What changes have you experienced in workplaces today and how do those contribute to procurement management?
The whole concept of a workplace is changing today. The ‘CRE’ trend surveys show higher degree of focus on technology, smarter workplaces and enhancing employee experience. Today in an age of technology, we have mobile devices, tablets and laptops which literally connect us 24×7. The new age employee of today works comfortably with technology and demands e – tools to provide information.
Today with net penetration, being present in the property and working, per say, has lost its relevance, because one can be located anywhere and work from there. I can be on the road, sitting in my car, home or anywhere else and work. Even offices today have moved away from the traditional setting to a smart workplace concept. Offices are wi-fi enabled and one can see people sitting on sofas or easy chairs at the lounge or cafeteria with their laptops.
As more and more organisations are moving to an ERP environment bringing in work order automation, we are now also looking to have access to real time information about the supplier out on delivery — whether they have delivered the material or how correct their delivery has been through smart phone applications. But, at the same time, this has also created pressure on the skills of the people engaged in such services. If they do not have the mind-set or if they do not fit in the framework of technology or are unfamiliar with internet and net connectivity, then it is a big struggle for them.
Hence, there is a need for people with a project driven mind-set for dealing with multiple aspects of deliveries. For example, suppliers will have cross functional category expertise and the person delivering should be able to communicate well across those categories.
Is there a customised software in procurement management?
Of late, many of our clients have been expecting me, as a procurement head, to address and take away a lot of their challenges faced in dealing with ad-hoc and transactional requirements at the facility or with buying of materials and supplies. While there are a number of technology platforms available off the shelf but none that offers end to end solutions to what we need in a Real estate FM environment. This prompted me to sit back and think: as strategic partners to all these businesses, how can we address the speed and bring more value to clients. We created a new business model and started procurement services for a few of our clients last year. This year we introduced technology and created a catalogue management tool that completely integrated ‘procure to pay’ on the platform. The robust approach reduces time to book, time to process and time to supply and creates a supply chain environment that is purely driven by performance. The platform provides visibility and governance, and also links in our suppliers, our staff and the client on a single platform. We created what is branded as “One Source”.
The catalogue module enables client to view the products, their description and price, and then to place order and buy online, just like an e-commerce. A list of 16 product categories was identified starting from stationery, water, tea & coffee consumable, painting, repairs and maintenance, electrical & plumbing consumable, carpet, carpet shampooing and so on. These were high sale categories of the client and the client can simply log into www.jllonesource.com and place the order on the catalogue. At the backend, each of these products is ascribed to a supplier who is localized to a particular site of the client so this simplifies taxation and enables work order automation. Once the supplier is ready to deliver the product, he is able to generate a delivery receipt, fill in the details based on the work order and deliver the goods at the site. We enable each supplier with a smart-phone app, where they can choose the work order against which they deliver, take a photograph of the delivery receipt and upload it through the smart phone app on to the technology platform, as a confirmation against the work order. The moment the delivery receipt is uploaded, there is a three-way matching on the platform. It automatically generates an invoice to the client. The finance department validates the invoice and sends it off to the client for payment. Not only that, it also integrates the delivery with an inventory module for our FM’s at sites.
Thus, the delivery that is completed at the site is uploaded automatically into the inventory module of the site. We provide best in class Business Intelligence tools providing clients with customised MIS and Dashboards where the client can view the entire inventory on site. They can understand their consumption pattern and fix budgets for sites accordingly. At the client end, there is a lot of visibility and governance and it reduces theft cases or misappropriation of stock. This way the client, the suppliers and the JLL staff work on one platform.
How do you get your suppliers on board?
We have got a very strong pre-qualification criteria to identify suppliers. The first one is obviously their financial standing. The second is assessment of risk. The risk factors also include checks pertaining to legal issue or any complaint, any labour court cases or any other criminal or civil court proceedings. We go back to some of the clients for feedback on suppliers’ performance and look at their long standing history of presence in the market and service to various clients.
The supplier, thus assessed and taken on board, is first introduced to the smaller part of our business for may be three to six months and subjected to at least two rounds of quarterly evaluation of performance and delivery. If Once our team grades the supplier well, we then consider an upgradation. We work on a supplier segmentation model — a pyramid — which is broken down into three parts. The base of the pyramid is occupied by all our registered suppliers who want to work with JLL and are pre-qualified. This is a sizeable chunk of about 3,000 vendors that we have on the system today. As we upgrade the suppliers, they move into the next level, which is the preferred supplier network comprising those who have gone through a few rounds of performance evaluation. Some of these suppliers, based on their hunger for more business, their approach and how they can come up in their performance reviews, are moved up to the Strategic Partnership Program. This pattern applies to all the vendor partners and service providers.
However, there are also suppliers who may move directly as preferred or as strategic suppliers based on the kind of business they have been doing, the size of their entity, the volume of business in terms of financial background and standing, and the need of business. For example, a global company like Kimberley Clarke could directly be brought on board as a strategic supplier and we may also set up a contract across Asia Pacific with them.
What are the challenges confronted with supplier management?
Out of the entire supply base we have, there are many suppliers who are localized and work for a specific city or a specific client type. The supply chain professionals are not present in every city, so the operations team that is dealing with the suppliers has to manage them. We create the framework of supplier management program whereby the site team and the local operations teams manage the relationship, the work and the performance of the suppliers.
On a few occasions there are misses in between, either the suppliers are not managed correctly or the communication is not clear between the supplier and the operations team and so on. Slowly, the commitment goes down, the approach and the responsibilities are not defined and there are certain gaps that tend to come in. While at the central level, we qualify a supplier capable of meeting all requirements, at the ground level at the delivery end, the supplier starts to struggle because the KRAs have not been set, there are no defined SLAs and no KPI’s are set. Resultantly, a good supplier who could have done well, is now becoming a struggling supplier in the system. The first challenge is to continually engage with the site team and explain the importance of building a supplier relationship and setting up very clear guidelines and rule sets for the suppliers.
In some other cases in spite of the best efforts of the site and operations teams the supplier just does not perform to expectation. The supplier is so transactional in his approach that he may not have an inclination to improve performance. The supplier is provided opportunities to improve but there are many cases where eventually the supplier has to be replaced.
Compliance today is a very big focus area. For example, in a manpower based contract at a site, out of the required 10 housekeeping boys, only eight turn up because two were not available at the salary structure set by the client. Consequently, some of them start doing overtime, which has its limitations under the labour law. Beyond a limit it becomes non-compliance, but the client expects 100% deployment. Thus, you engage the service provider to ensure 100% attendance, but the supplier is not able to pay overtime beyond permissible limits or meet the shortfall or get the client to increase salary for boys. It becomes a kind of a conflict within the site, where again the blame sometimes goes to the supplier who is unable to deliver what has been contracted.
The second challenge is in getting trained and skilled manpower. There is so much of shortage, especially where skills are not really admired — nobody wants to be a toilet cleaner or to be seen with the broom – we find all types of people without much training coming in. How to ensure that the manpower engaged is skilled and comes up to the speed is a challenge being faced by our people on some sites.
How different is it when it comes to procuring cleaning products?
Normally, the entire manpower and material or cleaning supplies are bundled into the contact of the housekeeping vendor and we do not directly buy cleaning chemical or consumables. However, I have identified good suppliers and brought them as strategic partners on board on negotiated terms and conditions. In the cleaning segment, we have Diversey Care-Sealed Air and Schevaran Laboratories Pvt. Ltd as strategic partners for cleaning chemicals. As part of the contractual obligation, they conduct random audits and check some sites to ensure that the right chemicals are being used in the service delivered. They also train the housekeeping staff on proper dilution ratio for chemicals, put up charts & literature or posters on sites and make pocket cards available to janitorial staff for easy referral. This again could be in local languages, as not all will be familiar with Hindi or English. Thus, the responsibility of the partner does not end with just supplying. I have brought them into the work environment to have a higher stake in ensuring that what they are supplying is actually being used correctly and in the right method and also in creating awareness programmes.
What are the changes you have brought about in procurement and what more changes do you perceive?
I am changing the colour of procurement into being more entrepreneurial. Procurement as a traditional function will no longer exist in the next five years. It will become more of a document management function, which essentially means somebody is giving you a purchase requisition, you go out to your pre-approved and contracted vendor for a quotation, send it to the requester and on approval issue a purchase order. This is very transactional in nature and will probably peak as more and more technology comes on board. In order for the function to grow it has to now step away and be more entrepreneurial, a business partnership to reach out to the client and to assess what more can be done to bring in additional revenue and more profitability.
Thus, the One Source platform that I spoke about earlier could potentially become the game changer in the industry. What we have created is end-to-end B2B consolidation across the length and breadth of the categories that we require in corporate, CRE, FM or property structure. Whether it is repair and maintenance, supply of material or consumable or ad-hoc buying or ad-hoc request, everything is dealt with on this one integrated platform.
With the Internet of Things catching up, it will also create tracking mechanics for every element of the supply service. Today, we have technology that allows our staff to use bio-metric devices mark their attendance. In our case, instead of waiting for the vendor to reconcile attendance and provide his invoice, we are providing actual attendance to the vendor based on bio-metric reader output to raise his invoice on.
Procurement is going to lead the change in technology and the way we do business. As we move forward, the entrepreneurial mind-set is expected to understand finance, taxation and the business itself. Now with this overview of different functions, the day is not too far off when we can see procurement leaders actually becoming CEOs or Managing Directors of companies because they know exactly how the business operates, they know their supply bases and costs, understand their finance numbers very well and therefore, can run their businesses much easily.
What has been the contribution of procurement to the bottom line during your tenure?
In the last six years, I have contributed close to $12 million to the JLL bottom line in India.
For a company of that size and scale and with that kind of value and benefit in hard dollar savings coming to the bottom line, it is a great story.
