Special
Delivery
and its suppliers. For one thing, Pratt says, aggregating ingredients portfolios and buying on behalf of
the entire business provides transparency into the
economics of the commodities, such as geographic
variations in pricing. For another, it allowed procurement to harmonize its policies and messages,
standardizing its approach to McCormick’s vast community of suppliers. Moreover, suppliers who may
have been dealing with buyers from multiple product
lines now have one main contact they can work with
for the particular material or ingredient they provide. “Now we can work
with them as partners,” Pratt says.
“We’ve created relationship manag-
ers who can talk strategically with
them about issues like long-term
growth and innovative things we can
do together.”
McCormick’s procurement orga-
nization has made significant invest-
ments in technology in support of its
new approach to strategic sourcing.
“We have dramatically increased our
use of e-sourcing, including for some
very complex exercises,” Matthews
says. “In transportation, for exam-
ple, there are endless permutations
of routings for raw materials coming
in and finished goods going out.
Now we can use very sophisticated
bid evaluations to find the optimal
solutions.” The procurement team
has also invested in data analytics
by hiring an in-house data analyst
and making the information category managers need
readily available in a Web-based application.
CRITICAL SUCCESS FACTORS
It was not easy to implement the new strategy—not
surprising given the size and ambitious scope of the
project. When the global procurement reorganization finally went live, there were some administrative
issues that needed to be fixed, but by and large, everything worked properly and there were no business
disruptions. Why did such a massive undertaking
go so smoothly? The procurement team points to a
number of actions and decisions that were critical to
the transformation’s success:
Implementation was neither too fast nor too slow.
“Many people were eager to move faster, but imple-
menting at the proper pace was critical, so everything
was carried out in a planned manner, with no disrup-
tion to the business,” Pratt says. At the same time,
says Matthews, it was important to build momen-
tum with some quick wins to build a track record of
results and demonstrate the value of the transforma-
tion early on.
The plan didn’t just come from the top. While
Matthews, Woo, and other executives led the strategy’s development, in keeping with McCormick’s
philosophy of the “Power of People,”
they wanted to make sure all team
members understood that they could
make an important contribution.
Accordingly, they engaged team
members throughout the procurement function in designing some of
the transformation plans and determining how best to execute them.
Every business unit received its due.
The team went to great lengths to
ensure that the transformation plan
and policies were not U.S.-centric,
and that they acknowledged the
unique needs of McCormick’s international business units. The plan also
avoided prioritizing based on a business unit’s size. “We wanted to make
sure every business unit’s needs are
met, not just the ones with the most
volume,” Matthews says.
Reporting and communication
received special attention. Among
the top priorities during the design
phase, Pratt says, was building a communication and
reporting framework that would be “comfortable” for
the regional business units, give the central organization a clear picture of regional activities, and prevent
duplication of efforts or conflicting directions. One
aspect of the approach that ultimately was adopted was the management of the key commodities.
Although managed by a centralized team, McCormick
ensures engagement and connectivity with each business unit through the physical presence of regional
procurement directors in its principal regions: the
Americas, Asia-Pacific, China, and Europe, Middle
East, and Africa (EMEA).
People were carefully matched with jobs. For the new
team to function well, McCormick needed a different
mix of individual skill sets and aspirations than in the
