All posts by Kevin Bonsall

6 Ways Procurement Pros Can Be More Effective

87 per cent of organisations have faced a disruptive incident with suppliers in the last 2-3 years. How can we work in more effective ways?

Transforming into a strategic procurement organisation is not an easy journey. But there are a few obstacles that procurement teams should address sooner rather than later when thinking about how to be more effective in procurement. Here are 6 challenges to tackle today for success in the future:

1. Unproductive business relationships

The majority of CPOs rate their current business partnering effectiveness at less than 70 per cent with hopes of greater than 90 per cent in the future.  How can procurement become a better business partner? By creating a purchasing process that is the easiest, fastest and most affordable way for business partners to do their jobs. Users need what they need to do their jobs and they need those items quickly – and that’s all they care about. If you roll-out an e-procurement solution that is truly the easiest way for employees to request those goods and services within the natural course of their daily work, they’ll use the system and they will see the value that procurement is delivering. And when managers see how this process streamlines approvals and helps them better manage their budgets with real-time tracking, they’ll become champions of procurement as well.

2. Slow, inflexible approval workflows

Speaking over approvals, we’ve seen hundreds of approval workflows, each unique based on business maturity, locations, department structures and technologies. But a consistent challenge among many companies is that approval workflows often make purchasing more difficult for the requester. If requesters could make their purchases without needing to understand approvals or the inner workings of the procurement department, imagine how much easier it will be to get them spending in the preferred manner. Procurement professionals should look at ways to minimize the impact of approvals on the end-user. One way to do this is what we call “line item requisitioning.” This is when the approval workflow is configured so a single requisition/shopping cart can be split and sent through separate approval paths at the line item level. This means that items on the requisition that require fewer approvals get approved and POs are submitted, without being held up by other items that may take longer to get approved or require more reviews. And, the approvers only see the items on the request that pertain to them, making it quick and easy for them to sign-off on the items.

3. Supplier risk & fraud potential

87 per cent of organisations faced a disruptive incident with suppliers in the last 2-3 years. Risk inside of the supply chain remains a focus for procurement leaders. So, what’s the key to reducing risk? Transparency. The more transparency you have with suppliers, the more you can build up those relationships and better understand your suppliers’ needs. Perhaps you find out you have a key supplier that is struggling with cash flow needs – work with this business partner to understand their position and look at strategic payment programs that benefit both parties to mitigate that risk upfront. You can also leverage the wealth of data at your fingertips to pinpoint issues like this early on and better manage supplier data to prevent fraud.

4. Lack of spend visibility

If you want to know how to be more effective in procurement, I have two words for you:  spend visibility.

Every strategic procurement initiative starts with knowing how 100 per cent of the company money is being spent – not “some” of the money, all of it. 40 per cent of CPOs are focused on consolidating spend, but if they’re not seeing the full picture, those efforts will prove futile. Spend visibility – from both direct and indirect spending – allows CPOs to do what they do best, including: consolidating spend, rationalising the supply base, leveraging volume buying, negotiating better contracts, sourcing strategic suppliers and more. The data needed to support all of these activities is in the company spend data.

5. Manual reporting and analytics

65 per cent of organisations are accelerating investment in procurement-related analytics. But you really need to accomplish 2 things before making this investment: 1) Capture 100 per cent of financial data 2) Focus on data science within the procurement department. If you aren’t capturing 100 per cent of your data by on-boarding all your suppliers, achieving 100 per cent user adoption and processing 100 per cent of your invoices through the purchase-to-pay solution, your analytics tool won’t have the data needed to give you the right insight. And, once you have that data, you need someone who understands how to turn actionable insight into results – so make sure your procurement team is thinking about the skills they need for the future.

6. The talent gap related to technology

Related to the skills needed for the future is the talent gap procurement is experiencing, especially when it comes to technology. 87 per cent of CPOs believe talent is the single greatest driver of procurement performance, and yet organisations spend less than 1 per cent of their budget on equipping and training their procurement teams. Think about the tools, technology and training your procurement team needs to keep up with organisational transformation and deliver value, then start developing skills in those areas now – procurement is only going to get more digital. Check out my recent post on bridging the talent gap in procurement for other tips on attracting, hiring and developing new talent for this function.

If you’re questioning how to be more effective in procurement, overcoming these challenges will put you on the course for success. At Basware, we have a heritage in helping companies transform, so you don’t have to go it alone. Reach out– we’re here to help.

These stats are taken from Deloitte’s Global CPO Survey

Bridging the Talent Gap in Procurement: Attracting New Hires in a Digital World

Want procurement teams to attract the best talent? Show us your stuff!

oatawa/Shutterstock.com

According to The Deloitte Global Chief Procurement Officer Survey 2017, 87 per cent of the respondents agree that talent is the single greatest factor in driving procurement performance. But the rates of new hires and recent graduates pursuing a career in procurement is decreasing.

That translates into a problem for the future of this function – a talent gap in procurement. But why?

Procurement is More than Cost Savings and Compliance

There are several reasons we can speculate as to why the workforce is pursuing careers outside of procurement, but in my opinion the overarching problem is that procurement is not seen as a ‘sexy’ career path. In the world of tech startups, innovative products, self-made social media sensations, and more, the idea of focusing on corporate cost-savings and spend compliance just doesn’t appeal – especially to the up-and-coming millennial workforce.

But the truth is, procurement is more than policing the organisation and saving company money. It’s about building relationships with internal stakeholders and external suppliers, drawing strategic insights from data to help others and using unique talent to solve problems.

Confession time: I’m also a millennial, and I think we have an opportunity here to fill the talent gap with eager new hires by showing what the new world of procurement is all about.

Show Us Your Stuff, Procurement

As employers and providers in the world of procurement, it’s up to us to make procurement a strategic and desirable field to enter. Hiding in the back office has made many of us modest, but it’s time for us to show off a bit to demonstrate the true strategic value procurement brings to the party. In reading The Deloitte Global Chief Procurement Officer Survey 2017, there were clear trends on how CPOs feel about the state of procurement, which led me to think about how we can apply those insights to address the talent gap.

Here are 5 ways to bring procurement careers into the modern world…

1.Create a digital culture

I’ll admit, I stole this one right from Deloitte’s recommendations because it’s spot on. 75 per cent of the survey respondents agreed – “procurement’s role in delivering digital strategy will increase in the future and are also clear that technology will impact all procurement processes to some degree.” And you know who grew up with technology from day 1 and is perfect for navigating a digital procurement world? You guessed it – millennials. Demonstrate to this up-and-coming workforce that your procurement department is committed to leveraging technology to automate and outsource the repetitive tasks, expedite the pace of business and enable them to focus on strategic initiatives. Invest in digital procurement today and think about how emerging technologies like AI, machine learning and robotics influence the procurement world. And best yet – involve your entry level procurement team members in these discussions. Give them the opportunity to shape and influence the path of technology at your organisation and make recommendations on your digital future.

2. Invest in employee development

According to the survey, 60 per cent of CPOs do not believe their teams have the skills to deliver their procurement strategy, yet investment in on-going training and employee development remains low. Demonstrate to your current staff and those entering the workforce that you recognise that people are key to procurement success and invest in their future with procurement and non-procurement training programs.

3. Dial-in on data

Data is the alpha and omega of the future and 60 per cent of the Deloitte survey respondents regard analytics as the most impactful technology for the function over the coming two years. So, this is a two-part recommendation: 1) Make sure to capture 100 per cent  of your financial data, and 2) Properly train current and future procurement professionals on data analysis. Analytics and technologies like AI and machine learning are only as good as the data that feeds them, so it’s imperative to build a complete data set for your employees to leverage. Gartner also says that data science and analytical skills are required in procurement to leverage a future with AI. Many professionals enter procurement to be hands-on in solving problems across the business – this could be saving money; negotiating better contracts; optimising the supplier base; helping other departments create and track budgets; reducing risk; finding funds to support new product innovation or growth, etc. Give these professionals reliable data and training to properly analyse it to extract actionable insights so they can act quickly and effectively on strategic initiatives.

4. Provide opportunities to influence innovation

Long gone are the days when procurement meant squeezing every penny out of suppliers and business partners. Now it’s about building strategic partnerships that can take your business to the next level and procurement is at the forefront of that effort. Young procurement professionals are going to be excited and eager to make their mark on something – let them help lead the charge in sourcing and nurturing relationships with key suppliers. Product innovation comes not only from finding the money to explore and test but also from finding the right partners that bring you the elements you need to build that innovation. Create collaboration between your procurement and product departments, as well as other departments for that matter, so that procurement becomes a true business partner and is actively involved in core business functions.

5. Build rapport with internal stakeholders

Another reason that procurement might not be seen as ‘sexy’ is the simple fact that people in other functions just don’t know what exactly it is that they do. If you’re a procurement leader, be a champion for your team. Help others understand what procurement truly is and communicate and celebrate your wins. Also look for opportunities for collaboration between your team and other business functions. Become an advisor during critical times like budget planning and showcase the talent you have in your team. When budgets remain flat, offer up procurement expertise to help other departments produce cost savings and new money from their existing spending habits. As the Deloitte survey eloquently says, “Procurement professionals should challenge themselves to understand functional stakeholders in the same way they do their suppliers.”

At the end of the day, many people are motivated by the idea of being a hero at work. What profession enables employees to swoop in and save the day better than procurement? There are not many. With the required people skills, analytical approach and desire to focus energy internally and externally, the procurement profession is a truly unique career path that doesn’t receive the credit it deserves. Look on to the future of procurement at your organisation and build the culture that attracts your next generation of hires.

To learn more about Basware’s approach to collaborative procurement, download the eBook: WeProcurementTM: Putting the “We” in e-Procurement and contact us to learn more about rolling out a digital procurement solution.