Building a Global Procurement Function

Murali Sundararajan: Yeah, it’s a kind of a long story, but I’ll try to be as precise. I did my engineering long back from Delhi and then after that, basically worked on many engineering firms at various roles. And I always wanted to be connected with the external world. So there are two chances. One is you get into Marketing or Sales, or the other one is the Procurement or many companies have a thing called Contracts. So that’s how I wanted to be in. I didn’t like marketing and sales. Sorry. So I wanted to be, so that’s one of the reasons. So, and that’s how I got into contracts. So I first started with quality and quality assurance and that kind of a job, which is also an exposure to other outside world suppliers. And that’s the journey I’ve been in manufacturing and a lot of… big names and handling a huge value of spend. And then finally into IT and IT services, which gels with the work what I have done, which is a combination of services, manufacturing, procurement of raw materials, components, everything. So that’s how I came into this, but I never have a regret after coming. But you are right, there’s no specific course that you take, like an architect or a… finance person where you take certain course and get into that role. There’s no degree called procurement or purchasing and that makes it more interesting. So we can always, you know, there’s no certification course today. I mean, it’s there, but it’s not a degree course.

Rohit Agarwal: So tell us what made you get into engineering, first of all. Did you want to go into maybe the software space, IT services space, or what was basically the thought around getting into engineering versus something else?

Murali Sundararajan: Yeah, I mean, I was a, from the beginning, I was a science student and I certainly wanted to do certain, and during those days, IT and services were not that literally, right. I mean, it was that probably abroad, but not in India. So the basic three course lines were that, you know, electrical engineering, mechanical and civil, right. And then we had electronics and electrical later part, right. So that’s how I got into mechanical, which is like a base engineering and I wanted to be in the engineering since I used to like science. So got into some prestigious university in Delhi and did my engineering from there. And after that, worked in many of the mechanical industries, but slowly I got into electronics. So it fascinated me and electronics was picking up. So electronics products and electronic manufacturing and the firmware attached to that services and software attached to that. So that’s how I landed into this and it’s also a passion that you know and fortunately I was lucky what I wanted I was able to do it. Sometimes it is not possible lot of parents they say engineering car lo, right, you do something and then we’ll see. But I was very clear I want to do engineering. I was not a topper and all but at the same time I was very practical and so still was quite a ranked student in the college but that didn’t really help but I wanted to do the practical side and that helped me in engineering when I joined companies. It gave me that feeling. And procurement was something which is neither a highly technical nor it is completely commercial. So it’s a techno-commercial and a good procurement personnel can do a great job if he understands the technical side of it. If not, the engineering guys will say, this guy doesn’t know what he’s talking. So let me decide what I want. You just, you just place a contract. So that’s where the role is different for me.

Rohit Agarwal: What made your first move into procurement? You were an engineer. What took that, what was the instigator behind that first move?

Murali Sundararajan: Actually that’s a good question because most of the companies in India, they had procurement means some commerce guy or some BA or BSs and they’ll do some transaction. And when I joined some of these companies, which was led by TVS and Snyder Electric, they were advertising engineers because they wanted someone to understand the specifications, someone they understand what they’re buying. And it was not easy. If not, it was always a, you know, hand holding by some technical guy to explain to him what we want, right? So this was one thing which made me think that as an engineer, I can contribute that more. And whenever I walk into any procurement team earlier, there are very few engineers and mostly, you know, commerce guys or, you know, so that made me also think that I can contribute here more. And plus, I want to be the externals, you know, I want to see the external community, talk to suppliers, vendors, so that we met both the conditions.

Rohit Agarwal: Do you remember what was the most difficult item for you to learn when you made that switch from engineering to procurement? I’m sure there were a lot of different sort of, you know, just pure job description or job related nuances that comes along with that shift. What was the toughest thing that you had to resonate with?

Murali Sundararajan: Yeah, I mean, after you came in and it’s not all roses, right? When you came in procurement, then you after probably six months or one year, you were regretting that, why did I get into this? Right? I mean, so the reason is that the procurement, unfortunately, in many companies, not now for a great extent it has changed, but they were doing more transactional. So you know, like, you know, connecting the dots, some requisition will come and then they convert that requisition into a contract or a PO and it was highly transactional. There was no value add. As an engineer, you always wanted to, and fresh from the college and you know, you want to apply some of those things. So that was one thing which kind of, you know, I was in between, I was thinking, I think it’s not the right thing. But then somewhere in the background, I was thinking that if I go back again to the engineering side or factory side. So that will be more like, again, like, you know, getting inside a box within the company you’re communicating, you’re not communicating outside. Then also I thought it’s probably an opportunity for me to change the procurement thought process. It is not just, you know, just sake of buying, right? So that’s what I used to say, buying is more than buying, but people don’t understand that. So they just think buying, just buy it, right? So that’s where I thought I can make a change and I use some of the processes today. Even my old seniors and my colleagues, they really appreciate the detailing of the technical knowledge bringing into the procurement. How to understand the spec, how to do a cost of the product, how to do a cost of the component what you’re buying. So some of the questions I will always ask a new person who is joining me, do you know what you’re buying? So if he doesn’t know what he’s buying. His job is just like, you know, he’s just getting a salary. He’s just coming in the morning, seeing some requisition. He sends it to some suppliers and then get a quote and he doesn’t know what he’s buying. So I think this, this helped me to change that thought process wherever I went. But it’s a long journey, but it’s better now.

Rohit Agarwal: Makes sense. I completely resonate with when you say buying is not just buying. I’ve always thought of spend management as more the art of buying rather than the art of spending. Makes sense. How did the foray into Wipro happened?

Murali Sundararajan: Yeah. Yeah, so I was there when Wipro, Wipro there was a subsidiary of Wipro called EcoEnergy, where I was also involved, engaged in my other company procurement and renewable space. So I also worked in a lot of startups in US and the renewable space, right. So that’s how when EcoEnergy started in Wipro as a subsidiary. They were looking for professionals who have experience in renewables, including solar, wind, bio and you know, biogas and also the IP space of services where you control the energy of your lights and automating. Today, of course, you see many warehouses where the lights are automated and you know, based on the load, you switch on, you save energy. So those were the… requirement which Wipro started and that’s how I got into it because I had the experience. So that was a very short period but unfortunately we did a lot of projects in Wipro with Solar and others. Unfortunately as a company they didn’t look at the strategic area and they got out of it. And then I went back to my old company in Snyder Electric and I was working there as head of the, you know, one of the division. It’s called the IT division. Basically, they supply products and services for the IT industry, like UPS, etc. So that’s how I was there. And then again, it happened that we had a position for a CPO role and they were really asking me to join and take this role. And I was kind of nervous because I’ve been in a product company and of course, software and IT was there as part of that, but not really challenge, I took this challenge and I became a CPO of that and we did well. We managed a very large spend.

Building the procurement function#

Rohit Agarwal: Awesome. I think it’s a good segue for us to dig into the field of procurement and unpack that as much as we can. But before we go there, can you contextualize for us a little more in terms of your experience in procurement across various companies? Muralidharan S (12:26.395) So, yeah, since it was a worldwide requirement and one of the things was when we started, the spend was very less, it was less than a billion dollars. So, one of the things what we wanted to do is since we worked on a centralized procurement and it’s always debatable whether centralized procurement is good or a distributed one, but somehow I feel centralized one is better if it is managed well. So that’s how we were and we went with the centralized thing and one of my goal was how to increase the spend. Right, today the spend is happening, but it’s not happening with the proper governance, proper process of procurement, process of identifying this thing and giving fair chance to newcomers, giving fair chance to startups because the business side and they don’t have the time to do all this, right? So they are more worried about closures and deliveries to the customer and nothing wrong with what they’re doing. So, but there are somebody’s required to support this. So they are our internal customers, the marketing, sales and the delivery teams are our internal customers. So we give them that support to them that how we can do this more effectively, cost effectively, at the same time bringing the governance and bringing new teams, suppliers or vendors or partners in the system and looking at technology also, how we can effectively use technology to seamlessly work across the world with multiple languages and countries working in Germany, France and all. They will not even register your company in English. They want everything in German, right? So how do you do it? Same thing with Japan, same thing with China, same thing with many countries. So how do we do this at the same time bringing a uniform, it’s not like a civil code, but a uniform code of conduct of business, right? So we had a lot of this code of conduct of suppliers, code of conduct for partners and all that. So how do we translate that into their law, into their country, what is required, right? Like when you register a vendor, you’ll ask, can you give me your PAN number or other number and on India, but doesn’t work in US or Germany. So how do we do that seamlessly? Not like… you send a mail, how do we do that in the system? So a lot of work we did, and that’s how we could increase the spend. And we have to do a selling here, within the internal team, that we will be part of your team without stopping your work. And so it has to sell, and they should feel happy about what we are doing, and they see a value added on that.

Rohit Agarwal: And then how many people were you managing?

Murali Sundararajan: So, yeah, we were all over the world, but we, of course, we did more since we were using the systems more and portals and which we enabled. So there was a large team. So we divided this into a strategic team and a transactional team. So transactional team is more like a service, what do you call that, a shared service. So they share the thing for all the divisions within the company. And that job is to convert to a contract, convert to a PO, convert to a… whether the contract is when it is expiring, when… So those are the things which they’ll do. There’s a team of around… Worldwide we had a team of around 30 or 35 around that. And they were mostly in… less in Bangalore, more in, you know, like places like Kochi and other… Vishakhapatnam, some of these places, but we had here also and Hyderabad, Bangalore, like that. And they will work hand in hand with shared service of finance, the AP team, right, because there are a lot of things are shared with them. And then there’s a strategic team, which is part of my team, the strategic team, which is the shared services doesn’t report to me. They are independently using, but they work for us. We become their customers, right. So the strategy team, worldwide we were around about 50 people. Because the businesses are very different, very fast, very quick. The IT thing is that you don’t have time like, you know, two days, tomorrow and all. Like, you know, we’ve got to work around the clock. So we were around 50, but we were planning to bring it down to around 30. I think they are now at a linear than what we were. But we were at probably 100, we brought it down to 50, and still able to deliver with the systems. But we need that kind of thing to, and this is not that everybody’s front end, there’s a governance team. The governance team is to do internal audit, find out whether there’s any gaps in the other things. So there’s a governance team working independently, reporting to the governance team world for the company. But they’re still part of my team. And then there is a strategic team where they will look at partner engagement, look at negotiation and all. And there’s one more team where they work on more of internal systems, IT system, what, how we can automate something, how we can bring RPA, how we can automate some of the recurring processes. So, so that’s all. The 50s comprise of all this.

Rohit Agarwal: So quite a sizable number of team members, including both in the strategic as well as the services teams. Very cool. And just maybe the last piece in terms of contextualizing, how many vendors were you managing on an yearly basis?

Murali Sundararajan: Yeah Yeah, that’s a big challenge we had. I mean, the exact number, it will probably about around 8-9K worldwide. But that was our objective also to increase the spend and reduce the base. So when we do that, the more number of transactions, there’s more number of work for everyone, not just for the procurement or the strategic team, including the AP team, the governance team. more number of invoices coming, more number of work. So we did that, but there are certain constraints that we cannot do in certain countries because we need those vendors, we cannot optimize that. But we have done optimization that 8,000 to probably around 6,000 and then we had a target to bring it to around 3,000. Maybe they are, it is a work in progress, it’s continuous. And so that you reduce number of… But at the same time, you have multiple vendors for a work. It’s not that you are trying to reduce it to one vendor, one other thing. And then there are a lot of noise vendors, like one-time vendors, like there’s some event happening, big event happening. You need to register that, but he becomes a vendor in your system. But he’s really not a vendor or a supplier. He’s just a one-time. I don’t know next time you may show up or not. So, but in the system when you run, it will show that he’s a vendor, right? So, that’s how we should segregate that and we should do that.

Rohit Agarwal: Got it, very cool. That, I guess, does a good job in terms of contextualizing the experience and the vastness of the procurement team that you led and the procurements that you managed. Now with that, I would love to get into some specifics. So why don’t we start there with clarifying how are supply chain, sourcing, procurement, and vendor management, these four things related and different. So again, supply chain, sourcing, procurement, vendor management.

Murali Sundararajan: Yeah, I think it starts with sourcing. The first thing what you have to do, it’s not like, you know, suppose you need to, you need to have some hotels for an event. That’s not a big thing to source, right? You can just put the country, the state, and the city, you will get the people, right? That’s not a big thing. So when I say sourcing here, like, you know, in the shares, in the IT industry or in the service industry, So internally, we need to decide within the company what you want to outsource, what you want to do in-house. Right. So what are we, we decide what we want to outsource, like, you know, maybe the facilities management, a lot of companies say that we don’t want to do all this facility management internally, just give it to some outside guys like, you know, there are many people. So other way of thinking is no, we don’t want to outsource this. We want to do in-house because we learned this process and we can use this as a revenue for other companies. So it’s a thought process where you are. So once we decide this as a company, as a strategy that is not just by the procurement team, it’s the company’s strategy, that what we want to outsource, what we want to do in-house. But that’s based on data what we give to them. Then once we decide what we want to outsource, whether it can be manpower, it can be hardware, it can be software. I mean, these are the major spends like if you stick to our major spend in any services, your hardware, your software, your services, hospitality, your facility management, your IT management. How do you manage your IT? Suppose you have two lakh people, how do you manage your laptop? What is the life of that? How do you recycle that? Still we want to be green. We don’t want to trash the electronic trash. So those are the areas where the sourcing plays a role. Not really on getting some event done or something done. Maybe the spend is high. Suddenly we are doing an event for some road show. We may spending about some three, four million dollars worldwide somewhere in US. But that’s big spend, but that’s not strategic. That’s more like we need this. We got to have this play. We need, that’s more of a showcasing versus competitive buying, competitive sourcing and technology implementation of technology. So sourcing involves this identifying what is the right partner to source, what technology they are using, how we can use that technology to integrate with us and reduce the use of people. I mean wherever possible, I mean you got to clean the floor in a bathroom, you can’t automate that as of now. maybe future, but some of that you can do. But some things which can be automated, we still put bunch of people, right? So those are the areas where we work with them. How we can reduce people. That was always our thought, that how do we reduce people in the facilities? Doing boring job where they don’t have any chance to improve their, you know, there’s no promotion. You keep doing it throughout your life. So those are things that we want to outsource, bringing technology to reduce. So we have to identify right partner who will understand this. But if he says, no, I’ll just put a bunch of people, don’t worry about it. So that we don’t go to them. So sourcing involves understanding and thinking the big picture that how to reduce boring work, how to reduce costs, how to reduce… Reduce cost can be only by reducing number of people doing some standard job and increasing the people there You need more facility put more bunch of people there So those are the thought process right and the same thing in contract management. How do you manage IT services contract? How do you manage software? So there are many software in a company because every customer will say I need this I need that and then we as a supplier, we will go and give it to them. But internally, we come back and say, how do we consolidate partners? Because there will be too many small players, right? How do we consolidate at the same time, giving the output what the customer wants, what our end customer wants, I mean. So this is the work of a strategic sourcing and it’s not easy. I’m still meeting the price target, right? We can all have all this fancy thing. We want to reduce people, we want to do that, but price is more. No, how do we reduce costs and still bring in this? That strategic sourcing requires thinking, deep thinking, integrating with the team members in the technology space, with the business leaders, and then working with the partners. So it is not that easy. So it’s a continuous process, but the right person have to be there and trained to do this. So that’s a different strategic sourcing and the procurement and the shared service.

Rohit Agarwal: Got it. So that’s, yeah. How about supply chain? Is supply chain a sort of an umbrella term that includes all of them?

Murali Sundararajan: Yeah, supply chain, right, I agree. Supply chain is an umbrella, which has statistics, overseeing, which has logistics, which has shared services like you’re creating a PO and the same monitoring, including giving to the customer the tracking details when it’ll arrive, whether the customer wants some barrels in facilities, whether we can keep it in our barrels and ship it to him. A third party barrels management, there are a lot of third party barrels managed guys, like you know, where we. It’s not just the goods and services, it’s also the services. Right, services also we can have third party where they’ll have a bunch of people ready to get into the thing. It’s like a warehousing of people. So whether you want those, those all come under supply chain. So strategic sourcing is more, you know, I would say the supply chain, strategy source is the most difficult and more engaging and creative and where you can apply your engineering strength, even if you’re not an engineer, you can think logically and bring in something. And the supply, the logistics and this thing is more delivery, right? Get things done, get things moving, how we can improve the time, whether we can find a better partner to deliver faster, the last mile connectivity and all that thing, right?

Rohit Agarwal: Got it. So we got supply chain, then procurement, and then within procurement, we have the strategic sourcing and the vendor management. Got it. How is procurement strategic to a company and why is it so necessary?

Murali Sundararajan: Yeah, that’s a very good question. I mean, today, if you see most of the companies, the procurement used to report to some facility head or, you know, that’s how the procurement was viewed at. But that’s not anymore. Last time, I would say probably around 10 years, the reporting has changed to a CFO or a COO level. So most of the procurement I see in IT, they are reporting to CFO at the least, if not to the CEO. So that itself shows why it is strategic. Because one is the top line where the marketing sales do. Then certainly the procurement team helps the company on the bottom line. And at the same time, one is procurement as a process, as a team, or as a concept to reduce costs, right? That’s what everybody has been told. But how do you reduce costs when things are… not in your control, customer controls a lot of things, right? Your end customer. So that is where you come in, how to bring in your internal cost structure less, how to cut your number of, what do you call, the processes in between, how to reduce the time. The time is money, really. Sometimes a simple process goes through some 10, 15 steps and somebody is not doing something in between and nobody knows why it’s stuck, right? How do we bring those transparency in that? that’s through the system. How to reduce the TAT time of doing any work. So even vendor registration like large companies, I don’t want to name them. They take a month to register a vendor. Even now some of them are doing that, but it’s not necessary. Right. So we have brought down, we were also like that. How we have probably brought it down to a week’s time, four to five days. And we were telling we’ll do probably in two days depending on the country and time zone. So it is possible what is necessary and what is mandatory. And then what is good to have. So good to have, you can have the team work on with a supplier partner to have all these things. Because you’ve got to develop a vendor or a supplier. You cannot expect that everything is perfect and you get a vendor who understand green, who understand child labor, who understands everything on ESG. You don’t have that kind of ecosystem. You’ve got to develop those. So that’s separate team where I used to have a team called the vendor development team, along with the governance team, work with the vendors to bring in women entrepreneurs, bring in more green usage of materials or services. So this is a separate team and how to save and go and audit them and help them, how they can reduce their costs. So everybody wants to reduce cost, but the guy, the owner of that company doesn’t understand how to do it. or it doesn’t have the time to do that because they are very, they are, they’re small team and they can’t afford to have big teams to work on this. That’s where our team goes and helps them. They benefit and we benefit, but everybody cannot do this. I agree with that. But if you, even in a smaller company, if you have a smaller team, one or two guys working continuously and is good at it, it is possible, but that mindset of the owner has to change, right? Why he needs this.

When to hire procurement#

Rohit Agarwal: Very cool. That begs the question, when should a company hire in-house procurement experts? And should it always start with the head of procurement or would you rather hire someone maybe on a junior level and then once you have two three people at the junior level then bring in a head of procurement?

Murali Sundararajan: I feel we should hire a head of procurement to create a team. The head of procurement hiring should be very, very detailed and whether what’s his thought process, what he wants to do. I mean, the person should also understand the company where he’s going to join or he’s going to be selected, what kind of business they are in. Then they should come with some thought that this is the structure we have, how we are going to improve that, what kind of people management, training, skill, right? It is not that you just hire a person and he gets off from tomorrow, right? So I always say that if you want people to succeed, it’ll take one year for the guy to fire from all the barrels, right? It will take time for him to understand. So how you are going to create a team who is not just, you know, join after three months, he wants to leave? How do you create that kind of ecosystem, right? Where he’s learning and you’re able to get the benefits. So if he’s learning, in addition to the salary and other thing, I don’t want to get into that. If he’s learning, he will stay. And if he’s seeing the opportunity to grow and he has a thing to empower him and not go and do micromanagement, he will certainly deliver. So I feel head of procurement thing is more people management, peer management, working with the CEO and the partners to create that culture. He should bring in that culture of innovation. culture of understanding how to reduce cost, not by just meeting the supplier, but how to reduce cost strategically. What are the cost elements in it? How you can help him to reduce cost in turn you reduce. So I think this is very important to have a good person. It’s not always that you know everything will match, but even 60-70% you understand, he will develop and then create a team and what kind of team, how many people, what systems we should use. Whether we should have a fully automated system or what kind of money budget is there initially to spend on a system. All this thing he has to understand, which the junior guy will not be able to do. He will get into a transaction immediately.

Rohit Agarwal: Make sense. What do you think is the right time for a company to hire the procurement leader? Is it some stage of their revenue? Is it some kind of spend under management number? How do you contextualize that?

Murali Sundararajan: I feel any company should have a person. Level can be different if it’s a startup. I mean, I would say a startup requires more the need for a procurement person than probably anybody. Today startups have no clue like how they are, because they are the founder of the person who is doing, he’s more in the domain space of like, let’s say running a restaurant or running an IT services company or running a BPO service. he’s more expert in that or is a chemical expert. He doesn’t know how this thing works. Right. So, and then it gets into a lot of mess later on from a, both from a audit point of view. And when they want to go for IPO, it’s a nightmare for them to put all this in place. So I feel start anytime beginning itself is the right thing. The levels can be different, right? You don’t need a senior guy like you know about 40 years, sorry 25 years experience and all you better probably look at a 5 years, 10 years experience with the energy level and that’s one thing I say the personal guy have to have lot of energies. They got to keep their you know and to come to the office it will be charged right. If not it’s going to be it’s not the right place for a person. You need you will be completely drained at the end of the day.

Rohit Agarwal: So beyond energy, what are the traits that you look for when you hire for the procurement team? As you said, there is no clear straight line path in terms of you do this kind of a course, that kind of a course, and you are kind of, you know, at least qualified to arrive for this particular job. So what are the traits that you look for?

Murali Sundararajan: One of the thought process in a company which is already running established and or you want to start with somebody new and you are hiring a fresh, fresh guys, right? Fresh engineers or somebody who is interested in procurement, the guy will not know much. You would have just heard from his friend that the app procurement is good. You can meet suppliers and all that. So somebody who has got some thought on that, if you are looking for hiring a fresh guy and if he is an engineer, I would prefer an engineer or a diploma or something. I’m not against finance or this thing, but we can look at them also. One is that the communication should be good. The guy should be go getter. Communication should be good. He should be able to. When I say communication good, not like, you know, talking some great English and all. It’s clarity in speaking, like, you know, what he’s speaking, how he speaks and he’s able to convey what he wants. So that is very important. But if you see there are a lot of software coders and engineering guys, they will hardly able to speak. It will be very difficult to make them speak, right? But they are great at their work. So that’s a different area. So if you are going to get, it’s something like sales, right? So you got to be a good communicator. I think that’s the basic thing I do. Then second thing is we look at is that, you know, how… passionate he is about, whether he’s got the passion we can see in him. He’s kind of laid back, I’m okay, I’m just looking for a job and he tells that my interesting is I cannot go out of Bangalore or I cannot go to Bombay, I have problem, my father is ill. Those things are gone. So we have to disconnect the personal thing with the thing, whatever personal thing, everybody has personal issues. So I think these are the two traits from the soft side. On the technical side, certainly I would like to know whether, suppose, he’s a fresher, like what kind of course he has done and what is his strength, whether he likes engineering, mechanical engineering or electrical, or if he is more in software. So that will give an idea of where to place him, whether I should place him in IT procurement or I could place him in the facility management. So I think these are very important. But if I’m hiring an experienced guy with five years or 10 years, suddenly look at the companies he has worked and what coming systems, basic things. And all these things will matter also, his passion, his energy level, what he has done. What are the value ideas then? I mean, if some guy comes and say, I created some thousand POs in a month, I mean, straightaway you can have a coffee and tell him to leave. So I think we have to understand what value ideas then, what changes he has brought in the company. from where it was and what it is and how it helped the company. And I think that’s important. And then how he’s dealing with the partners and how his negotiation skills. What will he do? A negotiation is not because you’re in a large company, you put a hat and all these guys are sitting there as slaves and you know, those days are over. So negotiation is like understanding our requirement, understanding the negotiation company like what company they are from, understanding their margin. If it is an IT, it’s a listed company, you can go and see their margins and all that. And then talk about that, you have to prepare. So we used to call that a preparation time for negotiation. So a lot of people just, they just go into the negotiation table without even understanding what they’re negotiating. So you’ve got to prepare well, just like your marketing guys do when they go to a customer, they know the history of the guy, right? of the customer and the person whom they are speaking, what they like, what they don’t like, what is their… So the same rate has to be this side. So that kind of thought process should be there when I’m interviewing. I will ask him always, how do you prepare for a negotiator? He’ll say, yeah, I’ll just go and very good negotiator. Then the process is not there. So some of these things we have to check. Otherwise, you’re right. There’s no thumb rule that, you know, if this meets this other condition, we can… But I have hired people who are not in procurement and they had the passion to do and they have done well.

The evolution of procurement#

Rohit Agarwal: Got it. Very cool. How has procurement evolved over the last, call it 20, 25 years?

Murali Sundararajan: Oh, it’s changed a lot. I mean, because I’ve been in the procurement from last 30 years. So, last 20 years back, it was more transactional. And everything will be done by everyone. So, like, you know, I had a team. They will do the strategic sourcing. He will also go and run and meet the, you know, the business requirement or production requirement. He will also do the logistics function. He will also do the cost reduction, right? Different teams will pound on him. So the CFO and the CEO will say, how much you have reduced cost? So he has to be ready with that details. The production team or the business team will say that, how can you meet my customer requirement that delivery date is already late and you guys are not doing anything. So how do you do that? And then at the same time, how do you meet the audit requirement or the finance department? Like, you know, whether you’re having a… So all this was with one cap. one guy doing, one department doing everything, right? So that has evolved a lot now. So now most companies have realized that you cannot have everything done and it becomes a chaos. You don’t do a good job. So the logistic function is different now. The supply chain, what you call. The shared service is different. And then the strategic sourcing is different now. So that has changed a lot. So most of the companies, they have procurement and purchasing. So the purchasing is more strategy and procurement is more shared service transaction. And that procurement transactional, there are a lot of work can be done with the technology AI coming in. RPA we already used, but AI driven thing, you can do wonders there. But people have to embrace, and generative AI is an area where you can do excellent work in the shared service area, right? Which BPO is also using now.

Rohit Agarwal: So more specialization and use of technology.

Murali Sundararajan: More technology, yeah.

Rohit Agarwal: What kind of OKRs should the procurement team have, Murali?

Murali Sundararajan: So one other thing is a lot of people, procurement has a kind of outside world when you go and tell your relative that I am in procurement, they look at you with a different thing, they might be making a lot of money. So I think first thing is the integrity, I think, and it is not easy and you’ve got to bring that culture as head of the department or head of the unit or the CEO that this will not be tolerated. We can have inefficiencies, right? And me and we always say that a guy can be a bit inefficient. Probably he has got some thing happened in his family and he is not in a good state of mind for last one week or 15 days. It happens with everybody, right? But we cannot have integrity sacrificed. And that’s one thing which Wipro and all my companies have kind of resonated with my own thought and that’s where I really like working. So I work with companies like TVS where it is very high integrity. So even like claiming a travel bill, right. In the earlier days they will, that you know, 80 they will make it 180 or one will add something like, simple thing like you know, small thing, it’s all small petty money. But when a guy is doing that, he can go any extent to do anything. So those guys we don’t encourage. So I think the first thing, okay thing is to look for integrity and trust and this thing and it is not easy. We have to try and but always keep a watch on this and anything you feel it is a, it’s a no tolerance zone, right? He may have done a great job within other areas, but this is though he is not part of the team. So I think that culture has to be brought in. And a lot of companies are doing that, but a lot of companies are not doing also for various reasons. So, one good example is the real estate. Real estate, I mean, one of the things I said, I don’t want anybody from real estate, but it doesn’t mean that all real estate is bad, but they have to change the image. You know, who has to do that? I don’t know, but it is bad, right? So, like that, I think we have to keep this in mind. This is an area which you cannot sacrifice. And there will be always some people doing something wrong in a large company. And we got to find that out. And that’s where the head of the department, my governance team work independently. And then we have got to take action, quick action, not like do another. My boss is always tell me, I’m trusting you. You feel that guy is not okay. Don’t do investigation. It just take a decision and close it. So that kind of thing, we have to move fast. You cannot do investigation and all that.

Rohit Agarwal: Got it, makes sense. What kind of yearly goals make sense for a procurement team? Is it more around cost savings? Are there other elements? How do you think about it? Because that’s just one part of the equation on the procurement team perspective, right? That’s not everything.

Murali Sundararajan: No, no, you’re right. The KPIs or the goals. I mean, the cost reduction and this thing is there. It’s not that you can escape that. Generally around, when I say 100% goals, we used to always, I used to always put that you should still have to do that 60% or 70% of your cost reduction goals. And the cost reduction goals are not like just dollar terms or in rupee terms. What process reduction you have done, how much TAT time you have reduced. Those are all also converted into cost. How much efficiency you have brought in closing a transaction. Right? Sometimes, so all those things are, so there is a soft element and there is a, you know, the real figures in numbers, right? One is number and the other is soft. So that is 60-70% of your goals. The other goals is your team member development. How have you done the hiring? How many people have left in your, so I had some four general managers within the four division. How many of them have left? And what is that feedback? So one is that I talk to them, but I don’t talk to them every day. I talk to the people below. So what is they telling about this? You can get a feel. They may not tell about your boss immediately, but they’ll give an indirect message. I did that, but my boss didn’t approve it. So right, so those things, feelers you got to keep on watching. you have to bring in that what kind of value add they are doing. So that is one on the number of people staying in the company and what is the value add they have done in addition to cost reduction, then process improvement, governance, like, you know, which is basically ensuring that there is, there is a fair amount of arms length dealing with the partners, how he’s doing that. And so these are some of the KPIs. In addition to that, there will be KPIs given by the business unit. I want, I’m bleeding in this business unit, right? I need some special help. So create some special force, task force kind of a thing, cross-functional team, and create that CFP as a goal, how they are doing that. So all these things will become part of that. And main thing is I feel today, the speed of the thing we are working, speed is very, very important. I certainly look for speed, how quickly you’re able to do, meeting all your requirements on cost and… integrity or governance and all how quickly you are able to do this. So if the speed is too much and you’ve met all other things it’s of no use actually. So I think these are the things which we look for in the KPI. So there are a lot of soft KPI and the hard ones are easy to measure that everybody will do you don’t have to do the finance guy will do your business guy will do. The soft side is where it’s tough and that’s where we put in the works.

Rohit Agarwal: Got it. In your view, how and when should a procurement team be involved in a purchase?

Murali Sundararajan: Any, any, they should be involved in all purchases. That’s the, that’s, that’s called the spend expansion or the spend management. And where they should be, they should get early. So what happens is a lot of times the business team or the engineering teams or the people who wants to deliver the delivery team, they decide everything. And then they tell that we got to buy this, right? Or, so we always say that’s the reason I divided. And most of them work. We have divided the team with the business team. I put a guy in my team sits with them. He doesn’t sit in my floor. He sits with the business team floors. He works with the business team to understand early in the stage what new customer is coming in, what they want. So that’s so what happens. He also has the time to prepare, time to work on suggestions, time to float inquiries, look at vendor development, all that. But they come at the last moment. There’s nothing much you can do, right? You can just say that, okay, I got some three codes and this is good. So just close it, right? But if they get involved early, so we always tell the business team, whether you like the procurement guys or not, we would like to add value, but please involve them at early. And that is not easy by just saying, we’ve got to showcase that, that I’m putting a person with you, you do, it’s your guy, right? So, so that’s how it works. Because if you are working as a. as a separate arm, right, watching them. They’ll say that these guys don’t know, I’m look, let’s do all the work and then throw the ball over to him. So we don’t want that, that the team has to work in cohesion with the internal customer. So early to answer it, you have to read early, yeah.

Sourcing and risk management#

Rohit Agarwal: Very cool. Can we now dig into maybe some specific tactics around the various elements of procurement? Let’s start with sourcing. Can you maybe talk about two to three best practices for sourcing, and if there are two to three common missteps that people can avoid?

Murali Sundararajan: Yeah, the best step in sourcing is that you know do some with the internet available today and it also depends on where you are sourcing. Let’s say you are sitting in Bangalore or in Bombay and you want to do a sourcing for a deal for a customer in Germany and still you have somebody in Germany, probably one or two guys we put in. How do you do that effectively, right? So I think that’s where… That’s where you’re going to do network. We want to go to the Chamber of Commerce there, if you don’t know the country, and find out what the players, right? And then probably have your guy, if he’s there in Germany as one of the extra, then do some kind of study. What are the other IT companies over there? What are they doing for the similar role? We got to do some research, right? And suppose you don’t have anybody in Germany and you have still to the work. you have to use the government websites. And today the Indian websites also use a lot of information, but it was not that great compared to, you go to Japan. The Japan trade, I mean, if you open, everything is there what you want. Like that Germany is good. France is also not bad. US is not that great, but so you have to do some kind of a research study and identify what kind of players are in the market and then probably reach out to them, give an introduction. So that’s the selling part that a lot of people will not know I am from Infosys or I’m from TCS or Wipro, they say who is this right. So we got to do a lot of selling and you know do that talk and all that and somebody already knows that it is easier. So I think this is very important in sourcing and then using also this is a use of technology and websites and other things. The other thing is that you know that what is the labor rate with the IT services, what is the labor rate in Germany. If you say if you take Germany, Frankfurt and all, it is like $43 per hour, the labor rate versus India it is around probably $3-4 now. So what is the labor rate? What kind of cost will be? So you can do all those things and keep it ready. That’s how it is. Because this is all global sourcing. We are not saying that just source it in India, right? Especially for large companies. It’s global. And even for smaller companies, they are players across the world now. I would like to probably source for some work from Mexico. It’s very good, right? I can source it from Philippines. I can get things done for my AP work, right? Or for my shared service. If I get the whole thing done in Philippines, I can do it half the cost than what I am doing anywhere in India. So it all depends on how you view this.

Rohit Agarwal: Make sense. Any specific missteps that you want to talk about that people should avoid?

Murali Sundararajan: Yeah, the misstep is that if you don’t go prepared, you will be bullied by your business and your business teams that you have to close this and this is what I have found and just close this. So what happened that doesn’t meet your governance requirement, that doesn’t meet any of the things you have not done anything. You are just a body to do a transaction. So I think you have to avoid. If you can avoid in a 100 transactions you are doing, even some 20 of them you would do like this, you are still okay, 80 you have done a good job. But if the 80 are like this, then you got to think why are you there in the first place, right? The guy can still can do it and give it to the shared service. So I think these are all very important that, you know, if you don’t add value, I feel that you should not be in the group.

Rohit Agarwal: What kind of risk management is involved with vendors? That also seems to be a big area where a lot of focus is going.

Murali Sundararajan: Yeah, very big. Yeah, risk is very… So there are a lot of risk criteria. There’s a political risk, there’s a geographical risk, and then there’s a risk within the business what we are doing, right? So the geopolitical and the country and political, that’s very, very difficult, but we do that. Like suppose you are sourcing something from some country in Africa or in this thing, you’ve got to look at the geopolitical risk, what is that and if it is a single source. So you’ve got to mitigate the risk. Let’s say that you have still do, you’ve got to look at two sources, you’ve got to look at three sources so that there is a geopolitical risk is avoided. And then there is a financial risk, whether the company is stable or not. How do you find out if it’s not listed? So you’ve got to get some of the data. Some of them may not like to share that. How do you ensure that your financial risk? There are some companies now startup companies where I use them, where they put people there, they go and do all that, right? Because it’s a large contract and they go and study the company, what kind of loans they have taken, whether they default in the bank. Some of these things we can do. We can ask them also, give me a bank certificate and all that. So financial risk, geopolitical risk, and then of course, the risk of delivery. The delivery risk is that how much of the order booking they have. Suppose you’re giving an order to a vendor and he’s already loaded 80-90% and still wants to take your job, there’s a good chance he’ll not be able to deliver. A lot of people say that this price is very good, but he takes the order and he’s not able to deliver because he’s not able to expand the speed we want and he’s already full with the existing customers. So that’s another area where we feel that 30-40%… of our value should not be more than that. If he is doing more than that, then he doesn’t have the bandwidth. So even though he may be very competitive, so I always say that it’s not always to load the PO or the contract to L1. You’ve got to go to L2 if required, but based on these conditions, with the justification why we are going there. So I think these are the three areas which we have to because it is not always price. So the risk has to be checked. Because the business guy will say that you got a good price for me, but the customer is not happy because the delivery has not happened.

Rohit Agarwal: What kind of steps companies could take to safeguard against these risks?

Murali Sundararajan: So that’s what I said, the procurement team, the strategic team and the strategic team is basically online function with the business. So there’s a governance team independently working with the CPO or the head of the procurement or whatever it is. Their job is to check each and every transaction. That is the only way. So the strategic guy, the shared service, they know that these guys are there as like watchdogs. And they are not like investigating agencies. Their job is to make them understand, make them feel that we’re not new people joining, make them understand that this path is not right, there is a risk here. So we used to have a weekly risk evaluation review of all the suppliers along with the corporate risk from the company because they will also be involved. So that is one area mandatory meeting I cannot skip every week to review the risk on financial, geopolitical, this thing. So this is an area where we have to review and that’s one area. We can have all these teams. You got to have frequent reviews, not like once a month and all, every week. So that rigor has to be there.

Rohit Agarwal: Got it. So a lot of operational rigor that goes into managing that risk.

Murali Sundararajan: That goes on, yeah. But we’ve got to review so that, you know, there’s a seriousness in the job, what they’re doing. If you don’t review as head of the department, or they will say that, nobody’s reviewing, I don’t know what we are doing. So they’ll also lose interest. So that’s very important that we encourage them the work what they’re doing. So they do a better job.

The RFP process demystified#

Rohit Agarwal: Make sense. Let’s move on to RFP now. Can you unpack for us what is an RFP and what are the ingredients of a good RFP?

Murali Sundararajan: Yeah, I mean, what I do is I say that before we get into RFP, a customer has given an order to us, and in turn we have to find partners, right? We do the RFP. But before that, I start with them that, you know, you do an RFI, get the information from the supplier. You don’t know because things are changing very fast. New players are coming in. So please… If you have the time and that’s the reason the guy has to get involved early so when he gets involved you let me can send an RFI to the potential suppliers or even somebody whom he doesn’t know and get the information whether they have this Once we see that information is matching with the with the what the customer wants Then we convert that into a proposal and send the RFP. So the RFI or we call that RFX process so RFX process starts with an RFI, then RFP, and then RFQ.

Rohit Agarwal: Got it. So first we receive the information. We understand if that particular supplier is worthwhile if of doing that, then we ask them for a particular proposal, right? And so it’s in some ways also reducing of the funnel of suppliers that we are dealing with. And then based on the RFP responses, we may funnel it down further and then ask a smaller number of suppliers for RFQs, which is

Murali Sundararajan: capable of doing that. proposal. And then… Finally, exactly, do RFP. Yeah, yeah.

Rohit Agarwal: proposal request for code.

Murali Sundararajan: based, for quotation here. And RFI is an area where you’re building the risk, whether he has what is his financial stability, what country he’s from, what kind of customer base he has, how much is the customer. So there are a lot of bunch of questions we have and which can be designed. It’s not like some template and all. It can be very customized to what the business you’re in. And then you get that thing. Then you get filtered out, then you get the RFP. Then RFQ, you can do a reverse auction if it is a very standard work, right? It’s not very complicated. You can do a reverse auction. So call those 10 suppliers or five suppliers and you can do online bidding and it will be very fair and everybody can watch the business side can watch. And so it’s not that somebody suggested with procurement or somebody known to somebody suggested and all that can be avoided.

Rohit Agarwal: So in an RFP, is there no commercial that are being proposed by the supplier?

Murali Sundararajan: It’s everything. In the RFP, generally they will give the contractual requirements like, you know, how much time they need, what are the payment terms, whether they are agreeing with our payment terms and all. They can give the price also, proposal. Though it’s not that some people give, but some people they will just say that, please accept my all this proposal as per RFI, what we are given. And if there are any deviation, we can discuss with them, because they are minor. And then we can go for a quote, but you can, supplies can also give a quotation in the proposal. But that quotation is only for budgetary purpose. You do a formal quotation and then go for a reverse bidding or one more round of negotiation. That’s the final pricing.

Rohit Agarwal: There seem to be at least three, four steps in terms of RFI, RFP, RFQ, and then perhaps even a reverse auction negotiation, stuff like that.

Murali Sundararajan: reverse auction is part of the RFQ.

Rohit Agarwal: Got it. But still I would imagine it takes a couple of weeks, maybe a month to go through all of it, maybe longer. Is it?

Murali Sundararajan: No, no, it can happen. No, it can happen. It can happen. See, that’s the reason we tell them get involved early. So when early involvement is there, the contract has not come to the company as of now, but we are talking to the potential customer. That’s the time they get involved. So they already get prepared all this. So those are the passive lead times the procurement team has, which is not impacting your business. So once a contract comes, Then the time starts, right? Before the contract comes, the procurement gets involved, right? And he’s in the call with the customer. He’s just a passive listener, right? He doesn’t, the business side or sales guys are there in the call. So that’s the reason. Once you do the RFI and you have a very clear, when the contract comes, you do the proposal and RFQ, you can do it in like, you know, three days, four days, maximum week’s time. I mean, I have done that in many cases in like three days, four days, right? You give a set up time, if it is a multi-country, you give different time zones, they’ll all get into the system. And it is very, very quick. And you don’t need, because earlier what we used to do, the government and all, they will send the bid document, the courier and all, all that things are gone. So that’s the reason we used to take a month and all. The whole process RFP to RFQ is just maximum week and even week is very high two days three days. That’s it.

Rohit Agarwal: Got it. Would you do all this for all of the spends or would you have a certain kind of maybe like a dollar threshold to say, hey, any spend about this dollar threshold, we will go through this whole process, anything lower than that, we may have a different, maybe an easier or a quicker process to go through.

Murali Sundararajan: No, that’s true. I mean, you don’t do for everything. Let’s say that you want to somebody, the CEO of the company wants to use an Amex card, right? And he wants to and he has gone to some place and he has seen some very nice book for his leaders. He wants to swipe the card. I mean, you don’t do all this process, right? So, so, so that those things are understood, like there’s a limit of generally we say that $500 you can you can buy through your card, right? based on whom you’re giving the card, that is governed by the finance, right? Whom you want to give that you want to give to the leaders, you want to give to your whatever it is, the sales head or somebody, they can go and spend $500 swipe the card or so that’s one kind of spend which we don’t get involved. The second kind of spend is all your events and all this thing, right? Small, small events like, you know, so less than one lakh, less than $1,000 and all that we just say, just go ahead and buy, just have a process that you have you’ve got the correct price and there’s a proper invoice and that’s it. So we do this process of this RFI and all for, especially for large spends and standard procurement, right? It’s not that you are doing some, you’re buying a spacecraft, which is, you have only two vendors, ISRO and maybe somebody, right? So that’s a different buying, but when you’re buying, manpower or doing services, you’re buying some IT hardware. There are multiple players, right? Let’s say, IT hardware, you have HP, you have Dell, you have all these guys, right? So you can, and they’re all big players. You can still do the RFP and RFI, sorry, reverse auction with them, right? But not for all the spend. So, we have to cut off what spender, it’s a company wise. Like in my company, we told up to $1,000, don’t worry, right? About $10,000, don’t worry, right? You just… maintain some simple government principle that you have two suppliers, you have quotation, just go and spend that. But anything about $10,000, it’s so it all depends on the limit what you put. And that’s to be discussed along with CFO and the audit committee and finalize it. But as a process, I will not even audit committee says that IT hardware, you just buy it, it’s okay. No, then that’s against the procurement process.

Rohit Agarwal: Got it. Procurement is certainly a multi-party process, right? There are a bunch of people from within a company that are getting involved, that touch the process and approve their bit of the process. And of course, there are then external parties that are involved. How do you ensure such a large multi-party process remains on track? And then as a procurement team, you are able to deliver to the business user, whatever they are looking to procure in the right timeframe.

Murali Sundararajan: No, it’s a very good question. I mean, this is the problem, the most of the procurement leaders and the person who is working in the business space, the business guy who is in the field, he’s sitting in the customer in somewhere in Dallas or somewhere. And he says, the customer is yelling at me that why it is not closed. I’m sitting in their office. Can you help me? And here we find out the calls comes to me or to the person who is handling the procurement for the business unit. And the guy says that… I’m helpless. I’ve done all the work. It is sitting with this with the finance person or it’s sitting with somebody in the chain and that guy is on leave or something or you know, you’re not able to access So this is the thing where we tell the people you as a person you are responsible You cannot say that I have done my job now, It is pending with some guy in the system in finance and he’s not approving it So I keep telling them don’t put that blame, the blame has to come to you. So if he is not doing the job, okay, this one time, let him take the time. Next time, we go to, with the data, go to his boss and say that, so many hours we are lost, because the guy could not open his system and approve it, or he has forgotten to see it, or he is traveling in a plane, or he’s in vacation for 15 days. So what is, so we always have in the system two levels. One is the person who is approving. And if he’s not approving in 24 hours, it goes to the second person. So we have to bring those checks and balances in the system and not really get into this. It’ll always happen. Somebody is sitting on it. Not that they’re doing intentionally. Probably they are busy in something else or is on leave. So we got to always have this system control thing. Right. And if you are doing it manually, it is not going to work. It is small company. It will work. But if we are a multi organization, multi country you’ve got to put the systems in place. And measure. So we used to bring the analytics also for your information. And every month I will circulate to all the business leaders who are in the approving chain. The business person, the finance person, the governance person. I will make analytics how many days one acquisition was sitting with him and that will go to him, his boss and to my CFO. So that’s the only way we can bring the, you know, enlighten the people and take corrective action.

Getting the right price and contracting#

Rohit Agarwal: Makes sense. On the contracting side, how do you know that you are getting the right price for a particular product or a service that you are procuring? Because it’s not always about the price only, but that is one of the main components of any contract.

Murali Sundararajan: Yeah. So that’s a good point. Like if you take, I mean, that’s a big challenge I had when we went into IT services. So in the manufacturing, it was easy because we used to think called a clean sheet, which you know, the mechanism you guys have started a long back, but we used to do that before that or a short cost, right? What is the ideal cost, right? Like suppose you are buying a UPS or you are buying a laptop. So what is the cost, actually. So we used to do the calculation. So what is the laptop has major component? It has memory, it has Intel chip or AMD chip, and then there’s a PCB. So we know what is the 80% of the cost is, and the other one is plastic assembly and blah margin. So we used to do the food costing or ideal cost for every item we buy. The same thing we do for IT services, hardware we used to do. Software is not easy because there’s an IP related, there’s a design and all that thing. So software, we always do a partner comparison. And there are a lot of new startups have come where we do comparison of a similar services, what should be the cost, what is the partner cost should be. So that is one tool you can use. The other thing for services, just manpower. It’s just a manpower cause you can get those data from the published data in the government, what kind of skilled labor and IT. What is the average monthly rate or hourly rate? And what is the thing? If the difference is too much of a variation, we can start negotiation. So I always put that when they come to me, approval for anything, anybody, they’ll always show what is the rack rate or in that country or this thing, and what this guy is quoting, and what is the gap, right? So that’s the gap we can negotiate and bring it closer. So… So there is a process of doing it, not just comparing three quotes. That three quotes is also important, but it’s also important to know what the cost is for them.

Rohit Agarwal: So basically bring in the market data, market benchmarks to analyze.

Murali Sundararajan: market data and if it’s an engineering product it is easy to do that because you can cost the product.

Rohit Agarwal: Got it, very cool. Beyond the pricing for a really optimized contract, what are the other elements that you think from a procurement perspective it makes real sense to have a good eye on them and optimize for those?

Murali Sundararajan: In addition to the cost you mean.

Rohit Agarwal: Correct.

Murali Sundararajan: Yeah, I mean, see, the other areas are basically the how, what is the response time? If there are some engineering changes, the customer will make changes every time after they give the contract. There’ll be a lot of changes coming. How quickly the response time is for them to make the changes? Because it’s a chain, you know, the customer will give it to the company and we have to work with the partners. So the response time is a very important thing. And then their project execution team, what kind of tools they use, I mean, which we do that at the evaluation stage. How is their analytics working? What kind of data they give to us, right, in addition to the cost. Like, what is the progress of the project? How many, suppose there are 100 different sites where people have to be deployed in multiple countries. We had that challenge. That how are they, which country they will do? The customer will say, I need these countries to be done first. And then we’ll have a lot of challenges in those countries. How do we ensure that what customer wants and what the partner is having trouble? How do we make that thing? You know, we work with them to ensure that those things are done. And what is the time to deliver a site? You know, suppose there are a hundred sites to be done. We have to go live in the next three months and we have a hundred sites to them and country-wise it is. So this is, this is where these are the important thing in addition to the overall cost what he has given. The response time and changes, response to changes.

Rohit Agarwal: Awesome.

The future of procurement and career advice#

Rohit Agarwal: All right, why don’t we now move to talk a little about the future of procurement. Let’s level set and understand perhaps what are the biggest challenges facing procurement today and how can organizations prepare to tackle them well.

Murali Sundararajan: I feel the, if you divide into the procurement or purchasing into, you know, the thing we did earlier, the shared service and the vendor registration and converting a contract and all that. We have done to a great extent automation and brought in RPA. Now with the AI coming in, this whole thing can be fully automated. And I feel sorry for the people who are doing the shared service, but. I feel happy that they can do more value add work. They’re all intelligent people, but just because of their communication skills not great or they have not done education in English university, English college or speaking college, their English is not great. They are stuck in some of this transaction job, but they’re very, very intelligent guys. They can use their brains in some other area and not do this transaction of sitting every day and creating contracts review and all. All this contract review is already there, you know, today. And with the AI coming in, we can review that in contract, some 100 pages contract in probably in 30 minutes or one hour, it can tell all the throughout everything, right. So I think the automation, AI coming in, RPA coming in, RPA is getting more relevant now in procurement. All the recurring activities can be converted into a robotic thing where… things can happen very fast and it will work 24x7. Today our guys, whatever we do, there’s a holiday, there’s a vacation, all that thing, which doesn’t work in a country like Dubai it works on Sunday, right? But we are closed on Sunday here. So how does it work? So we used to have special teams and all that. And so those are extra people. So that’s the benefit of this thing. On the strategic side, the… The AI will help them a lot to do the study. They don’t have to use their brain too much of that to Google search and do the study. Suppose they can just say that I’m talking to this company out of that five listed companies, four are not listed. It will get me all the data of the listed company, whether they have any filing, whether they have got any blacklisting, whether they have any loan default. All the data will come to me in this thing. And my decision can be very… I don’t even have to send an RFP to them if I feel some of them or they are politically connected with a person or they are having some terrorist connection. All these are part of the risk. It will all throw out to me and I can validate that and not just blindly follow, which today we do manually. Manually means somebody has to do that work even through the internet. That’s the benefit the system will give. And the strategy sourcing will be more strategic. The person can use is a technical knowledge to work on that instead of doing the data collection. So the data lakes and whatever you call now is all available. Just pull from the data lakes, stream and get all this information from what we need, which is very difficult today. I think Indian companies, all the unlisted companies in India, we already have that. I am already using some of them today for some of the customers, that I can get all the information about the company.

Rohit Agarwal: makes sense. You talk about whether it’s RPA, AI ML, there are already a bunch of different software solutions available to this industry, and more are going to come for sure. Do you have a framework that you recommend to companies in terms of choosing the right kind of technology solutions for their procurement teams?

Murali Sundararajan: Yeah, I think if you take RPA, again, it’s a bot basically. You’ve got to use RPA, you have to decide internally what process you want to automate. And how do you decide what process to be automated? What are the processes which are taking the repetitive process, which is repetitive and recurring? So you’ve got to use that and bring the bot there and put the RPA, right? What technology you use on the AI side, whether you’ve got to use a Generate AI or just in simple machine learning Today most of the software partners, they are giving the AI as a feature, which is part of it. It’s not that you are asking for it and then they give it. It’s become like SAP Rise if you take. SAP Rise, all that thing has already has the AI built in and we can use that to bring the dead. So earlier it was tough for me to decide what technology to use, what portal to use. Now no more. Most of this, Procure-to-Pay portals have these features now. And in addition to that, you’ve got to be technology agnostic also, the head of the procurement. You cannot say that I’m a great negotiator, I can do all this thing, but he has to understand the landscape and spend some time with the business leaders, spend time with the IT professionals. Because everything is not known to everyone, right? So you’ve got to understand the technology side. I’m a mechanical engineer, but it’s got nothing to mechanical here, right? So you’ve got to spend that time to understand technology, read some thing, attend seminars and then bring the right technology. It is not like, no, you are a godfather, you know everything what’s going on. You’ve got to integrate. You’ve got to integrate and work. And then also look at the ROI because the company will say that if I do this, what’s the ROI? The ROI has to be within one year, two years. Nobody will give anything. If somebody is approving about two years, something great. People will look at one year, result me, if I’m going to spend some 20, 30 lakhs or one crore on something, what is ROI? So we’ve got to look at that and decide on the technology. And the timing, right? That’s the reason I say that don’t get hung up with one technology for everything. Have multiple technology and then have a layer on top of that to integrate all that. So that you have the flexibility to change and do some, you know, let’s say mix and match.

Rohit Agarwal: All right, very cool. Looking back, what advice would you have for young professionals aspiring to be leaders?

Murali Sundararajan: in the procurement area?

Rohit Agarwal: Yes.

Murali Sundararajan: Yeah, I mean, I think the first thing is the passion, energy level, integrity. If these three things are there, and then you have a kind of a, what do you call it, inclination toward technology. Like if you put a chemical engineer in this and he doesn’t want, he doesn’t understand first of all software and all that. Right. So I’m not saying he doesn’t, a lot of people, chemical guys are there, but I’m just saying You’ve got to look at a guy who is got all these things. It should be technology, you should be willing to learn, spend time. And I’m always looking for a person who says that I know everything versus the person I don’t know much and I want to learn. I think that’s very important. When cloud came in, a lot of people were talking what will happen. And today, 80-90% of business is running cloud today. So it all depends on how, where you get in. what kind of integration you have to do and what stage you have to get in so that the ROI thing is kept in mind. And at the same time, you can be able to convince the CEO and CFO why we need that. The first step is that’s the problem. How will you convince the CFO? Because CFO is very busy with so many things, right? He’s got the last thing to listen to you that I want to spend $1 million on that. You will probably, you’ve got to go with a clear thought. Why you won’t spend that 1 million? What is your ROI on that? Because technology is not just to have some fun. Okay, let me have SAP, I go and tell customer I have SAP. Those days are over, right? The technology should help you to reduce costs, help to reduce TAT time, help to bring the process in time, bring the risk mitigation. If it does all that, and then I get a ROI, that’s where I feel that’s important for a person.

Rohit Agarwal: All right, if you can change one thing about your career, what would that be?

Murali Sundararajan: Yeah, that’s a great thing. Yeah, maybe I should have spent more time on understanding software technology, getting into probably learning some of the software. One of my things my boss always used to say that tomorrow you have a hundred people team or a 50 people team. And tomorrow, if I tell you that all your 50 people are out of the company and still the business has to run, you’re the only guy, how will you do it? So, so you should be hands on. But I mean, “your nose should be in, your hands off.” That means, given a choice, like, you know, it’s like a business case risk, right? You are able to do the work on your own without depending on others, even though you may be head of the department with, you know, are you hands on, brass tech, can you go and run a report? Many of the managers don’t know how to run a report. They’ll ask some guy, can you run a report? So I feel it’s very important, the guys. should be, so when you’re talking to a subordinate, he knows that I know how to run the report. So he doesn’t give some kind of a bull, right. So you’ve got to be hands on, but at the same time managing. So I feel one of the thing I could have done is got into some of this trainings and learned some software coding, some of the things which I could have easily done, which I didn’t do. Right. So maybe that’s actually, but I’m learning now, but it’s late now. Right.