Why We’re Embracing e-Procurement in 2016

While e-Procurement has been around for a number of years, it seems to have made significant strides in a number of areas recently.

e-Procurement

You might have seen that the Procurious team attended the eWorld Procurement & Supply Conference in London last week. This bi-annual event is the leader for procurement innovation and it was great to be a part of. We’ll be sharing some more content about our experiences there soon.

However, it has been interesting to note that the subjects of e-procurement and technology have turned out to be hot topics all-round in the procurement and supply news over the last seven days.

The Ukraine has introduced e-procurement to help fight corruption; Verian, a software solutions company, has announced the release of its e-procurement solution; and a report by Webexpenses has claimed that UK workers are hindered by outdated technology.

Ukraine Introduces e-procurement

Ukraine are launching a new electronic public procurement system this April which will make procurement in Ukraine more transparent and save money.

The system, called ProZorro, will be mandatory for all public procurement tenders. To date, 15 per cent of public sector buyers, approximately 3000 of them, have signed up voluntarily to ProZorro, as well as 10,000 potential suppliers.

Arseniy Yatsenyuk, Ukrainian Prime Minister, said in January that public procurement had been a source of corruption, something ProZorro will prevent. The system will also reduce government spending and lower prices.

Verian Aim to Raise User Engagement

Verian, a US-based cloud spend management and P2P solutions provider, recently announced the release of its winter e-procurement solution, aimed at helping to change user behaviours to gain the benefits of e-procurement such as greater efficiencies and cutting cost.

Businesses will be provided with a configurable solution that allows users to track performance metrics and top performers. It will be possible to see a visual representation of the impact of a user’s individual behaviour on the success of the organisation.

Heidi Murphy, Director of Procurement, YMCA of the Greater Twin Cities commented that, “We wanted these metrics to show users how they were personally impacting the process, and create a common ground for communicating with them on something other than policy adherence.”

Verian are hoping that the latest updates to its software will help with user engagement, long believed to be one of the main barriers to successful e-procurement implementation.

UK Held Back by Outdated Tech

A recent survey on workplace technology has revealed that 85 per cent of UK office workers believe their company’s technology is not up to scratch.

The survey, conducted by Webexpenses, a cloud-based expense management provider, also revealed that the workers believed that if this situation were to change, work would be completed more efficiently.

Over a quarter (26 per cent) of participants specified that it was the IT systems which they felt needed improvement, while 41 per cent thought that the process of managing teams and internal communications could be easily enhanced with better technology.

The report ultimately reinforces how crucial it is for businesses to engage with the latest technologies. Don’t get left behind!

As always, we’ve been on the lookout for more of this week’s top procurement news stories.

Foot and Mouth Disease

  • The US has calculated that an outbreak of foot and mouth disease could cost the livestock industry in excess of USD$188 billion.
  • The Livestock and Foreign Agriculture Subcommittee met to discuss how prepared the US are to handle such an outbreak and determined that there was an alarming gap.
  • Michael Conaway, Agriculture Committee chairman and Republican Congressman, said, “It is essential we have all of the plans and infrastructure in place so we can be suitably prepared against intentional or unintentional introduction of plant or animal pests and disease”.
  • The hearing formed part of a series by the committee highlighting the importance of agriculture to national security.

Read more at Supply Management

Australia to Boost Defence Procurement

  • Australia is to increase spending on defence by AUD$29.9 billion over the next decade, including funding to help SMEs access global supply chain markets.
  • The Department of Defence has published its 2016 Defence White Paper outlining strategic defence priorities and challenges up until 2035.
  • The investment plans include: a continuous naval shipbuilding programme, starting with nine future frigates and 12 offshore patrol vessels and 12 submarines.
  • The government is also creating a new Centre for Defence Industry Capability and a new approach to defence innovation. 

Read more at Supply Management

Apple’s Supply Chain Recovery

  • J.P. Morgan analysts tracking the Apple supply chain issued a note to investors this week, revealing that build projections for the coming months are better than had been anticipated.
  • Having initially forecasted iPhone sales to drop up to 15 per cent quarter over quarter, units are expected to be flat between March and June, at about 45 million units for each.
  • Their visits with the supply chain suggest a build rate of 2 million units for the new 4-inch “iPhone SE” this quarter, growing to 4 million in the June quarter.
  • The  “iPhone 7” update is expected to arrive later this year.

Read more at Supply chain 24/7

India Expands e-Waste Recycling Company

  • Attero, an Indian company based outside New Delhi, has patented a technology which extracts gold and other precious metals from electronic waste.
  • The company collects one million pounds in weight of mobile phones and computers per month in India and resells the precious metals it extracts back to the electronics industry.
  • Attero has won the backing of US investors such as the International Finance Corporation and Draper Fisher Jurvetson to help it expand into the US.
  • It is much cheaper to install Attero’s urban mining centres than the European counterparts and the centres take up less space.

Read more at Supply Management

Denmark’s Out-of-Date Food

  • The first supermarket in Denmark called Wefood selling food beyond its “best before” date has opened to help cut the 700,000 tonnes of food waste produced by the country each year.
  • The food is still safe to eat but would be considered waste by supermarkets because it has passed its “best before” date, has damaged packaging, is labelled incorrectly or too much has been produced.
  • The Danish minister for food and the environment, Eva Kjer Hansen said “A supermarket like Wefood makes so much sense and is an important step in the battle to combat food waste.
  • Similar stores across the country are planned if the first is a success.

Read more at Supply Management

Is It All About The Money?

Money has been at the heart of business since the beginning. But as more start-up businesses take shape, we have to ask, “Is it all about the money?”.

Money

This article was originally published on LinkedIn.

Being at JP Morgan, the annual conference where the worlds of biotech and investment collide, gave me the opportunity to catch up and bump into many colleagues and friends. Everyone had a chock-a-block schedule, trying to squeeze in as many meetings as possible with current and potential partners, and money was a top conversation subject.

Of course money is needed to build and grow businesses, but does it define success? Being in San Francisco and talking to many people over the past week has made me think about purpose. All this talk about money made me wonder if it was really the driver. If it was, I am not sure success would be possible.

One could debate that money equals success or success equals money, but I really believe that it takes a lot more than the desire to make money to be successful.

What Drives Individuals?

For example, I caught up with a CEO that recently made an exceedingly large amount of money, but within just a few days of acquisition is already building another biotech company. I spoke with a VP of sales on his fifth successful startup who is working around the clock to grow yet another company’s revenue.

I met a successful physician that has been developing a product for the past 10 years, with a dream to see it approved and change the standard of care. I met with an investor with a very successful track record, diligently meeting with multiple prospects to identify his best new investments. Even without knowing each individual’s personal situation, I can safely say that the main driver is not money.

So what drives them?

I think it is passion. For some, it’s the rush that comes with seeing businesses grow. For others, it’s a desire to see their idea change the status quo. I can easily identify with that feeling.

I could have been satisfied with Matchbook, my successful and growing nine-year-old consulting business focused on providing procurement and sourcing support to fast-growing small biotech companies. I could have also chosen to be home with my three daughters. Although I have other options, I have chosen to work around the clock for the past 18 months to build tealbook.

Supporting Passion

What drives me to make so many compromises and remain so focused on building this business? It is passion for seeing tealbook come to life and become a market leader in providing supplier information. This passion is supported by many factors, and every crazy entrepreneur has his or her own list.

Here are a few of mine:

  • I believe in the idea: I strongly believe that tealbook can help clients significantly reduce time spent identifying the right suppliers and increasing cost efficiencies.
  • I want to solve the problem: I’ve seen firsthand the challenges of inefficient supplier information while supporting sourcing needs for large number of pharma and biotech companies. There is a solution!
  • I see the market opportunity: So many software companies have focused on developing Procure to Pay solutions and back end financial analytics. But compliance of the tools and user experience has not been done successfully. Technology is only as good as people using it and its data. User experience and compliance is at the top of our list when it comes to gathering and accessing supplier intelligence.
  • I want tealbook to be a market leader: We have developed smart and user friendly technology. I know we can give clients access to supplier information better than anyone else – we have talked to enough people to validate this statement both in the life science industry and beyond. We can own this position and easily become the most used front-end platform to significantly reduce the time spent identifying the right suppliers.
  • I made a commitment: I have made a commitment to myself, clients, suppliers, my team and the rest of the industry. Once I decided to launch tealbook, I made a promise to see it come to life, change the industry and make it a success.

One day, I hope to spend more time with my girls before they get too big. But, I can’t see myself stopping with tealbook. What drives me comes from inside and continues to grow with each interaction and success, small or large.

Although money certainly allows us to properly support our customers, grow our technology, generate more visibility, provide employee security and remain  attractive to potential investors or partners, I strongly believe that if we are truly passionate and motivated about growing a company, money will be an outcome.

You can’t put a price on the exhilaration of success!

The Best Companies to Work for 2016

The Sunday Times released its “100 Best Companies to Work for 2016” last week, and there was a new name at the top of the list.

Best Companies to Work for

London-based online insurance retailer, Simply Business, beat the competition to top the main list this year. Not only has the business never been in the top spot before, it was a completely new entry for 2016.

The retailer beat telecoms reseller, Chess (up one place to second, from third in 2015), and Red Carnation Hotels (first in 2015, but third this year), into first place.

How To Be ‘The Best’

The Sunday Times has been running their Best Companies survey since the year 2000, attracting the big names in UK business, all trying to make one of the high-profile lists – Best Companies; Best Small Companies; Best Not-for-Profit Organisations.

The organisations register themselves to take part – 925 did so this year – but it’s their employees who decide if and where they make the list. This year, over 240,000 employees completed anonymous surveys about their employers, rating that on the following categories:

  • Leadership – the head of the company and senior leaders
  • Wellbeing – stress, pressure and work-life balance
  • Giving Something Back – if companies are putting back into the local community and society in general
  • Personal Growth – whether staff feel stretched and challenged by their job
  • My Manager – how they feel about immediate and day-to-day managers
  • My Company – how they feel about the company, rather than the people
  • My Team – how they feel about their colleagues
  • Fair Deal – how happy they are with pay and benefits

It’s not a one-time thing either. Firms choose to enter on a year by year basis, and it’s clear that they need to keep engaging with employees and working hard to stay on the list. There were 79 new entrants in the three lists for 2016, meaning some companies will have to work hard to regain their place next year.

Secret to Success

Analysing the survey results this year, The Times has highlighted team spirit as one of the key factors in enabling companies to succeed. Although many of the survey participants said their workplace stress was increasing, this was frequently outweighed by the benefits of a strong staff identity.

Jason Stockwood, CEO of Simply Business, also highlights employee empowerment as part of his business’ success. Since taking over as CEO in 2010, Stockwood has worked to build an engaged workforce, aimed at bringing benefits to all business stakeholders.

He says, “It’s a fact of modern business that by investing in a happy, engaged workforce you’re also investing in your customers. Getting it right internally is good for everybody, including the SMEs buying our products.

“Six years on we have grown from 130,000 to 350,000 small business customers and the workforce has doubled in size. This has only been possible by making every single member of the team feel empowered to achieve their full potential.”

Not All About Rewards

And working towards being one of the best companies doesn’t necessarily mean spending more money. In fact, strong leadership, a focus on employee engagement for all employees, and ensuring a good work-life balance were all seen as more important factors for the top companies this year.

It was also found that small companies were out-performing their larger counterparts across all the categories this year. According to Dr Ian Dennis, Best Companies’ Director of Research, the teamwork found across the small organisations that is making the difference.

The Table Toppers

It was all change at the top of the Best Small Companies list, while two of the top three from 2015 were up at the top again in the Best Not-for-Profit Organisations.

Best Small Companies to Work for 2016

  1. Paragon Interiors Group (New Entrant)
  2. Phaidon International (23rd in 2015)
  3. Educ8 (New Entrant)

Best Not-for-Profit Organisations to Work for 2016

  1. SLH Group (1st in 2015)
  2. Wales & West Housing (3rd in 2015)
  3. B3Living (7th in 2015)

To see the full “Best Companies to Work for” lists, and get more information on all the companies involved, visit The Sunday Times.

ISM & Procurious: Leveraging Social Media in Procurement

Ahead of his keynote address at the Procurious Big Ideas Summit 2016, ISM CEO Tom Derry discusses ISM’s new partnership with Procurious, as well as the power of leveraging social media in procurement.

Leveraging Social Media

ISM and Procurious recently announced a new partnership, as ISM became a Procurious Foundation Partner. This will increase Procurious members’ access to ISM’s highly regarded research, events and educational offerings, from certification programs to the newly launched ISM Mastery Model™. ISM members will also benefit from the rich educational resources and networking opportunities on Procurious.

Leveraging Social Media

Over the last several years, social media has become crucial for connection professionals in all fields — especially procurement and supply chain. I honestly don’t see how anyone can expect to be successful in this day and age without leveraging social media.

Social media gives you access to a broader network than could ever be obtained face-to-face. You have the opportunity to tap into the global repository of procurement knowledge. Why would anyone choose to miss out on this competitive advantage?

Not only that, social media can serve as a news channel providing real-time updates and alerts. How powerful is it that you can be updated on market trends, natural disasters, geopolitical events and much more — all with a tool you keep in your pocket. It’s the agile organisation that survives and thrives in today’s environment, and you can’t be agile if you’re not plugged in to real-time events.

Procurious and ISM

When I first learned of Procurious, I felt it was a no-brainer. Procurious enables the supply management professional to leverage the immediacy of a social network in a in a professionally appropriate medium.

With the focus solely on supply chain, this platform connects professionals working on similar projects and initiatives globally. This adds value in two distinct ways: your building your own knowledge base, but also your personal professional brand.

When I tell colleagues about Procurious, I often hear, “How is it different from LinkedIn?” While there are many similar features, Procurious provides additional advantage for procurement and supply chain professionals. In addition to connecting you globally with those in the field, it gives you the upper hand through education, blogs, event calendars and my favourite — the Discussion board.

Discussions and Communication

I think we have all experienced our work being halted by a roadblock we have not faced before. As procurement professionals, we are often the experts in our organisation, making it feel like this is our mountain to climb alone. Instead of banging our head against the wall, we have somewhere to turn.

Whether you are looking for the right SRM system or a need career advice, the discussion board immediately connects you with others who may have the answer you need. There is strong, practical value in the communication on the discussion boards. One recent post was looking for advice on how to manage stakeholder expectations on procurement lead times.

Professionals from around the globe weighed in with advice on how to communicate the value procurement adds beyond simple considerations of speed and price. It’s just one example of how practitioners can leverage the experience of their peers to facilitate real results.

Looking to the Future

ISM is becoming more engaged with Procurious. We will be launching an ISM group this month. This group will add another place for those connected with ISM to go for networking and and for those new to ISM to discover and connect with us.

I am looking forward to watching the ISM community grow and develop on this platform. I see this being a great place for our members and nonmembers to connect. With more than 50,000 ISM members globally, there is a great opportunity to be had from potential collaboration.

Why It’s Critical to Keep Your Skills Up to Date

Technological change is disrupting every industry and profession around the world, and obliging professionals to ensure their skills are up to date.

Keep your skills up to date

In recent weeks, Procurious has published a number of articles on personal development, training and up-skilling. The idea of keeping skills up to to date, and making time for learning and development, are applicable not only in procurement, but also to virtually every profession in every country.

However, this is not to say that all the onus is on the individuals to take responsibility for their development. It’s important also for organisations to ensure that resources are made available to allow employees the opportunity to take advantage of the training that is available.

AT&T – Remaining Competitive

AT&T is a US-based telecommunications company, currently owned and operated by SBC Communications. In the USA, the company is the second largest provider of mobile phone services, and the largest provider of fixed phone services. The company also provides broadband services.

The rapid pace of technological change in the telecommunications industry has left AT&T vying to remain competitive against larger technology organisations, such as Google and Amazon. Part of the strategy for remaining competitive in this industry is ensuring that employees’ skills are up to date.

It was estimated that approximately 280,000 employees need to update, or learn, coding skills, something that the organisation is supporting through the provision of eLearning. The company will reimburse around $8,000 (USD) per year per employee for this training, although this will still mean employees are funding some of the training themselves.

Up-skill. Or else…

While this may sound like the organisation is being supportive of employees’ efforts to ensure they have the skills they require to perform their job, there is something of a darker undertone. In essence, AT&T are forcing their employees to learn these skills, or find that their career choices are “very limited”.

CEO, Randall Stephenson, has been quoted as saying people who do not spend 5 to 10 hours per week in online learning will “obsolete themselves with the technology”. The time commitment involved means that many employees are now working evenings and weekends, on top of their day jobs, just to keep up to date.

The company also plans, eventually, to include personal development and learning as part of performance reviews too. This will be based on what people have studied, how well they did, and whether they are willing to keep learning.

The Right Reasons

It would be easy to point the finger at AT&T and say that they are being unfair. That they shouldn’t be forcing employees to learn skills, or essentially be out of a job. However, there are many organisations who do not offer the support that AT&T are giving their employees.

Yes, employees own time and money are required in order to keep pace, but if these employees don’t have the same skills as those at competitor organisations, then the chances are good that AT&T will cease to exist, and those employees will be looking for new jobs in an ultra-competitive job market.

It is also not to say that AT&T are leaving their employees to fend for themselves. The company has a programme called “Vision 2020”. It combines online and classroom-based work in subjects like digital networking and data science, but also looks at old skills that can be transferred to new careers.

AT&T management want to ensure that the company has a future, and the employees have got on board with this, and are actively working to make sure that they have the necessary skills to do so.

Stay ahead of the personal development game by making use of all the eLearning resources at your disposal. Check out the Learning Hub on Procurious for over 80 free video and audio resources, from learning about procurement, to learning from the experts.

Life Changing Technology to Save You Time

When time is money, making sure you’re spending it on what matters is a key metric to profitability.

Time Saving Tech

Do you know how much time you’re spending on certain tasks? Do you know how your teams are spending their work day? And more importantly, do you know how your finance teams are spending their time?

Where Does Time Go?

APQC, a Texas-based research firm, recently conducted a study of some 832 companies’ finance departments. Using data from APQC’s Open Standards Benchmarking database, they found out what finance teams really get up to at work.

Things like transaction processing, decision support and management activities were all looked at as part of the study and APQC found that no matter how big or small the company was, roughly half of finance teams’ time was spent on transaction processing. Half.

Instasupply-Life-Changing-Tech

Source APQC

In plain English, this means highly paid finance staff spend the time equivalent to Monday AM through to lunchtime on Wednesday making sure invoices are being processed, bills are getting paid and fixed assets are accounted for.

Shifting the Balance

Now, ask a CEO what he’d like to see his finance team doing and he will tell you he’d like them delivering fast, reliable information about the economic implications of specific tactical business moves. When the year is halfway through and performance needs improving, a CEO wants to know the monetary impact of the decisions they plan to make. What the potential revenue and operational implications are when it comes to investing company resources.

When the finance team spends nearly 50 per cent of its time on transactions, plus a few more hours per week going through internal approvals and putting together financial reports, it equals not much time left to offer that critical decision support.

A finance team therefore needs to constantly juggle providing key financial information to support company growth and getting those bills paid. Reducing paperwork and minimising manual labor are an absolute must when it comes to shifting the balance.

Away from Paper-Based Methods

Based on research from bodies such as The Hackett Group, we know that just under 70 per cent of vendor invoices globally are still in paper form. That means someone within the finance department needs to manually enter all of that paper-based data into a computer based program, either straight into the accounting software, or in a spreadsheet first and then into said accounting software. This means there is a hell of a lot of paper clogging up the system, costing time and money in training, execution and management.

Further still, the software in use was generally built circa 1995 and fails to offer transparency on transactions, clarity in reporting or intuitive processes. Since the main aim here is to deal with transactions quickly, in a minimum amount of time, whilst minimising errors, having such software in place is nonsensical.

Finance departments need their working hours back to focus on their actual function in driving companies forward. Understanding costs, revenue streams and operational cost pitfalls is where their true value comes into play. Pushing paper around is a waste of time.

Be Sure to Choose Wisely

As the digital trend has been making its way into B2B (finally), larger companies have pushed for greater finance efficiency and invested resources into implementing digital tools to facilitate electronic information flows. Merely investing in something branded “cloud” though doesn’t mean it will solve all problems.

The choice needs to be made wisely. It needs to be made with the end user in mind. If it seems too complicated, it IS too complicated. And that means your staff won’t use it, or certainly won’t use it properly. You will be buying an Aston Martin, and it will be driven like a Ford.

Smart companies able to recognise the importance of user focused tech will instantly reduce the time spent managing transactions. This will enable them to direct finance talent away from repetitive tasks and back towards company growth.

What could your finance team do with more time?

Manufacturing in China? Here’s What You Need to Know

Manufacturing in China might be a cost-effective solution, but it can bring with it inherent risks to global brands.

Manufacturing in China

For procurement professionals, that means trying to understand the cultural nuances that dictate how to do business in China.

Stories of issues have appeared in the media, including now-defunct Australian boot manufacturer Bennett’s Boots blamed a Chinese factory for trying to reduce its margins for the collapse of the entire business. While early orders were perfect and business grew, subsequent orders were cheap imitations, with 80 per cent of the container load of boats un-sellable.

Company founder Amanda Bennett told BRW magazine that: “Success to the Chinese is trying to do things behind your back and get away with it. I don’t mean that in a derogatory way, it’s a cultural thing.”

Navigating the Cultural Landscape

But there are companies that specialise in helping foreign companies wanting to manufacture in China navigate the cultural landscape.

Chris O’Halloran is the founder of Striking Group, a project management consultancy, and has been to China dozens of times to build the bridge between China and Australian companies since launching in 2008.

O’Halloran admits that the Chinese do business by going in cheap and then trying to recover the margins by cutting corners, hoping no-one notices.

When manufacturing in China, the biggest trap Australian companies fall into is sending a drawing to China, and asking for 10,000 products to be manufactured without enough instruction, he says.

“To the Chinese, if it looks the same to them, then it is the same. They’re not trying to be nasty, it’s just the way they do business.

“Having said that, I’ve been to factories in China completely automated where you can eat off the factory floor that are far beyond anything we’ve got here.”

New Wave of Challenges

China has emerged as a manufacturing powerhouse, with immaculate robotic factories and far greater capability to manufacture luxurious goods rather than just mass produce cheap items.

However, the country faces new challenges. According to this report by McKinsey & Company, these include increasing wages, more complex value chains, and consumers growing more sophisticated and demanding.

Australian companies trying to do business with China also often fall down by thinking they’re dealing direct with the manufacturer, when in fact there’s two or even three middle men shielding the manufacturing operator, O’Halloran explains.

“The Chinese like to keep their cards close to their chest, so often you don’t really know if you’re dealing with the manufacturing facility or not. This is very common in Australia, and not the best way to do business.

“However, no-one can build to scale as well in Australia. They are light years ahead of many major manufacturing hubs around the world, and often Australian companies don’t realise how big these Chinese companies are.”

Fostering Relationships

O’Halloran shortlists a number of factories for his clients and helps them foster a relationship with the business owner and arranges guided factory tours. He also conducts spot checks for clients.

“We’re looking for things like, do they have a quality control process in place, and how do they buy their goods, and whether Fair Trade Agreements are in place. We always try to establish if they’re managing the entire manufacturing process in-house, because sometimes they’ll outsource some of the work to a sweat factory down the road without telling you.”

He also says that the Chinese are not great at design, but they’re amazing at copying and reproducing something, and mass producing it. Smaller scale runs are also increasingly cost-effective. Australian companies also need to understand cultural nuances, such as the importance of hierarchy to the Chinese, he adds.

The Chinese are also very superstitious, and their lucky number is eight, he says.

“The Chinese will go out of their way to find the number eight in their business dealings. They even design buildings with eight floors or eight windows in a room, and other things based around feng shui,” O’Halloran concludes.

Top Tips for Manufacturing in China

  • Don’t try and navigate the Chinese manufacturing industry alone, hire an expert.
  • Explain what you want in as few words as possible. Don’t leave anything open to interpretation.
  • Always start slow, on a small scale.
  • Understand cultural nuances and the importance of hierarchy.
  • As a sign of respect, when you accept a business card with two hands, and look at it carefully. Put the card on the table in front of you, never in your pocket.

 Source: Chris O’Halloran, Striking Group.

Is Your Personal Brand Picture Perfect?

Employers are increasingly using social media to hunt down their next employee. So what’s your personal brand saying about you?

Your Personal Brand

Today, a staggering 90 per cent of UK employers use social media to find employees. As we all know, a large proportion of roles are never formally advertised, with employers preferring to rely on references and people they “know” to fill important roles.

An important secret you need to know from the recruitment industry is about ‘passive’ candidates. These are people who are not actually applying for jobs, but are seemingly happily engaged in their current roles, as opposed to those who have actively applied for the role. These passive candidates are actually the most valued candidates.

So, the question is how will these silent employers “know” you, if you aren’t out networking, connecting and promoting yourself on social media?

The Importance of Networking

I had the perfect example just this week when a headhunter called me for some recommendations for the Head of a Digital Procurement Marketplace. It was a very senior job, paying in the high $200,000s.

I have worked in this profession for more than 15 years and am very committed to networking. I am fortunate to have met thousands of procurement professionals, have more than 5,000 connections on LinkedIn, and am an active participant in the 12,000 strong Procurious community.

Now, when I was asked for recommendations, who do you think came to mind first? Someone I met ten years ago when eMarketplaces were all the rage? Or someone I saw sharing information on LinkedIn or Procurious earlier in the day? The latter, of course.

In order to help you understand the importance of your network and online profile in helping you get that next job, let me share how my mind worked when trying to think of some suitable candidates.

Standing Out

I started thinking through the thousands of events and meetings I had attended and personalities that had stood out – I came up with a few names.

Next, I started reviewing my online social networks. First I found people who had the right skill set and experience, then I started looking at people’s profiles in depth. This was quite a lengthy process, so I used some filters. This is who didn’t make the list:

  • People without a photo on their profile.
  • People with limited connections (sorry, to me, its hard to think how anyone in procurement could have fewer than 500+ connections).
  • People whose work history hadn’t been updated or was very scant.
  • People who, when I googled them, weren’t mentioned anywhere, hadn’t published anything, or spoken at an event.

If people met any of these filters, I wasn’t going to recommend them. I would imagine many other senior people like me would use the same process. I know recruiters definitely would…

Why? Because my personal brand is on the line when I recommend someone. I only want to recommend people who are “in the loop” and up to date with what is happening in the world. And those are the people who are building and using their networks.

‘Picture Perfect’ Personal Brand

For this reason, all your work history, successes and contact details are important to include on your social media profile. But I want to particularly stress the importance of an impressive profile picture.

Our mission at Procurious is to change the face of procurement. So many images of procurement out there today reinforce a very old, brown cardigan-clad image. We want to replace those images with fresh, global images of being “the smartest guys in the room”.

Make sure your headshot is just that, a headshot where people can clearly identify you as you. Make sure your attire and demeanour are professional and represent how you would look turning up for a job interview – no selfies, no wedding photos, no hazy screens, favourite cars, or children. You laugh, but we see a lot of crazy things on Procurious, which is why I’m making this point.

Personally, I think of a shot of you speaking or in action in a professional setting can be powerful to promote you as a thought leader. These are tough photos to get, so a plain vanilla corporate headshot will also serve you well. Using the same photo across all social media can be powerful as your ‘personal brand’ is consistent and is reinforced each time someone sees you.

After all, a picture is worth a thousand words.

This blog is part of a speech Tania made at the eWorld Procurement and Supply Conference in London on 2 March 2016. In her next instalment, she will share why being first with the news will help you be a first mover.

How to Avoid Procurement Corruption and Fraud: The Fraud Triangle Analysis

When Benjamin Franklin said, “An ounce of prevention is worth a pound of cure,” he was referring to fire prevention, but even so, the saying holds just as true for procurement corruption and fraud prevention.

Procurement Corruption

This article was originally published on Delta Bid.

Donald Cressey is credited with creating the “fraud triangle,” which outlines the theory behind why people commit occupational fraud. Cressey identified the three legs of the fraud triangle as pressure, opportunity, and rationalisation.

The Fraud Triangle

Let’s take a look at steps your organisation can take in order to address these three areas and avoid procurement corruption and fraud.

Pressure

The pressure factor is essentially what motivates someone to commit fraud. Usually the motivation is financial in nature, and falls under one of two categories: personal or professional.

Personal pressure examples:

  • unpaid personal debts
  • desire for status symbols (money, house, car, etc.)
  • inability to pay bills

Professional pressure examples:

  • need to meet productivity targets
  • need to prove financial gains
  • feeling job is at risk

How to mitigate pressure:

1. Adequate compensation – While adequate compensation will depend on the organisation, country, and individual employee, procurement employees should not be at the bottom when it comes to compensation. Procurement professionals, at all levels, require a specific skill set to effectively do their job, and their compensation should reflect the value they bring to the company.

2. Realistic performance KPIs – This requires good communication with all stakeholders. Set KPIs and then review them frequently to make sure your procurement goals are realistic.

3. Adequate procurement budget – One way to avoid procurement corruption and fraud is to make sure your procurement department has sufficient funds for staffing, tools, and training. Being forced to cut corners can quickly lead to unethical decision-making.

4. Company-wide no gift policy – Suppliers often give gifts to procurement as a way to build relationships and show goodwill. Yet, these gifts may make it hard for procurement officers to remain entirely neutral. If Procurement is not allowed to accept gifts, enact the same policy for all departments as a way to reinforce a company-wide ethics policy.

In some parts of the world, it may be difficult to go 100 per cent no gift. If you do decide to allow Procurement to accept certain gifts, such as lunch or small tokens under a specific dollar amount, make sure the policy is crystal clear and communicated to all employees.

5. Recognise employee value – Adequate compensation is one way to recognise employee value, but other signs of appreciation can also go a long way. If your company has a no gift policy, perhaps set aside a portion of the budget for a procurement dinner or event to celebrate when certain objectives are met.

Opportunity

The opportunity to commit fraud has to meet two basic standards: the person must have the technical know-how to take advantage of the system, and the ability to keep it a secret. You can decrease the opportunities for fraud by:

1. Implementing a transparent procurement process

  • Adopt an e-procurement solution – E-procurement software is the best way to make sure your procurement data is transparent and easily accessible for audits. You can also assign permissions within the tool, making it easy to allow top management access to all processes, while also limiting who can add suppliers, change supplier contact information, make awards, etc.
  • Educating your employees about the process and how to identify red flags – While it may be a given buyers within the procurement department understand the sourcing and purchasing process, buyers on the outside may not have such a clear understanding. Anti-fraud measures require all hands on deck.
  • Monitor the data in the system – Implementing e-procurement software is just the first step to a transparent procurement process. You’ll need to continuously monitor the data in your chosen e-procurement solution and the ERP to look for any irregularities.

2. Segment purchasing responsibilities – Divide responsibilities to keep any one person from having too much power over purchasing decisions. You may also find it beneficial to rotate responsibilities on a regular basis, but when you do so, make sure to update any employee permissions in your e-procurement solution. For example, some companies rotate procurement employees between categories to avoid any one person having too much close contact with suppliers.

3. Adopt a four-eyes rule for approvals – Schoolyard bullies use “four-eyes” as an insult, but when avoiding corruption and fraud, the four-eyes strategy is best practice. More eyes on decisions means it’s harder for would-be fraudsters to keep their crimes secret.

4. Perform regular and surprise internal and external audits for all purchases – Audits are not a sign of mistrust; consider them more like a doctor’s check-up. You should hope that everything checks out, but if you note any irregularities, you can take action to straighten them out before significant damage is done.

5. Manage both suppliers and their subcontractors – Your supply chain doesn’t stop with your suppliers; it’s likely they’ve hired subcontractors. The business practices of these subcontractors will reflect on your business. Unfortunately, many companies have learned this the hard way. Your company should have a Supplier Code of Conduct, and signing off on it should be mandatory for all suppliers and their subcontractors.

Rationalisation

Rationalisation is the process of excusing one’s acts and finding ways to justify behaving in a way that you know to be unethical or criminal. It can take a number of forms: an exaggerated belief in one’s value (e.g. I’m entitled to this because I work hard.); a belief in a greater good (e.g. I’m doing this for my family.); dissatisfaction with the company (The company is cheating others, so I can cheat the company.); or comparisons with others (Everyone else has nice things. Why can’t I?).

How to avoid the pitfalls of rationalisation:

1. Hire ethical employees – This one looks like a no-brainer, but it’s easier said than done. However, if ethics are important to you (as they should be), they need to be discussed from the very first interview. Research your potential employees like you research potential suppliers. Step away if anything looks fishy.

2. Model ethical behaviour at the top and reinforce it through company-wide policy – It’s all about company culture. How can you expect employees low down on the ladder to behave ethically if the top management is constantly cutting corners and making ethically dubious decisions? Don’t fall into a “do as I say, not as I do” mindset. Give your employees a good model to follow.

3. Adopt a zero tolerance policy for fraud and corruption – There’s the carrot, and then there’s the stick. Just as you would outline expected behaviour, so, too, should you outline punishments for breaking the rules. Don’t make idle threats. If you have a zero tolerance policy, then it should be zero tolerance. If you’re not prepared to follow through, adjust your policy to reflect the true consequences for fraudulent actions.

Part of procurement corruption and fraud prevention should be based on the realisation that, yes, it can happen to your organisation. No company is immune.

However, those companies with the lowest cases of fraud and corruption have taken steps to prevent it before it happens. If you’re waiting for a big scandal to break before mitigating this risk, then you’re already too late.

South African Public Procurement – A Work in Progress

Despite some leaps forward in recent years, South African public procurement is still suffering from the same issues.

South African Public Procurement

“Despite the reform processes in public procurement and the employment of Supply Chain Management (SCM) as a strategic tool, there are predicaments in South African public procurement practices”.

This was one of the observations in a report by two leading academics at the University of South Africa in 2012. They noted, “For example, there is non-compliance with procurement and SCM-related legislation and policies as well as tender irregularities.”

You could say that not a lot has changed, South African public procurement still has some predicaments.

The Last Few Years

Since 2012, we have seen the appointment of a Chief Procurement Officer, Kenneth Brown, who is responsible for overseeing the entire SCM operation. His role is to ensure that the procurement of goods, services and construction works is fair, equitable, transparent, competitive and cost effective, and in line with the Constitution and all relevant legislation.

This in itself is a big ask as there are many laws, guidelines and regulations to adhere to. His portfolio includes central and provincial governments, municipalities and state-owned enterprises.

A new initiative is an e-tender portal and the creation of a centralised database of approved suppliers. This is a noble effort to fight corruption and make government procurement more efficient and cost-effective. The system, where all tenders are advertised, is also designed to electronically verify a supplier’s tax and black employment equity status, as well as to uncover any government employee attempting to do business with the state.

In the 2014-2015 tax year, the public sector spent >R500-billion on goods, services and infrastructure. The Government itself has admitted that at least R30-billion of this was lost to corruption. In 2015 the Treasury took a bold step of undertaking a Supply Chain Management Review on the status of SCM in South Africa and found it wanting.  This was the first attempt at assessing the situation since 2004.

The 2015 Supply Chain Management Review

The Treasury should receive kudos for highlighting its own shortcomings and imperfections, and providing some glimmer of hope of improvement.

The Review acknowledged that:

  • SCM across South Africa is highly fragmented. This makes it difficult for government to obtain maximum value from the purchasing of goods and services.
  • It needs to improve skills, processes and systems which are critical for a well-functioning SCM system.
  • It is dogged by “constant allegations of corruption and inefficiency”.
  • Key problems are: inexperienced leaders, high staff turnover rates, confusion about roles and responsibilities, political interference and the red tape for small and medium businesses.

So what is the plan?  

The big plan is to replace all the legacy systems, more than 30, with just one. This will be an integrated financial management system (IFMS) which will include the central supplier database. This will make data mining possible, and will provide more transparency into bid awards, a concept that has not been well understood in government circles up to now.

The intention is to centralise government contracts for categories such as:

  • Banking services;
  • Information Communication Technology (ICT) services;
  • Infrastructure;
  • Consulting services;
  • Security services;
  • Air travel and accommodation;
  • School textbooks and stationery;
  • Healthcare equipment; and
  • Leased buildings.

Technology will take us part of the way

Investment in technology, especially an e-procurement solution, has the potential to improve SCM efficiency and effectiveness considerably. Currently, the different systems result in fragmented and unreliable data, inconsistent processes, varying compliance levels and ineffective results.

It is not straightforward though. South Africa has a complex and unique system of preferential procurement policies to protect and advance previously disadvantaged people. These variables have to be integrated into any decision making software.

The many challenges can be grouped into these categories:

  • managerial, compliance and monitoring issues
  • lack of knowledge, skills and capacity
  • inadequate control systems
  • fraud and corruption
  • fragmented spend and lack of transparency

Comparisons with other countries

South Africa is not alone in its aspirations to do better. The UK has just implemented the Public Contracts Regulations which adds another dimension and complexity to Government procurement in UK, and brings practice into line with European Union regulations. One objective is to make procurement across EU countries easier and increase transparency.

A bill was introduced recently to promote the appointment of a Chief Procurement Officer for the United States. However, it was not passed into law due to the start-up costs, despite projected savings of 10 times the investment. It just goes to show that even developed markets have their problems.