By Richard Barnett
This is Part 3 of a talk with Geraint John, Research Vice President at Gartner, and Kevin Purser, Head of Global Supply Chain, Sourcing, and Procurement at Fitbit, on the topic of digital procurement and how Fitbit implemented LevaData's digital procurement platform. The discussion takes place at Gartner's Supply Chain Executive Conference 2018 in Phoenix. You can find Part 1 here. You can find Part 2 here.
When Fitbit introduced Leva in 2015, they hit the ground running and began to see immediate results. As time went on and the platform became embedded in the organization, they were able to leverage the transparency and information it provides to diversify the talent on their procurement team and allow other functions, such as finance, more direct input into the procurement process.
But what was the procurement of specific outcomes?
In 2016, Fitbit released several new products and added a new manufacturing partner, a move that again increased the complexity of their supply chain. Still, they were able to move forward as a procurement team. Kevin explains,
“In addition for supplier engagement, we did increase beyond the one to three sourcing events. We actually got to a quarterly cost process, and we were addressing far in excess of 50%, more in excess of 70% of the total spend supply base. We’re pretty happy with the progress up to date, up to then.”
Going into 2017, the company underwent a restructuring. At the same time, they introduced new products, including the Ionic, their first smartwatch. As you can imagine, the technology involved in a product of that sophistication changed the number, the types and the level of integration they had with their suppliers dramatically. Throughout this process, Leva was able to help Fitbit increase their engagement with suppliers and internal stakeholders making sourcing an ongoing process that draws input and intelligence from throughout the organization. Kevin feels that this has positioned him to compete against organizations with 20 or 30 times his available resources.
“[By] empowering my team with the LevaData platform and digital sourcing and digital procurement. We've really been able to compete and win in many cases. I think the real key part here is results and gaining negotiation outcomes. Using all of the insights, using all of the data sources as it is put together, ran through the analytics, and being able to gain some predictive insights as well and using those in your whole negotiation process.”
Halfway through 2018, Fitbit took stock of where they’d come since 2015. They’ve been able to reduce their analysis time by 75%. They identified and capitalized on more than $30 million in opportunities and realized 2% to 3% incremental cost savings with 90% of their strategic spend under control. Supplier engagement is continuous, and procurement can draw on insights throughout the organization, allowing them to be proactive and strategic, creating value.
So, has Fitbit achieved their end goal? Kevin doesn’t see it that way. He references the Maturity Model.
“As you look at moving on to kind of a level five. This is the fantasy of the future. In a couple years, level five will be level three and there'll be something else that'll be level four and level six.”
The goal, he says, is to keep moving forward. If you haven’t taken your first step, the time to take it is now.