Historically , Bayer ’ s procurement function operated in a decentralized structure , relying on each division or region to manage its own procurement strategies and supplier relationships .
This decentralized approach led to inconsistencies across the organization and often fell short of maximizing Bayer ’ s global buying power as well as supporting corporate priorities and vision . Moreover , the complexity of Bayer ’ s global supply environment necessitated a more efficient and standardized procurement model to optimize operations .
Prompted to action , Bayer ’ s procurement organization undertook a top-to-bottom transformation , with the explicit intention to deliver increased value to its business operations , reduce third-party costs , enhance working capital , maintain high service standards in an increasingly complex global supply environment , and reduce procurement operating costs .
To help execute the transformation , Bayer selected and partnered with GEP , a leading provider of procurement and supply chain solutions to Fortune 500 companies . GEP provided additional sourcing capabilities , specialized expertise and experience to help Bayer realize its vision of a world-class procurement organization .
TRACKING PROGRESS & QUANTIFYING RESULTS
One of the keys to success was measuring the transformation with specific key performance indicators ( KPIs ), which were tracked through a global procurement scorecard . The transformation drove significant improvements in process efficiency , customer satisfaction , compliance , and risk management . Periodic reviews of outsourced spend categories and changes to KPIs were then made to reflect shifting business priorities .
CONTINUOUS IMPROVEMENT
Following the initial establishment of the new model , a long-term continuous improvement plan was developed and evolved over time following three phases .
Phase 1 was stabilization ( 1.0 ), encompassing understanding scope , consistent service quality and delivery against all defined KPIs . Phase 2 was optimization ( 2.0 ), which included optimizing processes refining the operating model , and enhancing partnership behaviors . The next phase , 3.0 , will ensure the procurement function adapts effectively to market needs ,
“ The transformation of the global procurement organization , supported by a strong partner and measured with specific KPIs , sustainably increases the success of Bayer .”
Dr . Frank Kobor Head of PRO Rapid Deployment , Bayer
continues to integrate digital tools , and advances sustainability , M & A , and category transformation .
Digital solutions using AI , low-code platforms and RPA helped identify , prioritize , and execute improvements . These initiatives included enhancing the buying experience with AI-enabled conversational interfaces and digitizing the procurement category strategy creation and maintenance process . Establishing clearly defined roles and responsibilities and a governance structure was key to success .
The team also had to be adaptable and flexible to changing market conditions and business needs . By fostering a culture of continuous improvement and learning , the organization remained at the forefront of industry trends and best practices . Structuring relationships with stakeholders with a sufficient degree of contractual and commercial flexibility allowed breathing room to grow and evolve as the company ’ s needs changed to mitigate supply shocks , inflation , and marketplace challenges .
In summary , Bayer was able to gain better value , visibility , control , and coordination across the entire organization by transitioning procurement from a decentralized function to a center-led best-in-class operation . Leveraging digital tools , data analytics and automation to drive efficiencies , increase value and improve decision-making , are proving essential .
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Source : “ How Bayer Centralizes and Standardizes Its Purchasing ,” TECHNIK + EINKAUF , 19 February 2024