2017 Global SRM Research Report - Solving the value Puzzle

CASE STUDY CARGILL

BUYING INTO GROWTH RELATIONSHIPS

Some suppliers have much more to offer than the right product at the right price. A global leader in agricultural products, Cargill, explains how it can support customers’ growth strategies – if the relationship is right.

understanding and meeting its customers’ needs and objectives. “We know we get the contract through procurement and we want them to be successful. But if we understand the end-product marketing, supply chain or operational goals from an ingredients perspective, we can focus our efforts more effectively for both the customer and Cargill.” HELP IN NAVIGATING COMPLEXITY Working on the relationship can also help customers navigate a company the size and complexity of Cargill, Verner says: “If the customer and Cargill are not well co-ordinated, then we can be complex to work with. The customer who buys multiple ingredients from us might experience different invoice systems, ordering systems and management to supply chains. By approaching the partnership in the way most effective for our customers, we can work to make it more efficient.” Those buyers who want to become more co- ordinated with Cargill can gain an advantage, not just through working more efficiently, but also through leveraging Cargill’s broad capabilities, whether the customer need is for risk management, supply chain effectiveness or innovation and product development, she says. For example, if a customer is trying to develop a new product, and Cargill understands the marketing strategy, then it can advise not just on ingredients, but on how ingredients combine to achieve specific objectives in terms of

Procurement departments find good reason to control relationships with suppliers. In doing so, they try to manage risk, control costs and measure performance. But procurement should also work with suppliers to look beyond these measures, towards greater business value, says Jenny Verner, commercial leader of Cargill’s centre of excellence for its food ingredients and bio- industrial enterprise. Suppliers don’t get much bigger than Cargill. With $109.7 billion in revenue, it would make the top 20 of the Fortune 500 if it were a public company. With size comes a depth of expertise in ingredients, processes and global food supply chains that its customers can leverage by adding some key functional interactions to the mix, Verner says. “Among the things that can interfere with that is procurement being the gatekeeper to every contact. If it says, ‘Everything has to go through us’ and we cannot talk to marketing, supply chain or R&D teams about their plans, then it slows things down. We understand procurement is driven by different motives to R&D and marketing, but being too strong a gatekeeper can really inhibit the partnership. Our intent is never to exclude procurement but to enhance the relationship,” she says. Verner says Cargill still expects its customers’ procurement teams to have oversight of the relationship, but she argues direct contact between functional experts on both sides of the partnership is vital to

Among the things that can interfere with [our interactions with customers] is procurement being the gatekeeper to every contact. If it says, ‘Everything has to go through us’ and we cannot talk to marketing, supply chain or R&D teams about their plans, then it slows things down.” Jenny Verner commercial leader of Cargill’s centre of excellence

CASE STUDY STATE OF FLUX 2017 GLOBAL SRMRESEARCHREPORT