How ECCO Shoes uses AI/ML technology for strategic sourcing and operational efficiency

Edward is a solution-based thinker. His background in solving complex problems and “hands-on learning” while working within the textiles industry is what has given him his edge. In fact, it’s the combination of customer relations and sales-like activity experience that allows Edward to bring a refreshing perspective to procurement. Responsible for both developmental sourcing upstream and holistic strategic sourcing downstream for Ecco and managing a team based in Denmark, Portugal, Singapore, China, Vietnam & Thailand - Edward gives us the unique opportunity to see inside Ecco’s unique value chain.

I’m Edward, Head of Global Sourcing at ECCO Shoes. I'm responsible for global sourcing - we have a unique individual value chain and own most of the process ourselves.We do our own leather manufacturing, and shoe manufacturing, and own most of the retail and merchandising process so I manage the teams responsible for strategic sourcing for all the materials.

The biggest learning over the past couple of years has been finding the balance between agility and resilience. The biggest developments and progressions are with AI, machine learning and RPA. In relation to sourcing or procurement, you can essentially use RPA to do big data analysis, you can analyze heaps of data to draw conclusions from it. You can do it to you can use it to do predictive indexes, whether it's on raw material prices or forecasts or where you need material at what stage. You can also use it for vendor selection, taking the data that you have on deliveries, quality pricing and essentially draw conclusions without having to have a human filter through all that data and give predictions. On the machine learning and RPA aspect, you can essentially take a labour-intensive task and create an algorithm around it which can allow your people to have more time freed up and remove human error elements.

How are you leveraging digital transformation and advanced technologies to optimise your procurement processes and drive operational efficiencies for ECCO?

 From a procurement perspective, we're looking into different solutions on how we can make processes automated. We have a lot of different entities in many countries that handle different kinds of operational procurement tasks. We're focusing on a project currently to see which technology we can use across the entire, where there can be differences in P2P handling arrangements, and contract management. From an operational perspective, we're evaluating how we can contribute the right data into this one source of truth and additionally link other systems to make our day-to-day operations in procurement less heavy. Having data available for different locations and knowing where your manufacturing locations are, you're able to potentially predict where you might have a better cost-benefit in the future and cost saving potential – that’s where the data that you have is helping locate new opportunities.

What are the potential benefits and challenges associated with near sourcing and far sourcing, and how can procurement effectively manage these complexities to optimise their sourcing strategies?

How willing is the leadership to make changes and invest the money needed in order to facilitate looking towards the sustainability future? It’'s like a seesaw where you pull a bit more one way and there might be a downside on the other side. On the upsides - you might have freight reductions, cost reductions, you find places that manufacture at a higher quality, but then the offsets against that are again, are you then paying more for your product? Are you then having to give up on your agility or are you having to focus on longer lead times? Are you having to increase your lead times because you're not in a place with a steady material stream? To every single one of these upsides, there is a another side where you might have to forfeit some flexibility, some agility, some costs in order to make that decision. The biggest thing is inspiration. A lot of the times we're we're all running full steam and firefighting and focusing on our own areas. But I think one of the big things that an event like Procure Con brings is that you have a lot of people from a lot of different industries with a lot of different skill sets and knowledge and, and it helps us to sometimes take a step back and look outside of our own garden to see how other industries are handling these kinds of issues, what some of the trends are in other industries, and then to go back and see how this can actually be scaled within your own frame and your own line of work.