We can’t deny that Vodafone has had some service quality woes reported in the mainstream press recently, but in terms of its procurement provision, it is quite a different story. In fact Vodafone’s digital procurement transformation has produced some very positive headlines. And this week we hear that Sunrise, the Swiss telecoms provider, has partnered with Vodafone to access its suite of business services and central procurement features.
Vodafone was a 2018 finalist in The Hackett Group’s Annual Digital Awards, so we were interested to hear from Nic Walden, Hackett’s Procurement Advisory UK programme leader about how Vodafone completely overhauled its procurement process, and the lessons that other companies can learn from their success. Recent research from The Hackett Group says procurement organisations can reduce costs by 45% through comprehensive digital transformation, so how did Vodafone fare?
Nic explained that “as part of the firm’s latest efforts to streamline the company and keep up with changing business needs, Vodafone Group took a look at the inefficiencies in procurement. Key performance indicators (KPIs) had been signalling that something was not running smoothly, but it was taking a long time to identify and address any weaknesses.”
The firm issues about 800,000 purchase orders and receives about 5 million invoices every year. “In the past, in order to analyse procurement performance, this volume was handled by a small team that collated data such as approval rates and speed,” he said. “But this took an average of three to four weeks to process, so the data was often out of date by the time it was ready, and the manual collection process resulted in frequent errors.”
Its digital transformation process was reimagined through an ‘operations control tower’ concept. The company undertook a project to build a new procurement system using robotic process automation (RPA) to automate routine tasks, and artificial intelligence (AI), machine learning (ML) and visualisation to enhance analytical capability to identify process bottlenecks and improvement opportunities through pattern analysis and predictive modelling.
Vodafone provides services to over 600 million customers in 24 countries; the scale of their operations is such that even the smallest inefficiencies can be hugely costly. “High quality data is the currency of the modern business world,” he said “and the company knew that any new system would need to be data-driven to avoid replicating the problem of slow feedback. The goal was to make ‘data speak insights’ in nearly real time, providing answers to the ‘what,’ ‘where’ and ‘why’ of issues in less than 10 seconds.”
With this in mind, Vodafone developed the Supply Chain Management (SCM) Control Centre app as the heart of its new approach to analytics. The app, powered by SAP and Celonis, provides a transparent overview of how systems and processes are functioning, highlighting problems and inefficiencies almost instantaneously.
Vodafone’s SCM Control Centre enables the procurement team to view business insights, spend analytics, and risk and fraud analytics in one place, giving more than 700 users around the world an unprecedented, unified view of the supply chain. “It is like an X-ray machine that allows the team to identify bottlenecks in the system and the best continuous improvement opportunities; it also points out performance issues as they occur, so that the team can implement a resolution promptly. The tool also uses predictive models to forecast business results, and leverages AI to capture patterns and improve this predictive modelling,” he said.
Leveraging new technologies and skills
Ten years ago, procurement processes were highly manual and largely tactical, but today the function’s success relies on the ability to provide strategic value to the business. “At the forefront of the current technology conversation in procurement is the concept of digital transformation,” said Nic. “The Hackett Group defines digital transformation as ‘improving customer experiences, operational efficiency, agility and business value contribution by fundamentally changing the way services are delivered, using digital technologies and skills as the enabler of holistic transformation.’”
“Procurement leaders are increasingly shifting resources into technology innovation to support their strategic goals. Specifically, organisations such as Vodafone have recognised the importance of technology enablement and ease of use for end users, and are switching gears quickly. Vodafone’s successful overhaul of its procurement operation relied on a host of technologies, from AI to RPA and data visualisation. To ensure success, procurement teams engaging in digital transformation must seek to develop a receptive and open culture and use the right combination of tools for the specific use case to boost efficiency and improve the user experience,” he advises.
“Vodafone’s procurement team took full advantage of tools for analytics and information management. Staff in procurement need to make informed purchasing decisions, manage risk, and identify potential opportunities, so robust, trustworthy data is essential. Building a system to automatically collect and aggregate data enabled the team to conduct sophisticated analysis, and other procurement organisations should look to follow suit.
Whereas data used to be highly siloed and of variable quality, Vodafone’s new system offers tools for information management and analytics to provide a greater insight into trends, opportunities for value and to streamline operations and reduce costs. Rolling all of this out to all members of the procurement team, as Vodafone did, means that every employee has the opportunity to spot areas for improvement and keep track of savings, resulting in a leaner, more efficient business.”
Rising consumer demands, disruptive technologies and increasing competition all require that businesses adapt quickly. Procurement is not exempt from these demands and will need to step into a more strategic role as a business partner and operational enabler.
Many thanks to Nic Walden and The Hackett Group for sharing this success story.
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