Special
Delivery
gory of product or service and leverage their expertise
and decisions on behalf of the entire organization.
Leadership believed that the decentralized structure
led to other missed opportunities. For example, the
procurement team could not get a complete picture
of suppliers’ market capabilities and the mutually
beneficial synergies they might offer. They also felt
that the existing structure did not allow procurement
to leverage cross-cultural and geographic diversity
to drive the best category strategy for the business,
Matthews says.
In addition, although procurement influences
major components in the overall cost of goods, and
therefore influences profits and growth, “that value
proposition was not widely recognized,” Pratt says.
Procurement was largely seen as having a focus on
savings, and not as a key participant in the develop-
ment of higher-level strategies, he adds. “We were not
consistently at the table bringing innovation [and]
insights to the commercial side of the business or to
the leadership of business units.”
That would all change following a major rethinking
of McCormick’s business strategy. A few years ago,
company leadership adopted a long-term business
plan that focuses on global growth. McCormick
also implemented a wide-ranging program called
Comprehensive Continuous Improvement (CCI).
CCI’s objectives are to improve productivity, reduce
costs, and increase cash flow throughout the orga-
nization. In its first five years, CCI achieved nearly
US$400 million in cost savings; McCormick has
committed to achieving similar savings over the next
four years.
Procurement leaders understood that the team
could provide crucial support for McCormick’s global
growth strategy, and that procurement would be a
major player in the CCI initiative. Toward that end,
they focused on answering two big questions. The
first, Matthews says, was “how do we get more scale
and leverage” across McCormick’s product categories? The second was “how do we elevate procurement’s impact and provide a greater value proposition for the business?”
BECOMING A GLOBAL ORGANIZATION
The answer to both of those questions involved a
big change for the procurement team: moving away
from a primarily regional focus to a more central-
ized, global organization. Matthews and Grace Woo,
McCormick’s director of supply chain strategy, spear-
headed the development of procurement’s global
strategic plan. Any solution they and their team
devised would have to support McCormick’s three
main strategic objectives:
x Global growth. McCormick’s long-term objective
is to achieve annual growth through increases in its
base business, product innovation, and acquisitions.
x Performance improvement. As part of the CCI
initiative, McCormick in 2016 set a four-year, $400
million cost-savings target.
x The right organization and leadership. McCormick
wants to ensure that its organizational structure and
its current and future leadership have the capability
to achieve the company’s growth and performance
objectives.
One of the first steps in formulating the new plan
was to develop a definition of the current state of
the procurement function, including policies and
practices. Another was to project how trends like glo-
balization, geopolitics, and demographics could affect
procurement in the future. For example, because
McCormick sources over 3,000 different agricultural
products from about 50 countries, the procurement
team considered major commodity trends and other,
long-term factors that could potentially affect crops,
such as changes in weather patterns and the growth
of an urbanized middle class that is demanding more
meat, and therefore is imposing increasing strains on
farmland. All that information, Matthews explains,
would inform “what capabilities we would need
to build to capitalize on trends and stay ahead of
them while delivering strategic value and competitive
advantage.”
Over the next year, Matthews “built, refined, and
socialized the plan,” as Pratt describes it. The CEO at
the time, Alan Wilson, who had extensive experience
in procurement and supply chain, gave his support
“right away,” Pratt recalls. Once a detailed frame-
work for the new structure was in place, the global
procurement leadership team was formed. In 2014,
the regional directors started reporting directly to
Matthews, and the new global framework was fully
adopted in late 2016.
Today, Matthews says, the procurement organization is built around “three pillars”:
1. The global category management team, with
members located around the world, focuses on
the majority of McCormick’s spend on ingredients. Category leaders have formal, monthly strategy
reviews with the leadership team to ensure that deci-
