Six Steps To Building A More Responsible, Resilient Supply Chain

The unfortunate truth, though, is that most organisations only have a limited amount of resources available to identify and monitor the kaleidoscope of risks that exist in their global supply chains.

By yuttana Contributor Studio /Shutterstock

This article was written by Sondra Scott, President – Verisk Maplecroft 

More often than not, creating a safe supply chain is thought of as being an expensive endeavor. But resilient supply chains and more sustainable procurement practices can help bolster the bottom line. Companies that really understand their supply chains will come out ahead in the long term. They incur fewer costs in reactive post-risk actions and they generate more revenue by optimising their procurement processes and enforcing positive perceptions of their brand with their consumers.

The unfortunate truth, though, is that most organisations only have a limited amount of resources available to identify and monitor the kaleidoscope of risks that exist in their global supply chains. This is where analytics becomes so important. By using quality risk analytics, we can quickly map and high-grade our operations and suppliers for risks, which enables us to focus spend on the areas that need the most attention. We can use analytics to not only identify where our risks sit today, but to anticipate where risks will emerge in the future.

So, how do you make the most of the range of analytics and tools available to you? Here’s my quick guide on the six steps to success.

Step 1: Think holistically

First and foremost, we advise our clients to think holistically. Look at risks as interconnected, not only along the supply chain but across your entire business. For instance, civil unrest doesn’t just happen; the drivers of such events can include anything from government corruption, to drought, to egregious breaches of human rights. Getting the full picture by tracking a wide spectrum of risks is imperative in understanding your potential vulnerabilities and identifying opportunities for your business.

Step 2: Create a common language of risk

You need to create a common language of risk and manage one central source of data rather than lots of disparate disconnected datasets. Using one source of data will enable you to draw on a consistent framework where everything is measured in the same way. This makes complex issues easily understandable across the whole business – up to the most senior level.

Step 3: Centralise your risk monitoring

This will save you time, resources and confusion. There are lots of specialised tools in the market which help you monitor your supply chain for different risk workflows. That’s great, but, put a wrapper around them and keep your data consistent within that framework. This means hosting your own facility data, your supplier data, plus all your third-party inherent risk data in one place.

Step 4: Remember the world doesn’t stand still

Life would be a lot simpler if risks were static. However, when your supply chain stretches across 50 different countries your suppliers are subject to a dynamic environment where the picture on the ground is always changing. Whether it’s erratic policy making, protests over labour rights, government instability or an upsurge in security risks, analytics can help you become nimble. By regularly monitoring these issues, you will know which of your suppliers are most exposed and you can adapt your strategy accordingly.

Step 5: Be targeted

Once you’ve identified the risks in your supply chain, it’s important to be both sensible and cutting edge in developing your mitigation strategies. ‘Sensible’ means implementing a strategy that is tailored to the specific risks in your supply chain. It should be a hammer-to-nail solution that is both appropriate and cost effective. ‘Cutting edge’ in that you should constantly be innovating both internally and jointly with your suppliers who are on the ground and likely have quality input into how to reduce these risks. Be wary of one-size-fits-all solutions.

Step 6: Communicate what you’re doing

Don’t overlook the fact that you can distinguish your brand by your risk avoidance actions. Consumers and investors alike want to know that companies are responsible to the environment and the communities in which they operate. Properly communicating what you are doing to tackle these risks head-on can be good for your brand and help create opportunities for top-line expansion. Analytics are a perfect tool for illustrating improvements in your performance.

Don’t get left behind

Using analytics to improve sourcing or mitigate risk in the supply chain is not new. But, advances in data science techniques mean the ground is moving fast and those who move quickest will be best positioned to take advantage of their benefits. Picking the right source of risk analytics is crucial though. It will make your life easier and ultimately change the way you do business.

This blog was originally published here

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. 

5 Critical Factors for Improving Employee Retention

It’s normal for businesses to experience some personnel loss each year. However, the goal of retention is to keep that loss at a minimum.

By Samo Trebizan / Shutterstock

Employee retention refers to an organisation’s ability to keep, or retain, its employees and reduce turnover. It’s usually measured as a percentage of the employees who were present from the beginning to the end of the year. It’s normal for businesses to experience some personnel loss each year. However, the goal of retention is to keep that loss at a minimum.

Why is employee retention important?

One of the first, and arguably most important, reasons to put effort into retention is to create happier employees who will work harder, produce better results and ultimately, earn more money for the company. Happier employees are also more likely to feel a sense of loyalty to their organisations and recommend it to others for employment.

Contented employees are vital to a successful business, but retention is also important because of turnover costs. According to a CAP study, the average cost of replacing an employee can be up to 230 per cent of their annual salary for high-level executives, and 16 to 20 per cent of annual salary for low- to mid-tier employees. An executive making $200,000 a year could cost up to $416,000 to replace.

However, this figure doesn’t even include the “soft costs” associated with losing an employee, which can encompass productivity, engagement, training and cultural impacts. Focusing efforts on retention can keep employees happier and save organisations up to hundreds of thousands of dollars per person.

1. Start with onboarding

It may seem counterintuitive to start working to keep employees on their first day or before they’re even hired. However, studies have shown companies lose 25 per cent of employees within their first year, and as much as 20 per cent of that turnover happens in the first 45 days of employment.

Employees get their first glimpse of a company in the onboarding phase. Standardised onboarding processes have proven to result in greater productivity from new employees and 18 per cent higher rates of goal achievement. According to tech leader Mark Hurd, companies must make it easy for new hires to assimilate, especially when it comes to the simplest tasks, like getting an ID card and tools for their jobs, or even knowing where the restrooms are. “All of this stuff sounds so rudimentary, but it was taking weeks for some of this stuff to get done,” Hurd noted, “And in the meantime, the employee is unmotivated and doesn’t understand where the resources are.”

2. Demonstrate opportunities for growth

It’s important for employees to see a clear path for growth within their job right from the get-go. This can start during the recruitment process by highlighting to potential employees some of their prospective colleagues who have already moved up in the organisation. This can show them some potential directions they can take with their own career paths.

A Glassdoor and Harvard Business Review survey found employees who remain in a job for a long period of time without promotion are significantly more likely to seek out other companies for the next step in their career. Conversely, employees who see a clear trajectory for upward mobility have a much higher likelihood of staying with an organisation to work toward their end goal.

3, Offer flexible work arrangements

Flexible work arrangements are one of the most important perks job seekers look for right now. However, providing this benefit can do more than bring a company plenty of applications. It can also result in more satisfied, higher performing employees in the long run.

Offering flex time or a work-from-home policy shows employees their employer is cognizant of their time and is dedicated to creating a positive work-life balance. It also demonstrates a level of trust in each worker’s ability to do their job correctly without in-person supervision.

4. Provide consistent learning opportunities

A Consumer Technology Association (CTA) survey found special skills trainings or professional development programs to be one of the most important factors for retaining employees. Kevin Griffin, an IT advisor at Falco Enterprises, noted, “a commitment to training is seen by employees as an investment in their worth and a powerful incentive to stay at the company.”

By providing ample learning opportunities, companies allow employees to feel like they’re always making progress in their careers. Giving employees the opportunity to attend conferences, or providing regular in-office trainings, can act as major motivators for employees to remain with their employer. However, these activities should be counted as part of the workday rather than something undertaken on the employees’ own time, to prove the business is dedicated to educating their workers.

5. Implement open lines of communication

More employees leave their employers because of poor managerial relationships than for any other reason. Management should pay close attention to how they communicate with subordinates. Managers and supervisors should remain open to feedback and keep open lines of communication at all times.

Workers should feel comfortable and encouraged to speak up during meetings to offer their opinions without fear of backlash. Open channels of communication make employees feel valued, safe, and heard.

Companies that put effort into employee retention will have happier and more motivated employees, which will in turn save money over the long run.

Dynamic Purchasing Systems – The New Normal?

The framework is dead – long live the framework? As the public sector moves to make collaborative procurement easier, the Dynamic Purchasing System may be the key to long-term planning.

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So you know all about collaborative procurement frameworks in the public sector? Are you planning on using them in the short-term to kick start your year? You might want to hold on a second as there’s something that you might want to try out.

We have touched on collaborative frameworks that are available to public sector organisations in a previous article. Continuing the theme of the difficulties of collaboration, we come to a relatively new beast in the procurement jungle. This is the Dynamic Purchasing System (DPS).

Speaking from experience, it’s one of the hardest exercises I’ve done in my procurement career to date. Not only do you need to have all your stakeholders and requirements lined up before you even start (more on that shortly), but the complexity of the set-up has the ability to leave you scratching your head in utter confusion.

As hard a beast as it is to tame, once it’s in place it has the potential to solve a number of woes commonly associated with frameworks.

Let’s Get Dynamic

There are an increasing number of public sector organisations beginning to use a DPS as an alternative that still bears more than a passing resemblance to traditional frameworks. Buyers still have a list of pre-qualified suppliers who can compete in subsequent tenders, while suppliers can widen their chances by applying for as many Lots as they feel are relevant to their operations.

The key difference is that at the conclusion of the first stage, any suppliers who have been unsuccessful in their application for one or more Lots may reapply. They’ll then be re-evaluated and informed if they have been successful. A kind of ‘wash, rinse, repeat’ situation.

There are standard timelines involved both the first and second stages (see more here) and, unfortunately, it’s not a fast process. If you have never used a DPS, then you might wonder what actually makes it different from your standard frameworks. We’ll cover some Pros and Cons shortly, but in essence there are two key differences.

  1. The length of the DPS – Where a framework may be limited to 3-4 years, there is no upper time limit on a DPS. The buyer would make a decision on an appropriate length, taking into consideration the goods or services being procured, the market and any anticipated changes in scope or market conditions.
  • The ‘open’ application – The DPS is more dynamic than a framework (it’s in the name really!). Suppliers can apply to join at any time during the life of the DPS and are then on it for its duration. This is particularly good if there are new suppliers in the market, but also that unsuccessful suppliers don’t miss out on the chance of business for a number of years.

The Pros – Buyers and Suppliers

Beyond the longer length of the DPS and the fact that suppliers can be added at any time, there are a number of other benefits on both sides of the fence.

  • Reduced Timescales – see, I said we’d get back here! The length of time tenders are out in the market for can be as little as 10 days. This is a major reduction based on the minimum of 25 days for most Restricted procedures. And there’s more…
  • One Notice, No Standstill – Once the first Contract Notice has been sent out, there’s no requirement to do an individual one for each tender. And Award Notices can be grouped over a longer period to be issued in one go. AND there’s no requirement for a 10 day Standstill period on awards. All this means less time and valuable resources being spent on administration.
  • Access for SMEs – the DPS naturally sets up a greater number of smaller Lots and work packages, meaning that it’s much more attractive for SMEs to get involved. It maximises their involvement and means that they are competing on a level playing field with larger organisations.
  • Fully Electronic – further to this, all documentation has to be available in electronic format within the DPS, for its full duration. This means a level playing field again for any suppliers joining later in the process.

The Cons – Is it really for you?

Before we get carried away thinking a DPS is the panacea we’ve all been waiting for, there are a couple of caveats. Some are obvious, others come only with the painful experience of setting one up.

  • No Direct Awards, No Call Offs – unlike a traditional framework, there’s no scope of Direct Award or Call Offs from a DPS. Any procurement projects put through it need to have a full set of tender documents.
  • Set Up Isn’t Easy – as you might expect for something this size, scale and value, the early stages need some hard graft and infinite patience. You’re going to need to have outline specifications, tender documents and T&Cs, as well as a firm idea of what is going through each Lot. Set up alone could take a number of months.
  • No Guarantees – as we found, much to our chagrin, there are no guarantees that the suppliers you want will join. You can lead a horse (or supplier) to water with the notices, emails and follow ups, but they may choose not to drink. After all, from their point of view, they still have significant competition to go through to get any business.
  • It’s not for everything – there are categories and commodities for which a DPS will be brilliant. Markets where there is a fast pace of change or large number of new entrants are good. Commodities with a high volume of transactions, or less complex scope, can greatly benefit. But if you have a highly complex good or service and low number of contracts in your category or commodity, it may not be for you.

The New Normal?

It’s unlikely that Dynamic Purchasing Systems will completely replace traditional frameworks in the future. However, it does provide a powerful and useful tool for buyers both in getting tenders to market and ensuring a good level of on-going competition. Suppliers will benefit from reduced administration too, as they only need to pre-qualify once, but may be put off by the sheer size and scale of the DPS if you have a large number of Lots.

It’s definitely worth looking in more detail at the available information to see if a DPS is for you, and how you would set it up. Make sure you communicate with the market to see if it’s applicable (also good as a heads up that it’s coming) and how the Lots might be split down. Internally, gear everyone up and get everything in place. Once you explain the benefits, people are likely to get on board quickly!

Ultimately, don’t be put off by it. Yes, it’s something completely different that you may never have done before. But then, when’s that ever stopped procurement before?!

I’d love to hear your thoughts on this article and the series of articles on the challenges facing public sector procurement in 2019. Leave your comments below, or get in touch directly, I’m always happy to chat!

Big Ideas Summit – A Review

“The overall standard of the speakers and content was very strong, and here are four points that stood out for me as positives.”

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Yes, I was looking forward to the Procurious Big Ideas Summit last Thursday. But when I got up to see pouring rain and realised that the opening session was all about Brexit, my heart sank more than a little. Perhaps South Western Railways would come through with a handy 45-minute points failure? But no, all went well, and I was at the rather lovely Soho Hotel in good time for Professor Anand Menon, Kings College London and Director of think tank “UK in a Changing Europe”.  I sank back into the very comfy seat and prepared to be bored. 

And he was great. Probably the clearest description of where we are with Brexit that I’ve heard, and convincing ideas of where we go next. Why isn’t this man on the BBC more often, I wondered?  And guess what? When I got home that night, there he was, reviewing the papers at 10.30pm on the BBC News Channel!

So, what else was good about the Summit? The overall standard of the speakers and content was very strong, and here are four points that stood out for me as positives. 

1. Whether it was planned or not, almost all the speakers left plenty of time for questions and discussion. With the size of the group – around 50 – that meant we got into some genuinely interesting and engaging debates. For instance, Julie Brignac (from WNS Denali) gave an interesting viewpoint on why CPOs don’t make it to CEO very often. But because she only used half of her 35-minute slot for her formal presentation, we then had a really good interactive session with loads of comments and ideas flying around. A good lesson here for speakers and event organisers generally, I think. 

2. Although there were “sponsor speakers” from Ivalua, SAP Ariba, Barclaycard, and Icertis (plus WNS Denali), none of them simply promoted their product. Indeed, in the case of Justin Sadler-Smith of Ariba, someone asked him why he hadn’t focused more strongly on technology as an enabler for procurement transformation during his session! That showed admirable restraint from him in my book.  Vishal Patel from Ivalua was similar, talking about the hype and reality of AI, including the vital need for robust and accurate underpinning data, without pushing his own solutions too strongly. 

3. That size of audience – around 50 people – does help with networking.   You generally see and interact with people several times during the day, so particularly if you go along to the post-event drinks, you can make real personal connections through the event. That’s harder to do when there are 200 people at an event. 

4. The non-procurement “inspirational” speakers were very well chosen. Darren Swift lost both his legs when serving in the Army in Belfast, and has since become a champion sky-diver, a snowboarder, actor and motivational speaker. Just amazing and testament to the power of positive thinking. And David Gillespie is an actor and writer who told us about the power of stories, and how we can project our “status” and image in a way that will make us more respected and effective when working with others. It’s the sort of thing that initially sounds a bit fluffy and new age, but he was actually very down to earth and totally convincing in his messages. And perhaps he gave us some clues in terms of answering those questions I mentioned above about CPOs getting to CEO!


So, I assume the sessions will be available online at some point, and they are pretty much all worth checking out (there was only one during which I may have dozed off…!)  

If you’d like to attend Big Ideas Summit London 2020 on 12th March please contact Holly Nicholson [email protected]

Procurement Across Borders: Do You Have The Drive?

Do you have the drive, interest, motivation and confidence to adapt to a multicultural situation?


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In the last article in this series we discussed what cultural intelligence (CQ) is and how it is an important tool in working effectively across distance, culture and time. I described the four main components of CQ, which are CQ Drive, CQ Knowledge, CQ strategy and CQ Action. In this article I will be focusing on CQ Drive.

CQ Drive is the interest, motivation and confidence to adapt to a multicultural situation. There are three main areas of CQ Drive, these being:  

  • Intrinsic drive which is what motivates some people to have interactions with other cultures.  People with intrinsic drive have a deep, personal interest in different cultures and want to understand or experience the different foods, languages and cultural practices of others
  • Extrinsic drive describes those people that may want to gain experience interacting across cultures to improve their credentials, gain experience or gain a promotion in their organisation. People with extrinsic drive are more motivated by the ways in which having interactions with other cultures can benefit them
  • Self efficacy refers to having the confidence to deal with intercultural situations should they arise, especially when you are not in a position to know the best course of action. Often this entails navigating the cues you are receiving and interpreting them to the best of your ability

To further exemplify CQ drive in action I would like to share a story about a client. I was engaged recently to work with a scientist who is on a one year assignment in Australia from Germany. He works for a Biopharmaceutical organisation that has operations in both Australia and Germany. Apart from the technical side of his role, his brief is also to help bridge the different operational styles in the laboratory between the two countries.

 In terms of his intrinsic motivation, he really wants his assignment to be a successful one, has an interest in being of service and helping the organisation to grow through gaining experience in Australia and understanding how the business can operate optimally in a different context.

His extrinsic motivation is through knowing that having this experience will help him further his career and gain recognition and promotion in the future. This international exposure will be an essential component of his ambition to become a global leader.

He has also shown a high degree of self efficacy. Upon arriving in Australia, the organisation provided him with an apartment in a high rise development located in downtown Melbourne. He found over the first few weeks that he was quite lonely and had few people to talk to. Having had previous experience travelling through Europe, he decided to register himself at a Youth Hostel to enable him to meet other travellers and increase his friendship circle.

So, this is an example of someone with high CQ drive in all aspects. I encourage you to reflect on your own levels of CQ Drive in terms of intrinsic motivation, extrinsic motivation and self-efficacy. In my article next month, I will share some tips and techniques on how you can improve your CQ Drive and the kind of outcomes this can bring.

World’s Deadliest Supply Routes: Antarctica

Are you responsible for sending your people into danger? In a new Procurious blog series, The World’s Deadliest Supply Chains, we investigate the most high-risk supply chains out there…

By Thelma Amaro Vidales / Shutterstock 

The sight of 1900 rolls of toilet paper would not usually excite your typical urban dweller, but when the consignment supplies a remote Antarctica camp of 350 people for the whole winter it’s a case of unfettered joy and – of course – relief.

The most essential of household essentials was among the 3000 tonnes of provisions and equipment delivered by the chartered US vessel MV Ocean Giant to New Zealand’s Scott Base in January.

The supply drop – which can take up to nine days to unload – included 200 kilograms of coffee beans, 100 cans of peaches, a Toyota Landcruiser, two rowing machines and a triple-glazed window.

According to Antarctica New Zealand logistics manager Paul Woodgate, organisers need to think of everything the isolated community might need, including spare parts for water plants and heaters.

“We need supplies to keep the base clean, everyone fed and warm, and the water flowing,” he told Maori Television.

While routine, MV Ocean Giant’s delivery trip reflects the enormous task of supplying myriad human needs to the frozen wilderness.

While Antarctica might be known as the Lonely Continent, human activity abounds with no fewer than 36 permanent scientific and research bases operating there. In the summer months, many smaller facilities spring up too, all needing to be supplied by the mother camp.

Dangers lurks underneath every crevasse and ice flow, in an environment in which temperatures can fall to minus 90 degrees and winds can howl at more than 300 kilometres an hour.

As with Mt Everest, dozens of people have died on Antarctica’s icy expanses over the years – not just derring-do explorers but workers charged with ensuring the bases are supplied with thousands of items that city folk take for granted.

In 1976, 11 Argentinean airmen were killed when their plane crashed on a reconnaissance mission over Drakes Passage. In a tragic postscript, a helicopter dispatched to recover the bodies also crashed.

In 1971, a Hercules C-130 made a forced landing on a re-supply run to McMurdo Station (the US base on Ross Island that hosts Antarctica’s largest community).

No-one was injured. But the overseers of the US Antarctica program did their sums and realised that salvaging the aircraft would cost $US10m, compared with the $US38m replacement cost.

Seventeen years after it went down, the Hercules was fitted with skis, flown out and pressed into service once again. A testament, indeed, to the durability of the so-called ‘workhorse of the skies’.

As with the Argentinean incident a decade previously, the mission did not have a happy ending: in December 1987 two US sailors died when a different Hercules crashed, while conveying spare parts to the refurbished plane.

These days, the supply chain is made safer with technological advances such as GPS positioning, powerful ice breakers, carbon-fibre skis, freeze-proof laptops, satellite phones and sealed, all-weather runways.

But ‘safer’ is by no means ‘safe’, with many mishaps happening in more recent years.

In January 2016, helicopter pilot David Wood stepped from his aircraft and straight in a crevasse on the Western Ice Shelf, while on a routine mission to re-supply a fuel cache. He was rescued after four lonely hours, but subsequently died from hypothermia.

His death resulted in criminal charges being laid against Australia’s environment departments and a helicopter contractor.

To mitigate the ever-present dangers of Antarctica, governments are constantly stretching the envelope to make the complex logistics requirements that much safer.

In a breakthrough flight, a Royal Australian Air Force Flight C-17A in September 2017 supplied Davis Station from Hobart and then returned to the Tasmanian capital without landing at the base. The 10,000km round trip was made possible by a difficult mid-air refuelling exercise.

The plane air dropped nine tonnes of supplies – including fresh produce – to the base, which is inaccessible by sea from April to October.

Within the next decade, Antarctica’s logistics needs will only expand as more nations establish a presence there, if only to ‘fly the flag’ or with a view to claiming dibs on potential large oil and gas reserves in the future.

Most notably, China has established three bases and three airfields, reportedly spending more on its Antarctic program than any other country.

Six countries have territorial claims to Antarctica: Argentina, Australia, Chile, France, New Zealand, Norway and the UK.

But the Antarctic Treaty actually covers 53 countries, 29 having “consultative status”, which allows them to carry out research.

With 20 airports dotted around Antarctica, helicopters and fixed-wing aircraft are playing an increasingly prominent role – especially during winter months when sea access isn’t possible and roads on the continent are out of action.

“With more time and advancing technology, carrying goods to remote locations in Antarctica will only get easier,” says the Dubai-based Gulf Worldwide Logistics.

“The logistics industry is preparing for advancement in this continent over the next few years.” But again, ‘easier’ does not imply ‘safer’ and logistics operators perennially need to be alert to the dangers. Like the Emperor penguins, Antarctica is not the type of wild environment that can ever truly be tamed.

If you’d like to read additional related content or get involved with thought provoking discussions check out the Supply Chain Pros group – a one stop shop for all your supply chain need


4 Reasons To Get Your Whole Business Doing Procurement

How do you achieve effective procurement by giving all departments the possibility to purchase directly, what the risks of such an approach and how can you reduce them?

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Most mid-sized and big businesses already have a dedicated department responsible for providing a company with everything from paper to spare parts for production line repairs. Why would we offer to involve other employees in the procurement process?  

Let us explain how you may benefit from this approach, what the risks are and how they can be mitigated.

Why involve you non-procurement employees?

When you allow non-procurement employees to take a direct part in the ordering process, here are the gains you get:

1. Enhanced efficiency of the procurement department

Procurement teams frequently get ‘attacked’ with questions from other departments on order status, delivery dates as well as requests to change an order and so on. The involvement of non-procurement employees can help professionals to reduce time spent on low-value, repetitive tasks. And, even in cases when an order still requires approval from the procurement staff, this still decreases the time spent on order processing. It spares procurement professionals from multiple clarifications of order contents and duplication of effort as they don’t have to re-enter the info received from other departments via email or into an internal system to fill in the order documentation.

2. Smarter purchases  

When orders are made by people who need these products and services directly to use in their work, it’s more likely they’ll make smart choices. End users are more likely to know what product model or brand will serve longer and better and won’t require costly rework.

3. Reduced misinterpretations and errors

Misinterpretation and errors may appear when the order info comes through several departments before finally reaching its destination – a vendor. Moreover, procurement professionals often have difficulty understanding the characteristics of specific goods and materials. Allowing non-procurement employees to complete orders on their own, greatly increases the chances that their accuracy won’t be damaged and the requesters will get exactly what they expected.

4. Informed vendors  

Collaborative procurement allows for direct communication between non-procurement employees and suppliers, so it becomes much easier for the latter to get constant feedback from end users and understand what can be improved and how.  

Fears about purchasing directly

However appealing, the idea about involving other departments in purchasing activities may provoke rather disturbing thoughts, such as:  

1. It can result in maverick buying

The more people that are engaged in the procurement process, the easier it is to lose control and face violation of company guidelines and policies, budget exceeds, etc. 

2. It can distract other departments from their job

Employees from other departments may get distracted from their core responsibilities spending their time and effort on the extra procurement activities.  

Fortunately, these are not reasons enough to abandon the idea and forget to acknowledge the benefits that involving non-procurement staff can bring. There are ways to safely mitigate the associated problems with the right software choices.

How you can win with a procurement portal

One of the options worth considering is a procurement portal. A portal provides a possibility to enjoy the benefits while mitigating the relevant pain points you may face. It combines the functionality of a vendor portal and internal procurement software to allow smooth and controlled ‘extended’ procurement.

Controlled buying

To prevent maverick buying, an eProcurement portal uses various mechanisms that ensure a centralised, manageable, and efficient purchasing process. It allows procurement departments to configure the workflows to the specific guidelines and rules of the business, thereby preventing the non-procurement staff from their violation while making orders directly, for example:

  • The portal lets employees access only selected/recommended suppliers approved by the purchasing team.
  • The portal allows employees to purchase only according to the agreed terms.
  • The portal introduces access control with different rights for different employees, departments, and locations.
  • The portal sets up an approval process for either all purchases or specific situations (e.g., budget exceeds) and departments.
  • The portal lets vendors see only approved orders.
  • The portal allows setting up spending limits and sending notifications about all budget exceeds to the procurement and financial departments, etc. 

Intuitive user-centered environment

Easy-to-follow interfaces of modern procurement portals won’t require much effort, time or training to get accustomed.

Final Thoughts

It may be a good step to allow employees to take a direct part in a company’s purchasing activities in order to achieve more effective procurement and supply chain management.

A procurement portal provides good assistance for such an approach. It allows guided buying to prevent violations of the company’s policies and easy-to-follow workflows that don’t require much time and effort to get used to. Moreover, it helps to keep a clear picture of the needs of each department and avoid confusion with future redistribution.   

Yet, in no way do we mean that eProcurement should replace the procurement department. Procurement employees organise and control the procurement process using the portal as a tool for that and get more time to focus on more important activities (for example, strategic sourcing) as well as avoid mechanical and time-consuming work of gathering multiple orders, combining them, seeing to their relevance and working as a service desk for employees afterwards.

Three Ways To Hit 100% Pre-approved Spend

In a perfect business spend management scenario, all spend is digitised. You know what your organisation has committed to spend before a single dollar goes out the door…


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In a perfect business spend management scenario, all spend is digitised. You know what your organisation has committed to spend before a single dollar goes out the door. Pre-approved spend is a critical facet of a digital business spend management strategy because when spending is pre-approved, it means employees are buying from contracted vendors, realising negotiated savings, and complying with internal controls. With high percentages of pre-approved spend, everyone has visibility into spending against budgets and the organisation reduces risk and fraud.

So, what does this look like? In practice, the pre-approved spend process starts when employees submit a requisition and get an approved purchase order for anything they spend money on (besides recurring items such as utilities and leases). Downstream, when an electronic invoice comes in, it matches up with the PO automatically and goes into the queue for payment without anyone having to touch it.

It’s a totally digital process, which should be the ultimate goal of any company’s technology transformation. That’s why pre-approved spend is one of the key metrics we track in the Coupa Benchmark Report, our annual report that looks at performance metrics based on aggregated, anonymised data from our business spend management platform. Our 2019 findings indicate that in top-performing customer companies, 99.8 per cent of spend is pre-approved.

The long-term, positive impact of hitting that key metric goes beyond process efficiency.

It changes the way people can spend their time. Buyers can shift to managing vendors and commodities, not transactions. Accounts Payable can spend time on more strategic activities than chasing invoices. Finance has real-time visibility and control. Compliance is automated. In summary, your company can grow, without adding people to handle paper.

Eventually, your goal is get to a point where every invoice that comes in is backed by a purchase order. It’s a long-term maturity goal, and you need a plan to get both employees and suppliers on board. Here’s what that usually looks like.

1.Corralling “mavericks” by making it easy to follow the rules

Employees don’t necessarily want to be “maverick” spenders. They just want to get what they need quickly and get back to their job. If they search your system and find the right catalog and item, or they can easily find the policy that tells them where to go and what process to follow, they’ll follow the rules. It’s when they can’t find what they need, or the approval process takes too long, that they go outside the process and non-PO backed invoices start showing up.

So, the first thing you need to do is set up your system so that it’s easy for employees to follow the rules. To lay the groundwork for that easy employee experience, you’ll need to consolidate your suppliers and figure out which ones you’ll offer as preferred providers. Since some companies can have tens of thousands of suppliers, most organisations approach this project in tiers, focusing on suppliers with the highest numbers of transactions in the most common spending categories.

Next, you have to configure your policies in the system and set up your contracts and your catalogs. Catalogs go a long way toward providing a consumer-like e-commerce experience that makes it easy for people to find what they want and requisition it.

Finally, make sure that getting a requisition approved and turned into an PO is quick. This cycle time is critical to employee satisfaction and adoption of the system, which is why we also have a benchmark for requisition to PO time: 14.8 hours for best in class companies. Long approval chains are one of the biggest reasons for delays, so as you automate, take a look at your approval chains. Automation helps you increase visibility.

2. Encourage suppliers to adopt your new system

Once employees are reliably going through the purchase order process, you can shift your focus to getting more of your suppliers to submit their invoices electronically. Their participation is critical, because the more suppliers you have enabled, the closer you are to fully automating the invoice process.

Your major suppliers should be enabled in the system when you launch, but over time you will want to review the long tail of the supplier base, working through it in categories and starting with those that are submitting the most invoices in each. How deep into the supplier base you can go is usually a matter of resources. As we grow the Coupa Supplier Network and improve our Community Intelligence capabilities, our supplier enablement team is increasingly able to speed that effort by matching your current suppliers with suppliers already transacting with other Coupa customers via cXML or portal.

It’s pretty fast to set a supplier up; what really takes time is reaching out, following up, and providing any training that your hundreds or thousands of suppliers need. This change management piece is essential to obtaining supplier buy-in. You may want to bring in a partner to help you develop a communication plan around what you’re doing and why.

Explain the options your suppliers have for submitting their invoices, whether that’s by cXML or EDI, supplier portal, or supplier actionable email notification. Also make sure they understand the benefits, which are usually faster payment cycles and the ability to track the invoice status in your system without having to call anyone.

3. Benefits of Pre-Approved Spend Go Beyond AP

There’s a lot of benefit to AP from getting suppliers on board and spend pre-approved, but the best way to look at your digitisation effort is as an interconnected process that benefits procurement, finance, and the rest of the business.

You have to give users to right environment to be able to follow the policy. If the content is not there, and the system is too hard to use, you’re still going to have the same difficulty with people going around the systems, POs going to the wrong suppliers and cycle times remaining lengthy. Invoices still have to be coded and routed by AP, and you don’t get visibility into spending until after the fact.

If you get all of your employees going through the pre-approval process but you don’t have suppliers on board to submit invoices electronically, you’re still going to have a lot of manual work in AP.

When you can pull it all together from both sides, you can institute a “No PO, No Pay” policy. This is the best practice, the ultimate goal, and the reason you’re investing in an automated system in the first place. It’s a process transformation that takes time, but once it is complete it has the power to transform the way the whole company does business.

Learn more about how you can increase pre-approved spend and other KPIs you should be tracking in the 2019 Coupa Benchmark Report.

Out Of Savings Ideas? Here’s How To Unlock A New Level Of Buying Power

If you feel like you’ve exhausted every avenue for finding cost savings, a Group Purchasing Organization could be the answer to your challenge.

By Andrew Paul Deer /Shutterstock

There’s a gripping scene in the last chapters of Jules Verne’s Around the World in Eighty Days where the ever-dapper hero, Phileas Fogg, finds himself on a steamboat from New York to Ireland. Going full steam against hurricane winds, the vessel runs out of coal after a few days but Fogg, desperate to get to London in time to win a wager, buys the steamer from the captain and launches a desperate plan.

He instructs the crew to feed the furnace with all the wooden parts of the ship – the cabins, bunks, masts, rafts, spars were all burned, followed by the decking itself in a “perfect rage for demolition”. By the time they reach Queenstown the steamship has been reduced to an iron hull and an engine.

Procurement and supply management professionals on the never-ending hunt for cost savings can face a similar situation. Through the identification of efficiencies, negotiations with suppliers and more drastic cost-cutting initiatives, the wooden decking of the steamship (your organization) can be rapidly stripped away until suddenly you’re left with nothing but the hull.

In an immature procurement function, it’s very easy for procurement professionals to look good by posting impressive savings figures month after month. But as your function matures and savings opportunities become harder to find, your track record suddenly doesn’t look so hot.

Where to from here? Well, that’s where innovative thinking comes in. Finding further savings after all of the obvious avenues have been exhausted takes creativity and out-of-the-box solutions. If you do plan on going back to your supplier base to negotiate lower prices, you’ll need to offer them something in return for a better deal.

Volume, volume, volume

If you’re in a situation where you need further costs savings, but your suppliers genuinely cannot budge on price, there’s one sure-fire lever to reach for – volume.

Most businesses end up paying more than they need to because they only spend a modest amount in a particular category and will never unlock the power of bulk discounts. But not every organization has the resources – or warehouse space – to ramp up their purchase volume on their own. But what if there was a way to get the discounts of “bulk” without having to buy more?

Joining a Group Purchasing Organization (GPO) gives members access to savings you would never be able to negotiate on your own. Your organization joins a group of others buying the same thing, meaning you can leverage your collective purchase and buy in bulk as a group to create buying power.

GPOs help businesses of all sizes save on indirect and direct spend. The savings are found not just through bulk discounts, but through efficiencies (such as cutting down on search time and issuing RFPs) and administrative cost savings.

Collective buying decreases suppliers’ overheads, which drives further savings for the purchasing organization. Imagine, for example, a cashier who takes five minutes to process an order. 1000 single-item orders would require 5000 minutes of labor, whereas a single order of 1000 items requires five minutes of labor.

Looking for some facts and figures?

We get it – you’re a procurement pro, and procurement pros want to see hard numbers rather than fluffy promises of savings. We can’t speak for every GPO out there, but we can prove the value of GPO membership with our own figures.

UNA is a GPO with a combined $100 billion in buying power. We help procurement professionals:

  • Boost their bottom line with deep discounts we negotiate to save an average of 22% on direct and indirect spend.
  • Gain access to steeply discounted agreements (better contracts) that would typically be out of reach.
  • Unlock exclusive savings on products and services including 80% off office supplies, 26% off hotels, 20% off parcel shipping, and more.
  • Save time through pre-negotiated contracts to get started with new suppliers in 30 days or less.
  • Keep prices stable with agreements to ensure rates don’t increase.
  • We provide a free cost analysis across your highest categories of spend and offer procurement tips and support.

OK, but how much does GPO membership cost?

Every GPO is structured differently. Some GPOs charge members a fee for their services, while other GPOs, like UNA, are paid by the suppliers themselves. We, in turn, use that fee to fund our program, so that it’s always free for our members.

Membership with a GPO creates an advantage for the member that they couldn’t get on their own. If you’re running out of cost savings ideas and want to unlock the buying power driven by bulk pricing, a GPO could be the solution needed to keep your steamship sailing along.

Interested in learning more? Contact UNA to discuss the benefits of Group Purchasing.  

Golfing for a Spectrum of Opportunity

We’re seeing people on the spectrum unleash their intellect, experience and creativity across the company and around the world.

By bbernard/ Shutterstock

Recently I was invited to participate in a golf tournament. Golf is more than a game to me: it’s social; it’s outdoors; and it’s competitive. I’m always up for some good competition! Unfortunately, I just don’t get out there as much as I’d like, but in this situation, it’s not just about competing in a beautiful setting with friends and colleagues.

This tournament has a purpose that is meaningful, powerful and valuable: Els for Autism Golf Challenge. Not only do I get to play golf and feel good about supporting a great cause, but this helps people, communities and businesses. It’s a trifecta!

In the software industry, the network effect occurs when new participants join a digital platform, and the entire collective reaps the benefits — the more inclusive the network, the richer the experience and the greater the value. The same can be said for inclusivity in the workplace. Both serve as opportunity multipliers enhancing the experience and value for all.

I aspire to create a corporate culture that is welcoming to and respectful of all. For me, this aspiration is modeled through SAP’s Autism at Work program, one of our many great diversity and inclusion programs at SAP.

We’re seeing people on the spectrum unleash their intellect, experience and creativity across the company and around the world. People with autism are realising more than gainful employment; they’re forging professional careers. Here’s an amazing feature highlighting the program:

Of course, in the procurement business, where matching supply with demand is our specialty, we know a mismatch when we see one. There is upwards of eighty-five per cent unemployment rates for adults on the spectrum — people with skills and ambitions and dreams — which indicates that our colleagues, customers and communities are missing out on a huge untapped pool of talent. It’s also an opportunity denied to people with a tremendous amount to offer.

When I think about these people with skills, ambitions and dreams, I think of Dennis, a quality assurance specialist at SAP Ariba. Dennis has muscular dystrophy and struggled to fit in. He always assumed it was because of his wheelchair.

A diagnosis of autism after college gave him better insight into why making friends was so challenging, but it didn’t change the fact he couldn’t land a job. Lucky for us, Dennis found his way to SAP through the Autism at Work program. He has said, “I’m sad to have lost the ability to walk, but I’m an optimist and don’t let it get me down. Now, I live life without thinking too much about my physical disabilities… Autism is neither a disability or an ability. It just makes a person like me different.”

Now that is the caliber of colleague that I want on my team — someone who spends more time thinking about what he can do than what he cannot. Not to mention that as a quality assurance specialist, Dennis is an expert at catching issues way before customers experience them!

Dennis, in foreground, with colleagues

At SAP, we hire people like Dennis because we’re better for it. We develop the best products because we hire the best people. It’s as simple as that.

Though I am looking forward to a great day of golf, it’s really not about the game. It’s about providing opportunities and presenting the realm of possibility. American writer and lecturer Dale Carnegie once said, “We all have possibilities we don’t know about. We can do things we don’t even dream we can do.” Dennis is doing his thing, and I’m doing mine. We can all do something. The Els for Autism Foundation is a valuable resource to educate ourselves on autism, to donate and to volunteer. Each of us can play a role in helping our communities and companies be better. The possibilities are simply waiting to be seized.

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.