Ep. 8 - The Procurement Leader's Dilemma: Short-Term Wins vs. Long-Term Value - with Thomas Janvier

Unlock the secrets to achieving immediate gains and sustainable value in procurement.

In this episode, our host Martina Buchhauser sits down with Thomas Janvier, founder of Janvier Advisory, to delve into the intricate balancing act between short-term financial gains and long-term value creation in procurement. Thomas, a former CPO, shares his mission to drive sustainable value while meeting immediate business needs, and emphasises the critical mindset shift required to integrate sustainability into procurement practices.


You'll learn:

1. Strategies for balancing short-term financial goals with long-term value creation in procurement
2. The necessity of transforming to circular value chains and its impact on procurement
3. The critical role of aligning procurement strategies with overall company purpose and goals
4. Effective cross-functional collaboration structures for enhanced procurement outcomes
5. Insights on driving sustainable procurement practices and embedding ESG criteria in supply chain management

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Get in touch with Thomas Janvier on LinkedIn: https://www.linkedin.com/in/thomasjanvier/?originalSubdomain=de

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About the host Martina Buchhauser:
Martina Buchhauser is a global leader with extensive knowledge of the automotive industry, and its shift towards sustainable technologies and low-carbon business practices. Her leadership journey includes executive roles in Global Procurement and Supply Chain Networks at General Motors, MAN, BMW, and Volvo Cars, where she served as Chief Procurement Officer and on the management board. She is a senior advisor at H&Z Management Consulting and a non-executive director on several company boards. Martina enjoys hiking, golfing, and skiing, and values time with her family and friends from around the world. She is passionate about leadership and actively engaged in developing and promoting talent.

Get in touch with Martina Buchhauser on LinkedIn: https://www.linkedin.com/in/martina-buchhauser/ 

Transcript

SPEAKER_00 0:02

You cannot sacrifice the short-term savings. It's an expectation. It's almost um hygiene, business hygiene at this stage. But as a procurement executive, you need to continuously advocate for the long-term objectives and for resources being allocated to those long-term objectives. To some degree, it's something you can steer by yourself. And sometimes you must communicate about it. Sometimes maybe not draw too much spotlight on the fact that you are maybe going a little bit above and beyond on allocating resources to the long term. But very often you realize when the crisis comes, when the new regulation takes effect, right? People will applaud you for that forward thinking.

SPEAKER_01 0:50

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, Martina Buchhauser, founder of the Procurement Initiative Think Tank and senior advisor at HZ, Europe's leading management consultancy. Join me as I 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, resilient 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, Martina Buchhauser. All right, welcome Thomas Chanvier to our The Procurement Initiative podcast. So you've basically been through a whole process of what a CPO does from probably when you started, you know, finding a few things that can be improved. And you will talk about this. So basically going through a whole cycle, I guess, also with it could have been some change in ownership and setting up the strategy, finding issues and external disruption, as we've seen in the case of COVID. And then from there onwards, a lot of more issues from a geopolitical perspective. So you will be able to tell us about a whole cycle of what's happening in procurement with all the issues one can think of, and that's going to be very exciting to hear about. You have then changed into running your own business. So now I would say you're the kind of the CEO and founder of Champvillet Advisory, and we also want to hear about that. But without any further ado, uh, I'd actually like to go into the first question. And remember, we have a huge community now, we have um very exciting news all the time, and we have these podcasts where we try to show a bit how you can kind of survive in this world, and how can you also make sure we're doing the right things for the future of procurement? And, you know, kind of stepping up a bit out of these short-term thinking, short-term cycles, a bit away from the shareholder, but more into the stakeholder proposition, um, you know, to make things happen and engage everyone in the process. Thomas, the stage is yours. Welcome again. And maybe you can explain a bit in this first round that we're having here. How what did you do? How did you go about it when you first started uh in the company developing and selling energy equipment?

SPEAKER_00 4:17

Yeah. Thank you, Martina. Thanks for this opportunity to contribute to the procurement initiative. Um, so starting as a CPO in the uh energy system and solution industry, it was back in 2017. Uh back then, I was actually leading procurement for a business unit within a large group, a much larger group. Uh, so I could rely on a network of peers within the group, which was good. Uh, it helped accelerate the learning curve. And 2017, from a macroeconomic and geopolitical perspective, was actually an okay year still. It wasn't riddled with crisis like what we've seen since, uh, which is great because actually, in my first year, uh, our parent company decided to sell our business unit and turn it into an independent company uh under private equity. So actually, uh, I had barely learned the ropes of the CPO role that I had to jump directly into a confidential due diligence process, understanding exactly what was going to be the transition to becoming an independent company, understanding the dependencies to the larger group, and uh severing those dependencies, right, as soon as possible, which meant essentially uh building a team from the ground up on the indirect side. Indirect procurement used to be a shared service. It also meant turning our digital landscape into our own digital landscape, choosing all of the tools that you want to work in your procure-to-pay process and in all of the processes around it, whether it is supplier quality, accounts payable, um, even business intelligence, all of that we had to make the decisions really fast and implement in record time those new tools. So imagine the amount of transformation. Imagine the amount of transformation in this first year, right?

SPEAKER_01 6:24

And probably high expectations, you know, from uh from a private equity.

SPEAKER_00 6:29

Very high expectations, uh, but actually they take that transformation for granted. What they're interested in from day one is value creation. So all of a sudden, uh you are a procurement professional, but what you need to become is an entrepreneur, you need to identify value drivers within your function, how it fits within the broader context of your company that has just significantly changed its uh operating conditions, and you need to double down on them. Uh quite obviously, uh the very first thing that they look at is savings. Savings, can you generate them? How fast can you generate them? We put in place on a spend of 1 billion euros approximately, a savings plan uh over several years, which uh was intended to deliver approximately 100 plus million euros of savings. And we actually went about executing it. And uh, you realize very fast that it's not uh a job you can do by yourself as a procurement team. You need to partner with other uh functions. And I think we'll talk about that again during this podcast. Partnership, especially with RD, is key to delivering savings, in my opinion.

SPEAKER_01 7:42

Well, that's a bit that that brings me a bit to those success factors because I mean, it's not that, all right, there's a private equity coming in with these high expectations of value creation. But I mean, within this transformation, you need to make sure that you bring all the people, all the stakeholders on board, right? And that is in a transformation, usually takes a bit longer. So it's not usually happening like this just because there is an investor now or a new investor that, you know, everyone is actually turning and changing more into this value creation proposition. So, how did you do that? How did you convince the stakeholders within the company, basically engineering primarily, but also the operations, um, and actually your own team to be more into this value creation thinking and changing quickly? Because there's not so much choice, right? How did you do that?

SPEAKER_00 8:44

It's a lot of communication. First and foremost, making sure that we all have the same context information, right? What will it take for the company as a whole to be successful? And present the initiatives where you are accountable in procurement, not as procurement initiatives, but as company initiatives, uh, which are spearheaded by the procurement function, right? So you are not doing it for yourself, you are doing it for the company. And in that exercise, actually, you will also need to listen because sometimes you come at a challenge with your procurement lenses on, and through the dialogue with your peers in other functions, you realize that you are going at it the wrong way. So it can happen that you realize that you wanted very much to, I don't know, change a supplier because you found this great other guy that has uh a much better price. You discuss with your quality department and with your engineering department, and they tell you validation will take three years, and you realize it's no longer going to fit the expectation timeline of your stakeholders, right? Of your of your private equity owner. They want faster results. So you need to rethink, right? And maybe you do need to go to the supplier and obtain a cost reduction in a different manner. And that's when you start to embrace concepts like total cost of ownership. And this is where the value proposition broadens. That's what happens in the dialogue with stakeholders. Your value proposition broadens to integrate more than traditional savings.

SPEAKER_01 10:22

But then there's still, if I if I could pause you there, um, there are two things. So one between the short-term savings thinking and the value creation for more, you know, a long-term view of things, is that is that possible? Was that possible in that moment? Uh or was it in the end, as we unfortunately see in in many cases, uh, compromising towards short-term savings?

SPEAKER_00 10:55

It's an end equation. You cannot sacrifice the short-term savings. It's an expectation, it's almost um hygiene, business hygiene at this stage, right? Uh, but as a procurement uh executive, you need to continuously advocate for the long-term objectives and for resources being allocated to those long-term objectives, right? To some degree, it's something you can steer by yourself. And sometimes you must communicate about it, sometimes maybe not draw too much spotlight on the fact that you are maybe going a little bit above and beyond and allocating resources to the long term. But very often you realize when the crisis comes, when the new regulation uh takes effect, right? Um, people will applaud you for that forward thinking, right? In our company, for example, we went through COVID with almost no interruption for our end customers and for our plants. And this was the result of years of understanding the business continuity plans of our suppliers, of setting up dual sourcing where it was commercially viable, right? So those activities take time, need to continuously happen, need to be um present in your allocation of the resources, and they will suddenly you know uh surface in your discussions with your board when the time is right.

SPEAKER_01 12:26

So um, and you and I had the pleasure uh a couple of weeks ago to present those thoughts to uh to a wider audience, even um uh in London, um, which was fun. But and I it's completely my belief that as a CPO you have to you have to do a few things to secure the future, and you have to be smart about it. Because if you go by all these demands from your sometimes very short-term thinking CFO or maybe even CEO, then you know you would only always go opportunistically into directions where you find some savings, which in turn could actually uh damage the relationship with your suppliers, um, could damage the you know the things you you need, you know is coming for making sure that you have a long-term business sustainability. And that includes sustainability from a from a more environmental human rights perspective, but also from a pure business uh sustainability and and keeping up with the things that will come, right? And and the thing, and so we advocated for that. I like this that you actually uh say that here too, because that's something uh where the audience also, some people maybe can learn a bit that of course you have to have this hygiene factor and you have to have, you have to make room. So you need savings and cost reduction, maybe call it rather cost reduction for you know, let's say innovation, for transformation, for innovation, you need to make that room, and it's it's purely, and it's it's a lot falls into your responsibility as a procurement function. Of course, the others need to be in the same boat, the other functions like engineering, like operations. But in the end, you also need to secure that beyond, as you say, beyond savings, there's more than that. There's a business continuity and a relationship continuity. Uh I really like that aspect, Thomas.

SPEAKER_00 14:43

Yeah. Yeah, and I think the but the post checks of the procurement initiative um also show that it's about savings first, but it's not only about that, right? It's also about sustainability in the sense of ESG. It's about resilience, meaning supply chain continuity, right? Yeah, um, and it's about several other things. There are many dimensions to the role of a procurement professional nowadays. It's simply just that way.

SPEAKER_01 15:14

Right, absolutely. And we we really want to make this clear, right? Uh, we're fighting for that. Very good. Um, other uh success factors you can think of um in basically transforming the uh the procurement, and not only procurement, basically transforming the company. And and I also like what you said earlier, wanted to highlight that again also for the audience. Um, is this notion around well, there's not just a procurement goal or strategy that you want to fulfill, right? You you want to you want to start with a company purpose, with what is it the company wants to achieve, and then look into how do we as a procurement function fit into this? How can we contribute? And that is very important. Uh, I really also liked the way you described it uh as you did in your company.

SPEAKER_00 16:14

Yeah. Um, so you asked about the success factors. I would say we already mentioned cross-functional work, um, but that cross-functional work must have a solid structure. It's not just a buzzword. In our company, we put in place what we call category councils. So for us, a category was just uh you know a set of uh purchased goods or services of the same type, right? Some people call it a commodity, we called it a category. And for each category, we would bring in a so-called council, the strategic buyer, the operational buyer, the persons in logistics who was in charge of placing the purchase orders, etc., and the design owner uh who actually put together the specification. Um, and we uh told them to continuously uh shed light on the 360-degree um uh sort of status of that category and to uh decide together on the short-term goal actions and the long-term strategy for that category. And obviously, the more strategic the category was for our product portfolio or for our revenue generation, the more we would elevate uh the key decisions to senior executives. Yeah, and for that purpose, we had something at executive level which mirrored the category councils. It was across the whole direct spend. We called it our sourcing and supply chain board. And there you would find the chief trans, uh the chief technology officer, uh, the plant managers, myself, um, the people, the vice president in charge of product management, in charge of quality. So maybe seven or eight key internal stakeholders at executive levels who would take a close look at the decisions proposed by sourcing and verify that it fits with the overall strategy that we had for our product, for our other goals, which are all connected.

SPEAKER_01 18:22

I like that because it can go, if you only go by category, it can go very narrow. And um, people want to do the right things and they do the right things within their narrow piece. But if you look at it from a bit of a bigger picture, um, you know, you you could totally miss out on, let's say, how you want to uh build your supply chain from a global perspective with what suppliers, because that is a bit more than just going by the narrow category I found in my responsibilities. Um I think that's really important. And it also shows that you basically had a structure in place that people could follow and could go to and would actually go to and meet their peers and discuss with their peers. And but I think it's important to have that kind of a structure in place, otherwise it's hard uh for everyone, you know, as you say, as you said, throughout the hierarchies, um, you know, it would be hard for people to participate in something that isn't role-modeled uh in all areas and in all hierarchies, right? On all levels, basically.

SPEAKER_00 19:40

Exactly. At the end of the day, to make the right decision, you need to have the right context. And the structure we had put in place ensured that the people making the decision had the context they needed so that the decision would be the best possible. And then the second aspect I would say is the timing of a decision. Sometimes you look at a a product that was designed, and it's already, you know, there's been a lot of investment in RD hours, and you're already looking maybe at the print for the specification, and you realize this could have been designed differently and it would have cost half, right? And and that's where that's where you regret uh not having been involved earlier. And that's something that we paid special attention to. The procurement team being involved very early into the new product introduction and product development process. And sometimes so early that my team originally said, but why are we there? Um, we have nothing to discuss or to and I would tell them, Yes, you do. You very much do. You participate in setting the targets for this new product. Uh what they decide now will impact your ability to source the part from one or ten different potential providers. And this would be key in meeting the targets that they will give us down the road.

SPEAKER_01 21:06

And and maybe even also in a cost frame that you can realize later on, right?

SPEAKER_00 21:12

Correct.

SPEAKER_01 21:12

Uh, and also from a quality, but I I've been there. It it sounds so familiar when you when you say that. It's like, but and it's a competence shift too, a little bit in the in the comp in your team almost, right? Where you suddenly want people to stop the firefighting or at least go from, you know, all the firefighting, which people have learned well and done well, right? Don't get me wrong. But you want to make sure that you are part of this early process so that you don't have to do the firefighting in the end in the in the series production or anymore. Um but but it's different philosophies, it's different competencies, maybe even needed from the team. Uh, you know, going there and saying, well, wait a minute, I want to be part of this. What are you doing? Design and engineering, you know, what's the cost frame? What you know, how many suppliers do we have? It makes a big difference to even, you know, sometimes avoid the problems that you might see later on if you don't go for you know quality issues in the early phase.

SPEAKER_00 22:25

So I and there's probably a lot of the procurement professionals listening to us thinking that sounds all great, but where do I find the time to get involved in those early uh product development decisions, etc.? I'm busy firefighting, I'm busy 12 hours a day. And actually, I could if I didn't have a family to go home to, I would be busy 24 hours a day. And this is where, as a leader of a procurement team, you'd really need to work on your team's efficiency and the cost of your team itself, right? And making sure that there you do your homework of, for example, introducing digitization. I think we wanted to talk about that. Uh, to me, it's uh essential that we push the digitization agenda. It's not a goal in itself, it's a means to an end, and the end is to spend more time on strategic activities, for example, decision making.

SPEAKER_01 23:26

Right. I mean, it's this it's this massive amount that you spend on firefighting and the massive resources you spent, you know, in in the firefighting. And as as leaders, it's it's important to come down from the firefighting because it's not a sustainable situation either, right? As we've seen in in many instances. Not sustainable to always run after things, always firefight, but push the work and the ideas and the facts into this early phase. But it's it's uh it's a leadership issue and it's a leadership's task, I would say, uh, to manage that. And also to make sure, as you mentioned before, to put the structures in place that no one is wondering in engineering, oh, why are they asking these questions now? Well, they ask these questions because later on they don't want to firefight from a cost, from a quality, from a supplier perspective, right?

SPEAKER_00 24:28

Exactly.

SPEAKER_01 24:29

So uh that's also something that I've seen in every job I've started, is that the firefighting was very was big and uh you know, and we didn't even talk about COVID at that time, but but it's important to make room for the the unexpected, basically, which is going to happen anyway, right?

SPEAKER_00 24:51

Yeah, absolutely.

SPEAKER_01 24:53

So, I mean, you've you've you've seemed to to have changed a lot in the company. And now, hindsight, what what would you do differently, even even more having a focus on, you know, even better? What would that be?

SPEAKER_00 25:11

Well, there's a fine balance between consultation with other stakeholders and giving them the impression that they can veto everything you do, or that their KPIs are more important than your KPIs, right? And so you need to draw a clear line and say that yes, you will listen to their input, but it remains your exclusive uh responsibility, your exclusive decision. And at the end of the day, you will be accountable for it, right? And if they don't like it down the road, they will replace you. Uh but if you if you give the impression uh that the decision is consensual and uh is done by by consensus with everybody, uh eventually you will lose speed or clarity, you will confuse your teams, your suppliers, and that cannot happen.

SPEAKER_01 26:11

That's a really good point. I mean, you can you can make sure you know the requirements, you can debate even requirements, right? Um, and you can listen to a lot of people, but in the end, there has to be clarity, as you say. And um, and maybe in some cases you have a bit of a broader view over things in asking a lot of functions in the company, and then a decision needs to be taken. But it's also what I found is yeah, you will take a decision, and of course it's about a lot of money, but things will happen anyway down the road. So you will have to make adjustments. It's not that you sit on the same exact situation for decades, right? Um, and if you, I think if you found the right supply partner, it's no problem that changes are happening as long as you work through these changes and tough times and even good times together. Isn't that so?

SPEAKER_00 27:16

Yeah, it was very true. Very true. And it's a constantly changing landscape of requirements as well, right? At the moment, uh, I'm reading, for example, the European sustainability reporting standards down to the very last word, because they're very broad and they represent really uh a transformation in terms of what's expected from companies on ESG. Um, and for that as well, it's a transformation that you cannot do alone. You need to do it with your suppliers, as you said. You need to embark them on that journey, and you'll find that some have the same maturity level as you, maybe better, and you can learn from those, and you'll find that some have no idea what you're talking about at the beginning, even the lexicon is um is foreign to them, and that's when you need to teach, right? And uh explain the motives and why it's becoming important.

SPEAKER_01 28:20

That that's something I would like to um cover with you in in our podcast today, because you're known for putting sustainability into the decision-making process, integrating sustainability. And now, if we talk sustainability in a sense of environmental protection, human rights protection, you name it, diversity, even you know. Um you you've occurred, it has occurred to me that you are a leader who put those aspects into the sourcing process, into basically an integrated piece of the procurement process, um, which I think it should be. It cannot be something that is handled on the side. And over time, don't we all want to go towards kind of circular value chains and no longer, you know, feed and support this process of waste, which is what we do throughout the whole world, right? But but be more conscious about, you know, how do we become more circular? How do we become more independent? How can we use the material that is already out there? So let's talk a bit about that, because that's that's interesting. You've you've been um pushing this in the company, and um it kind of needs a new mindset, right? It's it's it's hard, I think, already to you know make sure you work cross-functionally for the teams. Um, but now we're adding something that is even more collaborative, where you have to be more collaborative, where you probably have to build new relationships, new partnerships to make it happen. And kind of the world needs that, right? Talking about CO2 and all the efforts being taken. What's your take, Thomas? Is the the business model is that future proof? How do you go about this in a company?

SPEAKER_00 30:33

It will vary from company to company. Um but you're you you pick the right word. In my opinion, it's all about future-proofing your business, um, your business relationships with your suppliers and with your other stakeholders. Um ESG, whether it's circularity or reducing CO2 footprint uh or everything around governance, is becoming an absolute must, right? It's becoming uh more and more visible. It becomes a driver for investments, for access to um to uh cat pegs, uh, for access to talented employees as well, right? The the upcoming generation wants to work for companies that demonstrate sustainable practices. So it's it's a must-do. It's no longer a nice to have. If it's a must-do, then you cannot treat it as a side hustle. You need to embed it into how you work. It's it has to become not an additional work stream, it has to become the way you do your main value generation. So it means scrutinizing every single process you have, whether it's your onboarding process for your suppliers, do you do the right ESG checks? Do you do your due diligence on those companies? Uh, do they sign a code of conduct? And is your code of conduct uh bulletproof, right? Um when you go and visit them, what do you verify um when you uh when you ask them to uh bid for your business, right? Do you have ESG criteria with thresholds below which they just cannot compete and cannot win the deal? So and then obviously during during the relationship, you need to continuously measure uh a few KPIs on ESG, the ones that are material to you and to your suppliers, right? Makes no sense to, I don't know, measure water usage if you're not using water, right? But uh so you need to pick those sustainability matters uh which are material and significant, and on those you can't compromise anymore. They have to be at the same level as the delivery performance, the quality of the product, and uh the um, let's say the commercial viability of the product.

SPEAKER_01 33:06

Absolutely. And and only then uh are you putting it on par with other criteria, right? Right.

SPEAKER_00 33:14

Like and you put it in the contract in your contract, right? Why why would you have a contract that you work on with your supplier that covers their limitation of liability, the guarantees that they give you, the price, uh the lead time, and not say anything about sustainability and about CO2 footprint that simply sends a message. If it's missing, then it's not that important after all, right? I'm not in contractual breach if I do whatever I want on ESG. No, you are in contractual breach if you do a misstep on ESG.

SPEAKER_01 33:48

Yeah. But wouldn't you say that there is a lot of there's a big educational aspect? Um, I think if you go into smaller companies, mid-sized smaller companies, there's often not so much the awareness and maybe not even the resources to take care of things like that, right? Especially in the last so many years. How do you see that as your responsibility as a higher tier supplier?

SPEAKER_00 34:22

Yes. I'll tell you so, say you're the CEO of a company, right? And you're trying to understand what you should be focusing on. Who do you listen to? You listen to your stakeholders, you listen to your shareholders. And one thing is certain, you will listen to your customers. And if you're in procurement, from the perspective of your suppliers, you're the customer, right? So your voice is the voice of the customer for all of your suppliers. You tell them, they will listen.

SPEAKER_01 34:52

Right. Yeah, and and I think it's a bit even beyond the telling, it's a lot of explaining and educating, and why is that important and how do we measure this? What do we want exactly? I think that we spend a lot of time on just explaining what it means. Because if people don't understand, why would they ever jump on this train, right? So, and it's the same for suppliers as much as it is for your internal stakeholders, right? If people don't know why this is important now. And I have uh I have another colleague, or we have another colleague in the procurement initiative. She has gone through so much education within the company, uh, just to make sure what, because people couldn't even grasp in this whole uh disruption happening outside of you know what we can control, what it meant if something in the world happens, how this had an immediate impact on the supply chain, on the business, on the revenue, on the building, you know, of the products. And I think this was pretty wise because if you have the understanding, well, then people will look differently at things in the supplier selection process. And um, and yes, while this this means a lot of work, uh internally and externally, it it is worth it, I get, I think.

SPEAKER_00 36:26

It is. And you can there there's a way you can scale it so that uh the impact grows faster than uh the resources needed. For example, you can do webinars with your suppliers, and you can have one person who's maybe a lead professional on your team who's knowledgeable about it, who does one webinar for 1,000 suppliers, right? Or maybe three sessions at different times of the day so that you cover your global supply base. Um that's you know, that's low effort, high return. And for your internal stakeholders, you need to understand how they think, right? I mean, I remember several years ago sending to my CFO some subtle hints. Uh, by we used to share articles, news articles, which we thought were relevant between each other, uh, again, to provide context for better decision making. And I would regularly send him an article from Forbes or from Reuters, et cetera, about what sustainability should mean to a modern CFO, right? And and slowly the message you know finally uh bloomed into realization. And guess what? Uh a few years later, uh, he's the one who posted a job for a chief sustainability officer on his team, right? So it you can convince people either by being very direct and frontal or in a roundabout way, uh, at their pace, trying to put yourself in their shoes.

SPEAKER_01 37:48

Yeah, very subtle. Yeah, of course, because for many people it means um, oh, this is more cost, more this, more resources, more that, but which is not true in all cases. Of course. I mean, if you wanna, if you talk about green steel, whatever, yeah, yes, there is a lot of investment to be made. And and then I think you have to think about well, how do you make sure that you work differently, that suppliers don't fear that you know a year into the supply uh process you find another supplier who can do it for a few cents cheaper. Of course, that would not be fair. So there's a there's a lot of rethinking necessary.

SPEAKER_00 38:32

There's some rethinking, but also there's some uh some myths that need to be broken. Right. That sustainability is more expensive, for example, or that decarbonization uh costs money in the sense of costs more opaque, uh simply cannot be true, right? At the moment, decarbonized products enjoy a premium because there's more demand than there is supply. So it's a simple question of you know capitalist rules. Uh but the reality is that typically the energy footprint is less, the the material footprint is less, and for those reasons, the actual production costs are less. It's just that capital expenditure is needed, right? So investments are needed, and then they need to be depreciated. Um, but this is the same for a lot of savings initiatives. Very often you need to do a one-time CapEx investment in order to then enjoy a lower cost product.

SPEAKER_01 39:29

Absolutely. So it's it's seeing the bigger picture of what a compared smaller investment could actually give you. Or even if it's a high investment, then you have to think about how do I make sure that you know we we kind of share that investment or we give the the planning security for a supplier to meet.

SPEAKER_00 39:52

It becomes the planning security. You're exactly right. A supplier will be reticent or unwilling to do large CapEx investments if they think that you might just go away next year, right?

SPEAKER_01 40:05

Yeah, you do business like you did in the last 50 years.

SPEAKER_00 40:09

Right. And that's also something that we changed significantly in the during my tenure as CPO, uh, we did more long-term engagements than before. And of course, those were subject to performance criteria so that we could not get stuck with a poorly performing supplier, right? Uh, and they were subject to price boundaries. Uh, so it takes time. But once those relationships are established and contractually reinforced, you can really rely on them and you can do so much more.

SPEAKER_01 40:44

So I want to reinforce that point because I think it's also a good point for our audience. Is I sourced like a really big deal, multi-billion dollar deal. And um, then many people think, oh my god, you're in their hands now, you're in a trap, da-da-da. But it wasn't the case at all with neither of the two suppliers we sourced. Um, just the contrary. They knew they had the business. They they were the ones coming up with cost reduction ideas constantly. We we put this on a very high level. We met with their CEO on a regular basis. We talked about sustainability and how we can improve. Um, we talked about cost reduction and how we can improve. And I've never seen a more innovative uh you know supplier coming in with all these ideas, although you know the whole world thought, oh my god, now we're dependent. Yes, we are dependent. Of course, we're even dependent with you know seeds resource, because you're not gonna change in a in a very short period of time, never for any of the products, right? Unless you have an emergency situation. No one, no one would. So it's a bit this pseudo-competition discussion going on that I think is false.

SPEAKER_00 42:15

As you say. But anyway, I think so. Some of those principles, whether it's the sustainability principles or simply how do you do procurement, um that's what I want to take to a larger audience. Uh at the beginning of the session, you mentioned the fact that I left my role as CPO and I'm now basically starting off as an independent um professional freelancing in the field of sustainability and procurement. Uh, and the main reason for doing so is because I want to have a broader impact and uh help full industry sectors rather than just my company and its suppliers, right? This is okay.

SPEAKER_01 43:00

So that's a that's a huge change, right? I mean, personally, this is a big change. Um are you up and running already?

SPEAKER_00 43:11

Um, the summer will be slow. I have a lot of things on my plate on the personal side. We're moving, uh, we're yeah, uh, with everything that this entails. But from September onwards, yes, uh, I will be available uh for any interested client. Great. As long as the ambition is high. Yeah, the the objective is to really support meaningful transformation in the area of sustainable procurement and supply chain decarbonization.

SPEAKER_01 43:46

Yeah, and and you are in basically in different industries, right?

SPEAKER_00 43:52

Yes, absolutely. It's industry agnostic. Uh I'm happy to help. I a lot of what I've uh worked on and accumulated as experience can be applied in any industry.

SPEAKER_01 44:05

Yeah, I think so too. It's it actually helps uh because in some industries are pretty pretty much forward in the front of uh you know, let's say especially the sustainability thinking, the putting sustainability on par with other criteria. So um, so yeah, that that could be really good. Well, fingers crossed, wishing you best of luck in your with your new endeavor. And um, I'm gonna stop it, stop us here. Uh, it's been fantastic to have you, Thomas. Um, it's been some really good insights, I think, for our audience. Thank you very much. I really appreciate taking the time and um good luck again in your new position. And um see you next time. Thank you very much.

SPEAKER_00 44:56

Yeah, thank you, Martina, for the invitation and thanks for all the work you do to uh collect insights from all of us and make sure best practices are shared in our profession. I think that's really key to our common success.

SPEAKER_01 45:10

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 community. And be sure to hit that subscribe button to never miss another episode.