In this episode of Be EPIC, Matt is joined by Dominique Lebigot, chief purchasing officer at LVMH Wines & Spirits, and Remko Van Hoek full professor of practice of Supply Chain Management at the Walton College. They discuss the future of procurement and ways to generate revenue through purchasing relationships.
0:00:07.5 Matt Waller: Hi, I'm Matt Waller, Dean of the Sam M. Walton College of Business. Welcome to Be EPIC, the podcast where we explore excellence, professionalism, innovation and collegiality, and what those values mean in business, education and your life today.
0:00:27.7 Matt Waller: Today, I have with me Dominique Lebigot, who is the Chief Purchasing Officer of LVMH Wines and Spirits, which is an impressive company we're gonna hear more about in just a little bit. But Dominique has a really strong background in purchasing, procurement and sourcing, not just in luxury brands, wines and spirits. He's got experience in construction, consumer packaged goods, healthcare, so it's very broad. And Dominique has been working with our students in the Walton College, and we're very grateful for that because purchasing, sourcing, procurement is so important for students in any industry to understand. I also have with me today Remko Van Hoek, who is Full Professor of Practice in Supply Chain Management and executive director of the CSCMP Hall of Fame. Prior to joining the Walton College, he had a tremendous experience in a number of areas, including SVP of Sourcing and Procurement at the Walt Disney Company, Chief Procurement Officer at PwC. He was a professor earlier in his career, and then later, he decided to come back to the academy, and we were fortunate enough to get him to join us. So welcome to both of you today.
0:02:03.7 Remko Van Hoek: Thank you, Matt.
0:02:04.4 Dominique Lebigot: Thank you very much, Matt.
0:02:05.8 Matt Waller: Dominique, I'd like to start with you, and again, I wanna just make it clear as Dean of the Walton College, I am so grateful for your collaboration with us, so thank you, thank you so much. I know you, in your position as Chief Purchasing Officer of LVMH Wines and Spirits, you have a really global purchasing operation and very diverse in terms of what you purchase and you also have quite a large staff. But I'd like you to start a little bit just tell us a little bit about LVMH, and then if you wouldn't mind, talk a little bit about your role.
0:02:46.8 Dominique Lebigot: Very good. Thank you very much for this opportunity, Matt. Yes, LVMH is the world's largest luxury company, a company which has been built on the most famous luxury maisons, we call it maison. And recently, LVMH acquired Tiffany & Co in US. So that's why we are now very much present in US, but LVMH is also Sephora, it's Christian Dior, it's perfumes and cosmetics, it's Louis Vuitton and it's Moët Hennessy. And LVMH in fact stands for Louis Vuitton Moët Hennessy. So I am personally in charge of the purchasing or procurement at Moët Hennessy Group, the Wine and Spirit division, and I am also at the LVMH group coordinating all the purchasing for marketing and communication spend items. I have been working for LVMH for the past seven years, and I'm very happy to have been able in this period to have transformed the purchasing organization of Moët Hennessy and also influence the LVMH purchasing organization as a whole. Before that joining at LVMH I, as you said, had a chance to work in many different multinational companies including construction for ArcelorMittal in the steel business, Colgate-Palmolive in US. So I'm very delighted today that as part of this transformation plan of Moët Hennessy, we have that chance of partnering with Walton College and do the very good work that Remko is coordinating with the MBA and the Master of Supply Chain. So very, very delighted for that.
0:04:38.1 Remko Van Hoek: Well, Dominique, your organization is award winning. You've won several industry awards in the field of procurement for the best practice capability that you have accomplished. Your team is very, very global, stretching from Australia to California, and you support many, many top brands, not just champagne, but also cognac, and whiskey. And your influence spent in all areas from bottles and labels to all the services in all the indirect areas, and I know it compromised several billion euros in total spent.
0:05:11.5 Matt Waller: Remko, how did you and Dominique meet?
0:05:16.1 Remko Van Hoek: A former business partner of mine, when I was at the Disney company, was the CFO of Disneyland Paris, where I had a procurement team that supported the parks in all of its assets. And he was the CFO and so was a key business partner for me. He also left the Walt Disney company to move to another company. We stayed in touch 'cause we had a really good working relationship and a strong mutual appreciation. And he recently joined Moët Hennessy, and when we were catching up about... I was congratulating him and asking him about his agenda, he said, "I need to introduce you to my CPO because he's done some great things. Maybe there's a way for you to help him along the way." And we've been in touch for six to nine months or so now, leading up to the collaboration that we've brought to our classroom.
0:06:06.5 Matt Waller: Okay, great. So Dominique, purchasing is a really challenging field. Within an organization, everyone expects what they want on time, but the company doesn't want too much because they don't want unnecessary capital wrapped up in inventory. They want it at the lowest cost possible. In your role, you have lots of competing goals and objectives. How do you deal with that and balance that from a leadership perspective?
0:06:43.5 Dominique Lebigot: Purchasing procurement, for me it's a service provider. We are in the company. Our added value in the company is to not only optimize cost, but it's also to provide innovation. You see, I see purchasing as the expert of the upstream market or the supplier market. All companies have two main environments, two main markets they deal with: The supplier markets and the customer markets. And we are the primary interface for the supplier markets. And we, our job is to do everything for exploring the supplier market opportunities to help the company, our company to grow. This is going of course through cost solution for sure, but this is not the only purchasing level that we have to utilize. We also are very much active as I said in innovations, in providing solutions to the business, in optimizing the relationship and leveraging the relationship with suppliers to also contribute to generate revenues for the companies. I often used to say, the purchasing job or the procurement job is reinventing itself every 10 years. So the focus on the '70s, '90s was clearly to cut the cost and then we moved to a different focus, which is not the price only, but the total cost of finishing things. And then we moved to the good... Best compromise between quality, delivery time and cost.
0:08:21.1 Dominique Lebigot: Then in the early 2000, we introduced a very important factor, which is the innovations, and how can purchasing contribute to manage the risk and control the business risk. This is not only reducing cost, and we are now moving into a new generation which is very much focused on sustainability. How can purchasing in all the actions and decisions we take, how can we contribute to empower the local economy and make sure that we have the local employment is getting furthered?
0:08:51.6 Dominique Lebigot: Today, with my organization, I'm very proud because we are now moving into a new stage in purchasing, what I believe will be the future of purchasing in the next 10 years for everyone, is how can we use the purchasing power and the purchasing expertise, the supplier markets to generate revenues and how can we identify within the upstream markets any opportunities to build growth and to generate revenues for the companies. For instance, for us at Moët Hennessy, we produce and sell the bottles, wines and spirits. Today, my purchasing organization is very much active in selling bottles to our suppliers and making sure our suppliers can get access at a good discount of our finished products. And also we are asking our suppliers and working with them to identify opportunities for us to open new markets, to create new distribution channels, and all those are very much important strategies that help to build a gross and it makes our job more interesting.
0:10:00.2 Matt Waller: Dominique, you have really luxury brands, both in wines and spirit, but also in buying Tiffany, you have another very luxury brand. And when it comes to luxury brands, one of the challenges is marketing because those kinds of brands have to continually be used in marketing to build the brands and to maintain the brands. And so your organization is responsible for purchasing the marketing, is that correct?
0:10:34.4 Dominique Lebigot: Absolutely.
0:10:36.7 Matt Waller: And today, marketing, if you were doing this 20 years ago, it would be primarily media and paper media in particular, but now it's so complicated. How do you manage that?
0:10:55.6 Dominique Lebigot: Yes. We have worked hand-in-hand with the marketing teams. In fact, you're absolutely right. There is an evolution which is going very fast right now, nowadays, on the marketing practices. And more and more we are very much focused on using the online platforms and online social networks. So we are helping the marketing teams to negotiate deals with the largest social media that we all know. We have also a very close collaboration for negotiating the agreements and the partnerships with some sponsors. For instance, we just negotiated a deal with the NBA and partnership with the NBA in US. So we have been very much involved also into negotiating the details of the agreements. We also are working close with marketing teams for creative agencies and how can we optimize the cost of the overall campaign even in advertising as well by overseeing not only discussing and negotiating with the agency, but also with the post-production companies that are very much involved. So it's a very diverse and complex world, but it makes the purchasing job very impactful.
0:12:24.4 Matt Waller: Remko. Would you mind telling us a little bit about which programs Dominique is helping us with in the Walton College?
0:12:33.7 Remko Van Hoek: Absolutely. Because it's no less than three programs at the same time, so it's a very generous contribution and an exciting collaboration. Dominique and I were discussing over the summer how... We're both very excited about how far procurement has to go in modern business and how exciting the agenda is for the progress of the field into sustainability, into risk, into innovation, supplier collaboration. And Dominique kindly agreed to share with our executive MBA students, our full-time MBA students and our Master's in Supply Chain Management students across two different sessions how he has taken his team on a journey and what his vision and plan for the future is. And we joined the class for about an hour or so. It was a very interactive session. The students really, really enjoyed it. And the punchline came at the end where he shared with the students five challenges within that strategic plan for the future that became project challenges for our students.
0:13:49.5 Remko Van Hoek: So I let students self-organize into teams and they got to pick one of the five each and we then had follow-up calls which I joined partially because I was so excited about the opportunity and partially to help our students with team members on Dominique's executive team to get a more detailed brief on the specific project challenge, again in the areas of sustainability, risk, supplier collaboration, innovation. And throughout the semester, those 10 teams will work on that challenge together with the Moët team, and at the end of semester, they'll present back to each other as well as to the executive sponsors of Moët what their findings and recommendations are. And so it's a fantastic opportunity for us to offer a very real world experience that is very global in nature.
0:14:42.3 Matt Waller: That's great. Dominique, you were talking earlier about one change that's occurred in purchasing has to do with the fact that now you're generating revenue for the company, not just spending. And I would imagine the competency that you're gaining in procuring and purchasing, marketing and communication services probably helps you even further in that regard. Is that right?
0:15:15.9 Dominique Lebigot: Absolutely because it's... Those purchasing skills that are very much required in the marketing field are very much interpersonal skills. It's a way we communicate and collaborate internal with our internal stakeholders. The way we can influence then and impact decisions is based on our possibility to convince them is based on the leadership. And that's exactly what is required for the job of purchasing today. It's leadership. The generating revenues for the companies is also adding a new piece in our puzzle, a new skill, but here again, it doesn't mean that buyers are becoming sellers. It means that we are in fact putting our suppliers at the disposal or in contact with our salesforce, and then we help the salesforce to raise the revenues. And we encourage this relationship with our suppliers because they can multiply the number of contacts they have in the company, and they are very much willing to also have an impact, an impact of the business of their customers. So yes, this interpersonal relationship skills are very important for influencing the organization.
0:16:30.5 Remko Van Hoek: I think to build upon that point, Dominique, there's two points that I often make is that first, don't mistake procurement for being far upstream in the supply chain tucked away in the back of the factory. Procurement has everything to do with the value that we bring to our customers and consumers. It's a very market-centered function. And number two, to be successful in procurement means that you are on a great path to potentially moving into general manager or CEO roles because that's truly what it takes. You need to be an all-around professional, I mean not just in the techniques but in so much more than that. And I think you really help bring that to life.
0:17:10.8 Dominique Lebigot: Yeah. For us it's very important this relationship and partnership that we are building with the most prestigious colleges are very critical and they are a part of our 2030 vision, not only to share our knowledge and our experience, to transfer that knowledge. It's part of our job. As the CPO, we have to transfer this knowledge. But also for us internally, it's very important because by working with students, we can benefit from their point of view which is very new, and they have new ideas and they have a new way of considering problems and they can open doors for new solutions, new innovations. And they brainstorm and we can benefit a lot from all their ideas. And I can tell you, Remko, currently with the first meetings that we have had between the Walton College and Moët Hennessy, the people in my organizations are very, very happy, and they have been impressed by the level and the quality of the questions raised by the groups. So we are very fortunate to have this exchange of information with Walton College, and again, it's a very, highly positive experience.
0:18:28.8 Matt Waller: Dominique, as Dean of the Walton College, we have 6600 students and it's a large business school, but having someone with your background and experience and skills and expertise really contributing to the education here, I can't express the depth of my gratitude for you and your team in helping us with this. And we're grateful, and I can tell you I look forward to a long-term relationship with you and really appreciate it. So thank you so much also for taking time from your busy day to visit with Remko and I just about what you're doing, and we look forward to continuing to get to know you better.
0:19:20.8 Dominique Lebigot: Thank you very much, Matt. It's a pleasure for me, and again, I am personally delighted to share that... To have that journey with the Walton College. And it's just a starting... The start of the journey so I'm very, feeling very excited.
0:19:36.3 Matt Waller: Thanks for listening to today's episode of the Be EPIC podcast from the Walton College. You can find us on Google, SoundCloud, iTunes, or look for us wherever you find your podcasts. Be sure to subscribe and rate us. You can find current and past episodes by searching beepicpodcast, one word, that's B-E-E-P-I-C podcast, and now, be epic.