Transforming the Procurement Function at Fujitsu

This organization celebrates and respects different cultures within its internal structure and supply chain, with over 124,000 employees supporting customers across the globe. Fujitsu's purpose is to make the world more sustainable by building trust in society through innovation and creating new possibilities, connecting people, technology, and ideas while always putting people first.

Since 2015, Fujitsu has had the vision to consolidate a best-in-class procurement team. The idea of embarking on a transformation journey arose from the need to improve and optimize the procurement function. A procurement transformation strategy typically involves rethinking and redesigning procurement processes and systems to achieve greater efficiency and value within a global organization. A successful transformation aims to reduce costs, improve supplier relationships, increase agility, drive innovation, promote sustainability, and position the organization as a leader in the market.

Pre-Transformation Challenges

As a result of a reflective exercise to streamline procurement activities at a global scale, Fujitsu identified five key challenges to address within the transformation strategy. Recognizing and being transparent about areas of opportunities and root cause problems, the organization can undertake appropriate and effective measures to maximize the positive impact of its transformation and lead the organization in the right direction to achieve successful outcomes within its internal structure, people, customers, and suppliers.

First, it was found that procurement functions perform different roles across the enterprise. The lack of standardization in procurement roles can lead to inconsistent practices and decision-making, duplication of effort, and confusion among stakeholders. Also, there may be different levels of expertise and priorities among different teams resulting in inconsistent outcomes. To address this issue, Fujitsu understands that it is essential to establish clear roles and responsibilities to ensure that procurement functions are aligned with organizational goals and that teams spread throughout the world will work effectively with a solid understanding of their role.

Second, there was no harmonized and clear reporting structure into a central head of procurement. Enterprises operating worldwide will often run into this problem. A vague understanding of reporting lines can diminish clarity and coherence across teams, undermining accountability in the delivery or execution of responsibilities. Finding the right balance between a fully centralized approach and a centre-led structure where teams are dispersed is a complex task. Fujitsu is now reshaping its reporting structure from a fully centralized approach to enable buyers sitting in local entities to manage functions independently, but still require them to align their operations with a uniform business strategy and report compliance to a dedicated central function.

Regions operating independently without an aligned overall procurement strategy is the third key factor in reshaping Fujitsu's procurement approach. In the absence of a coordinated strategy, entities operate independently following their agenda that might not reflect global business objectives. This can result in missed cost-saving opportunities, like volume discounts or supplier consolidation. Regional entities might find it difficult to gain visibility into the organization's overall spending and supplier relationships, reducing the possibility to optimize procurement performance. For this reason, Fujitsu's transformation has the purpose to redefine its procurement strategy to ensure that regardless of the region procurement activities align with the organization's goals and priorities, aiming for greater consistency amongst international teams to increase savings and avoid unnecessary duplication of efforts.

Fourth, a less coordinated approach in sharing best practices across regions was found as another reason to redesign Fujitsu's procurement strategy. Many large global organizations often encounter that information flows do not always reach all organizational levels consistently. Executives and managers across organizational levels and regions may have different perceptions of business objectives and strategies. Consequently, there is a great need to improve efficient communication alignment from the top-down and bottom-up structures. Teams must be encouraged to transparent information and metrics from good and bad experiences. Encouraging this open dialogue fosters cooperation, empathy, and support, as well as greater opportunities for problem-solving and implementation of good practices.

Finally, the fifth factor to address the need for a procurement transformation was the different regional approaches to engaging and managing internal clients and stakeholders. Fujitsu celebrates its multicultural and diverse structure, which is why it was important to avoid rigid strategies and it was also essential to recognize and understand that teams across regions will operate according to local practices. However, it is necessary to make sure that there are consistent client and stakeholder management guidelines to meet stakeholder and client needs. A standardized yet flexible approach to Fujitsu´s procurement strategy must take into consideration potential language barriers, legal and regulatory differences, and embrace local communication norms, negotiation styles and relationship-building conducts that will differ from country to country.

Fujitsu Procurement’s Global Supply Chain Unit One Global Procurement high-level strategy FY23

In the last eight years, Fujitsu placed increasing importance on developing its transformation strategy to optimize procurement functions and drive business value. To achieve these goals,  the company focused on five strategic areas. In this section, we will briefly review and comment on some of the actions and measures that the company has undertaken to develop its latest global procurement high-level strategy:

1. Strategic sourcing and cost reduction

• Supplier cost reduction
• Voice of Supplier
• Bid margin improvement via cost reduction.

By collaborating with suppliers on product development and process improvement, Fujitsu gains a competitive edge and creates opportunities for cost-cutting prospects. The advantage of a greater focus on strategic sourcing is that the organization and its suppliers develop a stronger and more efficient relationship, which will boost supplier performance and drives innovation opportunities.  to generate more competitive and economic rewards.

2. People

• Talent & Learning
• Commercial skills
• Glint survey

Investing in cross-cultural training and education is one of the most rewarding efforts to add to Fujitsu´s procurement transformation. A strong talent & learning plan consists in creating a branded structured training programme, virtually available for any local team across all regions, enabling individuals to have access to frameworks aligned with precise procurement professional capabilities and competencies. As a result, people and teams have expressed a positive impact through stakeholder feedback and employee satisfaction indicators. 

3. Internal client engagement

• Internal client mapping
• Collaboration / Communication and client engagement activities
• Voice of the Client Survey

Acknowledging the value of strong internal client relationships,  helps businesses ensure that objectives and goals are delivered within the overall global procurement strategy. The enterprise has implemented several mechanisms to identify and understand client needs and communicate with them effectively, these tools help Fujitsu to measure the efficacy, and impact of the procurement function when they are interacting with stakeholders and clients at a regional and international level.

4. Process standardization

• Operation Procurement and standardization
• Supplier risk mitigation
• Standard Tool/System

Streamlining process standardization and introducing transparency mechanisms helps enterprises gain better visibility into their procurement activities. Documentation and communications should use simple and clear language to ensure accessibility and comprehension for all stakeholders. It is important to keep in mind that a successful standardization of processes is flexible enough to accommodate local legal and regulatory requirements while ensuring a consistent framework of operations and clearly describes how to achieve business objectives. The enhancement of supplier risk mitigation activities is also necessary to secure business continuity and protect the company's reputation and interest.  At the same time, Fujitsu is continuously investing in systems and technology to document risk assessments and standards compatible with local systems to improve collaboration and information sharing.

5. Sustainability and Compliance

• Responsible Procurement Charter
• Green Energy/CO2 reduction
• Promoting diversity

The Fujitsu Group has adopted a responsible procurement approach, the organizations expect its internal stakeholders and suppliers to support Fujitsu´s efforts by embracing the ethos of the Responsible Business Alliance Code of Conduct. In order to work on a journey toward compliance, Fujitsu has also developed the “Responsible Procurement Charter” to support suppliers, , small and medium-sized enterprises (SMEs), and internal business units in their progress and improvement efforts. The Charter outlines standards for Labour, Health & Safety, and the Environment as well as standards relating to business ethics, with the aim of promoting greater collaboration in the supply chain.

Another important element of Fujitsu's procurement transformation strategy has been its focus on sustainability. The company has set ambitious targets for reducing its environmental impact, and it values procurement activities that have a significant role to play in achieving these targets. In recent years, Fujitsu incorporated a variety of sustainable strategies, such as using renewable energy, reducing carbon emissions, reducing waste, increasing energy efficiency, and promoting ethical sourcing practices. Fujitsu also encourages suppliers to develop and adopt sustainable procurement policies.

Lastly, Fujitsu understands that a diverse world requires a diverse approach, therefore, the organization has also included specific targets to increase the spending ratio from SME/Woman/Minority Owned businesses and to further develop supplier diversity. For the organization, the adoption of a diversity approach is the best way to attract the best talent, broaden perspectives, support innovation, and improve business performance. Leveraging procurement transformation as a tool to advocate for diversity, drives positive change and makes a meaningful impact.

Transformation Results

Fujitsu's procurement transformation strategy has achieved significant success. Currently, there are approximately 260 people in the Regional Procurement teams outside of Japan. Bringing together different nationalities and perspectives has consolidated one strong global team. By evaluating the level of centralization and decentralization, the company has adopted a central-led approach. The sharing of best practices has significantly improved and is encouraged through supra-regional collaboration between local procurement teams and stakeholders across the globe.

Generating an efficient global procurement high-level strategy is a true challenge. To achieve this task, it's important to understand and adapt to different cultural norms and ensure that regional procurement activities are aligned with the company's values and goals. This strategy promotes efficiency, sustainability, and innovation, resulting in optimistic results in the optimization of procurement processes and cost reduction. It is worth mentioning that the resources allocated for the transformation strategy have demonstrated a healthy return on investment.

Finally, the transformation strategy aims to implement a continuous enhancement of the procurement operational environment, empowering teams to build trust in internal and external relationships and take on training opportunities to retain the best talent. Overall, Fujitsu's efforts are driven to differentiate the business from its competitors and position itself as a leader in the market while maintaining a strong focus on sustainability, people, and innovation.

REFERENCES

Fujitsu. (n.d.). Fujitsu Procurement System. Retrieved March 28, 2023, from https://www.fujitsu.com/global/about/csr/procurement/.

Fujitsu. (2020). Responsible Procurement Charter. Retrieved March 28, 2023, from https://www.fujitsu.com/uk/imagesgig5/ResponsibleProcurementCharter-v2-2020.pdf.

Minto, R. (2021, June 30). Fujitsu: Building a sustainable procurement strategy. Supply Chain Digital. Retrieved March 28, 2023, from https://www.supplychaindigital.com/sustainability/fujitsu-building-sustainable-procurement-strategy.

Procurement Leaders. (2021, March 10). Fujitsu's procurement transformation story. Retrieved March 28, 2023, from https://www.procurementleaders.com/procurement-transformation/fujitsus-procurement-transformation-story-681648.

The Boston Consulting Group. (2021, August). When leadership say they are aligned but company leaders are not. BCG. Retrieved March 28, 2023, from https://www.bcg.com/publications/2021/when-leadership-say-they-are-aligned-but-company-leaders-are-not.

Procurement Magazine. (n.d.). A guide to understanding procurement transformation. Retrieved March 28, 2023, from https://procurementmag.com/articles/a-guide-to-understanding-procurement-transformation.