In a country where procurement is still graduating as an extended admin function, JLL has added a whopping $12 million through savings in procurement over the last six years. Aval Sethi, Head – Supply Chain Management & Procurement, Asia & Integrated Facility Management, in an exclusive interview with Mohana M, reveals the successful implementation of technology-driven supply chain management and procurement strategies and his most-favourite “OneSource Platform”.
How successful are the integrated procurement strategies in FM today? Is there a different strategy of procurement at different levels of the supply chain?
Yes, and no, both. Yes, because procurement is normally broken up into a number of steps. At the base level, procurement is very transactional in nature, focusing around day-to-day requirements. At the mid-level, it could be procurement at the manager level focussing on localized purchase for the facility or could be at the pan-India or pan-regional level looking at a larger base. However, at the next level, it is more around building strategy for the organization, focussing on value addition, consolidation with suppliers the buyer, building supplier relationship, grooming and developing suppliers to meet requirements and becoming partners to the organization.
At the chief officer level, procurement takes a different approach, as it involves working with stake holders – mostly from business orientation – it could be your clients or the CFO or other people in the business. Procurement involves understanding and meeting their requirement. At every level, there is a distinct flavour to procurement.
As far as monitoring of the whole process is concerned, it largely depends on the structure with proper delegation of responsibilities at various levels. There will be an objective check for each person with designated and specific deliverables. However, stronger organizations will have a stronger governance workflow to make sure that people are aligned and fulfilling what is expected of them.
“It is very important today for procurement professionals at any level to be in line and knowledgeable about their business; its needs and how it is changing. So whether it is the chief procurement officer or head of procurement, he or she can therefore mould the ‘procurement organization’, as it has become a backbone to the organization. The CFOs today are realizing that procurement does contribute directly to the bottom line. Thus, rather than the transactional or a knee jerk reaction to event or event based procurement, if the ‘procurement organization’ knows the plan of the business, they can strategize and delivery exceptionally well to the requirement.“
How have you been successfully integrating different procurement strategies at different levels through the years?
Six years back when I joined JLL, the focus was more on FM delivery and meeting client requirements. A structural change was brought about in 2009 when one of the big contracts required extensive delivery through of a lot of procurement. It gave me an opportunity to actually build up a robust structure to improve the business given my background and knowledge on procurement. It was literally like a green field dream project!
Over the years, the same structure has evolved to include changing requirements and expectations. However, at JLL, in the last 2-3 years I have moved procurement from being just a functional support entity into a more entrepreneurial based function, bringing giving more value addition to the business. From that perspective, I started looking at vendor consolidation, relationship building, value engineering, e-based program for our suppliers, different revenue streams within the supply chain and adding more to bottom line directly through efficient supplier management. We have evolved our supplier segmentation model which is a pyramid structure where the strategic suppliers sit at the apex. The model is structured around how we develop our suppliers and bring about those strategic suppliers to add value to our business. It has been a very evolving and pro-active structure in supply business chain.
Today, I have the privilege of being a member of the IFM executive committee and know where the business is headed, what the future is and what we are planning to do. Therefore, I am proactively involved and am able to bring up the procurement organization to readily deliver to business as required.
“This year we introduced technology and created a catalogue management tool that completely integrated ‘procure to pay’ on the platform. The robust approach reduces time to book, time to process and time to supply.“
What changes have you experienced in workplaces today and how do those contribute to procurement management?
The whole concept of a workplace is changing today. The ‘CRE’ trend surveys show higher degree of focus on technology, smarter workplaces and enhancing employee experience. Today in an age of technology, we have mobile devices, tablets and laptops which literally connect us 24×7. The new age employee of today works comfortably with technology and demands e – tools to provide information.
Today with net penetration, being present in the property and working, per say, has lost its relevance, because with internet connectivity one can be located anywhere and work from there. I can be on the road, sitting in my car, home or anywhere else and work. Even offices today have moved away from the traditional setting to a smart workplace concept. Offices are wi-fi enabled and one can see people sitting on sofas or easy chairs at the lounge or cafeteria with their laptops.
As more and more organisations are moving to an ERP environment bringing in work order automation, we are now also looking to have access to real time information about the supplier out on delivery – whether they have delivered the material or how correct their delivery has been through smart phone applications. But, at the same time, this has also created pressure on the skills of the people engaged in such services. If they do not have the mind-set or if they do not fit in the framework of technology or are unfamiliar with internet and net connectivity, then it is a big struggle for them.
Hence, there is a need for people with a project driven mind-set for dealing with multiple aspects of deliveries. For example, suppliers will have cross functional category expertise and the person delivering should be able to communicate well across those categories.
“We create the framework of supplier management program whereby the site team and the local operations teams manage the relationship, the work and the performance of the suppliers.“
Is there a customised software in procurement management?
Of late, many of our clients have been expecting me, as a procurement head, to address and take away a lot of their challenges faced in dealing with ad-hoc and transactional requirements at the facility or with buying of materials and supplies. While there are a number of technology platforms available off the shelf but none that offers end to end solutions to what we need in a Real estate FM environment. This prompted me to sit back and think: as strategic partners to all these businesses, how can we address the speed and bring more value to clients. We created a new business model and started procurement services for a few of our clients last year. This year we introduced technology and created a catalogue management tool that completely integrated ‘procure to pay’ on the platform. The robust approach reduces time to book, time to process and time to supply and creates a supply chain environment that is purely driven by performance. The platform provides visibility and governance, and also links in our suppliers, our staff and the client on a single platform. We created what is branded as “One Source”
The catalogue module enables client to view the products, their description and price, and then to place order and buy online, just like an e-commerce. A list of 16 product categories was identified starting from stationery, water, tea & coffee consumable, painting, repairs and maintenance, electrical & plumbing consumable, carpet, carpet shampooing and so on. These were high sale categories of the client and the client can simply log into www.jllonesource.com and place the order on the catalogue. At the backend, each of these products is ascribed to a supplier who is localized to a particular site of the client so this simplifies taxation and enables there is work order automation. Once the supplier is ready to deliver the product, he is able to generate a delivery receipt, fill in the details based on the work order and deliver the goods at the site. We enable each supplier with a smart-phone app, where they can choose the work order against which they deliver, take a photograph of the delivery receipt and upload it through the smart phone app on to the technology platform, as a confirmation against the work order. The moment the delivery receipt is uploaded, there is a three-way matching on the platform. It automatically generates an invoice to the client. The finance department validates the invoice and sends it off to the client for payment. Not only that, it also integrates the delivery with an inventory module for our FM’s at sites. department file. Thus, the delivery that is completed at the site is uploaded automatically into the inventory module of the site. We provide best in class Business Intelligence tools providing clients with customised MIS and Dashboards where the client can view the entire inventory on site. They can understand their consumption pattern and fix budgets for sites accordingly. At the client end, there is a lot of visibility and governance and it reduces theft cases or misappropriation of stock. This way the client, the suppliers and the JLL staff work on one platform.
How do you get your suppliers on board?
We have got a very strong prequalification criteria to identify suppliers. The first one is obviously their financial standing. The second is assessment of risk. The risk factors also include checks pertaining to legal issue or any complaint, any labour court cases or any other criminal or civil court proceedings. We go back to some of the clients for feedback on suppliers’ performance and look at their long standing history of presence in the market and service to various clients.
The supplier, thus assessed and taken on board, is first introduced to the smaller part of our business for may be three to six months and subjected to at least two rounds of quarterly evaluation of performance and delivery. If Once our team grades the supplier well, we then consider an upgradation. We work on a supplier segmentation model – a pyramid– which is broken down into three parts. The base of the pyramid is occupied by all our registered suppliers who want to work with JLL and are pre-qualified. This is a sizeable chunk of about 3,000 vendors that we have on the system today.
As we upgrade the suppliers, they move into the next level, which is the preferred supplier network comprising those who have gone through a few rounds of performance evaluation. Some of these suppliers, based on their hunger for more business, their approach and how they can come up in their performance reviews, are moved up to the Strategic Partnership Program. This pattern applies to all the vendor partners and service providers.
However, there are also suppliers who may move directly as preferred or as strategic suppliers based on the kind of business they have been doing, the size of their entity, the volume of business in terms of financial background and standing, and the need of business. For example, a global company like Kimberley
Clarke could directly be brought on board as a strategic supplier and we may also set up a contract across Asia Pacific with them.
“Compliance today is a very big focus area. For example, in a manpower based contract at a site, out of the required 10 housekeeping boys, only eight turn up because two were not available at the salary structure set by the client.“
What are the challenges confronted with supplier management?
Out of the entire supply base we have, there are many suppliers who are localized and work for a specific city or a specific client type. The supply chain professionals are not present in every city, so the operations team that is dealing with the suppliers has to manage them. We create the framework of supplier management program whereby the site team and the local operations teams manage the relationship, the work and the performance of the suppliers.
On a few occasions there are misses in between, either the suppliers are not managed correctly or the communication is not clear between the supplier and the operations team and so on. Slowly, the commitment goes down, the approach and the responsibilities are not defined and there are certain gaps that tend to come in. While at the central level, we qualify a supplier capable of meeting all requirements, at the ground level at the delivery end, the supplier starts to struggle because the KRAs have not been set, there are no defined SLAs and no KPI’s are set. Resultantly, a good supplier who could have done well, is now becoming a struggling supplier in the system. The first challenge is to continually engage with the site team and explain the importance of building a supplier relationship and setting up very clear guidelines and rule sets for the suppliers.
In some other cases in spite of the best efforts of the site and operations teams the supplier just does not perform to expectation. The supplier is so transactional in his approach that he may not have an inclination to improve performance. The supplier is provided opportunities to improve but there are many cases where eventually the supplier has to be replaced.
Compliance today is a very big focus area. For example, in a manpower based contract at a site, out of the required 10 housekeeping boys, only eight turn up because two were not available at the salary structure set by the client. Consequently, some of them start doing overtime, which has its limitations under the labour law. Beyond a limit it becomes noncompliance, but the client expects 100% deployment. Thus, you engage the service provider to ensure 100% attendance, but the supplier is not able to pay overtime beyond permissible limits or meet the shortfall or get the client to increase salary for boys. It becomes a kind of a conflict within the site, where again the blame sometimes goes to the supplier who is unable to deliver what has been contracted.
The second challenge is in getting trained and skilled manpower. There is so much of shortage, especially where skills are not really admired – nobody wants to be a toilet cleaner or to be seen with the broom – we find all types of people without much training coming in. How to ensure that the manpower engaged is skilled and comes up to the speed is a challenge being faced by our people on some sites.
How different is it when it comes to procuring cleaning products?
Normally, the entire manpower and material or cleaning supplies are bundled into the contact of the housekeeping vendor and we do not directly buy cleaning chemical or consumables. However, I have identified good suppliers and brought them as strategic partners on board on negotiated terms and conditions. In the cleaning segment, we have Diversey Care-Sealed Air and Schevaran Laboratories Pvt. Ltd as strategic partners for cleaning chemicals. As part of the contractual obligation, they conduct random audits and check some sites to ensure that the right chemicals are being used in the service delivered. They also train the housekeeping staff on proper dilution ratio for chemicals, put up charts & literature or posters on sites and make pocket cards available to janitorial staff for easy referral. This again could be in local languages, as not all will be familiar with Hindi or English. Thus, the responsibility of the partner does not end with just supplying. I have brought them into the work environment to have a higher stake in ensuring that what they are supplying is actually being used correctly and in the right method and also in creating awareness programmes.
It has been a great journey and I have seen procurement changing over the years. But, we still have a very long journey to undertake and we are heading the right way. There is a lot of talk around the value that procurement brings in. But, in India, there is a big shortcoming as we do not find good procurement staff today in the market. Procurement has never been in the focus and it has been someone from the admin team actually moving in and taking up the procurement role. He does not understand procurement nor the story behind the negotiation, the type of negotiation, the element of psychology and how that plays a role in good negotiation with a supplier. Unlike in the US or in Europe, where supply chain is taught in school and colleges, in India we do not really have a structured way of education in supply chain. Skill set is a challenge and this is something that really needs to be addressed to reduce this skill gap for procurement.”
What are the changes you have brought about in procurement and what more changes do you perceive?
I am changing the colour of procurement into being more entrepreneurial. Procurement as a traditional function will no longer exist in the next five years. It will become more of a document management function, which essentially means somebody is giving you a purchase requisition, you go out to your pre-approved and contracted vendor for a quotation, send it to the requester and on approval issue a purchase order. This is very transactional in nature and will probably peak as more and more technology comes on board. In order for the function to grow it has to now step away and be more entrepreneurial, a business partnership to reach out to the client and to assess what more can be done to bring in additional revenue and more profitability.
Thus, the One Source platform that I spoke about earlier could potentially become the game changer in the industry. What we have created is end-to-end B2B consolidation across the length and breadth of the categories that we require in corporate, CRE, FM or property structure. Whether it is repair and maintenance, supply of material or consumable or ad-hoc buying or ad-hoc request, everything is dealt with on this one integrated platform.
With the Internet of Things catching up, it will also create tracking mechanics for every element It has been a great journey and I have seen procurement changing over the years. But, we still have a very long journey to undertake and we are heading the right way. There is a lot of talk around the value that procurement brings in. But, in India, there is a big shortcoming as we do not find good procurement staff today in the market. Procurement has never been in the focus and it has been someone from the admin team actually moving in and taking up the procurement role. He does not understand procurement nor the story behind the negotiation, the type of negotiation, the element of psychology and how that plays a role in good negotiation with a supplier. Unlike in the US or in Europe, where supply chain is taught in school and colleges, in India we do not really have a structured way of education in supply chain. Skill set is a challenge and this is something that really needs to be addressed to reduce this skill gap for procurement.” of the supply service. Today, we have technology that allows our staff to use bio-metric devices mark their attendance. In our case, instead of waiting for the vendor to reconcile attendance and provide his invoice, we are providing giving actual attendance to the vendor based on bio-metric reader output to raise his invoice on.
Thus, Procurement is going to lead the change in technology and the way we do business. As we move forward, the entrepreneurial mind-set is expected to understand finance, taxation and the business itself. Now with this overview of different functions, the day is not too far off when we can see procurement
leaders actually becoming CEOs or Managing Directors of companies because they know exactly how the business operates, they know their supply bases and costs, understand their finance numbers very well and therefore, can run their businesses much easily.
What has been the contribution of procurement to the bottom line during your tenure?
In the last six years, I have contributed close to $12 million to the JLL bottom line in India.
For a company of that size and scale and with that kind of value and benefit in hard dollar savings coming to the bottom line, it is a great story.
SAVING $12M IN SIX YEARS
Soundararajan’s journey in the culinary field began at the Taj Hotel kitchen in New Delhi. Ever since, he has served at many hotel chains, organised several festivals and has been instrumental in getting recognition and accolades for his contribution towards culinary advancement. In December 1997, he joined Mahindra Holidays and Resorts as its Corporate Executive Chef and is continuing till date. He was pioneer in introducing the concept of waste management such as composting, Herb / kitchen garden, use of recyclable materials. He has been honoured with several national and international awards and is the recipient of the Golden Hat Award (2004) and SICA Golden Star Chef Award (2008) from the South India Culinary Association for two decades of Continuous contribution to the profession. In his 30 plus years of experience, Soundararajan has witnessed the evolution in the industry. 
In her address, Jayshree outlined the association’s effort in bridging the gap between upcoming professionals and the veterans in the industry, of providing a brainstorming, idea-sharing and training platform in skill development training, education and mentoring for the industry professionals as a whole to keep up with the growth, challenges and stride ahead. The executive committee of PHA will be responsible for conceptualizing, creating and standardizing housekeeping norms in the industry, create and endeavour as an evaluating body to certify and approve vendors. To have a pan-India presence, to be involved in audits and specifications in the hotel industry are on PHA’s future agenda, she told. 
On the occasion, Dr Malini Singh and Dr Sudhagar, HOD and Smritee Raghubalan, Faculty, Department of Hotel Management, Garden City College presented a state-of-theart case study and its outcomes on some of the hotels in Bangalore titled ‘Customer perception of service quality and a curated report on ‘Consumer experience analysis of Ecotel Hotels’ respectively. The convention also offered an interesting panel discussion over the unified functioning of procurement and housekeeping departments. 
