Editor’s Note: This week on CPO Rising, we’re publishing some “best of” 2016 articles as we reflect on the year and prepare for the new year ahead. We also have a research report and a webinar that are only available for a few more days. Enjoy!
Ardent Partners is pleased to welcome Jacob Gorm Larsen, Head of Digital Procurement at Maersk Group, as a keynote speaker at the upcoming CPO Rising 2016 Summit this March 29 & 30 in Boston. Jacob will present License to Source, based on his experiences at Maersk where he has been driving process changes and technology implementations over the past 12 years, culminating in the adoption of eSourcing and the execution of thousands of sourcing events each year.
The Chosen Path
Jacob joined Maersk in 2004 and has since climbed the ranks to his current role as head of Digital Procurement where he has the end-to-end responsibility for all digital procurement solutions operated out of Group Procurement including e-sourcing, e-contract, SRM/SIM, SpendViz, e-catalogues and BI solutions.
The Maersk Group is a multinational conglomerate based in Denmark that operates in roughly 130 countries, employing over 89,000 employees across the shipping, logistics, and oil and gas industries. In the latest calendar year (2015), it reported revenues of $40.3 billion. We had the pleasure of catching up with Jacob a few weeks ago and speaking with him about procurement operations at Maersk, the unique challenges that the brand faces, the power of eSourcing, and what lies ahead in 2016.
It is safe to say that many people stumble somewhat aimlessly before finally landing in a career that they find passable enough to stay in it. A smaller number have their “a-ha” moment in their career when they realize that they have struck employment gold and that this is what they were born to do. For Jacob, that moment came early in his career when a professor in his negotiation class declared that if there was anyone in the room that was uncomfortable asking for a discount – in their personal or professional lives – that they were not only in the wrong class, they were also in the wrong profession. Getting a good deal and saving money have always thrilled Jacob, so he knew early on that a career in procurement was the right one.
Optimizing Procurement Production with Technology
Jacob has spent his career at Maersk so far with optimizing processes through technology across the supply management spectrum – from contract and knowledge management systems when he joined the company nearly 12 years ago, to adopting and championing eSourcing later in his career and onward to today where he has responsibility for the whole area of Digital procurement. In fact, his first major project at Maersk was to develop a knowledge management platform for the procurement organization that helped his team codify best practices in procurement and make them centrally available. After gaining a foothold on the knowledge management front, he was part of the team introducing a contract management solution for the procurement group that allowed the team to centrally manage their contracts, foster collaboration, and gain greater visibility into important events and metrics.
With early experience in adopting, implementing, and managing procurement technologies at Maersk, Jacob took over the responsibility for the e-sourcing program in 2008. During the past seven years he has been developing and managing Maersk’s eSourcing program – from starting it to driving adoption “to the maximum” across the Group. In our view, this is an organization that has fully adopted the eSourcing 2.0 mindset (first published on these pages) that believes that, “Any project that ends with a contract should start with an eSourcing event or activity.” Thus, Jacob and his team have used the technology to conduct thousands of transactions across a variety of categories and business lines over the past seven years.
Beyond strategic sourcing, Jacob and his team use their eSourcing platform as their savings reporting and forecasting tool for how much they will deliver in the coming year, but also as their reporting platform for all projects that they have completed thus far. As Jacob explains, “Without technology, we couldn’t keep that level of transparency. When you conduct over a thousand projects a year as we do in our organization, it can be an administrative nightmare if you don’t have the right processes and tools in place.”
Procurement organizations need to have transparency into their people and processes and ensure that everyone is on the same page. To that end, they need to have a program management tool that provides visibility and allows for better reporting on what projects the organization is working on, which ones they have in the pipeline, how far they have progressed in the projects, and when they expect to finalize them. It also needs to allow different users to put the steps out in front of them, which at Maersk has allowed the team to model their sourcing program and layer in their nuances based on the categories and the needs of the different businesses that they are supporting. Here also, Jacob and his team use their eSourcing platform, as “a tool like this is very important for having a robust framework for driving and measuring compliance to our protocols.”
Exciting Times for Procurement – Today and Tomorrow
Being in procurement Jacob finds himself in a very interesting place and time. One of the things that make it interesting to work in procurement now is the complete transformation of processes that the introduction of digital technologies drives and the way it changing the perception of digital procurement from a back-office function to a competitive differentiator. When young people joins procurement organizations today they don’t question the use of technology such as e-sourcing, for them online is the only way, because that’s the way they do everything else in their lives. So from that perspective we have still only seen the tip of the iceberg when it comes to digitization of procurement processes which will accelerate further in the coming years making the digital procurement space a very interesting area in the coming years according to Jacob.
Looking forward in procurement, Jacob believes that there are three big trends that are taking the space by storm:
- Process automation – tools that give procurement professionals, whether they are CPOs or line-of-business staffers, the ability to cover more ground in a shorter period of time.
- Networks – Social networks and business networks, and now machine-to-machine networks enable greater supplier discovery and collaboration between trading partners.
- Big data will flood procurement departments, particularly as they mature and gain access to more data and methodologies for translating data into new insights. Thus, procurement teams need to be able to manage data in order to be effective.
Over the course of our conversation with Jacob, we learned how Maersk has progressed within procurement with the ambition of going from “good to great” which also includes a mindset of continuous development and a moving target about constantly pushing the barriers within procurement. We discussed how they gained their “license to source” and drive value by running thousands of sourcing events each year through eSourcing. Those of you attending the CPO Rising 2016 Summit will get the chance to hear Jacob speak in person and impart the lessons that he has learned over the last twelve years driving eSourcing at Maersk.
Tagged in: Adoption, Case Study, Chief Procurement Officer, CPO, CPO Rising Summit, CPO Shop Talk, CPOs on the Rise, eSourcing 2.0, Events, Innovation, Matthew York, People, Process, Sourcing, Strategy, Technology