Schneider Electric CPO, Daniel Bartel, sat down with Ceri Jones at Supply Management to talk about his approach to strategic procurement, developing the profession’s future leaders and the power that comes when a firm’s mission aligns with staff’s personal values. They also discussed The Zero Carbon Project which earned the company Best Sustainability Project of the Year and Overall Winner at the CIPS Excellence in Procurement Awards 2022.
Hi Dan, firstly, can you tell me about the relationship procurement and supply has with the rest of the company at Schneider Electric?
We’re more than a support function, we’re a business function. We have about 1,500 people located in about 50 different countries, they manage around €15bn in spend and I lead the function globally. Supply chain in Schneider Electric consists of about 200 factories, 100 distribution centres and then all the global functions – planning, logistics and, of course, procurement. And inside procurement there are three pillars to the organisation: first, our supply chain runs on a regional and local basis, working to support the factories and distribution centres. With most of the people in procurement embedded in those regions, that’s the biggest part.
We also have large teams driving category management, the people managing relationships with our most important suppliers. And then we have a few hundred people in what we call “business procurement”, who are embedded in the dozens of R&D teams we have all around the world. We align the strategy, technology roadmaps and working cross-functionally on sourcing, driving productivity, developing technology, driving the sustainability agenda and improving quality.
Has procurement always been a strategic part of the business or is that a recent development?
It’s always evolving. I’ve been doing procurement for 27 years and I feel like, in this industry, the function in general has steadily become more relevant – but even this has accelerated in the past few years. Schneider has been centralised for a long time so, when I came to the company four years ago, I didn’t need to make sweeping organisational setup changes. But with the need for more resilient supply chains, as growth has become limited by a company’s ability not to get orders but to supply, procurement has become naturally more relevant.
That’s a fortunate position to be in during a period of hyperinflation. Have you had to make any significant changes to deliver the same level of value?
Well, change is the only thing that’s constant. I wouldn’t say we’ve made sweeping changes to the organisation or to our supplier selections, in fact, quite the opposite. We’ve increased our focus on strengthening the relationships we have with our strategic suppliers so we can face those challenges together. Inflation isn’t triggered by us, it’s not triggered by our suppliers – it’s something that’s happening to all of us and what’s important is that we work together to react to it. We’re trying to foster an environment of higher collaboration with more co-innovation and partnerships with those suppliers. We want to move away from tactical relationships and towards building long-term strategic partnerships where we can leverage each other’s capabilities and capitalise on opportunities together.
On top of our team’s usual supplier engagements, we also host regional and global Supplier Days, which provide insights into our procurement strategy and the actions required from them so we can succeed together. We typically plan these in parallel with our Innovation Summits, which are large expositions where we showcase new technologies to customers. Suppliers appreciate the opportunity to see their technologies in action, how their components and materials are used in our products and applied in our key end markets. And, sometimes as a result, suppliers become customers as well. All this brings our relationships with suppliers to a whole new level and enables us to unlock value we could not previously see.
And can you share any lessons learnt on building up resilience and supply security in the longer term?
We’ve pivoted on this, like most companies over the past few years, and we’re now entering into a more mature stage of the transformation that’s about building an agile and resilient supply chain (which includes our internal factories and our external suppliers). We were focused on just-in-time, we are now focused on just-in-case, and are stricter on the need for having at least two running sources for every critical part or raw material. Dual sourcing in the past may have been defined as having two suppliers qualified – now it needs to be two suppliers constantly running. We’re also duplicating entire supply chains for some critical products, usually in different regions or countries where we often leverage third-party manufacturers so we can do it quickly and more efficiently.
Finally, we collaborate closely with R&D because resilience starts with design. We focus on standardisation of materials and we need to modernise our designs to align our product lifecycles with those of our key supplier markets. Modern designs and technology trends make a more resilient electronic supply chain.
I would Schneider is something of an influencer when it comes to sustainability. Is that the case?
In my opinion, absolutely. Sustainability is at the core of what we do as a business. We’re motivated to take it to the next level and to remain a leader in that space. The mission of the company is to empower everyone to make the most of our energy and resources, bringing progress and sustainability for all. We do it not only by leading by example with our own carbon pledges, but also by being part of the sustainable solution for our customers and our suppliers. And our people are passionate about delivering on that.
It’s not just about our own carbon footprint, we also help our suppliers in their decarbonisation journeys. That’s where our commitment to The Zero Carbon Project comes in – it’s simple, it’s easy to understand, it’s ambitious. We partnered with our top 1,000 suppliers (which represent 70% of Schneider’s carbon emissions overall) to reduce their CO2 operations by 50% by 2025. It’s a concrete step towards limiting the rise in average global temperatures – on one hand it’s really progressive but, on the other, we’re well on our way. We’re going to report the second-year results soon. I really want to encourage other organisations to see the value that can be gained through promoting sustainability with suppliers.
Many firms find it hard to transfer successful internal changes on to their supply chains. How have you achieved this?
Our people are very well educated on the impact supplier operations can have on the environment and on society. It’s on the agenda of most of our business review meetings and enables our teams to drive sustainability messages further in their supplier engagements, which has helped transform suppliers into change agents in their own ecosystems. And what we want to do is create a multiplier effect for a more evolved and responsible supply chain.
Looking externally, 70% of those participating suppliers are at the very beginning stages of their decarbonisation journeys, so we provide them with support. We do this through our Supplier Support Framework – they can access training, materials and tools; we invite them to our factories to see how we’ve reduced our own carbon emissions; and facilitate networks between suppliers to exchange best practices.
Another great example is when we held a supplier day in North America in October – we didn’t really have sustainability on the agenda but it came up throughout the discussions. At the end of the day, a few of us leaders asked the suppliers for feedback and somebody said: “I always knew sustainability was really important to Schneider, but I didn’t realise until today it really is embedded in everything you do, in every aspect of the business agenda.” Sustainability was somehow part of the discussion and that was really eye-opening. At Schneider sustainability is in our DNA and our challenge as procurement leaders is to embed sustainability in the DNA of our most strategic suppliers.
And how does this affect the future of energy security, and even energy independence perhaps?
We definitely need a big acceleration on the demand side of the energy equation. While energy supply is important, there needs to be a focus on how we consume energy. According to our Schneider Electric Sustainability Research Institute, 55% of the transformations required to meet our carbon neutrality objectives come from how we use energy. This refers to electrification and energy efficiency. There are steps we can take towards stability and independence and to highlight just three of those: one is deploying energy-efficient technologies to conserve energy. Two is having companies and households electrify everything. And the third point is more local energy generation to reduce dependency on foreign energy. This is where renewables come into play and they become much more viable as storage technologies improve.
All of this progress must require new skills. Has it changed what you look for in terms of talent?
Yes, the market for good procurement and supply chain people is absolutely competitive. That said, I think Schneider has some real advantages that position us as an employer of choice. For one thing, we’re big. We have 80,000 people in supply chain and it’s very strategically relevant to our business. Also, great people want to be part of winning teams and we’re recognised as a world-class supply chain overall, ranked number two in the Gartner Top 25 Supply Chain rankings. Another thing is we have a multi-hub structure all around the world, with global hubs for innovation and also supply chain hubs. This concentration in hub cities enables people to have a diverse set of roles in one location, so they don’t have to move to develop a rich career in supply chain.
Internally, our talent management processes are very much geared towards developing leaders of the future in Schneider and we want to develop people by exposing them to new opportunities. For instance, we have programmes, such as procurement sounding boards, which run every year. It’s where people from all over the world with high potential are brought together into two teams to solve a really tough problem. A few years ago, we had a sounding board that asked them to figure out how to get more cost reduction. They came back with amazingly innovative solutions on driving added value in collaboration with suppliers and R&D. It was really amazing.
How would you sum up the opportunities for a career in procurement?
I think it’s important for anyone at any stage, but especially today’s young generations, as they’re very purpose driven. I have a daughter who has just started university. I’ve always viewed business as a serious game with high stakes to be played and won – and she’s like that, for sure – but she’s also a purpose-driven person. I know that when she graduates from university, she’ll select the company she works for based on its mission. I think that’s where Schneider has a huge advantage in the labour market because our mission is clear, and it’s very anchored in sustainability.
I only joined four years ago but I’ve never felt a stronger personal connection to the mission of a company I’ve worked for – it has made my working life that much more rewarding and meaningful. So my advice would be to understand what your personal values are and make sure you choose a company that has good alignment with those because that gives you a massive tailwind in your daily work.
The company pillars for 2022 were electrification and digital. Has this changed at all for 2023?
It’s absolutely still the case. Electrification and digital are core to our company. In supply chain, 2023 is the final year of our three-year STRIVE strategy, which underpins everything we do in procurement. It stands for sustainable, trusted, resilient, intelligent, velocity and efficiency. We’ve talked a lot about sustainability; trusted is about quality and, to some degree, assurance of supply because we absolutely see it as a differentiator and a potential to create an advantage in the market. We talked a bit about being resilient and intelligent as in digitisation of the end-to-end supply chain – and procurement is absolutely in the middle of that. Then velocity and efficiency, which are all about people. We make sure they’re supported, they’ve got the right tools to succeed but we also have world-class competency development programmes. We’re giving the best people the best career opportunities because it’s the people who make the biggest difference to us.
You can read more about the CIPS Excellence in Procurement Awards on the website.