After a lightning brigade tour of some of London’s most popular tourist traps (the London Eye, the London Tower, Harrods, various pubs), I had the honor of kicking off the second-annual Supply Management 2.0 Forum series at the swank Millennium Gloucester hotel.

The stars of the show included an encore performance of ITT Industries’ e-sourcing program (more on that later) and a behind-the-scenes peek at Barclays supply management transformation initiative.

Nearly halfway through a three-year effort to standardize and improve its supply management operations globally, Barclays views lowering its supply cost base as one of the keystone’s in its effort to become a Top 5 Global Bank. (Of course, if successful, the financial giant’s recent bid to acquire rival ABN Amro could accelerate achievement of this goal.) Barclays supply management plans include standardizing global sourcing operations; developing and aligning global and regional category strategies; and cutting £100 million from its 2007 supply bill.

These goals are daunting enough under normal circumstances. Barclays’ appetite for merger and acquisition makes supply transformation a moving target. Previous M&A activity has left Barclays’ supply management organization with nine different businesses, multiple ERP systems (as well as multiple configurations of an ERP systems from the same vendor) and six different supply management organizations, each with different sourcing and supplier management approaches.

Craig Dowling, Barclays Head of Global Sourcing Operations, told a packed audience of the U.K.’s supply managers that such heterogeneous processes and systems “have increased the difficulty of intituting effective spend controls and have often resulted in [spend and supply] data inconsistencies” between the bank’s multitude of back-office systems.

Realizing that continued M&A activity — such as the pending ABN Amro deal — will only add more complexity to this environment, Barclays has embarked on embarked on a transformation initiative that aims to standardize global sourcing and supply management processes and controls and consolidating the supply management organizations across all businesses. Barclays will also deliver a “closed-loop” procurement capability. How it will do this is the most intriguing (some might say controversial) element of Barclays’ supply management transformation plan.

In an effort to is to “minimize impact on legacy technology infrastructure,” Barclays has segmented tactical transactional activities (i.e., procure-to-pay) from strategic sourcing and supplier management activities — both from an operational and systems perspective. (Such operational and systems segmentation is a growing trend, which I will address in future posts.) Since Barclays’ individual businesses use an array of back-office financial and purchasing systems — and future M&A will only add more — Barclays will avoid disrupting transactional operations by allowing each business to continue to utilize their existing systems.

To automate and support its strategic supply management operations, Barclays has selected a supply management solution that supports sourcing, contract, and supplier management activities on a common platform that is delivered in a true software as a service (SaaS) mode. Dowling said his company recognized that it is the information from the transaction that is critical for effective supply management — not executing the requistion or PO itself. “Platform independence separates us from other enterprise platforms and allows us the flexibility to pursue our supply management and growth goals simultaneously.”

Critical to Barclays’ plan is the role-based dashboard and advanced, Web-service-based integration capabilities provided by its supply management solution vendor. The bank is also using innovation Integration as a Service (IaaS) offering from its supply management solution, which provides pre-defined adapters to all major ERP and business systems from a fully hosted, subscription-based Web service. Barclays will use this service-based integration model to capture transactional information from all its disparate financial and purchasing systems and to deliver critical supplier and contract information to these systems in return.

We harmonize the [purchasing transactional data] through a common sourcing workbench that enables visibility into all supplier, category, and sourcing project information. It also provides global storage for all key sourcing documents, including contracts.

Barclays has begun its global roll out of its strategic supply management platform in the U.K. because, according to Dowling, “the U.K. organization has the most mature sourcing and supplier management skills.” However, the bank will extend this platform to the 500 person global supply management organization, including those in the U.S. and Asia-Pacific by year end.

By segmenting tactical purchasing and strategic supply management operations and systems, Barclays can continue to pursue its aggressive supply management cost and improvement goals without disrupting corporate M&A growth plans.

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