Listen to Nick Walden, Senior Advisor – The Hackett Group, talk Change Management.
Nick’s Big Idea revolves around having the courage to change, and he offers four basic steps for making that happen.
Listen to Nick Walden, Senior Advisor – The Hackett Group, talk Change Management.
Nick’s Big Idea revolves around having the courage to change, and he offers four basic steps for making that happen.
By Kay Ree Lee, The Hackett Group
Stop paying lip-service to your internal customers: Here are five things Procurement organisations should start doing now to meet and exceed internal customer requirements.
“Procurement needs to be more proactive versus the Business initiating projects”
“Procurement needs to be an integral part of the team”
“Consult the Business before implementing any process improvement”
“Procurement needs to issue the POs in a timely manner. Waiting 3 days on a PO is unacceptable”
These are some comments we’ve recently heard when conducting a Stakeholder Survey (Voice of the Customer) as part of a broader Procurement benchmark for different clients. We often hear that Procurement is focused on meeting and exceeding customer requirements, but benchmarks from Hackett’s Procurement database shows otherwise.
The chart below shares that 30 per cent of Non-World-Class (Non-WC) organisations rated Procurement as an Administrator while only 15 per cent of Non-WC organisations rated Procurement as a Valued Business Partner. So, if this is the stakeholder’s perception of the Procurement organisation, what are some things you can do quickly to change this perception?
What is the Current role of Procurement in supporting business success in your area?
Other than changes to the organisation structure, there are five things that we believe Procurement can quickly do to improve internal customer perception and exceed internal customer requirements:
1. All Procurement resources should be customer focused and empowered
We often hear the comment that perception is reality – unfortunately, there is some truth in this. As Procurement resources are typically focused on assisting end-users with different processes in Procurement, all Procurement individuals (whether they are internal client-facing or not) should be customer focused which means being helpful in problem solving and troubleshooting, being proactive, being a good listener, and feeling empowered to fix processes that are broken.
The term ‘fit-for-purpose’ or ‘fit-for-risk’ comes to mind when addressing broken processes. As Procurement works to address issues identified by its internal customers, it should determine whether the process is adequate or overkill for what the internal customer is trying to accomplish based on the value and appropriate risk appetite of the organisation.
2. Dedicate specific Procurement resources to Help Desk activities
Procurement activities are a complex string of processes. As such, we should expect our internal customers to have plenty of questions related to the process, status of transactions, etc. Dedicating specific Procurement resources to answer questions from internal customers is one of many ways Procurement can help address and resolve questions in a timely fashion. However, it is important to note that the more knowledge the Help Desk resources have about the usage of Procurement technology, status of sourcing events, process for sourcing, and a broad understanding of Procurement, the better they will be at being able to provide first-contact resolution.
3. Start conducting monthly training to educate internal customers.
Conducting monthly/ongoing training to internal customers will help provide them with the knowledge and latest information to perform their jobs. Ultimately, this will also help Procurement. There are various types of training that can be provided to include:
During these sessions, it would also be helpful to document the various issues that each of the internal customers faces. By addressing these issues, Procurement will be able to 1) ensure that internal customer requirements are met and 2) improve internal processes.
4. Create a monthly/quarterly newsletter and share recent projects, success stories and upcoming projects
Most of Procurement’s work goes behind the scenes and rarely do we share our success stories for one reason or another. However, creating a monthly/quarterly newsletter will help provide our Internal Customers with additional information on how the Procurement organisation is able to assist, help identify new projects and bring to light creative ideas from previous projects. In addition, it is also a way of demonstrating value that Procurement organisations bring along with some shameless self-promotion.
5. Create an internal website
While the monthly newsletter is focused on sharing the latest news, an internal website is another way of allowing our Internal Customers to perform self-service. There are various reasons to create an internal website including:
As a member of the Procurement organisation, our role is to help support internal customers by listening, understanding, meeting and exceeding their expectations. Being front and center to our internal customers is important. Hopefully, these 5 activities can quickly help your Procurement organisation change your internal customers’ perception.
“But sometimes I worry that large portions of the procurement profession are uncontacted…”
Watch our fifth Big Ideas Summit keynote (part 1 of 3)
Watch Tania’s keynote in FULL here
Tania Seary, founder of Procurious, started off with an statistic that there are 27 indigenous tribes in the Amazon region that are entirely disconnected from the rest of the world, comparing that to the often isolated procurement profession.
Tania looked at the impact of social media on the profession, and how it can help to create the community for procurement to allow us to work together, solve problems and ultimately create value for businesses. One of these platforms is Procurious.
Hear David Noble, Group CEO – CIPS, talking about licensing the procurement profession.
David’s Big Idea is actually something that CIPS has come up with as a policy statement.
Dr David Hames, Executive Chairman – Science Warehouse, is tapping spend data analytics and the eMarketplace.
Growth in the area has been driven by B2C – and as a result we’re seeing a huge digital revolution. However the technology is only driven by the data behind it, and this is what lies behind the good Dr’s idea…
Jan Godsell on keeping Britain at the heart of global manufacturing with the help of supply chain companies.
Jan Godsell, Professor of Operations and Supply Chain, WMG at University of Warwick, has provided Procurious with her thoughts on the importance of Britain needing to have a greater understanding of its supply chains across industry.
Jan says: “Today, many supply chains are misunderstood, neglected but brimming with potential, much to the detriment of the UK’s entire industrial base. Big opportunities that could set the UK on the path to becoming an important hub for international supply chains are currently being ignored.”
As evidence continues to mount that production is increasingly being re-shored back to the UK, certain questions spring to mind: Does Britain have the right logistical and communication structures in place to support a new wave of manufacturing activity? Are supply chains integrated and streamlined enough for smaller companies to operate leanly and efficiently? What are the restrictions on the supply side and how can they be broken down? And, what are the opportunities in the UK and abroad if businesses develop their supply chain capacity to reach their full potential?
Professor Jan Godsell covered these key issues during the Crimson & Co’s annual supply chain academy on 27 April, which is dedicated to sharing worldwide best practice across the end-to-end supply chain. Jan also noted her insights on the issues affecting global supply chains in the recent APMG Term Paper.
“The supply chain has been de-scoped to focus primarily on procurement and supply management. In today’s globalised world, such a narrow perspective can be damaging to the UK industry. It’s about recognising global demand and configuring the right global supply chains to meet this demand effectively (meeting the customer requirements in terms of cost, quality, time and increasingly environmental and social sustainability). Failure to do so will see the UK become increasingly marginalised with no recognised role or expertise to contribute to the global supply chain network. The good news is that it’s not too late for the UK.”
Godsell explains that with the aftershock of the global financial crisis still reverberating and traditional models being challenged by the internet, the time is right to revisit the role that the UK plays in global supply networks. Whether this be local supply to meet the demands of the UK market, regional supply for the European market or global supply for the world. To capitalise on this opportunity and redefine the UK’s role at the heart of the global supply chain network, there are five critical ways in which the UK needs to view supply chain’s differently.
1. Functional to holistic perspective
“The UK needs to return to the origins of the supply chain and view it more holistically. Within a company, this means recognising the full scope of all the operational processes that define the supply chain. The core processes are Planning, Procurement, Manufacturing, Logistics and Return (which covers reverse logistics, repair, remanufacture and recycling). These processes are used to understand customer demand and translate it into effective and efficient supply.
2. Manufacturing to planning centric
“If the UK wishes to maximise the role that it plays within a global supply chain network, it needs to consider the different ways in which the UK can contribute to manufacturing. The success of a global supply chain network relies on the correct positioning of the factories, suppliers and warehouses around the globe, to serve different markets. Planning is the “glue” that holds the supply chain together yet it is poorly represented. There is a huge opportunity for the UK to continue to develop a full range of supply chain planning capabilities, and to position the UK as the supply chain planning hub of the world.
3. Re-shoring to right-shoring
“Manufacturing is returning to the UK and one of the main reasons why this is happening is because businesses have started to look at their cost base more holistically and in relation to their competitive priorities. They are no longer fixated with production costs (and labour costs in particular) but are taking a more holistic view of the total cost of sourcing. The challenge for organisations is identifying the most appropriate supply chain network to support their business in order to determine which elements of their production should be made locally, regionally and indeed globally. It’s not about re-shoring but right-shoring. We should enable our businesses to right-shore, as it allows them to understand their strategic priorities and core capabilities, to develop the right global supply chain network and essentially to ensure the success of individual businesses and the UK economy.
4. ‘After thought’ to an integral part of strategy
“UK businesses need to ensure that supply chain strategy is an integral part of their business strategy and find innovative ways to both increase sales today and reduce costs tomorrow. This will require increased presence of those with supply chain expertise at the board level.
5. Specialist function to a pervasive part of our social fabric
“All roles in the supply chain are equal, as a supply chain is only as strong as its weakest link. We need a nation where our boards have good supply chain representation and have congruent strategies to enable competitiveness today whilst building capability for tomorrow, where everyone in the UK understands the importance of our supply chains and the critical role that each and everyone plays in supporting our nation. Together, we have the opportunity to put the UK back at the heart of the network of global supply chains, back at the heart of the global economy.”
Most people have heard of bitcoin as a digital currency, used by individuals and organisations to pay for goods, services and other items online. What you might not have heard of is how bitcoin technology could aid supply chain transparency.
Ethics and sustainability in the supply chain have been talked about at length, with organisations being pushed to ensure that they are operating correctly. However, what is less clear is how organisations can do this to the end of each of their supply chains, for all their products.
And this, according to a number of thought leaders, is where bitcoin technology can play a role.
What are ‘bitcoins’ and ‘blockchains’?
For those of you who are unsure what bitcoins are, it is an online payment system supported by open source software, described as the first decentralised digital currency. For more detail, there are a number of good videos available, like this one.
Supported by open source technology, bitcoin is not owned or operated by one individual or organisation. It is free to use (apart from an optional transaction fee) and can reduce the costs of transactions for merchants compared to credit cards.
The technology behind it is referred to as ‘blockchain’. The blockchain records all the transactions in a publicly available ledger. The ledger keeps track of what users are spending, provides authentication and keeps track of where the currency is.
Applicability in Supply Chains
There are two key ways in which the blockchain technology can be applied in a supply chain. First, the same technology could be used to track products and inventory through a supply chain, confirming receipts and automatically releasing payments to suppliers. This could help to trace items across a decentralised network.
The technology could also help to reduce transaction fees for organisations in their supply chains, as well as speed up payment, with a transaction normally processed within an hour, compared to the usual two to three days.
The second aspect is to aid transparency within supply chains. Blockchains can be adapted to keep track of what is going into a product, who has handled it, ultimately revealing publicly the full supply chain.
Using an app or website, an individual could stand in a shop holding a piece of clothing and be able to trace it all the way back to the farm that supplied the cotton. The information could be used to highlight working practices on the farm, use of pesticides, Fairtrade considerations and more, leading to far greater transparency.
Tracing the supply chain through the use of a ‘product passport’, showing the change of ownership of items through the supply chain and highlighting each step in the process. This would help to facilitate an understanding of the transactions from end to end.
The immediate challenge for this is being able to supply the information that would support a supply chain blockchain. The highly complex nature of organisational supply chains and the large number of suppliers mean that, although this technology could be used to increase transparency, there would be considerable work required in advance of opening this up.
This is a challenge that can also be seen as a call to action for the procurement and supply chain profession. Gordon Donovan, Principle Consultant for The Faculty, talks about creating a ‘supplier wiki’ to build the knowledge of the entire supply chain.
By getting the profession involved to fill in the whole picture, a database could be created, allowing the support for the supply chain blockchain. This could be the future, but procurement needs to be involved to ensure that the right information is made available.
If you have any thoughts on the creation of the supplier wiki, or how we could kick this off, please get in touch. We’d love to hear your thoughts!
In the meantime, here are some of the key procurement and supply chain headlines this week.
Corruption in African Procurement
Read more at Supply Management
Hi-tech Firms ‘Right-Shoring’ Supply Chains
Read more at TT News
British Manufacturing Rises in May
Read more at Reuters
Amazon Starts Hiring Push in US
Read more at Supply Chain Digital
Dapo Ajayi, Chief Procurement Officer – AstraZeneca, believes more must be invested in the capability of people in procurement for the future.
Dapo wants us all to build a culture of training and education.
At Procurement Leaders World Procurement Congress 15 Shelley Stewart, CPO – DuPont, talked about the challenges of embedding sustainability into procurement processes.
Why care about sustainability at all? That was the question posed by Shelley’s thought-provoking opening, before making the observation that although different places in the world feel differently about sustainability – ultimately it is an issue that affects all supply chains.
As evidenced by the following statement, sustainability is already hard-baked into DuPont and reflected in its core values: “DuPont is a science company. We work collaboratively to find sustainable, innovative, market-driven solutions to solve some of the world’s biggest challenges, making lives better, safer, and healthier for people everywhere.”
But while it’s nice to be sustainable, is there a real business value, after-all how do you quantify the value of sustainability?
Shelley points out that sustainability provides your business with mitigation strategies to risks in your supply chain. If we’re not doing much for sustainability then it creates a risk in itself.
Shelley says that at DuPont there was a sharp focus on saving targets, and conversely sustainability was in the distant background. Crucially, there was no one in the business for the CSO to call in the procurement organisation to talk to about supplier sustainability. In DuPont’s case they didn’t have a unified approach.
Happily this has since changed and you only need look as far as the company’s EHS programming slogan which once read ‘the goal is zero’ – and now ‘committed to zero’ for evidence of this fact. Shelley notes that DuPont has also appointed a single person to a centralised position to manage sustainability.
What lessons has DuPont learnt?
First you must learn what sustainability really means for you (in the context of your supply chain). However you must appreciate that the answer may be different for each one of your supply chains.
It’s also important to take onboard external perspectives – you will benefit greatly from peer to peer learning.
Specifically in DuPont’s case it was important to remind people that the work wasn’t being started from scratch. There was a foundation to build on, no matter how tentative that may have been.
It’s imperative that you create a unified approach and save yourself a lot of extra work by doing something ten different ways. At the same time “one size doesn’t fit all” – you’ll need to adopt a certain amount of flexibility to be able to understand changes in your supply chains.
Of course you might find that your supply chain and your suppliers are already ahead you in the sustainability stakes. Why not use their learnings to better realise your own initiatives? It is important to stress that sustainability is a mindset, not a checklist – we must encourage people to think differently if we are going to succeed.
What Procurement can learn from CPA Australia
According to Murray Chenery, Executive Marketing Manager, Brand, CPA Australia, procurement professionals cannot afford to ignore their business’ brand.
Speaking at the 8th Asia-Pacific CPO Forum, Chenery who for 12 years was marketing director of Target, one of the country’s most recognisable brands, guiding the retailer through the process of Coles Group selling to Wesfarmers, detailed that ignoring a business’ brand affects a company’s ability to do business.
Chenery highlighted that managing a business’ brand can help grow an organisation into a global player and detailed that this process has a direct effect on recruitment pipelines. Bad decisions in procurement can deal enormous damage to a companies’ brand, meaning brand risk needs to be constantly top-of-mind for every decision made.
It’s no accident that CPA Australia is a brand powerhouse. Under Chenery’s guidance, the accounting body has followed a clearly defined roadmap to success. Chenery highlighted the most important points of what he called “building brand DNA”: know your core business, protect it, nurture it and resource it. Define the brand by understanding your purpose, points of difference, your organisation’s personality and the customer promise.
Chenery stressed the importance of brand differentiation and the value of putting time into finding, understanding and amplifying what makes you stand out from your competitors. Importantly, your competitive advantage must be sustainable to establish and maintain your edge. CPA also places a big focus on customer centricity with an enviable growth market in young professionals between 24 and 32 years of age. His advice on “being where your customers are” to connect with this generation is 100 per cent relevant for the procurement profession and its ongoing challenge of securing the talent bank of future business leaders. Chenery also shared some valuable advice on the need to avoid internal-gazing, the importance of creativity and the immense opportunities for Australian businesses to push into the Asian market, where CPA Australia currently boasts 40,000 members.
To close his speech, Chenery gave the audience his top ten tips for good procurement practice. He’s not a CPO, but his background as a risk-averse brand expert makes his advice valuable and extremely relevant to the assembled procurement professionals.
The 9th Asia-Pacific CPO Forum will be held in May 2016. To ensure you receive an invitation, register your interest in attending here ([email protected])