By Tonya McMurray
When Jose Turkienicz took the reins of the procurement function at UPS Inc. in 2017, he promised big achievements — more than $865 million in savings and a $1 billion improvement in the company’s working capital within five years.
Four years later, a revamped procurement organization delivered $1.8 billion in savings and improved working capital of more than $2.7 billion, more than double the original projections a year earlier than predicted. At the same time, UPS tripled spend with diverse suppliers.
Increasing the value of procurement
Turkienicz, chief procurement and real estate officer and president of UPS procurement services, came to UPS with more than 20 years of experience in supply-chain management for Fortune 500 companies. When he joined UPS, most of procurement occurred outside of the procurement organization with many departments in the company doing their own purchasing.
Procurement had been focused primarily on executing contracts and had only 30% of global spend under management. He had to quickly restructure and professionalize the procurement function, bringing in and developing new capabilities.
While there was dedicated support from the UPS senior leadership team, Turkienicz knew it was critical to gain support throughout the company before he began asking department leaders to give up purchasing control and staff members to create a more centralized procurement function.
“UPS has a tradition for building tenure and promoting from within,” he said. “It’s not common to have an executive join from the outside, so building relationships was important. We made it clear what we were trying to achieve, so it was a collaborative strategy across the company.”
Turkienicz established credibility early by identifying areas where minor changes could show immediate results. He found several quick wins, including contracts where UPS could garner savings and improved relationships with strategic suppliers.
He also developed a Center of Excellence to drive data analytics, supplier diversity, training and skill development. And he began to identify where procurement activities occurred throughout the organization and made plans to shift both personnel and functions to the procurement team.
A valued partner
Today, more than 90% of UPS’ procurement activities are managed by Turkienicz’s team, and there is a higher perceived value of the role procurement plays within the company.
He also managed UPS’ Global Business Services, which includes customer service, information technology, financial and employee global shared services with more than 15,000 employees. He worked to improve customer service and streamline business operations within those functions.
Kris Oswold, who works for Turkienicz, said the transformation enhanced collaboration throughout the company.
“Our functions now have partners in procurement that have market insight and negotiation experience,” she said. “Jose restructured the organization to capture long-term value and be more strategic. Sometimes you think of an organization going after savings by cutting as much money as it can. But his approach was more about value than just chasing a savings number.”
And while the cost savings and improved working capital were impressive, both Turkienicz and Oswold note the successes are more than financial.
“Savings is not everything,” he said. “It was great to bring dollars to the table. But at the end of the day, it was about being fully aligned and supporting the business strategy. Third-party spend is a powerful lever that not only can support financial goals, but also help drive innovation and quality and grow potential economic inclusion.”
The role of diverse suppliers
Supplier diversity was a key consideration throughout the entire restructuring process.
“One of our main objectives early on was to integrate more diverse suppliers and see how they could support us on this journey,” said Turkienicz, chairman of the board for National Minority Supplier Development Council Inc. “Diverse suppliers are usually nimbler and bring a different speed to market. We are leveraging that.”
This year, the department’s scorecard of key performance measures equally weights both supplier diversity and savings goals.
“We’ve normalized supplier diversity,” Turkienicz said. “It’s not a project sitting on the outside fighting for attention. It was fully integrated through all the policies and processes as we went through this transformation. That’s why we could reach performance objectives and at the same time triple our spend with diverse suppliers. Supplier diversity is not in addition to our goals; it is part of achieving them.”
The transformation of the UPS procurement process and its impressive results gained attention within the procurement industry. Ardent Partners Ltd. named Turkienicz Chief Procurement Officer of the Year in 2021, and Procurement Leaders Ltd. 2022 World Procurement Awards recognized UPS with the Invalua Procurement Excellence Award and Turkienicz as CPO of the Year.
The procurement team is now focused on a digital transformation that will leverage the use of technology to improve the procurement function. In 2021, it launched UPS Procurement Services, a group purchasing organization that allows other companies to take advantage of UPS’s volume discounts. UPS Procurement Services has no membership fees and no required minimum purchase, making it accessible to small and diverse businesses.
“We have big buying power, but we realized we weren’t leveraging it appropriately. We decided we could share that with our customers, so they could get better deals and our suppliers could get new customers,” Turkienicz said. “It’s really a win-win-win scenario and another way of bringing value to the UPS organization.”
UPS Procurement Services is on track to help the UPS procurement organization make another transformation by 2024 — going from a cost center to a profit center.
“I do believe this is just the beginning for us,” Turkienicz said. “I believe there is more room for us to grow and to keep evolving. You don’t get to be 115 years old without continuously looking for opportunities to transform, and there are still lots of opportunities.”
To learn more about UPS’ supplier diversity program, visit about.ups.com/sg/en/our-company/suppliers/supplier-diversity.
Jose Turkienicz, chief procurement and real estate officer and president of UPS procurement services, UPS Inc.
Jose Turkienicz UPS Inc. procurement organization working capital diverse suppliers supply-chain management Kris Oswold National Minority Supplier Development Council Inc. Ardent Partners Ltd. Chief Procurement Officer of the Year Procurement Leaders Ltd World Procurement Awards Invalua Procurement Excellence Award CPO of the Year