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Banco Bradesco: Diversification through Procurement

Manoel Guedes (Procurement Director) and Douglas Klimak (Head of Procurement Transformation), look at how procurement can prove essential to Bradesco’s future...

As one of the leaders in Brazil’s private financial sector, a procurement transformation for Banco Bradesco carries with it a responsibility to unlock real change for procurement throughout the country.  

Maturity, particularly in procurement, is a key goal that underlines procurement transformation for many organizations and for Bradesco this is no different. Look across the procurement arena across Brazil and the picture is somewhat different when compared to procurement in Europe or the US. For Douglas Klimak, Head of Procurement Transformation at Banco Bradesco, he recognises the significance of his company’s transformation in moving the procurement needle further to where it should be for both the company and wider Brazil.

“I do feel that we have a huge opportunity to elevate procurement function in Brazil,” he says. “All businesses are being transformed aiming to be more innovative, digital and cost effective, and Procurement has all tools and disciplines to play a protagonist role in that scenario. As a result, Procurement acting strategically will drive a more mature education process for procurement professionals in the country. We face a long path ahead of us in the next few years to truly elevate the procurement function in Brazil.” 

Procurement, as we know, has spent the best part of the last decade transforming in the eyes of the board into a more strategic function that aligns with (and sometimes dictates) the broader strategic roadmap for organizations the world over. Klimak has seen this first hand and recalls his earlier days where he was almost admonished for electing to follow a career in procurement. “I’ve been working for a business area and was told previously that procurement was a back office area inside a financial organization with no protagonist,” he says. “It wasn’t until I was inside the function myself that I began to understand just how important it is for a company and I believe that this importance continues to grow year by year which provides huge opportunities to establish a protagonist career,” he says. 

For Bradesco, and banking in general, procurement transformation is born out of an environment where increased competition (such as fintechs) and a changing customer behavior has forced a rethink as to what, and how, banks can provide for their customers. Diversification is not a new concept, but diversification through procurement is most certainly the way forward for Bradesco and this is because procurement is moving away from cost reduction and avoidance and focusing on adding value to the Business and their strategies. 

“We are the main link between the company and the market,” explains Klimak. “We should have a clear view of business needs and what the market is offering to bring innovation for the company. To achieve that, Procurement should be at a good mature level with a close relationship with business areas. Right now, we are reshaping procurement by looking at the end to end journey, considering all aspects of the change: people, process, governance, structure and system. Not only looking for the purchase side but also establishing demand, contract and supplier management disciplines, procurement is increasing the risk coping in Bradesco. I’m seeing firsthand just how much the procurement department function can add value to the company.”

Procurement is the main link between the company and the market, as Klimak highlights, but to think of it as simply like that possibly reduces the true potential and scope of the function. Manoel Guedes, Procurement Director, believes that the procurement area must be part of the very first moment when businesses are discussing the needs.

“In sticking with a traditional view of procurement, our scope of action has been limited and, consequently, the added value”, he says. “We are challenging the way that we have done our job and we are willing to do it far earlier. This way, we can start the procurement planning sooner and find out how we can better support the business needs.

Guedes continues; “We’re also challenging ourselves to go further. Not only looking at the pricing dimension, but the services that are actually delivered and the quality of them. This journey is about looking at how we can improve the role of procurement and bring more value to business.”

So Bradesco is on a procurement journey, one that will see procurement walk hand in hand with all areas of the business and their strategies and be the key cog in achieving innovation and growth. Klimak outlines it as such: when other business areas think about their strategy, procurement needs to participate and play an active role in that strategic discussion. For him, if Procurement departments achieve that level of recognition, it means that the transformation is succeeding. 

“We are moving closer to the business to add value to their strategy,” he says. “By doing this, we take the company to another level with regards to costs and revenue, innovation and customer experience.”

Challenge number one is identifying the why, which Bradesco did and so challenge number two becomes: how? What does it look like and how is the company going to get to where it needs to be? This is where Bradesco worked closely with PwC as Klimak recognizes that in order to transform procurement in such a huge organization, a strong partner is required. The first step that was taken together, was a step towards benchmarking. Bradesco looked across the globe at leading procurement functions in order to truly understand what the company wants (and needs) its procurement to be.

In doing this, visiting international companies and assessing Bradesco’s existing infrastructure, Bradesco identified a vision. And Klimak speaks of another key benefit that comes from striking a key relationship with a strong partner. “Simply put, it brings a good sense for the project,” he says. “What I mean is that I can show the business that we have a strong partner, that we are bringing the best practices in the market, and we know that it works. It solidifies credibility for the project.” 

This credibility proves crucial in an organization that has operated successfully for a number of years. When transformation enters the conversation, the first question is often why fix what isn’t broken? Bradesco has a strong legacy of successful operations and Klimak says bringing best practices from the hub of Procurement was very important because it allows people to learn from the best of the best and to see for themselves the true benefit that will come from the transformation. 

“This benchmarking allowed us to understand what are the best world class procurement standards and the principal issues that will be addressed in the next future.

It’s not only about bringing more efficiency or cost reduction, but actually boosting the innovation process of our organization. Procurement as a strategic part in order for us to add more value in our operations and best services to our clients”, adds Guedes.

A common challenge that many procurement professionals face is: procurement knows procurement, but other business areas and disciplines do not. Klimak is all too aware of this challenge and that notion of credibility helps communicate the value of procurement to those who simply do not see it for what it is. But the key for him is recognizing one thing. “We are specialized in procurement, but we are not specialized in other business matters,” he laughs. 

“As part of that international benchmarking we looked at how those companies moved Procurement from a transactional role to a strategic one and we saw that all of them even though they are in a high mature level they are still running long transformation journeys. Also, we looked at how procurement works closer with the business and to do that they put in place a strong talent management and also create an environment to establish the procurement business partner role which has a strong knowledge about the business and make a link between those areas. Increasing the business knowledge inside procurement and having strategic discussions with them, the businesses start understanding how much value procurement can bring to their operations.”

In order for Bradesco to do this, Klimak speaks of how this movement can only come once procurement has reached that higher strategic level in the company. “To create that environment where businesses understand the Procurement importance, Procurement should be customer oriented. What I mean by that is, all pillars of procurement (people, process, governance, structure and system) should focus on how we can make the business grow. Working with this mindset Procurement will become a more sexy area mainly for talent (both existing and future talent)”. 

“Another important aspect that we mapped during benchmarking even though we are talking about Procurement 4.0, focusing only in technology doesn’t increase the procurement maturity level because it doesn’t solve all procurement problems, especially relationship matters – firstly it is important to focus on organization redesign, people upskilling and culture change – those items play an important role to put procurement in another level. When procurement already defines the business model, technology should come to support that operation and of course bring automation, efficiency and time to market.”

In order for Bradesco to follow those good practices, Klimak says that the transformation is established in three waves: fundamental changes – redesign the operating model, consolidation – automation; and then evolution – new techs (AI, Blockchain, etc.).

In transformation and change, results speak the loudest and for Klimak and Bradesco these results will continue to define the road ahead for procurement. While this procurement journey has certain KPIs that are unique to Bradesco, such as cost reduction or risk mitigation, the one overarching achievement is that move towards becoming a true business partner. Achieving that status is the key to enabling true innovation, increased revenue and reducing the costs of operation. 

In the quest to achieve this, Klimak is quick to highlight that this isn’t HIS story. Nor is it Bradesco’s story. It’s the people who make up procurement and those collaborating and driving the movement forward. This transformation is nothing without the people. “When we talk about transformation, we are not just talking about process, system, governance, or structure. We are talking about culture,” he says.

“We are transforming our procurement culture, increasing the scope of our day-to-day activities. We are working very hard in branding our transformation. It’s easy for us to say: ‘This change is good so get on board’ so it’s very important that we take care of the communication and work very closely with our teams, and our people, to help them understand just how key each and every one of their roles are in all of this.”

As Procurement Director, Guedes knows full well just how important people are. For him, Procurement will always be a job where people add the greatest value. “We must automatize processes and operational acquisitions, but the value that people add is incredible. People always bring the knowledge about markets, suppliers and the best way to reach their needs,” he says.

“Our people are really committed to the Transformation Project. We take good care of communication, what we are doing and goals. We all share the same desire to elevate our procurement area to a world-class level. Sharing this journey with our team has been the best part of this project”.

A collaborative culture is all well and good, but it needs to be built on honesty and transparency. Procurement sits in a very strong position within the business, but it’s also a very challenging one. Procurement is an orchestrator for business continuity and a conduit which all business areas run through. Procurement has a connection like none other and it’s important that when it engages with the business it can tackle the key issues that the business is facing. “As a cross-functional team, we should engage other areas on sourcing/purchasing discussions, creating an environment of cross-boundary ownership of tasks and problems and make all involved move to the same direction,” Klimak says.

“We are involved in a hard scenario internally; if we aren’t a collaborative department, and if the business doesn’t understand our idea or how we can help them to achieve their goals, it means they don’t believe in us and they won’t open the space or the subject that we need to address value to them.” 

Guedes reaffirms the significance of working closely with the business. “It’s extremely fundamental. It’s impossible to add value to our internal clients if we are not close with them,”

“We are implementing business partners to our internal clients to better understand their needs since the very start and manage it through the process. To do it, we have to be there from the very beginning till the end. If we are distant from our internal clients, we will not be able to reach their needs, and the organization will suffer.”

A procurement transformation is a never-ending process of continuous improvement, continuous challenge and continuously pushing the boundaries of what’s possible and while Klimak and procurement at Bradesco are working hard to achieve considerable successes to date, tomorrow is a new day. Over the next 12 months, procurement activities will continue to accelerate as Klimak looks to continue to reshape the collaboration between procurement and business, implementing a new procurement platform and looking at how the procurement model can continue to inform and influence the future of the business. 

For Klimak, when he started working on Procurement Transformation, he did so with a single belief that he considers one key KPI for the transformation success. He hopes this is a belief that many others share.

“Procurement, broadly speaking, has become so elevated that it finds itself involved in the important discussions because they have a policy in the company, or they have the documents that make the business involve procurement, but I don’t believe that is the best way to be involved in Business matters,” he says. “I don’t want to be involved because it’s an obligation. I want to be involved because I add value to you. Seamlessly working with the business to participate in their strategies and add value to those strategies is the best possible KPI we can achieve. If we keep this mentality, then I have no doubt that we will succeed.” 

Guedes adds: “At the beginning of this journey, we knew that it was necessary to have a view of the best purchasing practices, the potential for the evolution of these functions and the value that we could add to our organization”.

Now we know that our main objective is to implement an environment, where our people could continually improve the pillars of efficiency and innovation, through agile and effective purchases.
This journey is like a wheel that we will keep turning because procurement will always evolve, but we have gained the hearts of our people and are working and we are committed to deliver a world-class procurement function that will play a key role in the future of the organization.”

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