Specialists share transformation models with tech providers, industry peers

Manufacturers were well represented among the 400 attendees at The Hackett Group's 17th Annual Best Practices Conference. Hackett, an Atlanta-based strategic advisory firm, is known for its best practice research and benchmarking in procurement, IT, finance, and HR.

Senior executives from Textron, Honeywell, Rockwell Automation, Unilever, and others shared transformation stories and analyzed the role of best practices in their operations.

Case-in-point is Becton Dickinson, a global medical technology company focused on improving drug therapy, enhancing the diagnosis of infectious diseases, and advancing drug discovery. VP Christopher Shanahan says Becton built a unique integrated model for global procurement that delivered $230 million in savings since 2000, and cut the number of procurement systems from 50 to seven.

Becton's spend is 100-percent managed by procurement professionals. Sourcing managers operate from 65 plants worldwide, but the overall strategy comes from a centralized council responsible for “capturing the voice of the customer and carrying best practices out into the business,” says Shanahan. The council includes representatives from across Becton—even staff members not typically associated with procurement.

Becton's engagement model is becoming the rule for top performers, according to Christopher Sawchuk, who leads Hackett's procurement and supply chain practice. “Procurement's value proposition is evolving and should no longer be measured by traditional supply management metrics, but rather by contributions to the business,” he says.

Outsourcing IT was the order of the day in many of the presentations. Like many companies, Dayton, Ohio-based NCR, a $6.1-billion maker of ATMs, retail kiosks and data warehouses, took the decision very seriously. CIO Don Hopkins emphasized to the CEO that in offshoring the bulk of IT operations, NCR would lose 11,455 years of experience. NCR considered third-party providers, but chose to build its own captive center in India

“The key question when evaluating sourcing options is, how much control do you want?” says Hopkins.

NCR already had a significant presence in India—including a plant, sales operations, and HR and legal support. After evaluating each job, NCR moved about 70 percent of IT staff offshore. In terms of full-time equivalents, NCR cut help desk labor costs by 90 percent and achieved 15-percent productivity gains in application development.

The “captive versus outsourcing” debate prevailed at a well attended roundtable of outsourcing providers.

“Going captive only makes sense for large organizations,” says Tiger Tyagarajan, executive VP of tech services supplier and roundtable participant Genpact. “But by using benchmarking, best practices, and technology to run third-party environments as transparent captives, you get the best of both worlds.”