Women and Indirect Procurement – A Perfect Fit!

Indirect procurement is a perfect fit for women. And women in indirect procurement are a perfect fit for a company.

women indirect procurement

At a recent fantastic CIPS CH event on ‘Women in Procurement’, it got me thinking about why indirect procurement is a great function for women.

My path to leadership in procurement happened by accident. In the late 90s, when indirect procurement was emerging as a strategic sourcing function, I joined the corporate sourcing team at a large Swiss bank.

The team had been formed specifically to implement ‘strategic sourcing’. I got my first taste of the three things that make women in indirect procurement such a great combination.

  1. Indirect procurement is results oriented

One of the realities of being a businesswoman is that the range of acceptable behaviour can be pretty narrow. Being clear about your opinion in a meeting easily becomes being ‘too direct’.

But the great equaliser is delivering financial results. Everyone wants to hear more, especially senior executives.

But not just any numbers will do…

  • Clear financials – Focus on savings that bring the cost base down and have P&L impact via a tight link to the budget process (see my previous article on this topic).
  • Long-term savings commitment – The first time we committed as a team, I was nervous presenting it to the executive committee. But after we delivered the first year, my nervousness was gone.

Women who advance into leadership roles in corporations are all results oriented and tend to be super exact because the winnowing out process is earlier and harsher.

Mary, the leader of the US professional services category was exactly this kind of woman, delivering business innovation and significant numbers every year.

As part of our strategy for breaking through on more difficult categories, she led a new approach by working across regions. I also gave her a leadership challenge to think bigger on the numbers. She did. And the team delivered some great innovation to the business and tripled the savings delivery.

  1. Indirect procurement is flexible

One of the greatest aspects of being measured on results is that it makes space for flexibility between work and home time.

After some years in consulting, I was back in industry with a full-time role, and two small children, leading a big team for the first time. There were several other women with children in the team trying to manage work and home time. We needed to do something.

There were two things going for us.

  • A results oriented CPO even though he was an old style German man!
  • Procurement is in the ‘client’ role so sales people try to match your schedule.

This combination equals control of your agenda and gave us a chance to organise time differently.

  • No meetings after 5pm, but with the expectation of being online post bedtime.
  • Working fewer hours than the men just by being more focused. There’s nothing like needing to be home to get focus.

There’s no pretending that this was easy to do. But in addition to being able to balance work and home time, there were two side affects of this way of organising things.

  • The leadership team was young. And the men also started to organise themselves this way after they had children.
  • Talent retention and growth of women rising on the organisation.

Isabelle, a young woman in my former team recently had her second child and had the chance to take over a regional head role. We met for coffee and discussed her fear of taking the role with young children.

She made a clear plan on how she would manage her work and home time, including how many late evening conference calls she was willing to make, and went for it.

Great for her and great for keeping and developing talent in the company.

  1. Indirect procurement has P&L impact

Women continue to be underrepresented in senior management, and the ones there, are often in non-powerful functions like HR.

One of the key ticks in the box for advancing is P&L responsibility. Indirect procurement can have high impact on the P&L and therefore crucial ‘visibility’ to senior management. Keep in mind:

  • Senior management cares about the P&L. You need to not only deliver the numbers, but make sure you are up there presenting to them. And it’s a chance to show you can handle the pressure of executive level presentations and questions sessions.
  • Know your numbers inside and out. This means being aware of the status of all material projects driving delivery on a monthly basis.
  • Can you measure and track it – proof! Have a clear report that is linked to the budget cycle

The more visibility women have, the better their chances to advance. This naturally adds to the pipeline of women for a company – the lack of which is the eternal topic in every article about why there aren’t more women in senior positions.

The bottom line is empowered women deliver.

Pauline King is the CEO of Heykins GmbH, Rapid Results Procurement, focused on working with clients’ existing teams to deliver tangible financial results.

She is a recognised expert in indirect procurement with deep operational experience in procurement transformation. Pauline also works closely with The Beyond Group AG where she heads up the Indirect Procurement Practice.

How To Solve The Extended Payment Term Problem

Extended payment terms can be a huge burden for buyers and suppliers. Not to mention the negative press. But there is a solution at hand.

extended payment

In response to the financial recession of 2008, many supply chain and procurement departments began pushing their suppliers for extended payment terms as a means to improve cash flow and limit the need to acquire credit, which was in short supply.

While the recession has long since past, the practice is still very much in use today. In fact, major companies such as AB InBev, Kellogg, Diageo, and Mars commonly establish payment terms that extend anywhere from 90 to 120 days. Additionally, a 2016 study revealed that buying teams are planning to extend their payment terms even further.

This push for extended payment terms makes sense for buyers. Extra cash in the coffers can be used to fund R&D, buy back stock, and invest in strategic initiatives. It also never hurts to have more free cash as working capital.

However, while buyers benefit greatly from extended payment arrangements, they can pose a tremendous burden to suppliers – especially small- to medium-sized businesses (SMBs).

How Extended Payment Terms Hurt Suppliers (And Buyers)

Extended payment terms can be detrimental to suppliers for a variety of reasons, including:

1. Curbed Productivity

Many SMB suppliers have limited resources in terms of manpower and production capability. As a result, they can only take on so many projects and contracts at a time before reaching capacity.

When funds are tied up waiting for cash to come in, these companies are precluded from investing in new equipment, replenishing stock or adding to their workforces. This brings the company to a standstill, and could put it out of business altogether.

2. Lack of Financial Flexibility

While large corporations and buying teams have the purchasing power to demand extended payment terms, smaller suppliers do not.

As a result, these suppliers are forced to receive payments late while paying their own suppliers early. This creates a cash flow crunch in working capital that many can’t escape.

In fact, most firms operate on a month-to-month basis with cash reserves built to last only 27 days.  

3. Lower Employee Morale

In addition to the financial consequences of extending payment terms, the practice takes a human toll as well. Going three-to-four months without receiving payments from buyers makes it difficult for businesses to make their own payroll – usually the largest expense for a SMB.

As a result, small suppliers suffer from reduced morale and engagement. This can, in turn, lead to a decline in quality and production delays.

4. Limited Credit Options

With limited cash on hand, the only financial lifeline available to many SMBs is to apply for more credit. However, 50% of small businesses receive no money at all when they apply for credit loans.

SMB Credit
Source: Federal Reserve Banks of New York, Atlanta, Cleveland and Philadelphia

Extended Payment Terms Can Hurt Buyers, Too

In the end, buyers end up paying the price for extended payment terms as well. That’s because it introduces risk into their supply chains. If a trusted supplier is forced out of business or suffers a decline in productivity, it hurts the procuring organisation.

In addition, suppliers have long memories. Many will compensate for extended payment terms with higher costs, while others include steep late-payment penalties in their contracts.

Lastly, a high quality supplier whose products or services are in-demand supplier may simply choose to work with other companies that offer friendlier payment terms, and forego bidding new opportunities that come with onerous payment terms.

Reverse Factoring May Be The Solution

Reverse factoring allows a buying organisation to leverage its strong credit rating to acquire favourable financing, which is used to pay suppliers in a more timely manner.

Here’s how it works:

  • Supplier submits the invoice to the buyer.
  • Buyer approves the invoice and submits it to a 3rd party financial institution or factor, who bases interest terms on creditworthiness of the buyer.
  • Financial institution pays the supplier at their desired early term of net 30 days, discounting the invoice payment by the agreed-to discount rate.
  • Buyer pays the financial institution the face value of the invoice at their agreed-upon date, say net 90 or net 120 days.

The concept is fairly new, but it is already proving to be a great solution for buyers that want to reap the cash flow benefits of extended payment terms without putting their suppliers in jeopardy.

That’s because it is beneficial to every participant in the process. It allows both buyers and suppliers maintain cash flow while forging positive working relationships in the supply chain. The financial institution also benefits by generating a return on the funds lent to the supplier and reimbursed by the buyer’s payment.

Offering friendlier payment terms is just one way to build stronger relationships with suppliers. Discover more on how to improve your relationships with SMBs in our latest tip sheet.

Ed Edwards is Audience Outreach Manager at THOMASNET.com. He leverages his extensive experiences in engineering, manufacturing and procurement, to educate procurement and engineering professionals on how to streamline and improve their work.

Ed provides customised training to organisations’ engineering and sourcing teams and helps buyers with their challenges and finds them new opportunities.

Why Procurement Needs to Open the Door to Supplier Diversity

Procurement is under pressure to engage more in supplier diversity. But help is at hand from organisations who can help make connections.

open door supplier diversity

In May 2015, the Australian Government set out Indigenous company contract targets for federal departments and agencies. Starting from 0.5 per cent, the targets were set to rise to 3 per cent by 2019-20.

The joint message from the Minister for Indigenous Affairs and Minister for Finance claims, “the policy will ensure that Indigenous businesses have the chance to compete and showcase the products they have to offer.”

Supply Nation is the Australian leader in Indigenous supplier diversity. The organisation exists to connect Indigenous-owned businesses with the procurement teams of government and corporate organisations.

Supply Nation has worked closely with government to collaborate and influence the evolution of procurement policy that is now represented by the Indigenous Procurement Policy.

We sat down with Supply Nation’s CEO, Laura Berry, to talk more about the importance of this benchmark, and how organisations across Australia can strive to meet it. 

Why is engaging with Indigenous-owned businesses and suppliers so important for organisations across Australia?

Supply Nation strives to increase opportunities for Indigenous-owned businesses to supply their goods and services to large organisations. Supplier diversity puts under-represented businesses on a level playing field with other qualified suppliers when it comes to competing for the supply of quality goods and services.

One of the major benefits of opening the door to additional markets and engaging in supplier diversity, is that it facilitates the growth of Indigenous businesses. This results in increased economic activity and employment, and channels greater social value back to Indigenous communities.

In addition, data clearly shows that supplier diversity drives significant and measurable long-term business benefits, aside from the goods and services, which can ultimately provide a unique experience to customers. The addition of Indigenous-owned businesses can bring increased competitiveness, innovation and savings to the supply chain.

What qualities and capabilities have you built that supported you in achieving better procurement outcomes?

Creating an environment where our members and suppliers can connect, develop relationships and identify future procurement opportunities is integral to the work of Supply Nation.

Supply Nation assists our government and corporate members with tools and strategies to embed supplier diversity within their supply chain through a tailored account management model.

We also provide support for business matching, opportunity briefings, supplier promotions, external training opportunities and networking events.

What are the biggest challenges Supply Nation faces in procurement at the moment?

As a not-for-profit organisation, the procurement challenges facing Supply Nation itself are not significant. However, for our Indigenous suppliers, the challenges are the same as those faced by small businesses across Australia.

These include the difficulty in breaking into established supply chains and conventional procurement processes, or in developing relationships with buyers.

With the Federal Government’s Indigenous Procurement Policy, there’s more pressure for government buyers to find and engage with Indigenous-owned businesses. We see a real challenge – and a real opportunity – in facilitating the connection between the businesses and procurement professionals.

What’s the first step for organisations looking to alter their processes to meet new supplier diversity requirements around Indigenous suppliers?

Step 1 would be to become a member of Supply Nation (if you’re not already)!

Take the opportunity to search for goods or services through our directory, Indigenous Business Direct. You can engage with a Supply Nation Relationship Manager who can help you navigate the process.

We can help with changing internal policies and procedures, connecting with businesses that meet your requirements, and setting up established and sustainable supplier diversity practices that are modelled on world best practice.

How can attendees benefit from attending GovProcure 2016 (where Laura is speaking)?

We have some amazing, successful and diverse Indigenous-owned businesses that are growing fast and delivering incredible products and services. I’d recommend everyone comes along to understand how they can engage not only to hit their targets, but also to get some insight into the benefits these businesses can bring to your supply chain.

Among other Australian procurement leaders, the event will also feature Ian Rudgley, CPO for the City of Sydney, a council that despite not being subject to the federal targets, has award-winning engagement and mentorship of Indigenous suppliers.

For more details on the agenda please download the brochure.

Does Insurance Against Failure Really Keep You Covered?

Is it really worth taking out insurance against system failure? Is the true value in a system that works first time, all the time?

space launch insurance

Download ‘Parting the Clouds‘, Smart by GEP’s latest whitepaper, to understand the difference between Cloud Solutions and SaaS Software.

There was a debate in the office that ran for a while when we were putting together the white paper that’s associated with this post.

“Yes,” said one camp, “we understand that there are technical, operational and architectural differences between Cloud and SaaS, but so what?”

In other words, why should Procurement care how their software “solution” is delivered to them, as long as it works?

“Fair point” said the others, “but if we believe the cloud model is inherently more secure, robust and future-proofed than the other, should we not call out that distinction?”

“Again,” came the response “if a SaaS implementation is backed by the necessary service level agreements from the supplier, what’s the difference?”

And that is when the subject of insuring space launches came up.

Bear with me.

Can Insurance Really Cover Everything?

Insurance is what we’re talking about, of course. Ensuring your Procurement operation can carry out the business at hand without interruption or disruption is a primary goal of selecting the right software system. The SLAs in the contract with the vendor are what comprise that insurance policy.

As is the case with everything in the insurance world, the greater the degree of protection you want, the higher the premiums.  But there is also a matter of the risk.

Seven per cent of satellites and spacecraft fail at launch. Recently some fairly dramatic launch failures have made the news. The ones that really make the headlines are those that involve the destruction of a payload that teams of scientists have been working on for years.

You can almost feel the despair and horror of watching a decade’s hard work destroyed in mere seconds.

Usually, but not always, these payloads are insured against multiple possible eventualities. Launch failure, failure on deployment, failure on landing – as in the case of the recent ESA Mars mission. Naturally the premiums are immense to insure an interplanetary mission. Often the insurance by no means covers the ultimate cost of the failure.

The many millions paid out after a launch failure may cover some of the financial stake invested by the agencies funding the project. However, there is essentially nothing that can recover the loss of the science that was to be delivered. The physical and material can be replaced, but the loss of the results is absolute.

Don’t Insure Against Failure – Do It Right First Time!

A far better form of insurance for space launches is a system that doesn’t go wrong. This is in fact the calculated risk taken in many projects. Catastrophic failure cannot be mitigated with cash, so better to spend the insurance premiums on building something that won’t explode.

And this is why it seemed an appropriate metaphor for the kind of SLA insurance under discussion. It’s all very well having the on-paper insurance for failure coverage, but that’s of little consequence if the financial value of the pay-out can do nothing to mitigate the real cost.

This is why, then, we feel there is a clear distinction between different interpretations of what “cloud” actually means. The fundamental underlying scalability, security, robustness and other forms of risk really should be considered when making a genuinely informed decision.

Comparing vendor contracts like for like you may see the same SLAs – system availability, uptime and access. But without a doubt the benefit of an SLA is in never having to rely on it.

If your procurement technology fails, are you really covered against all the potential losses? What risks should you be considering when adopting new Cloud technology?

Download Smart by GEP‘s latest whitepaper, ‘Parting the Clouds to find out all you need to know.

The Power of the Hackathon: Putting Theory into Practice

The concept of a hackathon is nothing new. But more and more organisations are realising the benefits found in these events.

mcg hackathon

Many people associate the concept of a hackathon with the emergence of the digital age. However, it may come as a surprise to you, but the term ‘hackathon‘ was first coined in 1999. They started out as highly collaborative events, aimed at pooling computing resources for testing ahead of Beta launches.

However, in recent years, the hackathon has been hijacked by organisations who have recognised the benefits of these events. Now, everything from technological innovation to Blockchain have been the subject of a hackathon.

And there are more coming that you might be able to get involved with too!

This Hackathon is Spotless

This week, integrated facilities service provider, Spotless Group, are hosting a hackathon in conjunction with global start-up accelerator network Startupbootcamp. The two-day event, held at the iconic MCG in Melbourne, Australia, will focus on the Internet of Things (IoT) and DataTech.

Spotless recently highlighted innovation as a key priority for its business. The organisation is hoping that the event will help provide solutions to real problems, enhancing its overall customer service.

Julian Fogarty, Spotless’ General Manager of Brand, Innovation, and Technology, said, “By investing in external strategic programs, partnerships and events, Spotless is demonstrating to customers and shareholders its commitment to pioneering industry-leading services.”

The partnership with Startupbootcamp will ultimately help with a key issue found with hackathons – turning innovation into reality. The organisation connects corporates with start-ups and entrepreneurs, and helps put the ideas generated at a hackathon into practice.

The winners at the event will receive up to $10,000 and six months in Startupbootcamp’s start-up workplace. These teams will also receive advice from mentors and fellow hackers as they work on their ideas.

Digital Cities

It’s not just organisations that are organising hackathons to drive innovative ideas. The city of Sacramento, California, recently hosted a Startup Weekend to generate new business ideas for the city.

Teams were created on the first day, then ideas were generated over the course of the weekend, with business pitches on the Sunday evening. From there, the three winning ideas went to pitch to investors at a venture capitalist event in the city, with the hope of securing funding to go forward.

Another place looking to hackathons to generate innovation is Delta State, Nigeria. The event is aiming to generate new solutions in line with the UN’s ‘Sustainable Development Goals’, with a particular focus on critical needs and solutions for African countries.

The hackathon is being supported by Google, who is not only hosting, but providing some of their own developers to help kick-start the process. It’s expected that around 3,000 people will attend the event in December, either as participants or in the audience.

Hackathons and the Blockchain

One term that has been coined recently is ‘The Hackonomy’. The concept is derived from the Blockchain, and has much in common with bitcoin. To drive a more official side of hackathons, and to provide reward for innovation, a crypto-currency, HackerGold, has been developed.

The currency will allow “frictionless” access to a marketplace of developer talent pools and code libraries for start-up companies. By opening up this market, it should also enable previously unconnected ‘hackers’ to connect and work together.

Blockchain Lab, a blockchain technology pioneer, is set to be the first organisation to accept HackerGold. It will use the currency to pay for services, such as auditing on smart contracts, and code development.

There’s plenty more to come from this space in the shape of a 5 week hackathon, ether.camp, currently being held in London. It’s the first hackathon to be held entirely using Blockchain, and looks set to create a new generation of start-ups using this digital technology. We’ll be interested to see the outcomes when the event finishes on December 22nd.

Have you used a hackathon in your organisation? Or have you been involved with one? Was it a success? Let us know below.

While we try to get our heads around a whole new set of terminology, we’ve sourced your top headlines for this week…

Apple’s Rumoured Expansion into Digital Glasses

  • Apple is rumoured to be considering an expansion into the production of smart glasses.
  • Apple Inc. is reported to have spoken with potential suppliers about the wearable technology, and ordered small quantities of near-eye displays from one supplier for testing.
  • CEO Tim Cook is a known enthusiastic for augmented reality (AR), particularly after the success of Pokémon Go earlier this year.
  • The Apple glasses would be the company’s first product targeted at the AR market.

Read more on Bloomberg

Solar-power Shingles Cheaper Than Roof Tiles

  • Tesla and SpaceX Founder Elon Musk has unveiled a new product – a roof consisting entirely of solar-power generating shingles.
  • The tiles are comparable to high-performing solar panels in terms of power generation.
  • The roof costs less to manufacture and install than a traditional roof, on top of the predicted electricity savings.
  • The anticipated cost savings are due to lower shipping costs, as the tempered-glass tiles are only a fifth of the weight of traditional roofing materials and are less susceptible to breakage in transit. 

Read more on Bloomberg

Procurement Fraud Worsens in Australian Public Sector

  • A recent investigation has found that public sector fraud in the Australian state of New South Wales (NSW) cost the government up to $10 million between July 2012 and June 2015.
  • Procurement and contract management fraud caused the heaviest losses, with each case costing an average of $225,000 and, in one case, $1.7 million.
  • Scams involved invoices for work never done, inflating invoices, or invoicing for non-existent work done by non-existent companies.
  • Incidents also included falsified timesheets and records created for goods and services that had never been delivered.

Read more on Government News

VW to Cut 30,000 Jobs from VW Brand

  • Car-maker Volkswagen has announced it will cut approximately 30,000 jobs at its VW brand over the next five years.
  • 23,000 of the jobs set to be cut will be in Germany, the company’s biggest unit.
  • VW said the decision was aimed at improving profitability in addition to funding a shift towards producing electric and self-driving vehicles.
  • However, it added that it will create around 9,000 new jobs by increasing investments in electric car technology.

Read more at International Business Times

Could Brexit Cloud have a Silver Lining?

The Brexit result upset the apple cart. It also left many people searching for a silver lining to the clouds on the horizon.

silver lining

This article was written by Daniel Ball, Director, Wax Digital.

Marmite – you either love it or hate it as they say. Well, Tesco for one was probably agreeing with the second of those sentiments recently when its rocky relationship with the brand’s owner Unilever hit the press.

As you’ll remember the food giants’ spat was triggered when Unilever stated it would need to raise its UK prices. This was in order to offset the impact of the pound’s post-Brexit weakness against the Euro in its supply chain.

Tesco retorted by removing Unilever products from its shelves. A bold move considering the food manufacturer owns many leading consumer brands.

Weakening Sterling

To recap, in mid-October the pound fell to a value below €1.10 for the first time since March 2010. The pound had generally been on the slide ever since the UK’s EU referendum back in June. It was also performing weakly against other major currencies including the US dollar and those in most emerging markets.

In many ways this is bad news for UK consumer and business to business purchasing. Both as individuals and organisations we’re pretty heavily reliant on global supply chains, meaning that it will cost domestically-based organisations heavily.

UK manufacturers sourcing parts and materials from overseas to make products locally, will pay more due to poor exchange rates.

Equally retailers and wholesalers buying end products from other countries will pay more to put them on their shelves or fill their warehouses. These cost increases will inevitably be passed on to UK business customers and consumers alike.

Returning to Domestic Focus?

However the situation may not be all bad and there could be a silver lining in this post-Brexit cloud. One potential positive outcome from this situation could be some British supply chains choosing to return to a more domestic focus.

Weighing up the options in a less than favourable global financial position, it may make sense for some UK businesses to explore the cost benefits of buying locally. This will help to remove exchange rate risk, even if local supply is not the cheapest price book option.

After years of decline, UK manufacturing may actually receive a boost and resurgence of ‘Buy British’ standards of the past. However this will be fuelled by necessity, rather than a Brexit campaign.

Admittedly it’s an ambitious scenario. Imagine the impact of Tesco commissioning UK food producers to come up with viable, locally made alternatives to replace Unilever’s full range. Especially considering its brands comprise around half of the worldwide grocery market share.

Secondly, consider how a weak pound may also drive overseas buyers to look to British suppliers for pound-based pricing. This will allow them to realise the benefit when the Sterling costs are converted back into their own stronger currencies. UK suppliers could see new market openings and opportunities to trade overseas that once didn’t exist.

British supply may suddenly become in vogue.

Silver Lining in Currency Battles

For procurement teams choosing to buy domestically, a move such as this will mean significant focus on supplier sourcing and close inspection of supplier relationships. Necessary checks and due diligence would have to be built in, in order to ensure any changes in supply didn’t leave the business at risk.

Equally procurement professionals working supply side in the UK should seek to advise the business on how to make the most of new opportunities and negotiate effectively in supply relationships.

Brexit is rather like Marmite in that it divided the nation. But while there are fears about the UK’s future after Brexit, recent currencies-related battles have highlighted a potential silver lining.

Now could actually be the time where we see both onshore and offshore buyers eyeing up UK supply options over going overseas or opting for their foreign domestic choices.

Procurement would need to ensure necessary checks, due diligence and information management in new sourcing activities. There would be a need to ensure swift and effective onboarding. New contracts and relationships would have to carefully managed to minimise ongoing trading risk with new partners.

But if procurement can pull this off, who’s to say this cloud couldn’t have a silver lining?

Big Ideas Summit 2016: Big Idea #23 – Engaging Social Innovation

Are enough procurement professionals taking account of social impact in their work? Are they risking missing out on innovation?

At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.

From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.

Procurement’s Social Impact

Timo Worrall, Senior Category Manager FM EMEA at Johnson & Johnson, talks about J&J’s ‘Social Impact Through Procurement’ programme. The programme is focused on driving job creation and increasing spend with social enterprises.

Timo argues that by engaging with social enterprises, procurement is not only accessing innovation and new suppliers, but giving something meaningful back to communities.

Catch up with all the delegates’ Big Ideas from the 2016 Summit at the Procurious Learning Hub.

Want to find out more about Big Ideas 2016? And maybe what we have planned for 2017? You can visit our dedicated website!

If you like this (and you haven’t done so already) join Procurious for free today. Get connected with over 18,500 like-minded procurement professionals from across the world.

What Can Procurement Learn From 2016?

From politics to procurement – 2016 has changed our outlooks. But what can the profession learn as we head towards the new year?

politics of change

I’m not a political person, never have been, but maybe 2016 has put paid to that. It could be my advancing years or the direct relevance the events of 2016 have created, but politics has now piqued my interest.

Furthermore, as a business owner, parent and amateur investor, it’s beholden on me to be well informed and to put in place risk mitigating strategies should the worst happen.

Different Outlook

To anyone who knows me, I think I’d fairly describe myself as a cautious optimist. Someone who believes in the enduring power of ‘doing the right thing’. I must say this outlook has been tested to its limits these last three months.

And with the result of last Wednesday’s US election now a reality, I find myself having to re-evaluate this mantra.

I think it’s fair to say that few people in business expected the UK to vote for Brexit. Even fewer expected the US to elect Donald Trump as President. To say that the pollsters who predicted strong contrary outcomes have been wrong-footed is an understatement.

As BBC correspondent Mark Mardell wrote on Wednesday, “it is perhaps ironic that our two countries, with a reputation for stable political systems, have declared political revolutions of such importance”.

Ironic or inevitable, if find myself asking. As Trump put it, his path to victory was ‘not a campaign, but a great movement’.

Undoubtedly from these 2 cataclysmic events there is the notion that globalisation has given folk a raw deal. There is a belief that the gap between rich and poor has widened. This is clearly nothing new.

But the events of 2016 are now showing us that people are willing to express their desire for change in a manifest way, and that the UK’s referendum and US elections have facilitated this expression. Clearly the belief that ‘we need people who change the world, rather than describe it’ has never been more true.

Politics & Procurement

So aside from emotive connotations of such seismic change, what can the Procurement profession learn about these events?

I’ve always read with interest the term ‘Force Majeure’ in contracts, essentially the common clause that frees parties from legal obligation when an extraordinary event occurs. Is 2016 now the year of Force Majeure?

As organisations have historically rushed to globalise their supply chains, are we now going to see a reversal of this and a more localised, protectionist approach to markets? The challenge for Procurement Leaders will be how to predict these events and to mitigate the risks associated with global change.

Without doubt we are entering an era that favours a less politically correct approach of yesteryear, one that rewards forthright opinions and direct action. The new breed of procurement practitioner will need to build this thinking into category plans, sourcing strategies and contracts.

I, for one, will be watching with interest.

How 9 Technologies Will Drive Global Supply Chain Disruption

Cloud corporations, supertrends, and potentially procurement without lawyers and auditors. Are you keeping up with technologies driving global disruption?

technological-disruption

Last week, Procurious attended the ProcureCon Europe conference in Berlin. You can read about our experiences, keynote highlights, and more on our Blog.

One keynote caught our attention enough that we felt it needed delved into in more detail. Professor Leslie Wilcocks, Professor of Technology Work and Globalisation at LSE, spoke about how procurement needed to prepare itself for digital disruption.

If you are a regular reader of the Procurious Blog, then you will be aware that we have a keen interest in future technologies. From drones and last mile logistics, to blockchain, we’re aiming to keep up to date with the impact on global supply chains.

So with this in mind, we revisit what was a fascinating keynote.

Prepare for Disruption!

Professor Wilcocks kicked off with the following statement: “Technology will disrupt pretty much everything between now and 2025.” This isn’t just the world of business, though that will see a massive change. But it’s also everything we do, see, touch, and encounter in our daily lives.

According to the GEP Procurement Outlook 2016, there are 5 so-called “supertrends” we need to be on the look out for. These are:

  1. Heightened impact of geo-politics
  2. Shift of economic power to the USA and emerging economies
  3. Continued decline in global commodity prices
  4. Increased impact of climate change
  5. Push to Digital

It’s safe to say that all five have been highly visible during this year. We’ll be keeping an eye out for 2017’s “supertrends” with great interest!

However, it’s the fifth trend that Professor Wilcocks focused most on. He believes that much of the interconnectedness and innovation being seen in procurement comes from the application of technology.

As we have frequently stated, procurement cannot afford to ignore technology. If it does, it cannot deliver true value to organisations, and faces redundancy, or obsolescence, in a fast-changing world.

Rise of “The Cloud Corporation”

Happily, the assembled procurement professionals were given a list of technologies to watch over the next 4-5 years. These fell into an easy to remember acronym, SMAC/BRAID.

  • Social Media
  • Mobile Technology
  • Analytics (Big Data)
  • Cloud Service
  • Blockchain
  • Robotics
  • Automation
  • Internet of Things
  • Digitisation or Digital Fabrication

These technologies all link together to help the emergence of digital businesses. Or as Professor Wilcocks put it, “The Cloud Corporation.” They also provide a number of opportunities and challenges for businesses. They need to be more agile, and manage on a ‘micromultinational‘ level, but it also opens up the potential for major process innovation.

However, Wilcocks did give one caveat on technology and innovation. No-one knows how to fully maximise the potential of technology. The only way to do this is by learning by making mistakes, something less agile organisations have proven themselves to be less good at in the past.

Transforming the Supply Chain

So how does all this fit together with disruption to the global supply chain? For the most part, the disruption has already started, and, as a result, organisations are playing catch up. However there are some tactics that can be used.

  • Organisational – realigning organisations strategy for supply chains on a functional, geographical or regional level.
  • Technological – ensuring supply chains are integrated to work best through better connectivity.
  • People – traditional pyramid structures aren’t optimised for the digital era. Human talent in the digital supply chain should be organised as a diamond, providing a more streamlined hierarchy, and better training opportunities at the lowest levels.

Switching the focus to the benefits of automation showed how the technologies could impact productivity. Traditionally, organisations have used five methods to transform their supply chains:

  1. Centralise
  2. Standardise
  3. Optimise
  4. Relocate to Low Cost Region
  5. Technology Enablement

However, there is a sixth that can, and is already, increasing productivity in supply chains – automation. It’s estimated that by automating, an extra 3-4 per cent can be added, on top of the efficiencies found in the other measures, by automating processes.

Final Word on Blockchain

There was one final word on blockchain before the end of the keynote. The disruption being caused by blockchain is, in itself, a protector for organisations from being disrupted. And organisations can leverage the technology to aid transparency, governance, and authentication.

Blockchain can also help with the evolution of “smart contracts”. These contracts can have rules set for automatically storing data, and executing commands.

Could it help to disrupt the disruptors? Probably, yes. Operating the technology at its most effective level could remove the need for banks, lawyers, credit cards, and even auditors, in the procurement process.

Whatever the challenges that exist, surely that’s something to aim for. Isn’t it?

My 5 Killer Job Interview Questions

How do you separate the diamonds from the rough in your next recruitment process? Do you have the killer questions to help?

killer questions

When I started all my businesses (The Faculty, The Source, and Procurious) I declared that I was building a culture, not a company.

Culture can’t be forced, but it also doesn’t happen organically. It stems from recruitment. It’s not always the best person, but the right person for the job, that can help foster company culture.

Leadership experience, technical skills and cultural fit are all important here, so how can you recruit someone that ticks all three boxes?

From all my years of playing interviewer, I’ve compiled five killer questions that separate the diamonds from the rough.

1. The “Tipping Point” Question

“What were the reasons for leaving your current job?”

Asking a potential employee why they decided to leave their job provides good insight into what makes them tick. It also highlights their personality and gives you a definite indication of what they don’t want to happen in their new job.

It’s also a good question to ask in exit interviews to ensure your business can learn from its mistakes.

2. The “Leader of the Pack” Question

“Tell me about something you’ve lead – a group, a team, a movement, an initiative…any situation where you were in the lead?”

This question resulted in the most surprising interview response ever. When I first established The Source, my procurement recruitment company, I was interviewing for the Managing Director role.

When I asked this question, one of the candidates paused and then answered, “I once led a revolt against management in a manufacturing company I worked for.” Wrong answer.

3. The “Mentor Me” Question

“Tell me about some people you’ve mentored and what they are doing now?”

If people stumble on this question, they obviously don’t have a track record in developing people. Furthermore, if they can’t talk to what their mentees are doing now, they really weren’t genuinely committed and interested in that person’s development enough to keep track of their progress.

4. The “Question” Question

“Do you have any more questions?”

I always want people to have lots of questions. And not just about them – their pay, their hours, the role and where they’ll sit – but about the business, about the industry, the issues we are facing, about our future.

To be successful in any business, people need to be genuinely concerned about their profession or industry, not just their own career development.

5. The “One Word” Question

One of my mentors gave me this tip. One of her interview questions was:

“If your friends could summarise you in one word, what would that word be?”

This question is great because it allows the candidate to drill down to the one attribute they represent but also aspire to be.

Want to hire someone who describes him or herself as “encouraging” or “meticulous”? Of course you do. Someone who describes him or herself as “Chatty” or “Brilliant”? Didn’t think so.

Reflect on Your Questions

So you’ve asked your questions, the interview is complete and you look to move onto the next candidate. Before you do so, remember the final important step – reflect.

This was a key piece of advice I received from one of our recruitment experts at The Source. It’s important to reflect on the candidate’s responses and behaviour to help determine where they fit in the organisation.

Hiring managers should always consider their current and desired workplace culture, and think about how the candidate fits in.

To do this, I often ask myself:

  • What were the energy levels like? Did the candidate have energy – physical, mental and spiritual (I know, sounds spooky…but think about it!)?
  • Did the conversation flow? Was the candidate both interesting and interested? Did I struggle to follow what they were sharing? Was the conversation stilted?
  • Would the person be a good representative of the team? Here, I’m talking about their values and approach, as well as the way they communicate and present.

With these interview questions in your repertoire plus some “reflection” time, you will be on your way to recruitment success.