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Proactive Measures to Streamline Procurement
By David Hammerle, VP Procurement and Contracts, Bechtel Corporation
Procurement is undergoing substantial changes, with some industries affected differently than others. Here are some of the more notable trends that we have identified and are taking proactive measures to address in line with our emphasis on innovation at Bechtel:
• Digital transformation: The EPC supply chain has not seen significant changes in the last 25 years, but digital transformation and relying on data instead of paper will result in an enormous shift over the next several years in terms of increasing efficiency and reducing costs. At Bechtel, we have already implemented a “digital supply chain” which has paid dividends through improvements to our productivity, data analytics, digital records to include drawings and procedures, and giving us the ability to engage in direct digital interface with suppliers. The end result being a more satisfied customer.
• Innovation and technology: At Bechtel, we are taking pioneering steps in the innovation arena in order to ensure that we are bringing in new technologies and methodologies to lower costs and improve on quality such as the use of smart glasses, drones, and mobile solutions. 3D printing will certainly play a large role in our supply chain. And companies, no matter the industry, will need to continue to place greater reliance on suppliers to identify innovative approaches and seek out further cost reductions.
• Market volatility: Markets have been fairly stable over the last five years, but going forward, there are large uncertainties related to trade, regulations, and other factors. Having experts who can follow trends to manage this risk is essential. We are also updating our tools and skill sets to be more resilient to external changes to ensure that we will be in a stronger position to effectively navigate through market shifts or when other unforeseen events occur.
• Supply Chain Sustainability: Many companies, Bechtel included, are taking on the challenge of increasing their roles with respect to contributing to local economies, protecting the environment, and providing for the safety and health of workers. Chief Procurement Officers are advancing sustainability in their supply chain to have a positive impact on society. At Bechtel, we see this as investing within the communities in which we work. You can read more about our efforts in our just released sustainability report.
We need to depart from prior practices in order to forge ahead into this new environment and become even more innovative
2) What are the common business challenges Procurement sector face at this point in time? As a technology enthusiast, please opine your views on the steps organizations should take in combating those.
First, companies fully embracing a digital transformation can oftentimes create challenges in terms of maintaining a tight sense of integration with customers or suppliers who may not be as far along in terms of innovation in this space. Nevertheless, in the long-run, a complete digital transformation will inevitably result in vastly improved productivity as well as lead to the further reduction of costs. The goods we procure comprise a significant percentage of the total project costs, so driving down total costs and cycle times through undertaking digitization, lean and agile processes, collaborative supplier networks, data analytics, and other technology advancements are vital.
Second, in a large organization, undergoing significant work process and technology changes, organizational change management is essential. When a company such as ours has employees around the globe, suppliers located in more than 60 countries, and customers request that we integrate into their changing organizations, communication and up skilling of our colleagues is of paramount importance, and finding change champions is also imperative.
3) With technologies like Big Data, Cloud, Mobility and IoT put into use, the Procurement sector is through one of the most transformative periods in its history. What are your views on how these technologies can be timed to increase productivity and help companies reach their goals?
At Bechtel, mobility is enabling real-time data to be captured and fed into the procurement cycle to support more timely decisions. Previously, without mobility and cloud enablement, we used email, scanned reports, faxes and other non-data-centric work processes with the end result being that the impact of a critical issue would not be fully understood until much later. Now, we have the ability to move data around the globe in real time between Bechtel offices, and supplier and customer facilities, thereby allowing us to act on that information immediately.
The IoT holds the greatest promise for truly transforming the supply chain, and when used in conjunction with Big Data technology, has the potential to dramatically increase both the volume and accuracy of information. Instead of relying on human keypunching based on information obtained in phone calls, information will be relayed within the digital supply chain system between all the processes involved, such as manufacturing, transportation, customs, delivery, and installation.
4) What is your advice for budding technologists in the Procurement space? How do you see the evolution a few years from now with regard to disruptions and transformations within the Procurement arena?
In our industry, we will see more changes in the next few years than we have seen over the last 25 or more years. These seismic shifts will be driven by technology and the need to work in a leaner and more agile manner. It is no longer merely an option to adopt digitization and data management. Our customers will demand more data integration, competitors will adopt this automation, and regulators will expect that we have full access to data for vetting suppliers. We need to depart from prior practices in order to forge ahead into this new environment and become even more innovative. We need our supply chain colleagues to have or obtain the skills necessary to implement systems; mine, analyze and transfer data; and integrate systems, both upstream and downstream in our supply chain.