This year we have been working to deliver a “CPO Rising Virtual Roundtable” series, sponsored by IBM. Each of the roundtables brings together three or four leading Chief Procurement Officers to discuss a specific topic in depth and share their insights, experiences, plans, and recommendations. In each of these, I serve as host and moderator (click link to listen).
Today we present the first of two articles profiling Alicia Ralston, who is the Director of Global Sourcing and Procurement at Archer Daniels Midland Company (ADM). This first article will provide some background on Alicia, including her rise from accounting at ADM up the ranks to business development and most recently to her position as the head of procurement at ADM. This article will also explore the challenges that she and her team have encountered, and how collaboration is central to their collective success.
Like Dr. Nick Nayak from the Department of Homeland Security, Alicia didn’t set out to work in procurement, and certainly didn’t pursue an education with it in mind. She earned her Bachelor’s degree in Accounting from Millikin University in Decatur, Illinois. In 1997, Alicia joined ADM, a Fortune 50 company with more than 31,000 employees and 270 processing plants operating in 140 countries, where she has held various auditing, accounting, and business development positions in the company’s Oilseeds and Agricultural Services business units. After a number of years with ADM, Alicia was named the Director of Business Development for Agricultural Services where she was responsible for strategic planning, capital expense forecasting, and mergers and acquisition (M&A) activities. As a result of her financial background and experience with M&A, Alicia was asked to join the sourcing and procurement team at a critical time in the company’s history.
At the time, ADM was still growing fast, but also maturing and in need of more stout and robust business functions. To that point in time, its procurement organization had little traction within the broader organization; most were unfamiliar with the department, its mission, leadership, and how it could add value to the larger corporation. Having been with the company for roughly fifteen years, Alicia was well-connected and understood company operations and the key stakeholders behind them. Thus, Alicia was tapped by senior leaders to lead their global sourcing and procurement team. As Alicia put it, “credibility helped me get into this position in the company. And maintaining my credibility is what has helped keep me in it.”
Since taking over the procurement leadership role, Alicia has been working on standardization and rationalization of ADM’s supply base. One example that she gives is that of standardizing the sourcing of safety glasses. At ADM, workers could choose from over 120 different types of glasses – even an $80 pair of Harley Davidson edition glasses that may or may not adequately cover one’s eyes and protect them from grain dust. When Alicia and her team took over global sourcing and procurement, they began maximizing the company’s savings on things like safety glasses so that they were no longer buying 120 varieties – they were now buying just a few very good ones, and in higher volumes to drive better pricing.
Alicia has also been trying to align ADM’s systems to provide intelligence – not just data – to drive greater contract compliance, resolve savings leakage, and find alternative suppliers in other geographies and this process has taken some time. Before she developed strong collaborative ties with IT, Alicia and her team struggled to reconcile their calculated-projected spend with their actual spend. But this soon changed. “Having a finance and accounting background, you know what pieces of information exist somewhere in the company and you know where you can start diving into the details of pain points for your internal stakeholders. So, we’ve collaborated with the IT people, trying to pull that information out, so we can establish a plan based off of factual-based information. This allows you to build credibility, because [then] you’re fighting fights with facts.”
Despite having to ask IT to manually pull data and give them a more holistic view of their sourcing, suppliers, and spend, the data has been accurate and useful in driving better decision-making. As Alicia’s team gets historical spend information, they’re able to use it as their baseline so that they can compare new pricing against historical to calculate cost savings. With manual data pulls from IT, Alicia and her procurement team can take this intelligence to their suppliers and leverage it into greater cost savings. They can leverage it into more favorable contract terms and conditions, and ask their suppliers, “How do we get better at our business? How do we run our plants better? How do we manage our inventory better? How do we use less of a given product?” As Alicia states, “Our suppliers are experts in their field, so we look to them to help us and for answers.” Having this supplier intelligence in hand helps her and her team collaborate more effectively with their internal stakeholders so that they can deliver better value.
We’re discussing a manual spend analysis and supplier information process that benefits from strong the internal and external collaboration strategies that Alicia has developed. Collaboration is all the more important since Alicia notes that ADM may be one of the few, or perhaps, only Fortune 50 company without a supply management system to automate its sourcing and procurement processes. Fortunately, when she took her current position several years ago, she had already established a collaborative relationship with their IT Department, which has helped Alicia and her team map their global data to draw a more complete picture of their sourcing, suppliers, and spend. [And, as her team gathered specs for a new system implementation (that should be fully operational in 2015), they again turned to IT to help them understand their data needs, and appropriately size and scope their ERP program. When it is fully operational, ADM’s ERP system will feature a suite of business intelligence and spend analytics tools, as well as business process automation tools like eSourcing and eProcurement.]
No company is without its challenges and growing pains – even global, Fortune 50 companies like ADM. Fortunately, procurement is still very much a people-driven profession, and if you’re an effective collaborator, you can overcome these challenges more quickly and effectively, and with less headache than if you’re not collaborative. As Alicia states, “collaboration is easier when you have existing relationships, which is what I had coming into this role. I’d been around for a while and was able to tap into the people I knew and have a familiar face asking for something, but then also explaining why it was important and how it was going to help.” Moreover, “if you don’t have that or you don’t have the ability to have those collaborative relationships where you can turn information around fast, you’re going to get caught quickly being reactive instead of proactive.”
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