Being a business segment that is responsible for the movement of $1trillion worth of goods, the Canadian supply chain sector is of critical importance to the wider economy, contributing $66billion per annum to Canadian GDP and employing close to 900,000, according to a recent report by the Canadian Supply Chain Council. From negotiating to buying, planning, strategising and innovating, to moving and processing goods, and managing data and inventory, the supply chain function is a complex machine of sorts with countless spinning cogs and wheels. Like any specialist machine with innumerable interconnected, intricate moving parts, the supply chain function is difficult to understand and even more difficult to master, but as Patrick Etokudo, General Manager of SCM for the metals division at Sherritt International, knows better than most, a high-performance world-class supply chain will grant an organisation outstanding competitive advantage. Patrick Etokudo is a man that needs little introduction in the sphere of supply chain leadership, being a Fellow of Supply Chain Canada – an award granted exclusively to only the most visionary leaders from the field - and an industry veteran of more than 20-years who cut his professional teeth with Shell, Suncor and Enbridge, prior to joining Sherritt two years ago. A world leader in the mining and refining of nickel from lateritic ores, Sherritt International is a major player in the mining and energy space with extensive projects and operations in Canada, and Cuba, where the company is also the largest independent energy producer with extensive oil and power operations across the island. From Sherritt’s commitment to the development and coaching of its staff, both in supply chain and across the wider company, to its unbending ethical policy of only operating in non-conflict zones, the company’s world-class credentials are without question, and yet, upon joining Sherritt, Patrick soon found that the supply chain function he had inherited had a lot of room for improvement: “When I was hired in October 2018, the charge was pretty simple: to build a strategy designed to take the supply chain to a level fit for a company of Sherritt’s standing and move away from the tactical support approach that existed at the time. In the two years I’ve been here, continuous evolution has taken place as we’ve worked hard to build a strategic structure and create a supply chain system that is top tier,” Patrick said. In spite of the essential role supply chain plays in delivering organisational success, as is the case with many of life’s essentials, it is not uncommon that it often finds itself overlooked by more sales, marketing, and operations-focused executives who under-appreciate the value-add a highly effective supply chain function can deliver. Under such circumstances, it can be an uphill struggle to get an equal seat at the table alongside other key divisions within a business. The supply chain Patrick had inherited needed end-to-end management, being largely reactionary, if not entirely driven by the whims of what was happening elsewhere in the company. A complete culture shift was required to provide the foundation upon which a new strategic vision could be built, and subsequently a new supply chain Ways of Working initiative was implemented to drive this change – a key component of Sherritt’s successful wider ‘Vision 2024’ strategic action plan. The result of this initiative proved transformational. Whereas, before, Sherritt’s SCM function was in constant firefighting mode, a change of culture is taking root that has breathed energy, confidence and direction into supply chain. This has been centred around four key pillars: having a value mindset, working to a continuous improvement framework, being customer focused, and using category management as the philosophy for the acquisition of goods and services. Patrick elaborated on this further, stating: “These four pillars define the culture and ways of working going forward, and it was off the back of that, that we then implemented the category management structure we have today. That was a big shift for the organisation. It made collaboration with our clients and supply chain partners more effective and efficient. Every time we’re looking to source strategic goods and services, every stakeholder is at the table. The implementation of category management and SRM – supplier relationship management – along with that is changing the cost structure of our business services. As an example, we had eight warehouses when I first started and, since joining, we’ve reduced that footprint by 50% - right now we have four warehouses rather than eight, leading to a 33% reduction in square footage. Given austerity measures that the company implemented and the steps we took to improve our SCM capabilities, it made more sense to reduce excess warehousing than carry the amount of space we had.” Cost reduction continues to come top of the list of priorities for supply chain leadership, especially for a business like Sherritt which is facing a tripartite series of simultaneous threats from the Coronavirus pandemic, an austerity crisis driven by an over-leveraged balance sheet, and a softening of demand that has driven down nickel and cobalt prices. In the face of such an array of challenges facing not only supply chain but Sherritt’s operations at large, Patrick and his Supply Chain Management team have worked meticulously to ensure the successful delivery and implementation of the Vision 2024 strategy. The adoption of category management, a process of categorising goods and services and then managing these categories as ‘business units’ to achieve improved outcomes, effectively and efficiently, in order to meet business objectives and goals, has been central to this. By conducting continual analysis to stay ahead of risk, demands, trends or supply changes, category management is a proven means of achieving cost control without compromising on quality, and yet it is but one piece of the Vision 2024 jigsaw. Being the conservative industry that it is, the mining and metals sector has been slower than other industries in adopting the vast array of new technologies that have emerged over the past decade. Sherritt International is no exception in this respect, but Patrick has plans in place to drive change that will see the function transform into a fully integrated tech-driven organisation between now and 2024. He explained: “One of my concerns is that we’re not making data-driven decisions. The reason is pretty simple: we either don’t have the data or we have data we don’t trust. What most mature supply chain organisations would take for granted, like very smooth integration with payment systems, like suppliers’ ability to access our portal, being able to work off our suppliers’ catalogues – all of these great things, even visibility to our supply chain, don’t exist yet. And we have a real opportunity to get this done. Getting our ERP to work for us in 2021 is at the forefront of our objectives but more than that it’s about modernising the technology landscape, not only for supply chain but for the whole company. It’s not only about ERP but about updating and integrating our systems that need to talk to the ERP. Things like what a Transport Management System looks like, what a Contract Management System is, Customer Relationship Management systems. It’s all of that, and that’s before we start talking about why are we not using AI? why are we not putting bots into the system to execute routine, non-value-add processes? Why are we not using touchless procurement? We are way behind but we are going to catch up – this is our commitment. I spent three years at Shell implementing SAP and building the blueprint, so I know the value of operating in a good technology environment. We could be doing a lot more than we’re currently doing with the same amount of resources.” With the end of what has been a challenging 2020 in sight, Patrick and his team are looking to take the hard-fought successes that have been achieved this year and hit the ground running in 2021. To achieve the objectives set out for the 2021 phase of the Vision 2024 roadmap, there is work to do, most notably in implementing phase 2 of Sherritt’s supplier lifecycle management strategy. This end-to-end system will be used to manage vendors in an organised, transparent and integrated way, with a view to establishing the value-add suppliers can offer and how best to maximise their value in-line with procurement strategy and process. This will in many respects augment the work that has taken place this year in driving a new SRM practice that is fostering new mutually beneficial relationships between Sherritt and its supplier partners based on trust and a commitment to the fulfilment of contractual obligations. Additionally, further energy will be allocated to furthering the company’s sustainability goals – an objective which has been high on Sherritt International’s agenda since it joined the Mining Association of Canada in 2017. Furthermore, from a supply chain standpoint, there is work to do to boost supply chain risk management capability and continue optimising operations with a view to reducing inventory going forward. Sherritt is also undertaking a study of how supply chain services are currently being provided across its three Divisions. The objective is to identify synergies and determine the best way to consolidate, optimise and leverage its resources to achieve better alignment, effectiveness and efficiencies. Patrick is optimistically awaiting the recommendations of the study and, ultimately, their implementation. He is confident that this will bring tremendous value to the company. Patrick and his 80-strong team of supply chain professionals have their work cut out to succeed in meeting the targets set out in Vision 2024 but the company is moving in the right direction. “The fundamentals are strong,” in Patrick’s words, positive change is afoot and good times will return. Hear, hear to that.
