Still Trying To Understand Blockchain? Here’s The One Thing You Really Need To Know

Blockchain is so much more then cryptocurrency, and despite the scepticism, it is here to stay.

By Dean Drobot/ Shutterstock

I’ve had a blog on blockchain on my mind for a while. As far as business buzzwords and hype, it has to be right up there with the best of them. Everyone is talking about it, or asking about it. Questions can be quite generic ranging from what exactly is it, what does it do and do I need to care about? And then then are the questions of scepticism and challenge including; is it even real, and does it even do anything? Amongst all of that, is the one we have all heard, or perhaps been the one we have actually asked; that’s got something to do with bitcoin, doesn’t it?

Ah, bitcoin.  We’ve all heard about it now and many who have followed the heady rise have had the dream of making millions from the cryptocurrency. Hitting dizzying heights of USD$19,000+ in 2017, we were all wondering why we had not invested in 2016 when it was hovering around the USD$600 mark. Thankfully, we were able to quickly congratulate ourselves for not being susceptible to the whims of the market when it fell to USD$3,000 earlier this year. And if you’ve been watching it over the last few months? Well it’s back at USD$10,000+, so you may be either celebrating or experiencing another round of FOMO.

So, what has all this got to do with blockchain? For many, the two are essentially the same, or the mention of one prompts an association with the other. If you only feel like you need to know one thing about blockchain, it should be that it is not bitcoin. Is it connected to bitcoin?  Yes, in so far that the technology that underpins bitcoin is what we call blockchain. But blockchain is so much more then cryptocurrency, and despite the scepticism, it is here to stay. Here are a few other considerations that may be helpful once you make the disassociation from bitcoin:

Understand the maturity level

The demand and potential for blockchain application saw Venture Capital firms invest more then $1 billion in blockchain start ups as early as 2017. McKinsey classifies blockchain as being in the Pioneering stage of technology development. While there are a plethora of use cases that have been identified by organisations and also by governments, many are at ideation stage. Others have progressed to proof of concept stage. As with anything that is new, there has not been enough time to implement at scale and observe the impact across a whole industry or organisation. That is a question of time and opportunity more than likelihood or value, and there is no doubt that as the technology matures and more experimentation takes place, the more we will learn. The prediction from many industry leaders is that it will become as ubiquitous as the internet. Until then, it is important to manage expectations around what it can and will do. 

Know what to use it for

As with many emerging technologies, the temptation to pioneer and innovate has led many organisations to force a solution of blockchain into a problem or opportunity that it may not be right for. We need blockchain or blockchain will solve this is a refrain that has been heard in many a meeting across industries and geographies. And it could be exactly right. But the important thing to remember is that the principle of value and outcome applies to all new technology, even one as cool as blockchain. Work out what problem you are trying to solve; if it involves many parties, transparency, and trust, it may be exactly what you need. The financial sector has been leading the way with blockchain in KYC (Know Your Customer) initiatives to improve detection of fraud and integrity of financial transactions. In addition to the commercial benefits of mitigating monetary losses, banks and other financial institutions are also expecting to realise efficiencies from process savings. With savings of between 20-30 per cent estimated, it is an experiment worth undertaking.

It will change industries and practices

Blockchain provides a level of transparency, validation and security that has been needed, but has not been able to be achieved previously. Why are these important?  Questions of origin and ownership have become increasingly important as we become more digital savvy. In some processes, it has always been a critical dependency with onerous and time consuming operational activity to execute it. Property is a great example of this. Do you have a right to sell this property, will I be the legal owner if I proceed with the transaction?  In other cases, it may be a factor in a decision making process. As a consumer, how do I really know where this food item has come from? Is it really organic, or is it simply a marketing strategy? Luxury brands like Louis Vuitton and Dior are leveraging blockchain as part of an offensive strategy to deal with counterfeit goods. Initially applying to new items, the eventual intent is to be able to authenticate the item through the resale process and therefore manage it throughout its lifetime.

So, is blockchain more then bitcoin? Absolutely. And while it is still in its very early stages, keep watching. As a technology, there is no doubt that it in its infancy but this should only temper expectations and not prevent experimentation.

But wait, the blockchain action doesn’t stop here! Join us on October 15 with blockchain experts Shari Diaz, Innovation Strategy and Operations Program Director, IBM Watson Supply Chain and Professor Olinga Ta’eed, Director of the Centre for Citizenship, Enterprise and Governance in this webinar brought to you by IBM and Procurious. Click here to register for Blockchain: Supply Chain’s 21st Century Truthsayer.

After A Slow Start, AI Is Starting To Make Its Mark

Procurement has traditionally lagged behind when it comes to technology, but does AI offer an opportunity for things to change?

By GreenCam1/ Shutterstock

Artificial intelligence (AI) is going to make business better, at least that is what the solutions providers would have us believe. Businesses will be more agile, more efficient and, importantly, more profitable. Yet it still feels procurement is behind the curve when it comes to AI adoption, despite those that have implemented things, such as machine-learning and AI-driven data analysis, seeing the benefits.

Simon Geale, vice president of client solutions at transformation procurement services provider Proxima, says: “It is early days. On the procurement side of things, we are seduced by the hype over practicality. Most of what we are seeing is either aggregating data or speeding up a process, so far.”

That is not to say that businesses are shunning AI. A recent survey by McKinsey found 47 per cent of companies have embedded at least one AI function in their business processes, up from 20 per cent in 2017.

McKinsey’s research showed that while most companies were adopting AI in areas such as service operations, marketing and product development, a significant number have started to use the technology in managing their supply chains.

Some sectors, such as retail, are adopting the technology far more rapidly in supply chain management than others.

It may be time for those businesses on the long tail of adoption to speed things up. Of those that have adopted AI in supply chain management, McKinsey reports 76 per cent have seen moderate or significant benefits.

AI Focus on Efficiencies and Productivity

So how are companies using AI? A survey by RELX Group late last year shows a focus on using AI and machine-learning principally to increase efficiencies or worker productivity (51 per cent), to inform future business decisions (41 per cent) and to streamline processes (39 per cent).

There are those in procurement who believe AI will destroy their jobs. Yet not all are convinced of this nightmare scenario.

Trudy Salandiak of the Chartered Institute of Procurement & Supply says: “Unlike many professionals, we think procurement will be future-proofed from being completely taken over by technology due to the human interaction and relationship management required.

“What it will do is provide much more visibility over supply chains to manage risk and seek out opportunities for innovation. It will also take away the process back-office side of the role to allow procurement teams to focus on more strategic areas.”

Ms Salandiak sees a role for AI in quicker and more accurate fraud detection, intelligent invoice matching and categorising vendors to rank their strategic importance in the supply chain.

Chatbots for Procurement?

AI chatbots have started to be used to help businesses articulate their needs with procurement, instead of completing lengthy requests on enterprise resource planning (ERP) systems. This echoes the voice experience consumers get through the likes of Amazon Alexa and Google Assistant.

Turkish telecoms company Turkcell has implemented a procurement chatbot, which learns continuously and simulates interactive procurement professionals’ conversations with business partners and vendors by using key pre-calculated user phrases and auditory or text-based signals. The chatbot interfaces with the company’s ERP system and it has enabled procurement professionals to cut out non-value-added activities and allocate their time to more strategic topics.

Meanwhile, Ireland’s Moyee Coffee has been working on a project in Ethiopia where farmers, roasters and consumers can access data as beans are moved from farm to cup. Consumers are able to use QR codes on the back of coffee packs to see where the beans have been sourced and how much the farmers have been paid, bringing unprecedented transparency to the supply chain. The project uses Bext360’s Bext-to-Brew platform with AI, blockchain and internet of things technology.

AI Procurement Policy

As consumers demand more authenticity and transparency, this trend is likely to continue.

The forecast value of AI to the global economy is being recognised by the World Economic Forum (WEF). In September, the WEF’s Centre for the Fourth Industrial Revolution unveiled a plan to develop the first AI procurement policy.

The work is being done in conjunction with the UK government’s Department for Digital, Culture, Media and Sport. A pilot starts in July and it is hoped it will be rolled out in December. This will include high-level guidelines as well as an explanatory workbook for procurement professionals. A further eight countries have expressed interest in extending the pilot globally.

The reason for putting together a policy now is that “regulation tends to be too slow”, says Kay Firth-Butterfield, WEF’s head of AI.

“From the procurement perspective, it’s drawing a line in the sand, saying this is how we expect AI to be produced in our country and we will not accept AI products that do not meet these criteria. It is agile governance,” says Ms Firth-Butterfield.

Reorganising Time for Strategic Tasks

The technology will also allow public sector employees to do more strategic work. “In government, there are back-office gains to be had to free up civil servants to do more,” she says, adding that work on AI procurement in the public sector is expected to transfer to the private sector.

“Governments want their citizens to be at forefront of developing and using this tech, and benefiting from the economic gains,” says Ms Firth-Butterfield. “Governments’ significant buying power can drive private sector adoption of these standards, even for products that are sold beyond government.”

The 53 per cent of companies that have not started implementing AI may like to start thinking about it now.

This article, edited by Peter Archer, was taken from the Raconteur Future of Procurement report, as featured in The Times.  


Like what you’re reading? As a procurement or supply chain professional, we truly value your opinion. And that’s why we want you to tell us what you want (what you really, really want) to see on Procurious. Click here to take our ten-minute survey and help us, help you!

Why Do Introverts Make Great CPOs?

Recent research suggests we might be selling more introverted professionals short.

By PKpix/ Shutterstock

Unassuming, cautious, reserved – these probably aren’t the first words that come to mind when you think of an effective Chief Procurement Officer. More likely, your ideal CPO exudes confidence and commands attention. They’re a charismatic extrovert who feels most energized and productive when they’re surrounded by others. It’s not surprising that the stereotype of the camera-ready executive has persisted. Throughout our lives, just about all of us are encouraged to speak up, take initiative, and fearlessly make a name for ourselves. Conventional wisdom suggests that anyone who can rise through the ranks and serve as the face of a business unit has done all of that and then some.

In the age of social media oversharing and open office environments, introverts can find it challenging to function in procurement, let alone distinguish themselves. The world has rarely looked more hostile to independent work and quiet reflection. It’s only growing more tempting to assume that all effective leaders are extroverts.

Recent research, however, suggests we might be selling more introverted professionals short. While they’re less likely to seek out leadership opportunities – and less likely to earn high-level appointments – they are no less effective at driving change and empowering their peers. In fact, the CEO Genome Project found that “introverts are slightly more likely to surpass the expectations of their board and investors.” And that’s not just a matter of setting the bar low.

Publishing their findings in the Harvard Business Review, the CEO Genome Project identified four key traits that all effective CEOs share. The most essential was not ambition, charisma, or a collaborative spirit. “Mundane as it may sound,” the report reads, “the ability to reliably produce results was possibly the most powerful of the four essential CEO behaviors.”

Introverts are rarely flashy, but they’re nothing if not reliable. HBR suggests that consistent performance is generally preferable to the sudden spikes in innovation and productivity that might characterize a more extroverted executive’s leadership style.

If your organization is looking to appoint a new Head of Procurement, don’t forget to look past the most vocal and most obvious candidates. It’s possible – even likely – that the best candidate is the one who’s least likely to make an impassioned case for themselves. Here are a few of the reasons an introverted leader could be the right pick to drive Procurement into the future.

1. Introverts are Great Listeners

How many times have you come prepared to a meeting with insights and suggestions only to find yourself talked at? Nobody likes this experience. Leaders who talk more than they listen tend to stifle creativity. At worst, they can instill a sense of fear that will make collaboration all but impossible. Not all extroverted leaders bowl over their teams and toss out constructive suggestions, but few if any introverted leaders do.  Introverted executives come to both meetings and one-on-one conversations looking to absorb wisdom from members of their team. In doing so, they foster an office environment where no one is afraid to speak their mind and mutual respect rules the day.

2. Introverts Build More Genuine Connections

At a glance, it’s easy to tag an introvert as disengaged or disconnected. Dig deeper, however, and you’ll see that the introverted conversationalist is probably doing the same. Rather than speaking just to speak or networking just to network, they’re identifying opportunities to introduce real insight and build a meaningful connection. This makes them especially adept at carrying out interviews. Rather than talking about themselves or professing to know what the candidate wants to hear, they’ll listen intently and identify opportunities to make the candidate feel at home. An extroverted leader might enter the interview process with a list of talking points designed to sell the position. In some cases, they could come off as aggressive and cow a candidate into silence. Someone more introverted, on the other hand, will let a candidate speak for themselves and encourage them to describe the experience they’re looking for. Where it makes sense, they’ll connect their organization to the candidate’s interests and experience. Once they’re on-board, these candidates will feel connected to their new employer and confident in their ability to make a difference.

3. Introverts are Humble

For the introverted leader, good listening and a facility for collaboration stem from a strong sense of humility. While they certainly trust their own judgment, they never forget that they’ve still got a lot to learn. That’s why they’re quick to consult with their teams before kicking off an initiative. It’s also why they tend to avoid the spotlight. Rather than leading to earn personal plaudits, an introverted executive seeks to empower the entire organization. They would rather see a member (or several members) of their team earn recognition than collect an award for themselves. In their work, they will always emphasize the personal growth and development of their team rather than personal gain. This wealth of humility will ultimately build a sense of trust and rapport across the organization. It will quickly become clear that leadership is acting with the greater good in mind.

4. Introverts are Thorough

Introverts don’t rush into things. Quite the opposite. They leverage both collaborative sessions and private periods of introspection to make solid, strategic business decisions. Though they’re not opposed to risk-taking, introverts are far less likely to make hasty suggestions. Their prudence often pays dividends in the form of solutions that are both creative and low-risk. It’s not just about avoiding unnecessary hazards. The tendency to carefully mull things over and consider every option also means that introverted leaders are unlikely to settle. In other words, an introverted CPO won’t rush to implement a strategy that’s ‘good enough’ just because it looks like the best option at a given time. Rather than encouraging over-caution, their attitude will build a culture where mediocrity is never an option. Initiatives might take longer to get going, but they’ll enjoy a greater chance of producing results and elevating the entire organization.

This is not to say that extroverts cannot make effective CPOs. It’s entirely possible that your organization will thrive under the command of a more outspoken leader. The changing nature of Procurement and Supply Management, however, certainly calls for some broader definitions and more open-minded thinking. The same qualities that defined the function for generations are beginning to evolve. So, too, will the qualities that define its leaders. If you’re looking to appoint a new leader, don’t limit yourself to the most obvious options. Take a page out the introvert’s handbook and carefully reflect on every option. That introvert who’s sitting quietly through meetings and working independently might be a world-class CPO in hiding.

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

How To “Flip” Fear As A Driver To Greater Influence

Everyone – without exception – lives with fear. But only a few know that fear and anxiety can be turned to your advantage. Influence guru Julie Masters discusses the keys to dealing with fear with former Navy SEAL Brandon Webb.

Whether we’re in critical negotiations with suppliers, asking for a raise at work or presenting in front of our peers, fear is one of those unwanted emotions that we find ourselves encountering all too often.

Like it or not though, fear is something we have to deal with, and the sooner we can make it work for us, the more effective and influential we can be in our own lives.

Recently I was fortunate enough to interview Brandon Webb on the Inside Influence podcast to talk about doing just that.

Webb is a former US Navy SEAL sniper who worked as an experimental aircraft pilot, helicopter Search & Rescue swimmer and an Aviation Warfare Systems Operator.

After completing four deployments to the Middle East, you would be forgiven for assuming that Webb is as close as they come to being fearless.

It’s surprising to learn then, that Webb had to deal with his own fears and anxieties throughout his entire military career, gradually teaching himself how to identify and change the conversation that took place in his head.

Webb has since left the military and has gone on to become a successful entrepreneur and New York Times bestselling author, sharing the journey he has had with fear and the methods he has used to overcome it in his book Mastering Fear.

Webb’s message is applicable to anyone facing fear, no matter the context – whether it’s being involved in a life-or-death situation, or standing up in front of work colleagues to deliver a presentation.

Here are Webb’s five tips on mastering fear to increase your influence.

Redirect the momentum

If you see fear as the enemy, you’ve already lost.

Fear can never be overcome, beaten, or evaded. The feeling of fear is part of our physiology and treating it as an adversary will only set you up for failure.

Rather than treating fear as a wall that you need to break through, Webb suggests using the power of fear as a force to harness and redirect.

Try to observe and acknowledge the feelings that come up – the adrenaline, the nerves, the tension – and use those feelings to propel you to achieve the task that’s in front of you.

It’s the difference between telling yourself “I’m not scared”, versus admitting “I am scared, but I’m going to use these feelings to help me move through this situation.”

Imagine what you could achieve if you stopped fearing fear itself. How many times would you put your hand up to speak? Offer your expertise or ideas? Request that seat at the table – confidently backed up with all the reasons you can add significant value?

Flip the mental switch

We’ve all been told that staying at our peak is more about mindset than it is about our physical state, and mastering fear is no different.

Monitoring, recognising and changing your internal dialogue – the mental chatter in your own head – is a key step in mastering fear.

This often involves taking a step back from the situation that’s brought up those feelings, recognising those feelings for what they are, and making a conscious decision to take a different direction rather than remaining overwhelmed.

Despite what we may think about what it takes to be a Navy SEAL, Webb points out that mastering fear isn’t about being stronger, tougher or more aggressive. It’s simply about being able to change the conversation going on in your head – something anybody can do. 

The most influential people I have ever met – in industries, politics and organisations – all have that ability in spades. The ability to identify the internal story that keeps them – or their idea – on the sidelines. Then shift it to one of empowerment.

As a place to start, ask yourself these questions: What currently stops me from making the highest value contribution I could make to this space / industry / conversation? What would be the first step in letting that story go? How would I feel if I did?

Use the charge

A typical adrenaline rush (a hormonal symptom of fear) can briefly turn us into superhumans – our heart rate increases, our blood pressure spikes, we can take in more air, and our blood is quickly redistributed to our muscles for increased strength.

Webb likens these physical changes to a “static charge” that can be harnessed to electrify rather than paralyse us.

Successful procurement professionals proactively seek out this charge as one of nature’s best tools to sharpen their abilities when they’re under pressure, especially in tough negotiation settings.

Harnessing this energy is a great way to take fear and proactively use it to move forward, rather than remaining paralysed when the going gets tough.

So the next time you feel the charge – stop, feel it – and then consciously decide to channel it as the super human burst of energy it was designed to be.

Use fear in rehearsal

When Webb was working as a search and rescue helicopter pilot, he very nearly lost his life when a mission went wrong.

One of the two pilots he was on a flight with suddenly suffered from vertigo, dropping the helicopter from altitude and plunging its bottom half into the ocean.

The pilot was overwhelmed by fear – unable to act or respond to the crew screaming at him to regain altitude.

The co-pilot, however, was able to calmly lift the helicopter out of the water and back into the air, saving the lives of Webb and the other crew members.

Webb’s theory is that the panicked pilot had, until that point, rarely experienced a level of adversity or stress throughout his life – that would have allowed him to work through the situation in his head. He had effectively ‘frozen up’.

His co-pilot however, had come from a lifetime of adversity. He had been bullied at school when he was younger and had grown up having to mentally work through his fears in order to carry on successfully.

Webb recommends that even people who have led a comparably stress-free life can artificially rehearse the feeling of fear – by role-playing frightening situations and having to move through a level of decision-making to get to an effective outcome.

You might be familiar with role-playing at work – usually practicing ideal scenarios – but how many of us role play difficult scenarios? Where we’re really challenged to make tough decisions and actually work through our fears?

So what now?

While we’re all undoubtedly going to experience fear throughout our lives – especially in the quest to become more influential. The tools that we have on hand to deal with that experience can make all the difference when it comes to cracking under pressure or rallying successfully.

So as a first step – start recognising fear as an energy source that can be harnessed, that we can make work for us in incredible and unlimited ways. If you can master that – you will have truly ‘flipped’ the power of fear to your advantage.


Like what you’re reading? As a procurement or supply chain professional, we truly value your opinion. And that’s why we want you to tell us what you want (what you really, really want) to see on Procurious. Click here to take our ten-minute survey and help us, help you!

Is The Gig Economy Changing The Way We View Work?

The ‘gig economy’ is just a hipster way of describing people who contract their labour rather than being full time employees. But is it changing the workplace?

By LightField Studios/ Shutterstock

We are constantly told that the ‘gig economy’ is about to destroy the workplace as we know it. We apparently have entered a brave new future where workers are no longer tethered to a business and lack the protections of employment laws written in a bygone and largely irrelevant era.  But the evidence tells a very different story.

The ‘gig economy’ is just a hipster way of describing people who contract their labour rather than being full time employees.  In that sense, gig workers have always been part of our economy.  Most tradespeople, for example, run their own businesses and contract their labour to multiple employers, often simultaneously. 

Recently however, contracting or ‘gig working’ has bled more and more into jobs previously occupied by full-time employees.  Taxi drivers are the most obvious modern example.  Formerly a driver worked for a company who owned and serviced the car.  The driver worked for a wage or for a percentage of the fares collected.  With the advent of Uber, the car is owned and serviced by the gig worker and they get to keep a much bigger (in theory) proportion of the fares earned. And it doesn’t stop there.  Gig workers are doing a similar thing when they turn their home into a hotel and themselves into hoteliers using AirBnB.

But for all the headline-grabbing hoo-ha about Uber, AirBnB and Lyft etc., gig workers using electronic platforms still only account for about 1 percent of the workforce. If we include contractors, temps and on-call workers of any description in the definition, about 10 per cent of the US workforce is part of the ‘gig economy’.  And that percentage has not moved at all since 2005.  The overwhelming majority (90 per cent) of workers had full-time jobs in 2005 and they still do.

The introduction of electronic platforms like Uber, Lyft and AirBnB may not have changed the overall numbers but it has changed one very important aspect of contracted labour, the age of the person doing the work.  Between 2005 and 2017 the percentage of ‘gig workers’ aged 35-44 dropped from a quarter to a fifth.  Meanwhile the percentage aged 55-64 increased by 25% and the numbers aged over 65 almost doubled.  Today’s ‘gig workers’ are increasingly older workers who in earlier times might have been receiving a government pension or living out their golden years on their savings. The reality couldn’t be further from the youth culture branding of the digital platforms.

Gig platforms may be growing but they are largely not replacing more standard work patterns. The JP Morgan Chase Institute (JPMCI) tracks payments to the bank accounts of workers in the ‘gig economy’ (via the platforms that arrange the work).  Their data shows that, for most of those workers, gigs are sporadic and are usually a second job done in a household where another member has a fulltime job.

And far from suffering lesser conditions, data from the US Labour survey shows that the group of gig workers growing fastest (those over 50) had the highest weekly earnings and greatest level of health insurance and retirement coverage of any age group.  All of those measure increased significantly between 2005 and 2017. 

The same survey did however identify a different and more concerning trend for younger workers when compared to its 1995 results.  There is an undeniable decline in work conditions for workers in general.  There is less job security, fewer opportunities for promotion and the increasing probability that their job will be outsourced to a company paying lower wages and offering less benefits.  This is increasingly being driven by the deliberate creation of ‘contracting’ roles which in reality are being performed by people who on any reasonable measure are full-time employees.  The contractor status gives the employer much more flexibility but destroys job security for the employee.

There is a lot of spin associated with the story of the gig economy and it is probably driven by tech companies which have a lot to gain by us believing they are much more important than they are.  The reality is that gig work is not increasing.  All that is changing is the method of arranging it and the age of the people doing it. 

But all the noise about the gig economy hides a more important story.  Full-time job security is declining and with it, people’s overall earning capacity and sense of worth and well-being.  We need to care less about the marketing spin emanating from the ‘gig economy’ and more about the very real declines in job security. 


Like what you’re reading? As a procurement or supply chain professional, we truly value your opinion. And that’s why we want you to tell us what you want (what you really, really want) to see on Procurious. Click here to take our ten-minute survey and help us, help you!

Shifting The Dial In Procurement

Procurement has an opportunity, indeed an imperative, to transform from an enabler of cost reduction to a creator of sustainable competitive advantage.

By Stokkete/ Shutterstock

Traditionally procurement has been the efficient workhorse for organisations, driving cost savings percentage point by percentage point, contract by contract. Yet despite the tremendous impact that strong spend management can have in value creation, the reality is that in many sectors, procurement is still primarily a transactional function with a limited scope of influence. Minimal deference is currently given to a function that, in light of the unprecedented rate of change in the world today, could in fact unlock distinctive competitive advantages for their organisation.

There are major shifts taking place globally today to which procurement must respond: value chains are becoming more complex and volatile, with increased risks and opportunities that accompany that complexity; developments in digitization, automation, and analytics that can unlock previously untapped potential; and acceleration of technological advancements and innovations are now more difficult than ever to keep pace with without external partnerships. This rapidly changing setting brings an imperative to change how procurement operates as a business function, as well as an opportunity to extend the scope of procurement’s influence in an organization.

Winning in this more complex and digital future will require a complete transformation of procurement as a function: having a broader mandate, way beyond just cost reduction; investment in digitization, automation and analytics; and rethinking the procurement organization.

So, exactly where should procurement leaders start to transform their functions? As a starting point, let’s take a closer look at the most important global shifts, and the corresponding implications.

Volatility brings risks—and opportunities

Since 1980, global inter-regional trade has increased eightfold, making supply chains more global and interconnected. However, with rapid growth across emerging markets, ever-increasing talks of trade wars, and intensifying concerns about sustainability, global supply chains are becoming more complex, more volatile, and more risky. Procurement functions need to be more adaptable as ever to respond.

Recent changes in trade policies are forcing large multinationals to rethink their supply strategies. By some projections, for example, Brexit could cost automakers in the UK billions of dollars in additional tariffs, and potentially force some to shift production elsewhere. Many other industries are also experiencing significant upheavals due to the changing nature of trade relationships between the United States and other countries.

At the same time, by 2025, emerging regions are expected to be home to almost 230 companies in the Fortune Global 500, up from 85 in 2010 (Exhibit 1). In a rebalancing global economy, procurement teams need to look beyond traditional low-cost locations in China and Latin America and explore new emerging markets in Africa or Southeast Asia, which have become attractive for new global sourcing opportunities.

Increasing corporate attention to socially responsible practices adds another challenge in managing complex global supply chains. Greater transparency—and greater expectation to be transparent—means unethical behavior in even a tier-2 or -3 supplier has reputational impacts on the purchasing organization. While ethical sourcing isn’t a new trend, the extent to which consumers are now making purchasing decisions based on this is. And companies are responding: in the 2017 McKinsey Global Survey on Sustainability, respondents across all regions reported significant increases in the adoption of sustainability-related technologies.

Take, for example, the use of blockchain for the mining of cobalt, a critical mineral for the automotive and mobile-device industries. Reports of labor abuses in cobalt mines have led producers and customers to deploy blockchain technologies: each bag of cobalt is sealed with a digital tag that ensures full traceability to compliance-accredited mining locations, creating a new source of competitive differentiation.

This article is an extract and has been reproduced with permission from McKinsey & Company. It is co-authored by Tarandeep Singh Ahuja, a partner in McKinsey’s Melbourne office, and Yen Ngai, an expert in its Sydney office.  Full article is available here.

New Zealand Government Procurement – A Temperature Check

A lot has been going on in New Zealand Government procurement, compounding one after the other. Where to start?

By Andrey_Popov / Shutterstock

When you’re in the thick of something it’s harder to take the moment to carve out enough perspective to say something meaningful. A lot has been going on in New Zealand Government procurement, compounding one after the other. Where to start?

The Ardern effect

The Ardern effect started long before our Prime Minister was elected, it was coined during her election campaign as a way to explain (or criticise, depending on what side of the fence you are on) the undeniable, charismatic ability she has to lead and relate to people. Jacinda Ardern has gained a lot of notoriety for all of her firsts: youngest Prime Minister, first woman to be pregnant during her elected term, her partner is the primary carer – shock horror, they are unmarried to, although recently announced their engagement.

The Ardern effect has continued to follow her and is not just isolated to her election campaign as they are values that are inherent to her as a person, she does not switch them on and off. She is a leader that feels, this is perhaps the rarest thing about her. Perhaps this is the real “first”.

A leader with feels headlining at the UN

Ardern took these values and headlined them in her statement to the United Nations in September 2018 where she called out politicians and governments to respond to the “… growing sense of isolation, dislocation and a sense of insecurity and the erosion of hope.” New Zealand is a country where the Prime Minister’s response to this was to publically declare that we as a county are pursuing kindness.

The Ardern effect is a bow wave waiting to hit

I had never really seen values, emotions or concepts of a collective “betterness” be voiced in this way by a leader of our country in the theatre of politics, let alone on an international stage. I have watched with active interest how this would play out and trickle down into my day job – this vehement passion is bound to impact.

Positive warning shots

  1. Broader Outcomes

The New Zealand Government Procurement website states that government procurement can and should be used to support wider social, economic and environmental outcomes that go beyond the immediate purchase of goods and services. The Government agreed on 23 October 2018 to a set of priority outcomes for agencies to leverage from their procurement activities and identified specific contracts or sectors for initial focus.

Although the broader outcomes initiative is targeted to four priority areas, it sets the tone and the expectation that this the lens in which all government spending should be filtered through.

2. Wellbeing budget hype

The much anticipated, much talked about Wellbeing budget did not under deliver on its promise. New Zealand is the first western country to design its entire budget based on wellbeing priorities and instruct its ministries to design policies to improve wellbeing.

It’s not like Social Procurement hasn’t been done before, it’s happening in many areas, many businesses and many government agencies but what is different is the government which is leading, the context of what has happened in New Zealand recently and how you cannot move without being hit by social responsibility.

Added context

New Zealand has had a big year, here are some snippets that add to the contextual tapestry of our country:

  • The “I am hope” grass roots campaign by Mike King, New Zealander of the Year ignited the fight against mental health issues in NZ. Mental health continues to be a hot topic in our country and politics.
  • The Rainbow flag that symbolises diversity and inclusion was painted at the Airport of our capital city, welcoming people for the International Lesbian, Gay, Bisexual, Trans and Intersex Association (ILGA) showing that we accept and support everyone.
  • The horrific terror attacks and our response as a country to love more.
  • The first country in the world to bring in a Domestic Violence – Victims’ Protection Act that brings in new rights for employees affected by domestic violence. It gives them the right to take paid leave and to have flexible working arrangements to support them during this time.
  • NZ Government Procurement ranks number one in the world! Following research conducted by Oxford University

Poised

With our strong values based leader that is internationally recognised, our standing within the international procurement sector, the focus on broader outcomes and wellbeing for our citizens in NZ. It’s no wonder the trickle down effects are starting to make themselves known. It’s an exciting time for those of us that are passionate about social values.

Nine years of a government focused on infrastructure has been reflected in the hotness of infrastructure as a cool kid procurement job. It’s not too far off for the social warriors to get their turn to roar, conscious buying within the framework of government seems like an exciting challenge to me.

Who is ready to step up to the challenge?


Like what you’re reading? As a procurement or supply chain professional, we truly value your opinion. And that’s why we want you to tell us what you want (what you really, really want) to see on Procurious. Click here to take our ten-minute survey and help us, help you!

Where Does Your Supply Chain Begin and End?

Supply chain professionals are no doubt an important link in any supply chain but it is but one link in the end-to-end process.

By releon8211/ Shutterstock

Working in any supply chain management role can be all-consuming as well as challenging -but we can’t work in a vacuum. Supply chain professionals are no doubt an important link in any supply chain but it is but one link in the end-to-end process.

In the simplest type of supply chains, items and services are sourced from suppliers and converted into products and delivered to the customer or end-user.  During this process, both products and information move forward through the chain.   In the same way, products and related information move back up the chain.   

If only it were that easy. 

Any supply chain involves interactions between people, entities, information, and physical resources that combine, hopefully harmoniously, to sustain a company’s competitiveness.  It also has an objective to reduce overall costs and speed up the production and distribution cycle. As supply chain professionals know very well, if a supplier is unable to supply on time, and within the stipulated budget, business is bound to suffer losses and gain a negative reputation.

Q.  What is the main goal of an efficient supply chain?

A.  To get the customers what they want, when they want it, at least cost.  

If a company fails to focus fully on the consumer or end-user its ability to surviveis severely at risk. 

How to improve your supply chain

Sourcing is an early activity in the supply chain but demand planning comes first. By sharing projected requirements with your suppliers you can assist them to manage their own sourcing process and their inventory. Any forecasts that you supply them may not be cast in stone but they help to take the guesswork out of your order process.    Your Tier 2 suppliers, i.e. your supplier’s suppliers, are the ones that provide the items and services needed to fulfil your orders.  What products do they supply, what are their costs and what are their lead times?   

 The automotive industry is particularly good at this.  Modern vehicles are made up of more than 30 000 component parts.  Most leading vehicle manufacturers have a close grip on their Tier 2 suppliers: the parts suppliers for engines and equipment and computer software and hardware needed to make them run.

Technology in the supply chain 

The use, speed, and capabilities of technology are defining the trends in modern supply chains.  The cost of these technologies is starting to decrease making automation more affordable for mid-size companies. 

Demanding and techno-savvy customers are effectively re-shaping supply chains in the e-commerce world.  Customers expect to receive their order within a day or two whether it’s food, fashion or new bed linen.  They can choose not only what to buy, but who to buy it from and how to buy it.  E-commerce is creating new challenges throughout the supply chain from demand planning through procurement to warehousing, distribution and logistics.  Whether a customer is shopping in-store, on their laptop or mobile device, they expect their experience to remain the same, wherever they are in the world.  Retail companies that can adapt their supply chain operations to the new era of e-commerce will have the best chance of success.  

Global supply chains

Global supply chains are becoming very fragmented and dispersed and so require lots of resources and technologies to function well. Complex supply chains such as those in aerospace, hi-tech, chemicals and pharmaceuticals are becoming more difficult to design and manage.   According to Gartner, some of the most efficient global supply chains are in fast-moving-consumer-goods (FMCG) companies such as Unilever, Nestle, Nike and Inditex (Zara).  These companies have close relationships with their suppliers, even owning some of them, which is contributing to their successes. 

Johnson & Johnson is a confirmed leader in the healthcare industry due to its on-going focus on its supply chain capabilities such as end-to-end visibility.  The company prides itself on being a customer-centric organization.  It is an early adopter of new technologies such as 3D printing which it is using to enhance its manufacturing and distributions operations and unlock new opportunities.  Its global team has played a large part in streamlining the sourcing processes for both ingredients and packaging.    They realized that their supply chain was not as nimble and agile as it could be, and they weren’t leveraging their global scale in sourcing enough.

The professional association for supply chain management and the leading provider of research and education (APICS) provides a supply chain operations reference model (SCOR) on which you can assess your current abilities. It identifies steps in four measures:  process, performance, practices and people.    

The SCOR Model

APICS proposes that to improve your supply chain you need to:

  • Analyse your supply chain business processes and their dependencies with the SCOR framework in mind
  • Document and design your supply chain strategy, processes, and architectures to increase the speed of system implementations
  • Design internal business processes while taking organizational learning goals into consideration
  • Simulate the process to identify bottlenecks, gaps and process enhancements to improve supply chain performance

Underlying any successful supply chain is a strong organizational structure, up-to-date technology and strong leadership. An organisation’s supply chain is a significant source of competitive advantage and business leaders are embracing it as a strategic capability. 

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

3 Ways To Amplify The Profile Of Your Procurement Team

Influence expert Julie Masters demonstrates how online employee advocacy can supercharge the amplification and cut-through of your procurement content.

By Africa Studio/ Shutterstock

While we’re all searching for the latest and greatest way to get our company and brand out there, you might be surprised to find one of the most effective and underutilised methods sitting right under your nose.

Employee advocacy, where employees share company content and stories about what they’re doing at the office and the projects they’re working on, is now seen by some as the holy grail of content marketing.

Compared to the traditional method of sending out communication on social channels via the ‘company account’, employee advocates are shown to have exponential reach and have far more trust in the marketplace than a company or brand ever could.

MSL Group has shown that brand messages shared through personal social media accounts are re-shared 24 times more than when that same content is posted by the brand itself.

The reach is also substantially more via an employee network. Recent studies show that if you were to add together the contacts of all the employees in your company, that network would be 600 times larger than the network of the company itself.

According to the Edelman Trust Barometer, those surveyed were also twice as likely to trust communication from an employee than the CEO themselves.

These factors make employee advocates a significantly more powerful amplifier than a single channel of communication from the company or brand could ever reach alone.

And it’s not always about gathering more ‘Likes’ or having a positive public persona.

Nearly 10 years ago, IBM managed to harness the power of employee advocacy to show how it could translate directly to the bottom line.

Back in 2008, and faced with one of the largest recessions they had seen, the marketing team at IBM launched the “Smarter Planet” campaign.

The campaign was designed to explain how a new generation of intelligent systems (the Internet of Things) and technologies could be put to use for profound impact and to encourage further thinking.

Rather than lean on an advertising agency to create the message via the traditional mediums, the team at IBM peopled these ads with the company’s own employees.

They went deep into the organisation to uncover the stories, expertise, knowledge, and insights that were held by specialists who already worked at IBM.

They shone a light on the people who worked with them – from master inventors down to systems engineers.

But they didn’t stop there.

IBM also asked their customers to partner with them, shining a light on the customers own technological challenges and aspirations live on camera.

The result was nothing short of extraordinary, with IBM’s own employees and customers amplifying the campaign exponentially, rocketing IBM’s share price by 64% that year (against a market average in their space of 14%) and generating $3 billion in additional revenue.

This is a great example of the power of employee advocacy, the power of storytelling and shining a light on the amazing work that was being done within IBM.

But having employees enthusiastic to talk to others about the work they do, let alone share it on social media, can be easier said than done. Current data indicates that only 3% of employees currently engage in advocacy for their own company.

Clearly employees aren’t rushing over themselves to advocate for their company and there a number of hurdles that need to be overcome to really gain traction and make it a success.

1. Set boundaries but stay flexible

While there are hundreds of stories online about employees being sacked or disciplined for an ill-advised post on social media, the good news is that many of those posts were inappropriate by most standards.

In a work environment where mistakes can have severe consequences, it’s understandable that employees can be nervous about posting content that is considered ‘appropriate’ for the company.

A social media policy that is clear enough to stay within company guidelines but flexible enough to allow personalities to shine through can be a good start to lifting employee engagement around company activities.

Having designated communication ambassadors within each team – those who have a passion and talent for social sharing – can also be a good strategy for sharing and generating quality content around company activity if it’s not suitable for all.

2. Stay curious and dig for gold

One reason employees may not actively post company content is that they think what they do isn’t interesting to others.

This is often a mistaken view, as what may seem familiar and uninteresting to some are just as likely to be fascinating to others who value an insight into the working life of a procurement pro.

This could be anything from case studies to project experiences to “a day in the life” examples – anything that gives insight into the unique experiences that the company undertakes and is involved with.

And don’t forget, social posts are just one piece of the mosaic being created online which shows a vibrant, active team that others will want to investigate and join.

3. Get buy-in to amplify results

The third reason people avoid sharing company content is that employees only prefer to share information about projects in which they’ve had personal ownership or ‘co-created’.

As we saw in the IBM example though, a well-crafted theme that threads an inspiring idea throughout the whole organisation can be enough to band together otherwise unrelated departments and activities.

Drawing on the underlying ‘why’ that inspires your procurement team to do what they do, or championing a cause that is close to the heart of your company can be enough to drive your team to want to share what they do with the outside world.

So what does that mean for your team?

It’s clear to see that employee advocates can be a powerful way to build the company message in the marketplace, provided there is support from the top that allows a more democratic form of communication.

It doesn’t always have to be about the wins either.

Using social media to amplify important company changes can be equally effective – if it might otherwise be missed through the traditional office channels or intranet.

If there is a whole team of procurement professionals and stakeholders enthusiastically spruiking the benefits of the change, your message is much more likely to have cut-through.

Similarly, if individual members of your procurement team make the effort to share stories about their challenges, successes and day-to-day work, this can also serve to build up an online profile of your organisation that will make your team visible and attractive to top talent as well.

As a bottom line – what IBM learnt in 2008, and what we still know now – is that the most impactful form of communication is human stories. Preferably told by real, passionate people with a clear intention to drive things forward.

Identify those people in your team – bring them on board – give them clear boundaries – and then cheer them from the sidelines for having the courage to contribute.

Now that’s a procurement team with influence.

Like what you’re reading? As a procurement or supply chain professional, we truly value your opinion. And that’s why we want you to tell us what you want (what you really, really want) to see on Procurious. Click here to take our ten-minute survey and help us, help you!

What Can Yoda Teach Us About The Kraljic Matrix?

The Kraljic Matrix revolutionised Procurement in 1983. Now the world looks very different. Is it time for an upgrade?

By Yuri Turkov/ Shutterstock

The year was 1983. This was the year that the Internet was created. Bill Gates unleashed Microsoft World on the market. Star Wars Return of the Jedi was playing in the cinema. I was nine. And a director at McKinsey in Dusseldorf wrote an article that would change Procurement forever. The author was Dr. Peter Kraljic. The article, published in the Harvard Business Review, stated: “Purchasing Must Become Supply Management“.

A Procurement Transformation

Kraljic recognized that the world was changing fast. He saw that if Procurement continued business as usual, it would expose itself to competitive pressure. If it was to survive, it would have to move into strategic supply management. This was the dawn of the Kraljic matrix. It would have a transformative effect on Procurement. The philosophy (that remains valid today) is that not all spend, all suppliers, all customers & are the same. So, Procurement needs to build tailored and differentiated strategies, notably taking into account profit impact and supply risk.

Fast forward to 2019. A lot has changed. The Cold War is history, and the Internet dominates the globe. The iPhone in my pocket has way more computing power than my first computer, a Commodore 64, also from 1983. Since Kraljic published his famous article, world trade has quadrupled and globalization has exploded. Procurement is operating in a much faster, bolder world than it was in 1983. It faces new challenges like Corporate Social Responsibility and ethical supply chains. In short, our current environment today is more “VUCA” (Volatile, Uncertain, Complex, and Ambiguous) than it ever was.

The Next Evolution Of The Kraljic Matrix

“Since the early 1980s, pioneering individuals and companies such as Peter Kraljic, Michael Porter, and A.T. Kearney have pushed procurement professionals to think more strategically about the art and science of strategic sourcing. […] But times have changed. Today’s environment is more dynamic and is filled with greater uncertainty. The tried and true tools and tactics adopted over the last 30 years as the “gold standard” are not as effective as they once were.” Strategic Sourcing in the New Economy: Harnessing the Potential of Sourcing Business Models for Modern Procurement by Bonnie Keith, Kate Vitasek, Karl Manrodt, and Jeanne Kling

In some ways, the Kraljic matrix still works well. The segmentation at the heart of it remains valid. But the world is so complicated now, the matrix becomes more like a Kraljic Rubik’s cube. There are many more dimensions and parameters to take into account than there were back then.

Procurement now needs to win the Holy Grail of strategic supply management: value. Take Total Value of Ownership (TVO), for instance. Before, sustainability and risk were considered as nice-to-have, but not necessary. The TVO model places non-price information firmly within calculation of cost. This is a concept of sourcing in which the buyer has all the cards in their hand. But more than that, TVO enables the buyer to create bonus-penalty systems. In effect, it is a calculation of value that enables Procurement to identify how they can increase value after the award has been made.

Evolve Or Stay In The 80s

“My colleagues developed [the matrix] further and experimented with a nine-box version that allowed more flexibility. But always it must be adapted to the characteristics of the company where it is being used.” Dr. Peter Kraljic

The evolution of strategic supply management is challenging. Seeing the Kraljic Matrix as a Rubik’s cube is one thing. Solving the cube is something else entirely. Collecting the enormous amount of information and data that you need for this is almost impossible on your own. However, the change that makes the world so complicated also gives us the tools we need to keep pace: technology. Procurement must have a digital transformation strategy.

Also, and beyond tools like Purchasing Portfolio Analysis matrixes (that needs to evolve to be subtler), it is critical for Procurement organizations to look beyond the technical aspects of the profession. Procurement activities encompass more “soft” activities that require interpersonal skills. It is all about relationships and, even if tools help in defining the right type of relationship to build in a specific context, they fall short in delivering the “human” dimension. Also, that same dimension should be integrated in the tools and models we use.

The “experience” of working with procurement (for suppliers and for stakeholders) is as essential. Procurement delivers a service in a human-to-human context and becoming the supplier/customer of choice requires more than just tools. Digital transformation is not just about tools!

Therefore, just like Yoda “burns” the Jedi Books in “The Last Jedi” to teach Luke a last lesson by symbolizing the need to be able to move forward while being mindful and even respectful of the past, it may be the time for Procurement professional to “burn” the matrix.


Like what you’re reading? As a procurement or supply chain professional, we truly value your opinion. And that’s why we want you to tell us what you want (what you really, really want) to see on Procurious. Click here to take our ten-minute survey and help us, help you!