr. Buyer, or Mrs. Buyer, you need to explain to me what this outcome is. And they can help them structure and make sure that the factory in the right parameters for that. And, they can guide the buyer, but then the supplier, or multiple suppliers who are subject matter experts can then be engaged in that process, whether it’s an expression of interest, or whether it’s actually, going into kind of bids that are helping to shape that requirement, because sometimes it isn’t completely clear from the outset, what the best solution might be to a particular problem statement. And he might have three different suppliers that suggest to solve it in three different ways. So I think that’s a really interesting, something that we see all the time. And I think that requirements definition and the three-way collaboration between buying stakeholder, supplier and procurement is a really interesting evolving part of that picture.

Rony Moura:       49:32     Yeah, I have been involved in an RFP for a software. And it was my first time purchasing software to my organization. And it was so interesting, because we had three, four different solutions and they were really different, solving in different ways the same problem that we put on the table, and it’s a journey that starts even before the contract is signed, actually, in the RFP, you are presented to different potential suppliers. And you go through that journey, because you will be educated into that software, you have that user experience yourself, and then you will be able to evaluate how close it is to the problem statement you have. So it is important for service companies to be able to drive that sort of conversation and user experience even before you have the softer or even before you are awarded as a supplier for that company.

Jonny Dunning:   50:38     Yeah, there’s different ways to solve the problem or not particularly nice saying goes, there are different ways to skin a cat. It makes always makes me think of this TV program that my kids, my two daughters really enjoy, which is basically where robots fight each other. It’s called like Battle Bots, or something like that, this American program. And it’s really interesting to see the different approaches, like you will get some of the robots that are, have got a big hammer, and some of them are really small and compact, and they flip the other ones over, or you get a drone that fires as a flame thrower, whatever. And it’s like, it’s different approaches to trying to solve the problem. But if you are in isolation, trying to solve the problem on your own, is much more difficult, if you have got different minds within different suppliers saying, “Well, okay, you are saying that this is the problem. And this is how your base kind of requirement is looking at solving it like this, we think you could do it better, a completely different way.” And I think the more that... That’s, again, is starting to build those supplier relationships, and tighten those supplier relationships. Because we see this where organizations engage in kind of expressions of interest, before they even go out to bid. So this sort of like, future planning, and basically saying, “We have got stuff coming up that’s going to require these type of capabilities. Who’s got that? Who’s interested within our supply chain?” And let’s get the conversation going now. Because I think sometimes there’s a reticence within organizations to engage a supplier, for example, in helping shape a requirement because someone’s think, “Yeah, but you are just going to shape that so that it’s just right for you.” So sometimes that can be a problem. But sometimes a trusted supplier can help you shape a requirement. And it might not necessarily always be that they are the best ones for it. But I think if you have got multiple suppliers, coming at the same problem in different ways, that’s potentially very, very useful. That’s when you can harness innovation. You are giving people the chance to say, “Well, I know what that problem is, actually, I think we can solve it like this.”

Rony Moura:       52:36     Yeah, absolutely. And also, I think that’s the definition of partnership. You have suppliers, you might even have strategic suppliers, it means that they are strategic to you. But they are not necessarily partners. And this is, I think, a good example, if you have partners, they will develop together with you solution that will feed your purpose. And I think, that’s very important. So although, as I mentioned, it’s important for us to have procurement people and buyers who understand the problem statement and understand what they want to achieve. It’s also important for us, for suppliers, or potential suppliers, to guide this journey. And to guide the purchasing process, they have likely a product that is different from all the products that we reach that outcome in a different way. And they need to also have the ability to communicate that.
Jonny Dunning:   53:38     That’s where you need the visibility of your supply chain. And again, I think that’s more mature on the goods and services side, because it’s more binary in terms of you apply X, whereas services are a bit less tangible. So that’s where I think organizations can build up the resilience of their supply chain on the services side, and also the capability of it by being able to engage with suppliers effectively through technology and communicate with those suppliers. Because it’s not always about only having the communication at the point that you have got a set requirement, you need to build up these relationships and build up kind of capability in different areas, which we are seeing a lot more people do. Another thing allows you to do, we talked about diversity within procurement teams. It also allows you to increase the diversity within the supply chain, you might be able to bring in more small suppliers who are very agile and have a very innovative point of view against alongside your big secure solid suppliers that are already strategic partners. So I think there’s great opportunity and there’s definitely ways that technology can help with that as part of the transformation process. But again, as he said, it’s got to tie in to the overall objectives and the strategies got to be clear what...

Rony Moura:       54:49     Yeah, absolutely. You need to be always conscious of what is your objective what we are trying to resolve. That’s the key point. Otherwise you will be probably wasting money and solutions that you don’t need.

Jonny Dunning:   55:01     So just moving on to a different point. And one of the things that we talked about before was the impacts of procurement across the organization in different parts of the organization. And one of the things that you have mentioned to me before, was about procurement being a driver of the commercial strategy, or helping as part of that commercial strategy rather than just being engaged in cost savings. Can you just talk about that a little bit in terms of your experience and your kind of views on that side of it?

Rony Moura:       55:32     Yeah, absolutely. So procurement, I see, not only my organization, procurement is stepping up, and it’s becoming more and more strategic to organizations. The reason is savings, and we need, to be honest, savings will be always something central to procurement. But it’s not only that, and it will not be only that moving forward, because different industries in different organizations, you have the market in front of you, and you have your consumers. And ultimately, as we discussed before, you need to have strong solutions. And those strong solutions will come from within your organization, but with suppliers as well. And procurement orchestrates all of that, all of that interaction, and developments and new ideas and opportunities, etc. So it is important for procurement to step up. Because it’s not only about delivering costs, which we need to deliver anyways. But making sure that the supplier is part of your strategy. And on top of that you are the commercial element of the organization, it means that the money is not yours to spend, but you need to treat it like yours, because... I lost again.

Jonny Dunning:   57:09     So see, we are just talking about the being the commercial side of it, making sure that those supply relationships are in place. And, treating the money like it’s your own. Just a quick observation. I always think when you are looking at savings, and again, I think this is possibly more relevant in when you are procuring a service than when you are procuring goods and materials. I always think that there’s a risk within organizations where they are very focused on cost savings, that actually they are going to cut costs that are incredibly valuable and really important to their business because they can’t see what’s happening. So you could look at a consultancy budget, for example, or consulting spend and go, “We have got to cut 30% off that.” But how sure, are you when you are making that decision, that that consultancy effort that you are going to chop down isn’t something that’s driving new products, for example. So, I think is that difficult? It almost feels like a bit of a transition, at primarily cost to looking more at value, which is really difficult, values are hard to define. It’s a complicated thing. But ultimately, cost is always going to be important. You can never just ignore it. Organizations can’t afford to do that. You look at the current economic climate cost maybe is going to become very important to some organizations over the next few months and years, seeing some of the kind of, the Silicon Valley Bank and things like that happening at the moment. But that’s always one that kind of intrigues me in the sense of there’s a risk and focusing on cost, because you might be cutting out suppliers that could be crucial.

Rony Moura:       58:48     Yeah, and I think there are two different perspectives when we look at that. The first one is if you only look at savings, you mentioned that you might be cutting part of something that is important in your product or in your service. Rather than only focusing on savings, they are important because you have cash release and you have all the benefits, you need to make sure that you have the right price. And that’s why specially from the direct side, you do shoot cost analysis for example, and your shoot cost analysis is not always the lowest possible cost, is a cost that will provide you the good at the right specification with the quality and reliability and ESG perspectives as well. So you will not necessarily always have the lowest possible cost. So I think this is important and it’s a balance that procurement needs to step up and take the responsibility of communicating that inside of the organization because everybody will always expect, rightly procurement to reduce costs. But on top of reducing costs, are we at the right price for the product we want to deliver to our own consumers? And there is a balance. And that’s the balance that again, we will be able to orchestrate. And that’s why it’s so important for procurement to be strategic, to enable this conversation at the right levels at the right forums. Because if we only transactional, this conversation will never happen. Because by having a product, we will just assume that we want to have the lowest possible cost. If procurement doesn’t have a voice, we will never be able to influence that. So we are there to work on the cost. But we are there to ensure that the value is there in the product we are purchasing from our suppliers and delivering to our consumers.

Jonny Dunning:   1:00:56  Yeah, because the next question I was going to ask you was, when you look at the commercial side of it, the kind of front end of the business and objectives of business, how is it best for procurement to be part of that? You have kind of just answered that, to a certain extent. Procurement have to be strategic, and they have to be seen as strategic. And the communications have to add value from a strategic point of view. Because that makes sense for the commercial side of the business just to say, “Well, procurement can help us here or this is going to be important,” because, again, looking at that kind of supply chain, where, for example, a supplier has a very strategic contract manufacturing, outsourcing, for example, or certain services that tie into, the service you are providing to your customer or the product you are providing as your customer. There’s the stuff at the front end of that, and it needs to be considered, like things like new product development, where it really does tie into that? What capability have we got to do this? What innovation have we got within our supply chain that can help us break into this new market?

Rony Moura:       1:01:56  Yeah, procurement needs to be strategic, because otherwise, we will all be replaced by AI bots, performing RFPs because RFPs today, i.e. auction, you can do your auction, you can take a bunch of suppliers and just put them in the place to provide the lowest possible cost. Procurement is there to a certain extent to do the illogical because the logical the AI will do. The illogical is, okay, so this is the lowest possible cost, right? On top of that, what is the percentage of reusable materials, recyclable materials we want to have? What is the importance of quality or reliability of the product or the goods that you are purchasing? And all of that comes back to the equation that procurement will need to resolve, and ultimately to inform or to help the business to make informed decisions. So that’s what differentiates transactional procurement to strategic procurement. And that’s what we will always keep procurement valuable to organizations, the transactional part, it will eventually be more and more digitalized. And we will have more information, we will be able to deal with more numbers. And we will have results more quickly. But it doesn’t really add the necessary value that organizations today that they want to have from procurement.

Jonny Dunning:   1:03:30  That is a great description. I love it. The fact that it’s dealing with the illogical. Have you had a go with ChatGPT yet?

Rony Moura:       1:03:39  Yes. 

Jonny Dunning:   1:03:41  It’s really interesting, isn’t it? I sat down with one of my kids and I was like, “Okay, what homework have you got?” And they were like, “I have got to write a poem for someone’s birthday about a dog and it’s got to be humorous.” And I was like, “Okay, let’s see what we can get in the next 10 seconds?” There we go. Really good poem. And my wife was creating an invoice for some illustration work that she would done. And she was struggling with it. It’s literally within a 10-minute period, I was like, “Okay, create the invoice,” even pulled the address of the company that she was invoicing, even though just put the name in, it was just so clever. And I and my daughter always had to create an HTML pages like we had it done everything within like two minutes. And it obviously it’s in the early stages, it’s gonna go so much further. But like you say, this is a different scenario, we are talking about.

Rony Moura:       1:04:30  The ability to get information from everywhere in the world wide web and make a result from it, even a decision from it is something that we will be able to have support from AI for example. But again, that’s not everything the company needs and modern organizations will need. That’s definitely not there. Because there are intangible aspects, that you need to put in the equation as well. And you need people to think about those elements. Because most likely, your stakeholders, definitely and your consumers. They want to have an experience regardless if it’s a service or good, right? And experience, you might be able to measure that. But you will not be able to communicate that and make it part of your process of sourcing goods and materials. And if you don’t put that in the equation, ultimately, you will probably have the best possible cost, not necessarily the product he wants to sell to your consumers,

Jonny Dunning:   1:05:41  And therefore not necessarily the best strategic outcome. 

Rony Moura:       1:05:44  Absolutely. 

Jonny Dunning:   1:05:45  Yeah, really, really interesting. So I think one area that I just want to go back to, we are going to have to wrap up fairly soon. But when area I want going back to was just this diversity of talent within procurement teams. And I am interested, I would like to be interesting to hear a little bit more about your own experience of how it actually happened, what conversations took place, what things convinced you to stay within procurement, when you have kind of looked at it as initially as like a secondment? Because ultimately, the thing in my head is I am thinking, how would you advise other organizations to bring in talent from more diverse backgrounds or to maximize that to leverage it?

Rony Moura:       1:06:30  Yeah, I never imagined myself working in procurement at the beginning of my career. But I am very happy that happened. Because you can bring your personal experience and your professional experience to the benefit of the entire organization in a different way. When you are in procurement, because you have the responsibility to orchestrate multiple different areas and suppliers as well. You will put everything you have in terms of knowledge and experience at the table. Because ultimately, you will be negotiating, you will be communicating, you will be convincing people. So it’s a great personal exercise. And I definitely recommend for people from different areas to have at least a taster experience in procurement, because you put all your knowledge. In practice, you might not be at the factory, building something or solving an equation, but you definitely use that experience to communicate and to make things simpler, or to buy something that the factory needs. So it’s a great place for you to be in exercise everything you know, to the benefit of the organization. And on top of that, I think procurement is probably the most diverse area in organizations, because you are purchasing everything. And because you are purchasing everything, you have people that are serving IT department and finance and marketing and operations. So you have your team of colleagues that are working with all their areas. So I think it’s a central area, that you can actually experience multiple different perspectives. And it’s great, it’s amazing. You will be exposed to the strategy because ultimately, you will be involved in strategic RFPs and purchase. And you will also be experiencing different perspectives and points of view. And because you orchestrate, you will be actually in a privileged position to understand the all the areas. So for example, I go to cross functional meetings. And we have in the meeting myself for presenting procurement, and we have marketing and we have r&d, and operations. They have different starting points. We all want to have the best product at the best cost and the best user experience at the market. But they have different starting points. And the way they think and the way they elaborate and the way they challenge the actual process is totally different. Yeah. And of course, everybody is fighting for the same main objective. But you will see how interesting it is to put all of these functions in the same meeting for us to discuss about the same problem. Solutions are different. Maybe the perception of the problem is different as well. And procurement is there to again orchestrate and coordinate. So, I think it’s great. I love to be in procurement. I think It’s a great experience. Regardless if you are there for one or two years just to level up your commercial skills and negotiation skills, or if you are there for a longer term, and you will be able also to rotate and move inside of different areas in procurement, I will definitely recommend that.

Jonny Dunning:   1:10:19  Yeah, I love your enthusiasm. It’s great, really comes across your interest. So when you first went into procurement, you are the person you mentioned, who was kind of like, your unofficial mentor, I guess maybe your plans were for a relatively short space of time, like one year, two year? How long after you went into procurement, did you just kind of think, “I am going to stay here longer, this is interesting for me.”

Rony Moura:       1:10:42  Yeah, so it was supposed to be a short term assignment, meaning one or two years. After one year in Brazil, in procurement, I got this opportunity to move here. So at that time, I was still not very convinced that procurement will be something that relevant to my professional life. And I decided to come here because the role was very appealing. It was also an opportunity, a personal opportunity for me to move to London. But as soon as I joined this global team in the headquarter, I realized that actually, it’s a great place to be, I was still very close to my colleagues and friends from operations, because I was purchasing machinery. And that’s what I mentioned before, you are still very close to the other functions because you are partnering with them. And that’s why it’s so important. Now I am in a different function. And you can have your entire career 20, 30, 40 years working for an organization, having a new experience, every third, fourth or fifth year. If you work in different areas inside of procurements, serving different stakeholders, it will look like it’s a new organization again, and you will be able to refresh yourself, to take your lessons learned from the previous experience and apply to the next one. So it’s amazing. It’s a very diverse function. And you can definitely exercise and learn a lot. It’s an endless journey in terms of how much you can experience and you can learn from that. 

Jonny Dunning:   1:12:35  I think maybe this is the right time for you to be in procurement, because there’s so much change happening. And there’s so much scope for growth and development and transformation, because you are clearly a person who’s very motivated. You want to learn new things; you want to have experiences you want to push forward. So it couldn’t really be a better time because that is where procurement is, it would seem to me as a function.

Rony Moura:       1:12:58  Yeah, it’s a tough time as well. I think it’s always tough time. It’s a tough time, because we need to deal with inflation. There are some other challenges in terms of disruption, COVID, etc, it all affects supply chain. So in terms of problems, you can list the problem you want to address today. But I think this is part of the part of the experience, right? At the end of the day, you are in your organization, and you need to deliver your results, you need to deliver what you need to deliver. As part of it, you are growing as a person, as a professional. And procurement is definitely a function that can help you a lot to achieve lots of things from the personal perspective from the professional perspective as well.

Jonny Dunning:   1:13:53  Cool, excellent stuff. Well, listen, I really appreciate your time. It’s been super interesting. I will wrap it up there. But there’s one last thing I want to ask you. So clearly, you may not be driving an F1. But clearly, you were very good driver. You like to be very, very good. Have you ever had a situation? I would love it if you had like a work party or something like that, that went to do a motor racing thing. And people would be like, “Who the hell is this guy?” Is that ever happened? Have you ever had an opportunity to go somewhere not do something like that?

Rony Moura:       1:14:22  Yes. And actually, I was competing with the head of operations in one of those factories in Europe. And I actually won and I am not sure if my career that was the best. If you have the driver mindset, you just go for the first place. I did. And I will deal with the consequences. 

Jonny Dunning:   1:14:47  That is absolutely brilliant. I love it. I would have loved to be a bit of fly in the wall to see that because, yeah, just that level of ability would be something people maybe not expecting. 

Rony Moura:       1:14:55  Yes, absolutely. 

Jonny Dunning:   1:14:57  Excellent. Well, listen, thank you very much for coming and having a chat, really enjoyed it. And yeah, good luck with everything, it looks like really exciting times.

Rony Moura:       1:15:05  Thank you for having me. 

Jonny Dunning:   1:15:06  Cheers. 

Rony Moura:       1:15:07  See you next time. 

Jonny Dunning:   1:15:07  Excellent.


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