Episode 038: Field Notes – Insights from Procurement Leaders in the Consumer Products Industry at World Procurement Congress

(upbeat music) The future of procurement isn't something to prepare for. It's being built right now. As AI accelerates, supply chains evolve, and expectations continue to rise, procurement leaders face opportunities and challenges unlike anything we've seen before. On this podcast, we bring together the thinkers, practitioners and innovators driving that change. We explore what's next, what's working, and what it takes to lead in an increasingly complex world. This is The Future of Procurement. This week, we bring you another special episode in the lead up to SAP Connect 2026. Our very own VP of Research, Gordon Donovan, is back with three more fantastic and insightful conversations from the recent World Procurement Congress, this time with a focus on the consumer products industry. Gordon sits down with the CPO's of Nestle, Kraft Heinz and Heineken, to discuss their top priorities and challenges, as well as get their thoughts on where the future is headed. So, what do the companies making chocolate, ketchup, and beer have in common when it comes to procurement? Let's dive in and find out. (upbeat music) In this first conversation, Gordon spoke with Jakob Bussk-Nilson, CPO of Nestle. - Welcome. - Thank you. - Second year in a row? - Yes. - You know what I, we talked last year, I think you've been in the role a month maybe? - Yeah, maybe six months or something. - So what's the last 12 months been like? - Yeah, quite a journey, honestly. No, fantastic. I mean, we have really put procurement on the map at Nestle. We seized an opportunity, if you want, where the business really needed help drive the strategy of Nestle. The business needs to get back to growth, back to volume growth. - Yep, after five, six years of severe input cost increases driven by weather-related patterns in coffee and cocoa driving those markets to historically high prices. And over also the last five years, as I showed yesterday on stage, geopolitical events from the pandemic to the Ukraine, Russia, conflict, two Middle East conflicts, tariffs. So there's been a lot. - Speak quite quiet and relax, then, with the last. - Exactly, but with these massive input cost increases and passing on as much as we can to consumer, it's really hurt our ability to drive volume growth. And the business realized that we need a strong strategy to get back to volume growth. And to get back to volume growth, the strategy is to heavily invest in our brands, marketing. And to invest in brands, you need money. And at the time, our CEO looked at me saying, you're spending quite a bit of money. Can you please see if we can extract more value from the system to help finance that growth? And that's where we see the opportunity to really drive a transformation of procurement within Nestlé to unlock this value to reinvesting growth, but also transform simplifying how we operate to become faster and more agile in the marketplace. - That's impressive. And I was impressed by what you were talking about yesterday when you were on stage as well and now. And look, Nestlé is a brand close to my heart because I used to do a long time ago run an awful lot of training programs for Nestlé around negotiation and stuff. So I always kind of look out and see the people there that was really interesting. So when you talked about some of the transformation, undoubtedly there'll be some AI kind of parts of that transformation, either happening or to happen. Yes, how do you find the right balance between kind of investing in AI and this sort of human strategic oversight, the human in the loop? Somebody said human in the lead yesterday, which I think is quite an interesting line. No, so the way I look at it is that there will always be an element of human judgment that needs to be part of this journey. It's so powerful the AI that is coming and it's coming at lightning speed. I mean, I cannot even follow anymore when I try to use it. Use it. I also have two boys, 19 and 16, who goes to school. And I also see them using AI quite a bit to do their homework and et cetera. And at one point we said should we allow them to do it or not? But I'm not allowing them to do it. It is also putting them back, if you want. But allowing them to do it, but then teaching them how to critically analyze the data that comes out is super important because it's a tool to help you make decisions, but the decision has to be yours. And as we implement an AI-powered source-to-pay system at Nestle, I also am very cautious that I'm afraid that some of our people go into what I call out-to-pilot, simply trusting the system, where the system at the end of the day could be sending out agreements, contracts, to suppliers that we are not in agreement with, if you want. So there will be this human element, a human judgment decision-making that we will need to retain and we will need to train and upskill our people to use the systems so that we don't run into situations where we are doing stuff that we don't want to do. And I think you said actually on Mainstay yesterday when you looked at some of the skills that you wanted the team to have curiosity was a word, I'm pretty sure I came out of your mouth. And that was one of the highlights for me from the whole thing, because for me it's the biggest thing that I think humans, and specifically procurement humans, need to have as their primary skills is asking good questions, being curious about that, and then going into further detail, the most powerful question in the world is why. And I think that's what I hope that a lot of this AI-civil is going to do, is going to drive us to ask why I love a lot more. No, absolutely, and we discussed it also in the CPO community yesterday that we have all provided systems tools for our people, the co-pilers of this world, et cetera. And the ones who are curious and plays with it and adopts it are really the ones that are advancing. But it's kind of like pockets of this. You almost need to make it mandatory for people to get in there and play with it in advance because as you leave some people behind. So this is having this curiosity, and I use it around AI, but also using it generally around procurement. We need to have our antennas out. What's happening in the political world? What happens with whether, you know, if you're too siloed, you will miss out. And that's why I keep coming back to this curiosity. You need your antennas out to monitor what's going on all around the world. Yeah, because something's going to happen that you don't know is going to affect you, right? Unless you're actually being curious about the stuff that's going to move so fast, you know? If you're not on your toes, you're going to be left behind. I think that's one of the big differences that I've seen over the last 10 years. Is that if you look at the 15 years before that, so say from '98, '99, all the way through to about 2015, it relatively stable, slightly boring world, but you had this period of stability, which in itself is actually relatively unusual. And then for the last 10 years, it's almost like for me, reverted back to the norm the way it was before then, which is unbelievably disruptive, constantly volatile and totally unpredictable. And then, unless you are curious about what's going on, then you're going to miss opportunities. Look, this eruption has become the new norm. And the ones who manage it well create a competitive advantage, yeah? So if we can be anticipating, if we can be at the forefront, there's opportunities for us to support our business, to win in this very competitive landscape. Yeah, I think supporting the business is interesting. And so I want to just come back to a couple of things that you said earlier around, you spend a lot of cost. How can you extract more value? So looking at the research, we do a piece of research with the economist every year. It's two and a half thousand C-suite respondents, so CPO's, CFO's, COO's, chief supply chain officers. And they identified that 54%, so up 10% from last year, that cost savings, cost management, was procurement's primary value proposition. Last year was 43, this year it's 54. It is a lagging indicator, 40 tells us the way the world's been for the last 10, 12 months. But the gap between cost and the number two, which was digitalization, is why did it's ever been in the five years that we've been doing this? So it seems to be a growing kind of thing, which is interesting. And I guess my question to you is, you've also talked about all the other areas that we've talked about, risk and resilience, dual sourcing and getting all the different commodities and understanding all of those things that's kind of going on. How do you balance the focus from being purely cost control, cost at everything else? And all of these different kind of resilient strategies that need to also be in at the same time? - Yeah, no, look, and it's not easy. And we often debate in our leadership team, how do we balance the priorities with our teams? Because if you have too many, you also know that the result is not going to be great. But look, I'm not surprised that cost cutting, or whatever we want to call it, driving efficiencies, helping the business be competitive in the landscape is a top priority for our companies. Again, you saw my slide yesterday, the input cost increase we've seen over the last five years, the consumer is not willing to pay for it, you know? So we need somehow to become more efficient, effective, lean in order for us to be competitive on shelf. Having said that for us and for everybody, I guess, ensuring supply is number one. You know, we go after savings, but if we stop factories, all those savings are gone in a heartbeat, you know, because then you don't have product on the shelf. So number one, priority is ensuring supply. And then you can put a verb or whatever you say at that verb in to that saying ensuring sustainable supply, ensuring competitive supply, et cetera. So finding ways to optimize that and making that ensuring supply as competitive as possible is at the end of the day what we're aiming to do. - Yeah, for sure. And so some of the things that you've mentioned that might sort of help unpredictability tariffs. - Yeah. - I think, and the volatility around tariffs over the last 18 months has certainly introduced a layer of unpredictability how have your category strategies evolved with all of this volatility yeah only in mind that I was chatting to somebody yesterday and said predictability is what we need so we're having to hedge huge amounts more than we've ever had before yes because we need predictability so how is your category strategy's been impacted by all of this volatility yeah look basically since I would say even the pandemic we've been on this journey of having flexibility in our supply chains flexibility in terms of multiple supplier approved for critical materials and even multiple origins because of the tariffs we had the countries having higher tariffs than others so allocating your volumes to the lowest tariff origin suddenly became part of the strategy something we had not anticipated in the past but it goes beyond that we also look at more flexible recipes because suddenly you may not be able to import some of the ingredients that you use and may need to look for local options and thereby adapting your recipe to be able to produce without importing some of these materials so our sourcing strategies today try to look at having a local and an import option in a way that you can say when the import option is available there's no disruption and supply chain and it makes economic sense to import we do that but we're also running scenarios to say if we can't bring that material in what can we then source locally now we are very dependent on coffee and cocoa for example and it doesn't grow in many countries right so that we will always be having to import but even coffee it's grown in Asia it's grown in Africa it's grown in Central and South America and they're having recipes where you can also flex our supply chains exactly it's flex our supply chains there will become important both in terms of geopolitical issues but also because of these weather patterns that will El Nino now seems to be becoming a potential super El Nino that could also damage the crops in the near future and having this option to flex your supply from various origins becomes more and more important that's interesting so a lot of my background is rail and health care and health care you've I had to work with nutritionists right obviously for the patients in terms of making sure that they had the meals to help them get out of hospital as soon as they possibly could and one of the things we started track was weather patterns because the default protein that they would give to patients is chicken right and whenever there was a weather incident it would destroy the the feed for chickens yes which means that you would have less chickens and so it was about actually having alternatives in there so different recipes to your point around how are we going to get the lean protein into these patients to allow them to get out of hospital yes they can and get there and start their recovery so it's interesting that you're kind of saying the the different recipe changes that might need to be made for different types of cocoa beans and of course as part of that flexible recipe and also coming back to us trying to cut cost we are always very conscious that we do not do stuff that has a negative impact on the consumer preference of our product so when we drive these savings transformations and number one is ensure that the consumer preference remains high which is also why part of our transformation is really focusing on the services and indirect side where it does not directly impact the customer product interesting that's interesting because that alignment with the customer and the reason why the customer buys your product exactly is is absolutely important it might change the whole segmentation of your span we need to be a consumer obsessed as we say we need to ensure that the product on the shelf is the preference of the consumer and we cannot cut cost to a level where the consumer does not buy our product anymore so you don't want new coke in other words no I couldn't resist the analogy let's just quickly talk about the fact that you know all of these strategies have got more complex and the world's got more complex headcount doesn't seem to be moving upwards very much in fact it seems to rather be stagnating or potentially going down again the report the the college report identifies that the majority of organizations are thinking about reducing the headcount how do you redesign the rhythm or how are you redesigning the rhythm the flow of the work the how and the where work gets done to kind of ensure that this expanded remix gets mad but also maintain the humanity in this make sure people don't get burnt out yeah look the workload continues to increase for procurement with all what we've just discussed and I think the digital journey and and the AI capabilities that are being introduced will help us absorb some of the workload we're struggling to deal with today moving more and more of our tactical operational task to be done by by systems so that our people can focus on the real strategic task having the antennas out yeah in curious because there's potentially not time to do that today yeah I know when when we talk about this journey that people are concerned whether or not this will mean job cuts etc I don't see it as job cuts I more see it as we may on a natural how do you say people resigning a pensioning exactly and a natural show we may not rehire because we see we're driving efficiency through the system so I will not rule out that our our procurement population will be small over time but it's not going to be by a radical job cutting exercise it's more going to be a natural churn as you say yeah where we may not need some of the roles in the future and some of the roles then get redesigned to kind of use the technology to do acts and then absolutely and and some of the efficiencies we're driving in this space we will reinvest in the people that we will have retained because the skills will be different we will need to significantly invest in in upskilling the people that we have so I think we potentially will have a a bit smaller community but a higher skilled and a higher capability from the people that we do have going forward last question report talks about where procurement is now it becomes challenges less about arguing for a seat at the table yeah it's for what you do with the seat with the seat so and use the seat effectively which it certainly sounds like you obviously you're doing what's the one thing that you wish CEOs truly understood about what it takes to deliver a world-class procurement function? yeah so I think I'm in a lucky position because the CEO at Nestle has really put procurement at the table not physically I don't set on the executive board but we are being involved to an extent that I have not seen in in the past so it's almost this about earning your seat right I think the way that we have managed through these geopolitical crises the input cost increases over the last five years has really proven to the business that having procurement involved brings a significant amount of value and us connecting with the business and helping the business for example in pricing strategies we're already now together with our business talking about pricing strategies for 27 what will this Middle East conflict do they increase the the high crude oil prices as I mentioned yesterday packaging cost fertilizer cost what does that mean in terms of our input cost for 2027 that we already now can plan our pricing strategies with the business and this I have not seen three four five years ago that procurement is so tied up with the business on the business strategy rather than just the procurement strategy so at least in my case I sense that our executive board and our CEO fully understands the value of procurement so to answer your question I think that is what other CEO should really understand that the vast amount of money that procurement is managing on their behalf can really help them succeed in the marketplace awesome yeah thank you so much for joining me I really do appreciate it and I look forward to speaking to everyone again soon this next conversation was with the Chief Procurement and Sustainability Officer at Craft Hines Janelle Aiden one of the questions I like to start everybody office your procurement origin story how did you get your starting procurement yeah so I always like to start my origin story with I grew up in a middle of nowhere in the Midwest in the US my family were all farmers so I knew I didn't want to be a farmer but I kind of was always interested in food so I actually ended up studying agronomy at Kansas State University so it was in my mind it was a very global career because everyone in the world eats so it must be able to take you somewhere and so my first job at a school was buying corn to make whiskey so it was kind of the connection there working with farmers at a company called Diazio and it up staying there for 20 years but I think the the thing was I didn't even know there was a thing called procurement when I started but this was in the procurement org and I ended up just loving it and I think why I stayed in procurement my whole career is really the relationship part of it I love the sort of place that procurement gets to sit in the value chain where you to work all across the internal stakeholders you could to really touch everything internal to the company but you also have this lens to the outside so you get to work externally with really interesting companies you get to learn a lot about many different kinds of industries so every day's different you get to you know have use your curiosity and go out and solve business problems and I think that's what makes procurement really really interesting and that's why I've stayed you know it's interesting you're the fourth person in this who's sat in that chair yeah who said the word curiosity within the first five minutes of sitting down and if I take nothing else from so it's one of my favorite words anyway the curiosity that's needed yeah the procurement professionals is the thing that I think is going to look like vault it forward so let me ask you what was changed in the in the 20 years since you started what's been the biggest change that you've seen in procurement I mean there's so so many right if we go back so I've done almost 25 years now which really blows my mind I always say If procurement was just negotiation, I would have left the function a long time ago, right? So I think people generally that don't know a lot about procurement. They think that's what we do or just negotiating contracts all day long or, you know, in tenders or in bids and things like that. But the reality of it is obviously, and I learned this really early in my career, that procurement's fundamental job is really two-fold. One is to create value for the company and the second is manage risk and it's core. That's really what procurement is. What makes procurement so interesting to me, and I think it really does depend on the maturity of the function and how it's changed, but that you could have touched so many other things. Again, indirect procurement where you're working with marketeers and you're looking at growing brands and you're looking at innovation and new product launches. I think that's super exciting, and I spent some of my career doing that. But when you get to work on supplier diversity programs and you get to see like, how do we cast a wider net and what else is out there and who should we be working with that? We're not working with today. Now, we're responsibility that I have at Kraft Times is also sustainability. I'm going to ask you about that, yeah. That is such a, I'm really surprised that more procurement and sustainability teams aren't put together because there's such, particularly for companies like ours that make things. So much of our carbon is bought in from suppliers, and so there's such that connection, and I think when you think about the job of sustainability and what we really have to do to solve these climate challenges, it still comes down to a fundamental procurement skillset, right? You have to like work with your suppliers, make sure that they have the right capabilities, and if they don't, you need to find new suppliers. You need to negotiate sometimes for like, how are you going to cost share these activities or how are you going to make sure you work with the suppliers that are leading practices and sustainability? Where do you need to find new technologies to help solve some of these things? How do you make sure you're getting the right value for money for sustainable practices as much as for, you know, the cost of what you're buying? So sustainability is relatively new into procurement in the last, I don't know, 5-10 years, but it's really all of these things together, innovation, growth, sustainability, the opportunity to problem solve, create new value chains, while you're still managing risk and driving value. I mean, I think that makes it a really exciting, exciting function. Obviously, the other thing I'm sure we'll talk about is just the role that AI and technology obviously are playing, and that's big changes in the last few years, which I also find really exciting. Well, I'll ask the AI question. I want to come back and ask you about how do you keep sustainability high on the agenda, bearing in mind some of the other things that are happening in the world that might help to decrease it. I'm going to come back and ask you that question. Well, let me ask you an AI question. So we do a lot of work with the economists every year, we do this large procurement study, two and a half thousand respondents to this. This year, apparently, AI is a thing. Apparently. So 80% of C-suite, including CPUs, said that there were AI improvements in cost optimization, in process automation, but over half reported no improvement in actual decision making. For you, where has AI genuinely moved the needle? And where has it yet to do so? Yeah, it's interesting. So where we are today is we are still using it. And I think if you think of the two parts of AI, it's the first part is how do you use it to drive productivity and efficiency and how we do things. And then the second part is how do we use it to supplements the kind of buyer experience, whether that is how you help category manager think differently about their strategy or bring new insight or use it to help you think. How do you use it as a kind of complement to the human? Right now at Craft Hines, we're mostly in the first part, we're looking at the productivity opportunities, we're looking at things actually really across the organization, we're using it for marketing content creation, we're using it for data cleanup in procurement as well as supply chain, we're using it to drive our planning model. So we're using it to do a lot more of these efficiency things or places where you have to take you know, reams and reams of data and put it together, we're just talking to our e-commerce team and right the world of e-commerce is also changing a lot with AI because you know what you used to have is like a lot more choice on the digital shelf. Now is sort of being narrowed down because AI is really dictating a lot of the choices that people are seeing the summaries of what AI is telling you to buy. So companies like ours have to make sure we're evolving how we think about what the consumer journey is and what consumer information they want to have, how do you take this reams of information, actually sometimes the answer to that is give it more information, right, we only give, we only had kind of a certain amount of information on our label or a certain amount of information on the internet and in a digital app, whereas if you actually give it more information, it actually give guidance to the consumers in a different way. So we're starting to see it across kind of the the org. We're now launching more tools, so we're giving co-pilot to all of our procurement teams, we've been piloting it for a while, things like contract summarization, things like how do you do speed for like a purchase request, how do you help guide people, this is where we're seeing some of those use cases really play out today. What I'm excited about for the future, though, is really tools and things out there. Well, first of all, it's probably the democratization of this across everything, right, so I think whereas we were previously having to pay for all these like specialist tools and point by point and add all this huge tech stack that's very confusing for a procurement professional, right, to say, what do I do? So if we still have some complexity, now can put orchestration on the top and have, you know, just a little chatbot that you talk to and they can guide you to do that, whether it's the business user or the procurement user, I think that's really exciting, but also the tools, you know, the Gemini's, the chat GPT's, the co-pilots out there, mean that you can actually, you know, in the right parameters within your company, but upload a lot of information into this, and it can give you things that previously you might have had to use four or five tools and a lot of human intelligence and time. So I think that's whether it's contract summarization, helping build category strategies, really giving deep insights and, again, challenging our thinking, I think there's a ton of cool things that we can use it for as we go forward. And hopefully will help increase the professional's curiosity of things within us about to ask better questions and ask more questions and ask, what does this actually mean, and the interpretation piece? And there's still, I mean, let's be honest, right, there's still some resistance, and I think it's interesting also you see the difference, I was just reading an article about this yesterday of in the US, there's starting to be a bit of a ground swell of people pushing back on AI, right? So it's whether it's because, you know, they don't want the data centers and all of that coming in and increasing their utility bills and using water and all of that, they're afraid of their jobs, and there's a very, there's a potential obviously for a very large group of people to get very afraid of this technology, right? We're definitely seeing that. And I was, I was reading a different article, they were talking about how China's approached AI is very different than how the kind of Western, let's say, American mentality has approached AI where they are using it really to better people's lives. So they were giving the example of whether it was like using commuting times or delivery, you know, getting delivery faster, or there was a mom that was using an AI kind of mask to speak English to her child, even though she doesn't speak English. So how do you use it to make people's lives better versus using it as a way to say, oh, it's going to take our jobs away, right? So I do think there's a role that we have to play as leaders, I think, in helping to bring the whole organization, you're going to have the early adopters and the Mesaers, how do you kind of bring everybody to more of a common excitement about the technology and that curiosity, I think comes in there too. Yeah, that's a good point. I'm interested in, are you talking about your background in farming and obviously in any kind of manufacturing piece, in any sort of food manufacturing piece, supply chains are, you know, fairly important. And one of the things that we noticed from this year is that these investments in resilient strategies, they're probably gained pace because of an after COVID. I think there were there beforehand because I think there was a lot of turmoil before them, but certainly COVID kind of had that things like dual sourcing, their sourcing, inventory buffers, moving from a world of just in time to just in case, all of those carrier price tag. And right now, the environment that many organizations are in is cost decreasing, kind of we need our cost to be decreasing. So I guess my question is, how do you hold on to those resilience gains in a world where it's asking you to try and find lower cost outcomes? Well, we have to do both, right? I think this is always the job of procurement is to find the places to, and when we say value, that's what value is, right? It's figuring out the right strategy for the company. And it's not one size fits all. I think that's the biggest work that we've been doing in the resilience and kind of risk management space is number one, just really, and there's, again, there's an AI piece and there's a human intelligence piece to this. So we've been doing a lot of work and just really understanding me craft times is a very complex company, right? We buy lots and lots of different things. We have, you know, 10,000 skews globally. We're buying everything from dairy to meat products to potatoes, cucumbers, tomatoes, oils, packaging, all the different things, right? And so in that complication, part of the challenge again, the huge amount of data is how do you understand where you expect those risks to come from? Because it's not a one size, I mean, we're never going to have a 100% dual source supply chain. And in fact, we have a still a very high single source percentage of our spend by choice, because it's balancing that productivity versus the resilience. Recipes and also correct. Also, we need to make sure that in those places where the risks are higher, that we are being proactive to have multiple suppliers. And so there's that human intelligence that says, okay, I'm going to put all the data into the model. It's going to kick out and tell me you should do it. dual source, these things. And then I have to have the human come along and say, actually, there's something missing here. Or that's not as risky as it's saying. And this is how I want to work with my supplier. So we've done a lot of work on trying to build resiliency into an existing supply base. So not necessarily saying it has to be dual sourced, but can you have multiple sites at a supplier pre-qualified? And I think that, again, part of this is doing the thinking before you're in the crisis, as much as writing down what you would do before you get there. So I think there's something that people don't necessarily always think about that. You don't want to have to do that when you're in that moment. You want to have thought already, who would my backup be? Have I developed a relationship with them? Do they have the capacity? All of those kinds of that thinking is really important to do, but it doesn't cost you anything. It cost you when you start to pull the trigger to say, I need to implement my backup. And I think in those instances, we have done some of that. We have added dual sources, we have added inventory, et cetera. But it's been in a very kind of surgical way where the highest risks are. And for me, that sounds like a key part of category strategy, right? Totally. It's kind of a thing that reminds me, what you've talked about reminded me of stuff that we were doing for the Millennium Bug. And going to groups and discuss whether or not all the proactive work that was done to help mitigate the perceived risks of the Millennium Bug, which then nothing actually eventuated, was that because of the work that we did, or was it all just a fir for you anyway? You kind of answered my question. But all of those things you just talked about going, which of the most critical ones, which of the risk, where's the backup supplies going to be? What if generators didn't work on most of January? And we're going to have this, we're going to have that, all those kind of things. On the subject of category strategies, one of the things the report identified was that actually category strategy was the second biggest delay in the procurement process. I think largely because of all the things you just talked about. Which are all good in terms of having that rigor. - Yeah. - And guess my question to you is more, when you think about the category strategies, and the fact that it's going to now factor in things like tariff exposure and the risk mitigation piece, the geopolitics that's going on, sustainability, ESG, all of these things, as well as delivering the cost outcomes that your organization needs, how do you stop it from becoming a bottleneck while still delivering all the value that you talked about? - Yeah, it's interesting because I think the, this is, again, a place I think AI can start to play a role, but if I think about a great category strategy at its core, it's a story, right? It's a story that brings all the pieces together that gives you the context where you take the person, the category manager, who has that depth of understanding experience, and they're able to bring that story to life, to explain to me or our leadership team, or whoever it might be, what are the things that we need to do to create the most value and to manage the risk? So, it's really that summarization of a lot of thinking that goes into what should we actually do, right? That's ultimately what a great category strategy is. That's why I'm also not a big fan of kind of making it a template, or saying you must do these 18 steps to get to this category strategy, 'cause I think that sometimes is what holds people back or takes a long time. But also, you can tell the difference between a very seasoned category manager, someone who's done this many times, and how they can come in and kind of quickly be able to identify those levers and make those calls, versus when you haven't done it, it actually, it does help to go through certain sequence of events. And I think, again, that's a place where AI can potentially help to say almost as like your category strategy mentor, right? Like, have you done this? I pulled the data together. This is what it's telling me. What do you think, right? This is how I would perceive, you know, this is where the agent can help. I think teach someone who maybe hasn't done it before, what those steps are along the way to get you to a great strategy that tells you the right insight, right, that allows you to say, what are the levers that you're going to pull? So I don't at all see it as something that slows people down or should slow people down. And I think it is fundamental to not the strategy itself, and again, it doesn't have to be 100 pages. It can be three pages, right? It done well. That just really gives you that direct insight, tells you the context, explains the market, explains the dynamics of what's happening, explains how we should think about the future and therefore what we need to do. So I think it's really a skill that is human led, where agents actually can really help crunching the numbers, getting you some of that context, doing some of that external research to help speed up the process. - I was interested when you, everything that you said, but you started off and you may have noticed a smirk, 'cause a smirk was, you tell it's about a good category strategy tells a story, and there are two, again, I said curiosity was something that's been told an awful lot. Story telling is something that you hear a huge amount here, around that curious storytelling. In fact, if we bring those two together, I've got one final question. - Sure. - The final question is, report talks about, this isn't about getting a seat at the table, it's about using the seat effectively. - Yeah. - What is it that you wish CEOs would understand better than they do, about what it takes to run a world class procurement function? - Yeah, so I'm in a unique position at craft times, and I think the research I've seen is, it's about 15% of CPO's report directly to the CEO, so I actually-- - Yeah, it's not that many, yeah, so you're-- - So I report directly into our CEO, which I find it to be a great privilege, and I think, before I answer that part of the question, I think the first thing about that, I kind of really don't love the seat at the table, kind of analogy, but I think if we go to like the value that procurement adds, right? And when we were actually going through the process, so I've taken on the global procurement sustainability role in July, and when we were going through the process of filling my previous role as a head of North America, who also reports into the president of North America, it's a very hard thing to find, actually great procurement professionals, who also are good general managers. So, and I think that's one of the critical things as I think about all the things we've heard on stage the last couple of days, the future of procurement is someone who has the curiosity, has the business acumen, really understands the business, in order to show all the places where procurement can add value and procurement can help drive the business strategy, 'cause at the end of the day, that's what our job is, our job is to deliver the business strategy for the company, part of that might mean helping save money to invest in growth, part of that might be finding the right suppliers to drive innovation, part of that might be creating the sustainability strategy and delivering on that, it can be flexibility in the supply chain, resilience, all those things, but it's all about delivering the company strategy. And what we found is that there's a lot of great procurement professionals out there who have the technical experience, but maybe haven't had the exposure or haven't had the opportunity to be in those rooms and have those conversations at the sea speed level to really bring that to life and have that general management experience. So, if I was thinking about what I would encourage procurement professionals out there, junior, mid-level, even CPO's, if you're not already reporting to the CEO or spending some time with the CEO, is really spend time understanding the business strategy and really showcasing what procurement can do to deliver that, don't just talk about cost. In fact, maybe don't talk about cost at all other than to say we're gonna feel growth by allowing the company to invest more, maybe talk margins, maybe talk whatever is language of the business, that's the role. And I think there's also, it's gonna be my last kind of buzzword confidence, is the other thing, is that that's the other thing that I find missing often, is understanding the business and then having the confidence to speak up in those forums and in those rooms. And this proverbial seat at the table is useless, if you sit there and don't say anything. So, I think that is, to me, the fundamental thing that I use in my role is to say, I need to understand the business, I need to have all those great partnerships with my peers in order to understand their needs and understand the business, and then I need to know where to speak up, where to make sure I bring the value that we can drive as a function to the table. And then the last part of your question, what do I wish the CEOs understood more, is that we do a lot, and again, I'm gonna speak to it like a more of a manufacturing type of CPG that we do a lot more than just save money on the direct's cogs impacting side. Because I think that often, that's what happens if you're reporting to supply chain or even into finance, they usually want to see only that direct P&L impact. And so much of what we do is really driving the right contracts for risky business that might be with agencies, that might be with RIT spends, that, you know, and you may not see savings, but the work that we do is incredibly important to giving flexibility to the company, to protecting, you know, the future, to driving the right resilience, all of that. So, I get a lot of excitement out of the work that we can do across sort of marketing and indirect and all of that spend that sometimes goes unnoticed, but it's actually so critical. I don't think we give enough recognition to that indirect procurement teams in the company and the role that a great procurement or should play on that spend. - You know, that's been fantastic. I really appreciate the time that you spent with us today. And I look forward to speaking to you all again soon. Thanks a lot. - Thank you. - Finally, Gordon sat down with her of the food, CPO of Heineken. - Good afternoon. - Thank you for having me. - It's a pleasure. - Joy to be here. Have you enjoyed the conference? - Yeah, absolutely, very much. - Yeah, is this the first one you've been, or have you been there for several years? - Several years. How's it evolved and changed over the years? - I mean, you can tell you for the last two years, the tech stack is really stepping up and that's quite exciting to see all of these companies who are ramping up in AI. - Yeah, and we're definitely going to come to that. I can, I can. to show you the question. A question that I liked to ask everybody, and this is, how did you start in procurement? What's your procurement origin story? - Oh, I started quite late in procurement, in fact, because I think after 10 years in manufacturing and supply chain, I ended up having the chance to step into procurement, and this is something I really wanted to do, because I was quite interested into microacademics, agriculture, communities, and wanting to have a greater influence at the global level. So procurement started to be quite an interesting department to be in, and I jumped into that. - That's past 10 years after I started my career. - And now, it's interesting to talk about macro, as one of my passions is macroeconomics, and what that means from a category strategy, and a procurement perspective. So it's fascinating that you talked about that. So I guess since you started in procurement, what's been the biggest change that you've kind of observed over that time? I think, you know, there's been a lot of changes, you know, with waves of themes, you know, that have evolved, it started very transactional, obviously, 30 years ago, or 20 years ago, because I started 20 years ago. And then, you know, you've seen sustainability being part of the remit of the CPUs, and then now the tech digital transformation. So it has brought an agility resilience, as well, brought up the function into something much more influential within the company, and outside the company. Has begun a super interesting and influential department of functions to run, of course. Yes, yes, I think the remit of procurement has certainly broadened, hasn't it? Some of the things it's doing. You talked about AI, and so one of the things that we do the last five years is we've been working with the economist, and we produce, the world's biggest procurement study. So it's two and a half thousand respondents, CFO, CPO, Chief Operating Officer, Chief Supply Chain Officer, Chief Information Officer, all talking about procurement, which is interesting. And one of the things that it talked about was AI improvements. How AI has improved processes? So cost optimization processes, process automation. About 80% said, yet we've seen significant improvement. But around 55, 60% turn around and said, we haven't seen any improvement because of AI in decision-making. And maybe that's a good thing, maybe it's not. But my question to you is, where's AI moved the needle for you? And where do you think it's still got some ways to go? - Yeah, a good question. You know, it's something quite new, for me. It started on my radar at the very beginning of 2024. So it's really been 48 months, the start of adventure. Obviously, we started like everybody, you know, playing with co-pilot and all the new features coming along. And so we're able to summarize a meeting, translate a script into PowerPoint, you know, we are kind of playing with the co-pilot functions. And I think so far it has played a role of augmenting capacity, capabilities of the team. But we are developing some really strong, generic use cases in HINEC and 8 to 10 generic use cases are now close to be completed and put live into and have a real concrete impact. And we're quite excited about that. And the future is about really anything we can use in GNI that is going to impact efficiency. That's two, for example, agentic AI that replaces processes, effectiveness, where we're going to put AI into decision-making processes in categories specific, and of course user experience, where we're trying to go for hands-free procurement or the removal of all the transactional stuffing. - Yeah, for example. - Well, it's interesting. I think one of the things that I have seen AI do is almost take that user experience piece. You know, one of the things that I think a lot of my users, and a good friend of mine, said that like 95% of most people's experience of procurement in a business is the P2P system. It's raising a requisition. So how can we remove that through the use of AI? And that for me, I think, is going to be-- - Absolutely, absolutely. - That's where people see from procurement, unfortunately. - Yeah, and it looks still a bit dusty, and cumbersome, and transactional. And if we able to remove that completely out of the sites or stake holders and show that we are really business partners in decision-making to support them, that will help a lot. So we're really working on trying to get rid of all the transactional activities through putting people into share business services center, applying a GNI layer on top of that, to optimize, and having user experience which is completely hand-street. - Yep, you know, for the stake holders, me. - Yeah, that's going to be exciting, I think, to absolutely kind of see, because we're really going to release procurement to do what it can. So look around corners to bring strategic insight to the business, and one of the things Barba was saying earlier was procurement has got the ability to bring a broader market lens internally back into the business, not linked to the category of spend that they're buying, but potentially, and this was the promise, I think, of category management, was understanding that market so well, to be able to say from a revenue perspective to organizations, hey, look, this is what's happening in this market, this could be something that we want to be able to look at because of the potential state of it, which I think is going to be an opportunity for procurement to really connect with the end consumer of the products or services that the business sells, and deliver like mass strategic insights and revenue and really kind of cement that kind of relationship. One of the things that the report identified this year is the Joring COVID post-COVID immediately after COVID, and I heard a couple of the CPI presentations earlier today talk about the strategic changes that they made, things like dual-sourcing, multi-sourcing, near-shoring, on-shoring potentially, even in-sourcing back certain things, but all of that kind of resilience, inventory buffers was reading a McKinsey report where people said, "Oh, we're gonna near-shor," and then they asked the same question two years later, it's like, "No, we just bought more stock." Just build bigger warehouses, bought more stock, 'cause near-shoring is really hard. It's like, yeah, tell me about it, I've tried it, it's really hard. All of that resilient strategies comes with a price tag, and I think what's interesting is in the world, we're living in at the moment, we've seen costs rise. The report identifies that the importance of cost management, and I don't think it's ever gone away from a procurement perspective, but it's risen back up the agenda, like the number two priority, the number three risk, the number one value proposition that procurement brings. So I guess my question to you is, how do you hold on to those resilience gains while still managing a really tough cost environment? - Sure, that's a good question. You know, post COVID, obviously, we've invested a lot in the agility and resilience of the value chain, and you said it all, but from SNOP and to end value chain optimization with our suppliers, to predictability forecasting, to on-shoring in high-leakin, you know, the last 10 years we've made our suppliers invest into close to 15 to 20 green fields, you know, investments. And each time he has lifted up our profitability because we were doing that at lower costs, despite the investment. But altogether, yes, it's a quite big investment, but I would say the world and the macroeconomics now are so volatile, and the volatility costs so much money in high-leakin, we could be hit by billions of euro of inflation, that at the end, that additional investment that we've put into that, have a fantastic return on investment, versus the risk of that volatility, okay. So for us, it's a positive story, and you know, I always remember, remind everybody, that it's not the ugliness of the inflation that hits your P&L, that counts as the relative importance versus competition, right. So as long as the investment allows you to beat competition in going smoothly into the volatility, you still win. - That's fascinating, against the relative competition. That's, I like that, I do like that. As you said at the beginning, I enjoy your products, probably too much, but I do enjoy the products. Although the zero one more so than anything else, 'cause I think that's not the many more innovations to go. - I'm looking, well I should look forward to trying them. I think the older we get, the harder it is to try some of the different ones. So we talked about broader value. How do you demonstrate? So one of the questions that we asked last year was around the metrics of procurement success, and unsurprisingly cost savings was high, as there's never gonna go away. But we know that procurement delivers much broader value than that. So I guess my question here is, how do you demonstrate that broader value in managing risk in improving supply relationships whilst delivering on the cost agenda that we know is still kind of out there? - Sure. But you know, in the Hanukkah, we have family companies, so we think more long-term, we think top-line growth, we think innovation partnerships. We tend to develop very strong relationship with our key strategic partners at top-to-top levels, CEO to CEO, CEO to CPU. And I think we want a company have the strongest links in terms of quality of partnership on that topic. And of course, we look at how we can maximize our P&L relative to competition. We study competition really, really, really hard. And then we're able to know them as much as we know each other. That's what we like to say. And therefore, you know, we're going to really look and partners on how we can make a difference on the cogs per hectaliter versus competition. On the return on investment of the marketing engine, firepower. In some, we invest into marketing and on the fixed costs per revenue, of course, on a GNA and the deep-fragmentation of the supply base, etc. So all that we do that with our partners, with our suppliers and then we look at startups, the scale-up, the partners of the future, as well as partnering with the long-term partners we've married for life on the tradition of sourcing. So how do you, I didn't pre-warn you this question, it's just a question that after you say, how do you measure or do you measure the health of a relationship? Is there, obviously, a series of things that you look at? Does it give you a total score? Do you look at going, well, actually, we want this supplier to be a 73 and currently a 46, here are the areas that we need, either supplier to do better or we need to do better. How do you measure the health of a relationship? We measure an NPS course. Are we happy about the supplier? Are they happy about us? And then we try to look at the bottom part of the list and the top part of the list and through a partnership relationship, Stierkos, we try to look at what is going real, what is going wrong and how to improve. And most of the time, the quality of the relationship would not necessarily improve through commercial agenda, which is quite classic, but through a partnership on sustainability. Rehaniken is very strong, scope 1 and 2, scope 3, water, biodiversity, but also on how we co-invest into tech together to create resilience, agility and a competitive advantage, and also how we federate other mutual companies and to end value chain partners into breakthrough projects that are also going to make a difference for the long term. And when you do that, you suddenly improve in an unexpected way the quality of the relationship because everybody has a stake at it. And you move away from just a pious conversation, which is always a bit tense. Well, I think it also indicates to the supplier that you're serious about building and improving the relationship and there's a mutuality and it's building trust and there's been some great writing about trust and buyer-supply relationships. The reason why I was interested in this is I did a piece of research with the University of Tennessee about three, four years ago, specifically on how do you build and measure trust in a relationship? One of the things that they did was they basically did what you said was that they would then get a, of a particular, they'd get two suppliers of a similar category. It doesn't have to be a really good supplier and an average supplier and they'd ask them the same questions and you'd see where the differences were. Now, in terms of the response to those questions, go, if you want this supplier to be better, then you can actually see where you need to invest. And I thought that was an interesting kind of place. And I found out that most of the time, it's also the quality of the relationship on man to man that you create and we try to, you know, harness sponsoring a lot of events, the champion league, the Formula One. I usually invite the strategic CEOs of our suppliers to these type of events to spend a day together and know each other outside the working relation. And I create very strong bounds, personal bounds and you find out that these bounds are critical for the success of the two companies as you go through the tribunences of the world. Couldn't agree, but one of the things I used to say to my team was that we're not the biggest show in town. We're not, you know, we're not highly good. But we need our suppliers to love us to the point where if they can only supply to one of their customers, it's us, even though we're not going to be their biggest customer. And that doesn't mean paying them huge amounts of money. But it does mean that there's a whole bunch of things where those personal relationships are such that we can't let these guys down. And what can we do to make sure that they're working properly? How do we innovate for them, et cetera? I think that's a really interesting point that you make. You know, one of the biggest satisfaction I've ever had in the past is when you visit a supplier and then you talk to people in the offices and these people say, "Oh, you know, you are a customer of customers." Yeah, because we like Heineken and some other of your competitors are not that. Well, I think I'm speaking to at least one of your competitors later on. So I'm going to be interested in asking you the question. Let's see how you react to them. So let's talk a little bit about like operating rhythms and models and those kind of things. Report talks a little bit about only 39% of respondents expect headcounts to grow. And about a quarter expected to reduce from operating models. Yet, as we talked about, the remit and procurement keeps expanding. So how are you actually redesigning the rhythm of work, the workflow of your team to meet those criteria and also to avoid burnout, which is a possibility? And of course, we want to avoid burnout as much as possible. On Heineken's side, we are part of the company who are going to reduce our headcounts. And of course, we don't want to overburden our people, but we're going to do that through a smart new operating model. So the use of share business services center, maximizing the use of AI and robotics on processes. And he balanced the Kete model with the business partnering model. So there are three things we're going to do, which is going to enable us to, and also through an upskilling capability program, trying to do more things with fewer but more qualified people. Yeah. So let's talk about the skills and the development piece you're talking about. So they talked about redesigning a gentick AI. We'll handle a lot more of the transactional work. Interestingly, the research kind of mirrored what you've just said, that there's an expectation that in the short term, there'll be shared services. There'll be an agentick layer put over the top of those things. And then along with the term, it'll be more centralized around the data, with some of the work going back towards the business, but then the centralized team within procurement kind of looking at the data. And that will shift more procurement attention more to things like supply relationships, strategic judgment, influencing all those things that humanity brings. That possibly AI doesn't. So I guess my question is, how are you rebuilding your team for those skillsets, for those human-led capabilities? Yeah, that's an excellent question. Well, you know, all the transactional part of the organization will be automatized through a gentick AI in the future, and the repositioning geographically into shared business services centers, so that we can create synergies and put an AI layer on top of that. And then, you know, we re-balance things like I was saying, the cutting-edge model with the business-partering model, and business-partering model, you need to up-skill people and, you know, enable them to be supporting decision-making process, influencing inside the company, outside the company. And we do that through a very targeted, structured capability, up-skill-ling program. And it has become one of the most important topics on the radar, because if you don't do that, you run the risk of having an organization which becomes obsolete very soon. And it's that we heard one of the key skills this morning, I think, a couple of times, around curiosity and all of the other things. That, for me, I think, is one of the key skills. Thank you. You know, testing things, getting AI as part of your everyday life, so we do training programs where we show people the life of a particular persona, at work, during a day, and then we show them how they can use AI in the morning, in the middle of the day, in the evening, you know, whether. That sounds possible. It's a process. That's a classic test, you know. But that type of training, that type of curiosity that you need to explore things and how to do things differently, we're trying to push that very strongly within the organization, and almost sometimes not making it optional, but mandatory, because it is very structurally organized by our departments. Yeah. It's been fantastic. I really appreciate the time that you spent with me today. I could carry on talking to you. We'll do that over a Heineken at some point, absolutely. Absolutely. With that, thanks very much, everybody, and look forward to speaking to you all again soon. So what do Kraft Heines, Nestlé and Heineken, have in common? Well, aside from stocking pretty much every supermarket on the planet, their chief procurement leaders, Janelle, Jacob and Herve, just spent the best power on AI telling us in very different ways, probably the exact same things. The first is curiosity. It came up in all of the conversations, not just as a buzzword, but as a genuine skill. Janelle noted that it was the word she kept hearing from every guest before her. Jacob put it front and center on the main stage, and Herve told us Heineken has currently made curiosity training practically mandatory, because it's the teams that lean in and explore are the ones that are pulling ahead. In a world where El Nino threatens your cocoa supply, where a tariff announcement can reshape your sourcing strategy overnight, and where AI is rewriting what productivity even means, Curiosity isn't a soft skill, it's actually a core one. The second thing was about balance, and balance between AI's promise and its limits. All three are deploying it, for contract summarization, for data cleanup, for process automation. All three are excited about what comes next, agentic AI, hands-free procurement, if you like. AI is a category strategy mentor, but all three drew the same line. Jacob's word auto-pilot, I think, summed it up. The moment people stop critically evaluating what the system tells them, you have a problem. AI amplifies good judgment. It doesn't replace it, but then there was the line from her that I think is well worth sitting with. When the conversation turned to the cost of resilience investments, he refrained that question entirely. It's not he said about the absolute size of the inflation here, the lands on your P&L. It's about your position relative to your competition. If your resilience investments allow you to absorb volatility more smoothly than the company next to you on the shelf, you win. That shift from absolute to relative thinking, cuts through a lot of the noise around cost versus resilience, and it's the kind of strategic clarity that all three of our guests brought, which brings me to a bigger picture. The organization pulling ahead right now aren't the ones that have found the cheapest inputs. They're the ones that have built procurement functions and procurement teams that are curious enough to see disruption coming, resilience enough to absorb it, and at all three of showed us strategic enough to turn it into a competitive advantage. Thanks for listening, and we'll see you next time. Thanks for tuning in to the future of procurement. If you found value in today's discussion, please share it with a colleague and subscribe on your favorite podcast platform. The best conversations don't end when the episode does. Tell us what challenges you're facing or what you'd like us to explore next at the Future of Procurement at SAP.com. The future isn't something procurement leaders wait for, it's something they help create. We'll be back soon with more conversations, insights, and ideas from the people shaping what's next. Until then, I'm Eric Dorene. I'll feed you, Zane.