QUESTION FOUR $[25]$

AB InBev procurement transforms Africa$$s beer Industry

Take thousands of employees, produce hundreds of beer brands, and then distribute all across the world and you$$ve got yourself a very complex operation that exceeds US$$55$bn in revenue with the need for an intricately built supply chain. This is where Anheuser$-$Busch $($AB$)$ InBev has excelled over more than a century$$becoming the big$-$name business that it is today$$thanks to its ability to manage a global team and expand in line with current trends and demands within the industry.

With this growth comes expansion and AB InBev acquired South African Breweries $($SAB$)$ Ltd in $2016,$ which was a major step towards sharing its great products with more consumers across the country$$serving more than $55$ million of its population. Particularly in the current commercial landscape, procurement has come to the fore as a crucial component of expansion and ensuring compliance to environmental, social, and governance $($ESG$)$ throughout the supply chain.

To understand the important role of procurement in operations at AB InBev, we look to the Southeastern region of Africa, where the company boasts a great influence on Uganda, Tanzania, Zambia, and other countries through quality procurement processes as the company looks to localise its sourcing.

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$$Procurement within AB InBev has evolved immensely,$$ says Jacques Els, Procurement & Sustainability Director: BU Southeast Africa. $$As the company has modernised, procurement started to evolve within the business purely because of the value procurement can generate for the bottom line. Now that procurement has $$a seat at the table$$ within AB InBev, Els believes that new levels of value will be reached now the department has become more influential in the business$$ growth. Els really emphasises the importance of procurement as a function leading the business in a number of areas, including social aspects of enterprise as well as profitability for the overall African segment.

$$Our procurement function has been elevated within the business and it$$s become even more apparent since we started thinking about the principle of supply chain, which is essentially production, logistics$,$ and the procurement organisations all under one umbrella. $$This supports the understanding that the supply chain can deliver value within your business.$$

And for AB InBev, the supply chain is everything. From the sourcing of raw materials like wheat and barley from a variety of farmers, to retaining production efficiency and product quality across new markets and distributing beer to countries across the continent. Let$$s also not forget the sustainability requirements within the supply chain, which adds a new layer of complexity to the procurement role$$sourcing goods provided using sustainable energy.

Commercial perspective: Retaining necessary product quality of global products

The commercial value for AB InBev comes from several factors in the supply chain. As the company operates on a localised basis, product quality and cost optimisation are crucial outcomes the business strives for when dealing with multiple breweries that produce the same great products.

The procurement function is responsible for ensuring that not only the products meet the company$$s legacy$$high$-$quality$$standards$,$ but are produced in a cost$-$effective, equitable way.

$$When you look at industrialisation in Africa$$s markets, procurement is critical. It plays a critical role in developing suppliers to deliver at the right quality; the consistency from suppliers on a multinational level,$$ says Els.

$$Localising suppliers so that we$$re not so reliant on global supply chains$$ocean freight from Chinese, European or American ports$$has become a huge value$-$add for us$,$ because we are able as a procurement team to do that faster and quicker than most of our competitors.$$

Through further partnerships, procurement continues to duplicate these achievements across a number of countries, bringing them into an ever$-$growing partner network. Moving forward with its

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vendors, AB InBev can use its platform to facilitate further industry shifts and will be a driving force in reducing supply chain impacts on the planet and enhancing the lives of those affiliated with beer business.

Embedding the procurement team with suppliers across the countries seems to have empowered AB InBev to take more steps towards more sustainable methods of working. By getting closer to its suppliers, the South African team learned very quickly what the pain points were for small companies looking to develop more responsibly.

$($Source: AB InBev$$s sustainable delivery of Africa$$s developing supply chain, September $2023)$

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The procurement function is responsible for ensuring that not only the products meet the company$$s legacy$$high$-$quality$$standards$,$ but are produced in a cost$-$effective, equitable way.

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Discuss the concept of centralised procurement and examine why AB InBev would adopt this co