When we talk about the evolution or transformation of procurement, we often speak in broad terms. “Procurement has ‘moved from a back-office function’, or it has obtained a ‘seat at the table’, and while these sentiments are, in fact, true, they often diminish the real change in procurement,” says Alexandre Turolla – VP Procurement Global Raw Materials at Mondelēz International.
“The real change in procurement is about how we can do that together with the business and becoming an enabler to what the business wants to do. This has really opened up a large avenue for procurement that was never there before.”
Procurement and Mondelēz
So, what does procurement mean to Mondelēz? As the global conversation continues to be defined by stories of companies recognizing (at last) that the function can and should be a key strategic driver of growth, on what side of that conversation does Mondelēz find itself?
“Mondelēz procurement has always been highly valued. Since my very first day, I have experienced a company which really understands the value of the function and brings it along with a high degree of appreciation. The function’s relevance to the business comes from its ability to connect and steer both the supply landscape and Mondelēz business as part of a two-way value creation. It keeps evolving, and this is the exciting part of being at Mondelēz Procurement,” says Turolla.
“We are always positively dissatisfied and looking for the next stage of evolution.”
Mondelēz was created as a spin-off from Kraft Foods in 2012, with a clear vision to be a ‘growth engine’. The first years of the journey were focused on getting the organization fit to win. Every process and spend was streamlined and benchmarked against the best in the market. 100% of the company spend was managed through a process called “ZBB – Zero-Base Budget”. Robust category management processes and structure were implemented to achieve an impressive 650 BPS margin improvement and 60+ days improvement on Cash Conversion Cycle. “We are finally ready to grow and win. We needed the fuel to climb the summit,” beams Turolla.
In 2018, Mondelēz launched the current “Snacking Made Right” strategy, based on three key foundations: growth, execution and culture. For Turolla, it was important to recognize that Procurement not only played a fundamental role during the margin expansion phase but continues to play an equally important role in growth and “is deeply embedded into the three pillars of our Snacking Made Right strategy,” he says.
Turolla highlights that the procurement function is guided by its mission statement (launched in 2017) of becoming “Fearless Business Leaders and Trusted Partners who Bring the Outside in to Win.” As a procurement man at heart, having forged his career in various procurement and supply chain disciplines, Turolla knows well the value of the function and insists that communicating this in a broader business language is an ever-evolving challenge for any CPO.
So, what does it mean to be “Fearless” in Procurement at Mondelēz?
“Simply put, it’s about going beyond the ordinary, explains Turolla. “We try to make a connection with business performance and the personal growth of our people. The idea is to ask ourselves: How to have fun in going beyond our comfort zone? What is in it for the people? By stretching our limits, one can become better, learn new skills and push to go beyond. “We have only one career. Do you know what to do with yours? We do,” adds Turolla.
Fearlessness comes from moving away from the traditional incremental approach to change. Turolla leads by example and is always looking for the next “Thinking Big” idea or opportunity and invite the team to join. The secret is to invest in the change management required to excite the team to enable them to focus on the possibilities ahead. “We don’t just jump on target-setting, we invest precious time on creating a joint ambition at the start,” says Turolla. “What do I and others gain from that? Increased capabilities. We get to work with exciting people that challenge and support each other, ever expanding the boundaries. “It’s like sport, when the game finishes on a tight six to five and you sweat like crazy., regardless of who wins in the end, these are the best games and the ones we learn the most because you pushed and pushed hard.”
Establishing and maintaining a position of true “Business Leaders”
Procurement is transitioning from function excellence to become a true business partner. Cementing this position is an ever-pressing challenge and Turolla is no stranger to this.
The business landscape and consumers exigences continue to evolve. Turolla believes that what once was competitive will no longer be affordable in the future. At the same time, speed and agility have fast become the essence of success. No company will be able to address or afford to develop and maintain a consumer winning proposition on its own. “Forget about reinventing the wheel. You need to be with the best suppliers and hold hands with the people who will keep the momentum going,” says Turolla.
On paper, this may seem easy but Turolla is keen to stress the importance of investing on fostering and maintaining effective connections with the business leaders and suppliers alike. “Good procurement always starts with the business and not with the function itself,” he says. “I normally use the analogy of a bridge. Imagine that we have a bridge between suppliers and the business. We need to cross the bridge first and hold the business hands. We then invite them to cross the bridge back together. It’s about being genuinely interested in the stakeholder’s agenda, opportunities, dilemmas and pain points.”
These conversations and the actions to create “that bridge” speak to the “Trusted Partners” component of the mission statement. Trust and credibility are often recognized as the most significant components of a successful leader. Mondelēz certainly recognizes it and uses its own approach to nurture and improve trust.
The “Trust Equation”:
“Our Credibility has been built over the years by being able to deliver and to thrive when we are needed,” says Turolla. “Reliability is about putting yourself in the shoes of others. Do what you said you would be doing; always thinking about how to enhance the work and potential of others,”
“When it comes to Intimacy, it’s about getting to know people we deal with. Then we can be more flexible and more forgiving of the not so good moments and inspired by the good ones.”
Turolla notes that all these good intentions and investments can easily fall down the drain if perceived as driven by the wrong motivation; “We need to be clear and loyal to what makes us thrive and what our purpose is and keep it front and center as our motivation.”
Bringing the best of the “Outside In”:
Procurement is an open door to the outside world. Turolla and his team strongly believe in the power of co-creation and leveraging the complementary capabilities of its suppliers and partners together with the Company to arrive at the best outcome. A genuine interest and investment in the suppliers is a must, understanding them better and a realization that Mondelēz simply cannot do it all alone.
The final part of the mission statement is perhaps the most important and most fluid. “Managing our holistic value chain as one, from shelf to field, is the key to success,” says Turolla. “We try hard to foster greater relationships and to understand a uniqueness and sweet spot between Mondelēz and our suppliers,” he says.
Through supplier segmentation, Mondelēz chooses who and how to invest its resources. “We invest heavily on the partners that are aligned with our vision and we hold each other accountable for driving mutual value”, adds Turolla.
“Through our Supplier Partnership Excellence program, we develop a mutual value program and review it periodically. Are we growing with the right partner? How many projects have we developed successfully? How well are we aligning our future supply chain needs? How are we progressing on our service and quality excellence program? The ever-evolving quest for the cost leadership and the joint sustainability complement our ambition.”
This approach allows the suppliers and Mondelēz to openly and honestly give each other the chance to feedback and react to the positives and negatives.
Innovation plays a key role in Mondelēz’s Supplier Partnership Excellence (SPE) supplier proposition and it has pioneered a number of approaches that deliver bold results:
- Ecosystem Approach:
“We teamed a few SPE suppliers with complementary capabilities and raised a business challenge,” says Turolla. “From more than 100 ideas that were presented, 11 new products are on the launch pipeline spread over three years, starting from 2020.”
- One complementary Network footprint (make vs. buy)
“We started to holistically manage our manufacturing footprint with our SPE suppliers, generating several improvements to eliminate inefficiencies and optimize assets on the combined (Mondelēz + SPE suppliers) footprint.”
- Innovation fairs
“Through multiple innovation fairs, SPE suppliers had a stall at Mondelēz offices to present their capabilities applied to real specific open opportunities.”
- Digital platform for innovation
“We learn with the influencers how to be “catchy” and make business briefings more attractive, catching the attention of our suppliers, start-ups and innovators. Likewise, the suppliers also adopted the new approach, using highly effective short videos that easily reach different decision makers at Mondelēz globally.”
For Mondelēz, Turolla notes that the winning is when the wheel is spinning in the right direction. “It’s about ensuring that all the connections are working in a way that enable success for all involved,” he adds.
Sustainability and Mondelēz
When discussing how winning is defined by Mondelēz, it opens the door to the Sustainability conversation. The company’s sustainable snacking vision is focused entirely on creating a future where people and the planet thrive and win.
“Our global food system is facing numerous challenges and calls for solutions that require coordinated efforts by governments, industry and scientific, social and environmental experts. Smallholder farming communities need support to increase their resilience.”
“The Sustainability agenda grew from being the cherry on the cake to become the cake itself,” shares Turolla. “It is a fundamental component of every sourcing strategy and we are leveraging our market presence and relevance to foster the right attitude, actions and responsibilities from all payers in the value chain.”
Mondelēz recently updated its “Snacking Made Right Report” ) that each year tracks the progress made against its ESG (environmental, social and governance) strategy , objectives and programs.
Its signature community program “Cocoa Life” is a great example of Mondelēz engagement with communities at the origins. “We are committed to working with the suppliers that share our values and thrive by doing things the ‘right’ way; fighting climate change, preserving forests, improving water and energy efficiency, and respecting human rights,” says Turolla.
“To accelerate our journey, we have a small team of sustainability experts embedded within Procurement who keep us at the leading edge of technology and partnerships. These experts in turn build sustainability into the core competence of our buyers. As a result, our buyers are sustainable sourcing experts who seamlessly blend sustainability and commercial strategy into sourcing.”
We would be remiss to explore the procurement journey of Mondelēz and not look at the role that digital and data solutions are playing. Turolla is first to admit that there is still a lot of testing and learning on this front but make no mistake that for Mondelēz the digital journey is fast gaining space and enhancing success.
While Mondelēz leverages digital solutions in cost modeling, recipes comparison, and complexity, spend and revenues simulations and market insight to equip procurement for better decision-making, Turolla is keen to stress that he is much more interested in approaching the digital equation in reverse. “We spend time at the problem stage first,” he says.
“Only when we clearly define the Problem Statement, we move to create fit-for-purpose analytics and dashboards. Once those are created, we push hard on democratizing the data to all buyers and R&D researchers. This means making reporting tools simpler and more effective for the category and research managers, as well as looking further into the realms of artificial intelligence for data analytics.”
There is no better example to illustrate the Mondelēz digital journey than its Covid-19 crisis management. Within 48 hours of the COVID-19 outbreak in China, Mondelēz was able to map all materials originated in China and delivered to all other countries and put a contingency plan in place, expediting deliverables and qualifying and booking alternative suppliers. Through a massive cross functional endeavor, Mondelēz successfully executed >200 BCPs (Business Contingency Plans), monitored supplier performance, OTIF and managed to anticipate tier-2 disruptions ahead of time, gaining precious days to react as well as raising inventory for critical unique materials.
These decisions were driven by data, focusing on origination from turbulent areas and suppliers with difficult upward chain or constrained supplies. In taking these steps, Mondelēz avoided disruption, securing particularly admirable service levels throughout the crisis. “The Covid-19 crisis accelerated the way we leverage data and analytics,” says Turolla.
“We are moving fast on our digital transformation and we are only at the beginning. The value creation of a digitally enabled category management and sourcing strategy is immense.”
Since joining Mondelēz, Turolla has witnessed an incredible amount of success and growth as part of this procurement journey and he excitedly beams that the best part is that Mondelēz are “only half way through it”. For him, the next phase of procurement is all about moving from functional excellence to living and breathing the business agenda, bringing all the different elements of excellence together to form a truly integrated approach from shelf to field. “We want to be agents of change for a thriving ecosystem,” he says. “This makes a good link to our renewed commitment to fully integrate supplier diversity and economic inclusion into Mondelēz Global strategies,”
“We believe that healthy thriving communities need to include everybody and so we are expanding our business to small, diverse suppliers that have often been disadvantaged in the opportunity to engage with multi-national and/or other mid to large corporations.”
In a world where obsolescence is happening faster and faster, success is no guarantee. But Turolla reflects on the original mission statement of procurement at Mondelēz, particularly when it comes to being fearless. “Think big, don’t think ordinary,” he says. “It’s an ever-changing world. Get excited to be out of your comfort zone.” In order to achieve this, Turolla has his very own formula.
“It’s all about the three C’s and one S,” he adds. “Be curious about the world around you, have courage to operate out of your comfort zone and the confidence to lead the change then add a bit of self-confidence. This formula will give you a lot of fun creating the future and keeping obsolescence far out of your way.”