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To Make A Difference CPOs Must Have The X Factor

Ahead of the upcoming CIPS Australia event, Procurious caught up with Dr. Karen Morley, one of the event’s distinguished presenters. Karen has extensive experience working with organisations, teams and individuals to increase their leadership effectiveness.

Over her career Karen has led a broad range of leadership development, succession and talent management assignments. She emphasises evidence-based approaches tailored to suit the organisation/firm’s context.

Today Karen is talking about what makes great procurement leaders and how to successfully move technical procurement experts into managerial positions.

Procurious asks: At the upcoming CIPS Australia conference you will be discussing a piece of research you produced for The Faculty that looks to distinguish the very best CPOs from the rest. What would you say are the traits that separate the great CPO’s from good CPOs?

Karen: That’s right, I will be presenting the findings of our X Factor research. The report addresses the importance of great leaders in the procurement function.

To answer your question, I would say the two things that make the great CPOs stand out from the rest are their interpersonal leadership attributes and the way they go about linking these relationships to the commercial direction of the organisation.

It is clear that the really outstanding CPOs nail commercial leadership. This stems from the fact that they possess an in-depth understanding of the whole business, not just procurement. They are engaged across the entire organisation and are speaking to other functional leaders on a strategic level. They are engaging with the board and CEO on what has greatest strategic value, and they interpret this through their procurement initiatives.

Once that strategic dialogue has been established, the next critical step is to ensure these messages are reaching staff further down the chain. It’s here that interpersonal skills become critical. Great CPOs have very close relationships with the people that report into them. They are able to align the goals and expectations of the business to activities of their staff.

Procurious: Can you provide any insight into what difference these ‘great CPOs’ can make for their organisation?

A lot of organisations are still focused solely on cost cutting. It’s a vital part of what procurement teams do and this will certainly continue to be the case. I think the difference that really great CPOs make is around moving discussions and activities to a more strategic level. They are not simply focusing on what can be cut out, but where savings can be made and value added at the same time.

I think that’s a pretty rare mindset. A lot of procurement leaders talk about value, but only a few can actually deliver it.

The costs cutting initiatives will always be there. It’s something that you can do successfully for a couple of years and come up with some impressive saving numbers. But, the challenge comes in finding what’s next. Once you’ve delivered those initial savings, then what are you going to do? The great CPOs realise they need to understand the business broadly and create close relationships across functions to see where procurement can best add value.

Which Of These Sixteen Personality Types Are You?

Which of these sixteen personality types fits you best?

Isabel Briggs Myers created the sixteen personality types with the help of her mother, Katharine Briggs, and the theories of psychologist Carl Jung. Since then, much research has been done into how each type functions at work, at home, and in relationships.

A recent post in the Harvard Business Review pours salt on the Myers-Briggs Type Indicator (or MBTI for short), saying:

“Myers Briggs—and I would argue any personality assessment—is neither valid nor reliable. These tests identify a black and white version of people, a reduction of who they really are. They offer us the illusion of understanding at the cost of truth and freedom. Sure, they may make people more comfortable (‘Oh, I understand you now’). But it’s a trick.

It continues: “Self-assessments, by definition, reinforce a person’s self-image. You tell the assessment what you think you are like and then the assessment tells you what you are like. Which, of course, would incline you to think they’re valid. But they’re just telling you what you told them… Personality tests reinforce our blind spots.”

Not to be downhearted back in July we asked the Procurious community whether they thought there was a ‘typical’ Myers Briggs profile for procurement pros. There’s been 33 answers to-date, so it’s clearly a talking-point among members.

We’ve helpfully wrapped-up the results thus far (25/08)

ENTP 9, ENTJ 6, INTJ 5, ENFP 2, ISTP 2, ENFJ 1, ESTJ 1, INFP 2, INFJ 2, INTP 1, ISFJ 1, ISTJ 1

It appears the most common trait is ENTP and from 33 responders E is included in 19 out of 33 profiles.

Things to consider

Mike is just one of many who has asked an interesting question on the findings. He wants to know:

“Do you think you have a different profile depending on the role your fulfilling in the company? I run a consulting business and recently created a new commercial model for procurement, so maybe its no surprise I am currently a ENTP but I haven’t always been one.”

A few of you have picked-up on the changing classification too. Monica Palacios said: “I agree with the idea that we evolve with our roles. I took it at the beginning of my career ENTJ; some years before I found it was ENTP.”

Glen Lovett: “I’m an INTJ but given the changing face of procurement I would suggest that ‘E’ is becoming more valuable.”

Chris Roe notes: “We seem well represented for a type that makes up 3 per cent of the population in this sample…
I guess making decisions based on logic and facts rather than emotion is a desired trait!”

Judging by your individual test results there just may be some common traits among procurement professionals after all. Matt Cockfield exclaims: “Wow, what a great question. I’m not sure I ever thought of connecting the two — MBTI with the procurement discipline. Apparently, there is a correlation here!”

Do you see value in such tests, or are you like Iain Wicking who claims they’re just “a superficial way of assigning traits… I would not take it too seriously.”

Automation Can Unlock Savings In Accounts Payable

Research shows Accounts Payable Automation is a top trend when it comes to improving the procure-to-Pay cycle.

With enterprises realising the continued inefficiency of mostly manual, paper-based Accounts Payable (AP) processes, new research provides insight to the top trends for improving the procure-to-pay cycle.

According to “Total Transformation: Trends and Value Drivers for AP and Procurement,” written by Ardent Partners, top performing AP functions are indeed driving greater process efficiencies and delivering strategic value to the enterprise. Leading the way is the continued focus on AP automation. 83 per cent of respondents to Ardent’s survey believe that within two years, AP processes will be largely automated.

“Ardent Partners research has shown that automation is a critical element for enterprises seeking to drive value across their procure-to-pay processes,” said Andrew Bartolini, Chief Research Officer. “When P2P processes are linked and automated, procurement and AP groups can operate on a platform that promotes collaboration, visibility, and efficiency.”

Ardent found that following AP automation, stronger AP and procurement partnerships, evolving AP staff skillsets, and greater involvement in working capital optimisation are the top trends for greater efficiency. The research suggests that organisations of all sizes must leverage the strategies and technologies that can jointly transform AP and procurement, leading to significant competitive advantages.

“While many organisations are realising the benefits of AP automation, that is just one part of the equation,” said Jim Wright, Vice President of Sales at Corcentric. “This important research suggests that a more holistic approach and breaking down silos between procurement and AP is what will ultimately drive down costs and inefficiencies.”

4 Key Collaboration Takeaways That Will Make Your Job Easier

One of the key topics at the Big Ideas Summit 2015 was the concept of innovation in procurement and the supply chain. Many organisations look for innovative solutions from suppliers, but how easy are these to come by? And are suppliers rewarded for this?

Saying that innovation is a key pillar for an organisation, and actually being able to successfully embed an innovation strategy, are two very different things. Supplier innovation can be tricky to nail down and many procurement departments are not looking in the right areas.

How it can work

For some organisations, it’s about working with the right suppliers. Craig Muhlhauser, CEO of Celestica, spoke at the Procurement Leaders ‘Ovation’ event in July, and spoke about how he brings about innovations for his organisation and for the companies they supply to.

According to Muhlhauser, both organisations need to be open to change in ways of working and ask questions in order to understand the other party’s point of view. Where procurement is concerned, Muhlhauser believes that the profession needs to be less prescriptive to suppliers, leave specifications more open and use the expertise of the supplier to uncover innovation.

This collaborative working relationship has successfully borne fruit across a number of industries. In the automotive industry, Brose, a German-based supplier, worked closely with its customers to produce a new door unit, way ahead of its rivals in terms of quality and innovation.

The key for Brose had been procurement on two sides – their customer, but also internally in order to allow them to build collaboration and trust with their own suppliers to make innovation a reality. Supplier collaboration has also helped to improve supply chain sustainability in the NHS in the UK and led to GAP Inc. being named the winner of the GT Nexus Innovation Award 2015.

Both positive examples have highlighted the work of procurement in supporting the innovation.

Why it fails

Failure to generate innovation, or sustain innovation in the supply chain can come down to a number of factors, although it would be hard to pinpoint one in particular as a key culprit.

A common issue can be with one or both parties not fully engaging in the process. In the Brose example, one supplier involved had to make a financial commitment before a production contract was signed. Payments like this are certainly not common, but here help to build the commitment and trust between the two parties.

Strategy is another common issue. Where strategy is too rigid, or where the strategy is simply pointing to procurement savings, innovation will suffer as the parties in question have approached it with the wrong mind-set. Where innovation is seen as a step to future learning and opportunity, research has shown that it is more likely to endure.

The other side to the strategy argument is that often procurement functions do not formalise the innovation process. Formal programmes are often reliant on senior stakeholder buy-in, something that procurement may struggle with if they lack credibility in the organisation.

Just Reward

While formal programmes and investment can help to drive innovation, it’s worth remembering that rewards or incentives for innovation will help the process. In some cases, procurement has been tasked with saving money, so spending more to achieve innovation is not rewarded.

Suppliers who feel like they will be supported and rewarded are more likely to go the extra mile and suggest innovation to procurement. Building incentivisation into contracts can help to formalise the relationship and underline the support on both sides.

The Real Question

“Is procurement open to innovation?”

That’s the real question. There are good examples of innovation in procurement and supply chains, but plenty more where there is inactivity or hesitance. Have we as procurement professionals been painted into a corner, where savings and the bottom line are the only things that are considered?

We better hope not, or, as Craig Muhlhauser argued, it’s adapt or cease to exist.

Have you got any good examples of innovation in your procurement department or supply chain? How do you encourage it? Let us know on Procurious!

Here are some other stories that are vying for our attention this week:

FTSE edges towards 6,000 after China shock

  • The FTSE 100 was down 2.9 per cent in the first minutes of trading this morning, after stocks in China closed more than eight per cent lower. The market was at 6,014 points, its lowest this year. If it falls below 6,000, it would be the first time it has fallen that low since the end of 2012.
  • The selloff came after a chaotic day of trading on Friday, when weaker than expected manufacturing data caused European markets to plummet. The FTSE closed 2.8 per cent lower, while the S&P 500 crashed below 2,000 points for the first time since February this year.
  • Meanwhile the Vix volatility index, also known as the “fear index”, spiked 16 per cent to 22.2 points. The Chicago Board Option Exchange Volatility Index is thought to be a gauge of investors’ nerves.
  • Markets had spent the past few days falling steadily, as investors worried the Chinese central bank would stop its support of the stock markets.

Read more on City A.M.

Hills chief defends close links with Woolworths’ Masters hardware chain

  • The new chief executive of battling Hills Ltd has defended an outsourcing deal for the company’s iconic Hills hoist clotheslines and garden products that means a large chunk of the range is sold through Woolworths’ ailing Masters hardware chain.
  • Grant Logan, who took over as chief executive of Hills from Ted Pretty in May 2015, says Hills shareholders will need to be patient as the company marks its 70th anniversary because it will take time to restore profits across the company to an acceptable level after major upheaval and transformation, which have resulted in the Hills share price tumbling to a record low.
  • Mr Logan also admitted that the integration of some of the businesses that Hills bought over the past couple of years had been handled poorly and exacerbated problems as the company transformed from an old-world manufacturer to one focused on security systems, communications and health services. “We moved too quickly and as a result, we wobbled our supply chain,” Mr Logan said on Monday.
  • Heavy write-downs foreshadowed on August 7 triggered a slide to a bottom-line loss of $86 million for 2014-15. This compared with a net profit after tax of $24.8 million a year ago.

Read more at The Sydney Morning Herald

Gap to test ‘Fast Fashion’ model in select stores

  • The San Francisco-based apparel retailer said it plans to test small batches of product in its Gap stores this spring and then quickly buy more if the goods are selling.
  • Popularised by fast-fashion chains like H&M, the model allows retailers to jump on trends and quickly adapt to changing shopper behaviour. The strategy has underpinned a turnaround at Gap’s Old Navy unit, which has posted a string of sales gains. This spring will mark the first time the retailer is using it at its namesake division, where sales have slumped. Gap Chief Executive Art Peck said on a conference call that the company was trying to build this capability as quickly as it can.
  • In addition to sourcing goods faster, Gap has hired new executives and closed underperforming stores. Profit fell to $219 million for the three months to Aug. 1, from $332 million a year ago, partly because of charges related to the Gap brand overhaul. The company said it expects to record $130 million to $140 million in restructuring charges for the year, including for the store closures.

Read more at The Wall Street Journal

 

GCC airport construction 2015-19 to grow by 8 per cent

  • The GCC’s airport construction market will grow at a compound annual growth rate (CAGR) of 7.86 per cent between 2014 and 2019, a report has found. TechNavio’s report, Airport Construction Market in the GCC Countries 2015-2019, states that airports offer numerous economic benefits to the region.
  • “GCC countries are well-known worldwide for the infrastructural achievements” provided by airports, such as job creation, tourism, and the facilitation of imports and exports.
  • “The oil-rich countries, in their efforts toward economic diversification, are investing heavily in transport infrastructure, such as roads, railroads, and airports,” the report continues.
  • Additionally, international events such as World Expo 2020 in Dubai, Qatar National Vision 2030, and 2022 FIFA World Cup in Qatar, “considered as brand-building events by the respective nations, have necessitated massive airport construction activity in these countries”, the report adds.

Read more at Arabian Supply Chain

NHS competition could waste millions says Labour, after Care UK complaints

  • Labour has warned that the NHS could be forced to spend millions on competition lawyers after the UK’s biggest private healthcare provider demanded an immediate investigation into a decision to award an elective care contract to a local health trust.
  • Care UK has been branded a bad loser after lodging a complaint with the NHS watchdog Monitor over the management of a contract by commissioners in north London.
  • Monitor has now begun an investigation into the decision by four GP-led clinical commissioning groups (CCGs) to award a contract to the Barking, Havering and Redbridge University Hospitals NHS Trust. The trust said it was extremely disappointed by the investigation and warned that it would delay the opening of a care centre.
  • Andrew Gwynne, the shadow health minister, said the new competition rules could force the NHS to waste millions on competition lawyers.

Read more at The Guardian

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.

What’s In A Name?

If you want to become the top dog you had better change your name to Andrew…

What's in a name? Andrew comes top for UK bosses

As the ONS announces its annual list of most popular baby names for 2015, research from workwear manufacturer Stormline has revealed that when it comes to Britain’s bosses, there’s little variety and originality, as an homogenise collection of traditionally-named boys take up their seats in the UK’s board rooms for another day in the office.

The research shows that there are more men called Andrew than there are women running the UK’s top firms.

There’s a definite lack of diversity at the top, with the following seven names – Andrew or Andy, James, John, Peter, Ian, Mark or Marc or Richard  – representing 32 per cent of all UK bosses at top firms.

Just 6 per cent of Britain’s biggest 100 firms are women with bosses called Alison (Cooper, Imperial Tobacco), Melissa (Potter, Clarks Shoes), Lindsey (Pownall, Samworth Brothers) Theresa (T.J Morris), Anna (Stewart, Laing O’Rourke) and Veronique (Laury, Kingfisher PLC) representing female CEOs.

If you’ve got your eyes on running one of Britain’s biggest companies, it might help if you’ve got a traditional Hebrew (John, Ian) Greek (Andrew, Peter) or Latin (James, Mark) name. Your odds will also increase to better than 9/1 if you are a man.

Of the names on display in the 100 top board rooms around the UK, more than half (53 per cent) were one-offs; ranging from a Merlin, Jebb, Nicandro, Zameer and Pascal to Ralph, Jason, Nigel, Norman and Bob.

Men called Andrew currently bossing it in the UK’s biggest firms 

Andrew Witty – CEO, GlaxoSmithKline
Andy Hornby – Chief Executive, Gala Coral Group
Andy Harrison – CEO, Whitbread
Andy Parker – Chief Executive Capita
Andy Street – Managing Director John Lewis
Andy Long – CEO of Pentland Group (the Chairman is Andy Rubin)
Andrew Goodsell – CEO, Acromas Holdings (Saga Group & The AA)
Andrew Mackenzie – CEO, BHP Billiton 

Zameer (Choudrey, boss of Bestway Group), Jebb (Kitchen, boss of Bibby Line), Merlin (Bingham Swire, boss of Swire Group) and Nicandro (Durante, boss of British American Tobacco) make up the pick of most original boy’s names.

And although this survey is skewed towards the UK market, we’d be interested to learn what the name game is like elsewhere in the world. Can this oddity be repeated in your country?

National Coalition for Public Procurement formed in the US

A coalition for public procurement has been formed in the US.

Volunteers from three of the largest U.S. procurement programs for public agencies, educational institutions and nonprofit organisations have joined together to establish The National Coalition for Public Procurement (NCPP)

The NCPP will serve to drive best practices in public cooperative procurement, focusing on transparency, competition, integrity, auditability and process.

Marc Selvitelli (who will serve as NCPP’s Executive Director) said: “NCPP was founded on the belief that uniting customers and potential customers with national and regional purchasing organisations will ensure the most ethical and best business practices.”

NCPP’s founding organisations include the National Intergovernmental Purchasing Alliance Company, the National Joint Powers Alliance and The Cooperative Purchasing Network.

In addition to regular interactions with public procurement practitioners and contract purchasing organisations, NCPP will provide an independent forum for members to collectively address cooperative contract procurement concerns. Members also will have the opportunity to participate in advocacy issues with a united voice, and they will have access to a variety of resources to advance best practices in public procurement.

“A major factor in selecting SmithBucklin was its expertise in starting and managing a new organisation,” said Todd Abner, NCPP Chairman. “Additionally, SmithBucklin has substantial experience in managing associations that are active in procurement and supply chain.”

“It is a privilege to help launch NCPP,” said Matt Sanderson, Executive Vice President & Chief Executive, Business + Trade Industry Practice. “We look forward to helping establish NCPP as a powerful voice in advocating excellence in public procurement.”

How Can We Better Manage Compliance Across The Supply Chain?

New research states that half of global firms have faced supplier non-compliance challenges.

2014 was a year marred by risk… Whether we’re talking about plentiful product recalls, compliance and environmental issues, or devastating data security breaches – it seemed supplier compliance management was never far from the spotlight.

Today, companies are increasingly being held responsible for the actions of their suppliers, thus breaking the long-held tradition of the buyer turning a blind eye. Ultimately the blame and consequences of the actions lay at the gates of both parties – forcing buyer and supplier to tackle tricky compliance issues head-on.

At the same time supply chains are growing larger, heightening both the impact and odds of non-compliance incidents. As a result companies, customers, NGOs, and regulators are rapidly stepping up their efforts to manage and monitor compliance across their suppliers. The expectation for companies to develop comprehensive supplier compliance policies,  along with regular audits and inspections to evaluate supplier compliance is a heavy cross to bear…

In order to gauge the challenges presented MetricStream conducted an in-depth survey that looked into the ways organisations across industries are managing, measuring, and monitoring supplier compliance. Respondents were made up of 100 supplier compliance and governance professionals from various industries.

The survey found…

The survey contains seven main areas of concern. We’ve highlighted some of key the findings below.

Non-compliance issues around management systems and documentation are widespread

The most common area of non-compliance was around management systems and documentation (59.5 per cent). This highlights non-compliance with a company’s internal documentation such as product specifications and quality policies; or, absence of systems and processes at the supplier’s end to ensure compliance with external regulations.

The other dominant area of supplier non-compliance pertains to Environment, Health, and Safety (EHS) standards (29 per cent). In the last few years, some of the world’s most reputed brands have been criticised after their suppliers were found to be violating environmental norms, or running factories that were unsafe and exploitative.  Companies will need to find ways to strengthen supplier compliance with EHS standards, keep pace with new regulations and guidelines in the field, and resolve or mitigate compliance issues before they occur.

Local laws are often overlooked

Only 43 per cent of respondents focus on local laws while drafting supplier policies. This could be a cause for concern, especially since local laws vary from one region to the next. For instance, the minimum age for employment in China is different from that in the US. If companies overlook these differences when drafting supplier compliance policies, they could face regulatory penalties.

Compliance information is only gathered when potential suppliers are being evaluated

Most of the respondents indicated that their organisations gather supplier compliance information either when evaluating a potential supplier (50 per cent), or while onboarding a supplier (26 per cent). Only 19 per cent of organisations gather supplier compliance information when adding a new product or service to the supplier’s portfolio.

To read the full findings you can download the report from here.