Thiago Foroni, Johnson & Johnson: On route to “Raising the Ceiling”
Thiago Foroni holds the position of Indirect Procurement Manager in Latin America for multinational pharmaceutical company Johnson & Johnson. Responsible for 19 of the 60 countries under the company’s coverage area, he certainly seems to have his hands full.
In my latest one-on-one with the executive in São Paulo Brazil, we discussed strategies for controlling costs in fleet management, ways to streamline efficiency, and more.
Could you first start by telling us a little about your responsibilities and the region you cover?
Foroni: I am in-charge of the Latin America fleet category. My job entails negotiating with auto manufacturers and fleet management companies and this includes trying to consolidate as many cars as we can under one single provider.
I’ve been with Johnson & Johnson since the beginning of 2018 and prior to this, I worked for Nestle for about two years, where I was in-charge of services and direct materials. Overall, I’ve been working in the area of indirect procurement for approximately 12 years.
As for the region I cover, it is composed of 19 countries throughout Latin America. And of these, Mexico, Brazil, Argentina, and Colombia represent 85-95% of our total spend in fleet. Currently, we have about 3,500 vehicles in our Latin America fleet.
Are these benefit cars or operational vehicles?
Foroni: Benefit cars are managed by Total Rewards which falls under our Human Resources (H&R) department. What I focus on are vehicles as a working tool, or operational vehicles like you said.
When selecting these working tools, we need to make sure we are offering the same type of car which is being offered in the market.
The models we choose also need to be aligned with the plans of Total Awards as well as Johnson & Johnson’s main goals. Once we issue the cars, defining fleet management policies and running the fleet is the responsibility of H&R.
One of the main responsibilities of procurement is to find ways to cut costs. Could you give me a few tips to cutting cost in fleet management?
Foroni: First of all, you need to have a clear-cut fleet management strategy in place. Thereafter, I’d say that there are three main steps for successful cost control during the entire fleet management process.
The first entails achieving basic procurement, or what we call “Get the things right”, and this simply involves getting our contract in place.
The second step is strategic sourcing, also known as “Elevating the Floor”. This involves eying the market and looking for providers that can give us the best conditions.
We need to know if they are in-line with our strategy, not only regarding costs, but in terms of providing the most reliable data management possible.
The third step, which I call “Raising the Ceiling”, no longer involves strategic sourcing. What I’m talking about is optimizing our relationship with the supplier, something we have yet to fully achieve in our current contract.
The supplier provides feedback telling us where we are not performing well and we provide feedback to the supplier, letting them know where they are not meeting our expectations. In the end, it is this optimization which will help us reduce costs even more.
Fleet LatAm editor Daniel Bland with Thiago Foroni (sournce: Fleet LatAm, Daniel Bland)
So, you are saying you haven’t reached step three?
Foroni: Yes, we are at step two, strategic sourcing. We already have a supplier providing 75-85% of our spend but, in terms of deliveries, they are not performing up to our full expectations. However, they are getting there, and I feel that we will be achieving the third step in about two years-time.
In terms of innovation, is there any new and interesting feature you are seeking in fleet management?
Fleet Management providers are the experts, so they need to provide us with innovative ideas. I am not talking about innovation like electric cars but more in the lines of ideas aimed at improving processes.
For instance, acquiring a car for a new employee can take a long time. Considering the steps of budget approval, car choice, dealing with purchase order issues, invoicing, and others, this could take about six months. Keep in mind that many cars are imported, and this alone could take three months or more.
So, what about providing an employee with a mobility card during this wait time? What I'm talking about is a card with a monthly balance which allows the employee to use uber, taxi, e-scooters, and other mobility options. Not all fleet management offer this, but it is an interesting feature to have.
For more on regional fleet management strategies and networking with your peers, join industry experts in Mexico City on 25 September for Fleet LatAm Training. It follows the Fleet Latam Conference (23-24 September).