How Massmart leverages data to embrace digital disruption in a procurement transformation
As a globally-based competitive regional management group, with a portfolio of differentiated, complementary, focused wholesale and retail formats, Massmart is well and truly a market leader across South Africa. With nine wholesale and retail chains, as well as a buying division, the Group has more than 400 stores and 500 buying group members across 13 countries in sub-Saharan Africa. Each and every one of those outlets and members is aligned to a shared vision; high-volume and low-cost distribution. Key to cementing this position and a successful, seamless operation across such a vast portfolio, is a solid and robust procurement and supply chain function and a fine understanding of the significant value that direct and indirect spend can bring. “I think that, particularly in multinational companies like Massmart, direct spend has been much more prevalent in everybody’s mind. But I also think a lot of multinationals are quite au-fait in terms of control spend and accountability with regards to direct spend,” says Melanie Pike, indirect procurement Manager for Massmart responsible for Masscash Retail and Wholesale division.
“On the indirect spend side of things we are still very far behind with regards to recognising the importance and the value in what it can bring to a business.”
Over the course of her career in procurement, one that she openly admits she “fell into,” Pike has worked at all levels of procurement in an organisation. This she feels has gifted her with an understanding of the key areas of a business and more importantly the pain points. “I fought in the trenches a lot from my early days at the lower levels and that allowed me to understand the demands and the requirements at an operational level,” she says. “I know what I'm talking about and it's not just a wishful thinking sort of attitude. I can do it with a bit more empathy for the relevant operational and internal stakeholders, as well as for external stakeholders.”
The very idea of procurement, and the value it can unlock, has undergone a major transformation over the last decade. Technology has proven a key driver of this change, particularly when it comes to visibility and accountability. Businesses all over the world now have greater access to data and analysis as to how, where and why they are spending. Massmart is no different to this, undergoing something of a procurement transformation in order to consolidate its spending and unlock cost savings and greater efficiencies across its entire multi-division portfolio. The company has looked to upgrade its existing procurement platforms and implement a new ERP from SAP to act as one central core system. This centralised system will allow each and every division to access spend data from one consolidated platform in order to align to one shared path that is in line with international best practices.
Implementing a new system across multiple business divisions is not without challenges. Pike recognises this and so Massmart is currently rolling out the new ERP system separately across each business through consolidated teams overseeing each implementation. “This is so we can look at all the data analytics from each rollout then the team engages with each relevant division to ensure that that rollout happens seamlessly within that division. But it is sort of a staggered approach that manages the risk and disruption to business,” says Pike. “It is quite a process to manage with lots of people involved at any given time. But I think to have a central ERP system of this size, it’s essential for us to all pull together as a group.”
In any form of technology transformation, it’s easy to become fixated on the technology and the data and neglecting the one key component that is central to any business, its people. As Pike has already alluded to, collaboration and pulling together as a group is crucial and so Massmart has created a number of centres of excellence across each business division. These centres, along with project teams, ensure that each and every person is trained in the right way, equipped with the right skills and brought along this transformational journey. “The incentives alone speak for themselves,” says Pike. “The ease of information and the ease for everybody to actually process their work and move from a very hands-on traditional way of doing things to a modern, digitally empowering way has been embraced wholeheartedly across the business.”
“They can see the analytics coming through. Insight is coming through and it's enabling everybody to do their jobs much faster and it's just much more user-friendly. I think that alone has been a great driving force for the business to come on board.”
Technology has also transformed the stakeholder perspective and experience and once again data is king. Through data, the stakeholder is able to see first-hand the efficiencies and both the existing and potential cost saving opportunities that are enabled through technology. For Pike this represents a true turning point, both in indirect spend and in being able to build procurement as a service portfolio. The tools are there to show that procurement and indirect spend is bringing true value to the business like never before, it’s no longer just hearsay. “Procurement needs to be seen as a service department to the business, especially in terms of indirect spend management, which had not been the case previously,” she says. “Technology has enabled a rebranding of procurement. With that comes all the good stuff that we've brought to the table in terms of the digital transformation, such as a capex tool that we are looking to implement in the new year that provides complete visibility and live access to the budget approval process.
“Again, this is improving the stakeholder experience. Its more efficient and provides them with quality data and analytics and for me it’s a total rebrand of what procurement can enable for the business.”
A supply chain and procurement function can only be as strong as its supplier and vendor network. Pike understands this and is a strong believer in Supplier Relationship Management (SRM). Early in her procurement career she was driven by one message; you are nothing without your vendor. “Without a good supplier, you don’t have a business,” she says. Pike believes that everything needs to be done in collaboration and that Massmart along with its vendors must seek opportunities to grow together. “I think we can listen more to our suppliers in terms of seeking the potential opportunity that we're missing. You need to build your relationship, so I believe in going to task for my vendors or suppliers just as much as I expect them to do the same.”
2019, Pike admits, is both an exciting and challenging year for Massmart as it will see the final stages of the SAP implementation as well as the continued transformation of the procurement and indirect division. Massmart will look to better manage its capex spend through e-auctions and reverse auctions as well as continuing to embrace the digitisation of its processes while moving services online. “We will continue to gather more information and data and make sure that from a strategic point of view, we're leveraging Massmart as a group and focusing on total cost of ownership rather than just each individual vendor and a price. We areooking at restructuring our relationships with our key vendors at Massmart as a division,” she says.
“It's just using strategic sourcing as a division to drive value creation, not at some divisional level but at group level. I think what’s going to be the key driver for us over the next year, is to change that mindset from divisions to group. So, using consolidated data and standardisations as a group, and using that to consolidate, leverage and drive all the good practices.”