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Thursday, August 28, 2014

Procurement Transformation at Xerox Is Real and Original

One stormy evening on a business trip, in a lonely hotel room somewhere far from home, Ken Syme thumbed through the local newspaper and stumbled upon a challenging quiz. “It was a rainy, miserable night without much to do,” said Syme, who had been juggling various direct procurement roles in mechanical commodities and electronics since 1977 with Xerox Europe Ltd., a British-based subsidiary of the $22 billion company.

Syme would have dismissed the puzzle had it not been so challenging. “It was hard, but I finished it,” he said. Curious to see how he did, Syme went to the back page to check his answers. There were words that popped out in front of him: “If you completed this, you may be a candidate for Mensa,” the note read about the high IQ society formed in Oxford, England, just after World War II. (Members of Mensa score at or above the 98th percentile in intelligence among everyone on the planet.)

Ken Syme

Ken Syme

Just for kicks, Syme mailed his completed quiz in, and a few weeks later, he received a letter inviting him to take another “self-test,” just to reaffirm things. Syme threw the letter in his briefcase and forgot about it.

It was 1993. Months later, in another lonely hotel room and on yet another stormy night without much to do, he pulled out the test, completed it, and mailed it back. He thought he bombed the test but was strangely hooked, more curious than impressed with this possible newfound revelation. He later received an invitation to go to Oxford and be formally tested.

“I went in one weekend and sat in a university conference room with a bunch of other crazy people and underwent four hours of testing and got a big headache,” Syme recalled exasperatedly. “I’m thinking, ‘I’m doing this for fun?’ A few weeks later, they called and said, ‘You passed. You’re in.’”

The Glasgow, Scotland, native is almost defiantly humble and quickly shrugs off any praise or fawning about his Mensa experience. “This didn’t change my life at all,” he said. “It was purely for my own amusement. I never would have known if I wasn’t there on that cold and rainy night with nothing to do.”

Serendipitous or not, the episode came just a few months before Syme’s 16-year career with Xerox was about to take a dramatic turn to being even more challenging than the Mensa quiz. In 1997, the company invited him to switch hats from direct procurement, move to America, and take charge of its indirect procurement operation. It was a role he assumed for the next 17 years.

From Procurement Trenches to CPO

In many respects, Xerox’s analog-to-digital, vertical-to-horizontal transformation and Syme’s career parallel each other. Syme later would become chief procurement officer in 2005, and in 2012, after 34 years of working procurement from both sides, Xerox elevated Syme to senior vice president of global manufacturing, supply chain, and procurement. It’s a fitting cap to a career that has seen Syme lead the company’s procurement transformation as an executor of invoices to true sourcing and productivity partner with Xerox’s external suppliers and customers and internal business units.

In 1985, the materials management arm of the reprographic manufacturing group at Xerox received the Purchasing magazine award of Professional Excellence. It was the second company the magazine honored with its award (GE was the first). Xerox “exemplifies the gutsy brand of purchasing professionalism that’s a must for U.S. industry,” read an announcement.

Today, Syme, who is a member of the My Purchasing Center Editorial Advisory Board, leads global operations engaged in sourcing and supplier management, manufacturing of Xerox technology products, and the distribution of equipment, parts, and consumables to the company’s operations, partners, and customers.

Syme’s unit is centrally led, and through operations in Asia, Europe, and North America, his group manages approximately $9 billion of spend for goods and services, purchased from a global supplier base and in support of Xerox’s services and technology businesses, according to the company. Xerox’s global manufacturing has centers in the United States and Ireland and is supported by suppliers and contract manufacturers globally. The equipment, parts, and consumables supply chain is primarily based in the United States and Europe and is expanding globally to accommodate changing patterns in sourcing and distribution of product, according to the company.

When Syme joined Xerox in the late 1970s, the company was already the world’s leading maker of photocopy machines, for which it has earned hundreds of patents since the process it was named for — xerography — was first recognized in 1946. (The company’s roots actually go way back to the turn of the 20th century with a photographic paper firm.)

Just around the bend was the dawn of the age of personal computing — a phenomenon that would radically transform the world, as well as virtually everything about running a business.

Indirect Revelations

“When I started in procurement, it was an extremely tactical function,” Syme told My Purchasing Center. “Our job was to find suppliers and write purchase orders and chase stuff up the supply chain. Companies back then were mostly vertically integrated. We did everything ourselves. The people in the cafeteria were company employees. You name it, we did it all.”

Syme was about to see firsthand the impact indirect procurement would have on the company’s fortunes.

When he was put in charge of indirect procurement, Xerox was already beginning to transform its entire procurement organization into a centralized operation — an achievement in which Syme played a pivotal role.

“It actually was a fascinating transition for me,” he said. “When you’ve always worked on the direct side like I had, it was easy to have a somewhat skewed perception of what the indirect side would be like.”

Syme says he quickly became “pleasantly surprised.” For one, he was amazed at the sheer complexity of relationships the company had built with service providers. For another, he had underestimated the impact the indirect side was having on the company.

“This was such a large area of spend,” he said. “I saw all kinds of opportunities for improvement and was challenged to figure out better ways of doing things.”

All in all, Syme calls his time in indirect procurement “a very beneficial learning experience. I had an amazingly good vantage point to see what was going on in terms of spend visibility — not just in manufacturing but the entire company. That’s what I liked best about the role — it gives you visibility in how things tick.”

While continuing to oversee indirect procurement operations, Syme earned his MBA at William E. Simon School of Business Administration at the University of Rochester. In 2004, the Upstate New York Regional Minority Purchasing Council named him Corporate Executive of the Year. By 2006, Syme was CPO and had completely restructured the Xerox’s procurement operation into a high-performing global team. In 2009, the Aberdeen Group honored him with its Chief Procurement Officer Award for Excellence. That same year, his team earned gold certification for process excellence from the Chartered Institute of Purchasing and Supply (CIPS), of which he is a fellow today.

Syme is most proud of the CIPS certification. “What this means is that Xerox is achieving leading benchmark levels in all aspects of ethical, sustainable, and strategic procurement, when measured against CIPS standards,” he wrote after earning the distinction, sharing the accolade with everyone in his department. “These standards are structured around things like leadership and organization, strategy, people, process and systems, and performance measurement and management.”

Syme openly embraced the challenge when he assumed leadership of the company’s global manufacturing, supply chain, and procurement arm in 2012. It was not unlike the feelings he had after sending in the Mensa quiz 10 years earlier.

“I was happy to get the opportunity,” he said. “But at the same time, it was a bit scary. There was a lot of supplier spend and a lot of revenue depending on these arrangements we’d made. I wanted to make sure we were doing everything to the best of our abilities. This was a lot of responsibility — not just finding the right suppliers and driving productivity, but making sure we have continuity plans in place for things that go wrong. I wanted to make sure we had really good processes in place that had the interests of the company’s revenue at heart and make sure we were doing everything we reasonably could to protect that. I didn’t take that lightly.”

Hard Lessons in Continuity Planning

Indeed, Syme was tested in a major way right out of the gate after epic floods hit Thailand following the earthquake and tsunami in Japan in 2011. The floods wiped out the country’s hard disk drive industry, the biggest supplier base worldwide.

PrintMany PC firms were able to transition quickly to solid-state drives, but Xerox’s customers still relied heavily on hard disk drives because of information integrity concerns. “The manufacturers of the disks pretty much were all in Thailand, and they all went under,” Syme recalled. “They had a very high proportion of the world’s production, and all were very constrained rather suddenly. We consume those in our products as many other companies do. Most of us have the capability to quickly react when a single supplier goes down after a fire or major malfunction, but it’s quite challenging when an entire industry goes down.”

But steps Syme took five years earlier after becoming CPO diverted disaster.

In 2005 and 2006, Syme oversaw expansion of the company’s procurement presence in key areas of the globe, establishing offices close to clusters of important supplier bases in Japan, Korea, China, Malaysia, Singapore, and India. “Instead of us trying to do everything from Rochester, N.Y., or England, which was our traditional base, we had a network of smaller procurement offices that are center-led rather than a centralized group all in one location like we used to do,” he said.

As a result, Syme and his team were able to source available inventories and mobilize alternative disk drive suppliers all over the world — a key one of which wasn’t even in the company’s space.

Xerox, like practically every other company, had encountered supplier continuity issues before. But this one was different. “This is a problem we all have to wrestle with at one time or another — governments and economics drive these clusters of suppliers, and everyone was left to fend for themselves,” he said. “We weren’t able to apply a technological solution in this case in the short term. And so it came down to me to find these drives somewhere and honor our commitments.”

In the short term, the plan spared Xerox of a major supply disruption. In the long term, it began to foster better relationships, more flexibility and productivity, he adds.

Xerox Today

Xerox’s fortunes have been shaped largely by the personal computing revolution and the ubiquitous digitization of information and data. And for a company whose chief product relied on paper, that created gigabytes worth of challenges.

But as CEO Ursula M. Burns once wrote, “From our earliest days, our purpose was never about making copies but making it easier to share information. Chester Carlson, the inventor of xerography, had a vision of ‘making office work a little simpler, a little less tedious, and a little more productive.’”

In fact, Xerox made the leap with remarkable aplomb. Today, the company is as well known for being a provider of outsourced services in finance, transportation, healthcare, document management, and human resources as it continues to be in document copying.

Today, hundreds of individuals in Syme’s Global Purchasing division manage Xerox’s yearly spend for business services, contract labor, facilities, information technology, marketing, transportation, business travel, and vehicle fleet, as well as direct production material suppliers, contract manufacturing, and design partners who help Xerox produce digital publishing systems, office printers, and multifunction devices and associated inks and toners.

Internal Procurement Partners

Part of the team’s success comes from powerful product cost engineering systems and what Syme calls a “robust set of world-class procurement tools” like competitive analysis and best-of-breed modeling. But an equally powerful resource is people.

Thanks to Xerox’s acquisition of the global services firm ACS, approximately 51 percent of its revenue now comes from services it provides its clients, as My Purchasing Center reported. And all but a tiny portion of its indirect purchasing is under the purview of purchasing, which today is closely aligned with the company’s lines of business. Internal stakeholders are actually referred to as “value chain partners” by procurement staff.

According to Syme, designated staff called “procurement business partners” are assigned to various business lines like the product development group and IT outsourcing. “There was a time when people in these divisions had no idea what to ask procurement for,” Syme said. “Our procurement business partners’ job is to look at not just what they’re spending and how we can possibly help them by leveraging that into fewer suppliers and all of that traditional procurement skills, but what are they pursuing for new business, where are they are headed, and how can we help them with that. We want to help introduce them to new opportunities and businesses. I think it’s fascinating compared to procurement of old.”

A Rare Perspective on Procurement’s Evolution

It wasn’t that long ago when many American companies had lost sight of what they do best in their zeal to compete on the world stage. But globalization and economic turmoil forced dramatic changes on everyone. Xerox was no different.

“Today, we focus on what makes us Xerox,” Syme said. “We focus on our core competencies and our technologies and the things customers buy Xerox for, and we hire other companies and specialists now to do things outside of that.”

Over the past 30-odd years, Syme has bore witness to the remarkable evolution in procurement from back-office buyers to front-office partners and decision-makers. The complexity of their roles today is not lost on him.

“There’s all this interdependence now,” he said. “Procurement is responsible for managing a much larger proportion of a company’s revenues on third parties than ever before, and it’s a heavy responsibility. Our success or failure now has a bigger impact on the company’s results.”

Syme was there back in the 1980s during a marketing campaign that was launched to squelch a growing and disturbing trend in the national lexicon, when the company’s name became equal parts noun and verb to describe the word “photocopy.” People inside the company were even known for using the term internally. It was mission critical that efforts were made to protect the brand and not allow the brand name to become generic and marginalize the breadth of products and services Xerox had become known for.

It’s emblematic of the changes the company has embarked upon over the years, and the challenges have kept Syme’s pitbull curiosity as fierce as the day he started back in 1977.

“Xerox is a fascinating company,” he said. “Internally, we’re hard on ourselves because we adhere to such high standards, which I think is good. But if you really stand back and look at things, we’ve managed enormous changes in our history.

“I’ve seen the end of the analog copier, when everything went digital and technologies of copying and printing and scanning all merged together and the multifunction machine was born,” Syme said. “I’ve witnessed a new set of competitors emerge. And we held our own. Here we are a decade later in a world where the market is changing, and while the technology is extremely valuable to us, we’re also looking at other markets that we can serve, as well as the markets that we can continue to serve as those markets change. The next time you think of all the billing you once had to do, or the checks you used to write and the stuff that used to be printed that isn’t printed anymore, you should think of Xerox. We’ve continually reinvented ourselves and found a way to remain relevant and to remain part of the process even though paper isn’t there.”

Thinking back to that stormy night and the newsprint Syme scrawled on, that quote seems even more profound.

 

John Hall is a freelance writer who reports on commodities markets and procurement and supply management topics for My Purchasing Center. His website is jhallmedia.com.

This article was originally published at My Purchasing Center and has been republished with permission. For more stories, visit MyPurchasingCenter.com

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