Marcell Vollmer is a man who has worn many hats. Partner, Director, Chief Innovation Officer, Chief Digital Officer, Chief Operating Officer, Chief Procurement Officer, SVP, CEO.
With decades of experience developing and implementing, procurement, supply chain, finance, and shared services, he has supported customers across all phases of their digital initiatives.
Marcell presently serves as Chief Executive Officer at the leading German purchasing services company Prospitalia Group, operating in the healthcare sector.
Given Marcell’s experience and reputation as a keynote speaker it was great to have the chance to ask him a few pointed procurement questions.
Hi Marcell, lets start off light and easy. What do you love about Procurement?
Procurement is the best way to start a career in a function providing an overview about the entire organisation, the stakeholders, the business model as well as creating real impact by keeping a supply chain running.
How did you get into Procurement? Was your perception of procurement different to the reality?
I got an offer I couldn’t refuse from my boss, the Group CFO at SAP in 2011. After focusing on internal restructuring, including setting up shared services, leading post-merger integrations and transforming organisations, I got an opportunity to optimize SAP’s external spend (at that time more than €3bn Euro p.a.)
How has procurement and the expectations placed upon it changed over time?
That’s a great question and despite all the changes we see in the world, from managing crises, like pandemics, floods, semiconductor shortage, energy cost explosion due to Russian war against Ukraine, the priorities for procurement didn’t change: it is creating real value by focusing on the best prices for the products & services needed for the desired quality and secure in-time delivery (golden triangle of procurement).
The change I see is stronger on risk mitigation (with suppliers from different regions) as well as driving impact for sustainability goals (ESG). A new task emerging in more industries beyond manufacturing (incl. Automotive) is driving innovations.
How do you feel procurement is perceived in general? Why is this?
Procurement is still perceived as a back-office and support function in most industries. I had the opportunity to run a large procurement / source-to-pay organisation as well as advising clients from all industries all over the world in my career. Based on the feedback from the latest procurement profession survey, (that Prof. Christoph Bode at University in Mannheim and I have done together with ISM) it is fair to say, that procurement is underrated on its impact it can create by leveraging the large ecosystem of thousands of suppliers, the automation, compliance, impact on sustainability as well as driving risk mitigation strategies. The reasons are different – and vary by industries – that procurement is claiming, but not all the time owning a seat on the table of the business to be involved early, to be part of planning, making, and delivering of a company’s products.
What should procurement do better?
Procurement needs to focus on creating value beyond savings. Supplier innovations, sustainability initiatives, risk mitigation in a more challenging global economy might be great initiatives on demonstrating the real impact procurement can provide.
Another area to improve is “marketing of the procurement success”. When I joined procurement and lots of business heads were complaining about the complex, slow and sophisticated purchasing process, the difficulties they and their team had to engage with procurement as well as the low employee satisfaction (within procurement, but also with procurement as function based on the annual employee survey), there was an opportunity to change the communication. An example is to publish successes of procurement (together with the business heads), like a 2-digit million savings on mobile costs with global flat rate for roaming costs for all employees, the fast expansion of datacentres in times of a crisis of hard disk production or the Apple-easy, Google-fast catalogue, which got introduced to the company.
Procurement wants the proverbial seat at the table. What does it need to do to earn that seat? What can procurement achieve with this seat?
Creating value for the business and really earning a seat on the table (not just asking for it) is key. Procurement should demonstrate real value creation beyond savings, like supplier innovations, sustainability initiatives, mitigated risks, …
The pandemic appears to have raised people’s awareness of procurement. There is a significant opportunity for procurement to move away from the back-office support function label and move towards the role of commercial facilitator. Does procurement need to re-brand or reinvigorate its processes and culture to make the most of this opportunity?
Probably re-branding procurement to a value creation function, including changing the title from the chief procurement officer to a chief value officer, chief purpose or chief collaboration officer might be an idea to further explorer. The name change is not the most important step, the value creation it is.
It is true that during the pandemic, procurement was a number one or two priority on every agenda of CEOs, CFOs, Chief Supply Chain Officers. We don’t have data at this point in time, but it looks like, that after the crisis – and the crisis is not over, but now changed from Covid to energy costs with risks of further disruptions of the supply chain – procurement did not elevate to the next level. We will see soon, if this will change and the focus on value might help procurement to elevate its positioning based on the impact the procurement leaders and teams can generate.
Procurement is evolving at pace. The pace of change often calls for new skill sets and disciplines within a team. What value can Procurement source from adding non procurement skilled staff to their teams?
Procurement needs to expand its skillset to meet the new requirements: from AI- or machine learning experts, big data analysts and architects to sustainability experts, design thinking coaches to drive supplier innovation workshops, to agile project management, just to name a few.
A cross-functional setup and digital mindset are key for the procurement professionals to deliver the value expected from the c-level.
As talents are not easy to attract a thoughtful hire-to-retire process needs to be defined to provide opportunities for experienced talents from the business to continue a career in procurement. This could be a career step for general management career tracks, but also experts from the business to take over category management for the functions they have best experiences in
The ecosystem of service, solution, and tool providers is rapidly growing. The need to automate processes, ascertain risk, drive sustainability, and work collaboratively with both internal stakeholder and suppliers are just a few of the areas that the ecosystem can assist. For procurement too truly take the next step and move beyond the seat at the table it needs to embrace this community of providers.
What are the benefits of this growing ecosystem? What are the shortcomings? How do you compare and select in an efficient time frame? What do you feel vendors could do better?
It is key to have access to a leading procurement system fully integrated in the backend systems of a company (mostly ERP-systems, like SAP or Oracle or Microsoft Dynamics). The understanding of the technical possibilities of existing solutions, but also the fast-growing start-up ecosystem provides, are key to understanding and to leverage benefit for your procurement organisation. This includes sustainability start-ups to reduce CO2 emissions, like carbmee, or new ways to source professional services, like Mercanis, up to the large source-to-pay suite providers (SAP Ariba, Coupa, Jaggaer, iValua, GEP, Zycus)
Will there be a need for a Procurement Technology Officer in the future to handle the dynamic and complexities new solutions can offer?
The technical business acumen is a key skill to be embedded within the procurement function. This includes the system knowledge of leading procurement systems and point solutions, new technologies, like process mining to analyse and optimise business processes, AI- and ML-skills to work with big data and use descriptive information to predict and ideally to prescribe what procurement professionals should do in the future.