How Mellanox Technologies continuously strives to deliver procurement prowess
In the procurement space, having a strong relationship internally with the wider business is proving just as crucial as establishing a strong relationship with suppliers. Over the past decade there has been a paradigm shift that has seen procurement move away from its traditional “support” function role as it becomes far more aligned to business strategy. Nowhere is this more apparent than Mellanox Technologies, a leading supplier of end-to-end interconnect solutions. Over the last few years Mellanox Technologies has gone to great lengths to ensure that its customer facing teams are fully supported by an efficient and robust procurement function.
“At Mellanox, procurement has a very special place,” says Oshri Cohen, Vice President of Purchasing and Logistics. “Procurement is involved at the very beginning of a project, through mass production and right up until the product’s end of life. We are providing support all throughout a product lifecycle and so what we are doing is overseeing product cost and deliverability from top to bottom.”
Oshri first joined Mellanox in 2007 as an NPI Manager. Over the years his role evolved as he took on more procurement responsibility before taking on his current role in 2012. He feels that this experience of growing within the company and developing a strong procurement team is a testament to Mellanox and its ability to grow the best people from within.
“The fact that I had the chance to touch almost every operation issue by myself, provided me the chance to learn a lot and prepared me very well to the role I’m holding today. When you know, theoretically, what the right thing to do is and you’re connected to your organisational DNA, then your chances to take the right decision and do the right implementation are very high,” he says. “Luckily, I grew up inside Mellanox and so did my great team. I think that this is a winning formula to succeed.”
Through his career with Mellanox he has seen first-hand this shift in understanding what procurement can deliver to a business. He feels that now more than ever before a good strong procurement function that is aligned to the right vendors can be the key difference; not only in delivering success but staying ahead of competitors.
“Traditional procurement was centred around taking care of orders and essentially focusing on shortages. That is a short-term activity,” he says.
“Procurement today is responsibile to establish a strong enough supply chain to enable company growth and even bring added value to the company’s customers. These values can be game changers, as customers are exposing themselves less to commitments but still demanding complete times.”
“I think procurement has a main role of making sure that we are enabling business on our end, while also protecting the company from over exposure.”
As Oshri notes, the market have changed and are continuously changing as procurement continues to evolve. The company prides itself on how it can continue to provide creative solutions to meet the evolving demands.
It is this approach that has allowed Mellanox to grow and to invest into spaces it might not have done otherwise.
“Customers are getting smarter and have access to greater information and technology,” says Oshri. “This allows them to compare better and to understand where their investments could and should be made. If an organisation or a business intends to grow and intends to be better than its competitors, then it has to continue to find ways to become better and better and listening to customers is key to doing that.”
The technology conversation in procurement is defined more and more by data and data analysis. With a supplier and customer base from all over the world, Mellanox has access to incredible amounts of data and information. Through technology solutions, Oshri and his team can use this data to gain a better understanding of those customers and suppliers and a better insight into how Mellanox can grow and improve.
Success through collaboration
Vital to this understanding is collaboration between the procurement function and the wider Mellanox business. Oshri is incredibly proud of the unique collaboration that procurement has with the design team as it allows the two teams to create a roadmap to achieving greater cost savings while enabling efficiencies together.
“Collaboration is a must to achieve our goals,” he says. “We stay aligned in front of the HW team, around the same targets of quality, cost and availability. This enables both groups to talk the same language and achieve the corporate goals we get.”
For Oshri, the key to enabling success for Mellanox lies in fostering and developing collaborative relationships across the business.
“Procurement can be proactive or reactive. Working with HW teams, we are getting involved at the very early stages of the product design process. This allows procurement to be proactive in eliminating potential supply chain risks,” he says.
“It makes our supply chain stronger and more robust. Once the products are moving to mass production, operations are able to support those products without any special issues or surprises.”
Changing technologies and changing customers
A particular challenge for companies in any sector embracing this technological innovation is understanding the right technologies to implement. In the quest to outweigh competitors, one could be forgiven for investing in technologies for the sake of keeping up, rather than investing smartly.
This is a challenge that Oshri recognises, but he understands that the most important part of the Mellanox equation is the customer. Through this understanding, Mellanox continuously challenges itself against a series of KPIs that are defined by the customer which allows the company to be more focused moving forward.
“We know our customers are measuring us and so we constantly look to better understand how we are perceived,” he says. “This leads to continuous improvement. Even from a technology perspective, we implement technologies and look at how it is received by customers. We are constantly evaluating ourselves to ensure we are delivering value to our customers.”
Supplier network
A defining component of what Oshri strives to achieve with Mellanox is that strong and robust supply chain network. A procurement function can have all the best tools at its disposal, but it’s all for nothing if there isn’t a supplier network in place.
Oshri understands this and approaches Mellanox’s supplier network with the same level of care and attention as he does its customer base. For him, Mellanox could not succeed without them.
But how does Mellanox establish and foster relationships with key suppliers in order to continue to bring value to Mellanox and its customers, while also growing and developing the suppliers themselves?
“We prefer to find partners that can provide us real added values in terms of technology, supply chain and quality and we invest in those partner relationships as if they were our customers,” says Oshri.
“The strongest partners we have, are the ones we experienced some difficulties with and we had to manage a few crises. Real partners are not only being measured when the business is perfect and blooming. The painful hours are the ones to expose the real partners.”
Key to fostering these relationships is establishing trust and Oshri firmly believes that trust is developed through transparency and communication.
“Very similar to marriage, such relationships need to be maintained,” he says. “Along the way we must keep transparent in order to hear and say our observations, so in case any adjustments need to be done, we will know about it and act accordingly.”
The future of Mellanox
As part of its entire DNA, Mellanox will continuously strive to improve in order to better serve its customers. Oshri is proud of where the company’s procurement function is in terms of its alignment with the core business strategy, but even he himself approaches each day with a means of improving.
The company is looking to break into new markets and Oshri believes that it cannot even begin to think about doing this, without this continuous improvement approach to procurement.
“Mellanox’s procurement is well positioned in the core of the business, but there is always place to improve.” he says.
“We should enable Mellanox to penetrate the new markets it aims to. We should allow the company to compete by keep suggesting short lead time, competitive prices and best quality products. Procurement is one of the key groups to enable such plan.”
