Are our supply chains tunnel-visioned, or do they support a diverse range of ethnic minorities, women, military veterans, people with disability, or ex-offenders trying to build a new life?
A few months ago, Beyoncé dropped a surprise new single. Hang on, what’s that got to do with Procurement with Purpose (PwP), I hear you say?
Well, apart from the fact the sing is really rather good, Black Parade is linked to her wider initiatives around charitable work (through her BeyGood initiative), black empowerment and consciousness. Revenue from the track is being used to benefit BeyGood’s Black Business Impact Fund – administered by the National Urban League – to support black-owned small businesses in need.
She has also launched a directory of black-owned businesses ranging from art & design, restaurants, beauty products, lifestyle, wellness, bookstores and more. It’s a fairly basic site, and pretty much all the firms listed there appear to be B2C (consumer focused) rather than B2B. But her move may raise more questions about how organisations approach their corporate buying, in particular when it comes to minority-owned businesses that could be used as suppliers. Recent events and the Black Lives Matter movement have made many of us think about racism and bias in our lives, and that applies in the supply chain as much as it does anywhere. So, that takes us back to procurement with purpose.
Diversity (broadly speaking now) in the supply chain is actually one of the most fascinating topics within the whole PwP world. For a start, there are any different types of diversity. Should you buy more from firms owned by people from black and other ethnic groups? What about female-owned businesses? Or those owned by folks with disabilities or health issues – or maybe those firms that employ such people? What about firms that are owned by support military veterans, or ex-offenders trying to build a new life?
Or maybe it’s not the ownership that matters. What about SMEs (smaller firms)? Some would suggest that those businesses drive successful economies and by supporting them at an early stage, buyers can capture innovation and also promote wider social and economic benefits. Others, particularly in the public sector, look to support local business, on the grounds that this will keep the money flowing in the local economy rather than being sucked up to some distant head office.
All these options mean it can be hard to know where to start. But in many countries, it is clear that minority-owned businesses in particular do have a tough time as they have to overcome all the usual hurdles faced by start-ups anywhere, plus they face the bias (conscious or unconscious) that does exist.
We’re not going to solve that problem in one article today, but as well as highlighting that this may develop into a high-profile issue, a few suggestions for now.
· Firstly, take a look at how easy it is for any new or small firm to become a supplier to you. How can they put themselves forward? Are your supplier qualification and selection processes designed for huge firms, rather than start-ups? Do you put accidental barriers in the way, demanding onerous contract terms, expensive insurance and so on? Too many large firms are virtually impossible to break into, which is not good for the agility and dynamism of their supply base, never mind the difficulty for minority-owned suppliers.
· Secondly, if you haven’t looked at these issues, seek out organisations that can help you work out an approach. MSDUK has done good work in the UK to promote minority owned businesses, WEConnect International does the same with female owned enterprises, and there are others covering different groups and issues and across different countries. The good news is that large organisations don’t have to move very much of their spend into supporting these causes to really make a difference.
· Thirdly, there are some good case studies around. Accenture has been one of the leaders in this area with their supplier inclusion and diversity programme, and there are others who have made strides in this field.
· And finally, how about Beyoncé for US Vice-President?
This article was originally published by Procurement With Purpose on 20 June 2020 and is republished here with permission.
Based on our research, here are five ways that procurement professionals can generate more social value from their next construction project
Many governments around the world, including the UK, are focussing on construction-led recovery post-COVID.
Here are 5 ways Procurement can play a key role in re-shaping not only our buildings and the way we live, but also our communities through the way we buy during the construction process.
1.Have a clear social value strategy and framework
There needs to be a clear, transparent and needs-based social value strategy and framework for both procurers and bidders which is embedded at all stages. Procurement frameworks, with required levels of social value commitments, can bring efficiency and good practice application across public sector contracts. They can provide suppliers with more clarity on what is required for social value and how this will be recorded. Procurement services that guarantee work once suppliers are on the framework can incentivise well-considered social value commitments for both SMEs and larger organisations.
2.Prioritise outcomes in monitoring and evaluation
There is fragmented market of tools and metrics used in both procurement and evaluation. Most do not take into account geographic disparities in their monetisation, nor include negative effects of development to arrive at the final value. A focus on ‘tick box’ outputs like number of people trained, or number of apprenticeships started, can lead to more aware suppliers knowing how to score well on social value weightings in the tender process, as discussed previously. By procuring outcomes instead of outputs, the procurement profession can open up the doors for innovation and creativity in bid responses, and evaluate bidders on the impact they will achieve, rather than bums on seats.
3.Consistency and holding to account
There are different procurement frameworks, regional models, and different sector frameworks, adding to the confusion in this area, and sometimes a ‘buy local’ requirement as well – there is no homogeneity in the procurement landscape. Given that Social Value typically accounts for anywhere between 2%-25% on tender scores, it is a key part of the procurement process. Having consistent, appropriate, clear goals at all stages, engaging in more pre-tender dialogue with bidders, and stating the evaluation methodology or tool to be used, will help achieve greater outcomes. Most importantly, hold suppliers to account for their contractual outcomes. Our research showed that rigorous monitoring and enforcement of contracted social value activities was very variable and inconsistent. With the high value of contracts in construction, ensuring that what may have secured a major win is actually delivered on the ground is imperative.
4.Enable straightforward comparisons of value
We recommend that environmental components are separately weighted in procurement, and that ‘normal or good business practices’ e.g. internal diversity/inclusion initiatives, prompt payment codes, training of existing supply chains, modern slavery, managing noise or disruption, should be considered as a given. Social value has to go beyond ‘business as usual’. Activities which may be commercially beneficial to the supplier, such as apprenticeships and educational visits, could be considered as social value if they were supported by a robust needs analysis in the area that this is going to make a difference. Even so, focusing on apprenticeship completions rather than starts would be a step in the right direction.
5.Guard against potential for disconnect
Our research suggests that a procurement framework approach may provide a further layer of disconnect between local beneficiaries and the provision of social value. The delivery of a locally responsive approach, which links to and utilises community groups and organisations, requires greater clarity. There could be an opportunity for procuring organisations to identify initiatives and local organisations in the tender documentation, embedding local knowledge and understanding of need into the brief, rather than leaving suppliers to try to work this out or to ‘reinvent the wheel’ during the process. Procurers could also consider requiring the upskilling of the voluntary and community sector, as well as the enabling of local businesses not in their supply chains to become fit to supply, which would leave a more enduring legacy.
The construction sector is the sixth largest source of employment in the UK, contributes nearly 7% of the UK’s GDP and is a major recipient of public spending – it is critical for placemaking, economic development and job creation, all of which highlight its importance to Boris Johnson’s ‘New Deal’ and post Covid-19 recovery.
With construction spend estimated to be £500 billion by the end of this decade there is also a need to make sure that every one of those pounds delivers additional tangible social impact, and makes a major contribution to addressing the significant inequalities faced by our most disadvantaged citizens and left-behind communities.
The Social Value Act, published in 2013, requires people who commission public services to think about how they can also secure wider social, economic and environmental benefits. Before they start the procurement process, commissioners must therefore determine how they can secure maximum benefits at all stages of the project for their local communities.
“No common definition of social value”
Given the significance of construction to our economy, we undertook research to support greater understanding of what ‘good practice’ social value looks like, and to find and share examples where innovative, replicable and impactful social value has been delivered at all levels of place-based interventions as a result.
Our final report,From the Ground Up – Improving the Delivery of Social Value in Construction, finds that we are a very long way from the social value nirvana we desire. The barriers are significant, and whilst social value plays an increasing part in the procurement process, there are some pretty hefty challenges running across procurement, definitions, activities, partnerships, monitoring and evaluation.
There is no common, comprehensive definition of what counts as social value, to frame understanding, benchmarking or reporting, and aid comparison of tenders and to determine best practice. This has given rise to significant disparities in what counts as social value activities, and no requirement to focus on improving the wellbeing of the most disadvantaged.
Current examples include attracting/retaining staff, prompt payment codes, internal equality and diversity programmes, fair pay, training of the supply chain, ethical/low carbon sourcing, managing risk/noise, and increasing awareness of the construction sector as a career for young people. So there is a high risk of social value lacking focus and becoming too diffuse.
We also found that projects spanning geographies have multiple project stakeholders often competing for social value outputs, different frameworks with differing social value requirements, and a real lack of alignment around desired benefits and outcomes. There was clear consensus on one of the biggest barriers – the lack of understanding of what social value is – and that substantial improvements need to be made in its monitoring and evaluation.
“Procurement must be a much more effective tool for change”
As covered previously, social value procurement must be a much more effective tool for change. This means putting people at the centre of place-based development, engaging and working with them to understand their needs and wants, so that the development happens with them, not to them. We need to change how we measure the value of our place interventions to take into account what matters to the stakeholders in them, and move from outputs to considering how we can achieve an improvement in wellbeing outcomes as an important deliverable.
In our report, you will see we have made five recommendations in response to our key findings. You can also view our report launch. To join us in the next phase of our discussions for driving change, please email me at [email protected].
Bev Hurley CBE is Chair of the Institute of Economic Development, the UK’s leading independent professional body representing economic development and regeneration practitioners working for local and regional communities.
A new survey of 500+ professionals reveals where procurement must focus to establish leadership and earn executive trust.
Procurement: it’s your time to lead. New research from Procurious and Coupa, released today, reveals that nearly two thirds of professionals have seen trust increase with the c-suite over the past three months. Similarly, more procurement leaders report having a seat at the executive table today compared to May, when we asked the same question as part of our Supply Chain Confidence Index.
“Procurement leaders continue to step up and executives are taking notice,” said Tania Seary, Founding Chairman of Procurious. “Procurement plays a critical role in navigating the uncertainty we face today. The function’s stellar performance opens the door for more – more recognition, trust, and opportunities to lead. It’s time to take advantage.”
Procurious and Coupa surveyed over 500 procurement and supply chain professionals in July to assess the state of the function and what’s on tap for the second half of 2020. Reflecting on procurement’s strategic position within the organisation, just one-fifth (21%) report that they are still being viewed tactically internally. While that number is still higher than we’d like, most would agree that for a function that’s historically struggled to stand out and get the recognition it deserves, we’re moving in the right direction – in a big way. Consider that over the past three months, only 7% said they did not see trust increase between procurement and the c-suite.
“Procurement today has a clear opportunity to capture our seat at the table. The findings of this survey highlight how important it is for us to think strategically and ensure our objectives are aligned to the board and our peers in the c-suite,” said Michael Van-Keulen, CPO, Coupa. “We must step up to help our organizations not only control costs, but also mitigate risk, maximize value, and increase the agility needed in today’s business environment.”
These results build off Procurious’ research findings from earlier this year. “In June, we uncovered clear indicators that the c-suite was paying more attention to procurement and supply chain. This trend is accelerating as executives recognise procurement’s unique and essential position in the ongoing recovery,” said Seary.
Procurement leaders looking to capitalise on this newfound opportunity should focus on delivering results that increase resiliency and continuity, and improve the bottom line. According to our research, the top three areas the c-suite wants procurement to contribute to are mitigating supply risk (70%), containing costs (69%) and driving business continuity (64%).
“At first glance, we’re seeing a back-to-the-basics approach for procurement teams, with a laser focus on savings, spend visibility, resilience and risk mitigation. However, when you step back you quickly realise this approach is anything but traditional. The desired outcomes may be similar, but companies are investing more strategically, aggressively and intentionally,” commented Seary.
Second Half Procurement Priorities: Controlling Costs and Risk
Procurement’s top three priorities for the second half of 2020 are similar to what we referenced above: containing costs, mitigating supply chain risk, and supplying the products and services needed to maintain operations.
Naturally, managing supply chain risk remains front and center for organisations across the world. But risk takes on many different forms. What are executive teams most concerned about right now? The top five areas, in order of concern, are:
· Operational risk
· Supplier Risk
· Business environment risk
· Reputational risk
· Cyber risk
Interestingly, the most prominent risk differs geographically. In North America and Asia Pacific, executives are most concerned about cyber. In Europe, the primary concern is operational risk. Either way, stronger investments in supply chain risk management will undoubtedly become one of the lasting marks of COVID-19. Mature procurement teams will never take supplier health, collaboration and risk lightly again.
When it comes to business risk, there’s often more than meets the eye. The survey also found that more than 80% of organisations have significant gaps in spend visibility, which is its own risk. This finding poses an important question: How can procurement teams lead and control supplier risk if they lack full visibility into where money is being spent?
Equipping Procurement to Lead and Thrive
Looking at the next 6 – 12 months, economic uncertainty was the number one concern for survey respondents, followed by cash and risk. Given the stakes – and procurement’s proven ability to add value in business-critical areas, including risk, resiliency, and cost containment – the majority of organisations (93%) are investing big to propel procurement forward. The top three investments organisations are making in procurement leadership are:
· Data and analytics
· Talent development
“COVID-19 continues to act as an accelerant for procurement transformation. The business case is right in front of us, and organisations are investing accordingly.” said Seary.
While organisations are finally stepping up to fund procurement initiatives, the function still has an important role to play to shape the future.
“We need to ensure the investments are strategic, and not tactical. We need to set the agenda, and ensure the c-suite’s vision for procurement is aligned with what we know is possible. It’s our time to lead, and we need to do it right,” said Seary.For more insights – including details on procurement priorities, operational gaps, investment strategy, supply chain risk and more, join Procurious and get the full report:Procurement’s Time to Lead.
How do you set a strategy for your procurement function? Discover what to actually do.
How many times have you heard the word ‘procurement strategy’ throughout your career? Hundreds, if not thousands? And how many times have you seen one created and executed brilliantly?
In 2020, especially after this year’s crisis, we all know that a procurement and supply chain strategy is more important than ever. But it’s also more challenging than ever to create the right one, as we posited in our last article Procurement Strategy: What You’re Currently Doing Wrong.
So with all the challenges and complexities that a procurement strategy brings, is it possible to create an ideal one? One that goes beyond a ‘your wish is my command’ strategy, yet doesn’t make the mistakes inherent in a ‘market leader’ strategy?
It most certainly is. And here is how you do it.
Step 1: Assess and define
The first step in setting a strategy is assessing the one that you already have. Think you don’t have one? Think again. As we showed in our last article, all procurement functions have a strategy – whether they like it or not.
If you’re struggling to define your strategy, or it seems like it’s nonexistent, have a look at the choices and activities you undertake every single day. Are you constantly behind, putting out fires left, right and centre and at the mercy of your stakeholders? If so, you’re probably pursuing a ‘your wish is my command’ strategy. Or alternatively, are you rocketing towards an idyllic vision of ‘procurement best practice,’ focusing more on the doing side rather than consultation with your stakeholders? If this is the case, you’re pursuing a market leader strategy which, although it may seem ideal now, will soon lead you astray.
Assessing your current strategy will force you to confront the truth about what you’re doing but more importantly, what is and isn’t working. Understanding your mistakes here will help set you up to create a strategy that does work.
After you’ve discovered your strategy, the next critical step is understanding the strategic priorities of the organisation. For example, perhaps you’ve always been focused on costs, yet your business is more focused on quality? When undertaking this step, as procurement professionals, it’s tempting to pour our everything into it, meticulously researching our business, their competitors, and so on and so forth. Yet with all things strategy, the solution is more important than the problem, so ensure that you spend no longer than a few hours figuring out both your own strategy and that of your business.
Step 2: Identify stakeholders and laser-focus
From a stakeholder analysis perspective, the problem with the ‘market leader’ strategy is that, quite simply, the firm’s internal stakeholders aren’t consulted in its creation. Conversely, the problem with the ‘your wish is my command’ strategy is that stakeholders aren’t consulted here either – they are just left to make demands.
The obvious solution for procurement, then, is to identify your primary stakeholders within the firm, figure out your core offering to them, and define what you will be able to deliver, and what may need to be outsourced.
Dave Pastore, Senior Director, Sourcing Operations, at Corcentric, believes that identifying key stakeholders is absolutely essential to secure buy-in across the organisation:
‘You’ll find that some stakeholders are more inclined champions of procurement than others, identifying them early and collaborating with them will lead to a snowball effect on procurement’s successful collaboration across the organisation.’
To give an example of, let’s say that a business has recognised that their rate of returning customers is low, due to substandard product quality. The primary stakeholders who are concerned by this trend are the executive, customer service team and marketing team – and they are exactly who, from a strategic perspective, you’d need to prioritise. As a procurement function, then, your focus may be on sourcing new, higher-quality suppliers, while also carefully balancing cost considerations, as undoubtedly the finance team would still be a key stakeholder for you. With the focus on product quality, you may then choose to outsource quality assurance or administrative tasks, so you can laser-focus on what will add the most strategic value.
When considering the overall corporate strategy, and which stakeholders to prioritise, you’ll inevitably need to choose the parts of the strategy that you can influence the most.
Step 3: Consider your competitive advantage
When it comes time to decide which strategy to pursue, your decision-making process should be similar to the way that any business decides their own strategy: by figuring out your competitive advantage.
Think about it. How does Starbucks get ahead? By providing better value coffee than Dunkin’ Donuts. And McDonalds? They need to find their unique value proposition and deliver on it, vis-a-vis Burger King. As strange as it may seem, this is no different from you and your procurement strategy.
Diego De la Garza, Senior Director, Global Services, at Corcentric, believes that your competitive advantage may not be just one thing, but rather it should evolve over time:
‘Your competitive advantage should evolve as the environment of the organisation changes, one day the organisation is ripe to capture savings and the next is prioritising process automation.
‘Procurement competitive advantage is predicated on its ability to deliver value to what the organisation needs most.’
Even if your competitive advantage is something that evolves, it still can be challenging to discover. For example, it clearly doesn’t make sense for procurement as a function to compare themselves against other internal functions, such as finance. It also doesn’t make sense for procurement to compare their own function to procurement in another organisation, as that business may have a totally different strategy. Procurement, as with all other internal functions, has an effective monopoly within each individual organisation, so comparison is hard. Often, the most effective comparison is an outsourced provider.
This can often be a useful starting point to define your competitive advantage, though. All things considered, what value can you deliver that an outsourced provider cannot?
Step 4: Play to win
Once you start to understand what value you might be able to offer your organisation, and your stakeholders in particular, create several different strategies with different focuses, and then decide on the one you believe will have the highest chance of success. For example, with the situation described above, you may decide to focus on procuring higher-quality suppliers, or alternatively, technology that can guarantee better quality assurance.
You won’t know which strategy will be the most successful, of course, but ensure that you’ve comprehensively consulted your stakeholders to maximise the best outcome. Then, throughout your implementation, make sure everyone is continually consulted, and informed, especially if requests akin to the ‘your wish is my command’ strategy start creeping in.
Stakeholders are well and truly key to a successful strategy, says Dave Pastore:
‘A key to ensuring the successful adoption of your procurement strategy is to collaborate with those who will be most impacted by it: your stakeholders.’
We all know that strategy is important – but equally, that it’s hard. But by understanding your company’s strategy, then figuring out your competitive advantage as a function and, finally, consulting with your stakeholders, you’ll have the best chance of creating and implementing a strategy that will add the value you know you can bring.
What challenges have you had in setting your procurement strategy? Let us know in the comments below.
How do you set a strategy for your procurement function? Discover what not to do.
In 2020, we’re all au fait with the word ‘strategic.’ Procurement needs to be strategic, metaphorically yells every advice piece we read. What’s the strategy behind that, what’s your function’s strategy, what’s the strategy this year? Exclaim C-suite executives we run into; or perhaps a strategy consultant they’ve engaged.
But when it comes to procurement – what does a strategy even mean?
As an internal function, a procurement strategy is a complex idea. As procurement’s purpose is inherently to serve our stakeholders, should our strategy simply be to do just that? Or should we set a separate procurement strategy, based on best practice we observe in our particular function, elsewhere? Both approaches have their benefits, but also significant downsides. So which one is it, or is it neither? Here’s a detailed explanation of the two different ‘strategies’ that most procurement teams execute, and exactly why they may not be the best choice going forward:
Bad strategy #1 – The ‘Your Wish is My Command’ Strategy
What is the ‘Your Wish is My Command’ strategy?
Ken had not long been in his role as CPO at a utilities company when a meeting entitled ‘Procurement Strategy’ appeared in his diary. He hoped – and assumed – that the meeting would be about the business’s long-term strategy, which he would then translate into a roadmap for his team.
But he was wrong.
Alison, the company’s CEO, told him that he need not bother himself with strategy, because ‘that’s what I’m here for.’ She said, unapologetically, that the job of internal functions like procurement was to ‘keep all internal stakeholders happy’ and that she expected his team to ‘do whatever was required’ to do just that.
‘That was the problem with the last CPO,’ she told Ken, ominously. ‘She was always on a different wavelength, always chasing her own version of success. But while she did that, no one here was happy. Don’t repeat that same mistake.’
Why is the ‘Your Wish is My Command’ strategy so appealing?
The ‘Your Wish is My Command’ strategy, or the idea a procurement function exists to simply do whatever is required by stakeholders within the business, is frighteningly common. This is because the basic premise of this strategy – the idea that internal functions are created to serve the wider corporation – is in fact correct. Many CEOs believe that the business units that create products or support customers should be supported by internal functions. While this is true, it can also be deeply frustrating for functions that need – and deserve – to create their own strategy.
But the problem with the ‘Your Wish is My Command’ strategy runs much deeper than just frustration.
What’s the problem with the ‘Your Wish is My Command’ strategy?
The ‘Your Wish is My Command’ strategy works in theory only; as many CPOs will have now no doubt learnt. By granting ‘wishes’ – so to speak – to a multitude of different commanders, without any regard for what to prioritise or how to allocate resources, staff quickly become overworked, resources get spread too thin, and stakeholders are often underwhelmed. All decisions become reactive and nothing is done well, meaning that the all-important procurement influence is lost, with little room to show value added. Business units start ‘insourcing’ – either doing part of procurement’s job themselves, or looking for cheaper, external resources to do it for them.
Overworked staff, insourcing and little value perceived to be added leads the C-suite to fundamentally question whether procurement is ‘worth it,’ meaning ever-more pressure on cost savings, and eventually, redundancies.
The ‘My Wish is Your Command’ strategy is something that Dave Pastore, Senior Director, Sourcing Operations at Corcentric, has seen too many times – but, in his opinion, it never works:
‘Any strategy that reduces the procurement function to a shared service without providing it with the ability to challenge the organisation is a squandered opportunity at best, and a self-inflicted wound at worst.’
On the surface, the ‘Your Wish is My Command’ strategy seems to make sense. But dig deeper, and it’s a deeply fraught concept that deprives procurement as a function of fundamentally doing what they need to do – adding value.
Bad strategy #2 – ‘Market Leader’ Strategy
It’s clear that the ‘Your Wish is My Command’ strategy is no way forward. So is the opposite strategy, one whereby procurement makes clear choices that set the company apart vis-a-vis other procurement functions externally, the better choice then?
What is the ‘Market Leader’ strategy?
As a new CPO in one of the world’s fastest growing tech companies, Karen thought she’d secured her dream role. And in her first few months on the job, that seemed to be the truth.
As someone who was quite entrepreneurial and strategic herself, Karen knew that to become a ‘market leader’ in procurement, the company needed to invest heavily in tech. The CEO, himself a young entrepreneur, gave Karen the green light to do whatever she needed. ‘Just make sure we’re the best,’ he said, while signing off on a budget that made Karen’s eyes water.
But as time passed by, problems materialised for Karen. It turned out that being ‘the best’ wasn’t as easy as emulating best practice in the marketplace, for a number of reasons.
Why is the ‘Market Leader’ strategy so appealing?
For ambitious CPOs, the chance to implement the ‘Market Leader’ strategy can feel like a career-defining moment. Firstly, it treats procurement with the respect it deserves, and places it equally with the rest of the business in terms of power and importance. Secondly, it just seems like the right thing to do. If you’re trying to be ‘the best,’ why not look for an example of that and then try and do the same?
Creating a ‘market leading’ procurement function may well look good on your CV. It may be the case study that nets you media coverage; that amplifies your personal brand and that makes you an authority in the space. But at the same time, there’s every chance it will fail within your organisation.
What is the problem with the ‘Market Leader’ strategy?
The ‘Market Leader’ strategy seems perfect until you consider one thing: context. And given that procurement is not separate to an organisation, but an integral part of it, context is hugely important.
Take the example of Karen detailed above. What evidence did she have, beyond the fact that she was working for a tech company, that investing heavily in tech was what was needed for her function? Precisely none. Many procurement leaders have chased ‘best practice’ before, only to discover that what might be best in the marketplace may not suit their organisation for a number of reasons.
Jennifer Ulrich, Senior Directory, Advisory, at Corcentric, believes that the idea that you have to be a ‘market leader’ in all aspects of procurement is misguided:
‘You don’t have to be a market leader on every aspect of procurement in order to generate a competitive advantage to the organisation.
‘Doing what is right for the business will put you in a winning position more often.’
While market-leading strategies look externally focused, they actually function more like internal monopolies, where procurement serves themselves, rather than the needs of the business leaders around them. As a result, the function falls victim to the typical problems experienced by monopolies, including arrogance and overresoucring. Managers within the business complain that resources are being used for ‘show’ as opposed to invested in things that would actually give the company a competitive advantage.
As a result, backlash ensues. The ‘value’ added by procurement is again called into question, and the function is seen as the exact thing it is trying to rebel against: burdensome cost.
So how should you set a procurement strategy?
If a ‘Your Wish is My Command’ strategy doesn’t work, and neither does a ‘Market Leader’ strategy, then how should procurement create a meaningful, long-term and effective strategy?
‘Start with defining what success should look like for procurement in your organisation, finding those answers early is a relatively easy way to build a strategy that will drive healthy support across the organisation.’
Want more detail? Discover exactly what to do in our next article: How to Set a Procurement Strategy Part 2: What to do. Join Procurious now to be notified immediately when it’s published.
Writing off Procurement as the department that finds things for the cheapest price is to write off a complex and important decision-making mechanism that expertly considers several vital factors over “buying cheapest”.
It is saddening how some organisations still think the only idea of Procurement is to buy the cheapest. This leads to numerous erroneous opinions about Procurement function and profession in general. Because of this myth, other departments within organisations try to avoid Procurement department while making strategic decisions. Consequently, in many instances those departments face numerous problems, such as poor service, substandard deliverable, late performance and even disappearing vendors.
It is important to instruct our colleagues and duly inform them about the role and significance of Procurement function in any organisation. It is important to bust Procurement myths.
First, in Procurement profession we do not even use the words “cheap”, “cheaper” or “cheapest”. These are banned words. Because the word “cheap” reflects many attributes, including quality. We say “lower in price” or “lowest-priced” or “less expensive” or “least expensive”.
Second, we never look at the price of goods, works or services, if we are not satisfied with the quality. Even if the price is $0.00. We are simply not interested in seeing the price of a bad quality product.
Third, we do not consider price if delivery schedule and delivery conditions are not what we requested. I.e. if medicines or other vital products are going to be delivered long after they are needed – why do we bother about the price at all?
Forth, most often we give zero attention to price if the company offering products or services is not qualified and reliable. Some exceptions might apply for new technologies, know-hows and monopolies.
Fifth, we do not consider price if a bidder disagrees with terms of the contract we envisage.
Only after all these criteria are met, Procurement starts reviewing, comparing prices.
So, in practice, we might review the prices of only 4 offers out of 20 offers received. The remaining 16 would be filtered out because of the criteria above that come before price.
In other words, price is just one of those numerous factors Procurement considers.
Additionally, it is vital to acknowledge that while sourcing best value for the organization, Procurement wears two hats:
The first hat is for dealing with the final recipient of the product or service. Procurement needs to listen carefully and understand all the details and peculiarities of the final deliverable. The price of a mistake here is too high. Any concerns or alternative solutions should be properly discussed before going to market.
The second hat is for dealing with vendors. Here procurement needs to obtain the maximum value for the organisation, while keeping the vendors interested and motivated.
Negotiating in two fronts is difficult, but no one said Procurement is easy. Procurement is a complex and important decision-making mechanism that evaluates risks and offers solutions to guarantee the best value for money. It is certainly more than just buying the cheapest.
This article is based on series of lectures by Levon Hovsepyan organised in 2008-2014
This article was originally published on June 9th, 2020. Source: Procurement.org and has been republished here with permission.
On the internet, content is king. So wrote Microsoft founder Bill Gates in an influential and still oft-quoted essay in 1996. Content informs and entertains. It can move people to action, whether that’s visiting a different website, buying a product or service or changing their thinking and behaviour. It is enormously powerful, done right.
But with millions of pieces of content added to the internet daily (four million videos are uploaded to YouTube every day, to give just one example!) how can you as a procurement professional stand out?
Start with these top tips for finding your voice, building your personal brand and creating brilliant thought leadership content online…
Who are you?
You might think that’s an easy question to answer. But when you’re considering your online presence, it requires a bit more thinking to create a personal and professional brand that will help you stand out from the crowd and be seen as influential and credible. Ask yourself the following questions:
What do I want to be known for?
Who is my audience?
What is my unique selling point? Why should people listen to me?
Once you’ve answered those questions, you’ll have a clearer idea of the topics you should create content on, the style of content you want to create and also the kind of things you want to stay away from. You can’t do everything, so pick your niche and stick to it.
Know your angles
Any content you create needs to have an angle. If you’re writing a blog post or thought leadership article, your angle is the clear theme or point that you want your readers to take away from your piece. An article without an angle is unfocused, unclear and uninteresting.
The best way to identify your angle is to think about the headline of your piece. How can you best sum up your idea into a short, compelling statement that will make people want to read the whole piece? Often a good idea is to answer a question that people might have or to offer a series of tips. For example: ‘How to build brilliant stakeholder relationships remotely.’ ‘Five creative ways to make cost savings in indirect procurement.’
Writing great copy
So you’ve got your angle, how do you write a great post? When it comes to online content, the best approach is to keep it short (fewer than 1,000 words unless you’ve designated it a ‘long read’), punchy and accessible. Our attention spans are getting shorter by the year – thanks internet! – and people do not have the patience to engage with overly long and complex material online. Break up your article with sub-heads, use bullet points or pull out a few top tips at the end.
If it’s getting too long and complicated, why not break it up into a series of pieces? This will also encourage people to keep coming back to you for insight.
And it might seem obvious, but remember to proofread your work. Your ideas might be fantastic but you’ll be far less credible if your pieces are riddled with spelling errors and misplaced apostrophes!
Keep it consistent
Consistency is a critical pillar of building trust, and you want to be a trusted voice and expert on your chosen topic. Being consistent means committing to putting out content regularly – not spamming people but making sure you are continuing to put out a regular stream of interesting and insightful pieces. If you are starting to blog, you can’t just post something every six months. Instead commit to at least once a month.
Consistency also relates to your voice and subject matter expertise. People should know what to expect from you. That doesn’t mean you can’t mix things up and be creative, but don’t just write about something for the sake of it or because everyone else is doing it. Being consistent means being genuine, authentic and true to yourself and what you stand for.
Know your channels
If a procurement professional writes a blog, but no one reads it, was it even worth writing? Think about the channels you can use to amplify your voice. Twitter and LinkedIn are great tools to publicise your work but also to ensure you are consistently sharing relevant content by others that relates to your interests and the personal brand you have created. Using a platform like Procurious is great because it has a readymade engaged audience eager for insightful content.
And think about format as well as channel. Is written content best for this message or could you get creative with video or audio? Should you embed infographics or imagery? Have fun with it and your audience will enjoy it as well.
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We all know networking and creating connections with the people around us is important, but how do we do at the moment? Here’s how.
Any successful person will tell you that it isn’t what you know, but who you know that gets you ahead. Forging new connections and fostering existing connections can help you broaden your horizons, discover new opportunities, and even secure a much sought-after promotion. Often though, creating these important relationships happens in person. Whether it be via a kitchen chat at your workplace or at an industry-specific event, great connections often start with a personal conversation, a handshake and perhaps an impromptu coffee.
Yet unfortunately, with the world the way it is at the moment, the face-to-face option is not appropriate and in many places in the world, not even possible. So does this mean that networking needs to stop? Certainly not. Here’s five creative ways to stay in touch with your connections, new and old, without ever having to shake a hand.
1. Check in people in your network
Given that demand for mental health services have soared worldwide, from a care perspective, there’s every reason to check in on people within your network, and a number of ways you can engage with them.
Connecting or reconnecting with people could be as simple as asking them how their pandemic experience has been, and whether they are, personally, doing ok. Doing so will help them feel supported, and could open up any manner of conversations about future plans or potential opportunities. Connecting certainly doesn’t need to happen in person, but instead should be done via industry-specific networking sites such as Procurious.
Given the high amount of people who have lost their job or had their hours or pay reduced, it is also a great time to ask others whether you can introduce them to anyone in your network. Well-timed introductions can make all the difference right now, and could be the source of hope and inspiration a colleague needs to get back on their feet.
Finally, it’s been a tough year for everyone, and every extra endorsement can help boost not just someone’s profile, but their morale as well. If you get a chance, give a colleague a recommendation. It could just be the boost they need to secure an opportunity.
With the unprecedented number of people out of work at the moment, many may be looking for work for the first time, so offering to look over someone’s CV could be of real benefit. Alternatively, you could direct them to opportunities within your network, or even recommend online events or upskilling options that might help. Helping others in need is what networking is all about – you never know when you’ll need to call in a favour and your connections won’t forget that you helped them out.
3. Give recognition and show as much appreciation as you can
When it comes to feeling appreciated by our colleagues and managers at work, people typically believe that money speaks louder than words. But research shows that isn’t true. In fact, simply saying thank you can go a long way – and can help deepen your connections with those around you.
Research conducted by Gallup of over four million employees showed that recognition at work boosts not only someone’s morale, but their productivity and engagement with those around them. In other words, recognition makes us happy! But how do you do it in a sincere and meaningful way?
One great way to do it is to give someone praise for something they individually contributed. Ideally, do this in a public forum, such as a procurement industry group discussion board. Giving someone praise publicly for their great work will help them amplify their impact.
4. Recommend learning content
While many of us in procurement have found ourselves busier than ever during the pandemic, some in certain industries may have found ourselves scratching our heads, wondering what to do. This might particularly be the case if we’ve been furloughed or worse, made redundant.
But if we’ve found ourselves with spare time, there’s plenty we can do about that! When this pandemic is over, the procurement landscape will look a little (or entirely) different from what it did before. That’s why now is the time to focus on a number of different technical and soft skills, including resilience. Many courses that you might be interested in are inexpensive or even free, and recommending them to other people can help showcase your industry knowledge and give you a reason to get in touch with your connections.
5. Start a group chat (and talk about things besides work)
The point of creating connections is to broaden your network and potential opportunities. But in creating and fostering these connections, sometimes it’s important to talk about everything but work. Plus, having a casual chat and even sharing some humorous banter with colleagues can inject some fun into your day and help you feel less lonely and more connected.
Whether it’s you sharing cat snap chats or talking about your children or the (limited) activities you’ve been able to undertake during lockdown, bringing your whole self into group conversations can help foster more authentic connections with those around you.
How have you been staying connected with your colleagues and those in your broader network? Do you have any other suggestions? Let us know in the comments below.
Procurement and supply chain leaders are experiencing newfound appreciation and opportunity following their response to COVID-19.
COVID-19 hit supply networks hard. So hard, in fact, that 97% of organisations experienced a related disruption. Still, there’s more to the story than disruption and chaos.
Insights shared by over 600 procurement and supply chain professionals actually paints a positive and inspiring picture: supply chain and procurement leaders were prepared – and responded brilliantly – when faced with a global pandemic that literally brought the whole world to a sudden halt. Now they have an opportunity to reset the procurement agenda.
A Look Beneath the Surface
Consider the data beyond headlines. While nearly every organisation was impacted, only 17% said the supply chain disruption was severe. On the other hand, almost half agreed the impact was minimal or moderate.
Similarly, despite the macro economic turmoil, the impact on supplier payments has been relatively modest. Most contracts and supplier relationships survived the chaos, showing the strength of existing relationships and strategies. According to our research:
58% of organisations are still operating and paying their suppliers per contract,
14% are speeding up payments to suppliers,
6% are providing direct financial support.
When the pandemic affected supply chains directly, procurement responded quickly and effectively. The majority of organisations (65%) were forced to source alternative suppliers for affected categories. As of early June, 79% of those surveyed had already found alternative suppliers for affected categories, with 53% locking down new suppliers in less than three weeks. Amazingly, 18% were able to find new suppliers in only a weeks’ time. This response has not gone unnoticed.
The Spotlight Shines Bright
The agility shown by procurement and supply chain leaders, along with their ongoing criticality in managing the crisis, has been a boon for the function with executives and board members.
“The crisis has put procurement in the spotlight,” commented Ian Thompson, Regional Director, UK and Nordics at Ivalua, a source-to-pay technology provider. “There are a lot of talented executives now getting the attention of the c-suite for the first time.”
When we asked how leadership leveraged procurement and supply chains teams during the crisis, only 16% of survey respondents said they were still being viewed tactically. On the other hand, 40% said their recommendations are solicited more than usual and 22% said they now have a seat at the executive table with input on key decisions.
“For as long as I remember, the question has always been how do we make the C in CPO a real part of the c-suite?” said Thompson. “It’s finally happening, and procurement needs to capitalise.”
According to Thompson, the key is taking advantage of the new platform. “Now that you have the attention of the c-suite, you need to have an agenda, and use the platform to properly set the record straight for what procurement is all about, and what’s possible. When called upon, you can fix the problem, or, you can fix the problem and reframe the conversation internally.”
The heightened attention has also led to renewed interest in procurement and supply chain careers. As a result of the crisis, nearly 62% of all respondents and 71% of millennials said their interest in procurement and supply chain has increased.
“The interest is very high. Procurement has become an essential function during the crisis, especially on the direct side. We have procurement teams that are fueling the food supply chain, sanitising the country and ensuring the flow of essential services across the globe. More people are recognising the importance of procurement and supply chain,” said Thompson.
The current dynamic should lead to fresh career opportunities for Generation Next. The function’s performance during the crisis sets the stage for increased investments in talent development and technology, a bigger seat at the executive table, and new opportunities for ambitious practitioners to make their mark.
2020 is the year of things that seemed easy suddenly being oh so hard. Take going out for dinner, for example, which many of us took for granted until restaurants worldwide were shut. Or from a work perspective, ease of logistics. Closed borders in every continent has certainly presented way more issues than any of us ever thought possible.
And yet another area of life that always presented its own challenges, and now even more so, is looking for a job. Whether you’ve been made redundant or stood down, or you’re starting to feel as if the pandemic isn’t bringing out the best in your employer, the prospect of job hunting right now seems a little scary. What’s even out there? Will I ever find something? And how do I manage my emotions in such an unstable time?
To help guide you through your job search, we spoke to two highly experienced recruiters, Imelda Walsh, Manager of The Source, an boutique procurement recruitment agency based in Australia, and Christina Langley, Consultant at Langley Search and Interim in the UK. Both enlightened us on not only the nuts and bolts of how to manage your job search at the moment, but also how to best manage and talk about your experiences if you have found yourself unemployed.
I’m not feeling that confident at the moment. Is that ok?
At the best of times, job searching can feel a little daunting. But right now, job searching can feel downright terrifying. With job listings in some sectors in the UK down by up to 59%, and job listings in Australia following a similar trend (latest reports show listings are down 54%), many people are feeling overwhelmed by the competition out there, but at the same time underwhelmed by their ability to break back into the market, especially if they’re unemployed. But is the situation so dire when it comes to procurement?
Christina certainly doesn’t think so, as many of her clients are actively hiring for roles. Yet at the same time, she understands that procurement professionals may be feeling a range of emotions right now:
‘How people feel right now depends on their coping strategies. Some will feel empowered and organised; confident in their skillset and pragmatic about what they will consider.’
‘Others may be in denial, unable to view themselves in the context of what has happened. They may be feeling angry, or even struggling with home obligations so it might be difficult to devote the time needed to find another role.’
I’m unemployed right now. How should I be looking for a job?
There’s no doubt that looking for a job right now can be stressful. So how do you ensure that you don’t get caught up in it all, and spend hours and hours obsessively looking for anything and everything?
When it comes to job searching, Imelda says that you need to make a plan and stick to it:
‘Start your job search by defining what roles you want. And at this time especially, I’d also recommend having a plan b. Be clear on what you want but also what you’d accept if you don’t get what you’re looking for in a certain amount of time.’
But what about if you’re really keen to get back to work? Should you apply for anything just in case?
‘No.’ Imelda says.
‘Be strategic about what you apply for, and don’t apply for something that doesn’t genuinely interest you, as this will dilute your profile and make you look desperate.’
Throughout the job search process, Christina says it’s critical to keep balance in your life, and to make sure you’re exercising, eating and sleeping well. Beyond that though, Christina says that like anything, in your job search you need to create achievable goals:
‘Give yourself goals, such as, this week I’m going to network by contacting ten former bosses or colleagues, next week I’m going to write my CV.’
‘Completing these actions will make you feel like you are making progress.’
How do I network effectively at the moment?
Right now, it’s fair to say that most people have a lot going on, with many still working through the pandemic and what it means for their jobs and lives. Thinking about careers and networking might not be at the top of everyone’s mind, so it may feel awkward or inappropriate to network.
Christina believes, though, that we don’t need to feel embarrassed about networking right now. It’s all about mindset, she says, and thinks that we need to change the fundamental question we ask:
‘It’s not “please do you have a job?” but instead “please let me know if you hear of anything.”’
Imelda and Christina both believe that if you are networking, you need to be systematic and targeted in how you do so. Specifically, Imelda recommends:
‘Start by researching the market. What industries are hiring right now? In many parts of the world, that might be healthcare, government, FMCG, tech and a few others.’
‘After you’ve done your research, figure out, ideally, what industry, company and leader you’d like to work for.’
‘Then specifically connect with them or ask to be introduced on platforms such as Procurious and LinkedIn.’
Actually connecting with people should only form part of this process though, Imelda says. The other part is giving back to the community and growing your personal brand and presence. The best way to do this is to be proactive online, through sharing your opinion via commenting on what others are doing and saying in your industry, and publishing your own thought-leadership articles.
How do I interview confidently?
Interviews are nerve-wracking at the best of times. But especially if you’re unemployed, and especially during a pandemic, they can be particularly nerve-wracking.
Fortunately, Imelda and Christina both believe there are many things we can do to calm our nerves before an interview, and especially one with a hiring manager.
Imelda believes the key to good interview performance is preparation. Prior to any interview, she says that it’s imperative that you know your resume:
‘Before an interview, ensure that you can explain all of your roles and your amazing achievements. To do this, reflect on your career and the value you’ve delivered.’
‘And make sure you’ve done your research. Practice storytelling and have answers prepared to common questions.’
Preparation, in and of itself, can make you feel more calm. But if it hasn’t completely taken away the nerves, do whatever you need to just prior to the interview to get yourself ready:
‘Whatever it takes to make you feel better. Meditate, listen to your favourite song, practice your answers in the mirror. If it works for you, ensure you do it!’
As someone who interviews hundreds of people in any given year, Imelda does acknowledge that interviews can be harder than they seem. But at the same time, she thinks that we need not be too hard on ourselves. Hiring managers and recruiters alike know that it’s a difficult market, and that many people have been stood down. The key, she thinks, is to be able to effectively explain your time off:
‘The pandemic is global – everyone knows what is happening. So if you’ve found yourself with a resume gap, people will generally understand.’
‘But still, a good explanation of what you’ve been doing will help. For example, if you say you’ve been doing “nothing” managers might be a little concerned. But if you say you’ve used the time to upskill, or even to progress a personal hobby or project, that will suffice.’
Recruiters can also be a big help if you’re nervous, Christina says. Specifically, she encourages all candidates to ask questions in order to understand the big picture of any job they may be going for:
‘Always ask your recruitment consultant for the real story and requirements beneath the job description.’
‘And also try and find out about the hiring managers who will be interviewing you. What is their background? Where have they worked? Etc.’
How do I know if I’m nervous in an interview?
Try as we might, sometimes it’s just not possible to get rid of interview jitters. But how do you know if you’ve successfully squashed your nerves or not? There’s a few things that give you away, Imelda says … and they may not be what you think.
‘Fumbling over words, sweating, nervous twitches like shaking a leg, a lack of eye contact, or even talking too fast and rambling are common signs you’re nervous.’
Christina agrees, adding that your voice volume can also give you away:
‘If someone’s nervous, they often talk too loudly or even too quietly.’
While these might be common signs of nervousness, Imelda has also seen a couple of other less common signs of nervousness that we should all be aware of:
‘Often, candidates are told to use “power poses” before the interview to calm nerves. But a couple of times, I’ve seen the overuse of power posing, for example, sitting back in a chair with a leg up on your knee, in interviews.’
‘Although this may feel commanding, it is often a compensation for nerves.’
Note to all: keep the power posing to before the interview!
What should I talk about in an interview?
The world of procurement has most certainly undergone a shake up since the pandemic. So does this mean that employers are looking for certain traits and experiences now that may not have been as important before?
Imelda certainly thinks so.
She’s seen the following shift in what employers are looking for:
‘We’re seeing an even bigger focus than ever on supplier relationships. Organisations are wanting procurement to have a genuine strategic relationship with vendors, meaning they can lean on them in times of need.’
Beyond supplier relationships, Imelda believes that the soft skills that were always considered important in procurement are considered even more important now:
‘Your ability to influence, engage and be customer-focused is even more critical right now.’
‘Beyond that, businesses want savvy procurement professionals who know that now is no time to waste a crisis. Instead, now is the time to step up and show the importance of procurement.’
‘Innovate, be open to change and take advantage of this opportunity to make a positive difference.’
How is job search going at the moment? Are you having to do anything differently? Let us know in the comments below.
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