DC Velocity - Digital 2018

past—from the very ambitious to those who are good at maintaining the status quo, as well as people who thrive in high-energy, high-ambiguity environments. The ability to work together was a must-have at every level. Between 70 and 80 percent of the employees working in procurement today are in different positions than they were three or four years ago, Matthews says. Some were hired from outside the company, while others transferred to different functional areas or roles within McCormick that were better suited to their skill sets.

Education was considered a worthwhile investment. “Early on we decided that skills development would be key to the success of the transformation,” so the company invested in developing a “procurement academy,” with the goal of achieving consistency in skills and knowledge, Matthews says. Team members around the world take Web-enabled training courses, some of which are offered in multiple languages. The early training is designed to bring procurement staff up to a specified level of knowledge and to provide everyone with a common business language. More advanced training focuses on areas like category management and negotiations.

FROM BUYERS TO BUSINESS PARTNERS

McCormick’s new global procurement strategy was introduced over the past three years, and the full transformation has only been in place since late 2016. Yet the initiative’s accomplishments have already exceeded expectations.

On the “hard metrics” side, Matthews says, the most prominent achievement is in cost improvement, which has increased by 250 percent over what procurement typically achieved in previous years. So far, the new approach has freed up over US$100 million in cash, primarily through extended payment terms with vendors and suppliers, he says. Another example is greater success in dealing with the extreme volatility of agricultural ingredients, ensuring consistent access to supply.

Among the most important outcomes of the ini-
tiative, in Matthews’ view, are the global implemen-
tations of effective processes, especially for category
management and sustainability, and of enabling tech-
nology. He also sees the reorganized team of capable
professionals—at corporate headquarters, within the
business units, and wherever the company sources
its products and ingredients—as fundamental to
the company’s future success. “We’ve given people
reason to believe [in procurement’s mission], and
through skills development, the tools to do the type of
transformational work that the business values. That
makes them great leaders and productive profession-
als” who can take those capabilities into other areas of
the business, he observes.
The procurement organization’s leadership role
seems assured. Now, Pratt says, procurement is “at
the table,” working with management on setting long-
term strategic budgets, addressing profit and loss,
enhancing customer engagement, and collaborating
on new-product development. “We’ve gone from
being procurement professionals to being business
partners,” he says.
While the hard work of a years-long effort to bring
an ambitious plan to fruition is largely complete,
McCormick’s procurement team is determined to
keep the momentum going. Currently, $1.2 billion
out of an annual spend of approximately US$3 bil-
lion is managed through the new global category
management process. The goal is to have 70 percent
of McCormick’s spend managed globally and with
best-in-class category management, Matthews says.
Another area that will receive further attention is dig-
itization of supply chain information and processes,
as well as gaining greater access to data and predictive
analytics.
Pushing for change and becoming more agile
and responsive during a period of relative calm
for the business, it turns out, was a wise move. In
July, McCormick announced that it would acquire
French’s Food Group for US$4.2 billion, adding
high-volume products such as French’s mustard and
Frank’s Red Hot hot sauce to its portfolio. At this
writing, McCormick’s procurement team does not
yet know exactly what role it will play. But Matthews
is confident that thanks to the procurement trans-
formation, the team has built a solid foundation for
enabling and supporting additional growth.

“The pace of change in the food industry is faster than ever,” Matthews says. “That pace of change will continue to drive how we build a procurement organization for a high-growth future. I’m confident we can build new capabilities faster than our world is changing around us.” c