Removing Obstacles to Competitiveness with CLM

Do you view CLM as an automated filing cabinet? You’re completely missing the point!

When you think about why a company would invest in a contract lifecycle management (CLM) solution, the first things that come to mind might include improved governance and agreement administration. But is that it? If the ROI of CLM is limited to better dotted I’s and more neatly crossed T’s, the effort to select and implement a solution hardly seems worth it.

Companies that view CLM as an automated filing cabinet are completely missing the point. They may even be at risk of having a constrained strategic vision for the future and for the place they want to hold in the market.

In order to create and defend a competitive advantage, a company must lean forward with every process, through every employee, and via every system they implement. There is no reason to do anything if it does not breakdown silos, overcome barriers and make them more competitive in some way, and contract management is no exception. CLM must eliminate obstacles to competitiveness and be as strategic as the company’s approaches to market segmentation and lead generation.

Competitiveness Requires Constant, Active Refinement

Even though the world is moving faster than ever before, contracts are still put in place for multiple years at a time. The chances of conditions being the same in the second or third year of a multi-year contract as they were during the bidding process are slim to none. As a result, companies – led by their procurement function – should expect to modify the contracts that govern supplier relationships. This is especially true for an actively engaged team that wants to drive maximum value through their contracts. CLM not only makes it easier to amend an agreement, it tracks the changes – even if there are hundreds of them – and makes clear which set of terms and conditions is the most current.

Are You Getting What You Contracted For?

There are two ways of looking at supplier obligation management. The first involves whether or not the company receives the goods, services, delivery, and outcomes outlined in the contract each time they make a purchase against the contract. The other is a bit more complex, and it forces procurement to look at demand management in a nonconventional way. Just like a world class athlete, a competitive organization has to be supplied with the appropriate fuel. If procurement estimated a certain level of demand by a predetermined point in the contract and actual purchases are falling short, there is a very good chance that other performance benchmarks will be missed as well. CLM can ensure that consumption is proceeding as planned, and if it isn’t, the system can alert procurement. Procurement’s insight becomes a leading indicator of potential performance – one that the executive team won’t want to be without.

Sleep with One Eye Open

In order to secure or defend a competitive advantage, procurement may be supporting decisions to take risks rather than just monitoring external risk from afar. If a company is going to engage in strategic risk taking, they must be able to constantly audit and review reports to ensure that performance benchmarks are achieved and compliance is maintained. This becomes even more important if procurement is taking advantage of appropriate opportunities to refine and amend the contract.

It is unrealistic to expect anyone working in a fast-paced environment to remember the latest terms and conditions; instead, CLM should bear the weight (and proactively report on) key contract data.

Results matter above all else in a competitive enterprise. Leading companies are harnessing the capabilities of CLM to navigate (and eliminate) uncertainty and enable maximum performance at all times. If your company is looking to become more competitive, you’ll need to be prepared to do the same – an increase in performance that is not possible without leveraging the full capabilities of your supply base through contract management.

This article was originally written for Determine By Kelly Barner.

Can You #FeeltheLove This Valentine’s Day…?

As a procurement professional, cutting costs is the very least you can do! Procure with purpose and start driving change world-wide…

tomertu/Shutterstock.com

Our webinar,  Feel The Love takes place at 3pm GMT /10am EST  on 14th February 2018. Register your attendance for FREE here. 

NEWSFLASH: Being world-class today doesn’t mean being the best in the world. It means helping the world run better.

In 2018, you should be working beyond cost savings and process efficiencies. You should be committed to making a positive impact on the communities in which you operate by eradicating slave labor, creating ethical and sustainable supply chains and levelling the playing field for all.

Thanks to the awesome power of social media and our interconnected world it’s easier than ever before to make that happen. But the challenge procurement pros still face is kick-starting, and measuring the impact of, their purpose-led work.

This Valentine’s Day, SAP Ariba and Procurious present #FeeltheLove – the first Procure with Purpose webinar.

What can I expect from the Feel the Love webinar?

We’ll be discussing…

  • What is Procuring with Purpose?
  • Why should professionals care about purpose-led procurement?
  • What are the small things that you can do immediately to drive big outcomes?
  • How do you measure and report social impact to the CFO?
  • The procurement teams who are already getting it right!
  • How can businesses ensure that economic growth is always accompanied by a respect for human rights?
  • Our vision for using the power of social media to drive purpose-led procurement around the world

Who are the guest speakers?

Tania Seary – Founder, Procurious

A true procurement entrepreneur, Tania is the Founding Chairman of Procurious, The Faculty and The Source. Throughout her career, Tania has been wholly committed to raising the profile of the procurement profession and connecting its leaders.

After finishing her MBA at Pennsylvania State University, Tania became one of Alcoa’s first global commodity managers.

In 2016, Tania was recognised by IBM as a #NewWaytoEngage Futurist and named “Influencer of the Year” by Supply Chain Dive. She hosts regular procurement webinars, and presents at high-profile events around the world.

Pat McCarthy – SVP and GM, SAP Ariba North America

As head of SAP Ariba’s North American business, Pat McCarthy is responsible for driving sales performance, the go-to-market strategy and overall operations of the field organization across the U.S. and Canada.Since joining SAP in 2005, he has held a number of executive roles successfully leading Net New, Mobility, and Database &Technology teams throughout the U.S.

Immediately prior to his current post, Pat served as chief operating officer for the Midwest region of the U.S., overseeing the consistent execution of sales strategies, operations and the region’s go-to-market initiatives.

Pat graduated from Elmhurst College, sits on the board of Chicago Tech Academy, a charter non-profit for Chicago high school students, and supports global charitable endeavours through Kiva.

Nicole Verkindt – Founder and CEO, The OMX

Nicole Verkindt is the Founder & CEO of Canadian technology company, OMX (theomx.com).

She is passionate about the role that data and networks can play in connecting diverse supply chains and analysing and improving the exact impacts from procurements.

The platform is the only one in the world that manages obligations companies have to invest in local businesses. OMX is an online marketplace to help companies diversify their procurement by providing opportunities through the platform that smartly matches to suppliers.

Nicole is a commentator on CBC and columnist for Vanguard magazine focusing on technology and business news and was a “Dragon” on Next Gen Dragon’s Den, which is dedicated to early stage technology businesses. She was named Canada’s national woman entrepreneur of the year in 2017.

Peter Holbrook – CEO, Social Enterprise UK 

Peter Holbrook became CEO of Social Enterprise UK in January 2010.

Social Enterprise UK is the national trade body for social enterprise and represents a wide range of social enterprises, regional and national support networks and other related organisations. SEUK works to promote social enterprise as a model for changing both business and society.

Peter has established, developed and supported hundreds of diverse social enterprises over his career. He has advised government taskforces in the UK and overseas and chaired the Social Enterprise World Forum, the global network of social businesses until 2015.

Peter has previously worked for Oxfam, Greenpeace and various disability charities. He has experience of working in overseas development, community development and public health. Peter started his career with Marks and Spencer PLC and also spent several years with Body Shop International

He was appointed a CBE in 2015.

How do I register for the webinar?

Joining the Procure With Purpose movement and registering for our webinar couldn’t be easier (and, of course, it’s FREE!)

Click here to enter your details and confirm your attendance. We’ll send you a email with a link to the webinar platform in the run up to the event.

I’m already a member of Procurious, do I still need to register?

Yes! If you are already a member of Procurious you must still enroll to access the webinar. We’ll send you a email with a link to the webinar platform in the run up to the event.

When is it taking place?

The webinar will take place at 3pm GMT /10am EST on14th February 2018.

Help! I can’t make it to the live-stream

No problem! If you can’t make the live-stream you can catch up whenever it suits you. We’ll be making it available on Procurious soon after the event (and will be sure to send you a link) so you can listen at your leisure!

Can I ask a question?

If you’d like to ask one of our speakers a question please submit it  via the Discussion Board on Procurious and we’ll do our very best to ensure it gets answered for you.

Commit to Procure with Purpose

Procure with Purpose is a movement. A coalition of committed, energised procurement professionals who want to deliver value beyond cost savings and efficiencies.

Through the Procure with Purpose campaign, we’ll shine a light on the biggest issues –from Modern Slavery; to Minority Owned Business; and from Social Enterprises; to Environmental Sustainability–and on you –our members -who are already driving exponential change.

How do I get involved ?

To stake your place, simply sign up here. It’s FREE to join –you just need to be passionate and ready to lead with purpose! When you sign up for the #FeeltheLove webinar, you’ll be automatically registered for the Procure with Purpose group on Procurious and all of our related, online events.

Our webinar,  Feel The Love takes place at 3pm GMT / 10am EST on 14th February 2018. Register your attendance for FREE here. 

Five Best Negotiation Scenes In Film And TV

How much can you learn about negotiation by sitting on the couch watching movies? Plenty.

Want to become a better negotiator? You could diligently read up on the subject or attend some negotiation training courses, but for the couch potatoes amongst us, you might just learn more by watching some of your favourite films.

Negotiation scenes come in many varieties in film. Often they’re in the form of a hard sell (think Leonardo DiCaprio selling dodgy stocks in The Wolf of Wall Street), or a hostage situation (Tom Hanks negotiating for his freedom in Captain Phillips) or other life-threatening situations such as Mel Gibson trying to talk a suicidal man down from a ledge in Lethal Weapon.

But when it comes down to the nuts and bolts of haggling, the following five scenes give illuminating examples of how to win – or lose – in a high-stakes negotiation.

 

  1. Sticking to your final offer – Nightcrawler (2014)

Jake Gyllenhaal’s character Lou is trying to sell a video of a crime scene to Nina, a TV news manager. Watch for:

  • Lou being willing to haggle down to a certain level, after which he refuses to budge.
  • The power shift in the negotiation from Nina to Lou (aided in part by Lou’s creepy intensity).
  • Lou throwing in a number of extra conditions when he knows he has Nina beaten.
  • Best line: “When I say that a particular number is my lowest price, that’s my lowest price, and you can be assured that I arrived at whatever that number is very carefully.”

 

  1. Doing your homework before a negotiation: True Grit (2010)

In this Coen Brothers film, 14-year-old Mattie Ross (played by Hailee Steinfeld) shows what horse-trading is all about – literally. In order to raise money to hire a Deputy U.S. Marshal to help her track down her father’s killer, she approaches an auctioneer named Stonehill with two demands – that he buys back the ponies he sold he father, and that he pays her $300 for a horse stolen from his stable. At first, Stonehill laughs in dismissal, but Ross’s perseverance and detailed knowledge of the relevant law wears him down until he yields to her demands – plus a little bit more. Watch for:

  • The moment Stonehill mentions the valuation of the horse and hence kicks off the haggling process.
  • Mattie’s threatening to walk out on the negotiation and go to the law, causing Stonehill to adjust his offer in panic.
  • Best line: “I do not entertain hypotheticals – the world as it is is vexing enough.”

 

  1. Negotiating across cultures – Snatch (2000)

Warning: strong language.

When boxing promoter “Turkish” and his partner Tommy approach Irish Traveller “One Punch” Mickey O’Neil to ask him to participate in a fight, the prospect seems simple enough. The only problem is, Mickey (played by Brad Pitt) has an almost unintelligible accent. His price is the purchase of a fancy caravan “for me Ma”, and then proceeds to list off all the features he wants included in the deal … while Turkish and Tommy can’t understand a thing. Watch for:

  • Mickey’s impossible-to-understand list of caravan features. The video clip below includes subtitles, but cinema audiences had no such assistance when this film was released.
  • The bewilderment on Turkish and Tommy’s faces as they realise they don’t know what they’ve actually agreed to. The cultural barrier between the Irish Travellers and the other characters in the film is a running theme that goes far beyond the tricky accent.
  • Best line: “Did you understand a single word of what he just said?”

 

  1. Coercion – Ocean’s 11 (2001)

“Frank”, played by the late Bernie Mac, has been tasked with sourcing the transport needed for the team to undertake the crime of the century. The dealer names his best offer, and Frank appears to accept. So far, everything seems to be going smoothly … until the handshake. Frank extends the grip to a full 60 seconds, apparently crushing the car dealer’s hand while chatting amiably the whole time. The car dealer, desperately uncomfortable and in pain, abruptly drops his price before freeing his hand. Watch for:

  • The range of emotions playing over the car dealer’s face as he realises he can’t free his hand.
  • Frank’s feigned surprise and gratitude when the dealer drops his price.
  • Best line: “If you were willing to pay cash, I’d be willing to drop that down to seven-SIX-teen each.”

 

  1. The power of silence: 30 Rock (TV series 2006-13)

By simply sitting in near-silence and looking stern, grumpy babysitter (Sherri) is able to make Jack Donaghy so nervous that he doubles her pay for working half the time. Donaghy (Alec Baldwin) comes into the negotiation with his usual swagger, but Sherri’s silence causes him to blabber and rapidly cave. Appalled at his own performance, he confronts Sherri a second time. Watch for:

  • Sherri’s tactical silence when Jack pauses to let her speak.
  • Jack rolling his eyes when he realises how badly he came out of the negotiation.
  • Best line: “I made every mistake you can in a negotiation. I spoke first, I smiled … I negotiated with myself!”

Want to suggest some other films or TV shows with great negotiation scenes? Leave a comment below!

Flashback Friday – Can You Make Procurement Decisions Under Fire?

Are you struggling to lead or motivate your team through difficult times and under extreme pressure? We’ve got some top advice from someone who knows a thing or two about making decisions in extreme conditions…

Przemek Tokar/Shutterstock.com

Andy Stumpf spoke at the Chicago Big Ideas Summit 2017. Read more about our upcoming event  – The London Big Ideas Summit – on 26th April 2018 and find out how you can get involved. 

“There are only two types of leadership.” begins Andy Stumpf “good (effective) and bad (ineffective).”

In today’s world, senior managers often struggle to effectively  respond and adapt to change. But the world is full of change and it’s crucial that our procurement leaders are flexible enoughto respond to the unexpected, to “read the tea leaves and meet the challenges of the real world.”

Andy  began his U.S. military career at the age of 17, transitioning from the position of an enlisted soldier, to an officer, and then,  in 2002,  he joined the most elite counter terrorism unit in the military; SEAL Team Six.

The unit, which is tasked with conducting the nation’s most critical missions, has become the inspiration for a number of Hollywood movies and books.

If you ever needed a man who knows how to plan for and adapt to change, Andy Stumpf is your guy! He’s strategised and executed hundreds of combat operations throughout the world in support of the Global War on Terror.

At Procurious’ Chicago Big Ideas Summit, Andy will draw on his wealth of leadership experience to talk about the intersections between business and combat, decision-making and empowering procurement teams.

Building the greatest leaders

“Business and combat are defined by their similarities, not differences and the theories of successful military leadership and successful business leadership are identical” Andy believes. It’s possible to apply the same principles and philosophy to your procurement teams because it’s really only the arena that differs.

“60 per cent of the time, organisations want me to talk about leadership. In fact, the definition is always the same. What can change is the way in which you approach leadership.”

So, how do the military build strong and competent leaders?

“Leadership is about empowering your people. From day one in the military we are taught, and it is enforced, that in the absence of leadership you must stand up and take control.

“Instead of creating individuals that think reactively in nature, we instead create individuals that think proactively.  You don’t have to be in a leadership position now to think two or three steps ahead.  In doing so, when a decision presents itself you’ll already have an answer for it.”

Does Andy believe these skills can be taught or are natural leaders exactly that?

“neither successful teams or leaders occur by accident, these are skills that must be learned, practiced, and refined. Navy SEALs are successful because of how we select, train, and lead our teams.

“Nothing in that process happens accidentally, everything is calculated. We demand leadership and accountability from each individual starting from the first day of training. We prioritise the individuals to our left and right, and the goal of our team over personal success. This philosophy is diametrically opposed to what is often found in society, and requires a structured approach and prioritisation from leaders to be successful.”

And Andy has some strong words of advice for any over-confident leaders out there. “The 1st leadership principle within the SEAL Team is ego; if you have a massive ego you’re more concerned that your ideas and strategy is being used as opposed to striving for success of the team. You can’t meet the challenges of the real world this way!”

Plan, plan and plan some more!

“We plan for everthing in the navy. We often say that if you want to shut down the military, you simply need to shut down powerpoint!

“Every stage of a plan gets one slide and there might be between five and seven slides on the ‘what-ifs’, the contingencies. Where will we land this helicopter? Where is the nearest location for medical treatment and what alternate options do we have?” When, as Andy points out, precisely 0 per cent of planning goes as expected, contingencies are everything!

“You make primary, secondary and tertiary plans because you don’t want to have make snap decisions in a crisis. You need to be able to fall back on stable procedures”

And of course, it can’t hurt that contingency planning makes you look like something of a genius! “It’s really hard to make difficult decisions in a crisis because you’re in a time compressed environment and you may have people’s lives depending on you.  We plan for 24 -72 hours and there are 5 phases per plan. Each phase has 5-7 ‘what if‘ contingency plans because, at the end of the day, you don’t want to make decisions in a crisis, you want to be able to draw on a branch diagram.

“It’s the contingency planning especially in the SEAL teams that makes the difference between success and failure in moments of crisis.”

What can our procurement teams learn from this? Spend a lot more time planning, for starters! But Andy also reinforces the value in having baseline standards to fall back upon. “Businesses should always fall back on standard procedures so people can come together, with a clear knowledge of the protocol. This is especially crucial when you’re working under restrictive time constraints.”

Andy’s final words of advice? “Don’t get attached to your plan -get attached to success!”

Andy Stumpf spoke at the Chicago Big Ideas Summit 2017. Read more about our upcoming event  – The London Big Ideas Summit – on 26th April 2018 and find out how you can get involved. 

Do We Still Care About Professional Associations?

Do procurement professionals across the globe still see the value in professionals associations? And, if not, what can these associations do to regain their appeal?

When Procurious put out a call for procurement survey participants, we were delighted when 500+ professionals across more than 50 countries shared their insights and wisdom.

We’ve investigated the finding that 54 per cent of procurement professionals don’t trust their boss and interviewed a number of global CPOs to find out why this figure is so alarmingly high.

We also asked them why it is that procurement staff are moving on from their current roles so quickly and how leaders can cope with this erratic workplace dynamic.

And thirdly, we looked at the scepticism the profession still feels towards social media – 77 per cent of global procurement professionals have never crowd-sourced a solution to a business challenge on social media.

Our final deep-dive into the survey’s results looks at the stat that 55 per cent of procurement professionals either don’t hold memberships in professional associations or do not regard membership as benefiicial to their career development.

This result would suggest that professional bodies need to re-group and reform in order to stay relevant in today’s world…

The Results Explained By Global CPOs

At The Big Ideas Summits in Chicago and Melbourne earlier this year we revealed the results of the survey to our CPO delegates.

In this video we ask what professional associations can do to maintain relevance and membership growth. Is there still a place for these organisations?

Have today’s procurement leaders benefitted from professional association memberships?

Many of the people  we interviewed admitted to placing a lot of value in professional associations, citing them as one of the key secrets to their success.

Tony C. Astorga, Supply Chain Management Consultant described his career path and explained  “I set my goals upon  what do I need to learn to be more successful and provide greater contributions to my company. I think through certifications, memberships allow us to have those tools to be able to grow.

Josh Teperman, Senior Consultant, The Source Recruitment “A membership organisation is going to have value. It gives you access to a community of people who are all thinking about what does the future of procurement look like. If you want to stay relevant you want to be part of a reall good  membership organisation where people are talking about the future leaders in procurement, what the technologies are going to look like,  what the macro economic and politial trends are that are goint to affect procurement. So there’s certainly a lot of benefit to be had in being part of those organisations.”

So what should professional associations do to up their game…?

1. Communicate their value

“I think the challenge here for organisations is helping people understand how to maximise the benefits” argues Alan Paul, SourceIt CEO. Of course, if  prospective members, don’t see the potential benefits of a membership – they simply won’t join.

Michelle Varble, Procurement Director, United Airlines concedes stating “I do think they need to reinvent their service offerings. But having said that I think these organisations need to focus on how they market themselves. We need to move past the idea that we have an affiliation with them and move to an area where we see them as resources.”

2. Stay relevant

“I am a member of an organisation in Australia. I would have to say it has not been very relevant to me,” says Jane Falconer. ” The generations coming through universities now will have to find different ways of commuting and embrace social media in its most modern form. If we use existing means it’s not going to work.”

Anne Berens, Principal AMB ProCures LLC agrees stating  “Organisations need to remain relevant. There are so many things that organisations offer whether its education or networking or develoment or futurisitc thinking that it’s important to not try to be everything to everyone. I think then it gets spread a little bit thin- be very focussed on what your mission is and allow the customers be discerning and select what’s appropriate.”

3. Be “on topic”

John Foody General Manager Procurement, U.S Steel believes that “Organisations have to be topical. Sometimes at the local level the meetings, the challenges, the issues aren’t topical to our people so the ability to address issues that are relevant in the moment and tie it up with that membership is the challenge that any organisation faces”

Keith Bird, Managing Director, The Faculty  shares this view arguing that “As long as you invite a membsership that adds value to the CPO, the CPO’s direct reports and the team overall that can bring the global insights to you then I think it’s worthwhile.”

Request your copy of the Gen NEXT Report

The Gen NEXT report, exclusively available to Procurious members, is packed with data, insights, recommendations, and links to over 20+ Procurious articles that further explore many of the findings that are raised in the report. Email us to request your copy. 

My 5 Networking Goals For 2018

Given that she’s always “banging on” about #networking, it’s no surprise that Tania Seary’s 5 New Years Resolutions are all about growing – and nurturing – her professional network.  

This year I am going to:

  1. Find my fabulous five
  2. Dine (not eat)
  3. Keep watering the seeds of possibility
  4. Connect the dots, and
  5. Take more photos!

I guess this isn’t the typical list you would see for someone’s New Year’s resolutions … but I feel that it works, given that I’m always “banging on” (English for carrying on, talking, espousing) about the power of networking. In the past I’ve spoken about networking in a theoretical way, so for those who are interested in improving their networking skills and want to start NOW, I thought I would share my 5 networking goals with you and provide some examples to get you started.

Find my Fabulous 5

My first goal is to identify 5 new people who I would like to connect with in 2018 who could really help “shift the dial” for my businesses. My challenge is that there are so many amazing people out there who could really help, so it’s not going to be easy to get it down to 5. I have to be strategic and even ruthless in my selection.

Now the tough part – once I’ve found someone fabulous, how do I find a reason for them to connect with me? This is where so many people get stuck. They freeze at the thought of putting themselves “out there” and fear rejection.

Here’s my advice. Take a deep breath, raise your head high and move forward in the confidence of knowing the most important rule of networking – and that is to Network From The Heart. Why from the heart? Because networking is about giving, not receiving. It has to be authentic. You need to have the other person’s interest as your priority … so, in my case, once I have my list I’ll immediately try to work out how I can help each of the 5!

Keep watering the seeds of possibility

The Fabulous 5 are not currently in my network; rather, they are game-changing people I would like to know. Equally important are my current connections who are the lifeblood of information about the profession. Of course, I’m following all these people online and can see what is top-of-mind for them, but to understand their concerns, strategies and aspirations, I really need to have a conversation.

This year, I have decided to become a bit more structured and conscientiously catch up with these people each quarter. I am going to schedule calls. There are probably up to a dozen people in this “inner circle” – they are a combination of CPOs, management consultants, media, and influencers who really have their finger on the pulse. They are the hubs of their own large networks.

Who are the hubs within YOUR network who can help keep you connected?  Write down their names – potential future employers, smart people whose opinions you trust, people who would recommend you to others. Now, what can you do to help them in 2018?

Don’t eat, dine

I am not sure who made the famous quote “why eat when you can dine?”… but it’s one of my favourites. Even though I write so often about the importance of online networking, I am also a huge believer in the importance of meeting people face-to-face. It’s only through face-to-face contact that we really get to know people and begin to understand both their motivations and their aspirations. You can then work out how you and other members of your network can help them achieve their goals. That’s when the magic starts to happen.

I love food and eating … so for me, sharing a meal is a great way to get to know people. “Breaking bread” with your network can lead to all sorts of mouth-watering business opportunities.

My 2018 resolution is to host some small dinner parties at home to get to know my key business partners (and their partners!). It may not be practical, feasible, or even of interest for you to entertain at home, but there are plenty of other options such as catching up for coffee or inviting them to be your guest at an event where other people are hosting. Get creative! The dividend of knowing someone well will always pay off – a pleasant meal, a new learning, a business lead, the creation of a new friendship … the business opportunities are endless!

Connect the Dots

As well as keeping in touch with my network online, high on my agenda for this year is to attend as many face-to-face networking events as possible. For me, this includes Procurious’ Big Ideas Summits in London, Sydney, Chicago & Munich, The Faculty’s CPO Forum in Melbourne, IBM’s Think event in Las Vegas and ISM 2018 in Nashville.

It’s going to be a busy year, but I am so energised by the opportunity to meet and connect with thousands of procurement and supply chain professionals around the world and help “connect the dots” within the Procurious network.

Many people equate having a good network with having a large database of contacts, or attending high-profile conferences and events. But they falter at the next step – actually doing something to make the connection meaningful.

It’s impossible for anyone holding down a day job to attend all these events, so my advice is to be strategic. Choose your events wisely and have a strategy to achieve your ROI!

Take and post more photos!

I don’t know about you, but I love seeing photos of real people in my professional social media feeds! I am so tired of those generic stock photos that are branded on too many social media posts. This year I am going to be talking a lot about being human (look out for #behuman and #beatthebots hashtags) because I believe authenticity is a vital part of being a great leader. There is also a huge opportunity for us all to carve out a new future for ourselves in Industry 4.0 by leveraging our own very human unique personalities and capabilities that robots won’t possess (in our lifetime, anyway). Procurement can also “procure with purpose” to make a big difference in the communities in which we operate. So many possibilities!

We all have to work on promoting our profession to the world and make sure procurement & supply chain are well represented in the Googlesphere! Photos capturing real moments, with real people, like me here with some procurement professionals from Costa Rica I met at ISM 2017 shows what an interesting, diverse and optimistic future we have for our global profession. #BRAVO!

All the very best for 2018.  Stay in touch 🙂

The ‘Why’ Behind the Drive for Retail Process Efficiency

Process efficiency is good. In fact, it’s one of the most frequently cited objectives for the procurement profession. But it can’t have a real impact unless we understand the bigger picture…

As we expand the impact of procurement beyond savings, one of the most frequently cited objectives is process efficiency. In theory, if procurement can help the company execute internal processes more swiftly they can… something, something, something (?). Process efficiency is good, and savings are good. But neither will have any real impact if we don’t understand why we are driving them.

The retail industry is a perfect case example for the need to understand the big picture impact of process efficiency. When you work for a B2C company, customer satisfaction is the answer to every question. In retail, the benefit of every project must be traceable all the way to the store.

The wholesale goal of retail: customer experience and satisfaction

Sourcing project teams usually sit down and articulate their goals and objectives at the outset of the process. Too often they are focused on the impact of the product or service on the company and its employees when they should trace that efficiency forward to the value it creates for customers. This perspective provides the context for many of the decisions made during the sourcing process:

Why should office supplies need to be easier to order? 

So marketing doesn’t have to interrupt their work on the new ad that will drive shoppers’ grocery lists this week.

Why are we going through a lengthy equipment testing process?

To prevent customers from being inconvenienced at the deli while we repair the slicers (again).

Which supplier should we award the fixtures and millwork contract to?

The one whose product best evokes a farmer’s market, ultimately increasing produce sales.

In a retail environment, one of the most dangerous lines procurement can draw is between direct and indirect spend. This division is practical enough, especially for categorisation purposes, but it creates the impression that indirect spend matters less than direct spend does. Even indirect spend must create value for the end customer. Every dollar the organization spends – whether it is an investment in inventory or to buy copy paper for headquarters – should efficiently advance the interests of the customer. That is what defines valuable process efficiency in retail.

Placing a value on retail intangibles

Case in point: Kemper Freeman is the owner of Bellevue Square, a multilevel mall in Seattle, Washington. He is a bricks and mortar king in an increasingly digital commerce world. Despite the lacklustre performance of retail chains like Macys, J. Crew, Sears, Charming Charlie, and J.C. Penney, his business is booming. He characterizes his approach to customer attraction as “emotional fulfilment”, and it is something eCommerce businesses can’t compete with.

As was recently explained in a Wall Street Journal article about Freeman, emotional fulfilment is “the joy customers take in seeing, touching, sniffing and testing the product before they pull out the credit card.” For a retail business to be driven by the creation of emotional fulfilment, every employee – from store clerks to corporate procurement to janitorial staff – has to buy in and place the customer at the centre of every effort they make.

Given this context, what does process efficiency mean in retail?

Procurement-enabled retail process efficiency removes barriers between demand and supply so that value can be created for customers. Process efficiency is not getting to the end of a sourcing project faster and it is not about making corporate roles easier. Efficiency ensures that the flow of products and services are not interrupted, and they certainly don’t take customer-facing roles away from their primary focus. Even in procurement, the customer should remain the central focus, and the goals for every project should be tied to a barrier removed or a benefit advanced. These are the only efficiency gains that matter.

This blog was orginally written for Determine by Kelly Barner .

Dude, Where’s My 3D-Printed Car?

3D printers have been around for 30 years, yet the prediction of “one in every household” has not yet come to pass. When will this technology really hit the mainstream, and how will it impact our careers in procurement?  

For those of us keeping an eye on the coming megatrends that will impact the procurement profession, the list of technological disruptions is a familiar one. Big data, cognitive technology, cybersecurity and blockchain are frequently included in “what’s next” articles, but here’s the thing – rather than being futuristic ideas that are 5 to 10 years away, all of these technologies are already here. What’s lacking is our ability to unlock the full (and vast) potential of these disruptive forces.

This concept holds true for another frequent inclusion in this list – 3D printing.

3D printing is still regarded as a futuristic technology despite the first additive manufacturing equipment being developed in the 1980s. The 30-year technology is seen as revolutionary even today because it is constantly evolving, and has not yet realised anywhere near its full potential. Every year we hear of innovative companies utilising 3D printing to produce cars, trucks, aircraft, clothing, firearms, and even body parts, yet these advances still tend to be reported as the “experimentation” rather than a new way of doing things.

When will we know that 3D printing has truly arrived? Perhaps it will be the day that you can walk into the showroom of an average car dealer and be told that 90% of the cars for sale are 3D printed. Or maybe when it becomes normal practice to go online to build a custom pair of sneakers that are 3D printed and delivered to your door. Or when organised crime catches on to the potential of 3D tech to print unheard-of amounts of firearms, counterfeit products, and drugs.

Meanwhile, keep an eye on the innovators who are helping push 3D printing ever-closer to the mainstream while regulators scramble to keep up. In just the past two weeks, we’ve seen:

What does the rise of 3D printing mean for our procurement careers?

3D printing means that every organisation will become a manufacturer. Instead of scouring the global supply chain to find the widget that’s required, the role of supply management risks devolving into two basic steps:

  1. acquiring the 3D model
  2. ensuring your organisation’s printer has the raw material it needs.

Doesn’t sounds like a very fulfilling career, does it? To take things one step further, consider the fact that it doesn’t take a human procurement professional to perform either of those tasks. End-users could source 3D models themselves, while 3D printers are intelligent enough to manage their own stocks of materials, just as an IoT-enabled laser printer re-orders its own ink when supplies are running low.

Here’s the good news, though – the result of being freed up from the tactical work of sourcing means that the profession can concentrate on the strategic projects that we really want to be doing, rather than just responding to a buy signal.

Image from Pinshape.com.

Procurement Process vs. Chat-Bots

What are chat-bots? What can they do? Are they soon to replace all procurement functions?!

panuwat phimpha/Shutterstock.com

Software Robots (called Bots/Bot) are dramatically disrupting procurement processes involving human interface. They will have a high appeal on the transactional and digital side of procurement processes and will gain growth in the coming years with cognitive and machine learning tools.

The strategic interfaces in procurement planning, strategy, performance management and relationship building will continue to be human-centric (people oriented) but will increasingly rely on the Bots to support them with structured knowledge readily available.

What are “Chat-Bots” and how do they differ from RPA Bots?

A Bot is a software program designed to perform a task which would be done by a human being.

Like any software, these Bots can be programmed to perform almost anything where the workflow can be programmed and information digitalized with the added advantage of the advents in Artificial Intelligence which improves the human-machine interface.

The key difference between a Bot and any standard software is that the Bot generally has the capability of working across a couple of system environments.

With recent advancements in human language translation capabilities (like IBM Watson, Microsoft’s LUIS and equivalent) a lot of software are now capable of interacting with human beings in a seamless “human-like” manner and these Bots are referred to as “chat-bots” (chatting bots).

They usually handle the human front-end interfaces and then interact with the back-end systems to accomplish the task. They are distinctly different from the RPA Bots which are primarily back-end (non-human facing) software that will perform the task based on the system-generated routine as opposed to the chat-bots which are triggered by human interaction.

The chat-bots can then be further classified into

  1. Information chat-bots Provision of information based on the human input. “Speak or Enter flight number” and the chat-bot will provide the flight information. (However, it won’t be able to book the ticket for you!)
  2. Interactive/Smart Chat-bots Ability to perform certain tasks based on customer input. These type of chat-bots can book tickets for you or even resolve defined issues based on rules “explain your problem in a few words and I will try to help you”
  3. Machine Learning chat-bots Self-learning chat-bots which learn from previous interactions and adjust their interactions as time goes on. These chat-bots are still evolving and are going to disrupt the legacy notion of “dumb bots”

Which areas of Procurement are more “Bot-able”?

In a typical Source-to-Pay process the following areas of Source-to-Pay processes are more likely to be linked to Bots with a clear carve-out of the processes which will continue to be human-centric.

What are the Benefits of Bots in Procurement?

The Procurement Bots add a significant value to the business on the following fronts:

  1. Improved Reliability Bots help improve the reliability of the process by taking away the human fallibility and the results are far more reliable.
  2. Reduced Cost-to-Serve Taking away the human tasks also helps reduce of the cost of the transactions especially if done on a large scale for highly repetitive tasks.
  3. Reduction in Cognitive Bias Humans handling any repetitive tasks are always prone to cognitive bias and resulting errors. Bots eliminate the cognitive bias from the workflow (Although they limited by the cognitive bias built into the program itself).
  4. Reduction in cycle time Since Bots work 24×7 and in real time bots have demonstrated a 20%-95% reduction in cycle time associated with tasks/processes.
  5. Resource allocation Resources can be diverted to more strategic aspects of procurement. When the Bots can take away the repetitive tasks away and help assist the procurement professionals they are now more devoted to handling the more strategic/value adding aspects of procurement.

What are the risks of Bots in Procurement?

While the Bots bring about a great deal of value to the organisations they have risks that need to be considered during evaluation and implementation:

  1. Snow-balling of errors created due to Bots The chances of errors created by Bots is heavily reliant on the business rules captured in the software. If not watched closely these un-intended errors can balloon very easily since there is no human being watching these errors.
  2. Loss of Organisation Capability on process knowledge As organizations implement Bots the organizational knowledge on how these processes work erodes and when escalations happen there are very few people who have an end-to-end view of these processes.
  3. Local customisations may not be picked up in Bots While Bots also help standardise the processes by removing the human bias element they also run a double-edged sword of missing out on certain local requirements that might not have been built into the program thus resulting in manual interventions or an inefficient process.
  4. Lack of Human Interface impacts perception/relationships While the Bots are becoming smarter in terms of aping the human interface they are not perfect and they often run into situations where the user gets frustrated at not being able to get across.

How will Bots Transform Procurement function?

Bots will revolutionise how the procurement function is perceived currently through its ability to work/analyse across systems at the speed of thought.

What are the other factors to be considered in the Procurement Bot transformation journey?

Besides the obvious elements of the business case the following considerations need to be factored in during Bot Implementations:

  1. Long term alignment with System architecture design

Even though the Bot implementations are extremely light implementations lasting a few days to a few months – it is imperative that the long-term alignment with system strategy be considered before embarking upon these initiatives

2. Human Org Capability considerations

Consider both existing and future org capability to implement and maintain the Bots. They will require different skill sets and both are equally important to the success of the value from the Bot.

3. Characteristics of the process and the Bot-ability

Strong considerations should be given to the alternatives available. Bot is not a panacea for any process issue and should be treated accordingly.

The Logic of This “New Reality” is that people collaborating with ‘bots’, within a current Procurement Department that possesses effective work-flow processes can be integrated with ‘bot’ utilization.

The myth that Bots will replace Procurement function is a little overstated.  Procurement function will continue to be a human-centric (people oriented) organisation

Sustainable Procurement: Reversing The Race To The Bottom

Don’t dismiss the importance of supply chain sustainability! Learn from the mistakes of others and count yourself out of the race to the bottom! 

A short-sighted focus on cutting costs and speeding products to market is resulting in a race to the bottom that will cost companies more in the long-run. Top performers in sustainable sourcing will emerge with stronger supply chains, higher margins, more trusted brands and happier customers.

Consumers are increasingly putting their money behind sustainability, with Nielsen reporting 66 percent of global consumers are willing to pay more for products from companies they perceive as sustainable. This is forcing every industry to innovate in a way that makes transparency and sustainability permeate throughout the entire supply chain. Companies are often stuck in a race to the bottom, focusing on offering the lowest possible prices to compete with retail giants like Amazon and Walmart. Manufacturers who sell through these giants are also competing with each other, facing immense pressure from their customers to have the lowest price each week. Although price may seem like the best factor to emphasize, quality and sustainability considerations are often sacrificed in favor of cutting costs and speeding time to market. Even companies that have made sustainability promises often retreat after the initial pressure wears off due to perceived higher costs, but the long-term impact of irresponsible sourcing will impact their bottom line even more in the end. In fact, a recent BCG study found that gross margins were 4.8 percent higher for companies that were top performers in sustainable sourcing compared to those who were median performers.

In the long-run, participating in the race to the bottom is bad for business as it results in cheaply made, low-quality products and services that undermine the viability of the companies they are sourced from. This will all eventually be discovered by consumers and other stakeholders, and will open companies up to varying kinds of risk, including economic and financial, reputational and quality control consequences. Because these risks can impact a company’s bottom line, it is crucial to consider how sustainability can mitigate risk before it happens.

Unfortunately, hesitation and fear around competition (antitrust) laws are deterring businesses from working together to promote sustainability. A new report from the Fairtrade Foundation found that businesses are wary of working with rivals to improve the quality and security of their supply chain, but with fluctuating trade fees and climate change they have no choice but to collaborate. Instead of competing with peers to be fastest and cheapest to market, companies should be working together to promote sustainable procurement. When companies within an industry work together, it sends a much clearer signal to suppliers about the importance of responsible practices. With the right indicators and tools, those buying organizations can help suppliers advance in maturity and improve their practices – not only in sustainably issues but across all business operations. Companies should be working with other industry players – instead of against them – to ensure efficient and effective sustainable practices.

Learn from the mistakes of others

Nike, Asics and Puma saw the consequences a lack of sustainable and ethical practices could bring when more than 500 workers in four factories were hospitalised after fainting on the job. Outsourcing factory jobs to Cambodia may have saved the company some money on labor and wages, but unethical work conditions including long days and soaring temperatures canceled out any small benefit the retailers may have seen. The reputational and operational consequences turn out much worse than the small cost reduction initially intended. Improving ventilation and adding air conditioning, although good intentions, only put a band aid on the problem – these retailers and other companies should be working together to implement ethical and sustainable procurement practices as part of a long-term solution.

Geopolitical considerations

The turbulent political and trade climate in recent months is also challenging. Companies in almost every industry in the U.K. are facing a difficult choice between joining the race to the bottom to secure post-Brexit deals in terms of purchasing cheaper products from other countries and promoting high-quality, ethical and sustainable practices. Unfortunately, lower standards mean lower quality products and services, which will not just limit the emphasis placed on tackling issues like climate change and modern slavery, but also impact business revenues in the long run. NAFTA is having a similar effect on North American companies, making the consequences of the race to the bottom a universal concern. Instead of panicking about the effects of eminent trade deals, companies should be focused on working together to pursue sustainable procurement and mitigate risk before it happens.

Fortunately, many local and global governments are encouraging businesses to get on board and combat modern slavery, environmental sustainability and other risks in the supply chain. California recently signed the “Buy Clean California” act, which will clamp down on imported carbon emissions by creating rules for the procurement of infrastructure materials purchased with state funds. The U.K. just pledged $53 million to combat modern slavery with a focus on improving the apparel supply chain, joining the U.K. Modern Slavery Act in attempting to ensure business compliance. Australia may follow suit and introduce its own laws designed to root out forced labor and compensate potential victims.

At this point, we shouldn’t be thinking of it as “sustainability for sustainability’s sake,” but sustainability for risk mitigation and improved business operations. Technology is evolving to help companies better trace suppliers and other parties and improve transparency throughout the supply chain. Regulations around the world are banning or limiting unethical practices. The movement towards sustainability has changed in the last decade, placing the burden directly on companies to ensure responsible practices – both within their own operations and those of their partners. It may seem daunting to invest in sustainability while competitors are continuing to race to the bottom in pursuit of producing the cheapest products fastest, but companies that go above the standard will find it truly improves their bottom line and creates more value throughout their supply chain.

Pierre-Francois Thaler is co-founder and co-CEO of EcoVadis, a supplier rating company that helps organisations institute corporate social responsibility (CSR) and various sustainability programs. Pierre brings 15 years of experience in procurement and developing innovative sourcing solutions. Prior to starting EcoVadis, Pierre was CEO of B2Build SA, the first B2B marketplace for the European construction industry, and also served as a director of Ariba’s Procurement BPO business.