UCB Procurement – A Digital Procurement Journey

Hello, everyone. Welcome to this part of the agenda of the Scope on Virtual Summit. My name is Fernando Gonzalez-Moro and today, I will share with you UCB’s Digital Procurement journey.

First, let me tell you a little bit about myself. I have been in the discipline in Procurement about 20 years. I started in Procurement right after school, right after college. I have worked in a number of industries across consumer goods, when I spent 11 years at Procter and Gamble in Europe, and also in pharmaceuticals. I have lived and worked in Belgium, in Switzerland, and the US. Throughout these 20 plus years, I’ve had experience in a number of categories at local, regional, and global level. I also have managed to develop my level of expertise in some of the key Procurement areas, some of those you can see in this slide.

Now, let me tell you a little bit about the company that I work for UCB. We are a pharmaceutical company, a mid cap size pharma, which are based in Brussels in Belgium. That’s where our headquarter is. We have got a very rich history. We started as a chemical group back in 1928.Throughout our history, we’ve pivoted towards a specialty biopharma company. Right now, what we do is develop and manufacture drugs to treat severe and chronic diseases for which we hope one day that we will find a cure. I think one of the aspects of UCB is the fact that throughout its history, it has changed this business model in relatively short times. I think that makes features like adaptability, resilience, agility, and flexibility a key feature of UCB and of its employees.

This is the agenda that we have prepared for you today. First, we will learn about our Procurement model and journey. This is important as it is where our digital journey is grounded on. We’ll learn more about Eusebius Digital Procurement. We will share our learnings. Now, one word of caveat, this is not going to be a technical solution presentation. The approach that I’m going to take is one more from the vantage point of leadership, and also from the vantage point of the end user and customer within the Procurement organization.

Let’s talk first about our UCB procurement value model. What you see on your screen is a graphic depiction of it. Fundamentally, what it says is that by being an agile partner, we will contribute to Eusebius patient value creation by connecting our internal challenges with solutions from our supply base. This is something which is very similar, and many other organizations have got it as well. For me, the keywords there is our partner and the partnership we need to establish internally to be successful in what we want to do. Also, of course, the connecting element between our company and the outside and solutions coming from the outside.

Now, when we launched this purpose and mission, we made the focus effort to be grounded into UCB’s corporate strategy. We started from what was our organization, our corporation study, and then from there, we decided to work on our Procurement strategy. For us right now, what this means is that we are in the middle phase of our journey, which is the accelerate and expand phase that you see there. As I said before, this mirrors exactly the strategic journey roadmap of the corporation of UCB as a corporation. Now, high level, what this means and what this looks like is that it’s our ambition to accelerate our ability to deliver sustainable value beyond savings to expand our procurement, value creation beyond sourcing, and do this through very high levels of engagement, both internally and externally.

Some of you might be surprised that there is no mention to digital intimate, and this is deliberate. This is not to say that we don’t have a digital strategy. We do have one obviously, but we realize that we live in a digital world, and we want to use digital to help us go through our programming journey, to do it better, to them more efficiently, and to do it faster. Digital in itself is not any strategy. Digital needs to be any strategy to support what the procurement strategy is.

Let’s dive now into digital procurement. First I’d like to start by sharing with you some of the definitions that we’ve seen and we’re seeing out there, and also the background asset to asset, how it fits with the evolution of our discipline. [Inaudible] in that slide, what you see there is a definition what digital is, which you can easily find if you search the internet. The one area that we really like—and I think it is helping us to deliver the traction and the engagement—is to focus on what are the areas in which digital procurement can add incremental value.

There are many models out there, but the one that we particularly like is the one that identified the value delivery into three distinct ways. One is on decision making, the other one is on process automation, and then the third one is on collaboration. How and where does this fit with the evolution of our discipline—our procurement discipline? I think and I imagine most of you are familiar with this, throughout our history, our discipline has made a significant shift from one focus area to the other. A very easy one is when the discipline switch from being transactional to being strategic after we have aggregated a lot of the spend. Recently, we moved from cost savings into new value areas of delivery.

To me, what is very clear is that all of these focus areas will prevail. Digital is just the conduit to do far more in those areas and to do it better. This is another model. This one is actually coming from Kearney analysis, and it pretty much debates the same thing. Digital is here to stay. Digital is the now and the future. Digital is just one tool that we can use instantly to go beyond the current limitations in the three areas that we identified before: decision making, automation and efficiencies coming from that, and collaboration.

Let’s talk now a little bit about what is UCB’s digital procurement strategy and journey. Again, I like to stress that I’m going to be sharing information here from the vantage point of leadership, and also the end user customer within the Procurement organization.

The first thing we realized is that to be successful and to be really serious at this, we had to establish a focus group working exclusively on this. Other initiative like innovation, this is not something that can be done on the side on the day to day activities. The only way to make digital solutions eventually part of a not on top of the problem behaviors, solutions, and our DNA was really to make sure that he had the right focus in the organization. For us, it meant to start with creating one group that was going to take care of this.

Another important aspect was to align on what is digital. When we launched this effort, we didn’t ask the organization. Do you see that we are a digital organization? Most people on the right, they said well, yes, we are because we’re using many tools like Excel, Word, and Outlook, which were digital tools, and they were right. However, what we quickly realized is that there were other tools out there, which basically would help us be much more interdigital than whatever capabilities the existing tools were delivering. Therefore, we became quite clear in convincing the organization that for us to be a digital organization, we have to go beyond whatever digital tool we’re really using at the time.

In the same line, we did ask ourselves, are we truly digital in the digital meaning of the world? We did look at this by exploring the areas in which we knew from research that digital could actually help us be better at. We then ask ourselves, are we really using to get the solutions to deliver value in those areas? You see six of them there. Of course, the answer was that no, we were doing something but not as much as we could have done. That led to the conclusion that we’re not a true digital organization. All of these questions and none of these processes, as naive as they might look, they were, for us, quite important for all the organization to understand where we were and where we want to be.

Another angle that we took was in order to amplify the need to change and the benefits of the change was to explore whether some of the challenges identified by the feedback of our internal stakeholders through NPS and other surveys, whether these challenges will actually be addressed by digital technologies and platforms and based on our research. Indeed, we identified that some of these themes were reoccurring and we have not found a way to really address them. It did actually made us believe that by focusing some of the digital solutions into this, we could actually help move the needle into these areas.

Now, once we have enough part of the organization on board, we started to look at and frame, how to go about it, how to go about becoming digital. What we found out is that, indeed, the best solution going forward was to keep whatever we’re doing on the digital side of things, but probably look at enhancing those. Think of it from procurement, spend reporting, buying channels, procurement portals, but also complement those with new digital solutions and new digital platforms. You heard me before that people felt that we were already digital because we were using Excel and other tools. What we’ll look at is okay, let’s not just discard all those tools, let’s look at the tools that can actually help us. Let’s see what we can do to enhance them and let’s complement them. As much as possible, plug them and interface them with new digital tools.

As any other project of this nature, we then move into identifying what was the current state, and what was the aspirational state. Now, we did these in nine key streams that are conduit for the three value areas of digital procurement, as we mentioned before—decision making, automation, and collaboration. What you see there in this graph is on the bottom side is each one of those behaviors, each one of those areas, how much we were addressing them using the traditional tools, and how much we were dressing them using the more digital tools. That was the current state, then we of course, came up with what we felt our ambition was to be in each one of these areas.

I have to say that, at this point, this is really when we felt the organization getting excited about moving into digital. Of course, it is very important to keep track of what’s happening in the development of these technologies out there. Technology is changing very fast, and it will continue to change and to evolve. It is key to understand what is the evolution looking like and what we can do to better position ourselves.

One of the decisions that we made was within our center of excellence group to make sure that they were keeping themselves informed on what was the evolution and the roadmap of each one of these technologies. This is very important. As you know, this is nothing but a journey. To be able to know where to go next, one needs to understand what are the options and these two words represent what will be the options in the future to continue to evolve in the digital procurement journey. After we identified the nine areas, I wish I mentioned before, we basically went into really drilling down specific interventions that will bring the digital promise to life into each one of those theories identified. What you see there are some of the ideas that we develop and we came up with, in each one of those area. I’m pretty sure that most of these will sound very familiar to all of you.

Now, you heard me before mentioning that digital enhancements and new digital platforms and tools, and the mix of those were key for us. We did identify what we’re really doing on the digital side of things, and what actually could be hands to deliver on that digital value premise. The idea here was to be as efficient as we could, not just not to invent the wheel, but even not to invent half of the wheel. By understanding what we already have in place, which could be further augment to deliver on the digital promise was a very important aspect for us. From there on, we went to execution mode. This is when really things become very intense. And what is identify specific initiatives projects, and we just got on with the world. What you see there are some of these initiatives in four key building blocks that we identified. I’m happy to report that many of the initiatives are right now in production, and the other ones are currently we’re working to deploy them as as soon and as fast as we can.

Now, as we progress into these unchartered waters for us, we did develop a standard roadmap based on our experience to identify the steps to explore new ideas and solutions. Now, note how we realized early on that IT and the business engagement was key for us in this journey. You can see the IT engagement in the exploration phase, and the business engagement was so paramount for us that we decided to actually make it to step on its own. The reason why is because a lot of the value that the digital tools and digital platforms are bringing to us, they will benefit the business and they will benefit the business decision making when it comes to cost management and others. We felt that to be able to have a very strong equity proposition to the business, we had to use these as one of the key benefits. Therefore, we decided to actually make these one of the key steps into exploring and implementing any digital tool.

Let’s talk now a little bit about the learnings that we have gathered so far. Again, I’d like to stress that I’m sharing these from the vantage point of leadership and also, from the vantage point of the experience of the users within the procurement organization of the new digital tools. You saw me before the onset of this presentation that I started by sharing with you what the procurement value model is. This is very, very important.

Digital, it shouldn’t be a strategy on its own. In other words, one should not just do digital, for the sake of doing digital. We need to start from the procurement strategy, which hopefully will come from the corporate strategy. Then, use digital to basically drive that strategy. It’s very important that I stress this, and I’m pretty sure most of you have have been in similar situation. The procurement strategy, which is well rooted into the corporate strategy, has to be the North Star for everything that we do, including the digital transformation of procurement. That is the digital transformation of procurement is to serve the procurement strategy—very important. The other thing is, this can be very overwhelming. There is a lot of complexity, a lot of technical details, but we need to be clear on what are the actual capabilities of the digital tools and the platforms.

Bear in mind that the actual capabilities will depend as much on the technical specification of the tools, but also in the environment in which the tools are going to be implemented. Things like policy, and involvement of procurement will drive the effectiveness of some of these tools. It’s very, very important that when you understand what are the capabilities of tools, you make the leap into, okay, but how is this going to work in my environment? This is absolutely critical.

One example that I can tell you here is, what we found out is that in the area of automation, whether it was on contract and coding and into a contract repository tool or vendor creation and vendor management, we found out that between 30 and 35 of the percent of the events actually needed exception handling. We learned that we’ve had to actually include this in our process, and obviously, foresee the right level of support. Make sure that you understand and you go from the digital from the specification of a tool into how is the tool really going to work in the environment that I want to implement it in.

Much like outsourcing, one needs to understand fully all of our processes before we go digital. If a process is broken and a process is not well understood, outsourcing certainly isn’t going to fix it, and developing a digital platform or digital solution for you likely is not going to fix it either. If something needs to be streamlined or fix within a process, do that before you try to move into a digital solution, because if it’s not fixed in the first place, either is not going to work once you actually implement a digital solution around it or within it. Certainly, if you plan to actually fix it through any sort of digital implementation, unless you are very vocal and clear about this to whatever the users or stakeholders are going to be, it will create confusion and potentially chaos as people will go with the same mindset and the same approach to the previous process into the new one.

The message here is very strong. Make sure you fully understand the process. Make sure that you fix it before you try to implement any sort of digital enhancement or digital solution into it. You heard me before talking about and how important IT and business engagement is for these initiatives, and I cannot stress this enough—procurement, on its own, cannot do this. It just can’t. The technical implementation, the technical implications are quite intense. Therefore, to make sure that whatever system is going to fit within the architecture, the technical IT architecture of the company that you’re working for, you need to have it on board. As I said before, most of these or a lot of these tools will actually deliver value and benefit for our stakeholders. It’s important also to engage them and to bring them along as that incremental value for the stakeholders should be part of the proposition and the value proposition to actually justify the request for budget and funds to implement a digital procurement strategy.

Another very important one is to be very, very clear on what resources are needed, and in which areas we want to actually deploy these resources. I’m not talking just here about budget and FTS, which is important, of course, but also I’m talking in terms of other areas, which traditionally, they are overlooked. For example, what is the mindset of the organization towards new digital solutions? Is there any sort of culture and mindset change that needs to happen as we deliver and implement these technical solutions? I think we need to be very clear in understanding what those are. Also, to be able to explain those to the people who will be ultimately using those tools. If we don’t spend enough time working on those key aspects for the adoption, and the utilization of the tools, the tools will not be used, and the digital procurement strategy will not deliver as much value as we thought in the first place.

I can tell you that, in some cases, this is going to require even a full cultural change within the organization. It’s important that this is done because it will help with the adoption, to change the behaviors required to use the new technologies, and ultimately, to receive value from those—very important. We need to have a very robust support model. What I’m talking about here is a model that ideally is going to be close in proximity to those users or those individuals within the organization with whom we expect to change behaviors to drive the adoption of the new technologies. I can tell you from my experience that we did move, a year ago, into a process where we actually have somebody co-located with a group of buyers, and helping them throughout the adoption and the use of digital tools and platforms. It made a whole difference for us. We saw adoption rate increasing, and ultimately, the adoption and the usage of the new technologies is going to be an absolutely key requirement for the journey to deliver on the promise. A robust support model will help you achieve that.

Last, this is a journey, as the title of the presentation indicates. The typical comparison that people make here is that this is not a 100 meter race, but this is a marathon. Well, this is not a marathon, this is an ultra marathon where there’s no finish line. Technology changes. There is going to be one tool which is going to be doing something better and more faster and more efficiently. That whatever tool, we must have implemented in the past. I think it’s important as we keep an eye on what’s happening out there, and we stay well informed of what the technologies are, and what the evolution of those technologies are.

It’s also important to make sure that we spend time with organizations to help them understand that this is not a static one of effort. This is something which becomes part of our DNA, becomes part of our lifeblood. We need to be ready to start the work in an environment where we’re going to be always learning about capabilities or tools, about solutions. Always ready to change whatever we might be doing or whatever we might be using for something else that we believe is going to add more value.

There you have it. That was the presentation that we prepared for you today. I want to thank you very much for your attention. Please do use the box at the bottom of your screen or my email details if you would like to ask me any questions or connect. They say that sharing is caring. I think the more that we learn from each other, the better will serve our procurement function, our stakeholders, and ultimately, our company’s customers. Thank you very much for your attention and enjoy the rest of the summit.