Hold The Phone! Procurement Pay Increase Smashing The Average Salary

Both ISM and CIPS have released their annual salary surveys. Read on for a short summary of the similarities and differences in salaries across the Atlantic.

Salary surveys make for interesting reading. They reveal much about the perceived value of procurement and supply management, and provide a very helpful data set to have at your disposal the next time you ask for a raise.

If you haven’t seen them already, the two most comprehensive salary surveys for 2018 are available here:

Let’s look at 5 of the most interesting findings across the two surveys:

  1. Average salaries for the profession

  • ISM has announced that the average overall compensation for participating supply management professionals was US$117,425, while CPOs earnt an average of US$263,578.
  • CIPS reported an average salary of £46,422 for procurement and supply professionals, with CPOs earning an average salary of £124,000.
  1. Salary increase smashing the national average

  • In the U.S., ISM reported that supply management salaries rose an average of 4.1% over 2016 salaries, versus 3% for U.S. professionals generally.
  • CIPS found that 68% of procurement professionals received an average 5.1% increase in salary, versus a 2.2% increase for the UK national average.

Paul Lee, Director of ISM Research & Publications, offered the following explanation:

“In today’s global economy, excellence in supply management improves both top- and bottom-line performance, and advances companies’ leadership on the worldwide stage. Supply management professionals’ higher-than-average wage growth reflects the significant value they add every day”.

  1. Certifications DO boost salaries:

  • ISM: Those with the ISM Certified Professional in Supply Management (CPSM) certification averaged 14.7% higher salaries than those without any certification.
  • CIPS: The data reveals that MCIPS and FCIPS professionals have increased earning power, with an average 12% salary disparity between MCIPS and non-MCIPS, and an average of 11% disparity between FCIPS and non-FCIPS across all job levels.
  1. Most important factors when considering a new job

We’re a mercenary bunch. “Salary” has once again come out at the top of both ISM and CIPS’ research into what people consider when evaluating job opportunities. Beyond the money, however, are some other factors that employers should note:

ISM top 6 factors:

  • Salary: 85%
  • Job satisfaction: 81%
  • Improved work/life balance: 80%
  • Benefits package (medical/dental/vision): 79%
  • Pension/retirement plan/401(k) or similar: 78%
  • Organisational culture/work environment: 75% percent

CIPS top 6 factors:

  • Salary: 74%
  • Location: 71%
  • Content of the work: 65%
  • Career progression opportunities: 62%
  • Company reputation: 59%
  • Company commitment to training and development: 58%
  1. Gender gap disappointment

  • ISM’s data reveals women are paid less than men across every level in U.S. supply management, with male CPOs earning 26% more than female counterparts, male VPs earning 52% more than women, and male Emerging Professionals earning 13% more than women.

CIPS reports that the most striking pay disparity exists at the Advanced Professional level, where men earned 33% more than women, a pay gap that has widened since the previous year’s (25%). Pay disparity at the Professional and Managerial levels is also considerable, at 14% and 11% respectively

How To Upgrade Your Procurement Mindset

In a world where cost-savings are no longer king in procurement, how can the function demonstrate its business value and earn a seat at the table? Jaime Mora talks upgrading your procurement mindset!

In recent years, our organisations have gotten a better understanding of the valuable contribution Procurement can deliver to the business.

And yet, there remains a feeling that the function has not yet reached its full potential. Procurement is certainly a relevant and appreciated corporate function. But we’re not yet sitting in the C-Suite…

As procurement professionals, we unanimously agree that the function should be elevated within the business, but convincing those at the top is easier said that done.  Whilst all organisations consider implementing cost-savings to be a crucial part of business success, it’s no longer regarded as a strategic process or a competitive advantage. Leaders are becoming increasingly aware that savings alone will not distinguish them against  their competitors. As such, procurement can be dismissed within the business as a less important function.

The bottom-up approach

If traditional procurement contributions are not at the top of an organisation’s agenda, how can procurement earn its place in the C-Suite?

It’s difficult to find a “one size fits all” recipe but we could start by upgrading our procurement mindset. I propose that we rebrand  ourselves as: “External Competitive Advantage Strategists.”

But what on earth does that mean?

As it stands, we’re  pressured into taking a bottom-up approach to our work. We know we have to bring savings to the table, we achieve this, and only then do we start thinking about the other nice things we can do with our time; innovation, sustainability, supplier development etc. And we deliver on those things too.

It makes sense that the more value-adding contributions we make, the more arguments we have to justify a spot, and a voice, at the highest levels of the organisation.

But in reality,  we end up doing bits and pieces here and there, following trends and simply trusting our gut.

Taking this approach is one of the reasons that procurement objectives and output may deviate from actual business goals.

Taking a top-to-bottom approach

If we truly want to step up our contributions, we should be taking a top-to-bottom approach. Our organisations operate in highly competitive environments, where sustainable advantages are required in order for us to outperform our competitors.

Procurement is uniquely positioned in the business given our access to so much information from our supply networks and an awareness of the opportunities here. We’re in the perfect position to source more than just products and services – we can actually source competitive advantage.

Procurement is capable of seeing things strategically. We can analyse where our organisation stands in a competitive environment and we are capable of both meeting our business targets and identifying where and how our organisation could compete better.  To take a holistic approach, this should be complemented with strategic analyses of our suppliers.

As I mentioned at the beginning of this piece,  cost-savings will always be appreciated. But procurement’s work should never be limited to that. The new approach to procurement is about sourcing the external competitive advantages on offer to give our organisation unique advantages in a competitive environment.

Imagine the following scenario: one of my organisation’s strategies is to develop its people. From my knowledge of the supply market I know a particular supplier that is uniquely skilled in people management and development and this makes them the most competitive supplier. We have the power to bring this supplier to the table; to initiate the discussion to build a partnership and leverage the supplier’s competitive advantage, or even a vertical integration.  Boom! Now Procurement is sitting at the M&A table.

As saving becomes a commodity and not a priority, it is time to reinvent procurement. Leave the Procurement Manager title behind and become a External Competitive Advantage Strategist!

3 Top Tips For Dealing With Legacy Contracts

How sure are you that all your current contracts are still delivering their intended value? Or is the legacy beginning to hold you back?

In the third article in a series charting the key issues in public sector procurement, we examine the challenge of delivering value in long-term contracts.

As we have discussed in previous articles, time is a precious commodity in public sector procurement. The time taken to tender, retender or extend contracts needs to be factored in when making an initial decision on contract length.

Make the contract too short and there’s less scope for realising the value that you have worked into it, or very little incentive for suppliers to invest in the relationship (and potentially offer something of more value, for example, innovative solutions).

However, a contract that is too long has just as many issues. There’s more time for relationships to sour and more time away from the market where new solutions and technology might be providing better services and efficiencies. Finally it’s more time locked into a contract where costs are only likely to be on the rise.

There’s no right or wrong answer when it comes to contract length. A goods contract might benefit from a shorter term as it means new products or solutions can be assessed as the market develops them. There’s also the argument that for less complex goods a strong business relationship isn’t as critical, particularly if you aren’t going to do business with them again in the future.

That’s not to say certain products shouldn’t have longer contracts instead. Where there is high value, or a high level of complexity, a longer contract term may be necessary to ensure continuity of supply, or ensure the stability of a supplier.

A service contract might be better served with a longer contract. There’s more time for both parties to develop their relationship and gives the supplier time to understand the service without looking over their shoulder from Day 1.

But what of the contracts that professionals have no say over their length?

The Legacy Issue

It’s inevitable with the churn of professionals that at some point you will end up in a role where there are contracts that have been put in place by colleagues who have moved to a new role, or left the organisation entirely.

And you’ll certainly not be alone in thinking, “why have they done this?” when you get your hands on the contract specifics. You’ll probably even end up attributing issues on the contract to PBE (Previous Buyer Error) – even if you swore you’d never be one of those people!

In the public sector, the majority of these contracts will be in place for 3-5 years, potentially with an extension period should it be applicable for the contract, good or service. The extension could be up to another two years, meaning there’s a long time between procurement exercises for the product in question.

A hangover from previous public sector practice in procurement is perhaps the willingness to set contract length at 3 years and rarely changing. This might be the norm for frameworks (limited to 4 years at its longest length anyway), but as we have mentioned, there’s scope to make the length shorter where appropriate.

Another consideration for legacy contracts come in the information that is attached to them. It’s likely that, unless it’s been refreshed, most of the information will be out of date. Without the up to date information, you may not be able to see the full picture and it’s something that will have to be done as a priority when it comes to any extension or retender.

Finally, you should always be aware of what Terms & Conditions the contract was issued with and if it complies with all current regulations and legislation. Compliance is key here, so you shouldn’t hesitate to speak to your Legal team. It’s also something to remember when setting up new contracts that they account for all legislation, both current and potentially to come into force during the contract term.

From Legacy to Cutting-Edge

There’s no getting away from the legacy issue. You might put in a terrific, watertight contract now, but in 3-5 years’ time, it could be one of those legacy contracts your colleagues are wrangling with! If there’s no getting away from it then, what is there to do?

Never think you can’t put your own mark on a contract, even if it’s already up and running. Even a contract that’s over halfway through still has another half where you can contract manage and add value, all the while looking at options for the new contract.

So what are my top tips for dealing with the legacy issue? I’ve put some below:

1. It’s never too late to start contract management

Ultimately, preserving or releasing value in a contract comes down to the quality of the contract management. And it’s never too late to do some good contract management. If you work on the basis of any value is good value then even half a contract is enough time to make sure that your organisation is getting something out of this.

2. Use the time to build relationships

If you’re struggling to release any value from a legacy contract, use the remaining time to build up good relationships with the incumbent supplier. You’ll get to know their business and anything you learn can help when it comes to putting together new requirements for the next contract. At the very worst, you’ll get a chance to assess the whole market and see your other supply options!

3. Prepare for the new contract

Don’t leave it too late to start working on the new iteration of the contract (or retender). You might have planned for a good exit, but you need to be sure that any new contract going to do a better job. Use the time wisely and make sure that you put any lessons learned into practice.

Team Comes First in IBM CPO’s Roadmap To Success

What would you do after all of the low-hanging fruit in procurement has disappeared?

Here’s a quick quiz:

What would you do if you became the CPO of a procurement function that is a top-quartile performer and already highly mature?

  • Keep things as they are – if it ain’t broke, don’t fix it.
  • Make small, incremental improvements, being careful not to change anything significantly.
  • Roll your sleeves up and transform the function from top-quartile performer to a world-class organisation.

Bob Murphy was faced with this choice back in 2014 when he first took on the role of IBM CPO. In many ways, inheriting a highly-mature procurement function is more of a challenge than stepping into a low-maturity team. For Bob, the low-hanging fruit had all been picked: the team had already undergone a significant transformation, it was recognised internally and externally for its high level of excellence, cost savings were at record levels, and supplier relationships and sourcing strategies were delivering results. Client engagement and interlock with business unit stakeholders was also maturing, while procurement was viewed as a key function enabling business unit objectives.

So, what was there left to do? Bob’s challenge – as well as his opportunity – was to take a high-functioning team that was delivering best-in-class outcomes and make them even better. He did this through unleashing his passion for the profession, leveraging 30+ years of procurement and supply chain experience to mobilise a global team of 3000 procurement professionals around a shared vision.

He developed a set of global, transformative initiatives and domain priorities that moved IBM from the front of the pack to a truly world-class outlier position. Today, IBM Procurement services have arrived at a status dreamt of by many CPOs – that of an essential trusted advisor to the business.

IBM’s secret recipe for success isn’t actually a secret – the roadmap established by Bob early in his tenure as CPO covers six key areas:

  1. Investment in talent and skills development
  2. Digital transformation through AI (Watson cognitive procurement), robotic process automation and Source-to-Pay transformation.
  3. Unlocking big data to drive informed, outcome-based decision making for IBM and its clients.
  4. Supercharged engagement through end-to-end ownership for deliverables and client-aligned squads, while satisfaction is captured using the Net Promoter Score.
  5. Deployment of Agile principles and self-empowerment across the entire team.
  6. Growth of supplier innovation as complex enterprise relationships mature.

Leadership recognition

It’s interesting to note that people and talent are at the very top of Bob’s list. To quote an article he wrote for Procurious, “I learned a long time ago that the key to success is having a great team. And there is a very human element to procurement. There will always be a need for people to handle the relationship management side of the function, with both suppliers and stakeholders and make the strategic decisions.”

Although he operates in a highly technical sphere, Bob stresses the importance of soft skills:

“When we think of the soft skills necessary for future success in the procurement industry, we focus on building closer stakeholder and supplier relationships. Broadening our communications skills, including active listening is a key enabler to both visibility to value proposition, but also in understanding our stakeholder requirements from their point of view. Another critical element is having better agility skills; think flexibility, adaptability and speed.”

Bob Murphy’s achievements in leadership were celebrated at the Procurement Leaders awards in May, where he picked up the prestigious 2018 Procurement Leader Award.

His first comment when interviewed after receiving the accolade? “This award is about my team.”

Can Category Management Clean Up Its Act, AI- Style?!

In a post-AI world, the cards are up in the air and everything is up for grabs. Can category management help the procurement profession to scrub-up and embrace these changes?

How are large corporations managing and recruiting their workforce in the age of the gig economy?

Can cognitive tech help marketers connect the dots and better understand their customers?

Will we require architects in the future to design our buildings, or can we ask bots do that for us instead?

AI and cognitive technology will impact all corners of the business whether it’s construction, labour or marketing. For procurement’s category managers, technological advancement provides the chance to reinvigorate the profession and develop innovative ways of working.

But there is also a legitimate fear of the major disruption AI brings. Which services and industries will we lose entirely? How many roles will be made redundant?

The cards are up in the air and procurement prosperity is there for the taking. Can category managers help the profession to scrub up and seize this opportunity?

This month, we’ve enlisted the help of three category management experts to advise you on how to clean up your act and get the most out of AI!

On 28th June 2018 we’ll be hosting a new webinar – Clean Up Your Act! Category Management AI-Style – in partnership with IBM.

With a focus on construction, labour and marketing, we’ll be discussing:

  • What common problems have category managers faced in old-world procurement, pre-AI?
  • How is AI impacting these categories; what sort of disruption can procurement professionals expect?
  • How can AI help procurement professionals in construction design, build and maintain their projects?
  • How can AI assist procurement professionals working in labour to attract, recruit and retain talent?
  • How can AI help procurement professionals working in marketing to strategise, create and manage optimal marketing campaigns?

Who is speaking on the webinar?

  • Tania Seary, Founder – Procurious
  • Luis Dario Gile, Global Category Leader (Design Construction and Real Estate) – IBM

How do I register for the webinar?

Registering for Clean Up Your Act! Category Management AI-Style 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 11am EDT4pm BST on 28th June 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.

Our webinar,  Clean Up Your Act! Category Management AI-Style takes place at 4pm BST on 28th June 2018. Register your attendance for FREE here. 

How Not To Break Up With Suppliers: 5 Tips From the Movies

What can Hugh Grant, Will Ferrell and Homer Simpson teach us about ending important relationships in procurement?

Credit: PolyGram/Working Title Films, Four Weddings and a Funeral (1994)

Knowing me, knowing you (a-haaaa)
We just have to face it
This time we’re through
Breaking up is never easy, I know
But I have to go…

ABBA – Knowing Me, Knowing You (1976)

I’m not the first to draw a parallel between romantic break-ups and ending a relationship with a strategic supplier. The similarities are many: the relationships may have existed for years (decades in some cases), you’ve been through both good times and bad together, and sometimes your two companies are so interwoven that there can be no hope of a clean break.

But… all good things must come to an end sooner or later. Without going into the tell-tale signs of when it’s time to let a supplier go (that’s an article in itself), I’d like to concentrate on how not to end a supplier relationship. And – once again – let’s look to Hollywood to provide an illustration for each point.

1. Don’t make a shock announcement

“Ricky – you and I – we both know this marriage has been over for a long, long time.”

“I honestly did NOT know that!”

Don’t be like Carley Bobby in Talladega Nights. If you’ve ever been on the receiving end of a shock break-up, it’s incredibly unpleasant for the person who was hitherto living under the assumption that things were going smoothly.

Giving your suppliers no hint that the relationship isn’t working is both unfair and unprofessional. Break-up “shock” can be avoided by holding regular and ongoing catch-ups where KPIs are tracked and red flags discussed, along with honest communication about your organisation’s willingness to continue the relationship into the future.

Don’t be fake! If you’re deeply unhappy with your supplier’s performance but you’re all smiles and encouragement whenever you meet, it really won’t help the situation as the supplier will see no reason to make changes or improvements.

And who knows? If you’re able to have an honest discussion with your supplier about why you won’t be renewing their contract, it may become the catalyst for a change in behaviour that ends up removing the need to break up altogether.

2. Don’t be blasé

“Welcome to Dumpsville, population: YOU.”

Don’t be like Homer Simpson. After it’s revealed that Bart has tricked Edna Krabappel with a series of fake love letters, the Simpson family rally around to compose a final letter that will sensitively end the relationship without further breaking the heart of poor Edna. Homer, unfortunately, just doesn’t get it.

Don’t be flippant. Be serious – the decision to change suppliers can potentially impact people’s careers and livelihoods. In the case of small suppliers, it may even bring them to the brink of bankruptcy if your business makes up a high proportion of their income.

Make time for a proper conversation. Schedule a face-to-face meeting if possible, or a phone call as the next-best option – but don’t hide behind an email.

Similarly …

3. Don’t be cold

“Rhett! If you go, where shall I go? What shall I do?”

“Frankly, my dear, I don’t give a damn.”

After Rhett Butler delivers this zinger to Scarlett O’Hara in the closing moments of Gone With The Wind, she collapses sobbing on the stairwell. Scarlett is heartbroken, and clearly needs help – but Rhett has already gone, striding determinedly off into the heavy fog.

The equivalent behaviour in procurement would involve calling a supplier to end the relationship, then hanging up without giving them an opportunity to debrief and discuss. It’s entirely possible that the supplier won’t want to talk (and might even hang up on you), but if they do want a discussion you need to make yourself available.

To share a story from my FMCG days, I remember sitting next to a procurement colleague who had the unenviable job of ending a relationship with a small supplier over the phone. The call lasted about one and a half hours. After the initial, difficult part of the conversation, the supplier asked her for advice on what they should do next – and that’s when the whole tone of the conversation shifted to that of a positive coaching session. By the end of the call, the supplier was still understandably upset but also armed with plenty of advice for the future.

One last thing to keep in mind is that business requirements are cyclical. Although you may not want to work with a particular supplier any more, who knows what the situation will be a few years down the track. If you ended the relationship coldly or otherwise unprofessionally, it’s going to be very difficult to pick up from where you left off.

4. Don’t do it at the wrong time

“Do you love someone else? Do you, Charles?”

“… I do.”

Don’t be like Hugh Grant in Four Weddings and a Funeral. While he ultimately makes the right decision, his shocking timing earns him a much-deserved punch to the face from his jilted bride.

In a way this advice contradicts what I wrote above about keeping your suppliers fully informed about how the relationship is going, but you do need to use some common sense when it comes to picking your moment.

Suppliers who value a relationship will often go the extra mile, whether this means putting more staff onto a project, or working additional hours without passing those costs on to you. It pays to keep in mind that once a supplier knows they’re soon to be let go, they may not perform with quite so much gusto in those last few weeks or months of the contract.

Another parallel to help illustrate this point is when someone in your team is working out the last few weeks of their employment after taking a redundancy – you’re never going to see their best work in that period.

5. Don’t send mixed messages

“Please don’t go.”

“I am not spending the rest of my life with a loser. I’m gone.”

 “Good, then get the hell out of my life! Who needs you? Beat it! Leave me alone! … [2 seconds later] “I’m sorry baby, I didn’t mean that either…”

Adam Sandler is at his best in this scene from Happy Gilmore where he’s alternately screaming abuse and crooning love songs into his apartment building’s intercom. While he desperately wants to stop his girlfriend leaving, he’s also consumed by a schizophrenic desire to get in the last, angry word.

Suppliers want to know where they stand with you and your organisation so they can plan for the future and invest in your relationship with confidence. Again; good communication, honesty and transparency are the way to go. Crystal-clear KPIs will help you clearly delineate where suppliers are performing well, and where they need to improve if they want their contract renewed.

The other factor that can muddy the waters of supplier relationships is misalignment within your own organisation. This can involve the supplier receiving contradictory messages from the different parts of your organisation that they work with, pulling them in different directions and ultimately harming their ability to meet your company’s overall requirements.

Do you have another example from cinema that illustrates one of the points above? Share a link below!

4 American CPOs Nailing Change

A group of the USA’s most influential procurement leaders gathered at ISM2018 to discuss digital transformation, the evolution of the CPO role, procurement’s influence and the gig economy.

Image: Shutterstock

In a press-only event at ISM2018, ISM CEO Tom Derry brought together four CPOs from some of the world’s leading organisations to debate the biggest issues facing supply management today.

Digital Transformation

The consensus around digital transformation among this group is to take a step back and consider carefully before taking the plunge. DowDuPont Ag Division CPO and Chair of the ISM Board of Directors, Craig Reed, observed that there’s so much technology out there that everyone’s hyper-focused on it. He warns: “Some companies have a culture and a rhythm that doesn’t necessarily work at the same speed that the technology is growing. [You need to consider] how you get it, where do you use it, and what’s the benefit for the company.” Reed reports that in his organisation they’re starting to see a slight evolution where Service and Operations are looking at how digital technology can bring efficiency: “We won’t need as many people doing routine tasks”.

Reed also makes the point that first-movers are sometimes at a disadvantage. “It’s like being the first person on your block with a landline phone”, he said. “If suppliers have to standardise technology specifically for you, it’s going to be difficult [because] the cost of trying to deploy becomes prohibitive to the supplier.”

MGM Resorts International SVP and CPO Stacey Taylor drew a parallel between digital evolution and the industrial revolution, where a lot of people were doing unnecessarily manual work. “We need to be super-disruptive to the market … with a vision of where we see our teams from a talent perspective.”

Taylor notes that technology can drive process optimisation. “What can you fully optimise and automate [to function] without human intervention? The AI could do data, write the RFP, send out the RFP … right up to negotiating the contact. But at the end of the day, we’re not going to have a bot award a contract to a bot, and AI isn’t going to manage the supplier relationship.” For Taylor, human talent will also be needed to find creative, innovative ideas that shift the game.

Camille Batiste, VP Global Procurement at Archer-Daniels Midland, has seen how energised young people in her organisation are by technology opportunities. “If we bring an opportunity to automate and eliminate tactical work, they get excited about that. Then there are employees who don’t yet understand what that tech does – that’s where you get the fear. I feel we have leaders who just don’t understand the value of what this technology can bring and are very concerned about the risks. Our responsibility then is to make that clearer.” Batiste comments that we need to consider what concepts like the digital revolution, robotics and AI would mean to your average plant manager. “A lot of companies say they’re doing digital transformation, but … don’t really have an idea of what it is.”

Reed comments: “My fear is that all the great technology that’s coming out today [won’t survive] because we can’t communicate the opportunities to our organisations properly. I think the technology firms we’re dealing with [need to] help us better communicate that. How do you translate that cost reduction into operating margin and improvement?” Reed is looking at iterations of technology that can drive value for his organisation. “Look at Salesforce – it’s driving tremendous opportunity. That’s the [kind of] stuff we want to do in procurement, but it’s difficult to have that conversation and get the organisation to understand the value.”

The evolution of the CPO Role

LG Electronics VP Global Procurement Strategy, Chae-Ung Um, notes that every organisation has different levels of maturity. “We [currently] consider the CPO as the top, but whoever will become the Chief Value Officer will take the lead. I’ve been on a lot of transformation projects, and everything crosses procurement”.

Reed also talks about maturity. “How mature is your company in understanding the role of the procurement function? In some companies it can be seen as strictly commercial negotiations. In others, it’s broader – looking at things collectively to drive integrated value. But what you’re starting to see more of is that one function can’t do it by themselves – there’s a lot more collaboration.”

But who is best positioned to lead this transformation of the role? Reed says it needs to be someone business-focused, not procurement focused; someone who can look at the business strategy and demonstrate how your suppliers can provide solutions.

Tom Derry talks about meeting a professional at ISM2018 who, to him, epitomised the evolution of the CPO. “She was not only the CPO, but the CFO of IT and head of the business transformation office in her organisation. That’s the leading-edge conception of the CPO role.”

Growing Influence

“From the time I joined procurement 17 years ago, one thing I’ve thought we’ve never done well is marketing ourselves”, said Batiste. “It’s so critical … [I’m considering] hiring a marketing person to drive the internal communication of our value to the organisation.” Batiste also reiterates that support from your organisation’s leadership team is paramount. “The CEO must be talking about what procurement is doing to drive the purpose of the company. Procurement needs to be vocal, not humble, and share … all the good things we’re doing.” She recommends partnering with a strong writer (such as someone from marketing). “It’s good for influence, and for attracting talent.”

Chae has a different approach to this challenge: “If I don’t have influence, I ask our customers – who have the leverage – to help us get there. We bring in a dealmaker.”

Gig economy

Batiste predicts that by 2023 she’ll be seeing a much smaller organisation, with transactional work completely embedded within the business. “What the name for this is, I don’t know. Right now it’s P2P solutions. What’s it going to be in 2020?”

How much will CPOs want to invest in talent in the future? Chae warns that any major transformation will require a lot of people, but two to three years later you won’t need all those professionals. “You need to balance optimising value for the company and minimising future headaches. Having the right people makes a difference.”

Taylor says that in regard to the gig economy, it really depends on your organisation. “There are areas of my business that I just can’t get to, so I’m augmenting it by getting in consultants. Do we train and scale up everyone, or get some blackbelts and move them around key areas as projects come up? Over time, through attrition, we’re scaling back and building powerful little teams.”

4 Reasons Why Your Organisation Isn’t Embracing Cognitive

In the battle for capital, how does procurement ensure its cognitive projects come out on top?

At last month’s London CPO roundtable; Amit Sharma, Global Procurement Practice Leader for Cognitive Process Services (CPS) –IBM led our attendees in a discussion on how procurement leaders can ensure their cognitive projects come out on top.

There is so much potential in cognitive technology to transform the role of procurement. It will allow professionals to do dynamic forecasting, telling you when to raise acquisition and awards contracts to a particular supplier based on a triage.

“For procurement, maintaining our relevance to the organisation beyond cost savings is imperative” said Amit.  “[Procurement pros] need to embed the latest in technology as best practise into the business as it will free up our time and help us to move from transactional to strategic management.”

“The logic is unquestionable.  We know the sophistication of AI is going to come. It’s a question of when, not if.”

But when it comes to making the leap to cognitive, which can do a world of good for analytical and predictive analysis, organisations are still hesitant.

Procurement needs to make the business case for how cognitive can add long-term value and, as Amit reminded us, “If you’re not convinced, you can’t convince someone else”

Throughout our discussion, four key reasons for an organisation’s reluctance to embrace cognitive tech became apparent.

1. Remaining skepticism at the value of cognitive

As Amit explained, cognitive technology like Watson can help procurement professionals to analyse reams of data. It would, for example, allow users to plot the price at which they are being charged for something by suppliers and analyse how the index has moved in past [x] years. Five years ago this process would have been extremely time consuming but with the index data, the system can quickly tell you exactly where you’ve been overcharged.

So it all sounds great. But in reality, business leaders are often skeptical about the actual cost savings brought about by this kind of analysis.

Do you genuinely make better decisions in the long term by having so much data at your fingertips? Or can you have just as much success through effective negotiations with your suppliers?

Amit’s response to this “If you’re not doing spend compliance – you don’t know if you’re compliant. If you’re not analysing this data, you don’t know the potential cost savings.”

“I spoke to a CPO who thought their processes were good. [But it was discovered that] there was a 40 per cent unit price difference across the company in the same category, simply because the left hand doesn’t know what the right hand is doing!”

2.  Spend within organisations is fragmented

One key problem for procurement, when it comes to implementing cognitive technology, is that the CPO doesn’t always have the authority to drive transformation. Perhaps they are reporting to a CFO who doesn’t see value in cognitive tech or the spend might simply be too fragmented across the business. When it depends on lots of other people, procurement are unable to drive change effectively.

As one of our roundtable attendees pointed out “there are organisations I know who can’t justify the need to implement Ariba to their CFO- let alone cognitive technology!”

3. Trouble looking at the bigger picture

Several of our roundtable attendees cited short-termism as a key reason for their organisation’s lack of cognitive adoption. “The mistake we make is that we look at opps in a tactical way and not at the bigger picture,” said one CPO.

“For example, we know that there will be headcount reduction in the coming years and we will benefit hugely from cognitive tech, but articulating that at a hollistic level to the CFO and explaining it as a 5-year journey is the challenge”

4. Confusion about AI

Remarkably, one of the biggest challenges remaining around  the uptake of cognitive technology is a universal lack of understanding of what it actually is and the distinctions between different terms.

“You can start talking to a group about AI and within a few minutes people are talking about blockchain, as if the two are interchangeable,” said one of our attendees. “People need to have a clearer understanding of the buzzwords ; AI, blockchain cognitive etc.”

Of course, there are people who know a little and people who know a lot. And that’s a challenge in itself.

Read more here on the insightful discussions had at our London CPO roundtable. 

Procurement 2030: Makeover or Game Over?

The profession must evolve, but which way will it go? How can procurement give its value offering a makeover, and what are the indispensable human skills that will future-proof procurement careers … before it’s Game Over? Take the survey to help us find out!

10-15 minutes is all it will take to put yourself in the running to win a retro, cocktail-style arcade machine!

We need your input to discover:

  • What’s keeping procurement and supply management professionals awake at night as we hurtle towards the brave new world of Industry 4.0?
  • How is your procurement function preparing today for the digital revolution?
  • Which skills are most likely to be automated, and which skills are irreplaceable?
  • What does the future of procurement talent look like?

We’ve kept the survey to under 15 minutes – we know you’re busy!

Cool prize, right? But you’ve got to be in it to win it! The Procurement 2030: Makeover or Game Over survey is only open until Friday 22nd June. Participants will also receive a copy of the report summarising the findings of the survey.

CLICK HERE to take the survey!

5 Organisations That Are Fighting Plastic

The war against plastic is not all doom and gloom. Thankfully, the world’s biggest corporations are waking up to the reality that big change has to happen… and soon!

In last week’s Procurious blog we explored the threats currently facing The Great Barrier Reef – reporting on the eight million tons of plastic that enters our oceans every year and the prediction that by 2050 there will more plastic in the ocean than fish.

It’s hard not to be horrified by some of the images emerging that demonstrate the impact of plastics on our oceans, our beaches and  our wildlife. No one could forget, for example, Justin Hofman’s photograph of a seahorse clinging to a discarded cotton bud – a  painfully stark image.

Last month National Geographic launched their new initiative, Planet or Plastic – the focus of their June publication and a multiyear effort to raise awareness about the global plastic waste crisis and encourage readers to take the pledge to help reduce single-use plastics.

“More than 5 trillion pieces of plastic are already floating in our oceans.”

National Geographic, Planet or Plastic 

It can seem like a hopeless situation. But, as their campaign highlights, there is so much you can do both as an individual and as part of your organisation to impart real change.

And the situation is looking hopeful. Across the globe, the biggest corporations are waking up to the reality that big change has to happen with regard to their use of plastics. More and more of our restaurants, bars, theatres and cinemas are removing plastic straws from the offering and a number of big supermarkets have promised to make all plastic packaging reusable, recyclable or compostable by 2025. 

Today, as we approach World Ocean’s Day on 8th June,  we’ve highlighted a handful of corporations who are doing some inspiring work to tackle plastic pollution.

Their inspiring campaigns prove that solving the plastics problem is both a challenge and an opportunity for organisations to lead the way in finding innovative solutions.

1. Pret a Manger

Pret a Manger is consistently recognised for its efforts towards sustainable, socially conscious. The organisation is well known for offering all of its unsold produce to homeless people and recently introduced a 50p discount for customers bringing in there own reusable cups.

In October 2017 Pret a Manger’s CEO, Clive Schlee, penned a blog for the sandwich shop’s website entitled “What if Pret stopped selling plastic water bottles?”

Schlee explains that Pret a Manger are striving to make it as easy as possible for customers to use fewer plastic bottles “All of our Veggie Pret and Manchester shops will now be encouraging customers to fill up their bottles for free using new filtered water stations. These shops will also start selling reusable plastic bottles alongside our regular water bottles, so the choice is clear.”

In February 2018 Pret a Manger announced they would be trialling a 10p cash back scheme for plastic bottles.

The company will add 10p to the cost of its plastic bottles which will be refunded to customers when they bring the bottle back. Any unclaimed deposits will be invested in their sustainability work.

Pret a Manger have also pledged to make all their plastic packaging use by 2025 100 per cent recyclable, reusable or compostable.

2. Whole Foods

Supermarket chain Whole Foods has been backing the no-plastics horse for some time.

In 2008 they made the switch from plastic to paper bags in all of their stores and they have consistently committed to reducing plastics by offering biodegradable alternatives for plates, cutlery and other food takeout items.

At some or all of their stores, Whole Foods are doing the following:

  • Using reusable dishes and flatware in dining areas
  • Reclaimed wood, bricks and other materials in construction
  • Printing and packaging using recycled paper and water- or vegetable-based
  • Collection bins for batteries, printer cartridges, cell phones, corks, plastic bags and toothbrushes
  • Composting to decrease landfill waste

3. Timberland

Last year, Timberland unveiled a line of products developed with Thread’s Ground to Good™ fabric, harvested from plastic bottles littering the streets and landfills of Haiti.

To date, over 1300 Haitians have collected and recycled 765, 280 plastic bottles.

“At Timberland, we’re constantly seeking innovative ways to create both social and environmental value, and are excited to continue making a difference in Haiti and in all the communities where we live, work and explore,” said Colleen Vien, sustainability director for Timberland. “Our collaboration with Thread has proven to be a meaningful way for us to grow our work in Haiti and generate social value for the people behind our products. We’ve embraced the opportunity to share their unique stories with our consumers, because this collection is about so much more than a boot. A Timberland X Thread boot represents real change – it helps create jobs, restore communities and build futures.”

4. Sky

Sky launched Sky Ocean Rescue in 2017 to shine a spotlight on the issues affecting ocean health, find innovative solutions to the problem of ocean plastics, and inspire people to make small everyday changes that collectively make a huge difference.

Partnering with WWF, Sky have committed £25 million to help find innovative solutions to reduce plastics and pledged to eliminate all single-use plastics from their operations, products and supply chain by 2020.

They’re also running a successful online campaign to encourage consumers to #PassonPlastic

5. Dell

In December 2017 Dell announced that it would be launching the world’s first commercial-scale, ocean-bound plastics supply chain, which takes ocean-bound plastics and repurposes it for their packaging.

“When Dell uses plastics from the beach, shorelines, waterways and coastal areas, we bring them back into the economy and stop them from breaking down and becoming part of a bigger problem.

It gives us an affordable resource, creates jobs for the recyclers, provides a template for others to follow and helps put a dent in the vast problem of plastics entering the ocean.”

In partnership with The Lonely Whale Foundation, Dell have helped convene Next Wave, an open-source initiative that brings leading technology and consumer-focused companies together to develop a commercial-scale ocean-bound plastics and nylon supply chain.

The group anticipates that they will divert more than 3 million pounds of plastic and nylon-based fishing gear from entering the ocean within 5 years – the equivalent of keeping 66 million water bottles from washing out to sea.

We’d love to know what your organisation is doing to reduce the use of plastics. Tell us in the comments below!

Procure with Purpose

Procurious have partnered with SAP Ariba to create a global online group – Procure with Purpose.

Through Procure with Purpose, we’re shining a light on the biggest issues – from Modern Slavery; to Minority Owned Business; and from Social Enterprises; to Environmental Sustainability.

Click here to enroll and gain access to  all future Procure with Purpose events including exclusive content, online events and regular webinars.