Making It Stick #3: David MacDonald on Benefits Realisation

The Faculty Roundtable Members speak about benefits realisation and how to Make it Stick.

Hear David MacDonald talk about Benefits Realisation in the third of four videos from The Faculty.

The Faculty Roundtable is pleased to release its new research report, “Making it Stick”, on benefits realisation for your Procurement team.

Five reasons why procurement savings don’t stick

Earlier this year, The Faculty Roundtable commissioned an investigation into best-practice benefits realisation, and its researchers have conducted a series of interviews and data analysis to unearth the factors that prevent Procurement’s savings from hitting the bottom line. The results were boiled down to five key hurdles to Making savings Stick.

Download your free copy of this exclusive research on Procurious today.

Procurement Hero Reaches For The Skies In Aid Of Cystic Fibrosis

Every two years Matthias Fuchs has been undertaking a flying marathon challenge. The challenge is supported by Qantas and raises funds for terminally-ill children at the Children’s Hospital Westmead.

This time around Matthias will take on a record 12 days flying in economy class without ever leaving a plane or airport terminal. Qantas has already supplied Matthias with the proposed flight schedule, and we can tell you that it clocks in at around 200 flying hours, over a distance of 167,000km…

During his time spent in the air, Matthias will cross the Pacific Ocean six times, and the Indian Ocean four.

The challenge has been an enormous success in previous years, in 2013 he alone raised a whopping $140k for the Cystic Fibrosis Unit at the Children’s Hospital Westmead. This year Matthias says that the proceeds will be used to maintain the mass spectrometer machine that was bought previously, as well as fund a clinical research fellowship.

Sponsor the challenge here

Matthias says: “This is a cause very close to my heart as my 12 year old daughter Kristen has cystic fibrosis.”

Matthias loves to fly, so much so he’s kept a record of every flight he’s ever taken. That’s 1232 flights…

Will you support the good man in his noble cause, as he attempts the marathon challenge for one last time? To-date $161k has been raised, but he hopes to reach $175k-200k before it’s time to take-off.

What’s more, donate $5k and you’ll get your company logo embroidered on the shirt he’ll be wearing during the challenge.

Come on, dig deep!

How Can Procurement Increase Health And Happiness?

By delivering social good, procurement has the ability to increase health and happiness.


Procurious has been attending the CIPS Annual Conference in London.

Professor Olinga Ta’eed, Director – The Centre for Citizenship, Enterprise and Governance, who spoke at our own Big Ideas Summit back in April 2015, said that although financial value is still wonderful and still king, we’re more interested in social value. It is essential that procurement (as a function) converts sentiment into financial value.

The Social Value Act was passed in 2012 and allows local and national government to consider the social good offered by bidders during procurement exercises in addition to monetary value.

The Act has been designed to make it easier for charities to win public sector contracts, applies only to procurement exercises worth more than £113,000 if awarded by central government and the NHS and £173,000 if awarded by local councils.

But what do we mean by social value?

“Social value” is a way of thinking about how scarce resources are allocated and used. It involves looking beyond the price of each individual contract and looking at what the collective benefit to a community is when a public body chooses to award a contract. For instance, social value asks the question: ‘If £1 is spent on the delivery of services, can that same £1 be used, to also produce a wider benefit to the community?’

It is now becoming increasingly necessary for social enterprises to report on their social value. Social value should equal happiness – but in order to promote the good you’re going to need happy people, a happy company, and ultimately a happy world. We have to look at ourselves, and how much value we bring to the table as both individuals and as businesses.


Is there a true and fair view of social value?

Olinga points out that there are lots of handcrafted metrics out there, but you need to have a model T Ford. You need a benchmark – the benchmark is critical. It has to matter. You can be doing great things, but you need to be able to articulate it.

Hugh Chamberlain – EMEA CSR Procurement Head, Johnson & Johnson, followed Olinga and explained how his organisation was helping people to live happier lives through the products they bring to market.

Johnson & Johnson has the lofty ambition of ensuring people live longer, healthier, happier lives, it is estimated that around a billion people use its products every day.

Johnson & Johnson’s Credo (a common set of values unifying diverse business) states: “We are responsible to the communities in which we live and work and to the world community as well”.

Hugh wanted to highlight the measurable social impact through procurement Johnson & Johnson was making. For instance it buys the goods and services it needs from organisations that would otherwise struggle to get a foot in the door – and also targets those organisations that employ people who are furthest from the job market.

What you need to know about social enterprises

Social enterprises are businesses that trade for a social and environmental purpose. At the time of writing there are 70,000 social enterprises in the UK, collectively contributing £24 billion to the economy. health and social care, but also in housing.

Social enterprises are growing faster than most SMEs, with more women leading and taking charge.

In-fact research from 2014, showed that that 38 per cent of social enterprises are led by women compared to 19 per cent of SMEs and 3 per cent of FTSE100 companies – and that 91 per cent of all social enterprise boards have at least one female director, compared to 51 per cent elsewhere.

Do you know how much social value can be achieved through buying your organisation’s services? How much emphasis (if any) do you put on delivering social value?

86% of UK Sales & Marketing Teams Say Procurement Hinders Progress

Sales and marketing fails to see importance of negotiating deals with suppliers.

According to new research from eProcurement software company – Wax Digital, sales and marketing is the department least likely to get the best deal from its suppliers, with a massive 86 per cent saying procurement hinders their progress.

The CPO Viewpoint research, surveyed by Redshift, on behalf of Wax Digital, found that over one in three sales & marketing functions place orders and spend budgets with suppliers without any procurement involvement. And only 24 per cent in sales and marketing said that they use formal supplier tender processes managed by procurement, far fewer than other departments such as IT and finance.

The problem seems to be sales and marketing’s negative perception of procurement with only 12 per cent of sales and marketing respondents describing the relationship as ‘very close’ and only a quarter of procurement respondents saying the same.

Sales and marketing appears to view procurement the least favourably, with only 28 per cent regarding it as value adding or critical, compared to 44 per cent of finance having the same view. A significant 86 per cent of sales and marketing describe procurement as hindering progress, and 1 in 5 view it as a ‘necessary evil.’

Dissimilar procurement priorities suggest why the two departments fail to work collaboratively. Procurement sees ‘handling supplier negotiations’ as the top way it can help other departments, but this scored the lowest with sales and marketing – only 4 per cent of them prioritising it.

The two departments also disagree over sales and marketing’s spending priorities. While sales and marketing are focussing on creative communication activities such as advertising, website and branding, procurement prioritises marketing fundamentals such as analytics, data and CRM.

Daniel Ball, director at Wax Digital, said: “Businesses need to bridge this gap between procurement and sales and marketing but it’s often a difficult challenge as the two departments function uniquely. This often places an importance on different areas such as creativity and personal relationships versus best price and supplier risk and compliance, which clearly leads to them clashing and being poles apart.

“Through better communication, sales and marketing could perhaps learn from procurement the importance of negotiating worthwhile deals with suppliers, and how damaging maverick spend with suppliers who are not adequately vetted can be. This could also help procurement better understand what sales and marketing value, hopefully leading to a more balanced set of priorities between the two departments.”

5 Key Findings From The ‘Making It Stick’ Research Literature Review

Have you read The Faculty’s Making it Stick report yet? As part of the investigation into the challenges and opportunities presented by benefits realisation, our researchers undertook a literature review to understand the present state of play for CPOs worldwide.

There’s some excellent material out there on benefits realisation, predominantly in the IT space where organisations want to ensure they extract the full value from significant investment in technology and systems. The amount of literature confirmed that this topic is front-of-mind for CEOs, CFOs and CPOs in procurement functions all over the world.

Boiling down the literature review to a handful of key findings produced the following five recurring themes:

  1. Globally, benefits realisation levels are poor and remain an enduring challenge for organisations.

Four years ago, Aberdeen produced a stand-out piece of research that contained an assessment of benefits realisation levels across 130 organisations.[1] The Aberdeen Worldwide CPO survey found that the industry average (middle 50 per cent of aggregate performance scorers) achieved an average of only 8 per cent realised contract savings. The best-in-class (top 20 per cent) organisations had an average of 17 per cent, while “laggards” (the bottom 30 per cent) realised only 4 per cent of contract savings.

Eight per cent is a truly alarming figure and by all rights should have sent the procurement profession into a panic. To illustrate, imagine you have a staff member who works hard, seems extremely productive, yet at the end of the year, someone from Finance taps you on the shoulder and informs you that only 8 per cent of the staff member’s claimed achievements have actually made their way to the bottom line. You’d be furious, and that person’s job would be on the line. The same applies to procurement teams as a whole – this statistic brings the effectiveness and credibility of the function into question.

Findings from an earlier survey published by Gerald Bradley (UK, 2006) estimated that 10 per cent to 25 per cent of potential benefits are achieved from investment in change, costing the UK over £50bn per annum.[2] The Faculty’s own 2015 survey found an average of 50 per cent in unrealised savings across our research participants [3] – an improvement on Aberdeen’s 2011 figures, but still representing a lot of money being left on the table.

  1. Benefits realisation is inextricable from change management

The Making it Stick report makes the point that there’s no quick fix to improve benefits realisation. It requires an organisation-wide change management program to encourage shared ownership of procurement’s targets, drive cross-functional collaboration, improve end-user compliance and build a cost-conscious culture. C-level support is integral to this process to mandate change from the top.

A report from the Great Britain Office of Government Commerce entitled Managing successful programmes (2003) defined the necessity for change very succinctly: “The fundamental reason for beginning a programme is to realise benefits through change”, [4] while Gerald Bradley also framed his definition of benefits around change: “A benefit is an outcome of change which is perceived as positive by a stakeholder.”[5]

Stay tuned for part two of this article, and be sure to download Making it Stick if you haven’t already.

[1] Limberakis, Constantine G. Procurement Contract Lifecycle Management: Assessing the value of contract automation, Aberdeen Group, December 2011.

[2] Bradley, Gerald. “Why more CEOs are turning to Benefit Realisation Management”, CEO Magazine, August 2006.

[3] The higher figure is likely to be due to the relatively small number of research participants drawn from The Faculty Roundtable, with higher-than-average functional maturity across the group.

[4] Great Britain Office of Government Commerce, Managing successful programmes, Norwich, The Stationary Office, 2003.

[5] Bradley, Gerald. Benefits Realisation Management: A practical guide to achieving benefits through change, Hampshire, Gower Publishing, 2006, p.102.

4 Key Strategies for Tackling Today’s Most Prevalent Supply Chain Risks

What is the biggest single risk facing your supply chain? Chances are, it’s impossible to name just one. Global supply chains are inherently complex, making the task of identifying, let alone addressing, marketplace and operational risks akin to aiming at a moving target. If you’re like many of today’s supply chain and procurement professionals, you’re under constant pressure to reduce costs while increasing operational efficiencies—and hard-pressed to effectively balance business needs with risk management efforts.

Survey Reveals Common Challenges

Findings from a supply chain survey conducted by global professional services firm, The Smart Cube, shed light on today’s most formidable supply chain risks. Of the senior-level supply chain and procurement executives surveyed, over two-thirds (69 per cent) consider the financial health of suppliers to be one of their largest risks in the next quarter. Respondents also cited geo-political instability (46 per cent); ethical risks, including environmental, social, and reputational risks (31 per cent); and political risks (38 per cent) as key factors with the potential to adversely affect the integrity of their supply chains.

What’s more, the majority of the executives surveyed also predict that the regulatory environment will have a high impact on their supply chains. And they expect outsourcing to substantially increase, due in part to a lack of internal expertise and resources. These factors, taken together, show that global supply chain management is a collection of many moving parts—and the risk management component is becoming even more critical to survival in the global economy. One cost-cutting decision made to affect just one point in the supply chain can lead to vulnerabilities in your entire system, resulting in unexpected costs or delays that derail the company’s ability to reach business goals. Likewise, the introduction of a new industry regulation could increase your supply chain’s overall volatility if you’re unprepared to manage the aftermath of change and its impact on your processes and supplier relationships.

Forward-Thinking Solutions

Innovative leaders are seeing that the challenges can be transformed into opportunities through the strategic integration of risk management into supply chain management. This makes it more important than ever for you to understand your organisation’s supply chain risk profile and take steps to strengthen and safeguard what makes it resilient and fortify areas in need of attention. Additionally, you need to know how risks (and various points of failure) could impact your organisation on the whole. Based on their recent research and consulting expertise, the Smart Cube recommends the following four key strategies to combat, if not mitigate, risks along your supply chain:

  1. Avoidance

When the risk of operating in a particular market, or with a particular vendor or customer, is extremely high, it might be necessary to take drastic action in order to prevent or sidestep calamities. This might include discontinuing business in certain geographical markets, ceasing relationships with established suppliers or customers, and even dropping operating segments of the organisation.

  1. Control

Here, an organisation tries to take charge of the situation through specific manageable actions, typically to abate short- to medium-term risks such as supply disruptions due to human error. Examples include adjusting inventory and production capacity to better manage product movement and implementing easier-to-audit contractual structures with suppliers.

  1. Cooperation

In this strategy, an organisation tries to mitigate short- to medium-term risks by cooperating with external stakeholders, especially its suppliers. Strategic initiatives may include the preparation of joint business continuity plans and collaborated efforts to improve supply chain visibility. Your goal is to protect your interests and those of your business partners, in the spirit of solidarity.

  1. Flexibility

Building flexibility into your business practices and processes can improve the overall, long-term efficiency of your supply chain. Multi sourcing, for example, may help companies tackle multiple challenges—such as those pertaining to geo-political instability, supplier-related risks and financial risks—in one go. By engaging multiple suppliers to deliver quality, price, and reliability requirements, companies can mitigate risks such as supplier bankruptcy or performance deterioration for strategic categories that are critical to operations.

Committing to Proactive Risk Mitigation

Aside from developing a plan to identify, assess, and monitor the various risks impacting your organisation’s supply chain, putting a plan in place to proactively address them can ensure the health of your bottom-line and provide competitive advantage. Knowing that there are different strategies you can employ to help you manage your supply chain risk factors puts you ahead of the game—and in front of potential failures, rather than behind them. Practicing avoidance, control, cooperation, and flexibility in your risk management plan may not remove the element of uncertainty or eliminate the consequences of unfortunate events, but it can give you peace of mind that you have strategies on deck to protect your supply chain and the business it supports.

Omer Abdullah is The Smart Cube’s Co-founder and Managing Director.

A New DNA for Public Sector Commercial Activity

DNA is the material that identifies a living thing and determines how it looks or functions. But can it ever be altered?

Thanks to the East of England Local Government Association for permission to republish this article. Procurement lead for the East of England Local Government Association Eddie Gibson talks through plans for “a complete reversal of the commercial DNA in the public sector” and looks at ways in which this can be achieved.

When Cambridge biologists Watson and Crick unravelled the double helix structure of DNA in 1953 their research was labelled groundbreaking.

But even though the discovery would go on to shape genetics, forensics and the medical, legal and scientific professions, nobody could have imagined back then how great an impact this tiny molecule would have on our everyday language.

These days successful sports teams have “winning DNA”. Musicians perform because it’s “in their DNA”. Even actors want to get “inside the DNA” of the characters they portray.

In March 2014, when Sally Collier, Chief Executive of Crown Commercial Service (CCS), announced that the new EU Public Contracts Regulations would require “a complete reversal of the commercial DNA in the public sector”, it seemed that Watson and Crick’s great discovery had even wormed its way into the sometimes impenetrable language of public contracting and procurement.

But what did she mean? And could the DNA of anything really be given a makeover?

Shaking up the system

Collier stressed the need to “fundamentally change the shape of the commercial landscape in central government.”

And those who attended the first round of CCS training on the new regulations during Summer 2014 were given a good indication about how this could be achieved.
The session opened with a slide representing the “new DNA”.

It showed a public sector placing far greater effort and resources into pre-tender activities (identifying needs, market research, supplier engagement) and into post-tender activities (contract management, continuous improvement, negotiation), instead of focusing large amounts of attention on the actual process of “The Tender” itself.

What happens next?

The UK Public Sector has been living in the brave, new world of Public Contracts Regulations 2015 (PCR2015) since 1st April 2015.

And critics would say that the profession’s somewhat predictable reaction to PCR2015 has been to obsess about the disruptions to process.

This included the additional requirement to advertise contract opportunities on “Contracts Finder”, the abolition of the Pre-Qualification Questionnaire (PQQ) for procurements below the EU tender threshold and the need to adopt the government standard PQQ for those tenders above threshold not using the Open procedure.

Martin Reeves, the Chief Executive of Coventry City Council and National Procurement Champion for Local Government, told the Society of Procurement Officers National Conference in February 2015 that, although the procurement profession had an excellent reputation for compliance, procurers needed to be innovative, risk-taking, adventurous and even disruptive.

And, with local government procurement spend estimated to be about £57 billion, he argued that the profession should prepare to behave differently in future – a message which backs the DNA changes Collier is striving for.

It also underpins a lot of the thinking stated in the Local Government National Procurement Strategy, published by the LGA in July 2014, the four key strands of which were: Making Savings, Supporting Local Economies, Demonstrating Leadership and Modernising Procurement.

Changing the game

So how do local government procurers need to change and what skills do they need to make best use of?

Well firstly, I think the profession needs to be bolder.

If we can see opportunities or scope for improvement, whether in the specification or contract management stages, then we need to be braver in pursuit of these.
Procurement professionals are often the most commercially qualified officers in a local authority and they need to demonstrate repeatedly where they can add value through the best use of this commercial capability.

Secondly, there needs to be a recognition and maximisation of the use of relevant expertise where it exists.

Too often in the past, the profession has had a reputation for fragmentation and internal disagreement.

With limited and shrinking resources available, there needs to be a collective recognition that focused expertise acting on behalf of the many will give a better result than being isolated and acting independently.

Following on from that, the profession needs to be much more open with each other to promote beneficial sharing and collaboration.

There is still a limited amount of commercial intelligence shared between organisations and we are generally not good at celebrating and sharing our procurement and contracting success stories.

Putting it into practice

The National Advisory Group for Local Government Procurement, convened and run by the LGA, is working hard to tackle some of these issues.

It has been developing national category strategies in key areas of spend, having a “national conversation” at the highest level with some of the key suppliers to local government and through collation and sharing of best practice on the LG procurement web-site –

At a regional level, the East of England LGA supports a network of procurement professionals and brings them together on an annual basis for a Master Class event to showcase some of the best and latest thinking across the procurement community.

This year, we are working with a number of key partners, including Crown Commercial Services, the International Association for Commercial and Contract Management and

All these organisations have something to offer procurement professionals looking to develop their skills.

And what’s more, with their help, we really could see a new DNA for the sector emerge.

Eddie Gibson is a Senior Manager at the East of England LGA and the regional representative on the National Advisory Group for Local Government Procurement.  Get in touch with him at [email protected].

The regional Master Class will take place on 16 October in association with Procurious.

Will ‘Unicorns’ Deliver a Horn of Plenty in the Future?

Traditionally a Unicorn is a mythical creature, much wished for but seldom seen outside the bounds of the Harry Potter universe and the pictures doodled on children’s notebooks and stencilled on their bedroom walls. However, a new type of Unicorn has been coming to the fore in recent years and is multiplying fast.

For those who aren’t aware of this phenomenon, a ‘Unicorn’ was a term coined by Aileen Lee, founder of Cowboy Ventures, back in November 2013 and used to describe a start-up company whose value has exceeded $1 billion.

When you think of unicorns in this regard, think Facebook (actually classed as a ‘super-unicorn’ thanks to a valuation over $100 billion), Slack, LinkedIn and Uber. It is estimated that there are around 80 ‘unicorns’ prancing around currently, predominantly in San Francisco, but the odds of building or investing in a billion dollar organisation are around about the same as being struck by lightning…

So what’s the secret?

It depends who you listen to, but the common consensus is that there is no secret or magic bullet to creating a ‘unicorn’. As with any start-up, innovation plays a huge role in success, but for a unicorn it’s also about catching the right wave, at the right time, and taking advantage of prevailing trends and public opinion.

These trends, and their unicorns, go all the way back to the 1960s and look something like this:

  • The development of the semiconductor (Intel)
  • The advent of the personal computer (Apple; Oracle; Microsoft)
  • Development of new networks (Cisco)
  • The Internet (Amazon; Google)
  • The rise of Social Networks (Facebook; LinkedIn)

The list looks like a who’s who of powerhouse technology companies, all instantly recognisable, all companies we have come across or used ourselves during our lives. But where will the next trend come from?

The New Unicorns

Investors and experts have begun to look to the short-term future to see where the next unicorn might come from. According to a couple of sources, the Collaborative and On-Demand Economies may give birth to the next unicorns. You probably haven’t heard of them yet, but here are just some to keep an eye on:

  • Envato – an online marketplace for creative, enabling access to freelance talent, videos and tutorials
  • Canva – an online graphic design tool, aimed at making design accessible and easy for everyone
  • Campaign Monitor – providing easy creation, sending and reporting on e-mail marketing (clients already include Coca-Cola and Airbnb)
  • ROKT – online marketing platform aimed at delivering higher engagement for service advertising

Could the ‘Bubble’ Burst?

However, all this needs to be delivered with a word of caution. Most people in business are old enough to remember the bubble of the late 1990s. What started out as a rush of new, innovative online organisations, ended with a set of spectacular failures and the loss of hundreds of millions of dollars.

This is the concern for some analysts with this new wave of technology start-ups and unicorns. Greycroft Partners founder, Alan Patricof, warns against the belief of being able to raise endless capital, with businesses vulnerable to changes in the market and the outlook.

Some organisations have lost their unicorn status, and even Facebook’s value dipped dramatically before reaching its current peak of around $225 billion.

Your Unicorn

So if you have an innovative idea, now might be the right time to get started and you could end up with a unicorn of your own. But be wary, you might want to get started soon, before someone takes your idea or the bubble bursts entirely…

We’d love to turn Procurious into a unicorn, but there’s plenty work to be done first. If you’ve got any ideas or comments about the site, we’d love to hear from you!

And just because we’re so good to you, here are some top headlines from procurement and supply chain this week…

No Evidence of Wrongdoing in London Garden Bridge Procurement

  • An audit has concluded that there was no evidence of wrongdoing in Transport for London’s (TfL) procurement for the London Garden Bridge project
  • The audit aimed to provide assurance of an open, fair and transparent process in the procurement of design and development services
  • While the audit found that in some instances where TfL policy and procedure were not fully complied with, it concluded that it had not identified any evidence that the final recommendations did not provide value for money from winning bidders
  • However, concerns have still been raised by the London Assembly Liberal Democrat Group as key documentation supporting the evaluation of the bidders had been disposed of during a TfL office move and could not be evaluated

Read more at Supply Management

Schultz stresses need for Supply Chain at top table

  • Howard Schultz, CEO of Starbucks, stressed the importance of the supply chain during a keynote address at this week’s Council of Supply Chain Management Professionals (CSCMP) Annual Conference in San Diego.
  • Schultz explained that a classic mistake made by most companies is that two areas often left behind by companies are HR and supply chain
  • Schultz argued that the supply chain needs to be at the forefront of every enterprise in the world, especially the ones that are consumer-facing

Read more of the keynote points at Logistics Management

‘Freelancing in America: 2015’ Report Released

  • Upwork and Freelancers Union released their jointly-commissioned study “Freelancing in America: 2015” last week
  • The report included a sizing and segmentation of the freelancer population, and assessed a range topics, including freelancer motivation, earnings, attitudes and outlook for the future
  • The study estimates, as of mid-2015, that overall there were 53 million freelancers in the US, representing about 34% of the total US workforce
  • Upwork CEO Stephane Kasriel stated that “strong growth in the economy and the rapid increase in full-time job opportunities, has led some number of freelancers to return to full-time employment”, showing a potential changing environment

Read the results at Spend Matters

US Car Sales on the Rise in September

  • The Big Three car manufacturers in the US projected the overall sales pace for September will top 18 million vehicles
  • General Motors Co., Fiat Chrysler Automobiles NV and Ford Motor Co. each posted double-digit percentage increases compared to a year ago
  • If volumes continue at the same rate as predicted, it would be the highest yearly volume since 2000, bringing much needed good fortune to the industry

Read more at the Wall Street Journal

Making It Stick #2: Michael Rose on Benefits Realisation

The Faculty Roundtable Members speak about benefits realisation and how to Make it Stick.

Hear Michael Rose talk about Benefits Realisation in the second of four videos from The Faculty.

The Faculty Roundtable is pleased to release its new research report, “Making it Stick”, on benefits realisation for your Procurement team.

Five reasons why procurement savings don’t stick

Earlier this year, The Faculty Roundtable commissioned an investigation into best-practice benefits realisation, and its researchers have conducted a series of interviews and data analysis to unearth the factors that prevent Procurement’s savings from hitting the bottom line. The results were boiled down to five key hurdles to Making savings Stick.

Download your free copy of this exclusive research on Procurious today.