Category Archives: Career Management

Talk Less, Ask More

Procurement leaders must create more opportunities to be open with the levels of the organisation below them and consistently request feedback… Talk less and ask more! “When you’re the CEO of a large organisation – or even a small one – your greatest responsibility is to recognise whether it requires a major change in direction. Indeed, no bold new course of action can be launched without your say-so. Yet your power and privilege leave you insulated – perhaps more than anyone else in the company – from information that might challenge your assumptions and allow you to perceive a looming threat or opportunity. Ironically, to do what your exalted position demands, you must in some way escape your exalted position.” – excerpt from Bursting the CEO Bubble, Hal Gregersen. Harvard Business Review, March – April 2017.

This passage stuck a chord with me and I couldn’t agree more wholeheartedly.

The majority of feedback given in organisations tends to flow in a downward direction; people in higher levels of an organisation are giving feedback to people in lower levels. People may be asked to provide feedback in the opposite direction – back to their superiors – but it is rarely given freely and without careful consideration.

I believe many people don’t give feedback to their superiors out of an instinct of fear. That is not to say they are scared of their managers, but more that there is a sense of uncertainly around how their feedback will be taken and any resulting consequences. The safer option tends to be to bite one’s tongue and keep quiet.

The impact of this behaviour is that people, or groups of people, can feel stressed or excluded, and ultimately become disengaged.

I also believe that many leaders don’t ask for feedback from lower levels of their organisation because their information “feeds” are so broad in our modern era.

CEOs have so many sources of information to consult and deal with that they are spending more and more of their time in a scanning mode rather than a deep analysis mode. Consequently, as their decision-making time is continually reduced they have to use their bias to make quicker decisions.

Important decisions in any organisation deserve careful consideration. Bias tends to work as an opposing force to this process. As the excerpt above suggests, and that I strongly agree with, our leaders  must expand on their process of discovery. They must create more opportunity to be open with the levels of the organisation below them and consistently request feedback, particularly on their own performance. Not only will staff feel listened to and more engaged, but also this process will invite alternative perspectives – alternative ideas, alternative ways of thinking, and alternative cultural outlooks.

It is this diversity of thought – the diversity of their entire organisation – that should be informing our leaders’ decision making process.

This article, by Tom Verghese,  was originally published on Cultural Synergies. 

Procure with Purpose – Join the movement

Procurious have partnered with SAP Ariba to create a global online group – Procure with Purpose.

Through Procure with Purpose, we’re shining a light on the biggest issues – from Modern Slavery; to Minority Owned Business; and from Diversity and Inclusion; to Environmental Sustainability.

Enrol here to join the Procure with Purpose group and gain instant access to our exclusive online events, including the Don’t Go Chasing Unicorns webinar, which, in part, explores the importance of diversity of thought in procurement teams. 

Critical Factors When Selecting Your Suppliers

Procurement exists in a dynamic, fast-paced, constantly changing environment. So surely the reasons we use to select our suppliers and supply partners would change over time too? Wouldn’t they?

It’s been over three years since the Procurious network was canvassed on what critical factors they look for in their suppliers. The world has moved on a-pace in the intervening period and it’s interesting to take an inward look to see if procurement has developed at the same pace, particularly in its supplier selection processes.

Gone are the days of the cheapest price (or at least they should be!). Gone, and consigned to a very dark part of history, are the days where supply decisions were made over lunch or in private meetings, and related more to who you knew than what you knew, which golf course or members’ club you were part of. Or even (sharp intake of breath) what you might be offering the buyers in return.

Even the list below, the key factors highlighted last time out, may have been superseded. So what are the new criteria? Or, if they are still the same, why is this the case?

Cost and Quality vs. Social Value and #MeToo?

If we take a look back at the responses from the network in 2015, we find ourselves looking at a list with a number of the usual suspects on it:

  • Cultural Fit – including values
  • Cost – covering price, Total Cost of Opportunity/Ownership
  • Value – value for money and value generation opportunities
  • Experience in the market and current references
  • Flexibility
  • Response to change – in orders and products
  • Quality – covering products and service quality and quality history

In addition to this, some that didn’t make the top 7 as it was included trust and professionalism, strategic process alignment and technical ability. There’s nothing that looks out of place on the list. In fact, they’re all eminently sensible and fair criteria to be considering.

The problem is it that it reflects a very traditional view of procurement.

Given the changing environment that procurement operates in, wouldn’t we expect to see these criteria changing too? In the past couple of years, geo-political instability has dominated the landscape and shows no sign of disappearing soon with Brexit and a potential trade war between USA and the rest of the world just two examples.

But what about the other factors we need to be considering? Social value has jumped to the top of many organisations’ lists, increasing work with SMEs and Social Enterprises. And let’s not forget an increased focus on harassment, discrimination and equal opportunities following #MeToo and campaigns like Procurious’ own ‘Bravo’.

What Does the Network Say?

When asked their opinions on what the critical factors were, the Procurious network highlighted the following:

  • Previous Safety Performance
  • Service Delivery
  • Efficiencies
  • Cultural Fit
  • Price/Cost
  • Flexibility
  • Ethics
  • Quality and Consistency
  • Supply Chain
  • Financial Stability
  • Environmental Policies
  • Communication

I’ve highlighted in bold the criteria that appear in the previous list that also appear in the new one. As you might expect, they are the common criteria that procurement are known for, and may be expected to deliver as standard.

It doesn’t appear that other factors in line with Sustainability, Social Value and Equal Opportunities (to name but a few) are getting much of a look in. However, we’d need a much bigger sample to be sure. And that’s where the wider knowledge base comes in.

Procurement’s Response

Having a trawl through the latest articles on supplier selection and key criteria two things struck me. One, there were very few articles, blogs, thought leadership posts or even research papers from the past couple of years. The most recent one I found was from early 2017 and even using a broad range of search terms, it was difficult to find anything relevant.

The second, and perhaps most surprising/concerning, thing was how few mentioned any different criteria for suppliers. Only one article I could find mentioned Social Responsibility or Environmental Performance/Sustainability. The remainder still focused on the criteria commonly found in a Commercial or Technical/Quality evaluation. The most common criteria still were:

  • Years in business and financial stability
  • Price/Cost
  • Quality and Delivery
  • Reliability
  • Communication
  • Cultural Match

What does this say about procurement? Is the profession still falling back on the old favourites when it comes to supplier selection? Or could it be that traditional “thought leadership” is no longer leading the way, and organisations are working differently without shouting it from the rooftops?

For me, it’s a combination of all of the above. There’s no denying that it’s hard to separate procurement from cost and quality (after all, it’s what we’re there to do). And why wouldn’t professionals use criteria that are both reliable and easy to measure, particularly when time and resources are tight?

Getting our Message Across

Speaking from experience, however, there are areas in which overall value is much more prevalent. In the Scottish public sector, organisations are mandating Community Benefits for contracts above a certain value. These can cover everything from creating apprenticeships to financially supporting community projects.

In addition, Local Authorities have started to mandate evaluation of ‘Fair Work Practices’ in all procurement exercises. Again, this can cover a multitude of elements, such as paying the living wage, no zero-hour contracts, equal opportunities and good training and development. Suppliers are being forced to consider these criteria to the benefit of their employees and the wider society.

There is good work going on in procurement, but maybe we aren’t making the most of communicating our message to the wider market. And if communication is one of the key factors in supplier selection and subsequent relationship management, it’s high time the profession started telling suppliers what is important to us and seeing what they have to offer.

6 Ways To Prevent A Negotiation Blow Up

There’s no denying that negotiations can be tough. And the best thing you can do to lessen the tension and prevent a negotiation blow up is to be prepared…

Palms are sweaty, knees weak, arms are heavy…

No, it’s not the start of an Eminem song… (well, it is, but that’s not what we’re getting at!)

You’re preparing for a big negotiation with a group of key suppliers and you’re already anticipating a disastrous outcome.

Perhaps you already know the people you’re dealing with are difficult to work with, or you’ve heard about their reputation.

Or maybe you know your own negotiation skills leave a lot to be desired when it comes to crisis management.

Whatever the reason, there’s no denying that negotiations can be tough. And the best thing you can do to lessen the tension and prevent a negotiation blow up is to be prepared.

We joined a recent Negotiation Roundtable organized by CABL (Conti Advanced Business Learning), a firm that specialises in Negotiation & Influencing, on the topic of Emotions and Negotiation. We wanted to hear advice from a number of procurement and sales leaders on how to keep your negotiations sweet.

Giuseppe Conti, the founder of CABL, led the conversation by discussing how emotions can influence decision making during negotiations and the ways to increase effectiveness when this factor is taken into account.

  1. Practice mindfulness

If you enter into your negotiation like a coiled spring, chances are the spring won’t stay coiled for long. The calmer you are the calmer you’re likely to remain for the duration of the meeting.

Olga Guerous, VP Commercial – Mars,  recalled a confrontation she experienced early on in her career. A particularly difficult supplier, who’s emotions were “all over the place” became so angry that he was forced to “leave the room midway through a negotiation and remained in the corridor for fifteen minutes in order to calm down.

“He came back and apologised but the situation wasn’t redeemable and he didn’t get what he wanted. Losing his temper made him lose any power and control he had in the negotiation. Having full control of your emotions is a key benefit in negotiations.”

Paul André, Director Reduced Risk Commercial Supply – JTI agreed, recommending, low breathing and mindfulness to help create a barrier to your emotions.

  1. Practice what you’re going to say

If you’re nervous or apprehensive about an impending negotiation, there’s nothing wrong with rehearsing in advance, to ensure you come across as intended.

Regina Roos, VP &  Sales Segment Leader Mineral and Mining – Schneider Electric,  said: “In the morning in front of the mirror I smile and practice some conversations, particularly ones that help you respond to people that are angry.

“When you are talking you can’t see yourself.  When you look in the mirror you can practice your facial expressions so it is not ironic or sarcastic. I call it ‘the mascara moment’.”

Francesco Lucchetta, Director EMEAI Supply – Pentair, agreed asserting the ” importance of making people aware of emotions without showing them, making an effort to keep the exchange respectful and controlled”

  1. Be physically prepared

Regina Roos recalled working with a procurement leader who took a very unique approach to managing his negotiations. At the beginning of every meeting and regularly throughout he would direct participants to the bathrooms.

“The need to take a break, to go to the toilet can create problems and impact on emotions during a negotiation. It’s good to take a minute, recharge your batteries and re-enter the discussion with a fresh perspective.”

Olga Guerous agreed in the importance of taking regular breaks throughout the negotiation process, even if it’s simply a break in the current conversation.  “It’s a powerful technique, when emotions are running high, to completely deviate from that topic, particularly if you believe you are going to have minimal success. Switch to a less contentious discussion and return to the difficult point later, whether it’s in a few minutes or a few hours.”

  1. Prepare to be confident

Preparation before a negotiation is crucial to help regulate emotions because it gives you the confidence to calmly assert your position and communicate your key points.

Ifti Ahmed, Managing Partner – Titanium Partners, argued that the most important way to control emotions is through self-confidence. “Confidence comes from preparation. If you’re prepared – you’re confident. If you think you’re going to win – you’re confident. If you think you’re going to lose – that’s when the emotions come into it.

If it helps you, don’t be ashamed of preparing everything you have to say in writing and sticking to that script.

  1. Plan your stand-up routine

There’s nothing like a touch of light humour to diffuse an escalating argument. Alessandra Silvano, Global Category Director CAPEX & MRO – Carlsberg, explained that his favourite way to blow out tension during negotiations is to crack a joke.

“Of course it has to be tactful, considered and culturally appropriate but it can be a useful and powerful way to break the tension.  Be sure you are not offending anyone and perhaps keep it exclusively to jokes about yourself!”

  1. Pick your venue wisely

Location-choice can make or break the success of your negotiation. If you want to ensure all participants remain civil, calm and professional there’s nothing like a neutral or public space to guarantee best behaviour.

“I’m a very emotional person and I find it difficult to process,” said Alessandra. “The venue of the negotiation has a big impact for me. I try to pick a relaxing, informal setting, such as a dinner. In an office environment it’s easy to get angry. In a nice restaurant I’m more relaxed and it’s easier to joke around and control emotions.”

Is Procurement Full Of Psychopaths?

If one in five procurement managers are psychopaths, how should you manage them?

A recent study of senior managers found that one in five procurement managers are psychopaths.  No, this doesn’t mean they are likely to wear clown makeup and brandish a chain-saw.  But it does mean the organisations which employ them need to exercise caution if they value their reputation.

The study, published in 2016, was conducted by Simon Croom, a professor of supply chain management at the University of San Diego in collaboration with two researchers from Bond University on the Gold Coast. It consisted of a global survey of 261 supply chain managers working in industries with an average price negotiation budget in the range of US$50 million.

The survey was based on a questionnaire widely used to identify psychopathic personalities.  If found that 55 (about 21%) of the procurement managers surveyed had clinically significant ratings in traits which would classify them as psychopaths.  That’s about the same levels as similar surveys produce in prison populations.

Largely thanks to Hollywood, most of us think of a psychopath as a violent serial killer. And while some of them probably are, there is a much more dangerous version that we are more likely to encounter every day in the workplace. You might call them bullies, or micromanagers, or narcissists, or sociopaths.  I don’t feel particularly charitable towards them, so I go with psychopath.

They all share a common set of personality characteristics.  They can be among the most charming people you’ll ever meet.  They are also fearless and focused.  So far so good, but then it gets tricky.  They take big risks on impulse, feel absolutely no remorse, are callous, lazy, have a very high opinion of themselves, will always take credit for good outcomes and blame others for bad outcomes.

Psychopaths are drawn to careers that give them power over others, so jobs towards the top of an organization are inherently attractive to them.  And they will find those jobs easier to get because they are extrabodily good at telling employers exactly what they want to hear and will happily lie about everything including their experience and education.

If you want a go-getter procurement manager who could charm a dog off a meat wagon, then you might be wondering what the downside is.  A psychopath will shoot first and won’t even bother to ask questions later.  They are completely amoral, will lie and cheat compulsively and will leave nothing on the table. They are deal-makers. You might even be thinking these characteristics make psychopaths fantastic assets in the cut and thrust world of supply chain management.  Given that, the surprising thing about this study is not that 20 per cent of procurement managers are psychopaths, it’s that 80 per cent aren’t.

A psychopath may well be fearless but they will only look after themselves. Yes, they will face down a mugger but they will not protect you against that danger unless there is something in it for them. Yes, they will charge into battle but military units depend on every soldier being able to trust the man beside them. You cannot trust a psychopath to act in your best interests, only their own. They won’t be taking a bullet for anyone, no matter how fearless they are.

And this applies just as strongly to your corporate reputation.  A psychopath does not care how your company is perceived in the market unless it directly affects the deal he has on the table today.  They will not plan strategically and they are motivated by nothing but self-interest.  If he behaves dishonestly and trashes your reputation then that is your problem, not his.  If you are in an industry where you will only ever do one deal with any other counter-party and none of them ever speak to each other, then I guess you could get away with employing psychopathic procurement managers.

But reputation matters.  Yes, you could be the fisherman that takes every fish out of the sea, but if you want to be able to do that next year, you’d better leave a few behind.  There is always short term gain to be had from counter-parties in a weaker position, but if you let a psychopath exploit that party because they can, your reputation will be mud and you will miss out on the longer term gains that fair dealing and honesty can deliver.

If your procurement manager is in the 20%, then for the sake of your own long-term welfare, make sure you have strong systems in place to ensure they act fairly and honestly or you will ultimately be paying the price.

David Gillespie is a guest speaker at the Big Ideas Summit in Sydney on Tuesday 30th October 2018, where he’ll help delegates understand how to deal with toxic people in the workplace. Interested in attending? Register here: http://www.bigideassummit.com/big-ideas-sydney

Blockchain: The Technology, the Myth, the… Legend?

We’re told Blockchain is a huge game changer, that it’s the biggest innovation since the internet. But we’re also told it’s overhyped, it’s no big deal and that it has some serious limitations. So…what’s the truth? “Depending on who you ask, blockchains are either the most important technological innovation since the internet or a solution looking for a problem.” These are the opening words to a recent Wired article, entitled: The Guide to Blockchain.

And they certainly resonate with procurement professionals across the globe.

We’re told Blockchain is a huge game changer, that it’s the biggest innovation since the internet; it’s unhackable, it’s pervasive, it’s unparalleled and ultimately…it’s coming to the mainstream imminently.

But on the other hand, we’re told that Blockchain is overhyped, it’s no big deal, it has some serious limitations and, whilst it might be a pretty cool piece of technology, it’s certainly not the procurement disruptor that it’s hailed to be…

It’s no surprise that when it comes to Blockchain procurement pros don’t know who to believe when to expect its takeover or how to prepare.

So we’ve enlisted the help of some blockchain experts to give you the truth, the whole truth and nothing but the truth.

On 7th August,  Procurious presents: Blockchain: The Technology, the Myth, the… Legend?

Blockchain: The Technology, the Myth, the… Legend?

We’ll be discussing: 

  • How will Blockchain impact procurement?
  • What are some of the most common misconceptions about Blockchain?
  • How is Blockchain commonly being used in businesses today?
  • How can blockchain help procurement pros to manage their organisation’s contingent labour force?
  • What are the flaws at the heart of blockchain? Is it over-hyped?

Webinar Speakers

Vishnu P Tadepalli, Global Program Manager – Procurement Blockchain Lead – IBM Procurement Services
Vishnu is a highly motivated design thinker and is a digital procurement / supply chain enthusiast. In his current role Vishnu Tadepalli is the Global Program Manager / Lead for procurement blockchain solutions at IBM Procurement Services (IPS) , program managing the blockchain procurement transformation for both IBM global procurement and its procurement services clients. In his earlier role at IBM , Vishnu product managed Procurement Cognitive solutions and earlier worked as a sourcing consultant for multiple Fortune 200 companies. In addition to IBM, Vishnu worked with Unilever , AGCO and Suzuki Motor corporation in supply chain transformation and category manager roles.  His experience spans end to end global supply chain, including both direct and indirect procurement.
Vishnu has an MBA in Strategy & Supply chain from Uni of Wisconsin, Madison and is currently pursuing second Master’s in  Artificial Intelligence. He is a member of Government Blockchain Association(GBA) and Council of Supply Chain Management Professionals (CSCMP).  An active Linkedlner, Vishnu likes to spend his free time social volunteering and mentoring.
Linkedln : linkedin.com/in/vishnutadepalli
Twitter Handle : @vishnu65886588 

Paul Sidhu, Blockchain Practice Lead – IBM

Paul is a senior leader with over 25 years experience delivering business transformation in large and complex business environments. A natural strategy and innovation practitioner, Paul works with business leaders to articulate the benefits of process optimisation, digital transformation and new operating models that impact upon their business and to present them with options and strategic recommendations in a way they both understand and feel passionately about.

Paul leads the IBM Global Business Services Blockchain Practice in Australia. His cross-industry background and working with clients in multi-discipline business functions enables a deep understanding for the needs of diverse stakeholders and the ability to solve business challenges by incorporating new solution offerings built with Blockchain.

Jack Shaw,  Co-Founder and Executive Director of the American Blockchain Council

Jack  is a leading expert on the strategic business implications of Blockchain technology who has spoken and consulted on Blockchain around the world.

He is a world renowned Keynote Speaker. He was recently voted one of the World’s Top 25 Professional Speakers by over 27,000 meetings planners, executives and conference attendees – the only Technology speaker to be accorded this recognition.

Jack has been a Technology Futurist for over 30 years – helping others to understand the impact of emerging technologies. In addition to Blockchain, he is widely recognised for his expertise in such breakthrough business technologies as:

  •   Artificial Intelligence,
  •   Internet of Things, and
  •   3D PrintingHe has advised such Fortune 500 Companies GE, Coca Cola, Johnson & Johnson, IBM, Oracle, and SAP as well as hundreds of small to mid-sized businesses.A charismatic speaker, he’s delivered more than 1000 keynote speeches and executive presentations in 23 countries and every U.S. state. Jack graduated from Yale with a degree in Business Administration and has an MBA from Kellogg in Finance and Marketing.

AmericanBlockchainCouncil.org 

How do I register for the webinar?

Registering for our webinar couldn’t be easier (and, of course, it’s FREE!)

Click here to enter your details and confirm your attendance. We’ll send you a confirmation email with a link to the webinar platform and a handy reminder one hour before we go live!

I’m already a member of Procurious, do I still need to register?

Yes! If you are already a member of Procurious you must still register to access the webinar via this platform. We’ll send you a confirmation email with a link to the webinar platform and a handy reminder one hour before we go live!

When is it taking place?

The webinar will take place at 9am EDT/ 2PM BST on 7th August 2018

Help! I can’t make it to the live-stream

No problem! If you can’t make the live-stream you can catch up whenever it suits you. We’ll be making it available on Procurious soon after the event (and will be sure to send you a link) so you can listen at your leisure!

Can I ask a question?

If you’re listening live, our speakers would love to hear your questions and we’d love for you to pick their brains . Questions can be submitted throughout the live stream via the webinar platform.

If you think of a brilliant question after the event, feel free to submit your question via the Discussion Board on Procurious and we’ll do our very best to ensure it gets answered for you.

Blockchain: The Technology, the Myth, the… Legend? goes live on 7th August at 9am EDT/ 2pm BST. Sign up here.  

How To Answer The “Tell Me About Yourself” Interview Question

Five tips from the experts on how to answer a commonly-used and deceptively simple interview question.

Image: Photographee.eu/Shutterstock.com

Remember the “Bridge of Death” scene from Monty Python and the Quest for the Holy Grail? King Arthur and his brave knights must answer three questions posed by the keeper of the bridge in order to pass safely. If they get them wrong, they’re cast into the Gorge of Eternal Peril.

Sir Galahad answers the first two questions with ease, but is tripped up by the simplicity of the third:

KEEPER: Stop! What is your name?

GALAHAD: Sir Galahad of Camelot.

KEEPER: What is your quest?

GALAHAD: I seek the Grail.

KEEPER: What is your favourite colour?

GALAHAD: Blue. No, yellow! — Auuuuuuuugh! [Galahad falls to his death].

‘Tell me about yourself’ is a question posed by nearly every interviewer, yet data from Google reveals it is a question that a vast amount of people struggle with: on average over 33,000 people in the UK search online each month for answers or guidance on answering the question.

With this in mind, sales recruitment agency, Aaron Wallis, has collated a series of hints and tips for getting the most out of the common interview question and performing to your best ability.

1. Be prepared

As ‘tell me about yourself’ is such a common interview question, there’s nothing silly about writing down your answer and saying it in front of the mirror, or practicing your answer with someone you know. Whilst it can be good to have a rehearsed answer, it’s also worth bearing in mind that you don’t want to sound like you’re reciting it from memory. Be prepared to appear confident but natural.

2. Structure your answer

The best answers to the question give a brief overview to you and your experience, without taking too much away from the later stages of the interview.

Begin by outlining your current or most recent role and describing the skills or attributes that you bring or brought to the position, ensuring these will be relevant to the job you’re going for.

Finish up by saying while you’ve enjoyed your work, you’re excited for the fresh challenge this new opportunity brings, and why.

3. Consider what you want to get across

A common pitfall is mentioning too much about yourself that may either cause you to waste time during your interview or lose the natural flow of the conversation. Chances are that your interviewer has already studied your CV, so does not need to be told about every job you’ve ever had, or what your exam results were – even if they were straight As.

4. Avoid the irrelevant or controversial

Similarly, although you might be a cycling fanatic, or a keen cook, this can be totally irrelevant at the start of the opening stage of the interview. In the majority of job interviews, avoid talk of family, pets and politics.

5. Get ready for the following questions

If you’ve introduced yourself well, your interviewer is going to be impressed and keen to delve deeper. He or she will want to explore your experience, strengths and weaknesses further, but will do so under the impression you’re a good fit for the role. Make sure you can back up your initial answer with examples or anecdotes.

So, if you said: “In my current role I have increased sales by broadening our customer base,” just make sure you’re ready to answer follow-up questions later in the interview like: “How much did you increase sales by?”, or “How many extra customers did you bring on board, and how did you find them?”

Often the simple questions can be the ones which are the most unnerving if you haven’t considered what you might say. Generally it can be a good idea to plan out the interview in your head from the very start to the very finish. It’s never a bad thing to be over-prepared!


For a more detailed guide on answering the “tell me about yourself” interview question, please visit: https://www.aaronwallis.co.uk/candidates/advice/answering-tell-me-about-yourself

Understanding The Shape And Cut Of Procurement Organisations

Elaine Porteous clears up some common misconceptions about the ways  procurement  organisations can be structured, and demystifies some of the jargon…

Sergiy Bykhunenko/ Shutterstock

 Starting a new job can be both stressful and exhilarating. The people are different, the location is strange and the way they work is peculiar to that enterprise. There may be a seven-level procurement organisation chart or a loose, undocumented reporting structure to be navigated.  What is also daunting is the “in-speak”, the specific terminology which may be like a foreign language to you.

Let’s clear up some misconceptions about ways that procurement can be organised, and try and demystify some of the jargon.

An operating model is just the way the procurement function is set up to work.  Most companies start up being decentralised, unstructured and even disorganised until the workload grows.  As the functions expand and mature, there needs to be some form of formalising and centralising of the activities to consolidate the spend. Only then can we expect to make savings and reduce our risk exposure.

Centralised or centre-led?

Centralised procurement does have its benefits. It means more control over suppliers and contracts and it helps drive supplier diversity and corporate social responsibility (CSR) initiatives.  The risk is mitigated and skills development is made easier, expanding capabilities.  However, it can become a very bureaucratic and expensive cost centre. Too much data and not enough information can cause loss of focus and poor service to stakeholders.  People at the centre do not always understand regional and local supply markets and consumption patterns.  If “central” means the US and the region is Papua New Guinea, there may be cultural challenges too.   As procurement organizations move on and mature, over time, many of them become centre-led, taking some time to decentralise personnel and day-to-day operations.

Figure 1: The procurement journey

Image:  www.zycus.com

Wherever your organisation is on this curve, it is helpful to know what it means to be where.  There is no one best structure. The way your organisation works is influenced by the external supply market, the end-users needs and the overall company strategy. You just have to ride the wave.

Centre-led procurement organisations concentrate on defining strategy and policy for both their direct and indirect procurement.  Corporate spend can be fully leveraged on strategic commodities and services which are well-suited for centralized sourcing.  Non-strategic categories not suited to centralized sourcing can be handled by the individual business units or regions.

Centre-led procurement uses a category management structure which supports the rollout of sourcing and contracting plans to business unit and regional level.  The type of set-up is often called a hybrid model.

Category management means the bundling of third-party spend into buckets to extract more value.  The main aim behind category management is to aggregate the internal demand and achieve economies of scale by contracting the best suppliers at the lowest price.  In its best form, it involves an active category manager to roll out category plans, strategic sourcing and supplier management initiatives.

In a centre-led organisation, a global category manager would set the strategy for the category group, e.g. transport logistics, and for the sub-categories (also sometimes called commodities) within that group:  road, rail and air transport, freight forwarding, port activities and courier services.  At regional or divisional level, the category plans are followed and executed locally to achieve the best results for the organization.  This is the ideal but it is rarely implemented in full. Some categories are really challenging. Marketing services, technology and professional fees come to mind.

Cross-functional teams (CFTs)

To be effective, a category needs to be managed using one or more cross-functional teams.  A cross-functional team comprises representatives of key divisions and business units that work together, with procurement, to achieve the best results for the organization in that category or commodity. Although extensively used in strategic sourcing, CFTs are being used increasingly and successfully across process improvement, product development, quality assurance and the assessment of suppliers.    

The benefits are well-documented:  a more robust outcome, transfer of skills and learnings, improved internal cooperation and sustainable relationships.

Global organisations that run virtual CFTs have special challenges.  With the application of innovative methods and up-to-date online technology, it is now easier and more effective.

Whatever the operating model or the make-up of the CFT, the satisfaction of stakeholders and end users is paramount.  A stakeholder is anyone that has a vested interest in the outcome of your project or action.  He or she could be any one of these:

  • An internal departmental executives, manager or end-user
  • Another procurement team member
  • A co-opted subject matter expert
  • A supplier or a subcontractor
  • A member of the media or a regulatory body

Stakeholders are capable of influencing the success or failure of a project.

The model is not cast in stone

As a procurement organisation matures, it is likely that executives will revise and adjust a hybrid or centre-led structure so that it stays aligned to corporate objectives and continues to deliver value.  The best model is always the one that delivers results through open lines of two-way communication and uses processes that are flexible enough to take into account regional and cultural differences.

4 Ways To Reduce Maverick Spend

The Hackett Group estimates that maverick spending can cost companies up to 2 per cent of all indirect spending, due to lost savings opportunities and inefficiencies. That amounts to millions of dollars wasted every year.

Dean Drobot/ Shutterstock

Maverick spending, also known more formally as unmanaged spending, is a big problem for most companies. Maverick spending is when employees “buck the system” by going outside of contracts negotiated with preferred suppliers to purchase goods and services on their own, normally paying much higher rates. It occurs most often in areas of indirect spending, which includes large, diverse categories like MRO (maintenance, repairs, and operation), office supplies, professional services, and contract labor, to name a few. This diversity makes maverick spending behavior hard to spot and control. It’s not hard to spot the damage to the bottom line, though.

The ironic thing is that most negotiated supplier contracts are in place for the express purpose of governing tricky indirect spending categories. Yet studies have shown that a large percentage of indirect spending is still non-compliant.

What gives? Why do some employees still go off contract? Here are three eye-opening reasons:

  • Because they can – If there are no controls in place to enforce supplier contracts and negotiated rates, and no penalties for purchasing off-contract, it’s easier for employees to justify bypassing agreements when it suits them.
  • Because they don’t know any better – Especially in large companies, poor visibility is often blamed for maverick spending. If everyone in the buying chain is not aware of the contracts, or worse yet, contracts and catalogs are out-of-date, off-contract spending becomes more likely.
  • Because existing processes take too long – Slow ordering and approval processes are one of the leading causes of maverick spending. If approving a purchase and placing an order takes weeks, employees are going to go right around that process, especially in the case of time sensitive needs.

So how do you stop it? Put plain and simple, maverick spending will not stop until an organization does something about it. There’s a saying that goes, “Make the right way easy, and the wrong way hard.”

Here’s how to reduce maverick spending, so you can get better compliance, and realize some savings from your supplier contracts:

1.Put a system in place for better control

If you haven’t thought about this already, you should strongly consider implementing a purchasing system that automates all of your purchasing, regardless of commodity, approval process, or supplier. Purchasing systems make your entire purchasing process more efficient by governing requisition, approvals, buying, receipt, reconciliation, and reporting. They also serve as a “corral” for maverick spenders, by running all spend through a single platform, and providing only one way to do all purchasing.

2. Provide an intuitive and easy user interface

When putting a system in place, look for a best-in-class solution, known for being easy to use, and place where users can actually find goods or services they most commonly need. Usability and an intuitive shopping experience like consumer e-commerce sites will provide an inviting atmosphere that attracts off-contract purchasers back into the fold.

3. Simplify workflow procedures

World-class purchasing systems can streamline even the most complicated workflow procedures, making it much easier for employees to comply. Cumbersome purchasing processes that used to take weeks can be reduced to days or even hours. Even in cases where complicated ERP or accounting systems are gumming up the works, integration with cloud-based solutions are available to reduce traditional time, cost and resource hurdles and help simplify workflow for employees.

4. Take it seriously

It’s hard to believe, but maverick spenders still sometimes dodge even the easiest and most intuitive systems. The good news is, the spend analytics available in purchase-to-pay systems can tell you exactly where that rogue spend is coming from. Once it’s identified, it becomes much easier for management to enforce spending policies in those areas.

I Have Measured Out My Digital Transformation In Coffee Spoons…

Eager to lead your procurement team through a digital transformation?  We’ve got some advice from someone who knows the score… Grab a coffee and let illycaffè’s Procurement director talk you through the process… 

nazar_photo/ Shutterstock

Digital Transformation.

We assume that everyone is at it behind closed doors.

But how are they doing it? What’s the process? Are they doing a better job than us? Or is everyone simply floundering in the dark? Sometimes, you need the inside scoop from someone who knows the score!

Last month, at Jaggaer’s REVInternational 2018 event in Munich, Diego Pedroli, Procurement and Logistics Director – illycaffè gave us an overview of the organisation’s ongoing digital transformation and how he made it happen.

“What I’ve learnt over these two days” he began, “is that we are actually at the beginning of our [digital transformation] journey, and it’s one that will never end.  But at least we’ve started.”

illycaffè: A Brief History

illycaffè remains a family owned company with 1000+ employees,  100,000+ clients and B2B business in 140 countries.

Founded in Trieste, Italy, illycaffè prides itself on a century of innovation from launching the first high pressure espresso machine in 1935 to introducing the first single portion coffee pod in 1974.

Diego’s mission, as he sees it, is to uphold procurement excellence: continually advancing the procurement processes and supplier cycle management and managing the execution of the multi-year procurement programs.

The organisation’s digital transformation began back in December 2013 and has been evolving ever since.

Digital Transformation: The Beginning

Diego’s ultimate aim with leading illycaffè through this transformation was to streamline their processes organisation-wide, thus transitioning the procurement team from saving-hunters to value-hunters. “We wanted to try to digitalise the processes to add value and bring time for employees to actually look after the business.”

“At first it was all about developing and defining guidelines and procedures, changing the mindset of our people and the people working closely to us. We wanted to give procurement the responsibility to do procurement, not shopping!”

Between 2016 and 2017 Diego worked with illycaffè’s CEO and the board to approve the introduction of an SRM platform. After going through the bidding process and selecting Jaggaer they immediately kick-started the implementation.

Digital Transformation: The End Game

The hardest part of embarking on a digital transformation is often convincing key stakeholders, namely the CEO or CFO, of its necessity and potential value-add. Having a strong case to present and key objectives  is crucial. As Diego explained, “we were able to convince our CEO to implement the SRM system because of these factors:”

  1. Governance and Compliance
  • Allows for traceability of processes
  • Gives procurement professionals complete management of all suppliers, which greatly limits risk
  • Makes it easier to monitor suppliers and improve performance

2. Method

  • Implementation of a culture of shared method
  • Standardisation of procedures makes the business more streamlined
  • Increases the speed of response to internal and external stakeholders
  • Allows for continuous improvement, partly through sharing best practices

3. Transparency

  • Gives procurement greater accessibility and makes information easier to interpret
  • Having data in one place makes it simpler for everyone in the business to work and guarantees ethical practices and ethical processes

4. Economic Return

  • There are obvious economic benefits due to the workflow automation
  • Allows for a reduction of TCO in different purchasing categories

Diego’s parting words of advice? When it comes to digital transformation, “it is not enough to have the sponsorship of your CEO. And it is not enough to have a good tech partner. It’s important to have each and every person in your team on board.”

Learn more about Jaggaer and  REVInternational 2018 

Making the Case for ‘Libertarian’ Procurement

Can we start taking an approach to spend management and compliance that nods to the free will of buyers?  Kelly Barner discusses Libertarian procurement. 

Public sector procurement has always gotten a unique kind of attention. Not only is it the sector of our field most likely to get general media coverage, when it does, it is almost always spectacularly bad news. Trying to regulate procurement may be well-intentioned, but things have a way of going awry when buyer free will is denied.

Here’s a perfect example:

In 2013, the Massachusetts State Lottery Commission awarded a $5 Million contract for advertising services. They required that a portion of the work be sub-contracted out to a minority or woman-owned supplier. All proposals were evaluated on cost and presentation as well as the diversity requirement.

The contract was awarded to a firm that did not earn the highest score for cost or presentation but did commit to sub-contract $12,000 (0.24%) of the work to a woman-owned supplier. As a result, another firm involved in the bid, sued the lottery commission. Not only had they earned the highest score for cost and presentation, they were a certified woman-owned business. Had they been awarded the contract, 100% of the $5 Million would have been awarded to a diversity supplier and the state would have gotten better results for less money. They did not receive the award because they did not submit a plan to subcontract the work, believing their own status covered the intent (if not the letter) of the requirement.

Talk about missing the forest for the trees.

Public sector procurement may take the majority of the heat, but private sector procurement is just as guilty of using rules rather than sound judgement to drive desired results. Onerous governance and harsh mandates can have the opposite effect of what we intend with ‘strategic’ processes such as sourcing and supplier performance management.

Technology and consumer expectations have advanced to the point where we can consider the possibilities of ‘Libertarian’ procurement, an approach to spend management and compliance that nods to the free will of buyers whenever possible, even if it means giving up some of the ‘control’ traditionally associated with spend management. Libertarian procurement might include:

  • Allowing distributed buyers with strategic experience and category expertise to run their own sourcing projects.
  • Evaluating the suitability of a full sourcing project on a case by case basis (I.e. sometimes when a buyer requests to contract with a specific supplier, they have already done their homework and procurement should just support them).
  • Balancing supplier performance metrics with qualitative approaches to recognizing their total value contribution.

Sometimes internal colleagues want to work around procurement’s processes because they find them too slow or frustrating and just plan to push on principle. Other times, they really know what the right path forward is and can’t get started a minute too soon. The challenge is for procurement to tell the difference between the two. Understanding the motivations of stakeholders who want to exercise their free will is what separates spending mischief from spending vision. Procurement should be willing to take a chance when the conditions seem right, allowing vision to thrive even if the occasional mischief slips through.

Combining responsible spending principles with an increased level of trust for internal buyers will create challenges for procurement teams, but it will also create new opportunities and increased ownership on the part of internal stakeholders. Not being open to such change may actually be a risky move for procurement. After all, the more rigid and codified our role is, the more likely we are to be the target of automation initiatives. Any procurement team with their own healthy dose of free will should want to prevent that.