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’s article is the fifth installment in the CPO Roundtable series, and the second of two articles profiling Alicia Ralston, who is the director of Global Sourcing and Procurement at Archer Daniels Midland Company (ADM). Today’s article will examine ADM’s goal to expand its global sourcing and procurement operations under Ms. Ralston, particularly as the company embarks on a multi-year, multi-prong, global growth strategy. It will also highlight some of the challenges to growing in this economy, and conclude with a two to three-year outlook for ADM.
As a Fortune 50 company with more than 31,000 employees and 270 processing plants operating in 140 countries across four continents, ADM is a very large company that is only getting larger. While this is great for the company’s shareholders, employees, and customers, it presents a challenge for Alicia and her Global Sourcing and Procurement team. Indeed, one of the biggest challenges for them is to become more global as ADM’s revenues grow and the company’s footprint continues to expand. Currently, her team is comprised of 61 members driving a global program that operates mostly in North America, with some resources located in South America, Europe, and Asia. Together, they manage the company’s indirect spend – more than half of which is in North America – while integrating and capturing synergies from ADM’s mergers and acquisitions (M&A) projects.
Alicia and her team are “working heavily on growth projects, not just our M&A deals, but also organic growth projects where ADM is building additional plants and expanding its infrastructure.” Moreover, “we have a pretty healthy budget for growth here at ADM on a global scale,” particularly in the Asia-Pacific region where ADM has been expanding recently to serve those emerging markets. But the challenge for Alicia and her team will be to then leverage that scale more globally. Managing inventory, for example, becomes even more important to her team, as they help locations involved in M&A processes better understand and manage their needs. One such method has been to leverage vendor-managed inventory (VMI) to reduce the amount of working capital tied up in inventory.
Alicia and her team have also been “flooded” with more opportunities to save ADM money than they can execute upon. For example, they know that the company’s sourcing needs are growing year-over-year, but they must focus first on sourcing high-risk, critical items in order to mitigate the risk of plant shut down or other disruptions to production. Once those needs have been met, Alicia and her team can move on to source the other items and services needed across the company’s network of plants and locations. As ADM continues to grow, Alicia and her team will focus on consolidating spend and improve their indirect category management.
With limited process automation tools in place today, the ongoing ability to scale sourcing and procurement operations globally is limited. To that end, Alicia and her team plan to deploy a supply management system with a suite of process automation and business intelligence tools that can significantly reduce the amount time spent on pulling spend reports, crunching numbers, and validating them with their suppliers. As she noted, their system transformation will allow this information to flow to them faster, resulting in shorter cycle times, greater fidelity in the outputs, and greater bandwidth to tackle more projects with the same staff size.
When I asked Alicia to give us her two to three-year outlook for ADM – what the drivers will be to get ADM to where they want to go – her answer was twofold. First, ADM will change where it sources, since its global footprint will have gotten significantly larger and more complex. But they won’t be able to do so until they deploy better systems, like their forthcoming supply management suite, which should enable them to find more sensible sources and products. By then, ADM’s Global Sourcing and Procurement team will have more global contracts, wider spend coverage, and the necessary standing to make this all happen. Alicia and her team will also take a hard look at leveraging the capabilities found in new acquisitions and joint ventures while also helping these constituents better manage their capital spend, particularly large equipment, supplier contracts, and their labor force as they grow in other geographies.
With Alicia Ralston at the helm of its Global Sourcing and Procurement Team, ADM is well positioned for the next chapter in the company’s history. It’s an exciting time for Alicia, a 17-year veteran of ADM who has extensive experience managing M&As and leveraging existing relationships across the enterprise to effectively execute on her responsibilities. Under her stewardship, ADM will undoubtedly integrate its newest acquisition, WILD Flavors, and continue to expand at home and overseas as one of the world’s largest providers of agricultural products and services
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