All posts by Euan Granger

Are Charities & Non-Profit Organisations Getting the Most from Procurement?

We’ve all donated to charities at some point, but do we know where our donation is being spent? How effectively are third sector organisations able to leverage their procurement?

Charities Donation

This article was originally written for, and published on, Novo-K.

A bucket in the street. A bake sale or coffee morning. A fun run. A phone call. We’ve all donated to charity at some point in our lives, and we frequently put our money down without thinking about where it goes to. But do you know how your donation is being spent?

With an ever-increasing number of charities in existence around the world, organisations need to be seen to be spending money wisely, or else donors could take their money elsewhere.

It’s not something that immediately springs to mind when you make a charitable donation, but charities and not-for-profit organisations rely on procurement teams in the same way as the public and private sectors. And the role that procurement plays for them is just as valuable.

Procurement Complexity

Despite my experience working in procurement, and the countless conversations I have had with procurement professionals, I will admit to a lack of extensive knowledge on procurement in the third sector. I had also (mistakenly) thought that procurement might be less complex than in other industries such as manufacturing.

However, following some conversations, and giving the subject more consideration, it’s clear that there is just as much complexity as in any other organisation. It’s not just indirect procurement activities as people might think.

In many cases charitable organisations are looking at procurement of a range of services, highly complex machinery, chemicals and drugs, and even construction services for new buildings.

Fighting the Same Battles

I asked the Procurious community whether they thought that got the most from their procurement activities. What struck me was that these organisations face the same issues the wider procurement community, one in particular being maverick spending.

In charitable and non-profit organisations, as with procurement across the world, there is still the need to convince business stakeholders, end users and other functions of the value procurement brings to the organisations.

Traditional mind-sets of, “But we’ve always done it that way”, and “We’ve used that supplier for years”, exist in these organisations. You might think that convincing stakeholders might be easier for a charity – more procurement involvement means better deals, means more money to go on research or helping people.

Effective Procurement

All of this brings me back round to my original question. In truth, as a donor, I don’t really mind what my money is spent on, just that it is being used to support the charity’s cause. As a procurement professional, however, I feel that there is more that could be done to make this more transparent, and also to support these organisations when procurement is less mature or experienced.

There are a number of ways that procurement in charitable and non-profit organisations can be supported. In the UK, the Charities Aid Foundation provides various services on a pooled basis for smaller charities.

There are also opportunities for procurement professionals to work with charities and social enterprises on a pro bono basis. This is a great way for the organisations to access procurement skills, without having to pay for a full-time staff member.

Another option is to expand our procurement networks, getting as many people involved as possible. By creating global networks, procurement professionals can access a wide range of knowledge and experience.

If you have a procurement issue, the chances are high that someone else has dealt with it before. By creating networks, we can help create real value.

All this can help to raise the profile of procurement within charities, educate stakeholders to procurement’s role and value, and make a major difference to how (and how effectively) money is being used.

The Future’s Bright, The Future’s Niche Social Networks

Social media has enabled global collaboration on an unprecedented scale. But as attitudes towards the major platforms change, it’s actually niche social networks where the future lies.

Niche Social Networks

In the interests of full disclosure, I do work for a niche social network. So yes, I am slightly biased. But stay with me, as you’ll see why the argument for niche social networks holds weight.

It might seem strange to talk about a more narrow focus when technological advancements have ensured that we can speak to anyone, in any corner of the world, at any time. But as the world grows, it’s important to ensure that you are speaking to the right audience.

We only have a finite amount of time during the day to engage with colleagues, peers and stakeholders, read interesting articles, and share our experiences with others. If you’re spending that time talking to the wrong people, then you are potentially missing out on great new opportunities.

Facebook-isation

Does this post look familiar to you?

Niche Social Networks

How about this one?

Niche Social Networks

These and countless others pop up on the major social networks on an hourly basis. And while you may think I’m talking about Facebook, these were actually lifted from LinkedIn in the past week or so.

Yes, that’s right, the world’s largest networking site is now beset with endless maths problems, selfies, family photos and quizzes. While presumably posted by well-meaning members, they serve to create friction on what constitutes an ‘appropriate’ post for LinkedIn.

And it doesn’t stop at the main network feed either. Speaking to procurement professionals at conferences and events in recent weeks, many have voiced the opinion that LinkedIn’s Groups and Discussions have become “spammy”.

There are a couple of possible explanations for this turn of events. The first is that, with over 300 million members, the network has grown too large while trying to cater for too wide an audience. The other is possibly that for many users, LinkedIn represents their entire social media presence, which is why there are Facebook-type posts appearing on it.

Both LinkedIn and Facebook aren’t going anywhere. They are great networks for connecting with people and, on a professional side, LinkedIn remains the place to be for marketers and recruiters. But for individual professions, the future lies in niche social networks.

Finding Your Niche

For many professions, relevant discussions, content and connections are lost in the noise on the larger networks. This was one of the primary reasons that Procurious was founded, and why it has grown as it has. People know that the site provides up to date, relevant content for procurement and supply chain, all in one place.

Procurious caters to the procurement and supply chain audience, but there are many others you can find, depending on your profession and interests.

  • Spiceworks – A network for over a million global IT professionals, providing content, and a free IT help desk for all its members.
  • RESAAS – Over 300,000 global real estate professionals, providing leads and listings.
  • Doximity – Over 60 per cent of US-based doctors as verified members, and possible expansion to overseas markets.

The list doesn’t end there, and there are countless others for a whole host of professions that are getting started every week.

Benefits of Niche

The benefits of a niche social network are along the lines of what I have said already. Joining one of these network allows you the following:

  • Connections – Surely the Number 1 aspect of social media are the connections we make. Niche social networks offer people who could really help with your latest issues or questions.
  • Content – Is a post about global politics interesting? Probably. Is it relevant to your next negotiation? Maybe not. Niche social networks offer articles relevant to your day-to-day work (although we do throw in the occasional off-the-wall topic to keep you interested!).
  • Learning – Whether it is eLearning, or learning by asking questions to other network members, niche networks are more likely to offer a more focused, better answer.
  • News Feed – What all the sites I have mentioned have in common is a collated news feed. This means up-to-date, relevant headlines, brought together in one place.
  • Events – An events calendar for all the major events for your profession. Quickly see what is near you and decide which one you want to attend.

By being able to access all of this in one place, you can spend less time wading through irrelevant posts to find good information, and more time connecting and collaborating with the right people.

So if you’re only going to use one platform for your social media activities, why not think about a niche network.

My Advice for Finance Professionals (and Others)

My advice for up and coming finance professionals? Don’t get stuck in your silo – get out and collaborate.

Advice for Finance Professionals

When someone asks you for your opinion or advice to pass on to young professionals, it’s often tricky to narrow down your thinking to two or three bullet points. When these professionals working in a different business function, the job gets that little bit harder still.

However, there’s not as much difference between Procurement and Finance professionals in the early stages of their careers. So, based on my own experience, I have put together my top three pieces of advice for new professionals (whether they are in Finance or any other profession).

  1. Avoid a Silo Mentality

Maybe the most important piece of advice I can think of, hence why it’s come first. In the early part of my career, there was nothing more frustrating than trying to explain what procurement did, and why we added value to the business.

We worked closely with other functions, such as Design, Manufacturing, and Finance, but always had the same conversation why we needed to be involved at all. If you’re going to fully understand the business, then you need to get out of your functional silo and meet other people, discuss their roles, and work out how you and they fit together.

The relationship between Finance and Procurement is key to the smooth running of a number of critical operations. From supplier selection and qualification, to invoice payment, these operations will run much more efficiently with better communication and a good relationship.

If you step outside your silo, you’ll probably find that other people are willing to do this too. 

  1. Share your Experience

Procurious founder, Tania Seary, has frequently spoken about the importance for procurement to flex their collective muscle and create a community of practice. The same could be said about creating a community of finance professionals.

Quandl’s tips for being a great analyst highlight spotting patterns and finding out the ‘why’ behind the numbers. A great way of doing this is to get out and talk to people, be it others in your profession, or others around your business. Discussing tools and apps that you and others have found helpful could make all the difference.

The chances are fairly high that someone, somewhere, will have come across a similar situation in the past. They might even have a solution for it too, and they’re probably willing to share their experience and knowledge to help out others.

Your experience is valuable too, no matter the stage of your career. Find time to note down specific issues you have had, who you spoke to, how they helped, and your eventual solution. Share this with your fellow professionals, and you’ll start to build both profile and influence. One of the great ways to do this is via social media.

  1. Leverage Social Media for Your Brand

Social media is just as important for your professional life as it is for your personal life. There are a number of great platforms available, each offering a different way to build your personal brand.

In business now, many people think that if you don’t have your own online profile, you don’t really exist. Both recruiters and employers will use social media to learn more about you as an individual – whether it’s to check your employment history against a CV you have submitted, to understanding what makes you tick as a person via social media posts.

The best thing is, it only takes 10-15 minutes each day to stay up to date.

Telling people what you are doing, reading relevant content from industry publications, listening to a great podcast – all of these can be done on your way to work, or over lunch. Once you’re in a routine, it’s easy to maintain your social media presence during the day.

By doing this, you’re raising your own profile and starting to build influence, as well as gathering knowledge that will help in your day-to-day work.

And whether you are Finance professionals, or Procurement professionals (or others), this will certainly stand you in good stead as your career progresses.

Is Brand Paranoia Stifling Debate on Social Media?

More and more people enter the world of social media every day, each with their own thoughts, opinions and values. Surely this is a recipe for open debate? Perhaps not.

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True, you see plenty of heated conversations on social media – people airing their views on a host of subjects, from television programmes to films, restaurants to products – but all too often they descend into arguments, instead of a proper debate.

Argument vs. Debate

Take the Scottish Independence Referendum in 2014 as an example. Social media was full of posts from both sides’ supporters, but in many cases these posts only contained campaign rhetoric, rather than hard facts, and frequently resulted in personal insults being thrown around.

When we talk about debate, we mean what you might have learned at school or university – two sides with structured, well-informed and well-supported arguments for or against a topic, which were presented and listened to respectfully, even if you didn’t agree with it.

Social media platforms seem to be set up perfectly for this to happen. Take the concept above, add in a global audience, all with different facts, figures and experiences, and you should have the recipe for quality, informative debate.

But this sort of debate is so seldom seen on social media. Why?

Personal and Professional Brand

The rapid growth of platforms like Facebook, LinkedIn, Twitter, et al., have enabled people to have a publicly visible account of their CVs and career histories, likes and dislikes, thoughts and opinions and pictures of their favourite things.

From a personal point of view, this is great. Our most meaningful social networking interactions happen within a group of friends, most of who will probably shares these interests in some way.

However, taken from a professional point of view, you have a diverse group of users and stakeholders, all of who have access to this public information, and who are able to link you as a person to all of these accounts.

Try as you might to remain anonymous, or limit your public exposure, as soon as you have a social media account, you are there for everyone to see. And in a professional sense, this means your peers, colleagues, managers, right up to the CEO and owner of the organisation.

Brand Paranoia

Like it or not, your public digital face represents your organisation. What you post, Tweet or share could potentially be attributed to both you and your employer. Even the ‘magic’ words, “My views are my own”, used as an attempt to separate individual and organisation may not stop people making the connection.

And there are plenty examples, like this one, of an employer taking a hard line if they think their brand is being misrepresented or negatively impacted by association.

The key here is brand. Whether it is personal brand, something that has taken on a much greater relevance in the digital world, or organisational brand, people are very (and rightly) concerned about how their brand is perceived by the public.

For organisations, it could mean the difference between retaining and losing customers. For individuals, it could damage their chances of landing their dream job, thanks to an errant post on a social network.

A friend recounted a story to me about how she had been contacted by a colleague regarding a post of hers that was “out of the norm”. It turned out it was her son who had posted, while logged into her account. No harm done, but an object lesson on the reach of social media.

Bringing Debate Back

However, I think this has all gone a bit too far. For sure, I would expect to be hauled over the coals by my manager if I insulted someone on Twitter, which was then associated back to the company.

But engaging in a real debate with one or more other parties, where an argument is built around facts, and everyone is treated fairly, where’s the harm in that?

Procurious has over 9000 members in its community, with another 20,000+ followers across its various platforms. The chances are high that not everyone will agree with me (even about this article), and that’s great.

We want to stimulate debate – it’s one of the best ways to learn and develop as a person and a professional. The Procurious Discussion forum is a great place to start, and everyone can get involved.

So the next time you see a point that someone has made on social media that you don’t agree with, and you can back up your opposing point, don’t shy away, post and start a dialogue. You never know what will come of it.

Future Proofing Procurement – Social Sourcing and Supplier Networks

Traditional procurement processes and methods are being overtaken and replaced. While they still have a role to play, how can you make sure your procurement organisation is ready to meet the future head-on? tech-913034_1280

A few weeks ago, I was involved in a Twitter chat on behalf of Procurious on the subject of social media, supplier networks and social sourcing. It got me thinking about how procurement can prepare for an expanding strategic role in the coming years.

Social media is well established for connections and networking for individuals, and forward-thinking procurement teams are ensuring that their brands are positioned to take advantage. But where should they be going next?

Supplier Networks

Supplier Networks are built on the premise of using social media to create a pool of organisations, which have the same or very similar requirements, and combine resources in order to achieve favourable rates on large-scale purchases.

The favourable conditions are not just for the buying organisations. Suppliers who are part of the network are able to access more organisations, combine orders (allowing for more efficient manufacturing or production processes) and reduce their own costs too. Think of this as a ‘win-win’ situation.

It was on this thinking that Innovo was created. Innovo is a free online business-to-business (B2B) marketplace for all goods and services. The platform aims to connect buyers and suppliers on the basis of requirements.

Buyers outline what they need and suppliers are notified when buyers are looking for their products. The site then facilitates volume sharing between buyers, rebating savings for bulk purchasing across the group, and enables suppliers also to share volumes and reduce their own prices.

While not directly linked to the ‘traditional’ social media platforms, sites like Innovo are facilitating online relationships and allowing procurement to both add value for organisations through improved supplier relationships, but also deliver savings for the bottom line.

Social Sourcing

Social sourcing is defined as buyers or purchasing organisations using social media platforms, such as Twitter and LinkedIn, to access a wider supplier market, where new solutions, supplier innovation and alternative products can be found.

What may be holding procurement back in this regard is the need to be open in a public environment with requirements or products issues. While this is not something that has been widely done in the past, there are a few organisations that are using social media to good effect in this regard.

This openness tends to be around lower value, non-critical products currently, but the possibilities of using this more widely will grow as more organisations become comfortable with it.

Currently there are a few examples of good practice in the market, but we’ve highlighted two of the best here.

  • LV= (Liverpool Victoria): The UK-based financial services organisation realised that they could use social media to share issues and ideas and attract responses from a wider community of small to medium sized suppliers.

This approach, seen as less formal and more flexible, has enabled LV= to have more collaborative discussions with a much wider community and benefit from innovative thinking.

  • GE and Quirky: General Electric and Quirky, a crowd-sourced innovation platform, to create a new platform to enable innovation. The platform enables crowd submission of new products and small-team designs, giving suppliers access to GE and GE a ‘renewable’ source of crowd innovation.

These smaller organisations also have the advantage of being able to access retail relationships that would have been difficult previously, as now they have the support of GE.

(Note – Quirky filed for Chapter 11 bankruptcy this year. However, their innovation journey continues on Wink.)

Securing Procurement’s Future?

Procurious are big advocates of using social media as part of the procurement process. Through conversations we have been having with procurement professionals around the world, as well as technological and industry experts, we believe that these are the conditions the majority of procurement will be carried out in the future.

Adopting a new approach to procurement is a big transformation for organisations, however, in order to ensure that procurement remains relevant, adds value for organisations and retains a strategic presence, the profession needs to keep up with the times.

The benefits of social media are there to see – you don’t need to jump in with both feet straight away, but can ease into it slowly in order to make a smoother transition. Our challenge to you would be – what could you be doing differently in your procurement process? Why not be the one to take the first step and ultimately get ahead of your competitors and up your social media game.

If these organisations are leading by example, what is yours doing? Is your organisation future-proofed? We’d love to hear more from you if you have a great example to share!

4 Reasons Why L’Oréal is Winning the War for Talent on Social Media

Because you’re worth it…

51-loreal

We talk a lot on Procurious about using social media to ‘win’ the war for talent. More frequently, organisations are using social media in this respect, but some are using it more effectively than others.

The Role of Social Media

So how can procurement organisations ensure that they are attracting the best talent and having a better perception than their competitors in the recruitment market? Social media may provide an answer.

Having a positive presence on social media can help organisations to promote themselves, their opportunities and the benefits for potential employees if they join the company. Visibility is the key, but it needs to be done right in order to have the best impact.

One organisation doing it right is The L’Oréal Group.

What L’Oréal Is Doing Right

The L’Oréal Group is the world’s largest cosmetics company, headquartered in France. With an annual turnover of €20.3 billion, a presence in 130 countries, 27 global brands and 68,900 employees, the Group has good reason for wanting to attract the best talent.

But in an increasingly crowded market, L’Oréal has managed to make itself stand out from the competition on social media by tailoring its approach in the following ways.

And, although these campaigns have not been directed at procurement specifically, there are some good takeaways for procurement teams to consider.

Presence

The L’Oréal Group has a major presence on social media in its own right, but has also chosen, as many other large organisations have, to dedicate pages and accounts to careers and job advertising in multiple countries.

What’s more, these pages are run as the main accounts are and pack just as much of a punch in terms of followers.

That’s a huge community, accessing regular posts, Tweets and videos and hearing the L’Oréal message.

Uniform Branding and Naming

The beauty of the L’Oréal pages is that they are uniform in branding and design on all pages, accounts and profiles. The branding helps to give each of the sites a professional feel and make them immediately recognisable for potential employees.

The accounts and pages are also easily searched for, with the naming conventions for them following a simple pattern, where the platform and location are called out clearly; e.g. facebook.lorealusa.jobs

Activity

One of the key tips Procurious gives for having a great personal brand on social media is to keep your accounts active. There’s no use having all those followers if you aren’t saying anything to them.

The L’Oréal accounts and pages are regularly updated with new job opportunities, information, videos and blog content (like this) to keep people interested. Part of this includes unique insights into what you might get up to at work and why L’Oréal is a great place to work, which brings us on to our next point.

Employee Advocacy

There’s very little that can say more about the strength of a company as an employer than testimonials from its own employees. And L’Oréal has made sure that their social media accounts show plenty of these.

Like this one from LinkedIn:

Screen Shot 2015-10-19 at 16

Or this one from Twitter:

Screen Shot 2015-10-19 at 16;99

Getting your employees to talk positively (and genuinely!) about your organisation sends a strong message to potential employees and may tip the balance for them.

And the result?

Two campaigns that bore fruit for L’Oréal came one each from Facebook and LinkedIn. Using a combination of approaches on social media, including an app to allow employees to share listings across their own networks, L’Oréal benefited from:

  • “Optimised” performance and return on investment and higher than average click through rate
  • Higher than average conversion rates from adverts
  • A higher percentage of qualified resumes than when traditional methods were used
  • Substantial savings on recruitment fees for hiring

And as the organisation’s networks continue to grow, there’s no reason to think that this level of success won’t continue. It’s just up to other organisations to try to follow in L’Oréal’s footsteps.

Is your organisation up to the challenge?

The Collaborative Economy – The New Globalisation?

New organisations, new social media platforms, great connectivity – all of these are expanding the wealth of knowledge and skills that individuals have access to. As this continues, are we looking at a shift in the nature of global trade?

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Ten years ago, I sat in a business lecture debating why globalisation was a good thing, and why organisations needed to be alive to the possibilities of being able to source any item, at any time, from anywhere in the world. Although I won that argument, I couldn’t have known how the world would change in the intervening decade.

Globalisation and Trade

At the time, I was young, idealistic and thought large, dominant global organisations couldn’t be a bad thing, no matter what my debate opponent said about local economies and global trade. I should say that this was also back when I drank coffee from the red, blue and green chain companies, before realising local, independent providers had them beat…

Now, reports are suggesting that traditional globalisation, the trade between countries, is decreasing. Some forecasts show that, for a third consecutive year, growth in global trade will be lower than overall economic growth, while others highlight that international capital flows are worth 10 per cent of what they were in 2007.

While it may be true that globalisation in a traditional sense may be on the wane, there is a new form of globalisation on the rise.

The Collaborative Economy

Cross-border trade is changing thanks to technological advances and increasing interconnectedness of subject matter experts and those who require specific skill-sets that they don’t already have access to. This is the Collaborative Economy.

Sites like Upwork (a combination of two pioneers of the collaborative economy, Elance and oDesk) allow organisations to ‘hire’ independent talent for one-off or short-term jobs, filling a requirement or skills gaps, without having to hire a full-time employee.

The difference in this case is that the individuals offering their expertise to meet business requirements are frequently in a different country or in a different time zone, but able to leverage technology to provide a service.

There are an estimated 80 million ‘sharers’ in the collaborative economy in the USA, as well as over 23 million in the UK and over 10 million in Canada. And with conservative estimates of investment totalling $25 billion, it appears that we are just scratching the surface.

Procurement Professionals without Borders

Procurement is very much at the start of its journey when it comes to the Collaborative Economy, but the potential is enormous. Asset sharing and transfer of knowledge could enable procurement to work across borders and access knowledge, all while reducing costs associated with travel and adding value through accessing best practice and reducing risk.

Online sharing platforms, such as FLOOW2 can assist with supply chain transparency and reduce overheads by facilitating the sharing of assets. And could we end up seeing this go one step further, with procurement professionals themselves being shared between organisations? It’s not as far-fetched as you might think.

This isn’t consultancy – this is freelance procurement. When asked about my ‘Big Idea’ for procurement, I voiced the opinion that in the next decade people wouldn’t work for one organisation or in one place, but on multiple projects and in many teams, dependent on the required skills for the job.

It has taken less than 6 months for others to talk about the same subject – how long before talk becomes reality? I’d be interested to hear what you think and if you would set yourself up as a procurement freelancer. Let’s start a debate – maybe someone else will win this time!

Attitude vs. Skill and Being 25 Again – Your Procurious Discussions

It’s been a while since we wrapped up some of the discussions on Procurious, but the questions and answers have still been coming in thick and fast.


This month, we’ve selected three of our most popular discussions, covering topics including attitudes and skills of procurement professionals, eSourcing and the chance to revisit our career choice.

What is more important, the right attitude or the right skill set?

This question really caught the eye of the community and has great resonance in procurement and supply chain given all the recent talk of talent gaps and recruitment struggles.

For many employers, finding the right person is more than the skills and experience that they possess, but ensuring that the candidate will be a good cultural fit. But which of these is more important?

The common consensus in the community was that, in a straight choice, it was attitude, rather than skill, that was more important. James Ferguson struck a chord with the belief that “new skills can be taught, attitude can’t”.

The right attitude allows the right skills to be learned more readily, with the individual willing to learn and helping with the overall development of the team too.

However, Darren Niblo and Monica Palacios had the opposite stance. Darren argued that attitudes could change over time, while Monica stated that it was dependent on the seniority of the individual, with executives needing the skills (i.e. understanding the environment) in order to succeed.

What’s the first thing that comes into your head when you hear the word ‘eSourcing’?

This is another hot topic, with procurement increasingly moving towards working electronically with new technology. However, a lack of clarity can sometimes inhibit the use of technology or systems, even when they seem very straightforward.

The most popular answer from the community was from Samantha Coombs, whose definition of eSourcing was “Procure-to-pay all in one platforms, with bolt on contract management blocks as and when required”, also stating that the process was “revolutionising procurement globally”.

Other key themes associated with the concept of eSourcing were:

  • Efficiency
  • Centralisation
  • Driving savings for the business
  • Repeatability
  • Collaborative and easy for both sides
  • Innovative

Two answers also highlighted the networking opportunities eSourcing presented, either speaking to an existing contact or inviting new/unknown suppliers into the RFx process.

And one thing we can all agree on is that it is a positive move away from endless printing, photocopying and envelope stuffing!

If you were 25 again, would you follow the same career path?

 

Posed by Procurious’ own Jordan Early, the question comes from the Procurious interview with ISM CEO Tom Derry.

Tom told Procurious, “If I was 25 again, I couldn’t think of a field that I would personally find more fascinating than a corporate career in procurement and supply chain.”

Perhaps unsurprisingly for a community of highly motivated, intelligent and progressive procurement and supply chain professionals, the verdict was unanimous – we would all make the same choice given our time again.

With more people actively seeking a career in procurement, the number of individuals ‘falling’ into the profession is decreasing. And with the opportunity to be an architect of change and drive business efficiency, mentor new entrants and push forward the boundaries of the profession, why wouldn’t you want to work in procurement!

Once again, we’d like to thank you for being part of our community and sharing your knowledge with your peers and colleagues.

If you have a burning question you would like answered, head over to the Discussion forum and pick the brains of your fellow professionals.

How to Achieve Award Winning Procurement – Learn from the Experts at Lloyds Bank

In the latest in the series of articles on the CIPS Supply Chain Management Awards winners from 2014, we look at Lloyds Bank.

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Lloyds Banking Group is a financial services group with millions of UK customers and with a presence in nearly every community. A household name on the high street, the Group thrives based on how well it serves customers, on relationships within the communities that it serves and on helping Britain prosper.

Whether through retail banking, financial services or investments, there are probably few people in the UK who haven’t interacted with a part of the Lloyds Banking Group during their lives. What many people may not immediately associate with the Group is a very successful procurement function.

However, over the past three years, and against a backdrop of great public scrutiny and a recovering economy, the function has played a key role in the successful achievement of Lloyds’ overall business goals. Under the banner of ‘Simplification Sourcing’, a procurement programme was developed with the aims of reducing cost to the bank and improving the overall capability of the procurement function.

The function achieved their goals, but also put measures in place to ensure that the changes and processes would be sustainable in the future. Last year, the team was recognised with the CIPS Award for the ‘Most Improved Procurement Function’.

Andy Collopy, Operations and Property Sourcing Director, talks to Procurious about what the award means for The Group Sourcing team within Lloyds and what’s next for the function.

How did you get started in procurement?

It’s the old cliché but I kind of fell into Procurement back in 1996 as part of an organisational change. I moved from a Logistics role into Procurement and have never looked back. I remember the conversation as if it were yesterday – “We are removing a layer of management in Logistics, Andy, so your job has gone. We think you would be good at Procurement. Do you want to give it a go?” The rest, as they say, is history.

Procurement hooked me in from day 1 when I completed my first deal, negotiating the new pallet contract. I soon realised the power of Procurement when I saved the company more money in an afternoon’s intensive negotiation than I had in 2 years in Logistics through incremental efficiency.

What prompted you to submit a nomination for the award?

The main reason was that the timing was right.

Lloyds embarked upon a Simplification journey in 2011, which ran until the end of 2014 (we are now in Simplification 2 – the sequel!). We felt as though we had achieved a great deal in the 3-year programme, and getting recognition for this from external sources, as well as from our internal stakeholders, was an important part of recognising our achievements.

I have always been a fan of the CIPS/Supply Management awards since I was part of the GSK team that won the Best Use of Technology award back in 2003. I also had the honour of being on the judging panel in 2009, and saw all the hard work that went into both the submissions and judging. I was keen for us to compete against the best.

The CIPS/Supply Management awards evening is always a great evening too, to recognise great work that the function does and catch up with old colleagues.

What is the ‘Simplification Sourcing’ programme?

Simplification Sourcing was the brand name for the programme. There were 9 key elements to the Transformation programme:

  • Vision & Strategy – Set out the 3yr strategy for Group Sourcing as part of the overarching bank strategy to be “Best Bank for Customers” and “Helping Britain Prosper”
  • Internal Client Management – Ensure that everything we do in Group Sourcing is closely linked with our internal clients’ goals and objectives through strong relationship management, with financial benefits interlocked into the Business Units P&L
  • Business Sourcing Process – Execute sourcing activity through an integrated process that starts with business needs, marries this with the supply market capability to deliver an optimal outcome for the bank in terms of competitive advantage, risk management and responsible business
  • Supplier Management – Apply segmentation to effectively manage all our suppliers from a basic risk and conduct assurance perspective, as well as work with our strategic suppliers to deliver value beyond the basic contractual terms
  • Contracts & Legal – Working seamlessly with Legal to deliver an end to end contracting process that ensures correct terms are used, negotiated and stored
  • Sourcing Transactions – Enabling the “Right Way to Buy” through user friendly Requisition to Pay processes and compliance management
  • Risk & Quality Assurance – In an increasingly regulatory environment, providing control on all aspects of Procurement from basic supplier assurance to checking the quality output of sourcing plans and supplier management rigour
  • People – Building human capability through tailored learning & development programmes, as well as key talent management and succession planning
  • Change Management and Communications – Embedding sustainable change through a co-ordinated change and communications programme to ensure that key messages and deliverables land with colleagues, stakeholders and suppliers

Has it lead to greater collaboration between procurement and the rest of the business?

Definitely. I do think that we had a real need in Lloyds to change the bank, both in terms of how we serve our customers, as well as fundamentally restructuring the cost profile of the bank. This sense of purpose galvanised people around a common goal, and Group Sourcing under Michael Whitby’s stewardship seized this opportunity to play a pivotal role in the future success of the Group.

The past 3 years has elevated effective third party spend management to being one of the key levers in the bank’s forward success. We find now that we have created the ‘pull’ factor with our stakeholders, as they understand what we can do for them. Our aim now is to keep this momentum and build upon it.

What was the most critical part of the plan for procurement?

Given the need to fundamentally restructure the cost profile of the bank, a key element of the plan was to deliver significant savings in the third party spend profile. Group Sourcing achieved £560m savings over the 3-year period. The key part of this was the interlock with the business’ bottom line, which saw a 16 per cent reduction in the Group’s cost base over the period, which was a key commitment given by the bank to the City back in 2011.

This achievement should not be under-estimated, given that in many organisations I have worked in; Procurement struggles to justify its savings to key stakeholders such as Finance. This is not the case at Lloyds. This credibility has created the space to allow Group Sourcing to start to influence the wider agenda of the Group.

How have you ensured that the success you have had is sustainable?

A key part of the programme delivery was to ensure that what was created was enduring. From a process perspective, we achieved this through robust change management at the time and built the key infrastructure to be able to monitor progress moving forward and address any potential deterioration. Performance Dashboards exist for all the main elements of the sourcing process e.g. contracts, supplier management.

The more challenging element has been embedding cultural change with our colleagues in Group Sourcing. Behavioural change is a key challenge in any organisation from my experience and it takes time.

In developing the capability of the team to meet the targets we set ourselves, we have focussed on the softer skills of influencing, engagement, relationship management and authentic leadership, as well as the traditional elements such as negotiation and effective project management. This work is never done however we have seen a step change in a number of our colleagues over the past 3 years, which has been great to see.

What’s next for the function?

A good rest! No, only joking. As I mentioned earlier, as we closed out our successful Simplification 1 programme at the end of 2014, we quickly ramped up for Simplification 2. Some of this involves sustaining what we achieved in Simplification 1, but we are also looking at new elements.

While Lloyds has always focussed on its customers, our intensity to get this right under our key aim, which is to become the “Best Bank for Customers”, means that we are increasingly looking at how to achieve this. Procurement is beginning to play a key role here, bringing market insight from our strategic suppliers to the Group to stay ahead of the competition.

This can be seen in a number of ways such as suppliers helping Lloyds re-design its processes from a customer perspective i.e. end to end customer journeys, to bringing new and innovative ideas to the Group to support the ever growing Digital Banking agenda.

Where do you see the future of the profession as a whole and how can social media play a role?

This is a really interesting question. I often read articles that say Procurement won’t exist in 10yrs time as a distinct function, or category management is as strong as it ever was. My sense is that being in a position to leverage the market, and blending this with stakeholder intimacy is the most effective formula.

Third party spend continues to grow as a percentage of the overall cost base of most corporations, so the need for effective Procurement will not go away. So we are in a good place in my opinion.

I sometimes have interesting conversations with senior stakeholders, where they are willing Procurement to take the lead, yet often see reticence from the function. My view is we need to be more confident in our capability as I was all those years ago in that first pallet deal!

In terms of social media, Procurement is a laggard here. I do think that we need to up our game and embrace this medium, especially with our suppliers. This area has so much potential, and we need to push our technology partners to come up with innovative ways to interface with suppliers in both an open and confidential way, given the nature of what we do.

For more on the CIPS Supply Management Awards, and the Procurious Knowledge Partnership with CIPS, visit our website

The Devastating Effect of Unsustainable Palm Oil

Palm oil is one of the most widely used products in the world, but its increasing demand has led to large-scale, unsustainable plantations, causing devastation to large parts of growing countries. Indonesia is one such place.

Deforestation

Earlier this year, Jordan Early wrote an article for Procurious in which he asked whether or not it would be possible to get to the stage where all palm oil would be produced sustainably.

Jordan cited the example of PepsiCo, one of the high-profile organisations using palm oil in a number of its products, and Sum of Us, who were highlighting the potential unsustainability in the PepsiCo supply chain. PepsiCo have since stated that they are working towards sustainability, but other large organisations are lagging behind.

This got me thinking, not about criticism or finger pointing, but education on this subject for procurement professionals. So that’s what I’ve decided to do here.

The Product

Palm oil comes from the oil palm tree, a crop that is grown exclusively in the Tropics. What makes it a popular crop to grow is the high yields it produces in comparison to other vegetable oils and the lower cost to growers.

While the oil’s most common use is as a cooking oil in developing countries, it is also used in a number of household products – from lipstick and soap to detergents and even ice cream. Increasing demand has led to increasing global production, with plantations spreading across Asia, Africa and Latin America.

Replanting with oil palm trees is a good option for many farmers and landowners, not only because of the higher yields, but also due to incentives offered for producing the crop for export. The Indonesian Government has been reported in the past as offering tax incentives and interest rate subsidies.

Effects of Unsustainable Growth

However, this growth has also led to unethical practices, creation of an unhealthy monoculture in some countries and widespread deforestation, leading to loss of habitat for a number of endangered animals, as well as land and livelihoods for indigenous and local populations.

It has been reported recently in Indonesia that thousands of hectares of peatland are under threat, due to companies clearing the land for oil palm plantations. The deforestation has polluted local water supplies and the situation is likely to worsen when the companies burn the ground to reduce the soil acidity before planting the oil palms.

In addition, local villages that have relied on the peatland for a source of water in dry seasons and a livelihood are struggling and face the prospect of being moved on from their home.

Part of the issue comes from a lack of strong regulation when it comes to licenses and permits for plantations. It’s felt by many in Indonesia that new regulations need to be issued by President Joko Widodo, as current ones offer no legal consequences for contravention.

Changes to be made

In spite of all this, it’s hard to argue against the idea that palm oil has had a positive effect on the economies of countries it is grown in, particularly when planting has been conducted in a sustainable fashion.

In 2008, as the demand for palm oil increased steadily, Indonesia exported $14.5bn worth of palm oil products. The country has also seen more than $20bn worth of investment from banks and financial institutions since 2008.

And there appears to be a change happening at an organisational level too, with Wilmar International, the world’s largest trader of palm oil, announced a ‘No Deforestation, No Peat land, No Exploitation policy’ – a move that many hope will encourage other traders and refiners to follow suit.

The Role of Procurement

As with many aspects of sustainability and ethics, the role of procurement is to ensure that supply chain practices are conducted at the required high standard. For palm oil production, it is about ensuring that strong practice around sustainability, including deforestation and ethical issues such as the treatment of local populations, are fully enforced with all suppliers.

It is a matter of both organisational and personal responsibility to ensure the practices and behaviours are correct. Consider taking the CIPS Ethics Test on an individual basis and opening dialogue with your suppliers to ensure that they understand what your organisation expects.

There may also be events in your region you can attend, similar to this one at the Melbourne Law School, which look to generate discussion on topics like regulation of the palm oil industry and what can be done to help countries like Indonesia.

If you are interested (and a procurement professional in Asia), you can contribute to a new book that is due to be published next year. Sustainability in the Asia Pacific’ intends to open the discussion of ‘pragmatic perspectives’ in sustainability accounting to support corporate decision makers in improving corporate sustainability management practices. Check out the website to see how to contribute.

Do you source products containing palm oil? Have you seen any good you can share? Or bad practice and how you dealt with it? We’d love to hear from you and get a dialogue going in this area.

I’d like to thank Dominic Gray for helping me with my understanding of this topic and providing sources of information.