In a country where procurement is still graduating as an extended admin function, JLL has added a whopping $15 million through savings in procurement over the last seven years. Aval Sethi, Head – Supply Chain Management & Procurement, Asia & Integrated Facility Management, in an exclusive interview with BuildoTech, reveals the successful implementation of technology-driven supply chain management and procurement strategies and his most favourite “One-Source Platform”. Excerpts:
How successful are the integrated procurement strategies in FM today? Is there a different strategy of procurement at different levels of the supply chain?
Yes, and no, both. Yes, because procurement is normally broken up into a number of steps. At the base level, procurement is very transactional in nature, focusing around day-to-day requirements. At the mid-level, it could be procurement at the manager level focussing on localized purchase for the facility or could be at the pan-India or panregional level looking at a larger base. However, at the next level, it is more around building strategy for the organization, focussing on value addition, consolidation with the buyer, building supplier relationship, grooming supplier to meet requirement and becoming partners of the organization.
At the chief officer level, procurement takes a different approach, as it involves working with stake holders — mostly from business orientation it could be your client or the CFO or other people in the business. Procurement involves understanding and meeting their requirement. At every level, there is a distinct flavour to procurement.
How have workplace changes contributed to procurement management?
The whole concept of a workplace is changing today. The ‘ARE’ trend surveys showed higher degree of focus on technology and smarter workplaces. Unlike the traditional 9am to 6pm desk job, today in an age of technology we have mobile devices, tablets and laptops which literally connect us 24×7. This is a big change that information technology has brought about, as we are able to interconnect devices and information flows constantly through internet. Whether it is your suppliers who are going out for delivery or whether they have delivered the material or how correct their delivery has been, the real time information can be obtained instantly on the mobile device. 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 mindset 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.
‘One Source Model’ for procurement management
There are a number of technology platforms available off the shelf but none that offers end-to-end solutions to what we ned in a Real Estate FM environment. This prompted me to sit back and think: as strategic partners to all these businesses, where we have long time contract of five years or in some cases even 12 and 15 years, how can we address the speed and bring more value. We created a new business line and started procurement services for few of our clients last year. We created a complete integrated platform from procure to pay, which brings everything online, creates visibility and governance, and also plugs in our suppliers, our staff and the client on a single platform. We created what is branded as “One Source”.
We integrated a catalogue module to view the products, its description and price, and then place order and buy online, just like 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 areas of the client and the client could simply log into JJLonesource.com and place the order on the catalogue. At the backend, each of these products are ascribed to a supplier who is localized to a particular site of the client so there is 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 department file. Thus, the delivery that is completed at the site is uploaded automatically into the inventory module of the site. We are providing a lot of tools, MIS and boards where the client can view the entire inventory on site. They can understand their consumption pattern and fix budgets for site accordingly. This way the client, the suppliers and the JLL staff work on one platform. This enhances efficiency because the complete AC and AR process, the account receipt and account payable is completely automated. We are not depended on the supplier to invoice us. We invoice the client and recover the money from the client which speeds up the entire payment process. At the client end, there is a lot of visibility and governance and it reduces theft case or misappropriation of stock.
It is very important today for procurement professionals at any level to be in line and knowledgeable about their business, its needs and how it is changing. The CFOs today are realizing that whatever the procurement does, contributes directly to the bottom line. Thus, if the procurement organization knows the plan of business of the organization, they can strategize and delivery exceptionally well to the requirement.