Leading supply management suite provider, Ivalua, recently held its annual user conference Ivalua Now as an in-person (but also virtual) event in Washington, D.C. It was another stellar showing of this always well-organized and high-class affair. Ardent analysts participated virtually this year and hope to return in person in 2023.
The Day One mainstage was filled with customer and partner presenters, including the first customer keynote from Honeywell Group’s Anthony Long, Chief Procurement Officer, and Mark Krause, Senior Director, Strategic Sourcing Digital & Functional Transformation, who discussed rethinking procurement to achieve continued success in today’s volatile marketplace.
Driven by the mantra, “What happens tomorrow is determined by what we do today,” Honeywell is on a transformational journey that began in 2018. The complexity of Honeywell is evident with its 825 global facilities (200 as manufacturing sites), and $19 billion in spend that spans 60,000 suppliers with over 5 million SKUs. The enterprise has 39 P&L cells agglomerated into four specific strategic business groups (SBGs): Aerospace, Building Technologies, Performance Materials and Technologies, and Safety and Productivity Solutions.
When the enterprise set out on its integrated supply chain transformation, the focus was on three critical areas: standardization, simplification, and digitization. Honeywell worked with Ivalua to help execute its strategy to create an end-to-end supply chain where procurement has input into all areas of the business rather than one siloed aspect. By doing so, it would transition Honeywell from a tactical, reactive organization into a more strategic, highly automated, digitized, and proactive sourcing enterprise.
Where has Honeywell made strides? These are just a few of the major wins achieved thus far.
Localized strategic sourcing. With the goal of attaining 80% spend with preferred suppliers, Honeywell has brought consistency and standardization to a once diverse and decentralized group of businesses. The process of strategic sourcing is now focused on strategic partnerships with a localized footprint — blending the appropriate labor arbitrage within close proximity of manufacturing facilities to the customer. More business is now coming through those preferred suppliers across multiple businesses. Ultimately, this should provide Honeywell with access to the best and newest technologies at the lowest landed cost to help drive innovation for its customers. It also establishes Honeywell as the customer of choice with its suppliers.
Digitized indirect process. Working with an Ivalua innovative tool, Honeywell has achieved a digitized end-to-end indirect process, freeing up capacity to reinvest in more strategic sourcing activities and talent. More than 90% of indirect transactional activities are automated, allowing the enterprise to leverage its strategic sourcing talent for initiatives, such as supplier compliance, supplier development resources, and productivity and working capital utilization. The enterprise needs a robust commodity strategy for every direct and indirect commodity. Managing and executing on that strategy requires strategic thinkers who can interact with engineering and product development to build out the preferred supply lists to drive benefits for the company.
Supply base management. Using Ivalua’s innovative dashboard, Honeywell has integrated procure to pay, source to contract, and other processes so buyers and suppliers can efficiently use the necessary tools to perform those tasks. The success of these initiatives is due to the dashboard coupled with Honeywell’s enterprise data warehouse, which enables centralization and standardization of many systems across the organization (e.g., productivity metrics, should-costing analytics, contract management, and vendor master management). With vendor master management, for example, suppliers can update their own information. This dovetails into a procurement taxonomy where suppliers will be mapped to their United Nations Standard Products and Services Code, a benefit on the indirect side particularly. The enterprise can identify five or six preferred suppliers based on their codes from the thousands throughout Honeywell’s entire network.
These efforts have resulted in an evergreen pipeline for direct and indirect materials and project details, driving accountability across the enterprise.
Lastly, a major area of focus is attaining dynamic RFQs where the business is receiving real-time feedback from the systems. Green, yellow, and red indicators signal how suppliers are performing on payment terms, cost management, lead times, etc., and it’s driving supplier change without needing to reach out directly by phone or email to initiate it.
Going forward, to gain buy-in from the people using these new systems will require listening to their feedback. If parts of a system are difficult to navigate, Honeywell must be committed to develop solutions to those issues — ensuring the best product experience and business outcomes possible.
