One procurement recruiter says the onus is on them to change traditional recruitment practice to uncover new talent.
At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.
From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.
Time to Change Traditional Recruitment
Lee Gudgeon, Client Engagement Director at REED Global, says that the increasing role of procurement has highlighted a shortage of candidates with the right skill sets available to come into the profession.
Lee argues that procurement recruiters also need to up-skill to drive new practices. This will allow them to recognise relevant skills and capabilities required in procurement, in other functions, and open up the market to people that might otherwise have been overlooked.
We know the why in the role of KPIs in Supplier Relationship Management. But we also need to be able to identify which type of KPI will bring the best results.
Catch up with the first part of this introductory overview of the role and relevance of KPIs to support Supplier Relationship Management (SRM).
So now we have established the role of the KPI in the SRM process, we need to think about the type of KPI we’ll use. Much of the decision making around this will be based on what procurement is measuring with the KPIs.
Remember – procurement should discuss KPIs with other stakeholders and, where possible, involve suppliers too. This engagement could make the difference between success and failure.
Types of KPI
Here’s an overview of the three different types of KPIs:
Quantitative – these are measurable, numeric and objective, like rating on a scale of 1 to 10. An example of a quantitative KPI would be the number of late deliveries per quarter.
Qualitative – these KPIs are more subjective. An example could be how responsive the supplier is to a request – let’s say you have a special order that needs to be delivered to an unusual location. It’s a one-off request, but if the supplier makes the delivery it would save you significant costs in transport and you know they make deliveries to that location for other customers. Is the supplier reluctant to change the delivery location, and is there a fee involved? Is the fee reasonable?
Cultural – are the KPIs aligned with your organisational values? Let’s say your organisation has a drive to always buy locally-made products. You want KPIs to capture whether your suppliers are buying locally as well.
Remember, there’s no one-size-fits-all set of KPIs. Whether you are working on direct or indirect categories, manufacturing or distribution, you need to match the KPIs to the supplier.
For your Toolkit: KPI Checklist
This checklist is a quick summary to confirm if your KPI will stand up to scrutiny.
Is it measurable? If it’s not measurable, than what good is it? How will you know if your supplier is meeting the required standards?
Is it meaningful? Do you or anyone else in the organisation care about it – if not, why collect it?
Is it actionable by the supplier? There’s no use measuring a data point and feeding that information back to the supplier if the supplier is unable to act on or improve the situation. If it’s not within their sphere of influence, they probably won’t accept the KPI to begin with.
Keep the KPIs simple, easy to understand and easy to measure. Ensure they support your overall business strategy and objectives by aligning them to your customer requirements.
Experience shows it’s better to capture a few vital measures that can be tracked consistently and repeatedly. This is much more effective than measuring randomly and or inconsistently.
Institutionalising the measurement process and regularly reinforcing it with suppliers and stakeholders will provide a common ground and common language, support a collaborative environment and make it easier for everyone to understand, participate and achieve.
Finally, you want to reinforce the value of the data collection to support improved business performance – that is, now that you’ve collected the information, make sure you tell the right story.
Contract Level KPI Reports
The dashboard (or scorecard) summarises your KPIs and measures them against a particular supplier. This tool can be used internally to review a supplier’s past or current performance. It’s also important to share this information with the supplier so they are aware of the data and can act upon it.
KPI status reports should be delivered in a timely manner to enable you to address stakeholder concerns quickly and responsively. The reports need to include all the relevant information your stakeholders require – this includes the good and the bad.
You don’t want the senior management finding out bad news from the inter-office grapevine or worse, the media. This is your chance to deliver important details relevant to the success of the business. It’s your news and you want the kudos that go along with identifying and sharing it first.
You also want to define a clear escalation process to address issues and problems as they arise. For example, in a supplier review meeting you may realise the supplier’s data doesn’t match yours.
The supplier is reluctant to change their process based on your data, when their own data says everything is okay. You need an agreed escalation point to review and resolve this disagreement.
Finally, you want KPIs that will deliver predictive measures, not just historical. This allows you to stay one step ahead by being in a position to identify and act upon issues before they become serious. Predictive measures will also help you to identify targets for the supplier to meet and beat over the course of the contract.
All of this information fits into the reporting documentation to demonstrate how and why you’re spending your organisation’s money. The highlights of this report can be summarised in the dashboard and presented to senior management.
Stay tuned for the third and final article in this series, which explores systems used to capture KPI data, typical data points for measuring KPIs, and multi-supplier performance dashboards.
Numbers don’t lie! Over 6,500 procurement professionals took our Career Boot Camp challenge. Were you one of them?
As the dust settles on one of Procurious’ biggest events this year, we’re taking a look at what the numbers say about what our Boot Campers were most interested in.
Which topics were the most popular over the course or Career Boot Camp? Which of our podcast presenters had the biggest audience? What were the podcasts and articles most shared on Twitter?
First up, the great news for all Procurious members is that our online community has grown bigger and stronger than ever.
Just over 870 new users signing up over the course of Career Boot Camp. That’s 870 more procurement and supply chain professionals for you to share knowledge with and add to your ever-growing professional networks.
On top of this, a staggering 6,500+ visitors listened to at least one of our free podcasts, while nearly 20,000 people read one of the great article that were published during the campaign.
It was great to see so many of you engaging with the podcasts and the content. If we’ve all taken just one lesson from Career Boot Camp, then we can start getting our careers on the right track!
Most Viewed Podcasts
We shared 15 podcasts, coming from a range of fantastic Career Coaches. If you missed out on hearing any of these, you can now catch up with them in the Procurious Learning area.
But which of the 15 podcasts were the most listened to?
The interesting thing about this top five list is that it’s such a mixed bag of topics. We’ve gone from Tania Seary’s “Kick-Off” podcast that got Career Boot Camp off to such a great start, to topics on progressing in your organisation.
Not to mention the fact that two of our most popular podcasts came from Tom Derry and Gabe Perez, representatives of two of the profession’s important organisations (ISM and Coupa).
Looking further down the list, we see two topics that are front of mind for nearly all procurement professionals. Our increasingly global marketplace is putting demands on our cultural intelligence and diversity knowledge. Dr. Tom Verghese’s message really hit home with you all it seems.
Then we had the topic of social value and social enterprise, with Charlie Wigglesworth from Social Enterprise UK. All professionals, but in particular procurement’s Millennials, want to make a wider difference in their careers.
Working with social enterprises struck a chord with you, and allowed us to build on our learning on the topic from Big Ideas 2016.
As well as article from our Career Coaches, we also invited our influencers and community to share their thoughts. We received an overwhelming number of articles (thanks!), and they really helped spread the word about Career Boot Camp.
Amongst the content were some articles that seemed to inspire you all with the career message. Our Top 5 here were:
It again shows that people were interested in the really detailed tips and career advice. But at the same time, they were interested to hear what our CPOs and influencers had to say for their own career advice too.
#CareerBootCamp: What Twitter Had to Say
The Career Boot Camp hashtag was tweeted out more than 1,200 over the course of the campaign, and reaching a potential audience of just under 400,000 users.
Once again, the Procurious HQ team can’t thank all our followers and supporters enough for their help with this. Your help allowed us boost our numbers and reach a truly global audience.
It’s great to see such large numbers of procurement professionals taking an interest in their careers. We hope you got as much out of Career Boot Camp as we did, and that you’ve already started making changes for your procurement career.
Although Career Boot Camp is over, there’s no need to despair. You can still listen to all fifteen podcasts via Procurious for FREE here.
A disagreement relating to rising supply chain costs has highlighted the importance of supply chain stability.
Early on Thursday morning, the top news headlines weren’t about conflict or celebrity scandal, but the future of a famous British staple. Maligned and loved in equal measure, Marmite was the topic on everyone’s lips.
The sudden interest in the salty, yeast-based spread came about due to a very public spat between Tesco and Unilever over rising product costs.
According to reports, Unilever had requested that Tesco, and other UK retailers, raise the price of their products in store by 10 per cent. However, when Tesco refused to pass on this cost to customers, Unilever stopped supplying certain goods to the retailer.
Tesco responded to this by halting online sales of Unilever products. This sparked concerns of a prolonged shortage of goods on supermarket shelves.
However, by Thursday evening, the situation was resolved and the stand-off ended. It’s expected that Unilever goods will return to the Tesco website in the next few days.
It’s understood that Unilever gave some ground in negotiations, leading to an agreement between the companies. Asda has also publicly commented that it successfully negotiated with Unilever on the price increase.
Rising Supply Chain Costs
Unilever’s reason for the requested price increase was the continuing fall in the value of the pound. This has in turn led to higher import costs for goods into the UK.
While many of its products, including Marmite, are manufactured in the UK, Unilever imports products and raw materials from its base in the Netherlands.
Since the Brexit vote in June, the pound has fallen in value by over 17 per cent. As the pound dropped to its lowest level since June 23rd on Tuesday, it was reported that some airport Bureau du Change had been offering exchange rates of less than one Euro per pound.
Graeme Pitkethly, Unilever’s Chief Financial Officer, was quoted on Thursday morning as saying the price increases were part of “normal business“. But, while the price increases may be a normal part of business, experts have warned that this may just be the beginning.
As the UK’s exit from the EU comes closer, it’s expected that consumers will see rising prices for many products. As the UK imports more than 60 per cent of what it consumes, the FMCG industry will be one of the hardest hit.
Items such as bread, milk, bananas and wine are expected to increase as manufacturers and retailers stop being able to carry the increasing import costs. A rise of between 8 and 10 per cent is expected on clothing, while petrol will rise an estimated 4 or 5 pence per litre in the UK before the end of the month.
Importance of Stability
At a time when margins are being squeezed, the importance of supply chain stability is huge.
A survey published by the UK Food and Drink Federation (FDF) showed that 63 per cent of manufacturers are suffering from decreased profit margins. As well as this, 76 per cent a seeing higher ingredient costs too.
With 96 per cent of the UK’s food and drink businesses small or medium-sized, larger organisations need to be aware of the impacts of margins throughout their supply chains.
Some organisations will try to put increasing costs back on to manufacturers, without taking into account the long-term impacts. Any further supply chain disruption on top of what is happening already could potentially drive prices higher again.
While prices rises for consumers are probably inevitable, increasing supply chain efficiencies and demand forecasting can help to limit the damage.
Helen Dickinson, Chief Executive of the British Retailers Consortium, said: “Retailers are firmly on the side of consumers in negotiating with suppliers and improving efficiencies in the supply chain to control the inflationary pressure that is building through the devaluation of the pound.
“However, years of falling shop prices and higher costs have left limited scope for retailers to continue absorbing this pressure. Everyone in the supply chain will need to play their part in maintaining low prices for consumers.”
By building a greater understanding of the costs through the supply chain, retailers and manufacturers can try to overcome a lack of stability collaboratively.
Do you work in procurement in retail or FMCG? What are your experiences of the recent price rises? Let us know below.
Away from the worries of empty shelves, we’ve stocked up on the week’s big procurement and supply chain headlines.
GM in Court Over Price Bargains
A court in Massachusetts will heard a case last Friday, brought against GM by a now bankrupt supplier.
Clark-Cutler-McDermott, alleges GM knowingly led the company into a bad faith deal, and encouraged them to take on more debt.
GM have requested the case be dismissed, arguing CCM is trying to pass the blame for poor management.
The case will help to shed more light on the highly-criticised bargaining practices allegedly happening in GM’s supply chain.
Is your procurement organisation world-class? Improving agility is a key step in this journey, according to new research.
New benchmarking insights from The Hackett Group have revealed that world-class procurement organisations now have 18 per cent lower operating costs than typical companies. They also operate with 28 per cent fewer staff, and generate more than twice the return on investment.
World-beating procurement organisations have shifted to a complete digital experience for their business users, according to The Hackett Group Principal, Sourcing and Procurement Practice Leader Robert Derocher.
“This includes a true move to a paperless environment and the ability to work from anywhere on any device. Companies are implementing new, integrated source-to-settle technology platforms, primarily in the cloud, and adopting new capabilities that enable the agility required by their customers and the marketplace,” says Derocher.
Added to this is a convergence in software advances and wider use of new technologies. Cloud-based infrastructure, and virtual business and technology networks make up the first parallel. The second comes from rapidly transitioning user bases that are increasingly adept with new mobile technologies and business models.
The research found that world-class organisations spend 23 per cent more on technology per person. The investment yields real productivity gains, including 71 per cent lower cost per order than typical companies.
Reallocate resources from transactional focus to value adding
A high level of automation also allows staff to devote more time to talent development and business performance-related activities. Digitally-enabled processes reduce errors, and make information easier to access, freeing procurement staff for higher-value work.
In addition to operating with dramatically fewer staff, leading organisations also allocate their people very differently. They dedicate a significantly larger percentage of the overall staff to sourcing, supply base strategy and planning/strategic roles.
They also have a much smaller percentage of people focused on operations and compliance management.
Top organisations spend 13 per cent more on outsourcing than typical companies.
They selectively outsource in areas such as procurement system support, supplier help desks and market intelligence to tap into greater expertise, augment knowledge, and leverage the capacity and capability of third-party providers.
This helps to increase agility by providing resources that can scale to demand and frees up procurement to focus on anticipating and responding to critical business needs.
Leverage analytics-based decision making
Increased investment in cloud-based infrastructure and applications is creating tremendous new opportunities for procurement organisations to apply digital technologies to transform service delivery.
Increasingly, this becomes the platform for delivering a whole new class of services, such as information and predictive analytics to guide decisions.
According to the report, the hallmarks of information-centric world-class procurement organisations are:
Having a sophisticated information/data architecture that makes effective data analysis possible;
Planning and analysis capability that is dynamic and information driven;
Performance measurement that is aligned with the business.
World-class procurement organisations also invest a greater proportion on systems and tools to enable analytics capability.
Adopt a stakeholder/customer-centric service design and delivery
The customer must be the focal point of all key activities and functions within procurement. With this approach, services are designed based on users’ wants and needs, rather than forcing them to change their behaviour to accommodate procurement’s internal processes.
World-class organisations are service-oriented and customer-focused in their approaches to procurement delivery. They design services and processes from the customer perspective or outside in rather than from the inside out.
According to the report, two mainstays of a formal service delivery model are global business services/shared services units and centres of excellence (COEs).
Overall, 39 per cent of all procurement organisations have some form of COE in place today.
Re-skill the procurement function
The report recommends the following steps to enhance the skills sets of procurement staff:
Invest in Talent Development
Hire or train procurement staff with the skills and business acumen required to meet the business needs of senior executives. Recruit staff from key business units in your company, and have them mentor and coach other business partners who have come up through the procurement ranks.
Increase your Team’s Business Acumen
Assign staff to cross-functional teams to provide exposure to different parts of the organisation’s operations. Make sure that having an understanding of business fundamentals is a requirement when hiring new staff.
Build Analytics Skills
Create a dedicated analytics group to fully leverage skills and tools across all areas of procurement.
Create a talent retention plan
World-class procurement organisations are nearly twice as likely to have talent retention planning in place, and see turnover rates that are more than 50 per cent lower than typical companies.
You can download your copy of The Hackett Group’s research here.
The Hackett Group is an intellectual property-based strategic consultancy and leading enterprise benchmarking and best practices implementation firm to global companies.
The Hackett Group also provides dedicated expertise in business strategy, operations, finance, human capital management, strategic sourcing, procurement, and information technology.
Could integrated procurement operations help break down silos and instil good practices? Isn’t it time to find out?
At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.
From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.
Success is Integrated Procurement
Anna del Mar, Director at Future Purchasing, believes that procurement doesn’t need to be separate to the rest of the business. She believes the function can be integrated into the business, instilling the culture of good procurement across the organisation.
Anna goes on to say that by up-skilling everyone in the business to be great procurement people, it will help to increase collaboration in the business. This can also take away the silo mentality, and allow procurement to act as a guide along the way.
There’s a step change coming in the procurement technology and software industry. And communication and relationships will be the central pillars of it, says this Millennial.
There is step-change coming in procurement, and the change is going to be keenly felt in the procurement technology and software industry. But for this change to take effect, it needs support on both sides of the aisle – buyer and supplier.
Simona Pop, Head of Partnerships & Global Communication at InstaSupply, is not your typical procurement professional.
She’s one of a new breed of professionals involved in procurement and supply chain, who believes change is on the horizon, and that it can’t come soon enough.
A tattooed Millennial, with a stake (both monetary and emotional) in the company she works for, Simona presents a refreshing view on buyer and supplier relationship management, and believes in creating emotional connections with clients.
Not only that, but she also walks the walk when it comes to leveraging social media in business.
Procurious caught up with Simona, and chatted to her about her career, her approach to social media, and why she believes we shouldn’t have to leave the real-time efficiencies of our personal lives at the office door.
Tell us a bit about yourself – how did you get to where you are today?
It has to be said, my career trajectory isn’t what you might call straightforward. I got out of school thinking I was going to be in advertising. Then I moved to the UK and started working with Brakes, the food supplier, in a sales role. I then went 180 from that path and started working in events.
Finally, I started working with InstaSupply as Head of Partnerships and Communication. One thing lead to another really, and in the end, it makes a lot of sense.
I love communication and building relationships. That’s what makes the world go round, as far as I’m concerned. My communications background is ultimately the driving force behind my take on business.
You’ve recently won your place at Virgin Disruptors – congratulations!
Yes, I am very excited about it. It was all about presenting my vision on what industry needs disrupting and how I would do it. I went straight to the core and illustrated how ALL business needs disrupting.
You can see my video below. It’s all about changing procurement and finance. They are the engine of each and every business so they need to be as well oiled as possible.
What role did social media play in the award?
As with every bit of communication I put out there, this was also a social affair. I got to chatting with Virgin via Twitter and found out about this opportunity. As everything in social media moved pretty fast, I only had a couple of days to script and create the video in order to stick to deadlines. I then uploaded it on YouTube and shared it via Twitter again.
I am a true believer in the power of social and its ability to not only bring us information in real time but also challenge us to become more creative and innovative. It’s why I am so happy to be part of the Virgin Disruptors community as a technology company.
So many procurement technology implementations fail – why do you think this is?
It comes down to how people interact with the technology and the company providing that technology. Is there a match there in terms of values? Or is it more about ticking a box and signing a three year contract so you don’t have to worry about it?
So many businesses will go for old technology just because someone else in their industry has used it before. Even if it’s not a great fit for them and their staff, they will implement it anyway just to tick that “tech” box and consider it done.
More often than not, businesses pay the price tag of an Aston Martin, and end up using it like a second hand Ford. The fact that back office operations, procurement and finance technology involve so many different roles and levels of seniority, makes it paramount that the interface and functionality appeals to all age groups.
There shouldn’t be a difference between the way we interact with brands in our personal lives, and brands that we see at work.
What are the key changes you think need to be made? Can we make procurement/B2B software more like B2C counterparts?
The way I see it, every business relationship is a partnership – it’s not a case of sell and move on. As a tech supplier, you are going to be working closely with your client, as they will interact with your product every single day.
You want to allow them to work smarter, be more efficient and ultimately make their lives easier. You need to provide top notch tech, but also real time support. There’s no place for a helpline that keeps people on hold for hours, or an email they get a response to in three months. That would be unacceptable in B2C nowadays!
There needs to be a shake-up. We need to remove the jargon, the boring pages of bland text, the hieroglyphic appendices, and the contracts that tie you into five years, whether you like it or not.
Software providers want partners, not prisoners. We are here to simplify buyer-supplier relationships, and make life easier for everyone involved in running a business, regardless of role and seniority. Ultimately we want to support them in growing their business, and having a better quality of work.
After all, why should we leave all the efficiencies of B2C, our personal life, at the door, when we get to work?
Not everything in life can be taught. Why is attitude more important than aptitude…(and almost everything else).
David Hearn is the Chief Advisor at CPO Advisement Services, specialising in effective change management and the successful implementation of eProcurement tools.
With 20+ years leading direct and indirect sourcing and procurement groups under his belt, David has some great advice to offer regarding the importance of building good relations, retaining millennials with challenging roles and what defines the procurement talent gap.
David keenly asserts that the attitude of his employees is of the utmost importance. Only with a good attitude, good relationship building skills and effective collaboration can you build a successful career. Everything else can be taught.
1.What were your first 3 jobs?
My first job was as an engineer for General Motors where I was responsible for sourcing parts.
I moved on to the telecommunications company, AT&T. As a system consultant here I developed skills in selling, influence and relationship building.
My third job was at Sun Microsystems as global sourcing manager. Whilst here, I honed skills gained from my first two jobs and learnt more about business partnership.
2.What’s one thing you know now, that you wish you’d known at the start of your career?
I wish I’d understood the importance of building relationships with the people you work with, internal and external. Good working relationships enable you to accomplish so much more, faster.
3.How can CPOs attract and retain millennials?
There are a number of ways to retain the enthusiasm of millennials in the workplace. Don’t given them boring, stereotypical procurement roles. Instead, craft new roles which allow them to learn on the job whilst delivering tangible results that they can be proud of.
Millennials want to contribute to the common good so it’s a good idea to find projects for them which have a positive impact on the world.
Finally, it’s a smart move to rotate millennials through multiple roles quickly. Keep them learning, motivated and challenged.
4.Does the procurement talent gap exist? Or is it just as perception problem?
The only gaps are in soft skills such as relationship building, influence and collaboration. These skills are necessary in order to be a success as a trusted business partner.
5.What’s more important for your hires – attitude or aptitude?
Attitude – 100 per cent. Anything else can be taught but you can’t teach attitude.
6. What key skills are critical for procurement in the next 5 years?
The Procurious Career Boot Camp will increase your stamina, get you in the best career shape of your life and help you stand out from the crowd.
It’s not too late to sign up. Enlist here and get access to our 15 free podcasts from some of the best career coaches around. Don’t miss out – your career will thank you for it!
An introductory overview of the role and relevance of KPIs to support Supplier Relationship Management (SRM).
In this three-part article, we discuss some of the different KPIs that are used specifically for SRM. This list is by no means exhaustive; it can’t be, as performance indicators must be relevant to your own organisation, customers, and requirements. However, this list can be used as a guide and can become an essential part of your toolkit.
We’ll also review some of the popular ways people measure and monitor KPIs through systems and reports. Again, this won’t be an exhaustive list because of cultural and technical requirements unique to every organisation.
You’ll also find some key tips for implementing KPIs successfully, including a checklist (more tools for your toolkit!).
We will explore how dashboards can be a fantastic tool for procurement professionals to use when communicating to stakeholders and promote hard-won benefits to the business. An effective dashboard will include KPIs that demonstrate how suppliers or categories are being managed and their impact on the business. Remember, the KPIs you set may influence senior management decisions. Therefore, you need to get it right.
Why bother with KPIs?
To get started, let’s talk about why we use KPIs.
As procurement professionals, we’re responsible for making smart purchasing decisions that support the values and principles of procurement, such as probity and value for money. These decisions must also support the philosophy and strategy of individual organisations. Importantly, we need to be able to justify and document how (and why) we’re spending money.
KPIs can help us justify spend. In fact, KPIs can be used to identify risk, cost savings, innovation opportunities and successes, value-for-money initiatives, customer satisfaction and any number of other factors that we or our customers feel is important.
The role of a supplier KPI is vast. They set the performance standard and have measurable features used to identify areas of improvement, such as establishing a baseline, identifying where you want to be and developing a path to get there. But it doesn’t stop there – KPIs can also be connected to payment milestones, credit payment and liquidated damages.
The important point to remember is that supplier KPIs must be agreed upon by all parties involved. If your supplier doesn’t know what is expected of them, they won’t be able to comply, let alone excel. That’s just one side of the relationship.
The other side of the relationship involves the professionals within the buying organisation. How do you, the procurement professional, know which KPIs to use? Are cost savings important? Delivery times? ISO standing? Inventory reduction? You won’t know unless you ask your customers about their requirements.
So, why are KPIs important?
What gets measured gets done. KPIs are a way of ensuring your supplier focuses on your fundamental business needs. We can do this through:
Incorporating our customers’ requirements into the KPIs to align supplier performance with organisational goals.
Providing constructive feedback (rather than punitive criticism). Why? Because the end goal is a win-win situation where you get what you and your customers need, while the supplier gets to improve its reputation and build its business.
Promoting a continuous feedback loop using KPIs to drive supplier performance, initiative and improvement. KPIs should be linked to the terms of the contract but remember, the focus is on the relationship. Indicators should therefore reflect the “spirit” of the contract as much as the “letter”.
Bringing clarity to overly generic contract requirements to drive meaningful performance.
Challenges in KPI management
Here are some common challenges that we’ve seen through our own experience:
Capturing the data – identifying the relevant data and accurately acquiring the data points.
SRM fatigue – motivating yourself, your team and your suppliers to continue SRM activities over the life of the contract, which can be months or even years. Activities can easily become stale and sometimes you’ll need to push them along.
Comparing and contrasting suppliers – supplier performance will be very different depending on their size, sector and region. Ensure you’re comparing apples with apples.
Engaging end-users is important
When driving supplier performance over long-term contracts, we want to keep things moving so end-users don’t feel that nothing is happening. Keep end-users in the loop, ensure their voices are heard and let them know how things are progressing.
We often focus on senior management as our primary “customer”, but the end-user is arguably more important – especially when it comes to compliance. After all, they’re the ones who will use the product, system or tool that is being purchased.
Stay tuned for Part 2 of this series, which will explore the different types of KPIs, complete with a KPI checklist and contract-level KPI reports.
Traditional supplier relationships are under scrutiny as organisations assess capabilities for the future. Could process automation help procurement teams stay ahead of the curve?
ProcureCon Europe 2016 is rapidly approaching! The ProcureCon team has been investigating some of the fast-moving issues which are affecting CPOs across Europe today.
Perhaps more than any other factor in the industry right now, process automation and advanced analytics are having a huge effect on the ability of Procurement teams to deliver improved cost performance.
This changing landscape calls into question traditional supplier relationships. Of the CPOs and Heads of Procurement we interviewed in advance of the event, 76 per cent told us that they are concerned about the ability of their existing supplier base to serve their business needs in future.
At the same time, more than half of our research participants think that implementing automated procurement is a high priority for their business. This raises questions about how best to manage your supplier network to make sure that you’re ahead of the curve when it comes to process automation.
We spoke to Kelly Babbit from jCatalog and the Opus Capita Group to find out more.
ProcureCon: How is digitisation and process automation affecting CPOs today?
Kelly Babbit: In the digitised, networked economy, companies find themselves in a changed competitive field. The game is no longer primarily based on unique business relationships.
The success of a corporation is premised on the performance of its network of supply chains – its entire business ecosystem. Corporations are looking to strengthen relationships, and create new forms of collaboration – and gain control and compliance over their extended business processes.
It is significant that more than half of respondents to this research gave high priority to the implementation of automated procurement processes. Furthermore, we expect a future adjustment to the demand drivers and criteria used for selecting P2P service providers.
This trend is due to a far-reaching shift in business priorities toward digitisation and automation.
What kind of processes are we talking about?
Progressive solutions cover the complete process from sourcing to payment – from managing the first request for quotations (RFQ) to optimised working capital management and supplier settlement.
This is where the traditional view of P2P processes needs to be expanded. Enterprises will no longer evaluate the quality of solutions with a sole focus on basic procurement functions. Solutions need to be part of a global strategy and based on pivotal interconnections between buyers and suppliers.
As a result, the responsibilities of the CPO and CFO functions will begin to converge. Cloud based SaaS solution providers will need to support this interconnection with a global perspective and inclusion of diverse company stakeholders.
Connecting and automating processes from sourcing through to payment will become the expectation of leading companies.
What features should CPOs / CFOs be looking out for in a source-to-pay solution?
Cloud-based business network solutions must support effective sourcing, procurement, invoice, and payment automation. This includes implementation and adoption across their global business. Some of the key features to look out for are:
Complete transparency, real time control and compliance with full audit trails across the entire source to pay process.
P2P automation and integration of the purchasing department with the accounts payables department. Plus full visibility to all purchasing and accounts payment data.
Visibility to company spend with total cost monitoring and supplier performance tracking as well as contract improved contract compliance.
Thanks very much for your time, Kelly.
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