What Do We Really Mean When We Talk ‘Talent’ In Procurement?

Depending with whom you speak, you get very different views on the subject of talent in procurement.

What do we mean when we talk 'talent' in procurement?

 

When we say talent, we don’t mean the ability to sing, dance or unicycle down the street whilst juggling flaming swords (although that would be a useful skill to have…), but having the skills and knowledge necessary to cope with the expanding role of procurement in organisations.

In some sections of the procurement profession, authors and business leaders believe that procurement is ‘doomed’, with procurement struggling to attract the right, talented individuals into the profession, while simultaneously limiting itself by not developing the right skill sets to deal with the changing role.

On the other side, some business leaders believe that the next generation is key and that, with a bit of effort, procurement can turn this around and attract the key talent it requires. By using social media, CPOs can understand how to stay ahead of the game and attract good procurement professionals, while strides can also be made by investing time and effort at university level students.

The Bad News

Spend Matters Editor, Jason Busch, argues that procurement skill sets are not changing with the times, or at least not changing as quickly as the skill sets in other parts of the organisation. A further argument is that the people who you have in procurement now, are not necessarily the people you need to take the profession that next step.

It has been widely quoted that 70 per cent of companies in the UK feel they have a shortage of skilled staff. The story is the same across the world, with similar results being posted in Australia and North America.

CPOs are expecting and demanding more from their teams, but have concerns that individuals are missing the crucial skills required for success. Among the ‘missing’ skills are some biggies too:

  • Negotiation
  • Stakeholder Engagement
  • Strategic Thinking
  • Adopting of Technological Enablers

However, for some, the issue is being able to combine all the basic procurement skills with subject matter expertise, something that is becoming less common in an age where the workforce is more mobile and less likely to stay in one place for an extended period of time.

What’s the Problem?

For a while now, associations such as CIPS and ISM, and organisations like Procurious, have been trying to change the perception of procurement as a career. However, old attitudes and perceptions are proving hard to shift.

The next generation coming through education now are looking at procurement and not seeing the potential for advancement and a perceived limited career path is dulling the attraction. It’s only recently that procurement or supply chain heads are taking up executive positions at major organisations in the public eye (think Tim Cook at Apple).

Financial compensation at the top level of the profession is also not keeping with pace with other functions. While CFO compensation has gone up by double digits on average each year, in some cases CPOs have been lucky to see a 3% to 4% increase.

The Good News

If that all sounds pretty bleak, there is light at the end of the tunnel. In the first 6 months of 2015, organisations have been making very public efforts to attract new talent and showcase procurement.

The UK Government has launched a new public sector procurement apprenticeship scheme, highlighting the experience to be gained working on high profile, high-value projects that affect millions of people. You can find out more about the scheme here.

Other organisations, like NHS Procurement and Skills Development Scotland, are actively working with universities, realising that by recruiting these fresh minds, they are also accessing a valuable source of innovation, new strategic viewpoints and thought processes.

How to Do It

There’s no sure-fire way of attracting the ‘right’ talent to your organisation as different people always look for different things. But we’ve pulled together some good tips for you to think about:

  • What is Procurement? – Define it well, offer prospects, tell the wavering students why this is a great opportunity
  • Pass on Skills – Around 60 per cent of procurement uses mentorship; ensure that skills are passed on and not lost
  • Professional Development – A big one for the ‘millennial’ generation, but critical for helping to retain talent too
  • Interesting Roles – Being able to be mobile, work on different projects and gain experience across the function
  • Grow Talent – Make sure you hire the right people. Assess things like cultural fit and personal values
  • Social Media – Don’t underestimate the power of social media and learn how it can benefit you

Procurious founder Tania Seary is travelling through Australasia in the next few weeks and will talk about procurement talent. Why not let us know if Tania is visiting your organisations, or contact us if you’d like to get her to come and talk to you.

Meanwhile, here are the big news headlines that should be catching your eye in procurement and supply chain this week.

Key takeaways from George Osbornes’s summer Budget

  • The government announced plans for a new apprenticeship levy, which would be paid by all “large employers”. Eddie Tuttle, senior policy and public affairs manager at the CIOB, said: “The government has set itself an ambitious target of delivering 3 million apprenticeships over the next five years – equivalent to 600,000 new apprenticeships a year. The introduction of a new apprenticeship levy is a big ask for business, but one that recognises the acute skills shortages industries such as construction will face in the future unless significant investment is made in training. And if the government is to deliver on its ambitions, more needs to be done to promote construction as a viable career path.
  • An increase in the national minimum wage, now branded the “National Living Wage” that will rise to £9 by 2020, should help some low paid workers. Iain McIlwee, chief executive of the British Woodworking Federation, says: “And looking at the direct impact on SMEs in the construction supply chain, while an increase in the minimum wage for the lowest paid is welcome, we cannot ignore the fact that such increases have a knock-on effect throughout a business, creating inflation in a firm’s total wage bill.“Our latest State of Trade survey among Britain’s joinery manufacturing firms already reveals that 73 per cent of respondents had seen a sharp increase in labour costs, and this is fast becoming a constraint on business.
  • The government is inviting bids for a new round of Enterprise Zones, which will encourage towns and districts to work with local enterprise partnerships to develop bids.
  • And finally: Public sector pay will increase by 1 per cent a year for four years from 2016-17.

Read more at Construction Manager

Nordic report calls for less fast fashion

  • A new report which has mapped out a more sustainable road-map for the Nordic textile industries recommends that replacing fast fashion, reducing resource inputs and encouraging local sourcing should become key priorities.
  • The report was commissioned by the Nordic Council of Ministers and includes work from the National Institute for Consumer Research, the Sustainable Fashion Academy, the Nordic Fashion Association/nicefashion.org, the Swedish Environmental Research Institute and the Copenhagen Resource Institute.

Read more at Ecotextile [subscription site]

India’s Snapdeal to invest $200m in strengthening supply chain services

  • India’s largest online marketplace, Snapdeal, is planning to invest around $200m in bolstering its supply chain services including warehousing, logistics and training and sale assistance.
  • The company aims to be able to host around 1 million sellers over the next three years.
  • In March, Snapdeal had acquired a 20 per cent stake in Gojavas that helps it with last-mile delivery. Following the acquisition, Snapdeal had committed to invest between $150 and $200m over the next one year in logistics and supply chain.

Read more at LBR

Uber Is One Step Closer To Realising Its Driverless Car Ambitions

Did Uber just declare war over your future driverless car service?

Uber's driverless car ambitions

We love innovation here at Procurious, and Uber, one of the biggest disruptors of recent times, are never far from our radar…

What’s it gone and done now?

Microsoft has sold its map-generating technology to the transportation kings in a move that will bolster its own mapping efforts, and ignite a spark in the war for driverless car services.

As part of a much-bigger move that saw the Seattle technology giant sell its display ad business to AOL, Microsoft is offloading some of Bing’s mapping assets (along with 100 engineers) to Uber.

It is thought the technology will greatly aid the ride-hailing firm’s autonomous car project.

Uber has been observed testing an early version of its self-driving car. The rival self-driving taxi will inevitably take on the likes of Google and Apple, and is being developed with Carnegie Mellon University.

Pictures show a system comprising of cameras and sensors, capable of mapping nearby objects, installed on the roof of the car.

Speaking on behalf of Microsoft a representative stated: ‘We will transfer many of our imagery acquisition operations to Uber.’

An Uber spokesman further elaborated: “Mapping is at the heart of what makes Uber great. So we’ll continue to work with partners, as well as invest in our own technology, to build the best possible experience for riders and drivers.”

Currently Uber relies on Google Maps for all of its mapping needs, so this acquisition will bring the firm closer to building its own mapping technology and data collection tools. In some territories Uber has its eyes set on other endeavours too, the logistically-themed UberFresh (a food delivery service) and UberPool (its answer to carpooling).

Uber is developing its driverless cars at the ‘Uber Advanced Technologies Center’ in Pittsburgh, Pennsylvania.

Earlier this year at Procurious’ Big Ideas Summit, Uber was referenced on more than one occasion as an example of best practice. The Hackett Group’s Chris Sawchuk reckoned that procurement could learn a lot – citing the agility and flexibility in Uber’s business model. Read what Chris had to say.

Similarly, it is banded into something we call ‘the sharing economy’. Along with services such as Airbnb, Uber is changing the very way we procure – moving us away from outright ‘purchasing’ and instead encouraging more of a ‘borrowing’ economy. We’ll obviously continue to monitor Uber, it’s driverless car ambitions and more. It’ll be interesting to see where it goes from here!

Is Your Organisation’s Sustainability Program As Good As This?

The Fruits Of Nespresso’s Sustainability Program Revealed.

Nespresso's Sustainability Program

On the one-year anniversary of The Positive Cup, Nespresso’s 2020 sustainability strategy, Jean-Marc Duvoisin, CEO of Nestlé Nespresso, has announced that significant progress had been made towards improving the lives of thousands of coffee farmers.

The Nespresso AAA Sustainable Quality Program was developed with the NGO the Rainforest Alliance to secure the supply of highest quality coffees, protect the environment and improve farmer welfare. Over 63000 farmers are now taking part in the program in 11 countries, benefiting from technical assistance, trainings, price premiums and investments in infrastructures.

Over the past two years Nespresso has been working with its partner TechnoServe to help rebuild the coffee sector in South Sudan, resulting in the country’s first-ever coffee exports in 2013, and its first non-oil export to Europe. Nespresso aims to produce a new rare coffee from South Sudan, while providing alternative sources of sustainable income to local farmers.

The fruits of the Nespresso AAA Program are already being felt, as Joseph Malish Thomas, a South Sudanese farmer, attests: “I have seen that there is great change within the community. We want to produce the right quality. People now have hope. We will be able to pay school fees for children and in the end develop the country.”

Nespresso aims to source 100 per cent of its coffee from its AAA Sustainable Quality Program by 2020. This depends heavily on the extension of the program into Kenya and Ethiopia, to support a more skilled, self-sufficient and sustainable farming community. In the last 12 months Nespresso and TechnoServe have provided training and technical assistance to over 10000 farmers, and will reach 50000 farmers by 2020.

Nespresso has also progressed with its agroforestry plan. The reintroduction of trees in coffee producing regions helps protect natural ecosystems, thereby strengthening coffee farms’ resilience to climate change and ensuring sustainable coffee production for the future. Around 130000 trees were planted in 2014 in Guatemala and Colombia as part of pilot programs. In the first half of 2015, approximately 200000 trees have been planted in Ethiopia and Guatemala, and another 300000 will be planted by the end of 2015 in Mexico and Colombia.

“The Rainforest Alliance has been working with Nespresso and the AAA Program since it was first created in 2003.  Together we have seen great achievements that have delivered tangible improvement to lives of coffee farmers, families and communities, as well as environmental and biodiversity benefits,” said Tensie Whelan, President of the Rainforest Alliance. “The progress being delivered by Nespresso, the Rainforest Alliance and Pur Projet through the agroforestry plan is building on that success, helping farmers to improve their resilience to the real and present threat that is climate change.  Working together we are showing that care for the environment and for coffee farmers is a fundamental part of supplying the highest quality coffee to Nespresso’s consumers around the world.”

What I Learnt At The Social Enterprise World Forum

Social Enterprise World Forum (SEWF)

Last week I attended Social Enterprise World Forum (SEWF) 2015 in Milan, Italy. It has been described by some as the “Davos meeting” of the Social Economy.

Procurious asked whether I’d like to report on my experience for the community – how could I not accept? It brings me great pleasure to present you with some interesting  takeaways through my seasoned CPO’s eyes:

First of all, a bit of background…

Social Economy in the European Union counts as 10 per cent of the European economy (GDP) and represents more than 11 million workers (4.5 per cent of the active EU population).

Social Entrepreneurship is 7.5 per cent of the active population in Finland, 5.7 per cent in UK, 5.4 per cent in Slovenia, 4.1 per cent in Belgium, 3.3 per cent in Italy, 3.1 per cent in France, etc.

Basically, the main objective of Social Businesses is to generate a significant impact on society, the environment and the local community.

Indeed Social Enterprises contribute to smart growth by responding with Social Innovation to needs that have not yet been met.

They also create sustainable growth by taking into account their environmental impact and by a long-term vision. For example Social Enterprises often develop efficient ways to reduce emissions and waste or use of natural resources.

They are the heart of inclusive growth due to their emphasis on people and social cohesion.

During the three day event the sessions with key expert speakers (movement leaders, policy makers, investors, entrepreneurs) covered several topics linked to social entrepreneurship such as Innovation, Social Impact, Impact Investment, Inclusion, Welfare, Social Justice, Environmental Sustainability and the Sharing Economy.

Besides GDP, the “Social Progress Index” is often talked about. This is a real way to measure the social impact and the “Value” generated across a country.

I realised, better now it had been confirmed to me, this is really a new growing “world” that has the potential to have an impact on Procurement and Supply Chain too.

Social Businesses can offer a wide range of products and services, not only to serve consumers  and public sector, but also to profit companies. 

In fact if we look at the potential products and services provided by the Social Enterprises (as well as their level of quality and competitiveness), profit companies should seriously consider to explore and buy from them.

Social Value was one of the big themes discussed (somewhat passionately) at the 2015 Procurious Big Ideas Summit. Watch a video of the panel session in question here

Additionally, the social impact of that kind of sourcing may positively affect the companies’ CSR programme.

Regulations may also help to expand the sourcing from Social Enterprises and the diversity suppliers base, for instance look to the “Suppliers Diversity Programme” in the US.

Furthermore I was involved as moderator and interviewer at the SEWF speaker’s corner and had the chance to meet several international charismatic Social Entrepreneurs who shared their experience. Out of this came an extraordinary selection of ideas to supply profit companies.

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Are Business Costs Too High or Too Low?

Watch the Procurious Big Ideas Panel Discussion on Business Costs.

In the third of the panel discussions from the Big Ideas Summit, Dr Jules Goddard chairs a ‘fishbowl’ discussion where participants are asked to argue both sides of the question, ‘Are business costs too high or too low?’.

Watch a sample below

The panel started with Chris Lynch, Theano Liakopoulou, Chris Sawchuk and David Noble, gradually interchanging the other thought leaders as the discussion progressed. In an often heated environment, a number of hot topics were raised and some great insights released.

Procurious members can view the full panel discussion here. Not a member yet? Register for free.

Why Supply Chain Risk Should Be On Your Corporate Agenda

Contribute to a wider understanding of organisational barriers to supply chain risk management.

The effect of natural disasters on your supply chain

Over the past decades the world has experienced several major natural and manmade disasters. Events such as the 2010 Eyjafjallajökull eruptions in Iceland and the 2011 Tōhoku earthquake and resulting tsunami in Japan have a profound impact on companies operating in the same country or even on the other side of the world.

The increased complexity and global nature of modern supply chains has the direct effect of reducing visibility of suppliers across the supply chain. Few organisations are aware of the full risks that second and third tier suppliers pose (Jüttner, 2005; Manuj and Mentzer, 2008), whilst a survey by the Business Continuity Institute found that more than 40 per cent of reported supply chain disruptions originate with second- and third-tier suppliers (Business Continuity Institute, 2013).

Supply chains are subject to a wide range of risks on both domestic and international level. Increased complexity of supply chains makes it more difficult to assess the likelihood and impact of disruptions, thereby potentially increasing the risk exposure. In addition to risks resulting from increased supply chain complexity, firms are exposed to operational disruptions due to quality problems, supply variability and capacity constraints. The past decade has also shown an increase in disruptions following natural disasters and terrorist attacks (Sheffi and Rice, 2005).

The direct effect of supply chain risks

Operating in such a connected world with high volatility hampers organisations in fulfilling their primary goal: shareholder value creation. In carrying out its business operations to maximise shareholder wealth a firm is exposed to risks that, once materialised, can have negative operational consequences and cause disruptions. Kleindorfer et al. (2003) exhibited how supply chain disruptions have a significant detrimental impact on both short and long-term operations and

financial performance. Shareholder value decreases by almost 11 per cent by these disruptions (Hendricks and Singhal, 2003) and organisations that experience disruptions, on average, experience a 40 per cent stock price decline (Hendricks and Singhal, 2005).

The effect of natural disasters on your supply chain

Implementing the right strategies

Implementation of a business continuity plan, dual sourcing strategy, and close cooperation between supply chain partners are mentioned as the most used actions in order to reduce exposure of the supply chain to potential disruptions or to mitigate the impact (MIT Forum for Supply Chain Innovation, 2013). There is however an inherent struggle with mitigating supply chain risks in today’s globally linked organisational models. The networks of interrelationships that build up a typical supply chain in its entirety hold exposure to risk. Whilst one link in the chain may bear the direct impact of a disruption, the actions of other members in the chain will have consequences for the entire network.

Research suggests that companies with mature and flexible supply chain and risk management capabilities are more resilient (lower impact and faster recovery) to supply chain disruptions. These companies have a clear focus on proactive (ex-ante) SCRM as opposed to only taking a reactive (ex-post) approach. This in turn leads to better operational and financial performance compared to firms with immature SCRM capabilities (MIT Forum for Supply Chain Innovation, 2013).

Overcoming organisational barriers by strengthening the business case

Even though advances are made, supply chain risk management activities still take up organisational resources in terms of managerial time, increased buffer inventory, etc. The major losses incurred by organisations in the aftermaths of events such as the Iceland volcano eruption and the tsunami that hit Japan, have shown that proactive SCRM is still in its infancy with most organisations. Several leaders have however emerged and shown the distinct value of proactive SCRM, thereby increasing the business case for organisations.

Saenz and Revilla (2013) demonstrate the importance of proactive and reactive strategies in dealing with unexpected disruptions through the example of how Cisco Systems, a communication

technology firm, successfully mitigated the impacts of the 2011 tsunami in Japan almost without a loss in profits, whilst the total economic losses are estimated on at least $217 billion. Having developed their risk mitigation strategies after the difficulty in dealing with the Hurricane Katrina’s aftermath, Cisco was able to evaluate the disruption impact for more than 300 suppliers – from tier 1 to raw material providers, listed more than 7,000 affected parts by number, assigned a risk rating to each part and charted a mitigation response within 12 hours.

Case studies like this help strengthen the business case for implementing (proactive) SCRM strategies. The apparent lack of proactive SCRM strategies adopted by organisations is an area that requires further research in order to convince business leaders of the importance of SCRM (Simangunsong et al., 2012).

Have your say

To assist practitioners in this analysis, the below survey has been created. Based on the findings of the survey responses and follow up interviews we will be able to identify what kind of risk mitigation strategies are used in specific industries and gain deeper insights into strategy selection antecedents and organisational barriers. By completing the survey below you will directly contribute to this valuable analysis and as a thank you, you will receive a free copy of the academic research once it is completed. Completing the survey will take approximately 10 minutes and it will be open until the 26th of July.

Contribute to a wider understanding of organisational barriers to supply chain risk management.

For any questions or further information, don’t hesitate to contact me directly.

ISM Reports US Manufacturing Has Risen To Five-Month High

The Institute of Supply Management sheds some light on the current state of manufacturing in the United States.

ISM Reports US Manufacturing Has Risen To Five-Month High

The Manufacturing ISM Report On Business is based on data compiled from purchasing and supply executives nationwide

In general respondents were upbeat about the economy. Some of the key insights from its June report include:

  • “Avian flu is having a huge effect on egg pricing and items manufactured with eggs.” (Food, Beverage & Tobacco Products)
  • “Automotive industry remains strong and is expected to stay that way through 2015.” (Fabricated Metal Products)
  • “Business continues to hold in the U.S., [but is] soft in Europe and in decline in Asia.” (Transportation Equipment)
  • “Manufacturing business has improved slightly.” (Chemical Products)
  • “Slight improvement in defense spending on future business.” (Computer & Electronic Products)
  • “Most prices are stable and business is stable.” (Nonmetallic Mineral Products)
  • “Downturn in oil and gas markets impacting demand.” (Miscellaneous Manufacturing)
  • “Stable. Extra capacity available if more orders come in.” (Textile Mills)
  • “A bit slow. Sales down from last year.” (Machinery)
  • “Business continues to be strong, with housing starts being up in our markets driving cabinet sales.” (Furniture and Related Products)

Barclays economists distributed the following note to clients following the release: “Looking ahead, the recent pickup in the forward-looking survey components suggests a modest improvement in output and employment for domestic manufacturing… We do not expect a robust rebound given the lingering effects of a stronger dollar and lower oil prices; however, we view a modest H2 manufacturing rebound as increasingly likely.”

How To Get Ahead: 5 Key Skills For Generation Y

Five skills to give you a head-start  in your procurement career

5 skills to give millennials the edge in the procurement profession

If you are one of the Generation Y (born between the mid-1980s and 2000) and have ambitions to get ahead in procurement, you can expect great opportunities ahead due to the retirement of the Baby Boomers.

There’s a lot of criticism – much of it unfounded – about young professionals having a sense of entitlement, being inwardly focused and having a preference for job-hopping. Procurement people, however, mostly don’t behave like that.

Generation Y, also called “Millennials”, have the advantage of immersion in new technologies from an early age, and exposure to rapid change has made them fast learners. The challenge is to put these skills to work.

Success in procurement is not only about systems and processes; it’s about how we handle people. The so-called “soft skills” are more critical than ever.

Here are five of our suggested success criteria. They are skills you can acquire through training and experience. Some may require you to re-train or adjust your approach and attitude to your job.

  1. Data Analysis

Being able to slice-and-dice spend data will not be enough. Your manager will expect you to have well-developed financial analysis skills. You could be asked to do a should-cost-analysis, explain the implications of fixed and variable costing, and analyse financial ratios, so just be ready. There is also much talk of “Big Data”. The sheer volume and complexity of available data will require new skills. It has the potential to assist procurement professionals to make better, more informed decisions if properly understood and managed well. Advanced MS Excel skills may be required, so get up to speed by taking a course and practicing the techniques.

  1. Researching the market

A natural curiosity helps here. Supply market analysis and gathering intelligence may be hard for some, but it can be learnt. Start with an overview of the global market and industry indicators, and then consider how this applies to your category plan or sourcing event. Get to know the market leaders in depth. This includes evaluating the financial health of the main players, studying their results and their profitability. Keep updating your knowledge of the global and local market as it pertains to your job role.

  1. Negotiation skills

This is definitely a learned skill; everyone uses some type of negotiation in their everyday life. In procurement, negotiation is a process in which you and your supplier attempt to reach an agreement on a matter of mutual interest, despite conflicting objectives.

Traditionally the goal is to:

  • source the right product or service
  • at the right price,
  • at the right time,
  • in the right location, and
  • in the right quantity

Negotiation is all about compromising, on both sides, to meet somewhere that is acceptable to both parties. There are many learning resources available to ambitious young people on how to develop negotiation skills, but don’t discount practical experience. Ask to sit in or take notes in meetings to have the chance to observe seasoned professionals in a real life negotiation situation.

  1. Understand Total Cost of Ownership (TCO)

TCO is a concept widely applied in procurement and strategic sourcing. It is often illustrated with an Iceberg metaphor, like in the image below. Make sure you understand the model and can communicate its importance to your internal customers and users. In its simplest form, it is “an estimate of all direct and indirect costs associated with an asset or acquisition over its entire life cycle”.

 

  1. Using social media

Be aware of your organisation’s policy on social media platforms, such as Twitter and LinkedIn. The Internet is a powerful tool when used in the right way, but fraught with pitfalls. A word of caution: manage your personal on-line behaviour as if your boss is always watching, no matter your privacy settings.

Many companies support the use of social media in procurement within certain limitations. Work out how to apply the technologies for best practice in your job, while staying within the parameters outlined in any company policies. You could look for vendors, gauge how active and knowledgeable they are, see what issues they discuss and what value-added information they offer. Through social media, you can get insights into a supplier’s capabilities and his approach to innovation.

Your confidence, ability to process and apply new ideas, and your understanding of new technologies can help revitalise an otherwise pedestrian procurement function.

Procurious Big Idea #29 – Buying The Right Expertise

Murray Chenery, Executive General Manager of Brand for CPA Australia, highlights the importance of having procurement onside as a partner.

Murray, having purchased over $1.8 billion of marketing communication, talks about the importance of procurement as a partner to marketing, but also ensuring that the best marketing expertise is bought, not necessarily the cheapest.

See more Big Ideas from our 40 influencers