In a Time of Environmental Disruption, DSM ‘Does Something Meaningful’

“Doing Something Meaningful.”

The term is instilled in employees at Dutch health, nutrition, and bioscience company Royal DSM N.V. (DSM), a Heerlen-based organization committed to improving global health by setting ambitious environmental, social, and governance (ESG) targets.

It’s a lofty ambition in a volatile era in which global businesses are impacted by ongoing inflation and restrained economic growth.

Supply chain issues that first surfaced during the pandemic have now been aggravated by the Ukrainian and other geopolitical conflicts, not to mention erratic weather events–creating distractions for companies on the path to addressing decarbonization and sustainability factors.

Given this climate, by the dawn of the decade, DSM was forced to reckon with the fact that its old procurement system was no longer sufficient.

In 2021, for example, highly fragmented processes and systems were still being used for indirect procurement.  With much of the burden placed on buyers, category managers, procurement project managers, and procurement professionals, the substandard purchase-to-pay process meant potential pay delays, among other risks.

It was time for DSM begin a new chapter by digitizing its procurement function, connecting partners, suppliers, and other experts across business units and international borders.

According to Andries Feikema, DSM’s Global Director Procurement Digitalization & Transformation, the company’s objective was to “put a clear governance structure in place to drive success.”

Value beyond cash

Established by the Dutch government to excavate coal in 1902, DSM has evolved into a purpose-led science company specializing in solutions for human and animal health, as well as nutrition.

The latest phase in that progress was the creation of DSM’s buy.SMART program to digitize and automate procurement transactions.

In its quest to achieve “value beyond cost savings,” DSM collaborated with EcoVadis, a company providing evidence-based business sustainability ratings for organizations wishing to monitor and improve their own sustainability performance, as well as that of their trading associates.

Participating partner McCoy & Partners, a Dutch SAP consulting firm known for its solutions market leadership, helped bring about the project’s realization while supporting change management. 

“In such a complex environment with the challenges we faced such as COVID-19, our team (kept) things simple, pragmatic, and realistic,” said McCoy & Partners Delivery Director Martijn de Coninck.

Another participating partner, Deloitte, chosen to oversee the transformation and project management office, already had deep ties to SAP, the world’s leading enterprise resource planning (ERP) software vendor.

Because of this and other factors, the SAP Business Network was used to digitize transactions and develop enhanced supply chains. The Business Network’s tasks would be integrated with a source-to-contract process utilizing SAP Ariba solutions.

Another strategic choice was using Brazil and France as the pilot market for the global design. “We made the decision to lead the procurement transformation in the regions with the most complex tax system for the Plant Maintenance design,” Feikema said. “This approach helped make the rest of the global rollout that much easier.”

‘Like getting a driver’s license’

A global, multi-lingual team of 270 champions was organized to help users improve adoption and assist them in everything from supplier enablement to sourcing support to contract operationalization. 

In the end, the time-consuming manual activities of the past were eliminated, minimizing human error, while indirect procurement operations were transformed into a standardized, automated, source-to-pay process spanning 85 sites across 20 countries.

The alliance with EcoVadis ensured that trading partners met the specific sustainability criteria to qualify as suppliers.

Under the new system, DSM can boast of greater spend compliance, improved catalog maintenance, automated e-sourcing events, and more touchless transactions.

Through the dynamic exchange of electronic business documents, 5,529 suppliers were enabled and 2,088 were onboarded between June 2021 and December 2022. During that period, 200,000+ purchase orders (POs) were sent, while DSM’s 99%over the Ariba Network on-time payment rate was consistently maintained.

For reshaping its procurement model, DSM received the distinction as a finalist at the 2023 SAP Innovation Awards, an annual event highlighting organizations using SAP products to make a difference. In fact, you can get the details behind their amazing accomplishment in their Innovation Awards pitch deck.

Capitalizing on its recent accomplishments, DSM has now begun the transformation drive toward direct procurement.

“For us, digitalizing our procurement operations was like getting a driver’s license,” said Feikema. “It’s just the beginning of our journey and it certainly doesn’t stop after deployment.”