"Sustainability plays a critical role which will not be confined to environment, but also factor the abilit y to balance profit, people and bring innovations"

Thomas Udesen,
Head of Procurement,
Bayer AG
Mr. Thomas Udesen, Head of Procurement, Bayer AG, was recently in Mumbai to attend the Together For Sustainability conference. He spoke to Chemical Engineering World on the complexities of global supply chains, the changing roles of procurement personnel and how India can participate more actively as a strategic sourcing partner for global majors.

How have the changing complexities of the world impacted the decision making processes of procurement function across the chemical manufacturers?

The world has never been as complex, as fast and as interconnected as what we see now. If you look at just a decade back, companies used to have sufficient inventory levels that could offset some of the worst of external inputs in their basic economy. But if you compare that with today, the world is becoming more and more volatile to disruptions because of external characteristics and it is very critical for companies to understand and mitigate the risks associated with procurement to avoid any disruption in the supply chains to serve the end – user customers.

Over the last couple of years, the role of procurement has evolved significantly and plays a critical role in creating, delivering and protecting value by fixing the basics like transparency, policy status, supply chains and truly understanding the capabilities as well as the risks of the partners.

At Bayer, we are implementing a multilayer program with new technologies tapping into disruptive technologies like artificial intelligence and advanced analytics. Implementing smart data technologies will help to improve demand and supply analysis. In the past many data sources have been used resulting in huge efforts to consolidate key data and build your future on data reflecting the past. In the future we shall see one data source, one single source of truth and real time information automatically connected. This will boost the quality of how we do business. At Bayer we are working on these tools and essentials to create a better future. Along our mission: Science For A Better Life.

How does the change in product portfolio impact the supply chains?

Change in product portfolio is a question of lifecycle adjustments and the supply chains are quite resilient to such fluctuations. At Bayer we decided to change portfolio either for lifecycle adjustments or based on extensive consultation with the regulatory authorities with the aim to put our company on a sustainable path of growth. We have a strong alignment with our suppliers, and when any such situation arises they also look at such moves as a positive step towards their growth.

How does Bayer go about identifying the partners?

Globally, Bayer has vast experience of working with partners through alliances and strategic partnerships and developed a strong network of preferential suppliers who understand our values and comply with the highest ethical values that we follow across our entire product portfolio. To ensure long term sustainable growth, we have started taking assessment studies for all our vendors across the supply chains globally where we are assessing them in quality, competitiveness and reliability.

Compliance is of pivotal importance and the potential partners need to go through a rigorous selection process. In some cases the process is longer; e.g. where the products require approvals from the regulatory authorities, thus resulting in longer periods for return on investments. However for the on-site service providers the time barriers are significantly low.

Irrespective of the size, if a supplier wants to grow, becoming better and to doing so in a responsible way, Bayer has the resources that can help to achieve its goals provided the partnership is synergistic and brings value to our business. Having said this, over the years, we have worked with many suppliers who have brought great ideas and expertise to us. Bayer has readily invested time and resources and enabled them to grow. We believe in building new relationships that are of incremental value and also work with the start- ups wherever we see a value proposition. Some of the start-ups have great ideas but they lack the traditional business expertise Bayer enables the start-ups to understand the nuances of doing the business responsibly.

For us, the ‘Me Too’ approach does not work and we firmly believe that adherence to compliance is very critical for sustainable growth of any organization. Moreover we also look at the willingness amongst the suppliers to innovate and improve systems and processes to be prepared for future prospects. We use our limited resources and invest for making maximum impact for greater good and maximizing the returns.
,br /> What are your thoughts on India visvis other markets like China and other markets like Indonesia and Vietnam in the South –East Asia?

We are constantly in quest of right people as well as organizations that offer unique capabilities and can support our mission – ‘Science for a Better Life’ and from this point of view, entire South Asia and India are important for us.

Bayer is operating and marketing its products in India since 1896 and has invested more than $500 million in India. We have been committed to serve the Indian market and we are also significantly dependent on Indian operations since we export a very large portion of our finished products to other markets in the world. What we have observed in India is that it is sometimes difficult to make the suppliers understand that sustainability is a question of viability that goes much beyond the cost. We have been propagating this thought to our partners and vendors and nearly 70 per cent of the assessed partners have shown the willingness to change but still there are many manufacturers who are averse to understand the importance of sustainability. For us quality has never been a challenge whether we produce in India, China or in any part of the world, since we adhere to uniform compliance standards across all our facilities globally.

The Indian Government has taken huge measures to improve the business environment but I feel there is a dire need to address issues related to logistics, warehousing, ports and roads making the industry cost competitive globally. China, for example has built excellent infrastructure which makes the Chinese industry highly cost competitive in the international market.

What are your thoughts on impact of Make in India campaign and the Government’s willingness to introduce GST bill?

As a manufacturer or buyer, any support that we get in terms of reducing the administrative barriers is a welcome move which will lead to efficiencies and new ways of making sure that our products get to the market. We serve various world markets through our operations in India and lesser transaction cost, easier processes will enable us to reinvest into the business. We also expect that the maturity amongst the suppliers will gradually increase and they will be able to deliver greater value to the customers. Overall, I feel these steps to be very positive.

What will be the future trends in procurement?

Sustainability plays a critical role which will not be confined to environment, but also factor the ability to balance profit, people and bring innovations.

Procurement functions will play a critical role in adding value to the companies through maintaining transparency across the supply chain and collaborating with the vendors. Companies will have to get back to basics, focus into what is important and have the capability of predicting more what happens in the future. Digitization will play a critical role in the years to come as the business and manufacturing processes are getting integrated. In the foreseeable future, the experience for procurement may be something very similar to the experience that the private users have dealing with online portals which offer options of placing the order online, generating invoices, auto payments and tracking the orders etc. Commitment to technology will result in digitization of B2B transactions and enable the industry to tap into those networks which could be part of future networks.