Transforming Tata Steel Netherlands’ category management process with Cirtuo

‍One of the world’s leading steel manufacturers

Tata Steel Netherlands (TSN) is part of the Indian Tata Steel company. TSN is one of the largest steel producers in Europe. Tata Steel supplies high-grade steel products to demanding sectors all over the world. Their steel is indispensable in construction, the automotive industry, the packaging sector, and for producers of industrial machines. 

TSN comprises two Business Units: Tata Steel IJmuiden and Tata Steel Downstream Europe, which have branches in the Netherlands, Belgium, Germany, and other parts of Europe. The IJmuiden site employs over 9,200 people. All in all, 11,500 people work for Tata Steel Netherlands. Tata Steel IJmuiden produces 7 million tonnes of high-quality steel every year.

The General Procurement department of TSN is responsible for sourcing and purchasing goods and services needed for the company's operations. TSN General Procurement consists of ~120 people. It is accountable for categories: General Services, Maintenance Services & Goods, Process Materials, Energies & Utilities..

With a long history of using Microsoft Office templates for category management and a stepwise strategic sourcing approach, Tata Steel Netherlands partnered with Cirtuo to transform its approach to strategic procurement with technology.

Evolving from using PowerPoint & Excel for category strategy development

Before engaging with Cirtuo, General Procurement at TSN managed their spend with mature PowerPoint and Excel templates for category strategies and a 5-step process for category management. While the results were decent, the process was neither consistently applied nor tech-enabled, creating a fear that value-adding opportunities were missed. On top of this, TSN faced multiple issues with its offline approach:

• Category Managers struggled to obtain accurate (spend) data as input for strategy creation, 
• Procurement Excellence lacked control & governance mechanisms to ensure a consistent application of the methodology, 
• Creating category strategies was a manual and labor-intensive exercise, 
• Stakeholder involvement and collaboration varied across the team, and
• Category strategies were often stored locally.

These factors made strategy creation, version control, visibility throughout the organization, and knowledge sharing and retention a pressing concern. In addition, the percentage of spend under strategy was unknown to leadership. It was a consensus within the Procurement Leadership Team that ~2,5bn of spending shouldn’t be managed with Excel spreadsheets and PowerPoint slides going forward. The team decided that simplifying the toolkit and process would be the most sustainable path forward.

TSN decided to digitize its processes to strengthen governance, compliance, and value delivery. After exploring the market, they found Cirtuo to meet all their requirements. A pilot was started in the summer of 2021.

Aspiring a new level of maturity

Daniel Kalmann, Digital Procurement Manager at Tata Steel Netherlands, was involved in assessing the solution fit based on his digital procurement transformation consulting experience. Like many Procurement practitioners, Daniel accidentally landed in Procurement when working on a P2P implementation at a major retailer for an IT consultancy. “Procurement & I - love at first sight,” he explained with a laugh. “Procurement provides a unique view of how a company operates through its suppliers and the products and services it buys. And while I enjoyed consulting on Procurement digitalization projects, the opportunity to actually deliver the transformation at Tata Steel Netherlands felt exciting.”

TSN had clearly defined objectives for digitizing Category Management and for improving their existing process:

1. Enhance the existing framework and improve the process of creating category strategies
2. Establish standard requirements for content and strategic tools, differentiated based on the nature and importance of categories
3. Bring transparency to the development status and availability of category strategies 
4. Improve (stakeholder) collaboration, knowledge sharing, and retention
5. Improvement in accessing, managing, and interpreting data

Embarking on the journey to digitalize category strategy management

 “I liked the solution from the start, but we needed to make sure we fully eliminated the pains in our existing process and leverage the opportunity at hand,” he explained. “For the pilot, we scheduled ten training sessions with buyers to show them the tool, explain the benefits, and get our hands dirty.”

“The initial feedback and results were very promising! The templates and phases matched the existing process, but Cirtuo also structured the strategy development process and either confirmed our own ideas or injected new ones we hadn’t thought of before. This created a lot of confidence in the robustness of the solution but also showed us that we had work to do”, explained Daniel.

One roadblock for TSN was to improve the accuracy of the available spend data to support the aspired transformation. While strategies can be created with limited spend information, accurate data improves their relevance. Triggered by Cirtuo, Tata Steel leveraged an internal Advanced Analytics tool their procurement data scientist developed to cleanse the spend data extracted from their ERP System. Triggered by the Cirtuo process, this resulted in significant improvements to spend accuracy within just a few months. The accurate spend details, in turn, provide insights into areas for strategy development, again enhancing the usage of the spend cleansing platform.

Harnessing the power of digital category management

With Cirtuo’s native spend visualization capabilities and confidence in the output quality of the solution, buyers experienced the positive impact of the transformation. 

Buyers and members of the leadership team became strong champions and advocates of the new solution, positively driving early adoption. Asked about the key benefits of Cirtuo for TSN, Daniel raved that the solution healed all experienced pain points and elevated the concept of strategic procurement:

• Streamlined format, content, quality, and completeness of information across strategies,
• Accelerated strategy creation through the guided development process, 
• Elevated maturity and strategic thinking of team members due to improved spend transparency and next-level category strategy framework,
• Improved stakeholder collaboration and alignment with business objectives,
• Integrated access to Market Intelligence through integration with The Smart Cube,
• Boosted the spend covered by strategies through segmentation of content requirements by category and transparency on the status and availability of strategies, and 
• Optimized knowledge retention and traceability of strategic choices.

TSN General Procurement was trained in three different waves. While changing to a new process was perceived as more strenuous initially, the efficiency gains were quickly seen when it came to updating strategies or creating additional ones, as all information was available on the platform. Through Cirtuo, it is now ensured that the process is followed and that category managers check all the boxes.

TSN’s initial focus was to complete categories strategies 100%, not to start many and leave them at 80%. “One of the biggest learnings was that filling a strategy template itself doesn’t mean that people fully buy into the process, engage their stakeholders, or understand the implications of their choices. We wanted people to properly conduct the strategy process and experience the new way of working”, explained Daniel. “By moving to a digital solution that has stakeholder collaboration embedded in the process, jointly thinking about options and trade-offs became part of the process. And the mindset moved from ‘we’re filling templates next to our job’ to ‘this is our job.’ This mindset and behavioral shift is what elevated a digitalization project into a transformation”, concluded Daniel. 

A successful partnership for reaching the next level in strategic procurement

When asked what he wants other procurement teams in a similar situation to know, Daniel didn’t hesitate to say that “the solution and its capabilities are very valuable, but it's the combination of solution and Cirtuo team that delivered on the promise.” He added, “I fell in love with the solution from Day 1, and that hasn’t changed in over 3 years. Next to that, you have direct access to the team and can discuss ideas for improvement. You don’t have to log a ticket that never gets executed. For Cirtuo, you’re not just a customer but a partner.”

With the improved capabilities around Initiative Management & Value Tracking, the focus for TSN evolved from creating strategies to driving “spend under strategy” and tracking initiatives and value (financial and non-financial) from category strategies. “The fact that the solution offers so many more benefits and capabilities that support our digital transformation ambitions is what keeps me excited about the partnership. And people should be aware of the opportunity beyond the product capabilities.”