Fast tracking the sourcing process has helped Generali push innovation into the business.
Jean Latty, group head of indirect procurement at Generali, has created a streamlined sourcing approach that opens up opportunities to SMEs and start-ups, he told SM.
Latty said “time to signature” was now core procurement metric on a par with savings, and that his department was now triggering discussions on whether the business should build or buy new technology.
Latty, who will be speaking at the ProcureCon Indirect conference in Copenhagen this month, said the firm took the decision to streamline its sourcing and onboarding process after a stakeholder engagement exercise uncovered specific business needs.
After an intake of new executives in 2013/14, Latty – who was also new to the organisation and forming the group procurement function at the time – sat down with these stakeholders to talk about their business strategies and to look for new category and sourcing opportunities.
The result was a number of very targeted business needs that Latty and his team could address, mainly in the marketing and operations functions – for example an interactive tool to help agent networks market and distributing insurance products.
“Sometimes we had to step totally outside of our historical panel of suppliers, and that included working with start-ups in some very specific areas,” said Latty. “We had to put some fast track processes in place to work with much smaller companies than we were used to working with, because they were providing something new and innovative that the business was looking for.”
Latty said start-ups were unlikely to have the financial or operational track record of the larger companies, so a standard due diligence exercise would have been a waste of time. “We know they won’t tick the boxes”, he said.
Instead the firm manages the risk by setting clear parameters around its engagement with small firms, and by making their involvements much more time constrained.
“Let’s be very clear about what we’re going to use [these companies] for, the limits of the engagement and when we revisit the engagement – versus a more traditional model,” he said.
Latty said a number of contracts were signed under the new process, taking about four to five months from identifying the need to signing the contract. Then a longer, more iterative process began that involved regular follow-ups and adjustments to make sure both sides were happy with how the relationship was progressing.
“We started with an ecosystem of three to five suppliers with different profiles, different capabilities and after two years we are actively working mainly with two of them,” said Latty. This was a “natural attrition”, not a selection process, he added.
The programme needed resources to be invested into procurement but has been seen as a high value project, said Latty. It has put procurement in a position to trigger discussions on whether future technologies should be bought or made in-house.
“With new technology, with RPA [robotic process automation], with IoT, we are really pushing the discussion,” he said. “Everyone knows the impact [of technology] on the way we interact with our customers, the big impact on how we streamline our functions. The real question is do we buy those technologies or do we do those in-house?
“In our case, not having much in-house is becoming an advantage, we can really put all models on the table and are in control of our destiny.”