Future Proofing Procurement – Social Sourcing and Supplier Networks

Traditional procurement processes and methods are being overtaken and replaced. While they still have a role to play, how can you make sure your procurement organisation is ready to meet the future head-on? tech-913034_1280

A few weeks ago, I was involved in a Twitter chat on behalf of Procurious on the subject of social media, supplier networks and social sourcing. It got me thinking about how procurement can prepare for an expanding strategic role in the coming years.

Social media is well established for connections and networking for individuals, and forward-thinking procurement teams are ensuring that their brands are positioned to take advantage. But where should they be going next?

Supplier Networks

Supplier Networks are built on the premise of using social media to create a pool of organisations, which have the same or very similar requirements, and combine resources in order to achieve favourable rates on large-scale purchases.

The favourable conditions are not just for the buying organisations. Suppliers who are part of the network are able to access more organisations, combine orders (allowing for more efficient manufacturing or production processes) and reduce their own costs too. Think of this as a ‘win-win’ situation.

It was on this thinking that Innovo was created. Innovo is a free online business-to-business (B2B) marketplace for all goods and services. The platform aims to connect buyers and suppliers on the basis of requirements.

Buyers outline what they need and suppliers are notified when buyers are looking for their products. The site then facilitates volume sharing between buyers, rebating savings for bulk purchasing across the group, and enables suppliers also to share volumes and reduce their own prices.

While not directly linked to the ‘traditional’ social media platforms, sites like Innovo are facilitating online relationships and allowing procurement to both add value for organisations through improved supplier relationships, but also deliver savings for the bottom line.

Social Sourcing

Social sourcing is defined as buyers or purchasing organisations using social media platforms, such as Twitter and LinkedIn, to access a wider supplier market, where new solutions, supplier innovation and alternative products can be found.

What may be holding procurement back in this regard is the need to be open in a public environment with requirements or products issues. While this is not something that has been widely done in the past, there are a few organisations that are using social media to good effect in this regard.

This openness tends to be around lower value, non-critical products currently, but the possibilities of using this more widely will grow as more organisations become comfortable with it.

Currently there are a few examples of good practice in the market, but we’ve highlighted two of the best here.

  • LV= (Liverpool Victoria): The UK-based financial services organisation realised that they could use social media to share issues and ideas and attract responses from a wider community of small to medium sized suppliers.

This approach, seen as less formal and more flexible, has enabled LV= to have more collaborative discussions with a much wider community and benefit from innovative thinking.

  • GE and Quirky: General Electric and Quirky, a crowd-sourced innovation platform, to create a new platform to enable innovation. The platform enables crowd submission of new products and small-team designs, giving suppliers access to GE and GE a ‘renewable’ source of crowd innovation.

These smaller organisations also have the advantage of being able to access retail relationships that would have been difficult previously, as now they have the support of GE.

(Note – Quirky filed for Chapter 11 bankruptcy this year. However, their innovation journey continues on Wink.)

Securing Procurement’s Future?

Procurious are big advocates of using social media as part of the procurement process. Through conversations we have been having with procurement professionals around the world, as well as technological and industry experts, we believe that these are the conditions the majority of procurement will be carried out in the future.

Adopting a new approach to procurement is a big transformation for organisations, however, in order to ensure that procurement remains relevant, adds value for organisations and retains a strategic presence, the profession needs to keep up with the times.

The benefits of social media are there to see – you don’t need to jump in with both feet straight away, but can ease into it slowly in order to make a smoother transition. Our challenge to you would be – what could you be doing differently in your procurement process? Why not be the one to take the first step and ultimately get ahead of your competitors and up your social media game.

If these organisations are leading by example, what is yours doing? Is your organisation future-proofed? We’d love to hear more from you if you have a great example to share!

New FSB Service Could Help SMEs Cut Energy Bills

Small businesses can reduce average energy bills by almost a quarter with the new FSB Energy service.

Gas Bill

  • FSB launches new service where members could reduce the cost of gas and electricity bills by 23 per cent, shaving nearly £1,000 per year off the average company bill
  • 70 per cent of businesses experience difficulty comparing energy tariffs and 43 per cent have never switched supplier
  • Main obstacles to businesses becoming energy efficient are working from leased or rented premises, lack of concern around energy costs and lack of capital for energy efficiency investment

Experts in business, the Federation of Small Businesses (FSB), is launching a new service to help its members reduce their gas and electricity bills. Members using the service could cut approximately a quarter (23 per cent) off their annual energy bill.

FSB’s new Energy Service (www.fsbenergy.org.uk) is part of a concerted drive by FSB to help smaller businesses reduce their energy costs. The organisation is also representing the interests of smaller businesses by responding to the Competition & Markets Authority’s (CMA) investigation into the energy market and creating a resource hub on its new website offering advice on energy efficiency measures.

Making Energy Easier 

The new service enables FSB members to obtain advice on competitive rates for their utilities, identify the annual saving achievable by switching tariffs and even have new contracts arranged for them if requested. It is born out of research suggesting that smaller businesses are being failed by the energy market, with 70 per cent of these businesses experiencing difficulty comparing energy tariffs and 43 per cent saying they have never switched supplier.

The new service will be run on behalf of FSB by business cost saving champion ‘Make it Cheaper‘.  It could generate annual average savings of 23 per cent for new customers switching their gas and electricity provider, equivalent to £973 off the £4,243 average annual energy bill of an FSB member. 

FSB Energy will also take care of the paperwork involved in switching – such as terminating existing contracts on behalf of members – saving them time and hassle in the process. And the service reminds members when their fixed price periods end to make sure they never ‘default’ on to more expensive rates.

SMEs Suffer Higher Costs

The CMA, which is preparing to conclude its investigation into the energy market, says SMEs in the UK pay around £500 million more a year than if competition was functioning effectively. It has voiced concern that 45 per cent of SMEs have been placed on a default tariff – one that has not been actively negotiated – which can be more than twice as expensive as a negotiated tariff. 

Dave Stallon, Operations Director at FSB, said: “Energy is an increasingly important issue for smaller businesses. There are many ways they can make substantial savings through the implementation of energy efficiency measures as well as ensuring they get the best tariff they can on their gas and electricity. Many smaller businesses, however, either don’t believe they can make substantial savings or haven’t trusted the market and the system enough to engage in the process.

“Our new service is designed to give smaller business owners easy to use advice they can trust, to enable them to make savings with the minimum of fuss. We are also very actively engaged with the CMA to improve the energy market for smaller businesses and are offering resources and advice on energy efficiency. In combination, we are confident that our initiatives can help to make a significant difference to smaller businesses’ energy bills.”

Energy Efficiency

In parallel with the establishment of FSB’s new Energy service, the organisation is promoting the benefits of smaller businesses introducing energy efficiency measures. The Department of Energy and Climate Change (DECC) estimates that the average SME could reduce its energy bill by 18-25 per cent by installing energy efficiency measures with an average payback of less than 1.5 years. 

However, while FSB research demonstrates that 90 per cent of businesses want to be energy efficient and 58 per cent of businesses surveyed have already made changes to improve their energy efficiency, there are major obstacles that need to be overcome. 

Almost half (45 per cent) of businesses identified operating from leased or rented premises as one of the biggest obstacles preventing companies becoming energy efficient.  Other barriers identified include a lack of concern around energy costs (45 per cent) and a lack of capital for energy efficiency investment (29 per cent).

The most widely reported energy efficiency measures already taken were: the installation of more efficient lights, lamps and bulbs (40 per cent); the introduction of switch off/turn down policies (23 per cent); and improved insulation (23 per cent). 

For the high level details on the research, check out the infographic below:

20151201 Energy Efficiency infographic FINAL

Established over 40 years ago to help its members succeed in business, FSB is a non-profit making organisation that’s run by members, for members.

FSB offers membership packages from £130. Members get an exclusive package of great value business services including advice, financial products and support. These cover a wide range of benefits such as tax, legal and HR, local network groups, business banking and mentoring.

What if Savings Didn’t Matter in Procurement

There are countless articles and blogs on the value procurement brings to an organisation.

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This article was originally published on LinkedIn.

Most say that savings are just one component of this value proposition and that we need to look outside of savings into other areas of value like stimulating innovation, supporting the organisation’s corporate social responsibility goals and reducing risk throughout the supply chain. Everyone agrees with these articles and, as we map out KPIs for our procurement department or individual team members, we ensure savings is just one, albeit important, metric that their value will be evaluated on.

What happens though when you remove the value of savings altogether from a procurement department and it’s individual team members? Even from the offerings of procurement consultancies which often focus on savings as a way of convincing CPOs to purchase their services?

Other Value Opportunities

This is a question I first grappled with in Singapore where I came across organisations so cash-rich that they did not seem to value savings, were not actively looking for savings within procurement or from external suppliers, and they actively pursed other types of value like corporate social responsibility as mentioned earlier.

Interestingly, the procurement team members in these organisations also seemed to be grappling with this issue as when savings are off the table the value procurement, and individual procurement professionals, brings becomes harder to demonstrate.

I came across a great quote recently in an old article on the SpendMatters website which is from a technical stakeholders view and sums up their view on savings well: “Procurement is like a UFO — here one day, gone the next. Zapping savings here and then going off to the next project.”

It is interesting that this technical stakeholder wanted his procurement representatives to focus on areas of value outside of savings as well. It seems then that in some of these organisations in Singapore that do not value savings, other areas of procurement value get their time in the spotlight.

Here are some brief observations on three of the many areas of value these organisations focused on rather than savings. I think these are valuable as they are complementary components of value and can be applied in organisations with and without a focus on savings:

1. Compliance

For a number of the organisations I met with in Singapore a key area of focus for the procurement team was on how they supported compliance within the wider organisation. A large part of their value proposition therefore was based around maintaining the quality of the goods and services being purchased, managing supply chain risk especially around continuity of supply and ensuring that supply chain practices around labour and bribery complied with applicable legal requirements like the UK Bribery Act.

Compliance is an area that all procurement teams focus on, however outside of Singapore I have not come across many compliance related KPI’s from a procurement team or individual view other than basic ones like non-acceptance rate for raw materials or supplier certification rates. By raising awareness of the way procurement supports compliance and measuring teams against it, procurement can grow its brand away from the traditional savings agent.

2. Innovation

Singapore has a focus on pioneering advances in innovation and driving competitive advantage for growth according to Teo Lay Lim, MD, Accenture Singapore and ASEAN. I found this to be true with most of organisations in Singapore I have met with recently bringing innovation into our conversation and wanting to discuss methods for using procurement to stimulate and support innovation.

Outside of Singapore, innovation is increasingly being recognised as the key to sustainable growth by companies around the world and as Capgemini research points out, innovation has evolved from a purely internal capability to a collaborative process with the external network of supply partners. Therefore the ability of procurement to work with suppliers to identify and execute innovation within existing contracts and to stimulate innovation outside of existing arrangements is a key part of the procurement value proposition.

Some simple observations from Singapore include having incentive schemes in place relating to innovation in supplier contracts, having innovation as an agenda item on regular meetings with key suppliers as well as internal stakeholders and having KPI’s in place which reward procurement team members for focusing on innovation rather than relying purely on traditional savings or throughput metrics.

3. Corporate Social Responsibility

Research conducted by the Harvard Business School found that organisations who focus on corporate social responsibility (CSR) significantly outperform their competition in terms of stock market and financial performance. One Singapore-based organisation, Fuji Xerox, describes their view of CSR very clearly, “…forging a link between long-term competitiveness and the sustainable development of society and the company…” which seems to be a view echoed by many of the organisations I have met with in Singapore.

Each of these organisations had different ways of using their procurement team to support their organisation’s focus on CSR. Some common examples included the standard inclusion of evaluation criteria on environmental, social and ethical standards, educating suppliers on CSR principles and supporting suppliers to implement improvements in their manufacturing processes to reduce environmental impacts.

An IBM IBV CPO study found that 97 per cent of successful and influential procurement teams are significantly involved in their organisation’s CSR initiatives compared to 61 per cent of average procurement teams.

Regardless of the current maturity of a procurement team though, or if it is the organisation driving these initiatives or procurement lobbying for them, clear KPIs (results driven rather than process orientated ideally) will allow procurement to demonstrate the value it is providing to the organisation.

In summary, regardless of whether your organisation is cash-rich and based in Singapore, a not-for-profit based in South Africa or is financially and geographically somewhere in between, your procurement team needs to deliver value beyond savings.

Whether the area of value is compliance, innovation, CSR or any other area, having good stakeholder communication and clear KPIs will help ensure the value your procurement team brings is clear and you avoid the sobriquet UFO unlike the unfortunate procurement team in the SpendMatters article. 

Supplier Relationship Management – Cavalry or Surgery

In my first article I consider whether buyers resort to blunt negotiation too much, arguing that a significant amount of value is ignored by not appropriately committing resources to the early and later stages in the procurement cycle.

Surgery or Cavalry

In this, my second article in a series of five, I address the issue of SRM and some of its potential pitfalls.

Much of the recent procurement press, conferences and social media has been consumed with organisations promoting their methods of working with suppliers in a collaborative manner to create value and return greater profits for all parties. Supplier Relationship Management (SRM) is the most commonly used phrase.

I agree with the outlook that often suppliers are the experts in their field; more expert in that field than the buyer’s organisation. This should not be a surprise as, for the most part, the buyer’s organisation only expends a very small fraction of its resources in any area of supply, but for the supplier that same area may represent a very significant part of its entire business.

Who Are the Experts?

It follows, logically, that suppliers may know more about the upstream supply chains and its extant inefficiencies than the buyer. It also follows that any supplier whose business substantially relies upon a small number of goods or services will have greater capability, capacity and appetite to analyse and strategise over how to extract maximum value from the supply chain when compared to the buyers organisation.

Of course, there are exceptions to this rule – particularly, in the case of new product/service launches or when the buyers organisation has a lot to win or lose. Generally though, I contend that such projects which are truly strategic to both the buyer and the supplier seldom occur and are even less frequently in the scope of the SRM blunderbuss.

Indeed, when such circumstances arise (true interdependance, or buyer dominance between buyer and supplier) then I will agree that full scale SRM can be appropriate. For a majority of buyers, I assert that they might never work on a project which is of enough significance to either their own organisation or that of the supplier to warrant full scale SRM and its associated direct and opportunity costs.

I also contend that if a SRM programme is pursued, unless buyers are aware of the dangers, the supply chain as a whole may become more efficient but that the buyers organisation sees little tangible benefit itself.

Who benefits most?

A core facet of SRM is the sharing of information in a collaborative manner. As we also understand from our first, rudimentary attempts at negotiating, information is a primary determinant of price and value. The party with better information is likely to conclude the negotiation nearer to their most desirable outcome.

As such the “players” in the supply chain (organisations in any supply chain are both buyers and suppliers) will seek to extract maximum value from the supply chain for themselves – as their shareholders oblige them to do. So, any high performing buyer needs to be aware of the impact of sharing any information and making sure that increasing their supplier(s) knowledge will not be detrimental to their cause – or if it is, to ensure that greater value is reciprocated.

Once information ceases to be confidential capitalist rules and human behaviours means that parties will, first and foremost, seek to extract maximum value for themselves, sharing the newly created value only when they are influenced to do so by the other players in the supply chain.

So far, so good, but repeated experience of working with major multi-national organisations has seen them under-state the investment necessary to ensure that at least their fair share of the value created by the SRM collaboration is retained by their own organisation, both in terms of direct costs and technical benefits.

Some organisations have recognised that and have invested heavily in a cavalry of SRM personnel (who often mis-practice SRM by performing Supplier Performance Management (SPM), which I will discuss in another article) and who impose a newly created SRM process on to unwilling suppliers who feel obliged to comply with the requests of the buyer as “building a relationship must be good for the two organisations as a whole, right?” Wrong.

Surgery, not Cavalry

In the circumstances I have set out above, building tight, well managed SRM relationships with key suppliers can be critical to the delivery of a project, even to the survival of a company however, no supply chain can survive the substantial costs which an ill-thought out SRM programme imposes; and well executed SRM relationships cost money, a lot of money. The substantial additional costs – and they need to be sustained over the medium/long term – can outweigh the benefits.

Furthermore, if those personnel are not skilled in controlling the information and understanding the dynamics of the relationships throughout the supply chain, and over a period of time, then organisations may only see a hefty number in the costs column while their benefits column remains meagre. The benefits are retained by others.

The opportunity costs of employing procurement’s scarce resources in SRM rather than other tasks can be significant. SRM may not deliver results quickly (although, it most certainly can) and small incremental improvements may be more likely produced as the parties feel their way around each other in the early stages.

Unless the supply chain dynamics are appropriate for implementation of SRM, organisations should prefer suppliers who simply perform to the required specifications – no more, no less. Commit resources to work on developing specifications to better reflect the needs of the business, but do not impose a wide-scale SRM programme that can be predicted to fail.

Instead of a SRM cavalry wielding blunt tactics and weapons, I favour a surgeon and scalpel approach. Firstly, identification of a small number of appropriate projects/supply chains on which to run (not impose) an SRM programme (4-8 is normally all except the very largest organisations can handle and/or afford).

Secondly, the selection or development of a small number of highly skilled individuals to perform the SRM and co-ordinate the efforts of the internal stakeholders. So the final element must be to have a medium/long term commitment, sponsored at a senior level outside of the procurement functions, and to have equally skilled surgeons willingly participating within each player in the supply chain.

Effective, sustainable SRM cannot be imposed.

Jim WillshawJim Willshaw (MBA, MCIPS, MIIAPS) is an experienced procurement professional acting as a consultant, speaker, coach and trainer to leading organisations all over the globe.

Paris Climate Conference Emits Cautious Optimism

As the twenty-first session of the Conference of the Parties (COP) rolls into its second week, there is a sense of cautious optimism that the meeting in Paris may produce a global agreement on climate change.

UN-Climate-Change-summit-graphic

The meeting kicked off last week with 190 countries in attendance, with the aim of coming to a universal agreement on climate change and how to handle it. This might seem like a big, if not impossible, ask, but it’s important to remember that this is a world problem and ten years of collaboration has produced some positive results.

Positive Steps

In the past, outputs from the Climate Conference have suffered due to the high number of diverse interests from different countries. When the meeting was held in Copenhagen in 2009, strong differences between the US and China on commitments to minimise rising global temperatures caused a breakdown in negotiations.

However, many observers have said that the countries are in a much better position this year than in many previous years, but also that there is greater collaboration between cities, collectively known as the C40, who are sharing information and achieving outcomes on issues such as food waste collection and urban climate change.

Michael Bloomberg, former Mayor of New York City and UN Special Envoy for Cities and Climate Change, stated, “We’re in better shape going into Paris than we were going into Copenhagen, largely because of the progress cities have made, and C40 cities have helped lead the way. It’s a great example of the power of cooperation.”

And this spirit of collaboration has been seen in the talks between the key countries, with representatives already issuing a first draft of the agreement, leaving a full week for negotiations to take place and the agreement to be finalised.

The ministerial negotiations are where the real challenge lies, as each country approaches them with different goals in mind. Negotiations will focus on helping poorer countries reduce their emissions, how richer countries can contribute financially to make this work, and how global temperature rises can be capped or reduced.

Action Stations

What has been agreed upon is that it is time to act. The meeting has representatives from Kiribati and the Marshall Islands, both countries where rising sea levels have submerged large areas of land. With a focus on the future, it’s now down to see what the actions need to look like.

Alexander Howard, Senior Editor for Technology and Society at The Huffington Post,  notes that much of the focus thus far has been on ‘response’ (e.g. developing crisis management systems), rather working towards low-carbon cities. He acknowledges that this is a difficult goal which could potentially mean, amongst other things, spending a fortune to incentivise the public to alter their lifestyles.

This week will be vital in ensuring the future of countries’ actions against climate change, as any agreement will still have to be implemented. And this is where procurement should come into play.

Howard goes on to explain how “…tech giants like Apple have worked to shift to renewable energy sources. Cities can do the same. Mayors and city councils can use procurement reform to ensure that vendors compete to host the next generation of digital city services in greener data centres powered by clean energy sources instead of coal-fired plants.”

There is potentially a major role for procurement organisations to play in any implementation. It’s now time for procurement to be looking fully ahead to the future and ensuring that sustainability is embedded in processes, helping to support ongoing initiatives.

What are your thoughts on the issue of Climate Change and how it relates to procurement? Get involved on Procurious today!

We’ve also compiled a short selection of the top headlines in procurement and supply chain this week to share with your friends over morning coffee…

Trinidad and Tobago Under Pressure to Reform Procurement Laws

  • Purchasing legislation introduced by Trinidad and Tobago’s government less than a year ago has already faced criticism due to its perceived loopholes and limitations
  • The law, which aimed to create a “comprehensive database of information on public procurement” and “set training standards and competence levels for procurement professionals” was implemented by former Prime minister Kamla Persad-Bissessar, but has since been challenged by the People’s National Movement
  • The amended bill will be put to a committee, with revisions seeking to establish a Public Procurement Review Board, with the role of reviewing decisions made by the Office of Procurement Regulation
  • It is hoped that changes will help to strengthen the existing laws

Read more at Supply Management

LAX Announces $5 billion Procurement Programme

  • The procurement programme seeks to modernise the Los Angeles airport, the fifth busiest in the world
  • The Landside Access Modernisation Programme will include an automated people mover covering 2.25 miles, which will connect the central terminal area with a car rental area and a station connecting the airport to the LA Metro
  • The eight-year programme aims to relieve traffic congestion within the terminal area and on surrounding streets
  • It is hoped that using a strategy of “Design, Build, Finance, Operate, Maintain” (DBFOM) will help with efficiencies in running the project

Read more at Airports International

Department for Transport (DfT) Receives CIPS Certification

  • The DfT recently transformed their procurement function which has seen procurement’s profile raised across the DfT
  • A “Procurement Centre of Excellence”, which operates across the entire department, was also created and procurement governance processes were strengthened, with new guidance issued across the organisation.
  • Melinda Johnson, director of group commercial services at the department said the ‘achievement of this certification has enabled us to assure our ‘best practice’ guidance, make changes as necessary and given us pointers for further improvement.’

Read more at Supply Management

Samsung/Apple Patent Dispute Continues

  • Samsung has agreed to pay Apple $548 million in court ordered damages in their long-running patent dispute
  • It is the first meaningful transfer of money as part of the dispute, which began when Apple sued Samsung for perceived copyright infringements relating to the iPhone
  • Following a jury ruling in Apple’s favour, the US-based organisation were awarded over $1 billion in damages
  • There is a further case pending next year, worth $400 million, relating to the same charges

Read more at The Wall Street Journal

Can we Expect Company Loyalty to Motivate People These Days?

There are many different ideas on how to motivate staff, but the one thing that everyone can agree on is that if you are able to motivate them, then the results can be amazing.

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If you look at any high performing company, in any sector, then you will find they have a very motivated workforce. Is this a chicken and egg problem? Which came first – the motivated staff to drive results or the results successes giving motivation back to the people?

Having worked with many companies in many sectors I know this ‘good motivational spiral’ to be true, and indeed the ‘downwards motivational spiral’ can be true too. The other thing I have noticed is that ‘loyalty’ – the desire for people to put in extra effort through a sense of pride and belonging – can be a factor, but only if the unit is small enough.

Creating Shareholder Value

Over the last 10 years there has been the on-going trend towards ‘global’ companies and ‘matrix’ organisations. This has had an interesting effect on loyalty – it has broadly destroyed it.

The bigger the company, the more they re-organise and constantly restructure, the less people appear to identify with it. The concept of creating shareholder value as a key goal is still talked about in big companies, but almost nobody (apart from very few at the top who hold massive share options) actually cares. Why should they put in extra work just so that some anonymous pension fund can make more money in 10 years time?

What is interesting is how loyalty can still be a real motivator if you can make your ‘unit’ feel that it has an identity of its own, and that the people in it can see how their extra effort can have a direct result on helping others who they work with or interact with directly.

The motivational psychologist Victor Vroom ( what a great name for someone studying motivation – VROOM!) had four ‘gateways’ of motivation that you had to pass before anyone would be motivated. In simple terms its ‘Could. Would. Would. Desire’. Could I do it? Would it make a difference that I can see? Would anyone notice? Do I desire the outcome? The middle two gateways are focussed on this area of belonging – if I can see my actions make a difference and people notice then that can be a great motivator. If I have to go through some massive IT change that is only of benefit to people in head office who I never meet then I am not going to be motivated to do anything more than the minimum required.

Losing a Sense of Belonging?

This then prompts the question of how big a unit needs to be before you lose this sense of belonging? My experience is that firstly they can be very small – a group of 6 people in a depot or office unit can build a great sense of loyalty. At the other end of the scale I think 100 people starts to get to the limit.

I worked with an incredibly successful Belgium food company. Even though their world wide network of sellers came from 40 different countries, the total group was only about 90 people and the sense of loyalty, even in this highly dispersed and nationally diverse situation, was amazing. Likewise you can go to massive head offices of 1000 people all in one building and nobody feels any connection at all.

There is a dark side to this – get too strong a sense of loyalty to a small unit and you run the risk of many small silo mentalities causing the matrix to malfunction. This is always a risk in modern business –but my challenge would be that we are better off creating really strong identities in smaller groups.

Do not try and get a corporate sense of belonging, you will waste your time. Nobody really cares about your corporate behavioural values – too many people can see how they are not being lived out in big corporations so they just destroy the sense of belonging, not enhance it. Instead think small – how can we bring back that sense of common purpose.

Perhaps we should take a lesson from history – go back to roman times and start organising our companies in units of 100 and no more. Wouldn’t you just love to have on your business card the job title ‘Centurion’ – that really would be motivating!

Procurious Big Ideas Keynote #2 – Big Ideas in Big Companies

The second keynote from the Big Ideas Summit was delivered by Chris Lynch, CFO at Rio Tinto, who picked out the key theme of risks and blind spots in procurement.

Chris spoke about fostering a culture of “intrapreneurship” within large organisations and understanding that the bigger your idea is, the more resistance it will face.

However he went on to state that by persisting with your idea, taking ideas from other sources, including suppliers, and showing the outcomes, you are more likely to succeed.

Watch the full keynote here.

See all the keynotes and panel discussions from the Big Ideas Summit, plus Big Ideas from our 40+ Influencers.

Like this? Join Procurious for FREE and meet like-minded procurement professionals from across the world.

Automating Procurement Management Is A Way to Drive Efficiency

Procurement management is a critical process and technology has been playing a major role in driving its efficiency.

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The procure-to-pay cycle, which involves everything from requests-to-suppliers to final payments, requires solid control and faster turnaround. It helps improve organisational efficiency by a big margin. According to FSN, an independent research and publishing organisation, “Automating the procure-to-pay process will be the easiest way to drive significant benefits for any organisation, whether it is a large public sector company or a small trading firm.”

The traditional or manual procure-to-pay process is exceptionally labor and document intensive. It involves processing mountains of paperwork, cutting through bureaucracy for purchase-order placements, gaining budget approvals and managing payments. That’s time-consuming and error-prone and brings low supplier satisfaction. But with automated procure-to-pay systems, work becomes much simpler.

The Benefits of Automation

Procurement efficiency can trigger a chain reaction that leads to better efficiency and a healthy return on investment. Experts point out that organisations using automation have an average of two-day purchase-order cycles, compared to the 7-day cycle for firms that use the manual process.

Automation of the procure-to-pay cycle streamlines the process and delivers key benefits like:

  • Faster communication with suppliers

Automation provides real-time interaction with the suppliers, which reduces time-consuming paperwork. Suppliers can instantly access the documents, contracts and the information that helps them understand the process completely. Employees get to access best practices online, deliver faster decisions and select the best course of action. Faster decision-making helps to improve efficiency of the procure-to-pay cycle.

  • Quicker cycle times with purchase orders and approvals

In most organisations, workers spend most of their time drawing up contracts and reworking them to incorporate changes. But with automation of contracts, management becomes easier. Online templates, where minor changes can be easily incorporated, help to save time.

You need not reinvent the wheel all the time by creating contracts from scratch for every supplier. Existing contracts can be stored and reused as and when required. Receipts, invoices, account information and other documents can be easily replicated with appropriate templates readily available within the system.

  • Instant data capture

The procure-to-pay cycle is extremely paper intensive. Online invoices, receipts and bills, which can be easily mailed to suppliers, reduce the effort and time spent on manualkeying. With the proliferation of mobile devices, apps can be used by employees to validate documents and upload relevant information from any part of the company. Therefore, an employee from the warehouse can easily send real-time information, which can be monitored by the accounts department instantly.

  • Better audit trail

The use of standard templates, online interactions and real-time document uploads create an audit trail that can be instantly identified. All communication with suppliers and other pipeline partners is captured. It can be referred to in case of disputes. Multiple stakeholders and departments can simultaneously view the interactions, and thus facilitate greater visibility and transparency.

  • On the go authorisation

Once the invoice has been generated, it requires approvals from different departments. Automation can trigger electronic authorisation and the data can be immediately entered for final processing. Multiple approvals can be configured within the system. Mobile access authorisation helps fast-tracking the approvals for users on the go. The system also sends email alerts for pending work, thus reducing the cycle time.

  • Faster payment cycles

Automated procure-to-pay has reduced supplier lead times, creating better trust for company actions. Executives can streamline company strategies to ensure that employees and stakeholders are trained to access and utilise the system for better outcomes.

Organisations that have automated procure-to-pay systems have clear advantages over those who continue with manual processing. Automation helps in driving up efficiency and utilising your workforce for developing effective strategies.

Ashly J is veteran industry expert working as a Marketing Operations Manager in India. She focuses on growing Expenzing procure-to-pay systems as an open source product, and communicates the value of identity to customers, partners, and the larger community, by targeting specific markets through segmentation and analysis.

David Bowie and Procurement – Dealing with Ch-ch-ch-ch-changes

Bowie_Changes

Ch-ch-ch-ch-changes, (Turn and face the strange),

Ch-ch-changes, Don’t tell them to grow up and out of it,

Ch-ch-ch-ch-changes, (Turn and face the strange)

Ch-ch-changes, Where’s your shame,

You’ve left us up to our necks in it, Time may change me,

But you can’t trace time.

I recently sat through a presentation on dealing with change and being resilient. Sadly most of what I took away was negative, telling people to “get over it”. It reminded me of the Bowie song, and I decided to write some thoughts about change management down.

A former manager of mine once said, “Gordon, in procurement we are basically change agents.” Every organisation needs to bring about changes in its management and policies, but besides the improvement of systems, there must be a change in the people as well. If not then the thousands of dollars invested will go to waste. Therefore every organisation needs to support the employees in the process of making transitions or changes. These individual transformations can be traumatic and may involve a lot of power loss and prestige issues.

In reviewing the range of literature there are some guiding principles for change management that have jumped out:

  • People – the main point to address are the people who impact or who are impacted by the change being proposed. Therefore there is a need to address the “human side” systematically
  • Change starts at the top – if you haven’t got buy in from decision makers, its unlikely that the change will happen. If the exec champions the change, then the change will be made.
  • Burning platforms – if there is a reason for the change to happen that everyone can relate to, the change becomes smoother. A friend once said to me that he had found lots of issues with a process that could have caused a large problem, however he couldn’t make those changes because they had “got away with it”!
  • Empower the “bottom” – although it starts at the top, it’s imperative that those directly affected have the chance to shape the nature and implementation of the change. This may then head off any disruption part way through.
  • Be realistic with the change – if you try and change too much too soon, you may end up actually losing ground like Evil Knievel and his Snake river canyon jump
  • Communication – I am planning the next article to discuss more on this important aspect, but suffice to say, the type of communication and the language you use is important.
  • Scenario plan options – I have written previously about the need to scenario plan.

Change Models

Here are the most used change models with a summary of them:

Kubler-Ross

The-Change-Curve

The Kubler-Ross Change Curve (which is also known as the 5 stages of grief) is a model consisting of the various levels or stages of emotions which are experienced by a person who is soon going to experience change. The 5 stages included in this model are denial, anger, bargaining, depression and acceptance. This model was introduced by and is named after Elisabeth Kubler-Ross in a book called ‘Death and Dying’ which came out in the year 1969.

The ADKAR Model

This Model was created for individual change management by Prosci. This model demonstrates the 5 ingredients needed for change to be possible and successfully implemented. These 5 ingredients are given as follows:

  • Awareness – Awareness is a very important building block that helps one understand why change is important and needed.
  • Desire – The desire to be a part of change and support it is another vital ingredient.
  • Knowledge – The desire is incomplete without knowing how change can be brought about.
  • Ability – Even on having the desire to change and the knowledge to bring about this change, things can go in vain if the individual does not have the ability to grow with it.
  • Reinforcement – This building block is important to sustain the change.

John Kotter: 8-step Strategy for Change Management

John Kotter suggested a strategy for change management consisting of an 8-step process to deal with change:

  • Create: Establish a feeling of urgency or hurriedness towards change.
  • Build: Formulate a guiding coalition.
  • Form: Develop a strategy to bring about change. This requires having a plan and a vision.
  • Enlist: Communicate or put forth the vision or strategy for change.
  • Enable: Empower the employees for taking action to incorporate the changes.
  • Generate: Formulating and generating short-term goals and achieving them
  • Sustain: Capitalisation of wins or gains in order to produce bigger results.
  • Institute: Incorporating new and better changes in the workplace culture.

Kurt Lewin – Force Field Analysis

This is a tool used to understand what’s needed for change in both corporate and personal environments. Typically used in the change part of his Freeze, Change, Refreeze model.

Lewin wrote that “An issue is held in balance by the interaction of two opposing sets of forces – those seeking to promote change (driving forces) and those attempting to maintain the status quo (restraining forces)”.

Essentially you brainstorm what would drive change or what would stop it, and the scale of each of the forces. You then identify what you can do to affect those forces; i.e increase driving, decrease restraining, eliminate restraining, add new driving, or turn a restraining into a driving force.

Summary

The common point about change is dealing with people as individuals and recognising that everyone reacts to change differently, its critically important therefore not to tell people to shake it off, or tell them they are overreacting, people deal with change differently and if we don’t acknowledge the issue, people won’t really change and will find more passive ways to resist, when the ideal is to accept and even drive the change though.

Remember people are the most important asset for change, so as David Bowie said…”Ch-ch-changes, Don’t tell them to grow up and out of it”.

Getting it Right on Social Media – 10 Do’s and Don’ts

Even for a seasoned pro, or ‘Master’ as we like to say at Procurious, social media can be a minefield to negotiate.

SocialMedia_Large

One wrong word, one misplaced link, or even something as small as a spelling mistake, can have you people clicking “Unfollow” in droves.

Like with reputation or trust, a social media following takes a long time to build, but can be undermined and disappear in the blink of an eye. But what can you do to ensure that you are getting social media ‘right’, and providing value for your followers.

We’ve pulled together a list of Do’s and Don’ts for you to remember the next time you are linking, tweeting or social networking.

Do

  1. Add Some Personality

Some platforms more naturally lend themselves to being a bit more creative with your profile, while others are very much more suited to a more professional outlook.

It’s important to make this distinction when creating your profile. You can still add some of ‘you’ to a professional profile, but try to get the balance right. Inject some personality into your profile and people will naturally engage more with it.

  1. Use Accounts Wisely

Use your profiles in a sensible fashion, but also in a way that suits you best. Want to use Twitter to gather information, rather than post yourself? Great – look for people to follow and stay up to date.

If you do post, do this in a logical way. Don’t post a dozen times one day and then nothing for the next week. It’s a sure fire way to stop people following you. Whatever you do, don’t create a profile and leave it to stagnate – it’s probably worse than not having a profile at all.

  1. Post Sensibly

Facebook is great for keeping up to date with your friends; Instagram is awesome for photos you want to share; Twitter is amazing for condensing your message; LinkedIn can help you get ahead professionally.

Your friends probably don’t need to see your CV, in the same way peers, and potential future employers, don’t need to see photos and videos of your children/pets/wacky family. Keep the message in line with the feel of the platform.

  1. Shorten Your URLs

There are few things more off-putting on Twitter than a post that is more URL than content. Long URLs are hard to read and interrupt the flow of your message.

There are great tools out there like bit.ly and tinyurl that can help with this – plus they’ll also help to steal a few characters back for you.

  1. Change Your Public (Vanity) URL

Surprisingly few people take advantage of this on Facebook and LinkedIn. When you first create a business account, your public URL will be a stream of unintelligible letters and numbers. However you can change this to your name, or the name of your business.

This will make it easier for people to find your profile and will be significantly easier for you to remember too.

Don’t

  1. Overuse Hashtags

People still use hashtags on Facebook, although they don’t work well, while Twitter and Instagram are the key platforms for them. Limit your hashtags to between 1 and 3 in each post, no more. Use too many and people will stop following you, or reading any of your posts.

Try also to fit them into a sentence or post so it makes sense and reads well. Don’t use them on LinkedIn. Ever.

  1. Connect with Everyone

You might want to seem like you are a master-networker and one of the most connected people on social media. However, you should be mindful of who you are connecting with. Are they going to give you value? Will you ever have a meaningful interaction with them?

Make sure you’re connected with key colleagues, peers, suppliers, even competitors, but keep it relevant.

  1. Auto-post Across All Platforms

Tools like Buffer and Hootsuite are brilliant. Using these tools wisely to schedule content can save you a huge amount of time and effort in getting your message on to social media.

However, remember that each platform displays messages differently, and a post good for Facebook probably won’t work well on Twitter. It’s worth creating tweets separately, as usernames and hashtags you have included won’t display well on other sites.

  1. Just Advertise

People have probably followed you based on the strength of your profile, or the value of your message. However, these people don’t just want to hear you advertise your own goods, services or brand.

Other people in your industry will have good messages too, and content that has value too. Help share it across your network and you might find that it increases your own following too.

  1. Give Up

Social media can be hard to get to grips with, especially if you are trying to do too much, across too many platforms. Pick the one(s) you are most comfortable with and build them up in order to get the most value from them.

Don’t worry if you aren’t getting hundreds of followers or connections either. Keep trying and posting good content and it’ll happen. Remember, even the best users started at zero.

There you have it – our 10 tips to get it right on social media. If you think we’ve missed something, or you disagree with any of this, please get in touch. We always love to learn!