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Procurement Success Stories: Interview with Erik Haegeman

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Procurement Success Stories: Interview with Erik Haegeman

In this interview, Arvesta’s Retail Director Erik Haegeman talks about how combining quick-wins with process improvement proved a winning combination for Arvesta procurement, and gives practical advice on navigating the (sometimes rocky) road of working with consultants.

After a long track record in the DIY business, Erik Haegeman joined Arvesta, formerly known as Group Aveve, in 2016, becoming the business unit director of Belgium’s leading agricultural and horticultural company. He was determined to put the Aveve stores back on a growth track after a couple of years of stagnant turnover. With the help of Enabling Procurement, Arvesta was able to quickly find the means to finance the investments necessary to propel turnover to new heights. “Thanks in part to Enabling Procurement, we were able to create the needed financial room to execute our growth plans,” explains Haegeman. “In the end, it proved a win-win-win situation – a win for our customers, a win for Arvesta and Aveve stores, and a win for our suppliers.”

Why did you decide to enlist the help of Enabling Procurement?

“Prior to working with Enabling Procurement, the emphasis of our buyers was very much – almost exclusively –  on the quality of our products. Ensuring that we got the best deal on the products we sell in Aveve stores was only a minor area of attention. Our buyers each had their own way of working and there wasn’t enough overall structure. The offering of our suppliers was also incredibly fragmented. That’s why I asked Enabling Procurement to perform an initial audit of our activities, which ended up revealing that there was room for a lot of progress. In August 2017, based on the outcome of that audit, we decided to team up with Enabling Procurement and focus on improving our purchasing conditions and purchasing methods.”

How did the collaboration with Enabling Procurement go?

“Not so well at first. Initially, they mostly peppered our buyers with questions, and our buyers started feeling like their time was being wasted. ‘I’ve got to explain how I go about my business from A to Z and they’re the ones getting paid? Shouldn’t they be transferring knowledge to us?’ they asked, slightly indignant. And after two months, their patience was gone. A crisis meeting had to be called and our buyers urged management to pull the plug on the whole thing. They said they didn’t see the added value of the project.”

“At that moment Enabling Procurement was gathering information needed to transform the first quick audit into solid preparation for entering into negotiations with the different suppliers. So we held firm as management and insisted that the project be continued. We pointed to the preliminary, but encouraging, results that had already been booked with the help of Enabling Procurement, and, in that crucial moment, were able to convince our buyers to continue. Those quick wins were clear proof that we weren’t purchasing at the best possible prices and that there was still room for a lot of growth. That argument swayed our buyers.”

How did things proceed after this?

“We ended up prolonging the project for six months at the adamant request of those same buyers. Their initial opposition had completely disappeared and made way for disbelief that we would let the project end on the previously agreed-to date just like that. Our buyers ended up persuading management to extend the project. We’d otherwise be leaving a lot of potential gains on the table, they said. Our buyers were dead certain that a payback would follow and that the additional benefits of further collaboration would be far greater than the additional costs.”

Was that also the case?

“I can say with absolute certainty that we earned four euros from our suppliers for every euro we paid to Enabling Procurement, so that’s a nice result.

We also improved our purchasing conditions and purchasing method. We now have a quarter less SKUs and our buyers are much more structured in how they approach their supplier data. They are still very focused on the quality of a product, but they’ve learned that tough price negotiations are indispensable, even on premium-quality products.”

What would you say to retail directors who aren’t entirely convinced of the cost-benefit analysis of a procurement project aimed at improving purchasing of goods or services?

“Purely because of the ‘spend one euro, make four euros’ outcome I mentioned previously, I’d say you’re getting value for money. Don’t underestimate that part of it. But every company is in a unique position of course. That’s why I would recommend having the candidate consultancy firm perform a quick scan of the gains they estimate can be made before entering into a global procurement project. It’s also important to clearly define the scope of the project. Finally, I would recommend that they negotiate a good balance between fixed and variable remuneration for the consultancy company during the contractual phase.”

Why did you want to work with Enabling Procurement specifically and not another company?

“As far as I’m concerned, the strength of Enabling Procurement is precisely that they aren’t a large company, that they aren’t a Big Four consultancy firm. The great thing about Enabling Procurement is that they aren’t big talkers and that they’re very down to earth, which also meant that they easily fit into our organisation. Even though they showed up with a clear task and with a take-no-prisoners attitude, they were very human, very open, and very flexible in their interactions with people.”

“They also didn’t fall into the well-known trap of giving our buyers the impression that they weren’t doing a good job. On the one hand, our buyers were doing a good job. But, on the other hand, there’s always room for improvement. That’s why I’m as good as certain that we’ll enlist the help of Enabling Procurement in the future. Several of our supplier contracts will come to an end in 2020 and we’ll have to choose new long-term partners or reconfirm our existing ones. And we’ll probably be able to use the temporary help of Enabling Procurement with that.”

Why was it in fact important that Enabling Procurement and the Arvesta buyers get along?

“Because our buyers have to be on board with the whole thing. Enabling Procurement can put things into motion, apply pressure and offer support, but our buyers are ultimately the ones who’ll have to make the closing deal with the suppliers. At the end of the day the closing deal has to be the best business deal and that isn’t necessarily the cheapest deal. Our buyers are the ones who’ll continue working with suppliers in subsequent years, so their buy-in is incredibly important.”

You may also be interested in:

Procurement as a center of profitability

The Retail Partnership Programme

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