Future of Sourcing Awards 2018: Innovations in Third Party Management, with FedEx, Florida Blue and Fannie Mae

Posted: 10/16/2018 - 04:43

At SIG's Fall Global Executive Summit in 2018, SIG held its first annual Future of Sourcing Awards. Join Sourcing Industry Group CEO and President, Dawn Tiura, as she interviews the teams nominated for the Innovations in Third Party Management category who have demonstrated excellence in their field and represented the best examples of innovation, transformation and/or leadership in third party management.

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Dawn Tiura: Folks, with me today is Morgan Schultz, and she is representing the team from FedEx that is in the finalist category for third party management, and their project was called "Intelligent Dashboard Project". So welcome to the show, Morgan, I'm glad to have you.
 
Morgan: Thank you, Dawn.
 
Dawn Tiura: So, can you tell me, why was this project launched, what was the problem you were trying to solve?
 
Morgan: Wow. How do you fit an answer to a project this big in just one problem?
 
Morgan: So really, it just wasn't one problem. We knew that, with a category this big and going into deteriorating market conditions that we had to take a more proactive approach. So ultimately, we had to figure out, you know, what our cost drivers were, and determine what the ask of the market is. So honestly, it's being able to say with confidence whether or not we're paying an appropriate rate in the market for when we go to source.
 
Dawn Tiura: Okay.
 
Morgan: You know, additionally, with a company as big as FedEx, we have, you know, several different operating companies, and each of them have their own strategy to go to market for their purchase transportation requirements. Often times driven by capacity in service, and you know, when the contract expires. And like I said, it's been more of a reactive approach than a proactive approach, and we realized that we just needed a platform for more real-time monitoring of the market, and figuring out how to be more resilient with these changing market conditions.
 
Dawn Tiura: And I have to believe that transportation is a huge category for all your operating companies.
 
Morgan: It is a huge category, and you know, it just increases every year in spend, so we've really gotta get better visibility to the data, to each of the operating companies, and kinda, better understand how we utilize purchase transportation, and how we go to market.
 
Dawn Tiura: Wow. So this is an innovative project, it made it to the finals, it just sailed right through—but is your innovation sustainable over time?
 
Morgan: It really is, and you know, I just have to give a shout out to my team here. You know, two on the people on my team, Natalie Fahrner and [inaudible] they have really just put so much thought into this, and a lot of work on the front end to, how do we make this sustainable? I mean, we've spent the past year and a half building a dashboard, working on a project, and you know, success for us looks like our operating companies being able to use it, you know, ongoing. So we designed it to be scalable and sustainable by creating more reporting and analytics capability, and really using a variety of data science principles in an iterative manner.
 
Morgan: So we're utilizing an agile framework, and what that means is, you know, right now we're specifically focused on the purchase transportation motor market. But you know, we've built the back-end data structure of this in a modular manner to support that scalability. So long term, you know, future, down the road, we can look at incorporating our rail data, or maybe, you know, our ad hoc cartage. So you know, even scale it up to an international.
 
Morgan: And the thing about this that made it so sustainable is that we created it using a voice of customer, which for us is a quality term, and what that means is, you know, we had to get to know our business. And we had to sit down with the operators and figure out what was important, and what drives their decisions. I mean, we've spent months learning alongside our business teams just to understand the nature of their operation. And we really listened to their input, and to what data they found would be helpful. So that's really how we scoped the dashboard, and you know, again, put a lot of work in the framework to make it sustainable.
 
Dawn Tiura: So it was an incredible nomination that made it through to the finals very easily, so what do you think the judges saw that was so incredible from your nomination?
 
Morgan: You know, I really just think that they saw that this was really one of those outside the box thinking, and a really, it's a driver for change. So again, it was just an incredible nomination. You know, I feel like our team has just been, we've been working on it for over a year, just heads down, really focused on driving these results. Not only for our team, but for our business stakeholders, and we're really trying to build an innovative project and product to incorporate this big data using, you know, efficient science, RPA.
 
Morgan: And we knew we were on the cusp of something building, you know, incredible, and likely it's to be one of the first in the industry. It wasn't out there, we had to utilize resources to go build it. And so hopefully, you know, I feel that the SIG judges kinda agreed with us, and it felt great to know that that was validated. So we knew we were working on something great, you know, when I submitted the nomination, had no idea it would actually get picked up. I had hoped so, but it just feels so good to have our team's hard work validated and recognized by industry experts.
 
Dawn Tiura: Yeah. Even if you don't win, Morgan, it is such an honor to have made it this far as a finalist. Because you were up against a lot of competition in this category. So if another company has a large transportation spend, what could they learn from you? Is it something that could apply to other companies, could they learn how to do this themselves?
 
Morgan: Oh absolutely, and I think that's one of the most favorite things about this project. I keep telling my team, if you build it, they will come. So really, after months of researching the market, we just could not find anything, you know, off the shelf that would work for us. And so we had to get creative, and you know, we knew with the way the market was deteriorating and the transportation space that we needed better insight. And we had a lot of our own data, but we didn't have the resources or the bandwidth to be able to give us that true data analytic.
 
Morgan: So we really just built it ourselves. And we had to step outside of our comfort zone, we had to collaborate with resources we had in our company, I mean, we leveraged sourcing, system developers, you know, procurement operations, marketing, internal audit, IT and even our tax department. So really, the thing about this is it's a truly transferrable framework, so if you're a company with a large transportation spend, building just a tool to visualize all of that data, it's so helpful. I mean it's really going to transform the way that we purchase transportation for FedEx, and I'm super excited about this.
 
Dawn Tiura: So you might have told your team if we build it they will come, meaning your internal companies and your stakeholders, I have a feeling other people are going to be coming to you for help and advice too, from other companies. So you might have just opened a flood gate.
 
Morgan: Yeah, well we are, you know, we're excited to share. We just—you know, information is power, and what you do with that power really says a lot about your company. And the thing about FedEx is that we're always changing to meet the needs of our customer.
 
Morgan: So I truly think that we can use this as a framework, you know, outside of our transportation category, but for other categories that we worked well in. You know, again, just happy to share lessons learned and our journey, you know. Success is all about the journey. So… happy to share that.
 
Dawn Tiura: Okay, so on the journey, then, if you had a crystal ball and you could go back and do it over, is there anything that maybe you would have done differently, or something, a lesson learned that you could share with everybody?
 
Morgan: Yeah, absolutely. So you know, every project presents an opportunity for reflection, and this project was no different. So we have been able to accomplish some amazing milestones with this project, but definitely there's things looking back that we could have done a little bit differently. So for example, you know, a little more forward thinking to plan the project timing to fall better within our budget cycles of our fiscal years, so we can plan for longer term investment when we were doing the contract for the market data. We have just budgeted for one fiscal year, so hindsight, you know, a little bit more forward planning, and understanding there's cost, it really would have helped us, not only you know, budget, but when we go to negotiate those contracts as well. And then we had no idea how much data we were going to come across, you know, making these key connections across the enterprise.
 
Morgan: So I think, you know, as with any project, we probably should have pushed a little harder for additional resources, to kinda help us navigate the process a little faster.
 
Dawn Tiura: And how big was your team?
 
Morgan: So, you know, if I include stakeholders, I mean, I guess we have a core team of about 10 people. But you know, across the enterprise, it was upwards of, you know, 20 plus people. So huge shout out to my team, and you know, everybody that we collaborated with, we couldn't have made this possible without your input.
 
Dawn Tiura: Well Morgan, I have to tell you, it was a phenomenal nomination, I get to read them after the judges, and I was very, very impressed with it. And I've been impressed with the fact that you have two rising stars also nominated, and I just want to wish you the best of luck, and you should be very proud of it. Everyone that I've talked to about this have just waxed poetic about it, so congratulations.
 
Morgan: Absolutely, thank you so much, and again, I just want to give a shout out to Nat and Biz, I mean I'm their manager, and did this admission, but man they are just absolute rock stars. So I'm looking forward to that, and really looking forward to being able to have the opportunity to do a TED talk.
 
Dawn Tiura: Perfect. Thank you so much, and folks, that was Morgan Schultz with Federal Express, and they're the team finalists in 3rd party management in the future sourcing team awards. So congratulations Morgan, once again.
 
Morgan: Thanks, Dawn.
 
Dawn Tiura: That was FedEx, with their intelligent dashboard. Up next is Florida Blue, the customer of choice as our third party management finalist.
 
Dawn Tiura: Well folks, this is going to be a great sourcing finalist podcast. I'm going to be talking with Tim Cronan, and their team was nominated for the third party management supplier performance, and they are now a finalist, and Tim is with Florida Blue. The name of the project was called the Customer of Choice project. So welcome to the call, Tim.
 
Tim: Thank you very much for having me.
 
Dawn Tiura: I'm excited. So tell me, what does customer of choice mean, and why was this project nominated?
 
Tim: Well, this project was named becoming the customer of choice, because it was, quite honestly, a year-long journey that we had taken on at Florida Blue to become easier to do business with. We felt that if we were easier to do business with, our suppliers would have less likely of a chance of failure, which can lead to expensive costs for the company and the entire supply chain. And more importantly, bring innovation to our company so that we could fulfill our mission of building healthy communities in Florida.
 
Tim: So this, it was a year-long project like I said, it involved many different departments within the company, there was a ton of change management that had to go into it, and I'm extremely proud of the team that undertook this, and I'm very grateful that SIG and our peers recognized us for this, because it was a great project for all of us to take on.
 
Dawn Tiura: So the project took a year, and it was innovative for Florida Blue to undertake, but what makes you think that this innovation is going to be sustainable? Because it's hard to stay the customer of choice.
 
Tim: It absolutely is, and I'll tell you that we're not resting on our laurels, we're already undertaking what I would call phase 2.0 in terms of this project. So we hope that not only the base that we built, I think that will stand, but we're already looking for ways to become even easier to do business with, and we're going to look for more ways to deliver, you know, services to the businesses, which ultimately pass down to the policy holders within the state. And as the company grows, we are taking this across state lines into the other subsidiaries that we assist on the procurement side as well.
 
Dawn Tiura: Oh that's awesome. So when you got nominated for this, what do you think was, what do you think stood out that made you so quickly become a finalist?
 
Tim: Well I think, I think a couple of things. One is that we had, you know we had the great privilege to work with a couple of people outside of the company, Kate Vitasek is one of them. We've worked with a lot of other SIG members to kind of bounce ideas off of, and we were able to take a lot of the great ideas in the SIG community and bring that back to our company, and really kind of put something together that fit our company, but really felt innovative to a lot of people in the sourcing profession.
 
Tim: So I think, I think not only being able to bring outside ideas into the company really kind of helped with people who kind of speak our language, and understand what we're trying to get to. But then also showing, you know, real tangible results. Some of them intended, and some of them unintended within the company, really brought some highlights to some of these initiatives that we've taken on.
 
Dawn Tiura: That's neat. And Tim, that's one thing that I have to say about you as a sourcing professional and leader, is that you are just as approachable. So you might have brainstormed with other folks, but I know people are always calling you and talking about, you know, different ideas and stuff. So I do want to thank you for that, because you've just always had an open door policy to talk to folks.
 
Tim: Well absolutely, we all are faced… We may be in different industries, we may be in different phases of transformation or working in different categories, but we all get faced with a lot of the same problems, and it's a whole lot easier to kind of, I'm not sure if it's right to commiserate with the rest of us or to innovate with the rest of us, but somewhere along that spectrum we all work well together.
 
Dawn Tiura: You can do both -ates with each other. That's absolutely fine. So if other companies wanted to undertake this project, do you think it's applicable to other companies, and what could they learn from you?
 
Tim: Absolutely, and one of the things which, I'm going to steal a couple lines from Kate, who worked with us, is that you know, we took a lot of the best practices from, you know, academia and from a lot of the great work that's going on, but we modified that to fit our company.
 
Tim: So will the model that Florida Blue used work for somebody in the automotive industry or somebody in the software industry? Probably not, but probably 85-90% of that would work, and then all they have to do is modify it to meet either, if they're a regulated industry or the uniqueness of their own company, or their culture of their company. So as long as there's no pride of ownership, let's call it, or they're able to take it, break it down and then build it back up to meet their company, I think it's applicable in almost any industry, to be quite honest.
 
Dawn Tiura: Oh that's awesome. So if you could go back to the beginning of the project, 12 months is a lot of time, and you probably learned a lot. What would you have done differently, or what do you wish you knew back then when you started the project?
 
Tim: Wow, I don't think we have enough time on the podcast to go through all of the lessons learned that we had. There was definitely some tactical things that we would have done differently, but what I would say is that I think the team did a very good job of communicating and getting people, you know, not even in our department involved in it. You can never underestimate the ability to collaborate within the company, so there's always somebody else that I wish we would have gotten involved in sooner rather than later. It honestly is just a chance of not being able to get to everybody that we can, but I think, you know, you can't underestimate change management, you always have to do more communication, and that's something we would have definitely done even more of.
 
Dawn Tiura: Oh that's awesome. So have you become the customer of choice?
 
Tim: Well you'd have to ask some of the customers out there, but we feel we do. We've, you know, a couple of the unintended statistics that we looked at, we're able to now complete initiatives 10-15% quicker, so that means our team is not a roadblock to the business and the suppliers, you know, from a speed to market perspective. So I think that is helpful. We've had cases of suppliers bringing us innovation and new ideas, which has happened somewhat in the past, but is definitely happening at a more frequent speed, so I think that's a telling tale.
 
Dawn Tiura: Mm-hmm.
 
Tim: We still have a long way to go, and I don't think we'll ever be completely satisfied with, you know, the work that we're gonna do, but I definitely think it has improved, and I definitely think we're on the right track.
 
Dawn Tiura: That's awesome, you should be very proud to make it to the finalist round, and you've got some tough competition, but you do stand out. This is a fantastic project, and the judges loved it, so I wish you all the luck in the world.
 
Tim: I'll tell you, it's an honor to be nominated, it's an honor to be a finalist, and I do definitely wish everybody in the category luck. Everybody's story is, you know, a great story, and I think that goes to the talent and the skill that we have in the procurement profession, and you know, we're happy to be around everybody and be involved with SIG and the community there, so it's been a great initiative for us.
 
Dawn Tiura: Good, and then how many people were on your team?
 
Tim: We had six people full time working on this, but part time and throughout the rest of the company, there were probably over 100 people that contributed to it in one way or another. They may not know it, but there were tons of people who brought insight that we used. But definitely the six people full time, which really brought a lot of great skills to it.
 
Dawn Tiura: That is awesome. Well, best of luck in the final voting, and I can't wait to see you in October. You're also going to be center stage doing a keynote presentation, so I'm excited to see you on center stage, and then hopefully I'll see you back on stage accepting an award.
 
Tim: Absolutely, we hope to be there as well accepting an award, and like I said, thank you very much for everything you do for us, and everything that, you know, you've put together so that we can serve our members better.
 
Dawn Tiura: Oh thank you, Tim.
 
Dawn Tiura: So that was Tim Cronan with Florida Blue, and they are a finalist in the third party management supplier performance category, and their project was named customer of choice.
 
Dawn Tiura: Up next is Fannie Mae, with an asset management solution as our third-party management finalists.
 
Dawn Tiura: Folks, I'm really excited right now to introduce you to Samuel. He is part of the Fannie Mae asset management solutions project, which is a third-party management finalist. So Samuel Turner, you are a finalist, and you are up against a lot of good competition. So tell me, what was the problem you were trying to solve?
 
Sam: Well, thanks a lot for the nomination too, by the way. The problem we were trying to solve is, we had a cost allocation for third party data, services at Fannie Mae that was very laborious, and it was a manual process, and it really wasn't very accurate. So we needed to automate that process, and the second thing is we, we're going to transfer all of the management of the new and the existing data entitlements over to our strategic partner at Fannie Mae, third party data governance of which we teamed throughout this project with.
 
Sam: So those were the two key components that we really wanted to solve as we put this financial tracking system in place. But there was a couple other things that kind of came out of this process that we knew we could probably solve with the tool as well. Without a category management plan or a data asset tool, procurement was really in much of a reactive mode for buying data, so in order to be more strategic and less transactional, we needed to get out ahead of data purchases, and that's where this tool came in. The asset management tool was a great vehicle to help us achieve that.
 
Dawn Tiura: And data is very, very important for a financial company like yours. So alright, you did the initiative, you put in place the asset management solution tool, but why is this innovation going to be sustainable? What do you have in place to make sure it sustains its value over time?
 
Sam: Well that's a good question, we put a lot of emphasis on the front end. The first thing that we did is we did an RFP to make sure that we got the right tool.
Dawn Tiura: Mm-hmm 
 
Sam: We wanted to make sure we got a tool that was made, really, for data. When we did the on-site demos with the suppliers, we talked to other companies that have implemented such a tool, and were very similar to companies of ours, we got references, and then we scored those as well. And what we really learned from those were really invaluable.
 
Sam: We ended up finding out that a phased approach over an 18 month period is really what to expect for putting in a new tool. And you don't have to do this big bang approach; you can really phase this in over time, but you do need full time dedicated resources that are all in. So the information that we got from these resources, from these references was really invaluable. And then the final thing there that I would tell you, Dawn, for the sustainability, is the communication that we really put out, we were just a full court press. We had executive backing, legal, this was a strategic initiative that we called Simplify 670. We created user groups that we shared the data with. They rolled their information up to a steering committee; we did the business case and the charter.
 
Sam: So we really put a lot of structure in place to begin with, to make sure that this project was sustainable.
 
Dawn Tiura: That's really neat, so obviously the nomination caught the sight of the judges, and caught their attention. So what do you think made this stand out from other nominations?
 
Sam: Well, I guess, you know, I'm a procurement guy, so I always have to go back to money, but we got a saving of at least $1.2 million as a direct result of this project initiative, so that was one thing that just happened right off the bat as we collaborated with key stakeholders, shared their inventory lists with them, [and] showed them how we were going to be doing this. They immediately started to look at their own inventories, finding ways to reduce, and the savings just started to happen before we even completely loaded all of the inventory into the tool.
 
Dawn Tiura: Did it really?
 
Sam: Yeah it was-
 
Dawn Tiura: Just the visibility made such a difference, huh? And paying attention to it.
 
Sam: And we really haven't even scratched the surface yet completely, because we're still completing the final load, and once we really get into some demand management then we really expect to start to see the full benefit of this.
 
Dawn Tiura: Wow. So now, are the results sustainable, are you going to have year over year savings, do you think they'll grow, do you think it was a one time savings and now you just have to make sure that you're protected?
 
Sam: So I think they're gonna grow a little bit more, because when we're really able to start to be proactive, and start to share budget reports, start to share inventory reports with the stakeholders, I think there's still going to be some more demand management exercises that we're going to see benefit from. So I do think that there'll be some savings, but that will probably taper off over time, and then we'll probably start to just get a lot of benefit out of just the value add that the tool gives. But you know, I will say one thing, you know, those are tangible items, but one thing that really made this an incredible nomination too, though, and that sounds like a cliché, but amazing people focused together doing amazing things, we partnered with third party data governance, and it was an awesome collaboration, and the two groups really weren't always in sync in the past. And their vice president told our vice president that we were able to achieve in 9 months what we have not been able to achieve in 9 years.
 
Dawn Tiura: Wow.
 
Sam: And I wrote that down, it was just a really good thing to hear, and that kept us motivated. And I think we were all aligned with the same goals, I think that really kept us on track.
 
Dawn Tiura: So, other companies might look to you and say I want to do this project as well. What should they learn from you, or does this not apply to other companies? Is it not repeatable?
 
Sam: No, I think it really is repeatable, I do. You know, there's some things that we haven't done yet: the self-certification modules. When you send inventories out to leadership, and then ask them to certify, do they really need the entitlements that they have, it causes a different dynamic, a little bit of a change in behavior.
 
Sam: I think there's probably some types of things that maybe I wish that we would have bought right out of the gate that I might do differently.
 
Dawn Tiura: Mm-hmm.
 
Sam: There's the self-certification module, single sign-on, you can have an HR feed so as soon as you have employees that leave the company, the feed, the HR feed will pick that up into the tool, and then the procurement or the governance team can proactively reach out to the business and say hey, we have learned that these people have left the company, do you want to change their entitlements? So, it's kinda hard-
 
Dawn Tiura: Oh, my goodness, I mean that... That is what I hear from everybody, that they keep paying for licenses for people that have been gone for years.
 
Sam: That is exactly right. And...
 
Dawn Tiura: Oh my goodness, I'd never heard of an HR feed, that's fantastic.
 
Sam: Yeah, and it's probably good to buy those things, maybe out of the box, go ahead and get them up front. I'm not so sure that we did the single sign-on in all of the modules at once, but we didn't pay a whole lot. It really was, the tool that we got was really inexpensive for all the bang for the buck.
 
Dawn Tiura: Wow. Alright, so now you've been at it for 18 months, if you could go back and look at it from the beginning, is there anything that you wish you'd done differently, or you would do differently, or maybe that you wish you knew?
 
Sam: Yeah, I don't know that, I don't know that I would really change anything, I just think that we really went about this the right way, I just think that buying those modules all together is really about the only thing that I can think of, quite frankly.
 
Dawn Tiura: Well the suppliers will love to hear that when they listen to this podcast, and they're going to be like thank you, Sam, thank you.
 
Dawn Tiura: So I wish you the best of luck, the final selections are happening very soon, and I hope to see you in October. Thank you so much, this is Samuel Turner, and he is representing the third-party management finalists, and this is Fannie Mae, and it was the Asset Management Solution project. So thank you for joining me today, Sam.
 
Sam: Well thank you.
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About The Author

Dawn Tiura's picture

Dawn Tiura is the President and CEO of Sourcing Industry Group (SIG), the world’s largest association representing Global 1000 companies, with a combined spend of $17 trillion USD in sourcing and outsourcing. SIG’s goal is to elevate the strategic impact of these organizations on their company’s top and bottom lines. Dawn is also the President of SIG University, an online and in-person training and education organization that offers certifications in Sourcing, Governance and Risk, competency assessments and Vested Sourcing techniques. 

Dawn has over 25 years leadership experience, with the past 15 years focused on the sourcing and outsourcing industry. Prior to joining SIG, Dawn held leadership positions as founder and CEO of Denali Group and before that as a partner in a CPA firm, focused on early Silicon Valley enterprises and high wealth individuals. Dawn is the proud mother of four and actively involved on a number of boards promoting civic, health and children’s issues in the Jacksonville, Florida area. Dawn is a licensed CPA and has a BBA from the University of Michigan and an MS in International Taxation from Golden Gate University.