Ep. 22 - Beyond ‘Your Wish Is My Command’: Elevating Procurement to a Strategic Partner - with Niels Walberg

If Procurement is still a ‘your wish is my command’ function at your company, you’re leaving value on the table.

In this episode, host Mike Jansen speaks with Niels Walberg, CPO at K+S Aktiengesellschaft. With over 25 years in procurement, Niels shares how he’s driving the shift from reactive service provider to strategic partner at a €1.5 billion spend organisation.

He explains why clear KPIs and supplier performance management matter, why stakeholder buy-in is the true lever for lasting change, and how Procurement can embed itself into complex CapEx projects to deliver real business value.


You’ll learn:

1. How Procurement can shift from service provider to strategic partner
2. Why strategic coverage outperforms savings as a steering KPI
3. The role of stakeholder engagement in driving lasting change
4. What makes performance management with contractors effective
5. Practical lessons from digitising and simplifying procurement processes

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Get in touch with Niels Walberg on LinkedIn: https://www.linkedin.com/in/niels-walberg-023308b0/


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About the host Mike Jansen:
Mike Jansen is Partner at H&Z Management Consulting with over a decade of experience enhancing the value that procurement delivers to organisations. Driven by a passion for tackling challenges, Mike thrives on competition—whether with others or himself. Outside of work, Mike enjoys quality time with his wife and children.


Get in touch with Mike Jansen on LinkedIn: https://www.linkedin.com/in/jansen-mike/

Transcript

SPEAKER_01 0:02

The internal stakeholder more or less looks at um his imminent demand, whereas the procurement function, if it does the job properly, has the company overall in its perspective. And so the role of procurement is to balance this by advertising, convincing, or introducing the benefits that procurement can provide to the company, to the internal customer, and becoming more than just a service provider acting on a micromand.

SPEAKER_00 0:40

Welcome to the Procurement Initiative Leaders Podcast, the ultimate resource for top-level procurement professionals looking to stay ahead of the curve and drive meaningful change within their organizations. I'm your host, my guest, Principal at Agent, Europe's Leading Management Consultancy. Join me at a sit-down with global leaders in procurement and other relevant areas to uncover the latest trends, strategies, and insights that are shaping the future of procurement. We tackle crucial topics like leadership, technology, value creation, cost management, resilience supply chains, innovation, and many more. Ready to up your game as a leader in procurement? Let's jump into this episode of the Procurement Initiative Leaders podcast with me, Mike Jensen. Today, Niels Wahlberg, Chief Procurement Officer at K Plus S joins us. Niels, welcome to our show. First of all, we have some intro questions. Tell us about your company. What are you doing?

SPEAKER_01 1:42

Yeah, so thanks for having me. And uh as for K plus S, the company that I work for, we are a German-based mining company that uh basically extracts raw minerals in Germany and uh Canada. We have operations in Europe and Canada where our mines are, and um the products that we basically sell are pottage and salt, so that are uh more or less indispensable raw materials for uh agriculture, medicine, nutrition, and private life industry, also, and uh so more or less in the raw material world, K S is a very important player. And in terms of procurement, it's a very uh exciting player because what we do in procurement is as the mining itself uh a little bit special and different from other companies.

SPEAKER_00 2:41

Okay, uh that sounds very interesting. Please tell us more. So, um, what is your role and what does it encompass? And as is just said for procurement, what spend are you responsible for?

SPEAKER_01 2:54

So I'm heading the procurement function at K plus S. That is a encompasses the complete global K plus S procurement world. I'm responsible for everything that we buy, indirect or direct materials, um, except for logistics spends and uh some minor um trade uh spend that we have for products that we that we are training with. And the overall spend on annual basis that I am responsible for with my organization is roughly 1.5 billion euro.

SPEAKER_00 3:32

So uh no small ticket. Um that's very good. So we will dig deeper today into three major topics. So we aligned that we talk about reframing procurement's role. So, how does procurement become a service provider uh from a service provider to a strategic value partner? We want to talk about simplification. So, how does tools or uh internal enablement look like at K plus S? And last but not least, we uh lead uh least we want to talk about navigating complexity. So for for you, especially that means contractor management, KPIs, uh, and especially procurement in CapEx projects, which plays a major role, right? Yeah. Okay. Okay. Yeah. So then how do you personally define the role of procurement in a company like K plus S?

SPEAKER_01 4:33

At K plus S, um and I work in procurement now for 25 years. Uh I see I see a very um important part um of balancing the service provider role with the role that we have as a um as a contributor to the overall success of the company. So what I mean is um generally, and I think that is true for most of the companies, procurement is perceived as a function that serves the internal stakeholders or requesters whenever they have a specific requirement so that uh they will get what they want. And not so much that procurement has a very important role in the overall uh company world, uh, that is um making sure that uh the overall overall success of the company, economically especially, um is at a level that can be expected and that uh can um uh and that procurement can provide and contribute to it in an adequate manner. And um that in an ideal world, this should not be uh opposite. It should be understood by everyone, but we know that the internal stakeholder more or less looks at um his imminent demand, whereas the procurement function, if it does the job properly as the company overall in its perspective. And so the role of procurement is to balance this by advertising, convincing, or introducing the benefits that procurement can provide to the company, to the internal customer, and uh becoming more than just a service provider acting on a your wish is my command basis.

SPEAKER_00 6:38

So it's changing from a reactive role to a more proactive role, right? And and that means also being earlier involved in certain topics, right? And driving them on your own.

SPEAKER_01 6:56

Absolutely. So um for sure it is um one of the most basic uh tasks of procurement to help internal customers covering their requirements. But that can be done in many ways. So we can react uh from on a case-to-case by basis. Whenever the customer needs one or the other service or good, uh, we just make sure that he gets it, or that we define um certain categories where we do not want to serve the customer on a case-by-case basis, but decide based on a strategic evaluation that uh the customer, internal customer, can do this on his own. And we provide a framework agreement which then limits his options, which what he presumably doesn't like, uh, but provides um uh qualified suppliers, uh better prices, because then we can um drive the spend towards one or two suppliers instead of just picking any supplier that the that that the customer wants, and that um yeah, that we have partnerships with the suppliers that make sure that uh not only the price is fine or the cost is fine, but that it's that it's a reliable supplier. And so that is the more or less strategic perspective. And um as I said, our internal stakeholders do not necessarily like that, but this is something that we have to sell and make sure that it's accepted. And once we are successful, it is easier in the next next instance to uh convince our our colleagues that that this is the right way to do it.

SPEAKER_00 8:49

Yeah, I think that is a very crucial part. So a lot of that is also driven by perception, as you just said, by your stakeholders. And yeah, you said acceptance plays a huge part in that, and that is made it or makes it easier to be recognized at a later stage then. So, what has actually helped your team to earn that seat at the table and be treated as a peer or not only a service provider, but a strategic partner by the other functions?

SPEAKER_01 9:28

I think the the most crucial part is that we are perceived on an uh eye-level basis by our internal partners, so that the colleague from the procurement department knows and understands the requirements of our internal customers and um really is able to help them not only by asking questions but also by offering solutions so that he know he knows the procurement market for the specific category that he is responsible for very good, and that he is um not only asking to be uh the involved as a as a partner who drives the procurement process, but really taking it on proactively and demonstrates that it adds value and takes burden from the internal customer. Uh, because um if we would not if we were not there, then the um the internal customer would have to do it on its own. Some some of them try to do it, and then they learn uh that they run into problems and we have to clean up, which is the the situation that we do not want to have. And once we can demonstrate that we lead the process professionally and um appropriately, uh this is perceived as a support and not as a burden or us meddling into the core business of our internal stakeholders.

SPEAKER_00 11:04

Okay. But I mean, even if you have those lighthouses where you walked the talk and showed the value, there are still some situations where you where procurement isn't isn't uh in the process at the right time, but where you're pulled in late, or you're as is just said, you're asked to fix something that is already gone off track. How do you cope with that?

SPEAKER_01 11:33

So typically we ask ourselves the question, and also we would ask this question to the guy approaching us um, can we add value here in this process? So just take the typical instance um that that someone that there is a service provider sending an invoice for work he performed, so everything is done, and there is no PO in place or no contract. So, how would we add value here? We would typically say, in this case, um it's not that we don't want to help you, it's just that we have to set our priorities and um we we prioritize uh the work according to where can we where we can uh add the most value. And as we all have limited resources, in this case we cannot help you anymore. So next time, better luck, you want to put it like this. This may um be perceived initially as unfriendly, but I think we have to make this point to be perceived as someone as a function who knows um what they are responsible for and that they handle the money of the company responsibly. And uh so so in this case, we would, or in cases like this, we would uh probably say um we can go back and and uh talk talk to you and try to explain how to how the procurement process works, but I think we have to make the point that in this case um there's no nothing that we can do anymore.

SPEAKER_00 13:20

Okay. And um so I think interesting would be also to to know how do your stakeholders react when you tell them you do not see any value in there. So what is what is your perception of the reaction? How do you manage it properly?

SPEAKER_01 13:42

Well, first of all, I have to say that these cases or scenarios do not happen so often. So this is really an exemption. Um sometimes where we where we feel that we can add value, we would try to help. Um but if we really had the situation that I just described, um there's pushback for sure, but um it this is a little bit a question of the culture in the company. So when when there's pushback, there's escalation, and at a certain point in time, this would come to my desk and to maybe the the head of the production um function, and then we would sit down and uh think what we uh talk about what we can do. But I think we're pretty much aligned there because every function has a certain responsibility, and so we would probably just use this as a lesson that's learned, and then hopefully um there is no burn soil, as we say, at the end. Um my perception is that there is no burnt soil, but uh that people know okay, this is something that I have to do better next time. And without taking that stance, although it seems may seem a little bit uh rude, um, we would probably not make any progress in this context.

SPEAKER_00 15:20

I think really to have that kind of transparency also to say, okay, what you said, you don't see any value in working on this. So it isn't on a personal level, on a personal decision because you want to push back because you were involved late, but you just don't see any value by working on it, right? So going more on a fact based than on a personal level. Yeah, um, you talked also about limited resources, and therefore, uh, when you look at everything, procurement can be involved. How do you decide where to lean in and where to step back?

SPEAKER_01 16:02

Um, so we decide uh uh it's not so much our decision. Um we have a clearly defined procurement process, um, and that includes timely involvement of procurement. And whenever we are involved timely, we will be there and and help. Um you may you mentioned the the issue of limited resources, that's that's right. So for significant work um that has to be performed by an individual colleague from my department, uh, we also have a procedure that this work needs to be reserved, if I may put it like this. So when there's a project coming up and someone knows that he know he needs someone from procurement in this project for a specific um category, for example, then this guy would come to me or to the team lead of the individual and ask whether the resources are available, and so we can plan at least a little bit uh whether or not we can have that, or in if if need may be, we try to source uh external um support uh to cover that demand. And yeah, so whenever we have a good process in place and everyone follows the process, um we will take on the work. On a strategic perspective, uh the category managers will look at their categories, and as I mentioned in an uh earlier example, they may decide that it does not make sense to work on a case-by-case basis, but that they need to somehow have some release in their categories and try to introduce the idea of um framework agreements that the individual requesters can call off from, so that whenever a certain um work type is required, uh procurement does not need to be involved, but the service is already contracted and um can then uh be called off individually by the respective um customer. So that would be a little bit a um wiggle room that the that the colleagues have uh to to free up space that they they need to work on on bigger projects, for example.

SPEAKER_00 18:43

And if you have more requests in parallel, what really drives your prioritization? Is it yeah, so is it capacity, is it uh the business case, so so possible outcome? Yeah.

SPEAKER_01 18:59

Um I have to admit that I didn't need to make the call so far, but in theory and in in what what our portfolio management guidelines tell us, it would be the business case. It would be the the uh ranking. It does not necessarily have to be the economic um contribution. Maybe there's some strategic or some some work to be done uh to fulfill regulatory requirements that would try and uh any other project. But uh based on on this ranking, we would then need to decide where we put our resources.

SPEAKER_00 19:47

And um circling back a bit to how to uh change the perception within the company, also with the stakeholders, what have you done internally to make your work, procurement's work, or and the impact more visible to the rest of the company?

SPEAKER_01 20:06

Yeah, so um we are not very good in marketing ourselves, I have to admit. But um I think we have a good balance between, on the one hand, not overplaying um small wins uh as a big success, which no one in the company understands, um, and running the risk that uh quite the opposite happens, so so our role is perceived as um less important. But um, on the other hand, um we try to um convince uh our internal uh customers of the benefits that we can offer by really having what you mentioned the lighthouse projects. So, for example, introducing new ideas for um an extension of our supplier portfolio to drive more competition. Um there may be an idea of getting new suppliers interested in our projects, and then we would invite our internal customers to be part of it, uh selling them the benefits, the idea, managing maybe a supplier event where everyone comes together, and then the customers, internal customers will learn and what our idea is and how it works, and at the end, because that's a concrete uh example that I have in mind, uh, they would ask for more of it. So if we feel that there's something that we we can introduce as a maybe clever idea in the given circumstances to uh have more competition in a tough market, um This is something that will be uh appreciated by our internal customers, and that kind of um improves our reputation uh as a as a contributor to our economic excess uh success. Yeah. And so this this is one example that I have in mind here.

SPEAKER_00 22:23

Yeah. Um I think I can add to that that uh you're probably not alone with uh room for improvement in the in the self-marketing department. Um, but I think it's also good to mention not to overhype certain smaller wins that might not have the visible contribution to the rest of the company and also how other departments are measuring their success. So we we gained now some clarity around where procurement adds value, and that also sets the stage for working smarter, of course. So let's shift gears a bit and talk about how you've approached the topic of simplification, digitization to make things more effective for your team and also the business. So when you think about improving procurement processes, what is the question that you're asking yourself before deciding whether to automate processes?

SPEAKER_01 23:26

Yeah, so I think first of all, uh we have made very good experience with um first of all thinking about do we need a process at all that we need to automate. So we don't automate something that we don't need. Um I think that's that's easy. Um the next step then would be um having a clear picture on the complexity of the spend portfolio. What I mean is um we we strive for an adequate complexity compared to the complexity of the service or good that we are buying. So I think we have a pretty good good picture on what we uh what we buy also in terms of complexity. And um then we try once we have uh our ducks in a row, what is highly complex, what is uh has a very little complexity, we try to find that the right channel to um put this specific category to. And so um based on what we what we find there, uh we try to drive as much as possible to automate it or self-service processes so that we um really have our hands free on the big tickets that maybe need a little bit more of our um attention and and work and time.

SPEAKER_00 25:04

Um I think that it's very valuable. And you also said, okay, don't automate unnecessary um processes. So in talks with your peers, for example, what I also quite often hear is to really pressure test the process itself. So before digitizing or automating a process to really see is the process optimized and not to turn uh um non-digital bad processes into bad digital processes. Absolutely. So uh that is something you also would would sign, right?

SPEAKER_01 25:45

Yes, and you made a good point here because um sometimes uh especially for the for the for materials with little complexity like tools or something like that, right? Which we um uh buy a lot of tools for for our maintenance workshops and so on, um we may find that we have a very scattered supplier um portfolio in this category. And um this drives the uh the complexity for the category managers or the buyers that work in this cut category. And um so before even automating, that's where I'm heading. Um before even automating, we uh may start a standardization initiative saying we could automate this if we had standardized process, because then we would have an outline agreement or a or a B2B catalog or whatever that we can um direct the internal stakeholders to and say, don't bother us with uh purchase requirements for um uh for tools, uh, but go to the catalog, you'll find what you need there. And then you know, there might be one or the other who needs a special tool. I only take this as a placeholder because no one sends purchase requisitions to us anymore for tools. But um, then there might be one or the other stakeholder saying, but I need this special tool, I don't find it in our in our uh warehouses, I don't find it in the catalogs. So I need to have a purchase requirement, uh purchase requisition for you to buy it. So that's the kind of uh work that we try to do at the same time. Standardize and then put it to automation.

SPEAKER_00 27:42

Yeah. So one thing you also um reduced a lot is the manual handling of POs uh at K plus S. So what were the key steps to achieve that?

SPEAKER_01 27:55

Yeah, so uh the first step um would would be to really see again less complex things would be handled automatically, put them to to a procurements channel like a outline agreement or a B2B catalog that the requester can um serve himself. And um then look at at the next step. What could what could be the next step in automation? Um for example, introducing a chatbot which we uh use for suppliers that um uh or purchase requisitions with a low value. So now we are not in automation anymore, but we can we can drive the purchase requisition to a chatbot that will then enter into conversation with with the supplier and um find the right price and find out whether the whether the material is still available, yes or no. So the typical questions that we would otherwise do over phone, email, or what have you. And um only what's then what's left then would be the next thing that we are looking at. And looking into the future, this would probably then something that we try to tackle uh by AI. Um but uh we are not there yet. We make our first steps. But um, yeah, that would be the the way to to approach that and go through it. And um, I'm pretty proud that overall in the company we already have an automation level uh that is uh roughly at 80 percent. And in Germany, where we have the the focus or the where we handle most of our uh procurement work, purchase orders and item lines, it's um even more, it's uh higher than 90 percent. So we are now quite impressive? So yeah, it it is impressive, and it is the only way that we um we could handle this. I always make the the example with the um uh Uaret region in Germany, where our old coal mining, coal mine um uh old coal mines are and where the pumps have to go, otherwise the the area would drown. And this is a little bit our automation. Um this automation has to run, otherwise we drown here because we would not have enough people to take on the work that is already automated.

SPEAKER_00 30:40

I mean, looking at the e process itself and coming from a more manual-based process, you're not working on a green field, right? So typically you have organization organizational or technical barriers. Um, what were the ones that you faced when you tried to simplify or digitize those processes? Yeah.

SPEAKER_01 31:09

So organizational wise, um, I I have to say generally any simplification of process is very much appreciated. Um the challenge that we are facing here is that automation regularly needs money, so at least you have some upfront um invest that you just just need to have to make the process running. And so that's a that's a budgetary question. It's not a really uh a mindset question. Yeah, for us. And uh technology-wise, um the yeah, the hurdles that we have to take are the rightfully in place um policies in terms of IT data security, privacy, because most of what we are looking at now for automation, as I said, is um AI. And then you always have the the challenges in finding out how does it work, where do we find the servers, what's where do our day does our uh data or where is our data going? So all this type of questions, and that takes time. Um but as I said, I don't I'm not criticizing it because I know that this is required. We are well advised to be um very uh carefully here, but it's a hurdle for sure.

SPEAKER_00 32:42

Okay. Um thank you for sharing. A lot of tools uh also in procurement are a bit dreary. So, what has your experience been with tools that aim also to improve the user experience using procurement systems?

SPEAKER_01 33:04

Yeah, so um my experience in the long time that I that I look into this topic is that there is no such thing as the one size fits all top number one everybody's darling procurement suite. Um, because the the individual requirements are or preferences are too diverse, so you you can never meet everyone's requirements. And um so based on that, um I think that there is it it's better to have um have a individual and um easier accessible solution and place uh that that really works like a chatboard, like a conversational AI in natural language that helps the individual, especially the occasional user of the system in finding its way through the process or through the system instead of entering um data into specific fields or or marks of a procurement suite, uh, which is then more or less intuitively understood by the individual user. And uh we actually found a solution that is a little bit in between. So uh we are using um for our purchase requisitions uh the SAP Ariba system, the guided buying system, and uh this is a cloud-based solution that does not allow too many individual uh modifications, and so we typically run into the uh yeah challenge that certain uh data fields or buttons or whatever cannot be renamed, and um the nomenclature does not really fit into our mining world, so people just don't know what to what to do or not to do. And uh we found a solution called Lotse that um kind of works like an add-on to to a browser, uh helping the individual customer of us, the requester, finding its way through through the system. And this is really a steps change for us. So uh we we started introducing it only a couple of months ago, uh having key users trained on it. And um I think this is what really makes um the difference in convincing the the users and offering good services to our to our users for the operational or tactical procurement, whatever you want to define it, um so that they are not held up or frustrated by not finding their way through what what we offer as a self-service platform.

SPEAKER_00 36:18

So increased acceptance to being more closer or related to your or your stakeholders' actual business. Absolutely.

SPEAKER_01 36:29

And and maybe not only the actual business, but they don't feel that it's their work to spend a lot of time in front of the um of a monitor. They want to maintain the the loaders or the scalers in in our minds, they don't want to spend much time on the computer entering data. So it really is a big benefit in improving the usability for that.

SPEAKER_00 36:56

Yeah, sounds great. And um I mean, have you seen any surprising reactions in in your teams or from your internal users being positive or also resistant when you introduced a new tool or simplified a process?

SPEAKER_01 37:14

Um for a long time, not really surprising. So you always have the people who don't like it and they don't like change, and others who are more show more affinity to new technology and change. But with the with this um AI solution that I mentioned before, I think it was something that people were really waiting for a long time. And with when this came up and we uh we could demonstrate the benefits, that was really impressive. And and yeah, I was a little bit surprised for the um because of the very positive feedback that uh that we not only received from procurement, we are not so much working with it. We are more or less uh as a function administering the system together with IT. But the more important reaction is for sure the people who really use it. And we really got um very good feedback from that.

SPEAKER_00 38:19

I I sensed in the beginning one of your philosophies is or can be called doing what's right and what's necessary. So uh looking at tools or simplifications, how do you evaluate whether a digital tool is actually delivering value to you? And what are the signals you're looking for?

SPEAKER_01 38:42

Um, so what we do whenever we introduce a new tool or a new process, um as good as we can, we track this based on the data that uh are automatically generated in the back-end system. So, how many mistakes um do we see, how many um system uh mistakes do we see? And um, whenever we find an adoption rate that is uh meeting our expectations, which differs individually from the system, um we've we feel it's successful. Uh and where we don't uh where we don't see that uh we we come to the thresholds that we uh that we thought might be achievable, then we question ourselves whether we introduced it or implemented it correctly. What can we improve? And in the in the worst case, we would then let go and say we don't ride a dead horse. Uh that this, although this would then be some cost. I have to say though, with the technologies that come up and um yeah, that uh offer significant um advantages for us or benefits or for the users, it's still okay that sometimes we fail. You you it it's just part of the game. Maybe I shouldn't say game, but uh that that that's just how it is. We can always um uh if if you don't if you make your evaluation um properly and professionally, then still you can uh at the end find out uh that the system doesn't work. Uh we had that uh in a couple of years ago, which was very annoying for us, but um it was like it was, and then we just uh uh shut the system down and didn't work uh use it anymore.

SPEAKER_00 40:48

Yeah. Yeah, sometimes you just have to move on, right? To to admit it's not working and then to see how you can manage it in the future better and yeah, take your lessons learned out of it.

SPEAKER_01 41:00

I think the uh an interesting perspective here is that um in in operations, I think the appetite is much bigger in trying something new, to be innovative, for example, and uh taking the risk that you fail. Uh in the so-called administrative functions, I think the appetite to accept it is not as high. Although uh also I'm saying is procurement really an administrative function? I don't think so, but it's often it is um what we considered to be.

SPEAKER_00 41:40

So looking back on all your efforts in terms of simplification, digitization, what has made the biggest difference? Uh and what, if anything, would you avoid doing again?

SPEAKER_01 41:58

Um what what would I avoid doing again? So I think um what I learned over the years is that the most important thing is really you you cannot involve your um you cannot involve your uh internal partners in the process um too much. You you have to have them on board, you have to listen to them, you have to show to them, demonstrate them what you are planning and making them part of the process. If you don't, if you don't do it, there's a high risk that you fail. And sometimes you don't have enough time to do it, and then regularly you have to do a lot of free work and get some conflicts and conflicts internally. So that is something that I really feel cannot be overplayed. That is uh the more you do, the better. Um yeah, so I think that's that's my key takeaway from uh when when introducing um new processes or systems to the to the company.

SPEAKER_00 43:13

And also in looking in terms of uh you said, for example, adaptability in in tools. Um are you going more for the all-functional big procurement suits, or do are you looking more into uh so to say, more pragmatic versions that are more customized to your needs?

SPEAKER_01 43:38

So absolutely the latter, because um I I don't really believe in the the big procurement solution that covers all our requirements. I need a sound back end system, and I think it's fair to say that you have the big players that offer these kinds of systems. For companies in a similar size as K plus S or even bigger. And then you need some individual, clever solutions. And I believe that AI will be will play a big part there. So that you can individually work with a robust back-end system. And then everything on top you can you can do on your own. So you don't need this typical graphical user interface. We talked about that before. You need to have the data input in a comfortable way. Make the evaluation maybe with standard processes that are defaults of the system, but the major part of the usability and the flexibility of the system. I don't think that this is something that I would like to have from the shelf.

SPEAKER_00 45:02

Yeah. Then that is something I've heard before. Yeah. Makes totally sense. So we have talked about simplifying what's in your control, so to say. Let's shift a bit to something trickier. Working across functions, managing your contractors, staying aligned in complex projects environments. In your experience, what enables procurement to get involved early enough for large-scale or capex projects?

SPEAKER_01 45:34

I think the key to this is that the company, the individual company, like here at K plus S has a solid um project portfolio and project management process in place. So that everyone is clear on how do how do big projects have to be set up. Procurement will not play a role right from the get-go. But everyone managing big projects or programs should be aware of necessary steps to be taken when to involve which function. And procurement is typically in the CAPEX projects a function that should be involved in an early stage. And this needs to be part of the DNA of everyone working in the company, especially the people who are leading the programs. And without having that in place, you will never be successful in having sound procurement processes or sub-projects in those programs. This is key. And it's key, it is key that procurement has a seat on the table when those guidelines or programs are set up. So that it's not someone from whatever department or function or maybe external consultant writing the playbook and not having the function that should be involved involved into the pro uh process. And this is something that we did uh like two years ago here at K Process. So we're still learning how to do it, but it really significantly improved the collaboration in this uh processes, the um comprehension on the side of the project managers, on what is expected from them, uh, clarity in the roles in the project, who has to do what, and what we had earlier in our conversation today timely ask for the resources, which is uh um you cannot assume that in uh that in the procurement department people are always available. So when you plan for a project, have the people uh involved early and um ask for the resources and find out that there may be a conflict that needs to be solved, not uh last minute, but planning forward, right? So that that without this, you will never have a good um procurement um contribution in any other projects.

SPEAKER_00 48:37

Yeah. I mean, I think that is very related to what we've talked at the very beginning, how to how to get the buy-in. So let's talk about that, especially for this kind of model. What did you do to gain the buy-in for that model and also what helped to make it stick? So that it is an established approach.

SPEAKER_01 49:02

So um I think the failure in the past or the failures in the past in those projects where we run ran into problems and um yeah, the internal unrest that we had here that helped pretty much in getting people um alarmed enough when something went wrong, lessons learned, what could be done better, and not only do this on the individual lessons learned um workshop, but really getting that or driving that into a system and process that helps avoiding those uh those traps that people regularly run into. And then this is integrated into the budgeting process. So when people start to ask for money for projects on an annual basis, um, this is also part of it. They have the checklists in place that we provided, so that it's not something that they have to remember based on the training they had one and a half years ago. It is all it's really easily accessible. We have a not in procurement, but um in the function that uh that is responsible for setting up the process. We have people that uh work as uh consultants, so you can reach out to them if you're not sure what to do. So it's the there is no um it's it's not a not a big big step you need to take uh or big thing you need to find out. You just can call someone, which is always more helpful than uh work to a 225 pages manual, which nobody really likes to do. And and I think all this together helped in um uh yeah, getting the buy-in and making the making the system work.

unknown 51:06

Yeah.

SPEAKER_00 51:07

So overall it's more like a 360 approach to have the governance, the trainings, the documents, templates, but also being available for the individual approach and to consult in in the way that it's needed at the moment. Yeah, and so what is the least the least effort for the people working with you? Yeah. And it okay, transitioning from that from that, I think um maybe it relates quite a bit, but how do you think what is the most effective way to get all your relevant stakeholders around the table, especially for those complex or cross-functional projects?

SPEAKER_01 51:55

I think the the the easiest way for us, and again, this uh project management um effort or initiative really helped, is that we don't have to do it, but that we will that someone does it for us, and that that is the um project manager of the individual CapEx project, talking about CapEx project. He's he sets up, he knows that he needs to have a um clear project order which uh needs to be in place, clearly defined, um, that he has to spend thought on which functions um do I need, and then uh properly start the project with a kickoff meeting, bringing everyone on the table to use your picture, bringing the um people together, and depending on the size and order of magnitude and euro-wise of the project, and really bringing them together in a kickoff, um, explaining to them what the project is about, what what's the expectation, that people know one another, that you know who is your counterpart, who who can I reach out to, and then have a kind of meeting governance or cadence that is set up in a way that uh relevant people come together at the relevant times and place. So in former times we would not have high frequency of meetings. Now we typically have maybe by um uh two two weeks, two meetings a week, short meetings, stand-up meetings, half an hour where people will come together to avoid that any information is not shared so that everyone is at the same time. So this kind of collaboration um that cannot be replaced by any system or or tool that really helped in um yeah uh getting getting procurement rightfully and and properly involved into the into the uh project world.

SPEAKER_00 54:06

Yeah, I think what you've said is uh quite interesting because what I experience uh from time to time also in social media is like okay, this meeting could have been an email. Um, but it it sounded like that you do meetings, you do free do meetings frequently to ensure that no information is lost, but still have a purpose in the meetings, yeah, like with an agenda and being agile if there's no news here, then you can more easily uh discard the meeting. Uh and it's better to have then the free time rather than having lost some information throughout the process. And also, what do you think about the topic of clear responsibilities? Because I think that is also, especially in those cross-functional bigger teams, it's quite important to ensure that everyone knows who's responsible for what so that they also see the need, why they should participate in the project and also in the meetings, of course, right?

SPEAKER_01 55:12

Absolutely. And this should be part of the project charter, that everyone knows what his ex uh what the expectation is, what what his role and clear responsibility is, and at the same time that um each individual feels empowered enough to really um work along his responsibility and not not being overruled by any other function is always a little bit of a uh a fight because someone might not uh feel comfortable in having work done by someone else, uh, but clarity can easily be perceived by um by clear roads. And and you're right, so there are a lot of meetings that may be unnecessary, but I'm not talking about big meetings that people necessarily come together in person that cannot be uh done here um because we are right over Germany, but um at least uh short meeting, as I said, it can be discarded, can be shorter, and for sure we um to make this clear, we need a sound base, uh information base for the um progress of the um of the project, which we played a significant role again, and I think that really served uh our our reputation as a function that can think beyond their own area of responsibility by setting up a easy, more or less easy tool, depending on the size of the project, that is the single source of truth and that the key players work in, that is procurement controlling and the technical department um managing the project, and then providing information through this tool to the project leadership so that they have one single source of truths, an aligned single source of truths. Are we in time? Are we in budget? What about the quality? And those stand-up meetings, they are necessary to give people the opportunity to talk about what's what may be wrong in the system. So there might be an information that we don't understand. We don't want an email to be sent to the colleague. Why did you assume that we only need two days for an RFP of this size? Um you have in the time um in the schedule for the project, we need 12 weeks for that. So please adjust that. You don't want to have this conversation over email, right? You can quickly do that and say, Oh, that was my mistake. Um, I I will correct it. Or and you said, Well, you misunderstood that. But it's you can much better explain that in person if you talk um and not not send an email. Um and for sure you need to define the participants um correctly. There must not be 12 people in the stand-up meeting. Um, this should then be done with an average size. But yeah, I agree on the both.

SPEAKER_00 58:22

So for now we talked about more about the internal perspective. So uh let's switch that. Um, so what challenges have you come across in terms of managing contractors across multiple sites, and how did you overcome those?

SPEAKER_01 58:41

Um so the the contractor at multiple side uh it's it's not so much a issue for us. Um we the the management part of that for us is uh more or less uh evaluating the supplier performance that we that we see, but the information we get from the responsible uh people at the side um sometimes it's a little bit uh a challenge because the transparency um is only there when when we get the information so when people really work with the system. Um but the multi-size uh multi-site um topic is not so much um a big topic for us at K ⁇ S, I have to admit.

SPEAKER_00 59:32

Okay. So you talked about performance management. So how does a good performance management look like in your view, and where do you see room for improvement?

SPEAKER_01 59:47

Yeah, so um I think that a good performance contractor performance uh management starts very early, so before the contractor even starts. So you have to pick the right contractor. So you have to have in place clear pre-qualification standards, you have to have a clear um scope definition, um uh bit evaluation criteria that uh may or may not be transparent to the uh contractor. But I think at least it's fair to understand that uh the contractor would like to know based on which criteria he he is evaluated, and then um have a good monitoring um along KPIs that are predefined and that are shared with the contractor to um to really have a basis, uh, objective basis to talk about uh what whenever there are topics coming up or not. And what I also like is the fear at risk model, so that uh part of the remuneration for the for the contractor is really based on more or less soft criteria. Um, that uh is not always achievable because um the contractors may not want to be uh subjected to our subjective perspective. But um, even if it's not soft criteria, you may want to hold the contractor responsible for important milestones and uh ask for his risk appetite to put a part of his remuneration at risk. Um, so that if he fails to meet a certain milestone, he knows that he earns less money. And um, in the evaluation of the bits, you already see how comfortable a contractor feels about taking that risk, which may be unfair or not, but you have a I think a good point in the discussions prior to the award of the contract, uh, when he doesn't feel comfortable in taking on any responsibility or risk or skin in the game, as you say.

SPEAKER_02 1:02:07

Yeah.

SPEAKER_01 1:02:08

Absolutely. Uh and based on if you set up this properly, then the management is easier than um not having that, just having a standard um specification or scope of work set out that is then uh worked along by the by the contractor. And whenever topics came up, you cannot really point at a specific thing that you agreed upon. I think you may say, well, you're you're too slow or you you're not efficient or whatever. So that this needs to be set up with clear and aligned uh KPIs. Then you have then the management itself is not the biggest topic. You still have to have people doing it, but without that, you can have tons of people, but you will never really come into a good situation when talking to the company.

SPEAKER_00 1:03:07

So that brings us back to sorrow preparation, right? Um yeah, yeah, you mentioned KPIs, which is to be fair, quite a big topic, of course, but we try to keep it short. So, how do you approach defining KPIs for procurement? And what makes a performance indicator actually useful in your view?

SPEAKER_01 1:03:33

So um this is really a big topic. Um so maybe one uh comment on the on the contractor management. So a typical KPI would there be um the uh the efficiency that you can measure, or the the planned curve of uh earned value along the contract so that that you really have something in place saying, well, you should have made progress by this, um, and you are already you're only here or you you're already better, you can also incentivize him. But I think your KPI question um addresses more or less the procurement-specific KPIs, which is an even bigger topic. Um, so I think KPI, before defining a KPI, we will always have to ask ourselves what what we want to drive with it, what do you want to control? Um, there are some nice KPIs that are more or less informative. You want to know how many suppliers you have, or how many suppliers does uh does a category manager manage? That's all nice, but you don't really control or steer anything with it. Um so the question is then the typical KPI like uh would be savings. Um, is that something that you would uh like to have in place? My general comment may be a little bit unpopular, uh especially for CFOs, but uh you really have to look in into the company whether or not it makes sense to define that, because it's always a question of baselining. So, what is the baseline for savings? Does someone does someone really expect um savings to be on a five-year plan 5% per year? So every year 5% less in a world where we usually uh know every every company is ask uh looking for growth. And um, so I think it's it's not really realistic. You can use it as an ambition, but um I'm not really sure whether savings, and then I stopped talking about savings, uh, whether savings are always uh measured also in a negative way, or whether only positive savings are accounted and then. If you do this, then what's the use, right? So that's not that does not really make sense. And this is one one of the reasons why we don't use savings as a primary um steering KPI. So what helps um what helps the uh the procurement department to uh to focus on the right things? And one of my um favorite topics here is strategic coverage. So can I demonstrate that um 100% of my or 80% of whatever you want to uh have out there of my spend volume is strategically covered? Now the question is then what are the and uh I I'm sure you have you would have a lot of ideas because you're a professional consultant. So you can define what is the strategy, what are the quality, what what quality does it uh need to have to be really counted as strategically covered. That's all fine, but I know because we do this, you can have a measurement on that and you can incentivize people on that. And if you really put this out, um then you I think you have a very strong KPI. At least when you define that a strategy is not a piece of paper that someone really thinks is a clever idea, and then he he puts it into the drawer and then it's gone. Yeah. Really involving the stakeholders and having a clear picture, demonstrating that um this strategy is providing benefit to the company. Whether or not the strategy makes sense is surely um something that has to be evaluated by the managers, and those strategies should that's uh uh textbook knowledge follow the company strategy. So this is, I think strategic coverage is something that I rarely saw when I saw KPIs, but I think that this is really something that needs to be put a lot of stress on. Um you can also look into the strategies so you have the strategies for the right categories in place. You can have a risk profile for your categories. You probably want to have all the risk categories strategically cut so on. So and that's something I think it's easy to set it up. Um, you have the information in in your system, most of it. You have to add a little bit um individual information to it, but that can be done in uh in any company, I think. And I think that this really makes sense.

SPEAKER_00 1:08:56

Yeah, I absolutely agree. And if I try to sum it up the the bottom line of the of the question in terms of how to how to approach that. Um you said like you can track a lot of things, but uh that that not necessarily helps you because it's just informative. But really looking for what is supporting or helping you to steer the function to achieve the targets set by the company or for the department itself, right? So that that that should be the overarching governance to to that to that approach, and I think that's really valuable and makes totally sense to me. Yeah. Niels, thank you for sharing all the insights. Uh to wrap things up, I have five rapid-fire questions to you. So you said in the very beginning you're doing procurement now for 25 years. How did you originally get into the procurement function?

SPEAKER_01 1:10:04

Yeah, so I um by by education, I have um uh economic grade and um I studied law in Germany, and so I wanted to combine that after finishing my legal education. I went to K plus S. So that's really my first and so far last job uh that I had. But I started as a legal guy, as a legal counsel, and um in this role I was a consultant to procurement, so that was the first connection. And um, as I did not want to do consultancy for all my life from a legal uh part, uh, when the opportunity came up, I was happy to grab it and to move to procurement. So that's the story behind it, and I never regretted it.

SPEAKER_00 1:10:58

Do you have any advice to anyone who wants to have a successful career in procurement?

SPEAKER_01 1:11:05

Yes. Um, do not uh take the way I did, um because there was a little bit of uh lucky circumstances in play for sure. I think um try to see as much outside procurement before you move there. Um, really see where the focus of procurement activities is. So, for example, our minds here in Germany or in Canada, uh try to find an opportunity to go there to understand what drives them, what's what are the things that that are the most important things to them because that gives you a little a lot more credibility than a guy um that never saw anything there. And in best case, really uh try to do the basic work and not um start as a high-flying manager because that may uh then you may lack uh really the the understanding of um of what's important. I was in the lucky situation that I really could do it step by step and uh for a long time. But if you really want to be successful in procurement, maybe in a in a shorter way, I would absolutely recommend to look into other functions. Preferably operations and controlling, I think.

SPEAKER_00 1:12:43

Okay. Who should be our next podcast guest and why?

SPEAKER_01 1:12:48

Well, uh actually I I have to admit I I did not ask the guy whether I I I can tell you, so I have to uh maybe um get back to you to to this one. But I I promise that I I have a candidate.

SPEAKER_00 1:13:04

Okay. Um so you can now directly address our audience. So is there anything they might help you with?

SPEAKER_01 1:13:16

Yeah, so um I I like to be a little bit careful because I don't want to invite everyone to come with clever ideas for me. But um what I really would uh like to uh to know if there is someone or if there is a company really having a clever idea uh on how to better manage um contractors at the site. So that is a maybe a um operative uh operational topic to have something that helps uh in better tracking who's on the site, uh, who has the right qualification for the typical um stuff around um site access, uh HSQ stuff, and so on. If anyone has a good experience with how to how to tackle this, um then I'm happy to uh to hear about that. And yeah, so then then anyone is invited to reach out to me on LinkedIn. Um I can be found very easily.

SPEAKER_00 1:14:28

Okay. Therefore, you just answered my last question. How the people can get in touch with you. So it's LinkedIn. Um listen to that audience. Yeah, and uh yeah, Niels, to you a very big thank you for sharing all those insights, for taking your time. And yeah, I think it was a or to me it was a pleasure talking to you.

SPEAKER_01 1:14:51

Thanks, Same Vir.

SPEAKER_00 1:14:53

And uh thank you for having me. Thank you for joining us on the Procurement Initiative Leaders podcast. I really hope you enjoyed it. Looking for more procurement insights, tips, and developments from leading procurement professionals? Join our procurement initiative community on LinkedIn. Just open LinkedIn and search for the Procurement Initiative. And be sure to hit that subscribe button to never miss an episode.