6 Sure-Fire Ways To Become A Head Of Supply Chain

We explore six ways that can guarantee you that dream head of supply chain management job…

head of supply chain
By fizkes/ Shutterstock

Firstly, take time to find out what the job is really about. At its simplest level in manufacturing, for example, it means leading the sourcing and procurement of direct and indirect materials from suppliers, production, warehousing, transport and the distribution to the customer and/or end consumer.

A simple supply chain

Secondly, jobs may not even have similar titles: it could be Executive Vice President of Global Supply Chain, Supply Chain Director or just Head of Supply Chain. The job content differs widely across industries so no two jobs at this level are the same.  There is no one definitive job description.

Whatever the title, the Head of Supply Chain is responsible for integrating and optimising all the processes that are involved in every stage of getting a product or service to a customer. If your desired role is in an industry such as agriculture, healthcare, or I.T and telecommunications, there are other considerations including security, waste, safety, managing returns and many other different risks. 

In reality, it has become much more complex. It may rather look like this.

Let’s look at the 6 ways that can get you that dream job.

There is no substitute for experience

Prospective or current supply chain managers that aspire to reach the top job in supply chain should acquire in-depth working experience in at least one of the functional areas within supply chain.  Heads of Supply Chain, in the list of the top 25 leading global supply chains as identified by Gartner in 2019, have all got extensive and relevant work experience, usually in their industry sector.

In fast-moving-consumer-goods (FMCG), global leaders also need expertise in distribution technologies, emerging markets and sustainability.  For example, Sandra MacQuillan, the Executive Vice President, Integrated Supply Chain at Mondelez International, has “a wealth of international expertise in sustainable supply chain and technology strategy, with vast experience in packaged goods at global companies where she has built world-class supply chain capabilities,” according to the CEO.

Get an educational qualification   

The competition for the top jobs is tough, without a recognised qualification it is almost impossible to get hired. An exception may be where the candidate has a spectacular skill in a tight niche where there are no other suitable applicants, but this is rare.   

The most common route into supply chain management is to take a foundation business, finance or engineering degree, and then an advanced diploma or certification in an area such as logistics or procurement within supply chain management.

Demonstrate the required technical skills

As a leader, it may not be necessary to be an expert on all the technical skills that exist in your teams, but some level of proficiency in most of these will provide you with a certain level of respect. 

  • Knowledge of the raw materials, manufacturing processes and distribution methods in your business
  • An understanding of business and management principles and strategic planning
  • Well-developed analytical skills and attention to detail
  • Knowledge of economic and accounting principles, ERP/MRP systems, forecasting, and budgeting

Show your ability to lead others and drive change

Building relationships and influencing others are fundamental to the role.

Change management is ultimately about people and your capability to guide them in a particular direction.  Some of the elements that lead to success in leading a team are:

  • An open and participative style when collaborating with influential stakeholders and their teams
  • Well-developed verbal and written communication skills and the sense to know when and how to use which channel 
  • Ability to work in a fast-paced dynamic environment while keeping calm under pressure
  • Solving problems based on available information
  • Dealing with ambiguity while providing positive outcomes and minimising risks.

A leader will spend a fair portion of their time on employee competency development, building capacity and understanding what people need to perform well.

Keep up with the program!

Because the role is essentially process driven you should be comfortable when implementing new technological solutions. Digital technologies are inserting themselves all over the supply chain from data analytics and e-sourcing through to automated picking and drone deliveries.

The implementation of digital solutions is redefining supply chain operations at leading companies such as BASF, Cisco, Intel, Johnson & Johnson, BMW and many others. As Head of Supply Chain you may not need to be head geek, but you will need to understand the basics of the various applications of each type of technology and be alert to trends. 

Have a global view with a local focus

The head of supply chain often has global responsibilities that entail maintaining supplier relationships across continents and cultures. Understanding these complexities is essential in supply chain planning and its execution. 

It is becoming increasingly important for supply chain leaders to have had global business exposure, either from working in virtual teams or preferably having completed international assignments.

David Cutter, as President, Global Supply & Procurement, for Diageo, a major supplier of alcohol beverages, is responsible for a world-class supply chain delivering their brands to over 180 markets around the world from over 100 production facilities located in some 30+ countries.  

Leading firms are looking for those people with process-driven experience, often in similar size companies, attained from outside their home country.   

There is no one accepted preferred career path or basket of skills that you need to become the head of a supply chain.  However, you will need to be able to apply modern methodologies and solutions to a wide range of responsibilities across the entire supply chain. 

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

Procurement Across Borders – Understanding CQ Action

Are you able to adapt your behaviours in cross-cultural encounters? Your final step may be to take more account of your CQ Action.

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Throughout this series of articles we have been looking into Cultural Intelligence (CQ) and it’s relevance to working across culture, distance and time.

We have already explored 3 of the 4 main components of CQ which are CQ Drive, CQ Knowledge and CQ Strategy. We will now discuss the fourth component which is CQ Action.

So What is CQ Action?

CQ Action (Behaviour) can be defined as your ability to adapt both your verbal and non-verbal behaviour when engaging in cross-cultural encounters. Being able to flex your behaviour helps you to respond to others in a way that conveys respect, builds trust and rapport and minimises the risk of miscommunications. CQ Action is in effect the manifestation of all of the other aspects of Cultural intelligence. It is behaviour based on motivation (CQ Drive), cognition (CQ Knowledge), and meta-cognition (CQ Strategy).

There are 3 key aspects to CQ Action, the first is verbal communication. When working across culture it is very important to be conscious of different verbal communication styles. Some cultures are very direct in their communication styles while others are not.

For example, people from South Africa and Israel tend to be very direct and forthright. They readily share their opinions. Compare this to people from Japan or Korea, who are far more indirect with their speech patterns. They tend to be much more circular when they say things. It is important to listen carefully to how people are talking or we may miss the point.

A client shared with me recently that one of their team members realised that the Chinese team with whom he interacted never said ”no” as part of their cultural context. Every time he gave them large quantities of work, they kept saying “yes”, even though they had difficulty in meeting the deadlines. On further investigation, he discovered They simply weren’t explicitly saying “no” in the way he expected or understood.

CQ Actions Speak Louder than Words

The second aspect of CQ Action is around non-verbal communication. This describes your body language – how expressive you are, how you use your hands and your facial expressions. This differs greatly in various parts of the world.

An example of this is touching of the head, in some cultures this is an endearing and friendly gesture, while in others it can be very offensive. Some cultures say a lot without using many words while other cultures use hand and facial expressions to add further meaning to their words.

Developing an understanding of non-verbal cues across cultures can take significant time and patience however by doing so you will better able to adapt yourself into a cross- cultural situation which will hopefully result in more fluid relationships.

Understanding Vocal Cues

The third aspect of CQ Action is Speech Acts. Speech acts refers to how much silence we use when speaking, how often we pause and the time spent in between pauses. If you come from a Western culture, you will understand that when there is a silent pause in a meeting, someone will automatically jump in to break the silence.

In other cultures, people are very comfortable sitting with the silence- no matter how long it continues. Thus, part of CQ Action is becoming familiar with these subtleties so that you have the ability to interact effectively with people of different cultures.

When working with a different culture, you may possess a great deal of knowledge, have the best strategy and be really motivated however if you are unable to execute or implement these aspects effectively then success will be very limited.

CQ Action involves implementing the appropriate social etiquette and behaviour to suit a diverse range of situations and people which in turn leads to a diverse and sincere connection.

Traditional vs Automated Procurement Process

Got major procurement issues in your organisation? You may well be able to use technology and automated procurement to solve them.

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The procurement process is much more complex than it looks. The more complex it is, the higher the number of issues. An automated procurement process can help you prevent and resolve these issues. However, many companies still rely on a manual process. 

Let’s understand the challenges of the traditional procurement process and the ways automation can help.

Challenges of Traditional Procurement Process

A company practicing traditional procurement process faces a lot of challenges. Here are some of the major challenges of a traditional approach:

1. It’s Time Consuming

A traditional procurement process consumes a lot of time of both vendors and companies. As a result, it slows down the entire process and affects productivity. In addition to this, it can take days to communicate a single message and get the job done.

2. Chances of Duplication and Fraud

In a traditional procurement process, everything happens on paper so it becomes difficult for your team to keep track of everything. That’s why there’s little to no transparency in the dealings. This can lead to malpractice such as duplication of contracts or fraud. A single incident of fraud can affect your company’s reputation. 

3. Inefficient Data Management

An offline procurement process involves a lot of paperwork, so data management becomes challenging. In addition to that, it also increases the risk of errors. In spite of this, 54% of companies are still using a paper-based invoice process. 

Paper-based records are always vulnerable to tampering or loss of information and data. This can put your company in a troublesome position.

Benefits of Using Automated Procurement Process

Here are some important benefits of using an automated procurement process: 

1. Improves Efficiency and Speed of Procurement Process

By automating your procurement process, you can not only speed up the process but also increase efficiency. This helps your procurement team by saving a lot of their time for other important tasks.  

With an automated process, you can automate all the repetitive tasks. This helps you cut down on the amount of manual work for your team. It allows them to handle much more important and complex tasks. 

2. Creates a Centralised System

As mentioned above, a traditional procurement process can lead to duplication and fraud in contracts. For any company, there’s nothing scarier than this.

However, automation can help you minimize instances of duplication and fraud. It helps you create a centralized system for all of your data and documents. This allows your procurement team to easily track down the required documents.

3. Reduce Manual Errors

Unlike a traditional approach, automation eliminates paper-based documentation and decreases the risk of errors. When you follow a traditional approach, it not only consumes a lot of time but also invites risk.

So, it’s best to automate your procurement process and encourage a paperless process to reduce manual errors. It also allows you to store information and data easily and safely.

Do you want to learn more about issues in the procurement process and how automation can help you fix them? If so, check out this infographic from PurchaseControl.

Major Procurement Issues & How to Fix Them with Technology

Image courtesy: PurchaseControl

Blockchain – A New Flavour of Traceability

Why did the chicken cross the road? More importantly, was there traceability of its journey and how many miles did it cover? Maybe blockchain can help us answer this age-old question…

Courtesy of Portlandia

Do you find yourself thinking more and more about the journey your food has taken to get to your plate? It’s not just because you’re a supply chain professional. It’s because, as a community, we are increasingly interested in the origin and safety of the food we consume.

Farm to Plate – Tracked and Traced

Consumers have an increasing interest in and focus on sustainability, food miles and the concept of ‘farm to plate’. The pressure is on the supply chain to maintain quality while providing both transparency and a fully auditable trail.

Production lines can be stopped and deadlines missed. But if fresh produce doesn’t get to where it needs to be on time, there isn’t any end product.

Delayed, incomplete, incorrect or damaged shipments create a monumental volume of administration. Productivity tanks, costs mount and trust erodes as the parties enter into a “we said, they said” situation, with each party trying to avoid being the ones to blame. This has led to a situation that as the food supply chain has grown, the level of trust has diminished.

However, one of the hottest new technologies, blockchain, has proved to be an invaluable tool in helping provide transparency and maintain trust.

Network of Networks

In most supply chains, communication is point-to-point and one direction. There is no single, shared record of events across multiple parties. Damages or changes – malicious or accidental – may surface in the moment, or potentially only when they are raised by consumers.

According to research published by Gartner in 2017, there is a movement for mature supply chains to operate in a “network of networks”. The network of networks acts as a self-fulfilling prophecy, as mature supply chains in these networks achieve higher levels of maturity, including improving ecosystem visibility.

By placing a supply chain on the blockchain, it makes the process more traceable, transparent and fully digital. Each node on the blockchain could represent an entity that has handled the food on the way to the store, making it much easier and faster to identify the source of food safety issues with much greater precision.

The attributes of blockchain technology are ideally suited to networks of partners, big and small. By providing a shared, single version of the truth through a shared, digital ledger, blockchain increases trust and creates efficiencies by eliminating the “we said, they said” problem and creating a shared understanding of all possible disruptions that could impact OTIF delivery.

With blockchain, transaction records are immutable, or tamperproof, and agreed upon by all parties. Immutability creates an audit trail. Privacy is maintained by setting the appropriate levels of data visibility for different parties. And business rules are shared and enforced by the system through smart contracts.

Trust and Traceability

A prime example of the effectiveness of blockchain in the food supply chain is Walmart. The retail giant has been working with IBM on a food safety solution, using IBM’s ‘Food Trust‘ solution, which was specifically designed for this purpose.

Before working with IBM to move some of its food supply chain to blockchain, it typically took Walmart approximately 7 days to trace the source of food. With the blockchain, it’s been reduced to 2.2 seconds. This time may be the difference between a consumer eating unsafe food and it never reaching the shelves in the first place.

IBM has also played a major role in the development of blockchain tracking for another retailer, Carrefour. The organisation uses blockchain ledger technology to track produce including meat, milk and fruit from source to shelf. The technology has enabled tracking on the consumer side too, with shoppers able to scan QR codes on products, allowing them to read product information on provenance and process.

Carrefour has credited the technology with increasing consumer trust in the brand, resulting in an increase in sales. It’s an example that many other retailers may look to follow soon.

Supplier ‘Passports’

IBM very recently announced a new blockchain network, ‘Trust Your Supplier’. The network, not solely limited to the food supply chain, has been designed to improve supplier qualification by creating a form of passport for suppliers. This will help to reduce time and resources for validation, with everything verified by third parties, such as Dun & Bradstreet, to square the circle.

The network, and network of networks, look set to revolutionise how organisations and consumers look at supply chains. The food supply chain is merely the first where the technology is making strides, though the fashion industry has also made moves to implement with significant success.

As consumers buy less fresh produce to reduce food waste, they are willing to spend a bit more to ensure quality. With blockchain, organisations can shine a light on the provenance of their goods, but also earn the trust of consumers by proving the safety and traceability of the goods. And in a fast-paced environment, those organisations who don’t engage with blockchain face the reality of being left behind.

We might never know why the chicken crossed the road. But with blockchain tracking the supply chain, we’ll be able to understand where it came from, how far away and track it’s route all the way to your plate (sorry Colin!).

Blockchain: Supply Chain’s 21st Century Truthsayer

From farm to plate, the food supply chain can now be tracked in an open, transparent, fully traceable and entirely digital way. We may never know the why, but the how and where are within our grasp!

In our latest webinar, Blockchain: Supply Chain’s 21st Century Truthsayer, we’ll be exploring the full applicability of this great technological innovation, understanding how Walmart and Carrefour have turned this to their advantage and revealing why it’s a must have for supply chains of the future! Click here to sign up now.

The Leadership Styles That Work Best

Leadership is as much a skill as sales, accounting, engineering or programming, but is rarely treated that way by companies making hiring decisions.

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There is a lot of complicated management theory about management and leadership.  There are detailed guides to choosing the correct management style.  Should your leaders be Authoritative or Visionary or Transactional or a Pacesetter or a Servant or Democratic?  You could spend your life studying the mountains of research and still be none the wiser.  But the reality is likely to boil down to just one rule.

Don’t hire psychopathic leaders.

Leadership is as much a skill as sales, accounting, engineering or programming, but is rarely treated that way by companies making hiring decisions. A recent study has found that a staggering 82 per cent of hiring decisions concerning leadership roles select an inappropriate person. Companies are choosing the wrong person for the leadership role an alarming rate of only once in every five hires.

Leadership Talents = Engaged Employees

Gallup has spent two decades studying the performance of 27 million employees across hundreds of organisations. They have calculated that the innate leadership talents of managers account for 70 per cent of the variance in employee engagement from company to company. 

In an average company in 2018, around 50 per cent of the employees were disengaged and a further 13 percent were actively disengaged. An actively disengaged worker has a miserable work experience and would quit tomorrow if they had any other choice.

The research shows that employee engagement is strongly linked to customer ratings, profitability, productivity, staff turnover, safety incidents, staff theft, absenteeism and product quality. There is however an easy solution at hand. 

The research also shows that increasing the number of hires of talented leaders can significantly increase the engagement of employees.  If the percentage of actively disengaged employees can be reduced below 10 per cent, then earnings can be increased dramatically. 

Lowering Active Disengagement

In 2012 Gallup examined the performance of 49 publicly traded companies and compared their results with engagement results from their survey data.  They found that companies that did manage to lower active disengagement experienced on average 147 per cent higher earnings per share than companies with more typical levels of active disengagement.

Hiring more talented managers can therefore have a massive and direct impact on the bottom line and a significant array of critical business measures. Gallup’s research has left it convinced that all good leaders share just five critical talents:

  1. They motivate every employee with a compelling mission and vision
  2. They are assertive, drive outcomes and persist in overcoming adversity and resistance
  3. They insist on clear accountability
  4. They enforce a culture of integrity and honesty and build relationships that create trust
  5. They make decisions based on productivity, not politics.

In short they must be honest, empathetic and have a clear vision. Or in even shorter, they must not be a psychopath. 

The critical difference between a psychopath and the rest of us is their complete inability to feel empathy.  There care for nobody but themselves and are quite happy to use any means possible to remove anything which gets between them and their goal.  That goal is accumulating more power and money for themselves.

Power over People

As a general rule, a psychopath will be drawn to jobs which give them power over other people. Psychopaths believe they are superior to everybody and that the role of all other people is to deliver rewards to the psychopath.

Add this to their prodigious ability to charm interviewers, and their propensity to make up whatever achievements they need to get the job, and it’s easy to see how they may be fast-tracked. As a result, we can expect them to be towards the top of any corporate structure.

To the psychopath, the team that works for them need to be tightly controlled and completely compliant.  Psychopaths achieve that using classic manipulation tactics, singling out members for public punishment, rotating those with favoured status, implementing ever more detailed micromanagement and the ramping up of secrecy.  

The workplace under a psychopath is in constant turmoil.  Factions are rife, sick leave sky-rockets, staff turnover becomes endemic and productivity drops like a stone.

Power of the People

Luckily the cure is easy.  Well, easy to say.  It’s honesty and transparency.  The best place to hide a murder is in a massacre and the best place to hide a lie is in a company full of liars. It is much harder for a psychopath to use deceit to their advantage if everybody else is honest. 

Companies that ban secret communication channels, reward honesty, punish dishonesty, encourage whistle-blowing and who have strong, honest and independent human resources divisions (and boards that listen to them) are much more likely to control psychopaths and massively limit the harm they can inflict.

This will not stop you employing psychopaths but it will ensure they are working for the greater good of your company rather than destroying its culture and its future.

Ignore Supply Chain Risks… At Your Own Peril!

Despite the general consensus that risk management is important, recent studies have found that many companies still have a long way to go and a lot of work to do…

By Wallenrock/ Shutterstock

“The Supply Chain stuff is tricky!” – Elon Musk at Code Conference in 2016.

When someone like Elon Musk says that something is tricky, it means something! The examples that Musk mentions in the video show that modern supply chains are becoming more global and more complex. This complexity also leaves organisations exposed to more risks because the current business environment is characterised by VUCA (Volatility, Uncertainty, Complexity, and Ambiguity).

The uncertainty surrounding Brexit aside, other recent events, like growing tensions with China and Iran, are daily reminders that today’s global business ecosystems are precarious. And it’s not just the potential for international conflict and instability that is making business riskier. Many countries have also introduced new regulations on sustainability (modern slavery, conflict minerals), or diversity, which add new risk factors in terms of compliance.

Make Risk Management Part of DNA

Between business continuity aspects, legal or normative aspects, and protection against a public backlash whenever malpractice is discovered in an organisation’s supply chain, there are more than enough reasons to make risk-management part of a company’s DNA.

Despite the general consensus that risk management is important, recent studies have found that many companies still have a long way to go and a lot of work to do.

Some of this work should include building better relationships with suppliers and colleagues. As I mentioned in a previous article, these relationships can play an important role in helping companies identify and mitigate certain types of risk — but not all. In addition to being on good terms with suppliers, companies will need to cover many other aspects to manage risk effectively and protect themselves.

These days, procurement organisations cannot afford to ignore leave risk management off their list of top priorities. There are many reasons for this. Here are three of the most important ones.

Reason #1: Risk is everywhere

I don’t want to sound alarmist, but we live in a troubled and complex world. There is no shortage of events that could jeopardise and/or disrupt a business, potentially impacting their profitability, business continuity, image, and reputation.

Protecting your business from these disruptions is challenging, because they can originate from so many different sources. Natural disasters, accidents, social events, changes in regulations, intellectual property infringement, quality issues, and attacks on cybersecurity are just a few examples.

“Governments are also taking action by engaging in an escalating global competition to maintain and improve national competitiveness in the 21st-century digital economy. […]. While such cross-border competition is by no means new, the geopolitical undertones in this battle for dominance raise the risk that the digital economy will continue to fragment, complicating global supply chains and the operations of international companies, and acting as a drag on economic growth.”

A.T. Kearney in Competing in an Age of Digital Disorder

Another key factor is that our world is changing faster than ever. Just look at the political, technological, and societal changes that have taken place in the past few years; many of them fuelled directly or indirectly by the impact of digitalisation.

As a consequence, the lifespan of companies is shrinking, year over year, as illustrated by the evolution of lifespan of companies in the S&P 500 index. All organisations are in danger, not just the large ones, and that includes your company and the companies you buy from.

Survival Through Prevention

Despite this reality, risk management has been a relatively passive domain for a long time, and it has frequently (and problematically) been equated with crisis/incident management. People were looking into risk management after an event had already happened; i.e., too late!

This was because the world of yesteryear was more stable and pretty predictable. In today’s world and in the future, the accelerating pace of change and the expanding globalisation of the economy mean that anticipation is crucial.

The risk management of today and tomorrow is about survival and making the right procurement decisions, which requires procurement to think about what “comes after” and how certain choices can make a company more or less safe in the long run. Prevention is better than cure!

“[An] enterprise is facing increasing danger that key sourcing decisions will prove uneconomic sooner, and with more damaging consequences than would normally have been anticipated by risk equations that presumed the older supply chain model. Starkly put, the odds of supply chain disruption are growing and will grow even greater in the future.”

CSCMP’s Supply Chain Quarterly

Obviously, what represents a risk depends on many factors and varies from one company to another:

  • Companies in B2C may be more vulnerable to risk related to their image and their reputation. If something happens that jeopardizes either of these, their brand could suffer.
  • Companies or organizations from the public sector and/or selling to administrations may be more vulnerable to regulation changes.
  • Standards/regulations regarding fraud and ethics may also vary from one sector to another.

Reason #2: Black swans are not an excuse to ignore risks

“Everybody has plans until they get hit.” -Mike Tyson

Anything can happen, even a shootout at the Mexican border, as told by Musk in his interview. Such “black swans” exist, and planning for the seemingly impossible is another lesson learned from “Best in Class” organisations regarding risk management: being prepared for problems enables companies to react faster to unforeseen events. They become anti-fragile!

It’s true that, by definition, risks reflect potential future disruptions. The goal is to foresee them and define ways to reduce the probability that such events ever happen and/or to reduce their impact if they do happen. Unfortunately, there is no crystal ball for Procurement; no one knows for sure what the future holds.

The only solution is to imagine different scenarios for potential problems. These scenarios can either be based on experience (problems that already happened to other organisations) and based on brainstorming (a.k.a. risk identification).

This may sound like daunting work, but it’s worth it. Organisations that have invested time and energy into identifying risks, assessing them, and defining ways to mitigate them are better at managing incidents they did not anticipate.

Reason #3: Supply chain issues are costly

There is no universal “best practice” recipe per se; only best practices in a certain context. But, what is certain is that not taking care of risk can be costly.

A 2018 study by the Business Continuity Institute and Zurich Insurance Company examined the financial impact of supply chain disruptions. The findings revealed that not only disruptions have a cost when they occur, their effects can do lasting damage. It takes months to recover and, in many cases, there is no full recovery!

So, in the war against risk, being prepared, defining various scenarios and recovery plans/actions, having the right skills, and the proper technology makes an organisation more resilient and more agile when something unexpected happens because:

  • they can re-use a predefined recovery plan
  • they have the processes and governance in place to act and decide fast
  • the people in the organisation have risk management in their DNA

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

Are you Effectively Mitigating your Automation Risk?

Procurement’s new direction comes complete with a number of new risks to consider. And automation accounts for a few of them.

Photo by Alex Knight on Unsplash

For several years now we’ve heard the same message – procurement is going to become more strategically focused in organisations. One of the key enablers cited in this change is technology and the increasing automation of transactional tasks to help free up time and resources.

But technology and automation bring their own challenges, not least the impact of dealing with the ever-increasing issue of cybercrime and third-party risk. And, as I’ve said before, despite knowing about it, few CPOs if any have a full grasp of the risk present throughout their supply chain.

It’s not just technological advancements that represent a key risk, but also the role of technology in the changing nature of work. Being educated and aware of these risk factors will help put mitigation strategies in place. But it will come down to how well risks are managed when it comes to understanding the impact of any future major risk events.

I’ve selected three areas linked to technology and automation that procurement must be mindful of as they take their new strategic direction.

Third Party Risk Management & Personnel

Technology has helped to drive and support the rise of the gig economy. A 2018 report estimated that over one-third of US workers (36 per cent; 57 million people) were part of it. It may have started smaller, but the gig economy has grown beyond the names traditionally associated with it, the like of Uber, Lyft, Deliveroo and Freelancer.com.

The attractiveness of the gig economy lies in greater flexibility on where, when and how people work. For organisations it means they don’t have pay all the costs associated with a full-time worker – potentially saving 50 per cent on rates by using a gig worker. This would even hold true in spite of recent legislation passed in the EU and in California regarding workers’ basic rights.

However, organisations may not realise that they are exponentially increasing their third-party, technology-associated risk. An estimated 90 per cent of hacks targeting organisations take place through an individual employee’s computer.

How can they be sure that the laptop or internet-capable device the worker is using is compliant with network security? Or free from viruses or malware? It’s not only the gig workers, but the employees too, with 87 per cent admitting that they use their own devices for work purposes.

How will organisations support the gig economy workers to carry out their tasks while managing their risk levels? It’s a question no-one has really answered yet.

Changing Skill Sets for Sourcing Professionals

An increasing level of automation in procurement will naturally change the skill set that sourcing professionals require to do their job. This will be seen in a move away from data and analytical skills, and an increasing focus on Emotional Intelligence (EQ) and soft skills like change management, negotiation, selling, presenting.

The question is what are organisations going to do with displaced employees? Do they have an ethical responsibility to retrain them, retain them or up-skill them to allow them to move on? Yes, EQ and soft skills can be trained and will come more naturally to some people. However, there will still be a number who have difficulty in moving into this new way of working.

In my opinion the key skill, even accounting for EQ, will be adaptability. With the speed of technological advancement we are now seeing, people have to be far more adaptable than they ever used to be.

It’s impossible to fight change – some people embrace change, others fight it, others are paralysed by it. People will struggle if they don’t have that adaptability as a natural barometer. It’s a much tougher skill set to train, but as technology continues to advance, it’s a risk that organisations need to be aware of.

Responsible Automation

Linked to this is the final risk factor I’ve chosen to highlight here – responsible automation.

Most automation is pretty obvious, for example, installing an ordering kiosk instead of a human for ordering fast food, or having self-service checkouts at the grocery store. What people don’t see is the impact on the low to mid-level managers, who lose much of their transactional and managerial work as a result.

They are at risk as much as the frontline employees, but this isn’t always considered. Organisations have the social responsibility to have intelligent automation, to consider this through the risk management lens and assess how their technology fits with the social agenda.

Being more socially responsible with automation will represent a dramatic change from the current situation. Organisations need to stop automating for the sake of it, only eliminating the transactional elements because there is good reason to do so.

By being too keen to automate, organisations lose site of the need to have humans in the process, which may in turn increase risk. Until such times as bots and AI have the EQ we discussed before, they will miss out on the human aspect of detecting fraud or seeing the human thought process behind decision-making.

This is a more responsible approach, but also, from a risk point of view, protecting organisations against the loss of the crucial human element in some tasks.

About the Author

Dawn Tiura is the CEO and President of SIG, SIG University and Future of Sourcing and has over 26 years’ leadership experience, with the past 22 years focused on the sourcing and outsourcing industry.

In 2007, Dawn joined SIG as CEO, but has been active in SIG as a speaker and trusted advisor since 1999, bringing the latest developments in sourcing and outsourcing to SIG members. Prior to joining SIG, Dawn held leadership positions as CEO of Denali Group and before that as a partner in a CPA firm. Dawn is actively involved on a number of boards promoting civic, health and children’s issues in the Jacksonville, Florida area. 

She is a licensed CPA and has a BA from the University of Michigan and an MS in taxation from Golden Gate University. Dawn brings to SIG a culture of brainstorming and internal innovation.

Dawn provided some great insight and thought-provoking ideas at the Big Ideas Summit Chicago 2019 this week. If you weren’t able to be there on the day and couldn’t get there as a Digital Delegate, don’t worry. You can still sign up to access all the great content by clicking here.

Supply Chain SOS: How Proactive Risk Management Can Put Out Fires

Spend all your time at work fighting fires? Proactive risk management can help douse the flames and get you ahead of the game.

Photo by Kristopher Allison on Unsplash

For as long as procurement has been a profession, risk management has largely been seen as a data collection exercise, undertaken at alarmingly infrequent intervals. Often, it was nothing more than a checked box to indicate assumed compliance, with no deeper insight or follow-up.

But as the reach of procurement extends beyond savings, compliance and performance. The profession touches almost every facet of a company, and mitigating risk is increasingly being seen as the fourth pillar of the profession. To be truly successful, risk management requires robust insight into all links of a supply chain – a task that has often been insurmountable.

How can you properly manage your company’s risk as supply chains go global? And who should be responsible for ensuring you’re ahead of issues before they arise?

Procurement teams have the potential to drive big changes on a global scale. If you’re not successfully navigating your risks then you’ll struggle to join the ranks of the world leaders.

Proactive vs Reactive

Whether caused by bankruptcy, politics or even severe weather events, risks to your supply chain come in all shapes and sizes, so it’s not completely unreasonable to be overwhelmed. Preparing for every single eventuality is a daunting task that seems to stop procurement professionals in their tracks.

As such, many people start on the back foot, considering the risks only when their bottom line has already been affected. However, if you understand your risk profile – the types of threats that will have the biggest impact on your business, whether they’re physical, logistical or reputational – then you’ll be able to develop proactive risk mitigation plans that can keep your business flowing seamlessly through strikes, shut downs and storms.

Successful risk management in action

At riskmethods, we combine advanced AI technology with human support to offer comprehensive risk management solutions for our customers. We train our AI using over 5 million articles relevant to their unique risk profiles, to allow us to give our clients the visibility into what the current and future risks are for their business and offer insight into the underlying threats in their supply chain – so they can take action before it hits.

For example, when Hurricane Harvey hit Texas in 2017, it made landfall three times in six days, causing $125 billion in damages and sending a third of Houston underwater. As the storm began making news, we were able to use our technology to create storm projections for our customers that narrowed down the affected location as the storm approached. This alerted them to the risk of damage or delays, and allowed them to contact any suppliers or manufacturers within the impact zone before the storm arrived.

As a result, they were able to take action to create proactive mediation plans for their impacted suppliers with outstanding orders before the storm even hit the ground, successfully navigating potential shutdowns that could have impacted their supply chain for weeks to come.

In an elite enterprise, this active monitoring of new and emerging threats means that while it may not be financially possible for all enterprises to have crisis management teams on hand, ready to pounce at the first hint of trouble, they will have contingency plans in place. This increases your ability to react faster and could potentially give you the leg up on your competition.

Where is risk management going in the future?

The next procurement transformation is taking the profession from a singular discipline to a cross-organisational centre for increased collaboration and supplier transparency.

Risk management is set to go hand-in-hand with this transformation to alleviate the risks within an enterprise, bringing another tool to the table for CPOs to leverage and creating a competitive differentiation for enterprises. While this direction may seem like common sense going forward, the reality is that it’s only in recent years that its importance has really been acknowledged.

Those who continue to think of risk as someone else’s problem will soon find themselves falling behind.

riskmethods was one of the sponsors for the Big Ideas Summit Chicago 2019, with Bradley Paster delivering an ace keynote too. Don’t worry if you missed out, you can still sign up to access all the great content. Register now by clicking here.

Suppliers: Partners not Punching Bags

If suppliers are treated as part of the team, rather than punching bags, it can actually help to accelerate procurement’s ability to add value.

Photo by i yunmai on Unsplash

When you are hiring employees, do you focus just on the salary negotiations?  With the only goal being to get the lowest cost talent?  No, because we know the value we are going to receive from that individual is through many years of ideas, quality work and the leadership they provide to others.   

The price negotiation is a point in time, while the relationship is the multiplier.   

The same holds true with suppliers.   

As you look across our supply base, procurement has a range of suppliers from “high potential” to “needs improvement”.  As we do with top performing teams, procurement has the opportunity to cultivate high potential suppliers through exposure, stretch assignments, and trust. 

There is also an opportunity to manage up or out the “needs improvement” suppliers by developing their capabilities and giving them the opportunity to improve.  Through this approach, procurement now has the ability to discuss with their new-found talent how to creatively reduce total cost of ownership, to solve problems, and to provide innovative solutions.  

When trusted are offered development opportunities, suppliers will go above and beyond for the customer.  They assign their best people on the account.  They look for ways to improve the relationship, reduce costs, and proactively call out risks.  And, in times of short supply, will serve their preferred customer of choice first.   

Through one change in perspective, one change in a relationship, procurement achieves lower TCO, lower risk, more innovation, and a reliable supply chain – this is the key to delivering value.   

The Next Big Idea in Procurement  

Procurement is on the brink of significant change, as are many more areas of our lives.  There will be many big ideas that brilliant procurement professionals implement into their organisations to support the advancements in technology, the new expectations of talent, and techniques to add value well beyond cost.  These are exciting times to lead, inspire, and create within procurement.   

Each year a small group of influential procurement thought leaders gather in Chicago for the Procurious Big Ideas Summit.  Participants are inspired and take back many big ideas for their personal growth as well for their organisations.    

While technology advancements often receive a lot of focus, perhaps the biggest shift within procurement is the expectation to move beyond cost to becoming value providers.  Procurement is being challenged to find new ways to reduce risk, increase sustainability, to help solve complex business problems, to increase revenue, to generate new innovations, to become an internal consultant to their stakeholders to obtain the best out of every investment. 

This expectation is becoming more pronounced and will allow procurement to analyse how they measure success, the skills their talent need, and even what technology they might need to deploy.   

Those organisations who make this change exceptionally well will also realise that their suppliers offer a limitless capability to accelerate procurements’ ability to add value.  When suppliers are treated as an extension of the supply chain, as part of the team, the relationship with suppliers also moves beyond cost.  In fact, one could argue that becoming a customer of choice to suppliers is the key to unleashing value, reducing risk, increasing innovation, and achieving agility within the supply chain.    

Leading the Supply Base 

An idea is just an idea until it is implemented, so how do procurement organisations get started with this change?  Below are some low investment ways to start this journey. 

  • Toss out outdated segmentations – Start looking at the supply base like one would talent.  Understand high potential suppliers, remain in role, and need improvement suppliers.  This does not need to be complicated nor does this need to be scientific.  Without putting much effort into this, the top performers and the lowest performers could be listed.  Start there.   
  • Offer development programmes – As one would with their internal talent, offer programmes that will help suppliers operate with excellence.  These programmes can even be supplier funded, but it shows suppliers that procurement cares about their success.  It develops a relationship where it is understood that procurement is only as good as their suppliers.  When suppliers perform at their best, procurement, suppliers, and the communities around them all benefit. 
  • Think differently about procurement’s role – When procurement starts thinking about their role as a hiring manager to suppliers, it creates a change within every interaction.  Set the expectation that a procurement manager’s role is to lead their team of suppliers to success.  This will have downstream impacts around measurements and skills needed but starting here will start the cultural change needed for success.   

Procurement is on the move.  These are indeed exciting times to renew the spirit of what procurement is all about.  Let’s not be overwhelmed and paralysed by the amount of opportunity.  The best thing to do now is to start.  Start taking the small steps that will create big change and the next big ideas.   

As the Big Ideas Summit Chicago facilitator, Amanda Prochaska will be harnessing the biggest and brightest ideas presented. You don’t need to be “in the room where it happens” – you can register as a digital delegate and get up-skilled and uplifted from the comfort of your own desk.  Register now by clicking here.

Taking Intelligent Spend Analysis to a New Level

Going from data to intelligent spend analysis? Traditional tools just don’t cut it anymore. How do we get from data to tangible, valuable ideas?

Photo by Jason Dent on Unsplash

Supply chain leaders today are being asked to help contribute to business growth and promote innovation while reducing costs. That’s a lot to ask.  Managing expenditures across global organisations has become increasingly complex and involves just about everyone: especially procurement, legal, finance and operations.  

Intelligent Spend Management is about more than classifying and reviewing historical spend. It is also about compliance, governance and mitigating supplier risk, all of which are needed to make informed decisions about future purchasing strategies.

Traditional Spend Management

The main objective of spend management is to identify and exploit savings opportunities and ultimately improve the firm’s profitability. It involves collecting, collating, cleansing, maintaining, categorising, and evaluating spend data from across the enterprise.

Traditional free-standing tools that manage spend analysis, P2P, contracts and supplier relationships are not set up to provide a consolidated view across all spend categories. Often these data sets reside on systems that don’t talk to each other and provide limited information.

What is Intelligent Spend Management?

A strategic, intelligent approach to spend management allows for a unified view and better management of risks across the supply chain and harmonisation of procurement policies and processes. This approach requires all spend data to be centralised so that any analysis efforts are applied to the total organisational spend thereby providing visibility of and control over each spend category. Intelligence means learning from past actions and improving responses over time.

Supply chain leaders can exploit spend opportunities provided by this “big data” to increase their cost savings, decrease operating costs, and reduce risk. To do this they need an end-to-end platform that uses the best-suited technology and the right tools.  These resources need to be applied in such a way as to deliver reliable real-time information that can be used for decision-making. 

Using conventional tools, it is difficult to achieve these outcomes.

Machine Learning

Machine learning is an application of artificial intelligence (AI) that provides enterprise-wide systems with the ability to automatically learn and improve from experience.  Using these new approaches we can learn much from the historical volumes of spend data without human intervention.

We can answer questions related to customer profiles and their spend history, provide explanations for past actions and guide users with recommendations about future purchases.  

What can Intelligent Spend Management deliver?

Intelligent spend management has the capacity to transform any organisation’s data into information that becomes a source of ideas and plans that can be used to grow the business.  

1. Historical data tells a story  

It reveals repeating patterns about users, approvers and suppliers. It also offers insights into which types of requests should be approved automatically and which others call for human intervention. Intelligent technologies that have exposure to a holistic view of spend-related data can provide learnings to continuously improve decision-making across the source-to-pay spectrum.

2. Improved user experience 

Intelligent processes provide a real benefit to users and approvers alike by ensuring compliance with all corporate policies and regulations while cutting down on waiting times and streamlining document approval processes. Supply chain staff and end-users need easy-to-access, reliable, real-time information on supplier performance to make optimal buying decisions.

3. Better market intelligence

To manage spend efficiently and identify new sources of supply, businesses need to interact with data coming from external sources such as from suppliers, government and business associations as well as from internal sources. This includes accumulating industry and economic intelligence automatically from third parties and using it in conjunction with their historical spend data.

“As enterprises embrace an increasing number of partners to compete globally and as value chains grow longer and more complex, they need intelligent platforms not only to extract the fullest value from data but to extend its broadest capabilities.”

Patrick McCarthy, Senior Vice President and General Manager of SAP Ariba and SAP Fieldglass.

Predictive spend analysis in supply chain is still fairly new, but it is becoming increasingly essential in large organisations that have already been exposed to spend analysis tools,  supplier segmentation and relationship management.

An enterprise-wide system that can provide a unified view of spending that brings spend data together from across all sources and categories allows users to make smarter, faster spending decisions. 

Achieving this requires investment in the right IT infrastructure and systems which will really put your spend data to work.

Innovations like AI, machine learning, IoT and blockchain are reshaping entire industries, but this is an opportunity for procurement, not anything to fear. Join Pat McCarthy at the Big Ideas Summit Chicago 2019 tomorrow (Wednesday 18th September) to find out why. Register as a Digital Delegate by clicking here.