Innovations in Third Party Management: Applied Materials

Posted: 10/13/2022 - 02:36
Innovations in Third Party Management: Applied Materials

On October 19th, the Future of Sourcing Awards will celebrate organizations and individuals that have shown innovation, leadership and transformation in categories that are critical to the sourcing industry. Interviews with the finalists provide helpful insight about their projects, the problem they sought to solve and the impact to their organizations.



Can you outline why your team embarked on this project and the problem that needed to be solved?

Key executives identified procurement as an enabler of scale and a function that would support the future growth of the company and new ways of working. The Global General Procurement organization needed to rise to that challenge. Since then, we have evolved from a function that used manual processes (such as tracking project management on a whiteboard) to a collaborative team with improved processes, increased technology adoption and top talent to support a global, fast-growing organization. To help us evolve with agility, we worked with third parties to accelerate, innovate and provide room to iterate.   Our relationships with third-party providers have enabled us to speed up our transformation journey. 

How were things done originally and what was the inspiration to innovate the process?

When we set out to transform the indirect procurement function, our focus was primarily on building visibility, standardization and automation into what was primarily a manual process.  Our Sourcing team managed projects and portfolios using spreadsheets and emails, and the source of truth for project operations was documented on a whiteboard.  We needed a significant step up to drive strategic-level conversations with key stakeholders.  
Sourcing plays a critical role in developing a high-performance procurement culture. We knew to be successful with our sourcing transformation journey and to better support the needs of a growing company we’d need a new approach to the sourcing function. We took the tried-and-true approach of People, Process and Technology.  We worked closely with our third-party service and technology providers to achieve our goals including deeper category strategies, strong user adoption of the new sourcing solutions and optimized processes to increase the time to value. In addition, we wanted to enhance stakeholder relationships, improve Source-to-Contract processes, increase spend under management and provide users with more self-service procurement options.

What KPIs did you use to measure success for this project? (For example: performance, customer satisfaction, revenue, sales or relevant financial gains?)

Within the first year, our sourcing transformation journey helped us achieve: 

  • Improved standardization 
  • Increased stakeholder and supplier collaboration 
  • Increased efficiencies 
  • Improved effectiveness 
  • Improved pipeline visibility 
  • Improved executive approval rating 
The most significant achievement was that we had set a baseline and were now able to track our progress above and beyond the office whiteboard. In addition, we developed KPIs for the health of our business relationships with our key suppliers and providers.  

How do you plan to ensure that the new model remains relevant and adapts to the future needs of the market?

Each quarter, we evaluate our impact on the business with our leadership team, relevant stakeholders and key suppliers. By having a proactive and agile approach to our transformation journey, we can respond quickly to new business needs and requests from our end-users. We are also looking at technology to help improve predictive analytics and risk management.   


What advice do you have for those who may want to implement this innovative approach in their own organizations?

To be effective and successful when working with third parties in your transformation journey, it’s important to bring in end-users, stakeholders and suppliers early in the process. Deploy Design Thinking principles to ensure you have empathy for everyone involved in the transformation journey. Make engaging with procurement easy and fun – it rarely works well to force the adoption of new tools, processes and engagement models.   

Also, measure the health of your business relationships. At Applied, we conduct a yearly stakeholder satisfaction survey to collect feedback on the changes we’ve made and capture new areas of improvement for the year ahead. In fact, this past year’s survey inspired us to think about our intake process for engaging with stakeholders, and we are now exploring innovative ways to guide our stakeholders through a digitally enabled intake process. We also collect feedback and have started hosting some onsite events with our key suppliers this past year to further enhance our ways of working.

How did your team assess the risks/potential for your third-party management strategy? 

When the global pandemic started, it created a remote workforce for us overnight. Like many companies, this change provided us with the opportunity to consider new ways of working. We embraced the overcommunication mindset when adjusting to the change and building new solutions for our team, stakeholders and suppliers. We spent time upfront collecting stakeholder feedback, uncovering internal and external pressures, and deploying the right digital enablers for our procurement ecosystem. Equally important, we changed the pace and scope of critical projects for the business.



About The Author

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The 2023 Future of Sourcing Awards recognizes organizations and individuals that show innovation, leadership and transformation in categories that are critical to the sourcing industry. The Awards will take place on October 18, 2023, the capstone evening at the SIG Global Executive Summit. Attendees will enjoy dinner, networking and an awards ceremony that brings together some of the brightest minds to create a truly remarkable experience.