Could You Afford To Lose $2 Billion In Sales?

What does digital transformation mean for the procurement and supply chain profession?  How will it help CPOs to mange risk in their supply chains?

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The concept of digital transformation has been around for quite a while, ISM CEO Tom Derry argues. “In the late 90s we started doing reverse auctions and e-auctions. Not too long after that dynamic discounting began to enter the equation and FinTech platforms have also been around for a while. We’ve been embracing it but recently we’ve hit a pause in that innovation wave. And it seems like we’re on the brink of this next wave.”

How will digital transformation transform procurement and supply chain?

Digital transformation is the full impact or outcome of using data on elevated platforms to really reinvent what procurement and supply chain professionals are doing.

“In the source-to-settle process we typically identify 37 discreet steps” explains Tom. “And we think four technologies – procure-to-pay platforms, RPA, machine learning and IoT – will mean that all but eight or nine of those discreet tasks will be automated.” This, of course frees up time for humans carry out only the most important things like stakeholder management and supplier relationship management, the things that can only happen as a result of conversations between people.

Indeed, it is these soft skills that will galvanise the procurement and supply chain professions and make them step out into the future. When data is pointing you in different directions and the computers don’t know what to do, that’s when you step in.

Is supply management ready for change?

A recent survey revealed that only 6 per cent of CPOs possess the strategic leadership traits to lead digital and analytical transformations.

“I’d say there is a lot of discomfort. People don’t really understand the technologies we’re talking about and they don’t necessarily have the in-house skills,” says Tom.

“An interesting example is the technology that is currently being piloted in 30-40 per cent of large companies – RPA.” And yet most people don’t even understand what this technology is. “They think it means a robot from ‘lost in space’ when we’re actually talking about software code. The code fits into the gap between systems so imagine your ERP system, your spend analytics tool and any other systems you’re using. We’re typically trying to build reports by extracting data from these disparate sets of data, putting them in a data warehouse or a data lake, doing some analysis and running reports.

“RPA can automate most of that work so a human doesn’t have to go in and identify the data. RPA is good at doing routine, highly-defined processes.” This frees up the time of professionals so that, instead of spending half the day obtaining and cleansing the data, time can be spent on activities where there is real value-add. “The insights and the applications, for me, is the real opportunity.”

Selling the benefits of digital transformation

How does Tom advise managing those risk averse CPOs, who are reluctant to take the plunge with new technologies? Can you overcome that and sell the benefits to them?

“One of the biggest pay-offs for even the most risk averse CPOs is using digital tech to visualise the risk in your supply chain.

“I heard about a publicly traded pharmaceutical company in the states who did a risk analysis and claimed that anything less than $1M in spend is so small it’s immaterial. They wouldn’t even look at it. But it turned out they had $200,000 in spend on a coating for a consumer medication, which supported $2B in annual sales.

“[The plant in Japan that produced this coating] had a fire and they were at risk of losing all of these sales. If that doesn’t get the board’s attention, I don’t know what will. So when it comes to risk, that’s where the immediate benefits will be!”

When it comes to digital transformation, people know they need to be educated. “you have to get as smart as you can on what’s coming!” says Tom.

In our 10-part “Tuesdays With Tom” podcast series, Tom Derry discusses a broad range of critically important topics that every supply management professional should be across.

Listen to the full podcast here.

Bursting The Leadership Bubble – You Have Got What It Takes

People often cultivate an air of mystique about the type of person it takes to be in a senior leadership role. Abby Vige bursts that bubble…

By Andrew Angelov/ Shutterstock

Influencing up is about taking ownership of yourself and not waiting for things to be handed to you no matter how lowly or isolated your role is. There is always a way to move forward and add value.

I have summarised the key takeaways that I deployed early on my career, they serve as valuable reminders in any role that I am in.

1.Spot things in your team that could do with streamlining or improving #efficencyprogrammes

2. Don’t overlook the basics like creating tools and templates – this can be gold #bigdata #storytelling

3. Do your time, do the churn and take each opportunity as it comes #rollyoursleevesup

4. Get organised. We are all busy, you need to get efficient with your time #productivityhacks

5. Pick a senior that you can trust and test ideas with them, they can be your biggest ambassador #squadgoals

Mystery management

People are people no matter what their job title is or how senior they are, this seems so obvious! but many of us have cultivated an air of mystique about what type of person it must take to be in such a senior role. It’s worthwhile to take a moment to put them into slow motion in order to unpack what’s actually going on.

The slowmo replay

We all recognise this scenario, the most senior person in a organisation walks through an office in close proximity. You’ve never spoken to them, never been introduced to them, you are just one of oodles of people that they manage. In many instances they will most likely know your name but your day to day jobs don’t require any personal interaction. They waft through the office almost like an apparition. The air of leadership. The manager has landed.

How it’s interpreted

When I have mentored people coming up through the ranks, I have noticed that they often hold these people in such reverence. They make bold assumptions about the life they must have lead, the number of degrees they must hold and how super duper busy they must be. It’s often stated “…there’s no way I could do that job…” And so I ask them, what makes you think this? They say “well because they have such a high level job and so much responsibility, they must have so much technical knowledge and experience, their job must be insane”. While some of this is usually true, it does the manager a disservice. Is a titanic sized shipload of technical knowledge where the value lies? Are these the most valuable things they can teach us?

Bursting the bubble

When you slow the manager down, view and accept that they are a person just like the rest of us, the reverence bubble will pop. In the demystifying the senior manager we can begin to see what really matters, and what matters is knowing how they human and what they learned in order to get to where they are.

Human hacks

These are the questions we should be asking.

  • What things have happened in your life that have given the capability to be able to do this role that you’re in?
  • What have you learnt about yourself along the way?
  • What does stress feel like to you? How does it present, what brings it on and what do you do?
  • How do you manage competing time priorities?
  • What did you try that didn’t work? What did you try that did work?

The answers to these questions lay out a path that maps the journey of experience. A degree isn’t going to teach you instincts about your business, a degree can be important but it doesn’t teach you about resilience that is crafted and learned over time. The technical expertise is not what makes most senior managers, it’s the life skills.

Behind the veil

Senior managers need to challenge themselves to pull aside the curtain and be open to people about what they’ve done in their life to build the person that is the leader before them.

From this point, people can make an accurate assessment about what type of calibre it takes to be in a certain role and whether those skill sets suit their strengths, their values and their aspirations.

Get away from the technical and focus on the human.

Want to get your wheels turning towards a supply chain career one could only dream of? Then don’t miss our upcoming Career Boot Camp with IBM – a free 5-part podcast series with some of the very best of the best. Check it out here: https://www.procurious.com/career-boot-camp-2019

5 Steps To Providing Procurement As A Service 

The core activity of Procurement 4.0 will be to deliver <<as a service>> in the same way that cloud technology has evolved…

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At Ivalua Now The Art of Procurement earlier this month, Emmanuel Erba, Group Chief Procurement Officer – Executive Vice President -Capgemini discussed what the journey leading us to Procurement 4.0 could look like.

In an unprecedented period of technological disruptions, we simply cannot escape them. Emanuel advised that procurement professionals choose to see this as a realm of opportunity and question how to deliver all the promises of digital transformation to our clients.

The procurement environment is changing and this must be embraced or the profession will sink like a stone, he warned.

Unpredendented disruptions

  1. Cloud : Cloud is now the primary way of delivering and consuming IT – it’s the new normal. No one can imagine running a business without cloud computing
  2. Cybersecurity:  Last year, 689 million people globally were victims of cybercrime. By 2020 60 per cent of businesses will suffer major service failures. In today’s world, no CEO goes to bed certain that tomorrow their company will not to be impacted by a cyber threat. Cybersecurity needs to be integrated within our systems
  3. Business Platforms: These are a core feature of our current landscape. Business platforms have enabled getting the client closer to the supplier
  4. Industry 4.0
  5. AI and automation: This will strongly disrupt data gathering and processing. Repetitive and mundane tasks will be automated

What would your CEO say if you asked them what their priorities are? It’s likely that the way you manage costs is not high in the agenda. It’s important to understand what top management wants and what your clients expect and then work out how your procurement team can address these needs.

Emmanuel believes that the core activity of procurement 4.0 will be to deliver <<as a service>> in the same way that cloud technology has evolved.

Five forces driving the market towards <<as a service>>

  1. Time to scale – The speed at which the biggest brands are growing is ever-increasing. For organisations including Youtube, Amazon and Android the time taken to go from 0-80 per cent WW market share is only five years
  2. Disintermediate– Direct access to the resource to capture value – for example Uber, AirBnB and Apple
  3. Go to market – GTM via most powerful marketplaces powered by AI, automation, analytics. For example, digital ads sold Teslas with $70 million in advertising investments
  4. Revenue share – All of these factor are funded by 20-30 per cent revenue share model and leverage of client assets
  5. Investment power – Free cash flow generated enables immense CAPEX ability and acquisitions

5 steps to providing procurement <<as a service>>

For procurement, the 4.0 wave should

  1. Integrate disruptions – let’s not ignore disruptions, Emmanuel argues, they are much more powerful than us!
  2. Gear its people to embrace – Globalise!
  3. Position its role as aggregator of services, either internal or external, and map them to the business outcomes of the organisation
  4. Adopt the platforms that will increase the speed of execution, the automation and the data insights
  5. Think not only bottom line impact but being a Growth Enabler

In the <<as a service>> world, you don’t need to integrate everything vertically, but rather focus on your key differentiators and aggregate other services in the most effective way thinking in terms of meaningful outcomes.

Procurement as a service can address sizable needs both in direct and indirect spend. As Emmanuel revealed Procurement cloud addresses a $5 trillion scope.

Procurious attended Ivalua Now The Art of Procurement earlier this month. Find out more here.

4 Strategies For Managing Change The Right Way

If you think change is easy, you must be doing it wrong! These 4 strategies can help…

Why do we say change is hard when we make changes every day; we change clothes, what we eat, where we go. We change meetings, appointments, schedules constantly. So what is it about change that makes us put the brakes on anything and everything that requires us to act, work, interact, and think a little differently? In the digital era, change is everywhere. There’s new technology, new initiatives, new customers, new opportunities and new risks. And all of them require some sort of change whether it be to our priorities, our time, or how we go about doing our work. And yet, with a recent Harvard Business Review finding that 70 per cent of digital transformations do not realise their expected outcome, it’s clear that we have a challenge around a change in mindset, business model and approach.

Time to get out of our comfort zones; digital is all about transformation and innovation, which at it’s core requires varying degrees of change and adaptability. And yet so many of us are still uncomfortable with it. Even something as basic as shared work spaces was initially a confronting change to many that signalled the end of something that was comfortable and familiar.   The idea to many, is that change means that there is something that has not been done well or right, previously. But what if we changed our mindset and saw change as an opportunity to engage differently and learn new things? What if we saw it as the way to get things done, and the way to inspire us, help us learn, and help us achieve?  Fred Emery articulates this brilliantly “Instead of constantly adapting to change, why not change to be adaptive?”

Understanding this may be easy however making it happen is another thing altogether. So where to start? Here are four strategies that will help shift mindsets and perspectives for organisations and leaders who want to get this right.

1. Make it make sense

Context matters. Change cannot and should not happen in isolation. When a company or team undertake any initiative without the benefit of alignment to a functional or organisational strategy, it can create confusion or a disconnect between what is happening and the broader priorities. Alternatively, being able to clearly articulate how one enables the other creates clarity and purpose. Dan Pink’s amazing book Drive, explores the powerful motivating force of purpose in creating inspiring and engaging commitment. Everyone wants to know they are moving in the right direction, and that it’s a direction that matters.

2. Make it matter

Change becomes very personal when we are asked, or expected to do something that requires us to be different from what we are.  The question we all inevitably ask ourselves when we are presented with something that requires us to do something different is What’s in it for me?  If this question cannot be answered then probability suggests success is going to be unlikely. It’s not that as individuals we are singularly selfish, or wish to be difficult (although I am sure we all have our moments), it’s just that a change usually does seem like more effort. And effort involves energy and attention that can be too much in the plethora of some many other competing priorities we have in both our professional and personal lives. Being able to explain the benefits of what’s coming and what it might mean in a before versus after scenario can create a powerful force in the direction the change is needed. Too often leaders and organisations expect people to simply get it and don’t take the time to communicate and break this down meaningfully. Doing so can make all the difference.

3. Make it simple

Even if context is set and personalisation has been defined, it’s easy to get caught up in the confusion around the how. Best intentions are often abandoned because we are derailed by competing priorities, or simply because it seems really hard; as noted above, so much of change requires what we interpret to be exponential and often unnecessary effort. In their book Switch, Chip and Dan Heath explore the importance of providing a simple and clear path for those who want to implement a successful change. In the corporate world, we all know the conversation around SMART goals.  Our approach to change should not be any different. Set small milestones that are well defined and achievable. Celebrate the success upon achievement before moving on to the next one. And acknowledge that a setback is not a failure, or a reason to give up. In fact, in the digital dialogue, it’s simply an initiative of testing and learning. 

4. Make it the way things get done

Change should never be an afterthought. It should be ingrained into the organisational DNA.  Understanding that not everyone is going to be on board from day one is one thing. Working out what to do about it and create the impetus to move in the right direction is a challenging proposition but as many organisations and teams have shown before, it is possible. In the digital world, it is very easy to be distracted by the technology and its potential, losing sight that it is man + machine that realise the true potential of transformation. Understanding this and incorporating it into the ways of working will enable the cultural engagement that is required to become an organisation that is adaptive and agile at heart. Leverage the expertise and willingness of those have become a part of an initiative to build stories and share learnings from what worked and what didn’t. Then integrate the learning into the next program and the next, continuing to build until there is a shift of momentum towards the change, as opposed to resisting it. 

Rush Hour: High Risk, Hidden Costs and Unexpected Travel Spend

Travel is complex, costly, affects the vast majority of your organisation’s employees, and everyone has an opinion on best practice. It is also one of the most “mature” categories managed by procurement professionals. So why so many challenges?

Travel was one of the very first categories ever formally managed by procurement.  It is what I like to call a “mature category”, which means we should have it well and truly under control…. however…

An eye watering $1 trillion is spent on corporate travel every year. 

It is a category in which the scope has mushroomed to cover not just air travel, transport and accommodation, but also expense management technology, teleconferencing, events – the full end to end complexity of corporate travel. 

Nestled within that, is the specific category of ground transportation. 

The transport industry has changed dramatically over the past fifteen years. The number of daily, corporate rides being booked has increased by 10 per cent since 2010, while personal bookings have increased by 58 per cent.

It is a category notorious for its administrative burden! And therefore, for procurement professionals, it is a category ripe for disruption. As it stands currently, travel costs are 10 per cent of total spend but 90 per cent of the headache. In some cases, it takes approximately 10 minutes to process a single travel expense claim and with an average of 7 receipts per person submitted per month – that’s a lot of wasted time!

By 2020, half of all these business trips will be done by employees expecting a B2C style user experience – online, on-demand, seamless and consistent.  

Blanketed over the broad scope this corporate travel category are some very serious concerns – sustainability, employee safety and cybersecurity.

And so today, as a corporate travel manager, you need to concern yourself with a whole new set of factors including:

  • employee safety
  • technology implementation
  • quality of service
  • sustainability
  • total cost optimisation
  • maverick spend

All this to manage, and we haven’t even mentioned pacifying your CEO’s when they’re bumped out of first class, or their chauffeur doesn’t turn up on time!

In our latest webinar Rush Hour: High Risk, Hidden Costs and Unexpected Travel Spend we explored the different aspects of how to manage the total cost of ownership within this complex, emotional category.

Sign up to listen now as we discuss:

  • Managing the total cost of ownership within this complex category 
  • How AI, IoT, Blockchain and other innovative technologies are transforming the way procurement pros work – improving transparency and mitigating risk in business travel
  • How to ensure corporations deliver a high quality and personalised serviceon a global scale
  • Why sustainability is coming to the forefront of global travel

FAQs

Is the Rush Hour webinar available to anyone?

Absolutely! Anyone & everyone can register for the webinar and it won’t cost you a penny to do so. Simply sign up here.

How do I listen to the Rush Hour webinar?

Simply sign up here and you’ll be able to listen to the on-demand. 

Why wait when you can have it now?

No one wants to wait more than five mins for anything these days – least of all for a taxi – or an on-demand webinar recording!

Luckily, Rush Hour: High Risk, Hidden Costs and Unexpected Travel Spend is now available on demand.

Click here to listen as we discuss:

Half Of Us Lie To Get A Job – Can You Get Away With It?

Dying to move on? Then try lying. Don’t worry, you won’t be alone if you lie to get a job


By FGC/ Shutterstock

More than half of us confess to not telling the whole truth on our CVs and one in ten people have even managed to land a new role as a result. However, there are certain do’s and don’ts to take into consideration.

Embellishing experience

This is the most common untruth according to research from The University of Law, with nearly one in three confessing to lying about past experience on their CV – and that’s because it is easy to get away with a few exaggerations, provided what you are saying is based on facts.

Careful wording is key. So, “experience of leading a team” is fine even if you have only done this once or twice. “Experienced team leader”, however, is probably a step too far.

Avoid any claims that are easy to check. You can be vague on dates (for example, 2015 to 2016 – is a way to get around a very short time in a job that lasted just a few months from November to January), but listing your title as “Operations Director” when your LinkedIn profile/the company website clearly states “Manager” is asking to get caught out.

Giving your skills a boost

This is another aspect of our CVs where we are more likely to lie. Skills are easier to exaggerate than qualifications (which are easy to check) and as such you are more likely to get away with a few embellishments.

With many CVs now scanned electronically make sure you include the exact words listed in the job spec to ensure you get through to the interview stage. Most of us can give examples of when we have been “target driven” or have shown “great attention to detail” so think of how you have shown these skills (just in case you are asked to prove your claims).

Hyping your hobbies

This is often the most difficult part of a CV to write. If you own up about spending your free time in the pub playing pool and drinking pints, it doesn’t do you any favours. No wonder one in five say they would be most comfortable lying about their interests (but don’t forget to do your research – interviewers often ask about hobbies to break the ice).

Keeping quiet about things you want to hide

This is not exactly lying. Around one in ten of us feel pressure to lie about our age. Why bother? The Equalities Act makes age discrimination illegal. As such you are not required to put your date of birth on your CV and should not even be asked about your age. The same applies to marital status, religion, gender and sexuality. In fact, if you feel uncomfortable lying follow the “if in doubt, leave it out” approach.

If all else fails…. own your failings

If you don’t quite meet the job spec, don’t worry. Talent shortages mean that many employers are now looking for someone with potential rather than holding out of a candidate that can tick all the boxes. The world of work is changing so quickly, that the job you are doing today will inevitably change over the next five to ten years.

As such adaptability and reliance along with soft skills such as relationship building, communication and organisation skills are more important than experience for many hirers. So, don’t forget to add these to your CV.

But when it comes to tech… don’t blag it

You may be able to demonstrate your soft skills by giving a few examples, but one area you are likely to get caught is with tech. Some employers may even give you a skills test or ask you to give examples of how you have used a particular piece of software.

James, 35, a Project Manager from London, and one of those surveyed by the University of Law, shares this cautionary tale: “Earlier on in my career I applied for a job that was out of my reach in terms of experience, but the money was good, and the company was one I’d always wanted to work for, I thought, why not try my luck? To help me secure the role, I exaggerated on my previous roles and claimed to be able to use a software I hadn’t even heard of (how hard could it be to learn on the job, right?).

I landed an interview but didn’t expect them to go into a detailed discussion about the software, asking me how I’ve used it to help run my projects and report effectively. I tried to guess my way through it, but they definitely knew I had no idea what they were talking about. Safe to say they didn’t call me in for the second round.”

So better to be safe than sorry….and if you are going to lie, don’t lie about being able to do things you can’t.

Want to get your wheels turning towards a supply chain career one could only dream of? Then don’t miss our upcoming Career Boot Camp with IBM – a free 5-part podcast series with some of the very best of the best. Check it out here: https://www.procurious.com/career-boot-camp-2019

Delays and Overspend – Do Your Contracts Have Your Back?

If the pot of gold at a contract’s end is realised savings, why do so few contracts provide adequate cover for completion delays and overspend? It’s time for the public sector to get serious about damages.

By Everett Collection /Shutterstock

In procurement we are no strangers to contracts overrunning or budgets being exceeded. As hard as procurement professionals try, sometimes it’s just not possible to get a contract placed in time, have works completed to schedule, or stay within the original budget.

In the public sector, the negative outcomes associated with these contracts are magnified. After all, they are usually delivering public services or infrastructure, and spending public money. The root cause for delays and overspend this can frequently be tracked to poor contract or relationship management, scope creep or unrealistic cost or project estimates at the outset.

While many of the issues can be attributed to internal process, with the public sector very much its own worst enemy, sometimes external suppliers and contractors are at fault. However, in many cases, the contracts that have been agreed and signed lack the clauses that would help protect procurement and the wider organisations against the costs associated with the delays.

As the challenge of delivering projects on time and in budget increases, we have to asked the question – why is public sector procurement so bad at using liquidated damage or penalty clauses in contracts?

High Profile Failures

Before taking a closer look at the clauses that could assist the public sector in their contracts, let’s have a look at some of the most high profile examples of projects that have suffered colossal overruns or budgetary overspends.

It won’t take you very long to find some examples in the media of these projects. What these 4 have in common is that even though some of the fault lay or lies with contractors, the public sector (and therefore the taxpayer) was and are the one to shoulder the burden of additional costs.

In 1997, a plan was put in place to build a new home for the recently re-established Scottish Executive (to become the Scottish Government). Initial estimates for the project were a total budget of £10-40m and an opening date of January 2004. By the time the building opened in October 2004, the total cost had risen to £414.1m (a figure confirmed in 2007).

Despite an enquiry stating that the wrong type of construction contracts had been used at the outset, and claims of contractors overcharging, no legal action was taken against contractors to recoup any costs.

  • London Olympics and Paralympics

Although the Games frequently have Olympic-sized budgetary overruns, the London Olympics and Paralympics in 2012 took the gold medal for the most expensive summer games ever. When London won the right to host in 2005, the budget was estimated at £2.4 billion. By the time the games were completed, the total cost ran to over £8.7 billion.

The London Organising Committee of the Olympic Games (Locog), essentially a private company, were criticised for the contracts it put in place, particularly for security for the Games. However, in the end, the UK taxpayer ended up footing the bill for the new budget.

Another project that looked to re-introduce a service that had been lost to the City of Edinburgh, the trams were originally budgeted at £545 million and be completed by 2011. In the end, the network delivered was only a third of what was originally planned, cost £776 million and didn’t start operating until 2014.

Again the finger was pointed at the contracts being used and courts found against Transport Initiatives Edinburgh (TIE), the public company responsible for project delivery, on a number of dispute with the main contractor. However, there was never any money recovered from contractors, leaving the taxpayer out of pocket again.

  • Crossrail

The most recent and still incomplete example of the group. At the time of writing, the project is already 9 months delayed to start operating, received 3 bailouts in 2018 totalling over £2 billion, and is already £600 million over budget. Even these estimates may prove to be lower than the actual final cost, and currently there is no agreement on who will shoulder this burden.

It’s all very well saying that contracts were at fault for these delays and budget issues, but the specifics of this are rarely highlighted. For example, were clauses put in place in the contract to help return money to the Local Authority or Government where delays occurred? This brings us round to our focus – Liquidated Damages.

Your Contract Shield

Liquidated Damages – A fixed or determined sum agreed by the parties to a contract to be payable on breach by one of the parties.

Before we do anything else, let’s caveat that in the examples above, and in many other cases, the fault may lie with the contracting authority in part or wholly. In this case, Liquidated Damages would be as much use as a chocolate fireguard. But where it can be proven that the contractor is at fault, then we’re in business.

The important part of the definition above is that the damages are a fixed sum, agreed by both parties up front. Damages which aren’t agreed in advance and have no set value are classed as penalty clauses, and are unenforceable in most contracts.

The key is for work to be done up front on this between the contracting parties. This means that levels of damages are agreed and aren’t subject to challenge further down the line. The damages also have to be realistic in line with estimates of the costs of a breach of contract, including delays to completion or commissioning.

For example, if you have a construction project, you might look at the day rate being charged by the contractor and agreed that this will be the rate used for damages per day in the event of delays. For the most part, Liquidated Damages will likely be capped at a certain value (say 20 per cent of the total contract value), providing a level of fairness for both sides.

Setting Up Your Clauses

Clearly, given the intricacies of the laws surrounding contracts, this isn’t something that procurement should be approaching in isolation. If you do feel that your contract would benefit from a Liquidated Damages clause, then you should engage at the earliest opportunity with your Legal department.

Make sure the clauses are set up correctly and called out clearly in the contract. Once you have awarded your tender, you should take time to speak to the successful supplier. This will ensure that the clause is agreed to and everyone is aware of the full implications of it.

No-one wants to use these clauses in contracts – it suggests that something has gone wrong in the contract management, plus the damages aren’t going to cover the full extent of the costs too. But by having them in place to begin with, procurement can help to limit the possible damage to their organisation in the event that budgets or schedules go awry.

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!

7 Tips On Mentoring Your Reports In The Art Of Negotiation

We spoke to seven procurement experts to hear their advice on mentoring junior professionals on the art of negotiation…

By Jacob Lund/ Shutterstock

For any junior buyer, going head to head with an experienced negotiator can be especially intimidating. In many cases they are thrown into the deep end without enough preparation and guidance by their colleagues and superiors. For this piece, Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning interviewed seven procurement experts and leaders in their respective industries to find out their advice on teaching direct reports the art of negotiation.

1. Access to training and development programs

Over the 35-years that I have been in the procurement and supply function, I have found the following three approaches in coaching for the preparation of negotiations to be critical in order to become a respected and effective functional leader and a consistently successful negotiator:

The first is to coach “win-win” outcomes in business negotiations, aiming for partnerships with suppliers instead of taking the “arm’s length” approach to relationships that are so common. Secondly, to provide access to training and development programs that genuinely help individuals to strengthen their potential for success in negotiations; not just from a functional or technical perspective, but equally in soft skills. Lastly, to mentor and encourage the development of emotional intelligence (EQ) in how we are perceived in our professional engagements and how this can be leveraged or disable our ability to deliver successful negotiation outcomes. 

Les Ball, Chief Procurement Officer, ABB Motors and Generators

2. Exposure to more complex negotiations lead by experienced sourcing professionals

I use a three-faceted approach when mentoring direct reports to negotiate. Firstly, I make sure that all ‘on-the-job’ elements of negotiation preparation are available, this includes understanding market forces, supplier/buyer strengths and weaknesses, leverage tool kit, leading post negotiation assessments to name a few. Secondly, I want to ensure my more junior direct reports are exposed to more complex negotiations led by experienced sourcing professionals and over time, provide more opportunities in real negotiations to improve their skills in the field. Finally, it is a must to provide high-quality external training to keep learning new negotiation techniques and strategies.

Elodie Cramer, Associate Director of Biogen

3. Negotiating together

I believe in learning by doing. The best way to help and improve the negotiation skills of direct reports is to undertake a negotiation together. Use these opportunities to provide feedback and reflect on what went well and what didn’t. I also believe that after any important negotiation you should have a post-mortem review. Younger negotiators need to have an internal, or external, coach to guide them in preparing and delivering a negotiation. This includes a rehearsal before a big negotiation, which is not often done by buyers.

Guillaume Leopold, Procurement Advisory Partner, Ernst & Young

4. Scenario planning

Scenario planning and role playing can really help accelerate a person’s ability to negotiate. Do they know who is coming and what their expectations are? How are they going to open the negotiation and present their needs? Have they considered what the responses may be to their arguments and how to counter them? Additionally, coaching in other facets such as learning to actively listen and what topics or words not to say are just as important as rehearsing the key arguments. 

Jon Hatfield, Director Global Supply Management, PPG

5. Joint preparation

Spending time with them during the preparation phase gives direct reports more assurance. This is especially evident for complex negotiations, for instance when suppliers may also be customers. Consequently, collaboration becomes an absolute necessity.  As a group, we organise simulations and role plays in order to practice, exchange, discuss, review the negotiations and our performance in them. This team element ensures that they can learn from me and I can learn from them.

Christophe Schmitt, Head of Strategic Supplies, Omya

6. Sharing of current negotiations as a team

I like to set up regular physical meetings with all my direct reports to share and think collectively in a secure environment. By creating a friendly and open-minded atmosphere, we can share our current negotiations, the techniques we used and the challenges we faced. We would discuss the approaches, the outcomes and brainstorm on any alternative ways.

Olivier Cachat Chief Procurement Officer, IWG

7. Role playing acting as the supplier

Role playing is my favourite method. Specifically, I would ask my buyer to brief me on their strategy then, when we role play, I take the role of the buyer and get my colleague to experience how the supplier may feel and react to their argument and proposals.

Giuseppe Conti, Founder and Managing Partner, Conti Advanced Business Learning

The following answers were collected by Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning (www.cabl.ch), a consulting firm that specialises in negotiation & influencing. This article is part of a series aimed at collecting real-life negotiation experiences from Procurement executives.

Check out the other articles in this series:

Part One – Seven Negotiation Fails We’ve All Experienced

Part Two – Seven Negotiation Tricks Procurement Procurement Professionals Must Know

Why Sexual Harassment Training Doesn’t Work (And What We Can Do About It)

There is no evidence that most anti-sexual harassment training actually prevents sexual harassment so how can workplaces stop it?

By Tero Vesalainen/ Shutterstock

About half of all working women report being sexual harassed at work at some point during their working lives.  This is true whether the statistics come from the UK, the US or Europe. Figures like this are underlined by the continuous flow of allegations brought to light as a result of the #metoo movement. 

The question for many workplaces is how to stop it.  For many, the answer is sexual harassment training.  In 2017, for example when two female lawmakers testified about sexual misconduct involving unnamed sitting members of Congress, the House implemented a requirement that all members of staff undergo anti-sexual harassment training.  Even more recently, the US State of California enacted a law to expand employers’ sexual harassment training requirements. Previously, employers with 50 or more employees had to provide their supervisory personnel with two hours of sexual harassment prevention training every two years. The new law dropped the number to any firm having five or more employees and requiring even non-supervisors to receive training.  And it is now common for government agencies, universities and other employers to implement similar policies, with over 90 per cent of US employers having some form of training in place.

Many organisations are now taking a pre-emptive approach to sexual harassment.  When, and not if, the inevitable claim happens they want to be able to point to actions they have taken to prevent it.  The only problem is that no evidence that most anti-sexual harassment training actually prevents sexual harassment or that it makes an employer any less liable for harassment claims by employees.

Comprehensive reviews of typical training programs suggest that under test conditions, men with a propensity to harass may be less likely to inappropriately touch a colleague, but the training does not affect their long term attitudes at all.  According to the researchers there is “absolutely no scientific basis for concluding that harassment training fosters employee tolerance and greatly alters workplace culture.” They also caution that there is a risk that the existence of training sends the erroneous message that the workplace is a harassment-free environment, when it is likely to be nothing of the sort.

The problem lies in the nature of the training according to a recent study conducted by Assistant Professor Elizabeth Tippett from the University of Oregon School of Law.  She analyzed 74 current and historical training programs spanning a period for 1980 to 2016. Her research suggested that harassment training solidified into a genre in the 1980s and 1990s.  It became a box ticking exercise (usually) consisting of a video based on an authority figure summarizing the law and then acting out a set of scenarios focusing largely on contrived situations rather than using real data applicable to the employer delivering the training.  Tippett notes, “a substantial portion of examples trainers use, involving sexual comments, jokes, and emails, represent borderline conduct that may not constitute harassment. Trainers do not always provide an explanation of whether the conduct would qualify as harassment, which may lead participants to infer that such conduct would be strictly prohibited.”  

The result is training which is either ignored because it portrays behavior which isn’t harassment or, results in workplaces which become hypersensitive to the point that productivity is impaired because people are scared of interacting with women at all.

Researchers have suggested a number of ways of improving the effectiveness of anti-harassment training borrowed from research into school-based anti-bullying programs.  One of the most effective of those programs is the one designed by 87-year-old Swedish professor of psychology, Dan Olweus, one of the clear leaders in bullying research. His program is designed to curtail any behavior that results from the power imbalance rather than focusing on any given expression of it. In short his program says set rules, stick to them, monitor compliance vigilantly and punish any violation consistently. Importantly, the entire community must cooperate in reducing the behaviour. A common feature of effective anti-bullying programs is ensuring that the community reacts against bullying. If the bully thinks bullying will make them an outcast, they’ll be much less likely to bully. If the bully’s peers react by reporting the behaviour or intervening on behalf of the victim, the bullying will decrease.

Like other bullies, harassers thrive in environments where supervision is minimal and rules are loosely enforced or non-existent. And just as with bullies, cooperation and community values are the most powerful weapons of containment. None of this will stop a harasser from wanting to harass, but it will severely curtail their opportunities to do so, and likely make it a career ending choice.

All of this depends on top-down buy in from the leaders of an organization.  They have to walk the walk, set the tone and make sure it is enforced without fear or favour. They need to do much more than tick the box and press play on the 1980’s sexual harassment training video.

All too often, group think and anxiety about imaginary consequences shuts down complaints before they are even made. If we want to stop abusive behavior in in the workplace, then we need to ensure our HR departments and all our other whistleblowers are protected and emboldened. When abuse is occurring we need to protect those who speak out, not shame them into staying with the herd.

Is Category Management Still A Career Choice?

Far from the predictions of many, category management is alive and well, but it is changing. Elaine Porteous explores how…

By Pertusinas/ Shutterstock

Contrary to some predictions in the last decade about the demise and imminent death of category management in procurement, it is alive and well, but evolving.  In truth, it is becoming more complicated as third-party spend in the 21st century does not easily fit into historical categories.  There is more overlap and intersection in I.T. services as it merges with telecommunications, marketing services now include internet and social media and packaging is concerned with sustainability.     

Category management’s aim is to segment its spending on third-party goods and services into groups depending on function and end use.  The difficulty in defining category groups has increased due to the overlap between commodities and the rapid innovation in technologies.  Category managers handle more than strategic sourcing. Their role includes creating a category plan, handling supplier relationships and providing continual oversight in the category. 

Specialise in your niche and own the category

It is generally understood that difficult and complex indirect categories pay more.  Indirect spend refers to goods or services that are not directly incorporated into a product or service delivered to a customer, e.g.  I.T., marketing, facilities and professional services.  Experienced category managers can earn £75 000 per annum.    

Why are some categories difficult?  Partly because stakeholders in these categories resist procurement efforts to influence their spend and are protective of their incumbent suppliers.  It can also be because procurement people may be seen to be lacking in the knowledge needed to lead the supplier selection and contracting process.  

Professional services can be a bit of a minefield. Marketing, management consulting, legal and insurance are commodities that have unclear and convoluted pricing structures which take time to understand fully.   

Managing indirect categories requires behavioural skills as well as deep technical knowledge of the category. Aspiring category managers need persuasive skills, empathy and the ability to listen as well as to be decisive when the need arises.  They also need to act as change agents and diplomats.

Don’t try and change the supplier of food catering services without engaging with the users or there may be a riot.   

Information Technology

Sourcing and contracting I.T services is different from any other category. Without extensive experience or formal training, this category is going to be an uphill struggle. The advancements in artificial intelligence (AI), SaaS and blockchain will require constant study and awareness of how to apply new types of applications. Where the I.T. function is mission critical to the company operations, e.g. in banks and insurance companies, procurement and sourcing professionals need to be totally immersed in the category and its commodities which can include: software licences, hardware, peripherals, servers, data and telephony, 3D printing, warranties and maintenance.  Category managers are increasingly being hired from internal and external I.T. departments.

The organisational culture and landscape on the indirect side has many nuances that do not exist on the direct side. The procurement executive will therefore need to traverse the waters of indirect spend with unique strategies to ensure success.

Marketing services

This category requires focus, stamina and a long line in patience. The relationship between marketing and procurement works best when they meet to discuss and agree on sourcing and contracting strategy and when procurement takes over the pesky administrative details.   Traditionally advertising agencies have been the major recipients of marketing spend, some providing a one-stop service, maybe with no contract or service level agreement (SLA).  This is changing; the use of printed matter is diminishing, digital agencies are taking over so there is healthy competition for the overall spend.

See also  Is Marketing Procurement’s Blind Spot?

Legal services

Even though the legal services area is complex and services are expensive, it is possible to build credibility with the in-house legal team by finding out

  1. and understanding what their needs and issues are
  2. which areas have the potential for savings
  3. where better value can be achieved from external legal firms. 

The low-end, routine or commoditized legal services are the easiest to address. By learning the language of solicitors and attorneys you can express your sourcing ideas in words they can understand. Managing supplier relationships with law firms need to be focused on minimising bad behaviours and rewarding and incentivising those who provide accurate, transparent pricing and deliver excellent service and good advice.

Human Resources

HR has a wide remit in many large organizations with the main focus being on people management. Most HR professionals would agree that they don’t have an in-depth understanding of their suppliers’ cost drivers such as profit, overheads, risk and how these impact on return on investment (ROI).  They are beginning to realise the benefits of having their procurement counterparts with them around the negotiating table.  Procurement’s selling proposition to HR is to demonstrate its ability to deliver value by being a source of market intelligence and a guide to best practice. 

Depending on the industry sector you work in, some categories can take on greater or lesser importance. In fast-moving-consumer-goods, packaging, logistics and transport are vital to the success of all food, drink and healthcare companies. In insurance and banking, reliable technology is the key.  

Tips to help you succeed in difficult categories

  • Research the market by benchmarking the pricing of services to  establish the competitiveness of current suppliers
  • Develop a database for each type of service by evaluating current suppliers, their pricing structures and capabilities
  • Re-negotiate and improve the contractual terms and conditions, pricing models and rates on current agreements and/or go to market with a well-thought outsourcing strategy.  
  • Establish what deliverables and technical skills are needed for each type of service so that you can determine which suppliers can provide them
  • Identify incentives to improve relationships with your incumbent suppliers and aim to consolidate your base

There is a growing awareness of corporate social responsibility across most categories. Sustainability is becoming more than a consideration in categories that have the potential to have a detrimental impact on society and the environment. Job descriptions for category managers are already including responsibility for sustainability strategies. 

See also  Where Are All The Great Procurement Jobs?