Five lessons from Cargill’s dramatic procurement transformation

PL Staff

Transforming a procurement function is not an easy undertaking. There are many pitfalls to avoid along the way that could undermine the project’s success and it’s an especially difficult task when you also need to balance the overhaul with delivering on the function’s day-to-day targets.

The procurement team at Cargill, the 150-year old agribusiness giant, knew that its transformation would be a huge undertaking but recognised such a change was necessary as it strived to ensure the function was fit for the future. Here are five things the team learned as it successfully transformed the function’s structure, its use of technology and its approach to capability development – doubling its return on investment in just 18 months.

1. Honesty is key to winning sign-off for your business case

When making a business case for transformation it can be tempting to focus on the positives and potential, to the exclusion of the challenges. But those who are being asked to sign off on a project will always be mindful of the potential pitfalls and will be likely to ask about these. Todd Stohlmeyer, Cargill’s procurement and transportation leader, emphasised the importance of anticipating these questions and incorporating them into the business case. By dealing with these from the outset, the team was able to demonstrate it was prepared for the challenges ahead and ultimately put together a more credible case.

2. Don’t underestimate the value of dedicated business partners

In the past, much of the rest of Cargill had seen procurement as a largely administrative function but the team was determined to position itself as a strategic partner that would be instrumental in helping the wider organisation deliver on its aims. Key to overcoming that perception was ensuring that business partnering was treated as a priority, rather than a secondary goal. To that end, Cargill created a dedicated business engagement team of five people within procurement who are responsible for ensuring the function’s sourcing capabilities connect with the business’s overall strategy. This connection with the business is further supplemented by inviting internal stakeholders into the category planning process and training category managers to take stakeholders’ priorities into account when making sourcing decisions.

3. When it comes to data, ensure you get the basics right

Watch: Todd Stohlmeyer on how the team overcame challenges it encountered during the transformation

Advances in data analysis and management promise to transform procurement in the coming years, eliminating time-consuming work and providing deep insights. But before going after more cutting-edge innovations, it’s important to get the basics right first. After a rapid start rolling out changes to its procurement data systems, Cargill realised it had done too much, too fast and ran into difficulty. The team took a step back and waited for changes to its underlying enterprise resource planning system to be implemented before getting going again, to ensure it was on the right track.

4. Don’t hold back on resources

Delivering an ambitious transformation project can easily morph into a full-time job, so it’s difficult for anybody involved to balance that with their day-to-day duties. To save on resources, Cargill initially attempted to make the transformation part of people’s existing roles – “we were penny-wise and pound-foolish,” admits Stohlmeyer. But after realising this left the transformation under-resourced, they changed tack and assigned some dedicated people to focus specifically on the transformation itself.

5. Remember, transformation is an ongoing process

While Cargill procurement can point to a number of milestones along its journey to demonstrate the successful delivery of the transformation, the team recognises there will always be more work to do as demands on the function continue to evolve. Focus areas for the future include implementing supplier relationship management tools, pursuing opportunities for supplier-enabled innovation and generating new insights from its enhanced data pool. “A healthy dissatisfaction with the status quo is my mantra,” said Stohlmeyer. “As soon as it was implemented I was already benchmarking what we needed to do next and having the team focus on next levels of the strategy.”

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