Category Archives: Generation Procurement

Sourcing, But Not As We Know It!

How many procurement pros do you need to manage $1 billion of spend? We examine the stats revealing the state of today’s sourcing landscape…

How many staff does it take to make a success of strategic sourcing?

We might not have a definitive answer to that question, but we do have access to some figures that tell us a lot about the state of the sourcing landscape today.

For instance, we know that companies dedicate 16 full-time employees (FTEs) to the sourcing process for every $1 billion in spend. It’s one of those stats that makes you think. At first glance this might sound ok, right? 16 full-time staff can achieve a lot. But $1 billion represents an incredible amount of procurement.

The fact is, most organisations aren’t maximising the value of their purchasing. Efficiency is being compromised, and in this there are a number of factors at play.

Periodic category reviews, while being the best way to ensure effective sourcing, are just not possible for most organisations with the resources available to them. This means companies aren’t adjusting their sourcing to account for changing market conditions.

Compounding the problem, the bulk of sourcing teams’ time – 50 per cent – is swallowed up by the supplier evaluation and negotiation stages, which in some cases can involve highly complex financial and regulatory work. With so much time spent on this phase, more strategic and potentially value-adding phases such as planning – which are still mostly conducted by category managers – don’t get the attention they deserve.

Looking at the landscape as a whole it’s no surprise that most sourcing projects are long and costly, and ultimately don’t deliver the results that stakeholders expect.

Strategic sourcing, it’s a-changing

And automation is the key…

More and more firms are convinced that digital transformation is the answer to increased efficiency in strategic sourcing, and they’re not afraid to invest in software that gives them a procurement advantage. In fact, they spend more than a quarter of a million dollars a year on these solutions. What’s more, they’ve found that this investment is paying off. According to these companies, supplier discovery, e-sourcing and contract lifecycle management software is helping them streamline the entire sourcing process – from discovery to contract signing. As a result, their total sourcing times are being reduced by 30 per cent as are their costs.

This is just the beginning of a trend that holds significant opportunities for organisations. But firms need to be bold in their thinking to achieve these results. Increasing FTEs isn’t the route to increased efficiency. Companies need to look to technology to help them transform their procurement processes and deliver faster, more cost-effective sourcing than ever before.

To discover how your organisation can embrace digital transformation and reduce costs and cycle times by 30 per cent, read The Hackett Group report now.

Meet the James Bond of Procurement

Looking for some holiday reading? We review Christopher Hepworth’s “The Last Oracle”, a fast-paced thriller starring Sam Jardine, the world’s greatest negotiator – and a procurement professional!

As a series of bizarre climate-related events occur across our planet, it seems the world is edging towards a catastrophic tipping point.

Rex Daingerfield is the owner of a giant fracking company that seeks to exploit a rich seam of gas in the environmentally sensitive Greenland ice shelf. But Daingerfield has a nemesis – his daughter. Born to an Egyptian mother, she is inducted as the Oracle of the Temple of Sekhmet. Her role is to protect the earth from the likes of her father.

The Oracle recruits the world’s greatest negotiator, Sam Jardine, to convince her father to change his destructive business model. But a secret society of the rich and powerful stands to profit from the chaos that has gripped the world. Led by an errant priest from the Temple of Sekhmet, they will do anything to stop Jardine.

As the planet edges closer to disaster, Jardine is confronted by politicians, lobbyists, vested interests – even his own radicalised half-brother – all of whom stand to gain from the mayhem about to be unleashed.

Sounds exciting, doesn’t it? Here’s what we enjoyed about this book.

A procurement hero

Sam Jardine is a procurement professional who is sent all over the world on special projects when his incredible powers of negotiation are required.

He is described in some of the advertising around The Last Oracle as “the new James Bond”. There are certainly some similarities – he keeps his cool in the novel’s many action scenes, he loves fast (solar-powered) cars, and he wins the heart of at least two female characters. But in many ways, his character has more depth than Bond. Jardine isn’t always sure of himself, and one of the strongest themes running through the book is his internal conflict between loyalty (and fear of) his oil-industry employer, his own conscience and his knowledge of impending climate catastrophe. He’s also very fallible – he makes mistakes, he gets severely injured on more than one occasion, and he doesn’t always “get the girl” despite his good looks and charm.

Jardine is also described as the world’s greatest negotiator – and this holds true, with arguably the best scenes in the novel being negotiations. Jardine leverages his cultural intelligence when negotiating with an African tribal chief, thinks fast to save his job in an interview with his furious CEO, negotiates for his life before a vengeful Egyptian goddess, locks horns with Washington lobbyists and politicians, and even extracts a multi-million dollar family secret from a drunken uncle in an English pub for the price of two pints of ale and a packet of crisps. The back-and-forth dialogue in these scenes is spot-on, and Jardine frequently wins the day by taking a risk that his opponents (and the reader) doesn’t expect.

The characters

Although there are some characters in the novel who have more scope for development, such as the ruthless fracking tycoon Rex Daingerfield, the bullish oilman Chuck Crawford, and even some radicalised Islamic terrorists, there are a handful of characters that are gratifyingly complex. We’ve already mentioned the hero Jardine’s internal struggles. Daingerfield’s mysterious daughter, Sienna, is one of three strong, intelligent female characters that Jardine interacts with, and faces a schizophrenic struggle between her identity as a holy oracle of an ancient Egyptian goddess, her filial duty to her father, and her mission to prevent an environmental holocaust. This conflict eventually lands her in psychiatric care. The theme of mental health is also present in Jardine’s younger brother Jack, whose internal demons and severe lack of judgement makes him an easy recruit for the aforementioned terrorists. 

The author is a CPO!

To let you in on a secret, “Christopher Hepworth” is actually a pseudonym. The author is head of procurement in their country for one of the world’s leading insurers, and therefore knows a thing or two about negotiation.

The world needs more procurement heroes, including fictional ones, to help raise the profile of the profession. Five stars!

The Last Oracle is the third Sam Jardine Thriller from author Christopher Hepworth. Read more reviews and purchase your copy on Amazon.

Are You Ready For The Procurement Rebels And Revolutionaries In Your Team?

We know Gen Z don’t fit into the traditional workplace – but how can procurement organisations embrace these revolutionaries to benefit from their rebellious nature and leverage their innovative approaches? 

As a procurement manager with very rigid, process driven procurement software in place, how do you plan to manage the potential chaos that will come from the millennials in your current workforce and the Generation Z’s about to enter it?

Firstly, let’s address three ways of dealing with this issue. Do you ignore them, do you suppress them, or do you take time to investigate what these natural rebels and revolutionaries can offer?

Both groups are born entrepreneurs; they mesh work and play together, they’re smart beyond their years and they have a clear picture of what they want from a career.

Technology has been a major influencer in the develop of a new type of professional. It has provided access to vast amounts of information and has become the great equalizer, playing a major role in their disruptive nature at home and at work.

In my experience, I’ve found that both millennials and Z’s are self-starters – they work smarter and harder than you may think and have disproved time and again the “lazy” stereotype. They’re not averse to working outside normal business hours and use their daily commutes or downtime to get work done because they want to complete it promptly.

The tech catalyst

So, we know that millennials and Z’s don’t fit traditional workplace rules, so how can organisations benefit from their rebellious nature?

Technology is the catalyst of this rebellion. It meshes the world of work and play into a single environment; one where users expect the ‘Amazon’ type experience they get at home on Sunday to be mirrored in how they use technology at work on Monday. ­­

What do you say to the team member that walks into your office to tell you that your existing procurement software is drowning the team? They then show you an app they downloaded over weekend that allowed them to create RFQs, connect and chat with suppliers, make decisions and save a ton of their time and your money.

Revolutionaries are born from discontent. They’re frustrated at the status quo, and those who lead them are searching for a better way. It can be a challenging process, but these young rebels – or, to use a modern term: these entrepreneurs – are simply seeking more effective and flexible ways to work.

A new approach

So how would you react to the above scenario? It starts by changing how you approach the thinking behind the solution. This means recognising that innovation is no longer a top-down exercise that remains in the exclusive domain of senior management teams or corporate retreats.

Real innovation today is being driven from the ground up by those rebels within our teams that simply want a better work experience and are not afraid to try new technology or methods to get better outcomes.

It wasn’t that long ago when ‘agile’ was a term used only in software and development teams. I now see sales teams working with scrums and management teams having daily stand ups – it’s just one example of the new way of thinking and doing that is helping business work faster in today’s instant world.

Does this mean that it’s time to let the revolution rise and allow the rebels to take over the organization? Well, not entirely – it’s about getting the balance right.

It’s time for procurement leaders to stop lamenting about being seen as the roadblocks within their organisations and to look to your millennials and Z’s as a talent pool rich with ideas, innovation and passion.

They will challenge, they will make mistakes, but it is time to move beyond the current boundaries you’ve set, and remember – you were a rebel once, too!

About the author

Alan Paul is a thought leader and CEO of sourceit, a technology company that has led the market in the development of simple and easy-to-use sourcing applications for indirect categories.

Sourceit offers three different products for buyers:

  • RFQ – time saving request for quote software for all indirect categories,
  • Market – a specialized procurement and job management application for marketing services, and
  • Catalog – an inventory management and on-demand product/services ordering application.

Visit the website: sourceithq.com

Deal Or No Deal? The Brexit Effect

What are the implications of Brexit on Procurement? And how should the function be preparing for the various possible outcomes? 

Zycus’ webinar The Brexit Effect Understanding Brexit and Its Impact On Procurement takes place on Tuesday, 21st November 2017. Register for free here.

On June 23 2016, the world woke up to some very unexpected news.

This was the day around 17.4 million people in UK, by a sizeable margin of 52 per cent to 48 per cent, voted to become the first country to leave the European Union.

As the world looked on in shock, the then prime minister David Cameron immediately resigned, leaving his successor Theresa May to handle proceedings. She soon confirmed that Article 50 of the Lisbon treaty would be triggered and did so in March 2017.

From the time the UK submitted its Article 50 letter to the European Commission, a two year formal process of leaving the EU began.  A number of events were set in motion that cannot now be halted without significant agreement between the two governments.

What will happen in these two years?

Within these two years, the UK and the European Commission will either agree upon an interim agreement or trade will be governed under a pre-agreed set of tariffs. The impact of Brexit on the UK economy will be determined largely by whatever relationship the UK manages to forge with the EU, and this may not become clear for number of years.

In these uncertain and unpredictable times, how can procurement professionals prepare and what risks does the function face? In the EU, the public purchase of goods and services has been estimated to be worth 16 per cent of GDP and it is nearly 20 per cent of UK’s GDP.

Regardless of whether you work in the public or private sector, there is no doubt that Brexit’s impact extends across the entire breadth of the procurement industry. It’s really hard to understand how significantly regulations are going to change for procurement.

The worst case scenario for procurement

  • Cost: The costs to import goods within supply chains are likely to rise, whether it’s due to commodity prices or labour cost. In terms of commodity prices, we cannot know for sure of the impact; there could be a major change depending on the value of the pound or we might see no change at all. Labour cost will be dependent on the new immigration regulations, which could make it more expensive to hire EU nationals in the UK and vice versa.
  • Freedom of movement and supply chain delays: There is a chance that there will be a loss in freedom of movement both in goods and services for UK and European businesses with supply chains operating across borders. There is also a possibility that there will be some disruption in existing supply chains because of time-consuming border checks and paperwork at UK ports, which could increase custom processing time.
  • Procurement recruiting and talent management may suffer: Not only the flow of goods and services will be impacted but procurement talent will also be considerably affected. If the “leave” campaign succeeds in stopping migrants from the EU, there is a chance that the procurement talent pool in UK will be considerably reduced. Many of the EU procurement professionals might not want to be a part of UK given the current instability.

Procurement’s Pre-emptive Action

CIPS recently conducted a survey with 2100+ supply chain managers, which delivered some very interesting results:

  • Around 32 per cent of UK businesses using EU suppliers are currently looking for British replacements
  • More than one third of UK businesses plan to respond to Brexit by beating down suppliers’ process
  • 46 per cent of European businesses expect to reduce their use of UK suppliers

As supply chain complexity increases, many British companies are considering the possibility of shifting supplier base from continental EU to the UK. In the meantime, European companies that have operations in the UK are looking at moving their operations outside of the UK to ease business. This is because UK will become a separate market for EU and therefore like we discussed earlier, the movement of goods across borders with the UK will be deemed as imports and exports, attracting new customs controls. This will become more time consuming and attract paperwork, taxes, tariffs, excise duties and VAT which will have direct implications for revenue and cash flow of businesses.

If trade negotiations fail throughout the Brexit process, businesses inside and outside the UK should be ready to explore new options. Procurement must plan ahead to find alternative suppliers or start work with existing suppliers to put deals in place, soon!

If you are curious to know more about how Brexit will impact procurement, do join our upcoming webinar on Brexit featuring industry experts Mark Webb and Jon Hansen. They will be discussing:

  • The impact of Brexit on supplier risk assessment and management
  • The influence of trade tariffs on cost
  • Increasing demand for procurement talent
  • What is the procurement technology answer to Brexit? 

Speakers:

Jon Hansen – Editor and Lead writer at Procurement Insights

Mark Webb – Managing Director at Future Purchasing, UK

Kanishka Ghosh – Director of Product Management at Zycus Inc.

The Brexit Effect Understanding Brexit and Its Impact On Procurement takes place on Tuesday, 21st November 2017. Register for free here.

Have You Aligned Your SIM & CLM Systems?

Procurement teams with mature SIM and CLM systems can extract greater value from supplier relationships. How can the two be brought into better alignment?

This article was written by Kelly Barner for Determine

Procurement is so accustomed to aligning our technology and processes with the objectives of the business at large that we sometimes miss opportunities to align our own technologies and processes with each other.

Supplier Information Management (SIM) and Contract Lifecycle Management (CLM) provide a perfect case example. Both bring together suppliers and internal touch points, extend beyond procurement’s peak involvement in managing spend categories, and play an important role in addressing (and mitigating) supply chain risk.

Procurement teams that have mature SIM and CLM programs in place reduce their risk, but they also create opportunities to extract greater value from each supplier relationship and reduce confusion within the enterprise.

When we stop and think about how SIM and CLM can be brought into better alignment, three critical shared issues come into focus: information integrity, ownership and actionability.

  1. Information Integrity Through Integration

Information is such an important component of SIM it is included in the name, whereas with CLM the devil is always in the details. An incorrect piece of information in a contract can easily become a legal liability. Both start with essential supplier contact information and metadata and extend to the details associated with supplier onboarding and contract terms. Although the following information is collected for separate reasons, it is critical that it be consistent across SIM and CLM:

Supplier Onboarding

 When a new supplier is on-boarded post award, a standard set of information is usually collected. This includes their contact information, location details, proof of certification, and details regarding the users who will represent the supplier in company systems during the term of the agreement. Making sure as quickly as possible that this information is complete and accurate lays the groundwork for an equally smooth implementation and on-going relationship. Beyond simple collection and centralisation, procurement must also validate supplier information at the time of onboarding – paying particular attention to documentation associated with certifications that were included in the award decision.

Contract Initiation

When creating a new contract, it is natural for procurement to focus on product/service specifications, prices, terms and SLAs, but capturing other more straightforward information is just as important. For instance, specifying a production location might seem like a minor detail — until the supplier makes the decision to outsource their production to another facility, or even another country. Having specified the location in the contract may not prevent the change from being made, but it does create an opening for discussion of the associated quality and oversight expectations. As contracts become an increasingly dynamic part of supplier management, more details need to be incorporated.

  1. Ownership

Since managing risk and increasing performance are at the heart of both SIM and CLM, establishing ownership early on is critical. Who will manage the relationship and who will be the documented owner of the contract? Should it be the same person? Why or why not? Alignment of goals can not be achieved if the individuals associated with each responsibility are not also aligned.

Supplier Relationship Management

Any supplier may have multiple relationships in an enterprise. Procurement is certainly a point of contact, but so are the budget owner and any functions that have a high volume of demand associated with that supplier. Many people may have contact with a supplier in the course of daily business, but information about performance reviews and contract updates should be managed in an organised fashion so that the supplier is kept informed and no one speaks out of turn.

Contract Ownership

 In addition to including a complete set of terms and signatures, each contract needs an owner from the outset. While captured as a simple name field in many CLM systems, a lot of consideration must be given when deciding who will own each contract. The primary value proposition of CLM is that it allows contracts (and the business deliverables they govern) to “leave the filing cabinet” in order to have a measurable impact on the business. Empowered by automated CLM notifications, someone in the enterprise needs to take action based on the information provided; and having an appropriate designated owner from the start provides accountability and ensures a prompt response.

  1. Alignment Actionability

Putting SIM and CLM in place is not about static documentation or information centralisation, but rather the actions each motivates. Unlike information integrity, where consistency is key to alignment, actionability requires each of these systems to “feed” information to each other. There are supplier performance considerations in both systems, and while they are different, it is in their combination that the best result is achieved.

Supplier Performance

SIM systems often include supplier performance details submitted by procurement, as well as the other individuals in the enterprise who come into contact with the supplier’s products or services. In some cases, determinations of performance will be based on buyer perceptions and expectations. This information should be recorded and communicated to suppliers on a regular basis.

Contract Compliance

When viewed through the lens of a contract, supplier performance is about following the “letter of the law.” Just as suppliers can have performance issues that do not rise to the level of legal non-compliance, a supplier can be in perfect standing based on the requirements of the contract and still not meet the expectations of the company. If performance measurement and contract terms are not both aligned and visible, it will be hard for procurement to know the difference and lead the appropriate response.

The full benefits of SIM and CLM alignment are realised over the term of the agreement, as long as 3-5 years in some cases. The sooner the enterprise can achieve alignment in terms of information integrity, ownership and actionability, the shorter the timeframe to evaluate and lower the overall risk.

This article was orginally pubished on Determine. 

Why Public Sector Procurement Consolidation Won’t Take Forever

Driving change within the public sector takes forever… and ever! Right? Tim Hamper begs to differ as he explains why procurement consolidation will only accelerate in coming years, if not months!

A few weeks ago another UK public sector body, Fastershire (a partnership between Gloucestershire County Council and Herefordshire Council, backed by the Department of Culture, Media and Sport), began implementing a major new combined agreement – this one with Gigaclear, a rural Internet Services Provider. The deal is to roll out “ultrafast” Fibre To The Premise broadband to thousands of some of the hardest to reach homes and businesses across the two counties, at speeds of up to 1000Mbps.

After decades of individual procurement teams in separate organisations diligently applying public procurement rules (often with relatively small spend and time-consuming award processes), it’s now becoming normal to combine with others. The results are often not only larger economies of scale, but also better access to relevant products and services.

Public sector procurement consolidation

Combined (in other words consolidated) public procurements have for some time been delivering in areas where it’s fairly easy to see a commodity – energy, office supplies, facilities. They’ll really take off and show benefit when they fully embrace what used to be called “ICT” – now better labeled Digital. Leaders of public bodies won’t be interested in the details of latest products or software solutions, or even in traditional efficiencies. They’ll be concerned about big outcomes. How to better support local economies and communities? How to join up health and social care? How to keep the trains running?

The facts about consolidation are impressive:

  • Although not everyone is a fan, in 2016/17 Crown Commercial Services, the public sector aggregator, channelled £12.4bn of public sector procurement spend through its commercial arrangements including frameworks – £6bn from central government, £6.4bn from the wider public sector.
  • The National Procurement Strategy for Local Government in England was launched in 2014. By 2016, 53% of single tier/district councils and 48% of district councils said their organisation had made savings or achieved other community benefits by “partnering and collaboration”.
  • Owned by six county and city council authorities, one public sector buying group based in Leicestershire, ESPO, now has over £1.4bn of spend going through its frameworks. The organisation consolidates requirements from over 9,000 education customers across the country.
  • Another buying group, Kent County Council’s Commercial Services, is one of the largest trading organisations of its kind in the UK. As the contracting authority, Kent operates in partnership with 12 district councils and 289 parish/town councils. It recently published details of framework contract awards for water and sewerage services potentially worth up to £208m on behalf of a number of public sector organisations.

The tipping point for consolidation

The often-heard view is that change in the public sector takes forever (one digital industry leader recently claimed this is due to a “lack of vision, entrepreneurial thinking and execution”, another that “the last ten years have seen public sector organisations progress only 20 per cent of the way through the business transformation journey, with the remaining 80 per cent to be delivered over the next ten years.”). But with the focus on outcomes, the necessary speed and type of market engagement will mean the trend for procurement consolidation will only accelerate. The benefits will be big: public sector bosses are already seeing better outcomes and stretched budgets being brought back into balance. In Gloucestershire, County Councillor Lynden Stowe, Cabinet Member for Economy, Skills and Growth says “faster broadband is vital for our communities and businesses to thrive and grow. I’m delighted that the Fastershire project, in partnership with Gigaclear, will be taking faster broadband to even more homes and businesses in some of the most rural areas of the county where larger suppliers were not prepared to go.”

We’re probably already at the tipping point where most public procurements look across organisational boundaries, so the need for separate individual procurements will diminish. A lead or buying group will more and more be seen as the right place for consolidating spend, not just for commodity items but strategic stuff as well.

Suppliers will react quickly to this situation and respond to consolidation opportunities – not least because larger volumes are more attractive, and with fewer organisation touch points, the cost to them of doing business will be significantly reduced.

Dramatic change has already started, though not every public sector management team involved in commercial activity has fully embraced it. They should. Consolidation in public procurement won’t take forever – the focus on outcomes and market speed will ensure that it’s now measured in months, not years. Certainly not in decades.

Blockchain: Are You Bothered?

There are so many misconceptions around blockchain and its potential impact. Will the fundamental concept of blockchain really have a significant impact on procurement, finance and supply chain?

Last month’s Procurious London Roundtable was sponsored by Basware

Blockchain is the coolest technology of the moment and the hype surrounding it only appears to be growing year upon year. Whilst the concept was first used for Bitcoin, the digital currency, its potential is far wider, and many industries are actively investigating the possibilities of using blockchain-based solutions.

But despite organisations around the world jumping on the Blockchain bandwagon and advocating for its enormous potential, do the majority of professionals understand precisely what it is, what it can do and the extent to which it will impact our businesses?

At last month’s Procurious roundtable, Paul Clayton, Head of New Service Development, Basware put us through our paces with an overview of blockchain technology and his insights as to why procurement pros need to be cautious not to overestimate it’s bearing on the function.

What is blockchain?

A blockchain is simply a digitised, decentralised and cryptographically secured ledger of transactions.

“The biggest misconception” Paul begins, “is that there is only one blockchain. There are actually many blockchains in use today throughout many different industries.”

“Blockchain is actually only a concept, whose origins go back to academic work in the early 90s, rather than a thing. The concept was first publicly used to allow the crypto-currency Bitcoin to be traded virtually, anonymously, and without the need for a centralised bank.”

“Blockchain technology says where something has been transferred to and retains a trace of the transfer. Conceptually a blockchain acts like is a single ledger, a source of the truth if you like. In reality, it is physically distributed where there are actually multiple ledgers, known as nodes, that all work together to come to consensus on where something has been transferred to, which is then shared between them.”

An obvious advantage of this technology, is that it’s very difficult for you to break the integrity of the ledger. “There are multiple copies of the same ledger and so if someone hacks one it becomes immediately obvious that it is different.”

The flaws at the heart of blockchains

Whilst a blockchain itself is safe, an application using it remains hackable – Security researchers and hackers have proved it’s possible to hack someone’s Bitcoin wallet and empty it of crypto-cash. Mt. Gox infamously lost 7 per cent of all Bitcoins in circulation in 2014, which were worth, at the time, approximately $473 million. It also appears to be an uphill battle trying to prosecute someone for taking a Bitcoin

It’s can be too transparent – With public blockchains, once a transaction and its associated data have been placed onto a blockchain, anyone and everyone who has access to it can view everything, whether you like it or not

It’s not the most elegant solution – The very nature of the deliberately distributed ledger with multiple copies (nodes), means that you have multiple nodes undertaking exactly the same piece of work ie working out where something has been transferred to. From a pure computing power point of view, for certain applications, this is a highly inefficient way of doing things.

The blockchain for Bitcoin for example, has already had to be re-designed to increase its scalability as the number of Bitcoins in circulation and the growth in the associated transactions meant that the ledger became too unwieldy and it was taking too long for it to update.

You can still lose things!

Even if you know where something went, you can still then lose it. Who could forget the unfortunate James Howells, who mistakenly threw out a hard drive containing 7,500 Bitcoins, now estimated to be worth $7.5 million

 

Blockchain for business

There are some who would argue that these problems have been addressed and eliminated for blockchain for business. Paul is not one of them!

“The distributed nature of ledgers means blockchain is good at maintaining the integrity of who owns something but what it cannot do is determine whether the person who put something into a system owned it in the first place.”

This means, when making a transaction via a blockchain, the recipient needs to be able to trust the supposed owner of the thing that is being exchanged. “You are, essentially, reliant on the veracity of the source of what goes in to the blockchain.”

For example:

Does the “owner” actually own the rights to the house they are trying to sell you?

If you’re exchanging metals, does the “owner” have documents to prove they have the rights to the gold?

It might be good at preventing a fraudulent transfer of an asset but blockchain is “next to useless at establishing if a person owned something in the first place”

“As a ledger system it is extremely inefficient, almost clumsy in the way it works. In certain circumstances, where there are a high volume of transactions it uses so much computing power it’s almost not worth it.”

“And it’s for these reasons that, whilst it will have applications in many areas from supply chain through to electronic voting, blockchain won’t change the world!”

Where is the value for procurement?

“Is there value in blockchain tech? Yes. Does the value match the hype right now? Not even close!”

“From a procurement point of view the biggest area of impact right now is most likely to be in supply chain applications. There are obvious applications for the transfer of title and bill of lading. Of particular interest in this space right now are supply chains that can be subject to fraud such as pharmaceuticals and food

Going beyond that the application of so called “smart contracts” to a blockchain can help automate certain business processes. Smart contracts, are pieces of computer code attached to a blockchain that automatically execute an action once a set of agreed criteria have been met. For, example, a smart contract could be used to automatically pay a supplier once the buyer has received their goods without the need for invoice processing and payment.

” In 2017, blockchain is word of the year, it’s absolutely everywhere. But it’s not earth shattering, it’s not the third generation of the Internet its just an interesting concept with some obvious benefits and flaws.”

Last month’s Procurious London Roundtable was sponsored by Basware

Whose Services Are You Really Procuring?

The workforce is fundamentally changing and it’s increasingly important that you can access the skills you need when, where and how you need them. But with the increase in corporate usage of external workers comes additional challenges and risks.

Driven by the digital age, we’re seeing a shift in the way work gets done. Globalisation and new ways of working are rapidly changing how talent interacts with companies, making it increasingly likely that the top talent needed by a business might not be – and might not want to be – on their payroll.

As a result, organisations increasingly rely on the external workforce – including contingent worker, Statement of Work (SOW)-based consultants, freelancers, specialized talent pools and more. In fact, these resources now account for nearly 40 percent of the average company’s workforce.

Why is this happening?

There are four factors impacting the way work gets done:

  1. Data: Data is the currency of the digital economy and we hear a lot about it these days. Big data is powering new insights and enabling better business decisions and outcomes.
  2. Digital technologies: Advancements such as artificial intelligence and machine learning are speeding processes and increasing efficiency. Looking forward, technologies such as blockchain will disrupt industries by facilitating the exchange of goods and services.
  3. Design-thinking or user-centered design: This is driving better experiences by putting people at the center of technology, not the process or the product.
  4. People: Perhaps the most profound change we are seeing in how work gets done is with people. Many of today’s workers – millennials, in particular – are looking for different experiences rather than spending decades with one company. As technology has enabled people to be untethered, the external workforce has boomed.

The result is that a significant portion of the external workforce is now comprised of service providers. To stay ahead of the competition, you need to be able to easily access this specialised and you need to be able to manage it effectively.

Challenges in services procurement

With more and more companies using external resources to fill vacancies, compensating for skills gaps and staffing ad-hoc projects, how do you know you’re getting the best talent at the best price?

With products, it’s relatively straightforward – prices are fixed and margins are small for suppliers. When it comes to services procurement, the situation is very different. Margins vary hugely and tend to be relatively high for the supplier.

For example: you’re looking for a plumber to work onsite at your facility for a specific time. Rates will vary depending on their experience and grade. When engaging your suppliers, how can you ensure that the person they send isn’t someone with little work experience who is charging a premium rate? Without insight into who is actually working for you at any given time and confirming that they are providing the level of service you expect, how can you ensure you’re not overpaying?

Organisations need a single place to go to source, engage and manage service providers. But many are managing this key labor segment with fragmented systems and processes which puts them at risk for excess spend, compliance issues and decreased quality.

A lifecycle approach

A solution lies in an external workforce management model. This model should include:

  • Visibility across multiple service providers and headcount tracking so you know who is working for you across your entire enterprise.
  • True demand management to enable the correct buying channels for each category of service.
  • Financial control, operational efficiency and collaboration, both internally and with suppliers.
  • Risk mitigation and compliance to rates and budgeting against contracts, along with the ability to discover how much a service cost last time to better forecast.

Enabling a services procurement solution to drive better operational control and rigor around services engagements not only enables cost savings opportunities, but enables key value levers including compliance, cost, visibility, efficiency and quality.

Procurement plays a strategic role in helping their organisation gain workforce visibility, be more agile and derive more value from their services procurement management. But executing the service only gets you halfway there – full potential is reached with management of the entire lifecycle.

Interesting in learning about more about the SAP Fieldglass External Workforce Management Model? Click here.

How Much Business Does £300m Of CSR Get You?

That might sound subversive – after all, CSR isn’t about the bottom line. Is it…?

There are many definitions of CSR. In general terms, it is about delivering benefits for economic, social and environmental stakeholders. On the ground, we’ve seen fantastic work going on – exemplified by organisations like Business in the Community. We genuinely believe that for a number of businesses, CSR isn’t an add on – it’s seen as a key ingredient of a sustainable business model.

As a CEO of a for profit, the bottom line is, well, the bottom line. How do we get more customers? How do we make the ones we have happy? How do we get the best out of the team? How do we ensure our product is usable and therefore shippable?

I understand any skepticism around CSR.

But it is there. And it’s not going away. Moreover, in many countries it’s now backed by legislation.

How could we improve the conventional model of CSR? Let’s come back to that. First a few more numbers.

We carried out some research a few months back. We looked at 30 of the biggest suppliers to UK government, including Capgemini, HP, Balfour Beatty, Babcock, Fujitsu and Barclays.

What we found…

  • They account for up to 15% of government expenditure
  • The total UK Community Investment spend of the 8 companies who share their figures is £9,533,461
  • The total Global Community Investment spend of the 12 companies who have share their figures is £328,249,901.

And, according to the Charities Aid Foundation, FTSE 100 companies donated an average of 1.9% pre-tax profits in 2014.

What we ask…

  • Is there a direct link between this CSR spend and sales? Short answer: no.
  • Should there be?
  • Why not? What if you could demonstrate a clear ROI on this spend?

We think this not because we think CSR is an afterthought or an add on. If it is a a core component of business strategy it has to be a core component of your financial strategy – because these two things are so intertwined. This is what we mean when we think we can square the circle of CSR.

Why not do well by doing good, if you could demonstrate that your CSR budgets and resources were going into local community projects that were delivering clear outputs, and were rewarded for that with sales?

Why not do well by doing good and demonstrate this in terms of clear ROI for your CSR spend?

That would be a good thing right? If you want CSR to be a core part of your business strategy it has to be a core part of your financial strategy.

Social Value is increasingly a differential in government tendering – how much you give can determine how much you win. At the Social Value Exchange we use market design to ensure CSR is paid for at a fair and efficient price – the sweet spot between making sure community projects benefit and suppliers don’t break their business models. Suppliers have used this approach to win more than £20m of government contracts.

With this option, why wouldn’t you use CSR to get more sales? 

Firesouls make digital products that drive innovation in, and get more resources to, the public and community sectors. Our latest product is the Social Value Exchange, an online marketplace that gets more funding and resources into local community projects.

Why Procurement Should Give Cognitive Tech A Warm Embrace

When you pushback on the advances of cognitive technology, you’re buying yourself, and procurement, minimial time. Working side by side in a warm embrace is the way to do it! 

Our webinar, Beat The Bots: How Being Human Will Win The Day, takes place TODAY at 1pm BST on 24th October 2017. Register your attendence for FREE here.  

There’s no question that procurement teams needs to prepare for their own cognitive journeys, to consider what their company’s digital transformation will look like, and then think about how to prepare, or even influence it.

But in doing so, are they also mapping out a talent journey?

The 2017 Deloitte CPO survey interestingly revealed that whilst the vast majority of procurement leaders see the need to train and develop their people, only 31 per cent were planning to focus on training in digital skills in the coming year.

John Viner Smith, Principal, Mercer and speaker on today’s webinar has some thoughts on why this is the case, “I think part of the reason is that there’s no consensus at present as to what the skills people need to acquire are to be ready for this [cogntive] world.  It’s just not clear for the leaders concerned yet.”

Last week we outlined the key soft skills procurement professionals should be developing to prepare for the cognitive age.  But what about the attitude on the ground? Procurement professionals are still wary of the impact cognitive technology will have on the function, which results in a level of pushback and reluctance to accept the changes that are coming.

The warm embrace of cognitive technology

“It may be reasonable to look at the state of technologies today and think ‘No worries, I can’t see anything out there that could do my job’, but that’s not the risk.” John explains. ” The risk is that these technologies, coupled with other disruptors, could make your job obsolete and truly redundant. Imagine being a farrier at the very beginning of the 20th century; if you were thinking ‘Thank goodness they haven’t invented a machine that can shoe horses better than me’, you were kind of missing the point.”

So what is Justin McBryan, Learning & Development, Strategy, Communications Manager- IBM ,seeing in terms of pushback within his organisation?

“I don’t know if I would characterise it as a pushback so to speak.

“We see it as a warm embrace across the organisation but a wary embrace as well. As we digitise the organisation and continue to march forward into the cognitive era, certainly the technologies on the horizon are noticed and seen [by our employees.]

“But I say a warm embrace because a lot of the technologies we are building, have built and continue to build need the procurement skills and institutional knowledge that we’ve built over the years including all of our great people. In terms of where we are today and as we’ve been rolling out Watson Supply Chain etc. we see it as more of an embrace.”

Cognitive tech is “not necessarily a replacement of the person, it’s someone sitting next to you and helping you.”

The environment that Justin describes is one of collobaration, with seasoned procurement pros looking to help machines learn and work alongside them. But that doesn’t mean they aren’t doing so with the wary eye of “what’s next?”

But as Justin points out, as procurement teams embrace and integrate these cognitive technologies, they can also be asking themselves “What can I do to begin to point my skill development in the right direction?”

Exploiting the advantages of cognitive technology

There’s a lot of scare mongering out in the field that says that if you’re not a data scientist, you don’t have a future in Procurement.

But we’re reassured by the fact that IBM is working hard on developing its employees’ soft skills and is a strong advocate for how cognitive tech will allow professionals to better perform their roles not seek to replace them.

When it comes down to data scientists versus soft skills experts, Justin believes they’re sequential from each other and likens it to climbing up two different kinds of hills, “We want the majority of our organisation to build up on their soft skills. We’re happy if everyone builds up their analytics skills. We certainly need a solid group up at the top who can drive the innovation and integration of the cognitive tools.

“We need our best and brightest from a data scientist perspective but not all of us need to be there.”

“If we continue down the cognitive path we’re going to have a lot of tools to add to the procurement portfolio. The digitisation of our organisations  free up time for our employees to focus on two big things that are important for procurement:

  1. Getting closer to clients
  2. Creating time and space to innovate on our processes and innovate on the solutions that we’re delivering to our client

“The more we add to the digital cognitive portfolio of tools that procurement pros can use, the more time that is freed up on the innovation and client engagement space, [which is an opportunity for procurement] to exploit the advatages of the cognitive era.”

Our webinar, Beat The Bots: How Being Human Will Win The Day, takes place TODAY at 1pm BST on 24th October 2017. Register your attendence for FREE here.