Daniel Helmig, former Head of Transformation at Asea Brown Boveri (ABB), discusses his lessons learnt from 30-years in supply chain & operations management, what it takes to move out of procurement, and his assessment of the future of the profession in the context of digitalization & IOT.
Daniel Helmig entered the supply chain profession in 1984 at Ford Motor Company in material planning and logistics. During his 20 years in automotive supply chain, Daniel fulfilled a variety of senior management procurement roles at Ford Motor Company in the UK, Germany and USA while also completing a BA degree in Business and an MBA at Michigan State University. His ambition to become a Chief Procurement Officer saw Daniel move to Infineon Technologies in 2004 before joining ABB in 2009 as CPO and Group Head of Supply Chain Management. 2017 he was nominated Group Head of Operations & Quality. In the last 18 months Daniel lead ABB’s largest transformation since the merger between Asea and Brown Boveri: The company moved from a center-led to a business-led set-up, comprising a lean corporate, 10% of its former size, and four autonomous businesses.
You have an extensive & varied career in procurement, what would your advice be to someone entering the profession?
Essentially, procurement is spending other people’s money, if possible better than they would do it. So you need to be closely affiliated with your internal stakeholders; listen to what they need and the reasons behind it. It is not just a case of cost optimisation, but need fulfillment. You act on behalf of your internal customer, so it is your responsibility to implement strategic sourcing practices and find innovative approaches for connecting the internal stakeholder to the right supply market. In being affiliated with other functions, as a procurement professional you have the opportunity to expand your circle of influence by helping others to operate better. Now, the more professional you perform in your role, the more opportunities you will have to contribute to other areas of the business thereby developing further business acumen. Consequently, you can, if you are interested, become less of a functional specialist and more of a generalist who is trusted across more areas of the business. Stephen Covey calls this: “increasing your circle of influence” and “act interdependently”.
You have since moved away from procurement, how did you adapt your style and thinking to fulfil this transition?
It’s difficult when – like me – you have done something for decades and developed into a functional executive to then be faced with subjects you always had an opinion on but lack depth of experience. My approach was to meet with function leaders and employees and ask many questions – what are the issues, the challenges, what works ? What needs to be addressed? – rather than going in with my preconceived ideas about what the situation is. As well you need to take a good look at the data available – and check whether the underlying process for generating the data is sound. From there, you can assemble a plan based on information gathered and build a road map together with the team. You don’t have to be an expert in everything, but you do need to be committed to listening to and learning from others. Frankly, it is quite simple, just swallow your functional pride and get on with it.
Did you have a mentor who supported you through the transition?
I have had many mentors during my career and I have always searched for people who could teach me new things. You have to actively ask for advice, not only from your bosses, but as well from your peers and direct reports. Finally, my, now retired predecessor, and friend Bill Black was instrumental to understand the history of what I found.
Beside physical mentors, I learn a lot from the 1-2 non-fiction books I read every week since many years. Take the advice of Stephen A. Schwarzman, the chairman, CEO and co-founder of Blackstone in his recent book “What it takes”. I paraphrase: Take the larger project instead of the small one: you will need often the same efforts and resources – so why go for less output”. In my last job we transformed all dimensions of ABB into a new business model in about a year – a massive project of decentralization - delivered in record time thanks to a great team. It was intense, but now ABB can concentrate fully on customers, products and markets, without a long-drawn, multiyear transformation process. Thankfully, the board choose the larger, bolder project.
What skills does a career in procurement give you and how has that toolkit enabled you to fulfil your role today?
The greatest skill that you can obtain in procurement is the ability to be a professional commercial mediator. For a procurement professional, everything in life requires some form of mediation. This in combination with competencies in process management will help you to bring people together with often different perceptions of the optimal way forward.
Process management skills, your own knowledge about product specificities, cost up to digital twin modeling competencies, global market knowledge and strategic sourcing models has to be paired with mediation skills enhanced by dialectics, game theory and an assessment of the culture and individual sitting in front of you. These are skills you can acquire in procurement but use in nearly every other profession.
What do you look for in a leadership team?
Every leadership team needs to either mirror the current or future structure of the organisation; if you have a regional structure, you have regional leaders; a business structure, business leaders; a functional structure function leaders. In ABB, at some point in time I had 18 direct reports, representing the different structural elements of the company. Thankfully these days are now gone. Still, whatever the structure, I believe in the leader who asks their people for their advice rather than telling them simply what to do: A leader who is passionate about the team winning, rather than being the knight in shining armor. It’s important for leaders to ask of those they lead, “what can we do better?” In my career I have found that the solution is already known in the organization, it just has to get asked to come to the surface. I also think diversity is essential in a leadership team; not just diversity of gender, race, culture, but a diversity of thought and functional understanding. Having the privilege to form and run such a team – is, albeit not easy, incredibly fulfilling.
Why is procurement rarely represented at board level? Do you think it’s taken seriously?
Over the years I came to believe that the value placed on procurement is relative to the profit margin in absolute terms. In automotive, for example, the average mass production product has a profit margin in the low single digits, and a massive material cost proportion. If you don’t have a professional procurement that can optimise your material cost, you’re out. So here, former procurement executives more often make it into the board or even become CEO. In other industries, with higher gross margins combined with a lesser material cost level, the focus stays on design, sales and marketing. For these companies, material cost and procurement is a blind spot and a excellent opportunity to enhance their value equation.
Looking ahead: if you look at the opportunities value chain digitization holds for excelling the customer experience as well as the ecological footprint of a company, supply chain & procurement executives would add to any board the knowledge and experience needed, to monetize the impact of this new industrial revolution. It will be interesting to see, which companies & industries will recognize this first.
It is not by accident, that companies with a phenomenal market capitalization focus on procurement talent: Since many years, some of the best supply chain experts were hired by Tesla and Amazon. And let’s don’t forget, that Apple CEO Tim Cook ran as well supply chain and procurement in his career.
Why do you think procurement professionals struggle to move beyond procurement?
I think this is the case for many functional professionals, not just those in procurement. It could be, however, that people become too function focused. They speak the language of their function rather than that of their internal stakeholders or the wider business. So, the opportunity to excel is lost in translation.
What would be your advice to someone wanting to move out of procurement?
Think of your value proposition: what do you have to offer? If you identify a skill gap: improve, train. Most obstacles in our paths are put there by our own minds, so expand your circle of influence by doing, what you are doing, excellently. And don’t be afraid to seek opportunities outside of your own company, if they see procurement or supply chain as a back-office function. It’s your career after all, and there are many companies out there that get procurement & supply chain value.
Are there functions that procurement people can move into more easily than others?
The most logical and straightforward move is to operations planning and fulfilment or manufacturing. Many procurement professionals begin their careers working in a production environment, something I always recommend. I believe every new procurement professional should start their career by living and breathing the physical flow of value creation. You gain a deep-level understanding of the processes involved, and the massive opportunities that exist every day.
Sales is another logical career move. If you understand procurement, you should be able to empathize with the other side of the table. Understanding both sides makes you very capable in steering towards a mutually beneficial solutions – a great skill in sales.
Finally, HR is a viable career option for the procurement professional, which I realise may sound a little strange. But, as mentioned, procurement is very much about bringing people and opinions together. These people skills, combined with a deep understanding of process excellence can therefore in turn be applied to human resource management.
When is the best time to transition, can it be achieved before you become a CPO?
Sure! The flexibility in terms of changing profession is easier the lower you are in the hierarchical pyramid. I would give a career in procurement at least five years to fully understand the function and hone your skills. From there you will have the foundation to be able to move into another career, if you must.
Finally, what does the future of procurement look like? Where do you see the profession in the next 10 years?
There is a revolution of epic proportions happening. It is so immense, that you have to step back to be able to truly recognize it for what it is: A fundamental shift in the way the customers will expect companies to provide products and services. While the 1st industrial revolution was driven by the suppliers production capabilities, this one is pulled by the customers.
Supply chain management has to become not only the heart of operations, ensuring the regular blood/material flow, but expand as well into the nervous system of the value chain . With clogged arteries (= inventories), slow responses to stimuli (=orders, disruptions, innovations) firms will even quicker become prey to faster moving competitors.
Going forward, I see three steps:
In the first step, the speed and size of revenue generation depends on the empowerment and competency of the supply chain cross-functional team to orchestrate all elements along the order to cash process in real time. At the time of the order booking engineering, service, production, finance, procurement, logistics, suppliers should know instantly of what it takes to deliver quicker and better than ever before delighting the customers.
What follows is advanced analytics via data and process mining inside the constantly evolving, newly created data reservoir to improve continuously every part of the value chain: from number of product features, portfolio, pricing, channel management to service offerings, vertical production depth assessments, resource and waste management, and supplier portfolio rationalization.
In the third step, companies move from advanced analytical to predictive capabilities, providing process and product solutions that will enhance even further the customer experience and ecological footprint in ways, we can not even know today.
Therefore, the future of supply chain management including procurement was never brighter.
But, this future will not be handed to supply chain leaders:
It needs to be claimed by their teams, who enhance their capabilities with true digitalization competencies along the whole value chain.
It needs to be claimed by supply chain leaders, who are able to communicate and demonstrate the art of the possible of IOT value management to their boards.
It needs to be claimed by board members, who are willing to listen and learn a new frame of reference.
If not, as always, survival is optional.