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Next Level Purchasing SPSM Certification at Erste Group Procurement Case Study

Robert SEMETHY
Robert SEMETHY

Erste Group Procurement underwent a transformation to become a world-class procurement organization. Led by Robert Semethy, they standardized processes, changed culture, and ensured staff were trained and certified. A key part of the transformation was staff earning the SPSM certification, which helped standardize terminology, fill skill gaps, enable adoption of best practices, and gain credibility with internal customers. As a result, Erste Group Procurement improved results, implemented new techniques like eSourcing, and continued their journey to procurement excellence.

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Next Level Purchasing SPSM Certification at Erste Group Procurement Case Study
Background: New Leadership Sets Procurement Group On A Journey To World Class Status Erste Group is one of the largest financial Three years prior to services providers in Central and Eastern Europe. this writing, US-born Its core activities include serving the financial proc urement needs of private individuals and providing executive Robert advisory services and support for corporate Semethy was brought clients in financing, investment and access to on board as the international capital markets, public sector Managing Director funding and interbank market operations. and, later, Chief Procurement Officer Erste Group Procurement is a discrete entity of Erste Group established to manage all external spend for all Procurement. He majority owned entities within Erste Group. Its describes his work Robert Semethy mission is to efficiently satisfy demand while at with the organization Chief Procurement Officer the same time aiming for cost reduction and as a journey. sustainable savings across the whole group. Like most procurement organizations, Erste Where was Erste Group Procurements Group Procurement had done a fairly good job headed? It was taking them to world class at fulfilling its mission, but there was room for status as a procurement organization. This case improvement. No one could have fairly study describes the steps in this journey to described Erste Group Procurement as being world class procurement and how the Next world class a few years ago, yet achieving Level Purchasing Association and its Senior world class procurement performance was Professional in Supply Management速 (SPSM速) certainly a goal. Certification played a role in an impressive procurement transformation. A Rough Start When Mr. Semethy entered the Erste Group One of those obstacles to success was related Procurement organization, he made several to the lack of standardization in terminology observations about its operations. Some were among the teams in the different regions in good, some were not. As a seasoned veteran of which Erste Group Procurement operates. A procurement, having enjoyed successful stints in lot of our problems stemmed around leading the procurement departments of communication and semantics, Mr. Semethy companies like Mattson Technology, Flextronics recalls. Even though we were attempting to International, and Solectron, he couldnt help communicate in English, our jargon was but notice some obstacles that were preventing different. the Erste Group Procurement organization from reaching its potential. While, on the surface, lack of terminology 2
standardization sounds minor, it prevented the lot to prove. subgroups within the organization from adopting standardized best practices that could As an example of the high demands and little produce optimal results. Different subgroups faith that the business units had in Erste Group were doing things their own way instead of Procurement, service level agreements were put the best way and this lack of unity across the in place as a means of holding the procurement organization stood in the way of making organization accountable to their responsibilities. progress. One of the aspects of the service level agreements was the requirement that the Another obstacle to success was internal procurement organization prove that they customer resistance. As a separate entity, Erste employ a qualified staff. From this alone, it is Group Procurement originally felt like an easy to see that the trust level was not optimal, outsider to the Erste Group business units. making for a challenging situation in which to Essentially, the procurement organization had perform. no credibility with the business units and had a The Transformation While the challenges faced by his new Semethys mantra was dont assume anything organization were steep, Mr. Semethy was regardless of any staff members years of undaunted by them. He set the vision for the experience. He was keenly aware of the value of journey to include adopting procurement best training everyone on all relevant topics to ensure practices, changing the culture of the that no latent gaps in skill levels remained after organization, and enabling his staff to possess training. the training and qualifications that would placate internal customers who doubted the As a component of Erste Group Procurements capabilities of the procurement team. professional development initiative, certification was extremely important. With the procurement In terms of that last point regarding training and organization positioned as a service provider to qualifications, Erste Group Procurement the business units, we are sometimes requested selected the Next Level Purchasing Association to provide proof of training and certifications of to provide its Senior Professional in Supply our employees, Mr. Semethy said. Management速 Program to the staff members in pursuit of each staff member earning the In this environment, it is obvious that nothing prestigious and globally-recognized SPSM速 short of stellar customer service is acceptable. If Certification. When asked what made the there were procurement disappointments, organization seek out additional training, Mr. internal customers might rally to wrest control of Semethy was emphatic about his desire to procurement activities related to their own ensure that every staff member was brought up business units. As such, accomplishing to a base level of skills and knowledge. certification early in the transformation was desired, not just to enable the implementation of While some organizations are perhaps overly best practices but also to manage perception meticulous at picking and choosing the right among internal customers. combination of courses for each individual, Mr. 3
Everyone thinks they of high degrees of competency and to say to can do purchasing, business units who believe they are best suited jokes Jorg Strauss, to m aking pro c ure m ent decis io ns Country Manager for independently, Look, we are certified here. Erste Group There is a minimum standard of quality [that Procurement Austria. we meet] and processes we know about, he But having a says. procurement certification enables So, Erste Group Procurement staff members members of Erste eagerly began working on, and completing, the Group Procurement Senior Professional in Supply Management速 to provide assurance Program. Jorg Strauss Country Manager Where The Journey Has Led Not long after enrolling staff members in the Senior Professional in Supply Management速 Team Unity: As mentioned earlier, one of the Program, Erste Group Procurement started barriers to achieving consistently good seeing improvements in the results they were performance was the lack of standardization in delivering for the business. In discussing the terminology and techniques employed by Erste methods of measuring performance, Mr. Group Procurement. The SPSM速 Certification Semethy said that Erste Group Procurement helped Mr. Semethy address this issue and he went from a very ambiguous methodology [in says that everybody is talking the same the previous year] and measurement to now a language and the team has aligned our very rigorous one in the current year and that jargon. But beyond the team unity brought results are better this year, as our team has about by such standardization, Mr. Strauss also done more and more training. notes that achievement of the SPSM速 Certification has made the team more of a At the time of this writing, over 50 Erste productive, close-knit group that he refers to as Procurement Group staff members have a community. He expresses that all of the earned the SPSM速 Certification. In addition, employees who have earned the SPSM速 the organization has implemented many of the Certification really feel a part of the practices covered in the SPSM速 Certification community. Mr. Semethy was somewhat curriculum, including eSourcing, supplier surprised at the unexpected pride that has performance reviews, and the latest galvanized his team in the wake of their success procurement key performance indicators. The in earning their SPSM速 Certifications. He positive effects of the SPSM速 Certification were shares that the engraved awards that the Next seen in many ways that contributed to those Level Purchasing Association sends to those improved results. Mr. Semethy and Mr. Strauss who earn the SPSM速 Certification are all over cited four specific areas where the impact of every single office as each SPSM速-certified the SPSM速 Certification was felt: 4
employee proudly displays it and they brag When we started implementing it, it was about their scores to which Mr. Strauss adds much, much easier because we did not have to that SPSM速-Certified employees are often so convince the people that it was a valid idea, excited by their achievement that they update Mr. Strauss says. Instead, he paraphrases the their LinkedIn profiles right away! reaction of the team as We heard in the SPSM速 its world standard lets do it! Filled Skill Gaps: Early on, Mr. Semethy had a Supplier business reviews are another best strong preference against allowing certain practice taught in the Senior Professional in members to opt out of certain training Supply Management速 Program that Erste opportunities based on their experience or Group Procurement integrated into its perceived skill levels. That turned out to be a repertoire. Leveraging eSourcing and holding smart decision. As a result of this train- supplier business reviews, and securing the everyone-on-everything approach, we now associated benefits, were never done before, have a base that everybody has in the so I look at those as areas where the SPSM速 organization, from our top buyers down to our very much assisted us in getting [new entry-level buyers, according to Mr. Semethy. procurement methods] culturalized in our Mr. Strauss elaborates that the Next Level organization, says Mr. Semethy. For getting Purchasing Association training helped the the team primed to try procurement team get past assumptions of skill levels that techniques that had not been attempted previously served to limit the professional before, Mr. Semethy said that the SPSM速 development to which they would expose material helped us a lot to show the people themselves. He said that team members who theres a world outside, to which Mr. Strauss originally felt strong in a topic and assumed adds that I think it really broke some ice. In that there would be no news in the training summarizing how the Erste Group Procurement on a subject, ended up being pleasantly leadership team leveraged the Senior surprised and making admissions like Wow! I Professional in Supply Management速 Program, never thought about [that]! Very good! In Mr. Strauss says that We have seen SPSM速 as summarizing the effect of the SPSM速 a change management toolto support the Certification on skill levels, Mr. Strauss states people to go on the journey to get to world- that it really filled some gaps. class procurement [and] supporting the whole change process within our company. Change Management: Going from any starting point to world-class procurement requires Credibility With Internal Customers: Finally, adopting new tools and techniques. Of course, Erste Group Procurement has achieved the long such adoption qualifies as change and, -sought-after credibility with its internal naturally, people can be resistant to change. customers. The dramatic skills improvement of However, participation in the Senior the team members has not gone unnoticed. Professional in Supply Management速 Program Internal customers know that weve done the helped to eradicate such resistance among the training, they know that our folks have passed, Erste Group Procurement team. As an reports Mr. Semethy. It has gained us example, Mr. Strauss recalls a rather friction- credibility where, two years ago, we did not free experience in getting the team to use an have credibility. Obviously, that credibility has eSourcing tool where, previously, leadership led to cooperation and cooperation has led to may have felt reluctance from the team. better results for the company
Why The SPSM速 Worked So Well For The Journey From the results discussed in this case study, it is us get a lot of folks through the program. obvious that the content of the Senior Asked the same question, Mr. Strauss cited Professional in Supply Management速 Program three components of the program that worked was right on target for helping a procurement particularly well. The first component was the team go from a respectable starting point to kickoff web conference that the Next Level world-class status. However, content alone was Purchasing Association conducts, at no not the only reason Erste Group Procurement additional charge, for its larger clients. When was successful at leading such a large team [Next Level Purchasing Association personnel] through a rigorous educational program. were all in the web conference and explained to Functionality and service mattered also. our people, What is the aim [of] it? and how to use it, broke the ice, he says. Secondly, he says When asked what he liked most about the that the Next Level Purchasing Associations Senior Professional in Supply Management速 online classroom is really easy to use. Finally, Program, Mr. Semethy replied Other than the he likes that each Next Level Purchasing content, the fact that it was online and Association online course incorporates a mix of [employees] could do it on their free timeor media including audio clips, video summaries, here at work was helpful. There wasnt a lot hands-on exercises, and more. of travel involved, he said. That really helped The Journey Continues Erste Group Procurement has made impressive leadership necessary to implement continuous progress in its transformation. In just a few improvements, both in terms of refining the short years, it has gone from an organization processes in use today and keeping an eye on with few standardized processes and little new practices that may emerge. And they have credibility with its internal customers to an an enthusiastic team, willing to embrace new organization that is implementing the latest ideas and ready to work hard at driving even procurement best practices, achieving better performance. measurably better results, and delighting its internal customers. However, the journey is not The Erste Group Procurement journey is over. continuing and that journey gets better with each step. Mr. Semethy and Mr. Strauss are supplying the Are you ready to transform your purchasing department into a center of excellence and achieve results like Erste Group Procurement? Contact the Next Level Purchasing Association today to schedule a complimentary SPSM 速 Certification Strategy Session. In that session, we will explore what your purchasing department needs in order to move forward towards achieving even greater results in cost savings, productivity, and risk mitigation. You can reach the Next Level Purchasing Association by calling +1-412-294-1991 or by email at: busdev@nextlevelpurchasing.com.

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Next Level Purchasing SPSM Certification at Erste Group Procurement Case Study

  • 2. Background: New Leadership Sets Procurement Group On A Journey To World Class Status Erste Group is one of the largest financial Three years prior to services providers in Central and Eastern Europe. this writing, US-born Its core activities include serving the financial proc urement needs of private individuals and providing executive Robert advisory services and support for corporate Semethy was brought clients in financing, investment and access to on board as the international capital markets, public sector Managing Director funding and interbank market operations. and, later, Chief Procurement Officer Erste Group Procurement is a discrete entity of Erste Group established to manage all external spend for all Procurement. He majority owned entities within Erste Group. Its describes his work Robert Semethy mission is to efficiently satisfy demand while at with the organization Chief Procurement Officer the same time aiming for cost reduction and as a journey. sustainable savings across the whole group. Like most procurement organizations, Erste Where was Erste Group Procurements Group Procurement had done a fairly good job headed? It was taking them to world class at fulfilling its mission, but there was room for status as a procurement organization. This case improvement. No one could have fairly study describes the steps in this journey to described Erste Group Procurement as being world class procurement and how the Next world class a few years ago, yet achieving Level Purchasing Association and its Senior world class procurement performance was Professional in Supply Management速 (SPSM速) certainly a goal. Certification played a role in an impressive procurement transformation. A Rough Start When Mr. Semethy entered the Erste Group One of those obstacles to success was related Procurement organization, he made several to the lack of standardization in terminology observations about its operations. Some were among the teams in the different regions in good, some were not. As a seasoned veteran of which Erste Group Procurement operates. A procurement, having enjoyed successful stints in lot of our problems stemmed around leading the procurement departments of communication and semantics, Mr. Semethy companies like Mattson Technology, Flextronics recalls. Even though we were attempting to International, and Solectron, he couldnt help communicate in English, our jargon was but notice some obstacles that were preventing different. the Erste Group Procurement organization from reaching its potential. While, on the surface, lack of terminology 2
  • 3. standardization sounds minor, it prevented the lot to prove. subgroups within the organization from adopting standardized best practices that could As an example of the high demands and little produce optimal results. Different subgroups faith that the business units had in Erste Group were doing things their own way instead of Procurement, service level agreements were put the best way and this lack of unity across the in place as a means of holding the procurement organization stood in the way of making organization accountable to their responsibilities. progress. One of the aspects of the service level agreements was the requirement that the Another obstacle to success was internal procurement organization prove that they customer resistance. As a separate entity, Erste employ a qualified staff. From this alone, it is Group Procurement originally felt like an easy to see that the trust level was not optimal, outsider to the Erste Group business units. making for a challenging situation in which to Essentially, the procurement organization had perform. no credibility with the business units and had a The Transformation While the challenges faced by his new Semethys mantra was dont assume anything organization were steep, Mr. Semethy was regardless of any staff members years of undaunted by them. He set the vision for the experience. He was keenly aware of the value of journey to include adopting procurement best training everyone on all relevant topics to ensure practices, changing the culture of the that no latent gaps in skill levels remained after organization, and enabling his staff to possess training. the training and qualifications that would placate internal customers who doubted the As a component of Erste Group Procurements capabilities of the procurement team. professional development initiative, certification was extremely important. With the procurement In terms of that last point regarding training and organization positioned as a service provider to qualifications, Erste Group Procurement the business units, we are sometimes requested selected the Next Level Purchasing Association to provide proof of training and certifications of to provide its Senior Professional in Supply our employees, Mr. Semethy said. Management速 Program to the staff members in pursuit of each staff member earning the In this environment, it is obvious that nothing prestigious and globally-recognized SPSM速 short of stellar customer service is acceptable. If Certification. When asked what made the there were procurement disappointments, organization seek out additional training, Mr. internal customers might rally to wrest control of Semethy was emphatic about his desire to procurement activities related to their own ensure that every staff member was brought up business units. As such, accomplishing to a base level of skills and knowledge. certification early in the transformation was desired, not just to enable the implementation of While some organizations are perhaps overly best practices but also to manage perception meticulous at picking and choosing the right among internal customers. combination of courses for each individual, Mr. 3
  • 4. Everyone thinks they of high degrees of competency and to say to can do purchasing, business units who believe they are best suited jokes Jorg Strauss, to m aking pro c ure m ent decis io ns Country Manager for independently, Look, we are certified here. Erste Group There is a minimum standard of quality [that Procurement Austria. we meet] and processes we know about, he But having a says. procurement certification enables So, Erste Group Procurement staff members members of Erste eagerly began working on, and completing, the Group Procurement Senior Professional in Supply Management速 to provide assurance Program. Jorg Strauss Country Manager Where The Journey Has Led Not long after enrolling staff members in the Senior Professional in Supply Management速 Team Unity: As mentioned earlier, one of the Program, Erste Group Procurement started barriers to achieving consistently good seeing improvements in the results they were performance was the lack of standardization in delivering for the business. In discussing the terminology and techniques employed by Erste methods of measuring performance, Mr. Group Procurement. The SPSM速 Certification Semethy said that Erste Group Procurement helped Mr. Semethy address this issue and he went from a very ambiguous methodology [in says that everybody is talking the same the previous year] and measurement to now a language and the team has aligned our very rigorous one in the current year and that jargon. But beyond the team unity brought results are better this year, as our team has about by such standardization, Mr. Strauss also done more and more training. notes that achievement of the SPSM速 Certification has made the team more of a At the time of this writing, over 50 Erste productive, close-knit group that he refers to as Procurement Group staff members have a community. He expresses that all of the earned the SPSM速 Certification. In addition, employees who have earned the SPSM速 the organization has implemented many of the Certification really feel a part of the practices covered in the SPSM速 Certification community. Mr. Semethy was somewhat curriculum, including eSourcing, supplier surprised at the unexpected pride that has performance reviews, and the latest galvanized his team in the wake of their success procurement key performance indicators. The in earning their SPSM速 Certifications. He positive effects of the SPSM速 Certification were shares that the engraved awards that the Next seen in many ways that contributed to those Level Purchasing Association sends to those improved results. Mr. Semethy and Mr. Strauss who earn the SPSM速 Certification are all over cited four specific areas where the impact of every single office as each SPSM速-certified the SPSM速 Certification was felt: 4
  • 5. employee proudly displays it and they brag When we started implementing it, it was about their scores to which Mr. Strauss adds much, much easier because we did not have to that SPSM速-Certified employees are often so convince the people that it was a valid idea, excited by their achievement that they update Mr. Strauss says. Instead, he paraphrases the their LinkedIn profiles right away! reaction of the team as We heard in the SPSM速 its world standard lets do it! Filled Skill Gaps: Early on, Mr. Semethy had a Supplier business reviews are another best strong preference against allowing certain practice taught in the Senior Professional in members to opt out of certain training Supply Management速 Program that Erste opportunities based on their experience or Group Procurement integrated into its perceived skill levels. That turned out to be a repertoire. Leveraging eSourcing and holding smart decision. As a result of this train- supplier business reviews, and securing the everyone-on-everything approach, we now associated benefits, were never done before, have a base that everybody has in the so I look at those as areas where the SPSM速 organization, from our top buyers down to our very much assisted us in getting [new entry-level buyers, according to Mr. Semethy. procurement methods] culturalized in our Mr. Strauss elaborates that the Next Level organization, says Mr. Semethy. For getting Purchasing Association training helped the the team primed to try procurement team get past assumptions of skill levels that techniques that had not been attempted previously served to limit the professional before, Mr. Semethy said that the SPSM速 development to which they would expose material helped us a lot to show the people themselves. He said that team members who theres a world outside, to which Mr. Strauss originally felt strong in a topic and assumed adds that I think it really broke some ice. In that there would be no news in the training summarizing how the Erste Group Procurement on a subject, ended up being pleasantly leadership team leveraged the Senior surprised and making admissions like Wow! I Professional in Supply Management速 Program, never thought about [that]! Very good! In Mr. Strauss says that We have seen SPSM速 as summarizing the effect of the SPSM速 a change management toolto support the Certification on skill levels, Mr. Strauss states people to go on the journey to get to world- that it really filled some gaps. class procurement [and] supporting the whole change process within our company. Change Management: Going from any starting point to world-class procurement requires Credibility With Internal Customers: Finally, adopting new tools and techniques. Of course, Erste Group Procurement has achieved the long such adoption qualifies as change and, -sought-after credibility with its internal naturally, people can be resistant to change. customers. The dramatic skills improvement of However, participation in the Senior the team members has not gone unnoticed. Professional in Supply Management速 Program Internal customers know that weve done the helped to eradicate such resistance among the training, they know that our folks have passed, Erste Group Procurement team. As an reports Mr. Semethy. It has gained us example, Mr. Strauss recalls a rather friction- credibility where, two years ago, we did not free experience in getting the team to use an have credibility. Obviously, that credibility has eSourcing tool where, previously, leadership led to cooperation and cooperation has led to may have felt reluctance from the team. better results for the company
  • 6. Why The SPSM速 Worked So Well For The Journey From the results discussed in this case study, it is us get a lot of folks through the program. obvious that the content of the Senior Asked the same question, Mr. Strauss cited Professional in Supply Management速 Program three components of the program that worked was right on target for helping a procurement particularly well. The first component was the team go from a respectable starting point to kickoff web conference that the Next Level world-class status. However, content alone was Purchasing Association conducts, at no not the only reason Erste Group Procurement additional charge, for its larger clients. When was successful at leading such a large team [Next Level Purchasing Association personnel] through a rigorous educational program. were all in the web conference and explained to Functionality and service mattered also. our people, What is the aim [of] it? and how to use it, broke the ice, he says. Secondly, he says When asked what he liked most about the that the Next Level Purchasing Associations Senior Professional in Supply Management速 online classroom is really easy to use. Finally, Program, Mr. Semethy replied Other than the he likes that each Next Level Purchasing content, the fact that it was online and Association online course incorporates a mix of [employees] could do it on their free timeor media including audio clips, video summaries, here at work was helpful. There wasnt a lot hands-on exercises, and more. of travel involved, he said. That really helped The Journey Continues Erste Group Procurement has made impressive leadership necessary to implement continuous progress in its transformation. In just a few improvements, both in terms of refining the short years, it has gone from an organization processes in use today and keeping an eye on with few standardized processes and little new practices that may emerge. And they have credibility with its internal customers to an an enthusiastic team, willing to embrace new organization that is implementing the latest ideas and ready to work hard at driving even procurement best practices, achieving better performance. measurably better results, and delighting its internal customers. However, the journey is not The Erste Group Procurement journey is over. continuing and that journey gets better with each step. Mr. Semethy and Mr. Strauss are supplying the Are you ready to transform your purchasing department into a center of excellence and achieve results like Erste Group Procurement? Contact the Next Level Purchasing Association today to schedule a complimentary SPSM 速 Certification Strategy Session. In that session, we will explore what your purchasing department needs in order to move forward towards achieving even greater results in cost savings, productivity, and risk mitigation. You can reach the Next Level Purchasing Association by calling +1-412-294-1991 or by email at: busdev@nextlevelpurchasing.com.