From regulations to supporting an effective solution

So far, the function of the company’s procurement policy is more restrictive than that which the business supports and directs. The market is changing, and in order to compete with startups, small and medium businesses where the decision-making process is much faster, the “giants” need to take internal documents seriously. Until 2016, Kernel had a procurement policy and procedure. In the same year, we began to actively implement an electronic workflow and an electronic trading platform, so we had to make changes to the internal documents. Everyone in the procurement process took this seriously and began to take an active part in updating the documents. As a result, we received a very detailed 70-page document from a 17-page document. But what would we do with it? We understood that few people would be able to read such a large document from beginning to end. So, our top management has decided to fundamentally change the approach to the document. We decided not to restrict participants and not to focus only on the needs of security service and internal audit, but to ensure that policies and procedures help businesses to operate quickly and efficiently. Who should the procurement policy be aimed at? Does our policy take into account business interests? At Kernel, a business is an internal customer, a mechanic, a laboratory assistant, a working person, and it is important for them to create additional value. We realised we had to remove those stages that do not bring practical benefits. What was needed was a document that would not regulate every step, but instead would support effective solutions, innovations, and development, so that employees would not be afraid to implement unconventional ideas. On the other hand, this document had to be simple and accessible to internal customers. At present, our procurement policy consists of only 9 slides. We have achieved our goal – to increase the efficiency and speed of the process by reducing bureaucracy. That is why there is little text in our policy. We removed everything unnecessary and focused only on key aspects. This transformation also became possible due Kernel having a high level of corporate culture and process automation. Nowadays many investment projects in the field of green energy are being implemented in our company. With the support of the European Bank for Reconstruction and Development and the European Investment Bank, we are building a new oil extraction plant and 6 biofuel power plants. The number of our staff has not increased, although the procurement volume has risen 2.5-3 times over the last two years. This became possible due to the high level of process automation. If the processes or controls are already “sewn” into the system, there is no need to describe them in detail in the procurement policy. So we reduce the time of preparation, verification and signing of the documents, and make decisions quicker at the stage of finding suppliers.

To understand what kind of policy you need, you need to know what stage of development your business is at. If it is a start, then there is no use talking about regulations. At the stage of mechanisation, the process of designing functions and instructions begins. But as the company grows, it needs to change. We need to react faster to market changes. An ethical point is also important here: we have bilateral commitments with customers and suppliers. Cooperation with 80 countries around the world and European banks is possible because we fulfil our obligations and follow the rules that are important for our customers and partners.

Digitalisation, optimisation and training

When talking about digitalization, we have to remember who will use these tools. They need to be made as intuitive as possible. Our company is now implementing electronic workflow and digital signature. Thus, the whole process from the creation of the document to its signing by both parties takes from 40 minutes to 2 hours. This makes the process faster and more efficient. According to a study conducted by McKinsey, the most difficult task is automating the audit, as well as procurement and supply management. Therefore, only transactional or routine procurement can be digitized. As for the rest of the processes, not only automation is needed, but also professionally qualified procurement managers. What is Kernel’s approach? We engage the best university graduates. As part of the educational project “Kernel Chance”, they do an internship from 3 to 6 months and prepare a diploma project. Upon successful completion of the program, they become members of our team. In two years, 10 such graduates have joined the company’s procurement team. At the same time, we develop experienced employees, emphasising creative thinking and the ability to find extraordinary solutions to professional issues.