In conversation with Alfred Aloysius — Asian Procurement Part 1

Our latest initiative, CPO Diaries — ‘Conversations in Asian Procurement’ aims to publish a series of interviews conducted with well-known Procurement Practitioners from the region, who lay out the vision for their function while detailing out the best practices they have implemented along the way.

In this dual-post series we bring, Alfred Aloysius, Director — Strategic Sourcing, SMRT Corporation Ltd. to share his expertise and ideas.

ZYCUS: How is the Procurement function setup at SMRT Corporation Ltd? What kind of a roadmap have you set for it?

ALFRED: In terms of the procurement setup, we are in a bit of a transition stage — we are a highly centralized team with a heavy emphasis on transactional procurement. We spend about one billion dollars each year, which is managed by a lean team of around 24 people. The roadmap we have in place seeks to enhance our strategic level procurement functions.

The procurement team reports to the Vice President of Procurement & Supplies who is responsible for the entire supply chain. I lead the procurement segment, where we spend most of our time on driving value for the business when we procure goods and services that are required.

ZYCUS: What expectations does your top management have for procurement in terms of both short- and long-term goals and value contributions?

ALFRED: Firstly, as a mid-term goal, we aim to move from transactional procurement to a more strategic function that makes procurement a game changer. Secondly, we need to balance cost-saving pressures with risk mitigation — as a public transport operator, we cannot afford any lapses in service delivery, but as procurement professionals, we must also pursue value. It is important that everything we do aligns with the strategic vision and business goals of the organization.

ZYCUS: SMRT is trying to move from tactical/transactional procurement to a more strategically focused organization. How are you undertaking this transition and how do those steps fit into the vision that top management has for procurement?

ALFRED: There are five areas of focus at SMRT. These are:

• Operational performance
• Customer experience
• Workforce health
• Organizational excellence
• Sustainable growth

Procurement is aligning to these organizational goals in our endeavor to become a key enabler for business performance. We plan to achieve this by:

• Making structural changes organizationally and within the team that will provide us with a launch pad to achieve certain long-term targets; and
• Enhancing capabilities of the procurement team by creating career paths that are sustainable and satisfying.
• As a next step, we would want our team to be in sync with global best practices and processes and are looking to a multitude of global certifications that might be pursued with training partners.

ZYCUS: What role do you foresee technology playing in your procurement organizational transformation from tactical to strategic?

ALFRED: In terms of systems, we have taken the first step by implementing a Spend Analysis solution, which has improved our spend visibility significantly. This is, of course, just the tip of the iceberg. We are currently reviewing multiple systems to understand what is available and how each system can help us to take the next step in our progression. The good news is that we are in sync with our senior management on these initiatives, which cover the entire spectrum of procurement — from how we manage our tenders to how we conduct RFx processes. We would like to leverage Big Data to improve our planning, sourcing and supplier management activities.

ZYCUS: What are the top three goals you have set to achieve with your team in 2014–15?

ALFRED: There are actually four top areas we are looking at this year:

• Strong savings in terms of percentage capture, cost reduction or avoidance
• Industry-standard high service levels to our internal customers
• Collaboration between procurement and supply/logistics to deliver on inventory targets
• Improved supplier performance through feedback and collaboration

ZYCUS: What top three challenges do you foresee in attaining these goals?

ALFRED: Let me list them out one by one in their order of importance:

• Handling change management in terms of our vision to transition to a more strategically focused function. People resist and even fear change at times. It needs to be managed so we achieve the right outcomes.
• Our specific performance targets are ambitious and challenging — we need to keep day-to-day operations running as we embark upon this strategic journey.
• Choosing the right systems will also be a challenge; there are many procurement solutions in the marketplace and choosing the ones that best fit our requirements yet last us for 10 to 15 years, will not be easy.

In our next post, we shall see what performance benchmarks does SMRT set and how they identify and nurture key suppliers.