The Digital CFO Asia took some time to sit down with Tan Swee Yong, Head of the Procurement Shared Service Center at ST Engineering to discuss the changes that he has witnessed in the procurement function over the last few years.
by Vanessa Quake, Digital CFO Asia | 12 Jan 2021
The idea that procurement’s only role in the organisation is to hammer down a supplier to get the best price has started to date quickly. Like other business units before it, the procurement function is undergoing rapid changes, driven in part by digital transformation and sped up further with the advent of COVID-19. The Digital CFO took some time to sit down with Tan Swee Yong, Head of the Procurement Shared Service Center at ST Engineering to discuss the changes that he has witnessed in the procurement function over the last few years, as well as how he has managed his own procurement transformations.
Digital CFO: Let’s start with you describing your experience in procurement, and the role procurement pays within your organization.
Swee Yong: My main role at ST Engineering is to head up the shared services team, centralizing the procurement functions, such as sourcing and purchasing, to service all four ST Engineering sectors – aerospace, land systems, electronics, and marine transport – and Group Corporate functions.
The aim of centralizing the procurement function is to improve operational efficiency and transformation efforts, as the company moves from a sector structure into two clusters – Commercial and Defense & Public Security in January 2021.
Prior to ST Engineering, I led procurement transformation at SingTel, exploring technology with the goal of improving efficiency, making cost savings, and driving process improvements.
DCFO: What are some of the changes that you have introduced at ST Engineering?
SY: People harmonizing was the first thing we did. With the merging of the four sectors, the procurement team was formed through a “lift and shift”, with headcounts moving from their various sector teams into the one procurement team. The main problem was that these individuals were still operating in silos, only working on tasks from the sectors and Business Units (BU) that they had come from. So, we introduced a round robin concept for all buyers so that no one would work on a specific BU within that sector. One of the teams was also combined to handle multiple sectors.
Process harmonizing was next – this is about identifying and creating standard processes and implementing these throughout the team. This required a mindset change, explaining to individuals how these changes would help to level out workloads while they performed the round robin, and benefit the entire team.
We also expanded the adoption of a self-service e-catalogue which allowed business units to place their own orders on an internal marketplace without the need to communicate with the buyer. Similar to existing consumer platforms like Shopee and Lazada, the e-catalogue allowed anyone to browse and select what they needed and to generate their own POs. This sped up the purchasing process, freed up the buyers from admin tasks, helped to improve service levels and created opportunities for capacity growth.
DCFO: These sound like some big changes that you’ve implemented at ST so far and I’m sure it wasn’t all smooth sailing. What are some of the roadblocks you experienced and how did you address them?
SY: Procurement tools in the market are becoming more user friendly, which is great. However, there is still a slow uptake of the technologies by the users. We’re not talking about the buyers within the procurement teams, but rather our internal customers. So user education is a big deal – for example, we need to try to educate the users on how to use the e-catalogue, and ensure that they understand the benefits of the system so that they are more willing to use it.
Within the procurement team itself, the round robin concept I mentioned earlier was designed to even out work. This meant that for some, their workloads would decrease but for others, they may be an increase in the workload. I had to make the benefits of the change clear to each individual – for example how it would help in annual reviews because everyone is now measured against the same scale.
DCFO: COVID-19 has really demonstrated the importance of digital transformation, and it has for some actually forced them to accelerate their digital transformation timelines. How has COVID-19 made a difference to the procurement transformation projects you’ve implemented?
SY: COVID has actually helped to reinforce that everything we’ve done has been a step in the right direction, and has proven to be valuable to the organization. The processes we had implemented meant that while everyone was working at home, projects could still continue, especially with things like the e-catalogue. Most importantly, our service level agreements were not affected despite the changed working conditions.
DCFO: Taking a more macro view of procurement, how do you think procurement is seen as a business unit, particularly as compared to other business units? Is procurement transformation seen as a priority in the industry?
SY: Unfortunately, procurement is lagging behind finance, marketing, and communications when it comes to transformation. Procurement is still seen as a very secluded business function. However, procurement is no longer just about cost savings – it’s also about driving business strategy so the importance of procurement transformation is slowly becoming more evident. One of the things is that procurement has access to a lot of data. And when you are exposed to this data, you can develop the strategy. What is important is for procurement transformation to be aligned with the business strategy in order for it to achieve the ultimate goal of bringing value to the business.
DCFO: To wrap us up, what advice do you have to other procurement specialists or CEOs who are trying to drive procurement transformation?
SY: To say procurement can drive business strategy is a big change.
First and foremost, the CEO must recognise the value that procurement can bring to the business and put an emphasis on procurement transformation. Even if procurement leaders are not part of your organisation’s executive leadership team, they should still be included in senior management meetings so that they have the best understanding of the business strategy, and can shape the way procurement works in the organisation to best support the goals of the business.
Within the team, procurement professionals need to change their mindset away from the idea that they are “just buyers”. Rather they need to become trusted buyers, and even what I call smart buyers. They need to analyse market trends and behaviours to make the best product recommendations to the business units that can best support their needs.
Thank you, Swee Yong, for sharing your insights. You can connect with or follow Swee Yong on LinkedIn here.