Len DeCandia is an award-winning Supply Chain and Procurement Executive with 40+ years of experience, most recently as Chief Procurement Officer for Johnson & Johnson, AmerisourceBergen and Roche.
In the latest episode of the PharmaSource podcast Len describes the changes he has seen in procurement, including his experience in mobilising procurement during COVID, and explains why he believes enlightened organisations must prioritise suppliers.
Here are some of the key takeaways from the conversation:
1. ‘Enlightened’ organisations prioritise and centralise supplier relationships
“I would say only 10-20% of organisations are ‘enlightened’” says Len.
“When I went from supply chain to procurement I knew I had to work for an enlightened organisation, meaning one that recognises that the relationship with your supplier base is critically important to your ability to deliver value to your customers.”
“So much of your innovation and execution now happens outside the company’s four walls. Business people are given two things to achieve their objectives: people and budget. 99% of budget is spent with suppliers. Over the years we train people to be really good people managers but we don’t train them to be good supplier relationship managers.”
In his tenure at Johnson & Johnson, Len centralised an organisation that had been de-centralised for 130 years and worth $100Bn revenue.
“I’d left J&J in the mid 90’s because I absolutely despise de-centralisation for procurement and supply chain. What happens is you can optimise pockets of the organisation but you’re missing incredible opportunities to leverage knowledge and learnings.”
“When J&J asked me to come back after being away 18 years, the only way I’d go back if if they had a different view on the value of external relationships.”
2. You need strong sponsorship from the board to be successful
“Procurement teams must build the internal relationships to show how internal investment complements external investment. That can be a hard journey.”
“I viewed my role as CPO as comparable to the CHRO role. The Chief Human Resource Officer doesn’t tell you who to hire, they give you the tools to allow you to hire the best person who is the best fit. And behind those tools are all the risk management framework to ensure you’re vetting the right candidates working with the right partners. It’s the same thing with procurement.”
I viewed my role as CPO as comparable to the CHRO role
Len DeCandia
“CFOs, CPOs and CHROs can partner around these three critical assets for which they are responsible: funding (Finance), third party capabilities (Procurement), internal capabilities (with Human Resources)”
“It needs CPOs and their leadership teams to have the credibility, the trust and the ability to deliver on promises. You have to make big promises in this space sometimes. But once you are able to cross that bridge, it opens up an incredible world.”
3. The budget owner is the customer
“Whether you’re in R&D, Marketing, Supply Chain, the business leaders ultimately own the budget and you have to enable them to achieve their objectives. How do you serve them with the right data and insights that allows them to make better decisions?”
“So many procurement people show up to senior executives and say, ‘How can I help’” but that’s the wrong question to as.
“Instead, go in there and say, ‘Hey, here’s what’s happening in the world outside of what we’re investing in and tell stories about some of the opportunities.”
4. Use technology to create trust and transparency
Implementing technology was a key way that Len was able to give budget holders a quick and easy way to achieve that objective.
For the first time business leaders “could look at simple things like approved supplier bases, Everything views centralised structure as being slow, but our ability to use cloud-based technology helped to empower the budget owner.”
This was used to reduce the number of suppliers across the business.
“When we started back in 2016, we had over 90,000 suppliers. And when I finished up my tenure, we were around 40,000 suppliers. In doing so, we took out 50,000 points of risk.”
We took out over 50,000 points of risk
Len DeCandia
“In my last year at Johnson & Johnson our spend budget was $40 billion dollars. The productivity we got from that spend translated into our ability to work in a more efficient way and deliver more value.”
5. Be early when finding business solutions
It is important for procurement to be ‘at the table’ as an early part of the decision making process.
To have the right information at an early enough stage procurement leaders must be “6 to 18 months out in front of the business around those external competencies to really know what’s happening in the market: Who are the innovators? Who are the high-performers and who is strategically aligned with your organisation?”
“Go out there and find out what’s happening in that competitor space, in the new innovation space, and in the partner space to be able to to close those to close those gaps or to bring that value up. So that when you get into conversations with senior executives, you can bring some insights,”
“Understanding the external markets for what your business budgets are trying to invest in, and then helping to create that partnering with the business partner who has the budget who’s trying to solve that problem. “
To smooth the way, Len adds how much time was taken up with internal legal team. “When when you start to talk about a complex world where you’re trying to manage intellectual property in a heavily regulated, regulated environment in 70 countries around the world, the number one issue sometimes around speed… how do I put an agreement in place that allows us to feel comfortable working with the right partner.”
6. Change the story to win hearts and minds
In order to influence “you have to understand and empathise with the pain points of the business and be good at selling. As human beings, we do our best work when we connect our heart to our mind”
“I’d say ‘I guarantee you, we’re going to have more savings than we ever thought you ever thought we could have. But I really want to talk to you more about about innovation, The only way I can do that is I need to understand your world, I need to understand the problems you’re trying to solve. ‘”
Len’s advice is for procurement to move away from just talking about cost-savings to finding more important values such as cycle times. “We measured how quickly could we go from identification of a problem, and the ability to get a supplier started and on it. “
“Yes, we talked about managing risk, building resilience, getting greater transparency in our supplier base, using technology in a positive way that would give us better data and better insights to make quicker, smarter decisions. But we also talked about how we were going to use this as an opportunity to accelerate innovation, leverage innovation across the organisation.”
“I told my senior procurement people is become a better storyteller. You’ve got to be able to catch somebody’s attention in 30 seconds. You’re talking to busy people who have a lot on their plate. Be really really smart and understanding what the business strategy is, how our investments relates to those business strategies.”
7. Make a positive impact on the world
“One of the important aspects was our commitment to purposeful spending. One of the commitments that we made as a team to the business was we were going to double our spend with women-owned and minority-owned suppliers.”
Johnson & Johnson over-achieved that objective during Len’s tenure. “To do that, we needed to engage the budget holders in that conversation, to prove they wouldn’t have to sacrifice innovation”
Johnson and Johnson regularly publishes a Health for Humanity report which quantifies the impact they make each year on diverse suppliers.
More than just numbers, Len explains that when investing in local and diverse suppliers you can see the difference in your community.
“They are the people you’re going to church with, on Sunday, or you’re seeing in the grocery store, or whose children go to school with their children, because we made it part of their community. They brought us insights and innovations that we never thought of before.”
Listen to the full episode podcast for more advice and inspiration.
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