Tasnee: Real cost value in procurement
Since its inception over 20 years ago, Tasnee has created a network of diversified industries by working with prominent companies across the globe. One of the significant factors behind Tasnee’s success has been the way the company has transformed the procurement organisation to accelerate the process of capturing synergies and creating an organisation capable of supporting the company’s growth to deliver unrivalled value to stakeholders.
Tasnee has re-designed the organisation to support the Business Units at operational level and, at the same time, affirm the strategic direction of the company. With the aim to deliver the highest quality of service at the optimal cost level, Tasnee focussed on:
- Monitoring cost and spend
- Implementing structured and robust processes
- Focussing on customer service by processing transactions quickly and effectively
Tasnee has also established Key Performance Indicators (KPIs) to monitor the performance of the global procurement organization at the SBU and operational levels. This has allowed the procurement leadership to set clear and focused objectives, provide clear understanding of the roles and responsibilities throughout the business, and ensure empowerment and ownership at lower levels.
Supplier Management Framework
Tasnee’s supplier management framework enables the company to look at Prequalification, Segmentation, Relationship Management and Performance/Risk Management when selecting potential suppliers.
Through this process, the company works with suppliers to establish responsible sourcing, reduce the supply chain risk and ensure consistent standards across its supplier base. Once a supplier meets the standards set out by Tasnee, the company then works towards building a supply chain strategy through a company-wide Supplier Performance Survey.
“Depending on the criticality of the commodity, suppliers go through a multi-stage qualification process. This allows us to select our supplier partners carefully, ensuring that they understand our requirements and are a good cultural fit for the business,” says Saleh H. Al Suwaiti, General Manager, Procurement Center of Excellence.
Tasnee also carefully segments its suppliers based on the spend and criticality to the business. A dedicated focus on supplier segmentation has allowed the company to:
- Better understand the supply base
- Optimise resource allocation on performance management, risk management, and development
- Focus on building relationship with the most critical suppliers
The sourcing strategy is developed based on the segment of its suppliers. A high spend, high criticality supplier will have a deeper and more strategic relationship than a low spend low criticality tactical supplier.
Tasnee has also initiated a Supplier Performance Management mechanism to evaluate the performance of a supplier over a period of time. The survey includes the rating of suppliers from people within the company, as well as the response of the suppliers themselves.
“The survey covers strategic commodities and is planned to be rolled out to more commodities and services down the road. The survey uses the same set of questions across all strategic suppliers of a particular commodity to gain a better understanding of the performance of certain suppliers,” Al Suwaiti says.
“It will create a full 360-degree view of the relationship between our company and our suppliers and we can engage with the suppliers and the business to drive improvement opportunities.”
The company also works from an internal perspective applying a strict code-of-conduct on the way its employees engage with suppliers, providing a clearly defined set of ethics that ensure a fair, honest and transparent working relationship.
To further streamline its relationship with the suppliers, the company has implemented a Vendor Invoice Management (VIM) system. This enables suppliers to submit invoices electronically, streamline the invoice processing and allow Tasnee to improve its on time payment performance overall.
Center of Excellence (CoE)
It is not only through the Organisational Realignment and Supplier Management Framework that has allowed Tasnee to transform its procurement organisation and work with key suppliers. The company has also setup a Procurement CoE, a global effort that has complete responsibility over strategic initiatives, statistical benchmarking, performance analytics, KPIs, policy and procedures, and the supplier management process. The CoE aligns with the company’s central procurement strategy, which is focused on the delivery of parts and services at the highest specification but at the lowest costs possible.
“The Center of Excellence provides the essential oversight over the procurement organisation globally, manages procurement processes, monitors performance and implements strategic initiatives and the supplier management program. This has allowed Tasnee to have a class-leading procurement organisation and furthered its ability to develop a strategic and value-added relationship with its suppliers and internal customers,” Al Suwaiti explains.
As with everything with Tasnee, the overarching goal is to identify and deliver real cost value in the supply chain and procurement process and it does this through an all-inclusive approach to procurement directed toward both internal as well as external stakeholders.
Through the implementation of technologies such as Ariba, Spend Visibility, e-Auctions and the VIM system, Tasnee is very much a company that is embracing the technological shift of the modern supply chain industry.
“Technology is one of the keys to procurement being able to deliver best value goods and services from our suppliers across the globe,” Al Suwaiti says. “We need to automate as much of the transactional activity as possible to ensure that we have time to devote to value-added activities.”
Tasnee has invested heavily in procurement technology solutions, particularly for automation of processes on SAP, introducing spend visibility tools and improving SAP reporting functionality. “By introducing automation in SAP functionality, Tasnee has come up with innovative ways to speed up the procurement process and improve overall performance,” Al Suwaiti says.
The company has also signed an agreement with SAP Ariba to tap into the leading cloud-based procurement platform and implement a comprehensive tool to cover the entire P2P chain.
Already, the company is reaping the rewards for investing in technology, with an additional 20 percent savings generated in some categories as a direct result of implementing reverse e-auction capabilities.
As a global player in procurement, Tasnee invests a significant amount of money into ensuring that the company operates an ethical, sustainable supply chain. As a company that oversees large volumes of imports and exported goods, Tasnee prides itself on the accountability of itself and its suppliers.
“Through the procurement transformation, we were able to implement a category management structure, introduce BUYER approach which laid out standard sourcing guidelines, strengthened our organisation through recruitment of qualified resources and providing extensive training, developed standard reporting, and rolled out strategic technology initiatives.” adds Al Suwaiti.
The Tasnee procurement transformation program has been immensely successful and continues to deliver results in the form of:
- Average savings of 10 percent for services, 8 percent for MRO and 3 percent for chemicals and packaging amounting to total realised savings of 150+Mn SAR to date since the inception of the program in 2016
- Enhanced the transaction time by 24 percent
- Increased coverage of framework agreements
“More and more collaboration between companies in the form of Group Purchasing Organizations (GPOs) aimed at leveraging purchasing power and enhancing service efficiencies is also one of the trends in procurement.” adds Al Suwaiti.
Running alongside these initiativesis the company’s Centralised Procurement Manual, a series of policies and procedures which detail the way in which the company operates. Tasnee has taken great strides in holding its employees accountable to complying with the policies laid out in this manual and acts on this through audits and further training opportunities.
As a company, Tasnee values the importance of Corporate Social Responsibility deep within its central mission. “Our mission is to achieve the interest of the society by preserving the environment and contributing to the human development through raising awareness, education, qualifications and skills development,” he says.
This commitment to CSR stretches wide and incorporates Tasnee’s approach to its supplier base, ensuring that its suppliers share similar CSR ambitions and values.
“We work closely with our colleagues in Sustainability, Product Stewardship, Risk and Legal, to ensure that we are all fully aligned on these issues,” comments Al Suwaiti. “We are even engaged with some third-party audits to ensure that we are fully compliant and that we can demonstrate continuous improvement.”
As Tasnee continues to advance its procurement strategies and deliver true cost value, efficiency and quality, Al Suwaiti believes that the company must find a balance in order to remain successful.
“The key is to know when it’s appropriate to invest in a new technology, implement new initiatives and engage right resources to extract the full value out of existing investments.”