Today’s article focuses on the customer keynote presentation delivered by Scott Singer, Rio Tinto’s Head of Procurement, at Ariba LIVE last week.
First, one quick story about Scott that, I think, reflects the type of Chief Procurement Officer and leader that he is and has been for many years. It was in one of our first conversations about five years ago where I had reached out to Scott, who was then the CPO (de facto) at United Technologies (“UTC”) to see if he had any interest in presenting at an event that I was organizing – he was interested. Our conversation turned to presentation topics and Scott asked me what topics I was planning to put on the agenda. Slowly I ticked off seven or eight potential topics – sourcing, supply risk, technology, people management, complex categories, and on and on….. In each case, Scott gave a very specific 60 to 90 second overview of what his team was doing and in each case, what Scott and his team were doing was very advanced/progressive relative to other leading groups and in each case, they had made a significant impact. After I hung up, I was convinced that I could have reeled off another 20 topics and gotten a similarly detailed, impressive, and highly enthusiastic response; hundreds of CPO conversations later, it is one that has stayed with me.
Anyway, beyond the keynote, which I’ll detail below, it was great to catch up with Scott on the eve of his keynote and in each of the successive days. Among other things, I learned that he has fully embraced the cloud and is Rio Tinto’s unofficial cloud evangelist, he has season tickets to the local (Brisbane) Australian Rules Football team, and can do several cool tricks with his cell phone. For those interested in learning more about Rio Tinto’s procurement and supply chain operations, fear not – one of Scott’s lieutenants is in the CPOs on the Rise in 2011 queue and Scott has also graciously offered to participate in a future story.
Global Procurement Transformation in the Cloud at Rio Tinto
Rio Tinto is a world leader in finding, mining and processing the earth’s mineral resources (“if it wasn’t grown, it was extracted”). Rio Tinto has 77,000 employees in 40 countries and reported $56.6 Billion. Slightly more than 1,000 of those employees form Scott’s team, Rio Tinto Procurement, the shared services organization that coordinates all strategic sourcing, buying, and inbound logistics and has a mantra of “Source-Buy-Deliver.” Another 350 employees comprise the warehouse staff that Scott also oversees.
Rio’s growth is primarily in non-OECD countries and with 57,000 suppliers in all parts of the world, supplier connectivity is a major challenge. To face this issue, Rio has leveraged technology and the enablement services of Quadrem (which was acquired by Ariba in January). As one example of the challenges of dealing with suppliers in countries that lack a basic infrastructure, Scott highlighted a supplier in Ghana that can receive and acknowledge purchase orders by SMS technology on cell phones.
Scott believes that there have been two major strategic drivers in the procurement transformations that he has led – (1) Visibility where the essence of supply management is having a consistent, high quality view of all the goods and services spend and (2) Alignment that leverages technology to drive consistent workflow across the Sourcing and P2P processes. Scott also believes that effective procurement teams have to understand the impact that their sourcing and procurement decisions have on accounts payable and payments [Sidebar: he was not alone in verbalizing this view of a holistic P2P process, a view which we share and applaud]. Scott believes that technology is the key to efficient and effective P2P and that the processes that are mapped to it must be easy to initiate, largely self-regulating, and responsive to issues.
Roughly one year ago, Rio deployed Ariba’s upstream sourcing solutions across the globe and with 700 users in 49 locations; he reports that in the first year, Rio Tinto has run 4,900 sourcing projects that have resulted in 1,850 contracts and $475 million in savings.
Finally, and as noted above, Scott has become a cloud evangelist and believes that the cloud will be a game-changer for P2P, particularly given its heavy transactional volume relative to other processes and because the ERPs have yet to evolve from their current installed / client-server paradigm. I wouldn’t bet against him.
