Category Archives: Procurement News

Weaning Stakeholders off the Procurement Welfare Programme

Where does procurement’s remit start and end? As these lines get more and more blurred, it might be time for procurement to take charge and start the painful weaning process.

By RGallianos/ Shutterstock

Time and again the procurement profession has asked for a “seat at the table” and the opportunity to be seen as a strategic business partner. In some cases, requests have been accepted and change has been forthcoming. In other cases, change is proving more difficult to put in place.

However, in this ever-shifting landscape of change and, perhaps in its eagerness to be accepted, procurement may have stepped outside of its remit. That’s not to say that this is a bad thing, but there is strong argument to suggest that what procurement has done is create a rod for its own back.

Public procurement, and procurement as a whole, already has its hands full with the myriad tasks it takes to get a good tender out to the market. Research and analysis, supplier engagement and internal stakeholder management all take time. And that’s not to mention the contract management that should be carried out post-award too.

But there’s a sneaking feeling that the lines around procurement’s remit are becoming a little too blurred, and that stakeholders are getting a little too used to the procurement ‘welfare programme’. And it’s perhaps time to start the painful weaning process.

The Welfare Programme

It’s worth examining in a bit more detail what we mean when we call it a ‘welfare programme’. Traditionally, procurement has been viewed as a transactional function, responsible for the preparation, issue, evaluation and award of tenders. It was a process-driven role with little or no strategic responsibility.

More recently procurement has been moving to become more of a strategic business partner, with objectives aligned with organisational strategy. More importantly, the function also has a role in setting these overall strategic objectives. However, this is where the issue lies.

As procurement has stepped up and been involved in strategy, its remit and responsibility has spread in line with this. And unfortunately, this has led to situations where professionals are undertaking tasks that have never resided in the procurement sphere.

Procurement should absolutely be getting involved with the writing of specifications, ensuring they are fit for purpose and allow for openness and transparency in the process. But the role should be one of challenging specifications, not actively writing the whole document. The same goes for short-notice or last minute tenders. Why take on all the time pressure ourselves when we’re presented with a requirement that we know, from the start, cannot be completed in the appropriate timescales?

The Budget Burden

From a personal point of view, this issue has been keenly felt in the public sector. Budgetary issues should come as a surprise to no-one (have you been living in a cave?!) and have pretty much been talked to death. The issue doesn’t just lie within procurement, but across the whole organisation. With resources stretched, departments will look to manage their workloads and focus on the most important and strategic tasks.

This means, inevitably, that certain tasks get passed around like hot potatoes and other tasks get left until the last minute.

Procurement, keen to be involved and to remove the (most would say ridiculous) notion of being a roadblock, has become like the school kid desperately trying to get in with the ‘cool kids’. For assignments, lunch money and extra credit read short-notice tenders, reining in non-contract spend and writing specifications. In the willingness to be a partner, the profession has lost its ability to push back on these tasks.

The question is, how does public sector procurement start the difficult process of weaning its stakeholders off this support programme?

Weaning your Stakeholders

The answer isn’t an easy one, but it does actually have a positive outcome all round. It stems from being able to push back, but in a positive way. For example, for specifications, rather than an outright no, ask what help your stakeholders need, whilst making it clear that the responsibility is still on them to write the document.

To assist with resourcing, put monthly (or more regular if required) meetings in the diary to discuss upcoming requirements. Procurement will be able to bring information to the table in the shape of work coming up for retender, plus what procurement resources are likely to be available.

For the most part, it’s about helping strategically define the best route for the organisation to get what it needs. There are stakeholders who still aren’t fully au-fait with the available procurement routes and how they can potentially save time. Not every procurement exercise needs to go through a full tender, taking the 6-9 months it can do to deliver an outcome. The public sector has the ability to use things like Prior Information Notices (PIN), Contract Notices and frameworks to help reduce timelines AND still deliver a good procurement outcome.

It’s neither rocket science nor a quick fix, but it’s vital to get it right and strike the right balance between helpful and put upon. Procurement may have a seat at the table now, but it’s now up to us to earn the respect we deserve for sitting there.

I’d love to hear your thoughts on this article and the upcoming series of articles on the challenges facing public sector procurement in 2019. Leave your comments below, or get in touch directly, I’m always happy to chat!

It’s Procurement’s Own Fault That The Business Thinks We’re Only About Price

If you’re forever complaining that all your stakeholders want from procurement is cost reduction, consider this: maybe it’s your fault. Here’s how to fix it.  

Over the years I have seen and agreed with a tendency in the area of procurement and supply management about the movement to become a broader function; one that goes beyond comparing prices only, and becomes a business strategist.

At the day-to-day level, the organisation has goals that when cascaded to Procurement could be understood as “only” about cost reduction. One consequence of this is that Procurement’s work and recommendation revolve much of the time around pricing. And this makes sense, as it is the most intuitive strategy to bring benefits to the company, and it is also the easiest way to measure impact (at least to the eyes of our stakeholders).

Considering that we as a function are trying to evolve, a consequence is that we feel that we get classified as professionals that can only talk about the prices from suppliers. This situation puts a glass ceiling on what Procurement can do, making it harder to gain relevance in the wider organisation.

But, which came first? The chicken or the egg?

It’s our fault

My theory is: could it be caused by us? Could it be that we ourselves are continuously reinforcing the cycle in which we always talk about price and then the organization talks with us only about price as well?

Competitive pricing does not appear from thin air, especially in organisations with mature procurement functions. These organisations require that the Procurement Manager (the agent that needs to make two different organisations “talk and function together”), make use of levers such as strategy tools, supply chain tools and people tools (mainly) to achieve what is regularly expected: a lower cost.

And how many of those levers are about price only?

If Procurement wants to become more relevant in the organisation, it needs to build over time the tone of the conversation, steadily broadening the decision analysis and variables and incorporating into the recommendation more business broad perspectives: create a competitive advantage, consider impact to society and environment, supply chain efficiencies, changing the category structure, and so on.

To understand if you are a Procurement professional who is capable of growth in the organisation and who will one day become a business strategist, growing at the same time the value of Procurement as function, take the first step: make a self-assessment.

Looking beyond price

Take your most successful procurement recommendation, and delete all the components that are price specific, or are directly linked to price (e.g. spend levels, price savings, price structure, price benchmarks, etc.). How much is there left?

If there is not much left, it means you have work to do to steer your business conversations into broader business impact topics. I present below a couple of ideas that could be used to initiate and maintain the transition to procurement contributions with strategic added value to the business:

  • The first one is not an actual recommendation because it is playbook: do the procurement homework. Create the procurement framework for your category including supply market strategic analysis, decision/evaluation matrix, category analysis and positioning, and all relevant topics that revolve around a strategic process. To change the game, you need to be aware of how is currently played.
  • During your competitive procurement processes, conduct a negotiation round (or at least a supplier meeting) without talking about the price (or similar); challenge yourself to identify the differences between suppliers and to identify the value buckets that are hidden behind the price tag. By simply broadening the topics in conversation, the chances for a successful negotiation increase (as you may increase the negotiation topics). As a result your procurement mindset will kick in and will guide you to new and better strategies.
  • When making presentations, ensure the information you present relates directly to your strategy: it clutters your work if you present supplier total revenue, number of employees or location, if these are not directly related to a component of your strategy. At the same time, use graphics to build momentum to present your recommendation; if the intention is to present which supplier is bigger (assuming that the aim is to communicate that bigger is a proxy for better), then presenting a code or a ranking of the “bigger supplier” could suffice to communicate your idea (details could always go to annex).
  • Show others how you expect the variables of your presentation to play out in one years’ time. This means: Do you expect the same supplier to still be the most competitive at contract exportation?  What level of technology compared to peers do you expect the supplier to own at contract expiration? Would the supplier be better prepared to collaborate with the organisation? Which supplier may have a change of ownership or acquire new assets?

Business mindfulness is created over time. By initiating an own process of “thinking  business” instead of “thinking price” while producing our daily procurement outputs, not only are we capable to implement more resilient and value adding solutions, but we enhance the mutual benefit relationship of our function with the business, moving away from that “price manager” tag that Procurement may have, and eventually opening up the space to create more opportunity for procurement professionals.

To give Procurement a seat on the table we also need to be leaders that develop people. It is important to say that these ideas of “talking about everything except price” is a technique that should be used not only with self, but with suppliers and with junior team members. Giving them the challenges as proposed here becomes a tool for their development, challenging suppliers to be better, and help your people become more rounded business professionals.

We should embed in our mindset that every Procurement project is an opportunity to improve as a business professional for the benefit of the business. I expect the ideas shared on this piece to trigger the process of transition from price managers to business strategists.

5 Reasons Your Procure-to-Pay Implementation Will Fail

Is your organisation about to embark on an initiative to purchase and implement procurement software?  Well, you’re bound to fail. Unless, of course, you address these landmines.

1. You don’t know what your requirements are

I’m sure you can define your problem.  You can probably guess without looking.  Lack of visibility, process, or control; maverick spending; inefficiency; mounds of paper…you name it. Immature procurement organizations that are not tech-enabled likely have it.  But these are just the symptoms.  It’s far more difficult to understand the underlying causes.  Sometimes Procurement’s ills are simply the result of  lacking the specific tool  to drive efficiencies, increase visibility, etc. In many cases, however, things are the way they are for a much more complicated reason.  The diagnostic process can prove time consuming, but accurately identifying Procurement’s sickness is the only way you can define and design a solution to cure it.  Going through a robust requirements gathering exercise is an essential to step in selecting best-fit technologies.

2. You aren’t buying the right tool

Without its requirements defined, how can Procurement know what tool to look for?  The underprepared organization is left to carry out solution design during the buying cycle, i.e. the sales cycle for software providers. This situation presents more than its share of headaches. For example, a common misstep is to buy P2P software to cure a lack of spend visibility (or simply because that’s what you had at your last company).  Someone selling a P2P platform will happily show you all the ways their reporting will provide spend visibility.  Of course this is after your RFP process (let’s say 1-3 months), implementation (6-9 months), and then onboarding and adoption to pull a full year of spend through the platform.  What that provider might not tell you is that there are spend solutions out there that can pull together your AP data, classify it, and feed it back to you in a matter of weeks!  That’s not to say P2P isn’t important for capturing savings, improving efficiency, and enforcing process compliance, it just may not be what you need right now.  Once you have your requirements down, you need to rack, stack, and prioritize your objectives as well as the tools you’ll need to achieve them. Building a technology roadmap to understand the full scope of investment over time to meet your goals.

3. Change management isn’t just training…and you aren’t prepared

Speaking of P2P, have you thought of just how many people, departments, and processes these tools will affect?  There are two factors that drive a successful technology implementation – strategic impetus and organizational readiness.  If you have neither, you probably won’t get budgetary approval.  But let’s assume that there is executive level buy-in throughout the organization to invest in procurement. Let’s even assume that one of those avenues is technology.  Do they really know what these investments will entail?  Does the rest of the organization understand the impact implementing a software platform will have on their people?  Do you?  If not, there are 2 options: 1) take some steps to get them on board, or 2) start with a less impactful investment that maximizes results and minimizes change.

For any platform, successful implementation depends on end users not just employing the software, but leveraging the technology (and doing so correctly) to derive the business outcomes you are looking for. Unlike more upstream procurement software modules like spend analysis and sourcing, CLM, SRM, and P2P touch various parts of the organization from Operations, to IT, to Finance, and everything in-between. This even includes the non-procurement stakeholders who will need to adopt the platform and the changes in process that come with it.   Communicating, generating buy-in, and managing the change throughout the organization is a huge undertaking.  Doing it successfully? That’s an even bigger ask.

4. You forgot to include your stakeholders

Speaking of stakeholders, did you forget to invite them to the design meetings?  How about the kickoff?  The demos? What about the project initiation meetings? If not, you are already behind the 8-ball.  Stakeholders should be incorporated early and often.  This includes requirements gathering and change management as mentioned above, but also the selection and implementation processes as well.  Not caring about the current state that you are about to change is a mistake.  Even if you think you know all of the ins and outs of the business (which you don’t), inclusion goes a long way in developing buy-in, encouraging  adoption, and (let’s face it) making sure you don’t miss anything. 

5. You don’t have a plan

Sure technology can probably solve your immediate issues, or put out the latest dumpster fire, but making tactical multi-year (and potentially multi-million dollar) investments in an ever-changing  landscape is short-sighted to say the least.  What is your ideal state?  Do you want to develop a best-in-class procurement organization?  Do you even need to?  Do you want 100% spend under management?  How do you even define spend under management?  What will your organization look like in the future?  How are you going to continuously improve?  How do you define success now and in the future?  And how are you going to measure that?  These are just some of the questions Procurement needs to answer when defining their vision for the future.  That vision should provide the foundation for your technology roadmap and ultimately determine the solution you select.  

Done correctly, the technology selection and implementation process could be a once-in-a-career undertaking. Don’t make these decisions lightly. Remember that Procurement’s new tools have to outlive the hype surrounding them and provide for the function’s continued strategic evolution. Slow down, ask questions, encourage collaboration, and never let the discussion around the ‘next big thing’ force Procurement into hasty decision making.

Anthony Mignogna is a Director at Source One, a Corcentric Company.

Reach Your Summit at Big Ideas Zurich

Sign up as a digital delegate to be in with a chance of winning a Parrot Bebop drone worth £449.99!!

Sign up as  a digital delegate for Big Ideas Zurich (it’s free)  

On the 10th December we’ll be donning our hiking boots, picking up our trekking poles and embarking on a new adventure.

Brace yourselves, because Big Ideas is about to get truly digital!

For the first time ever, we’ll be filming and streaming the entire day’s event via the Digital Delegates group on Procurious. If there was ever a time to register for one of our summits, it’s now. Featuring presentations and interviews from some of Europe’s top procurement leaders, we’ll be discussing:

1. Procurement and Supply Management Towards 2030
2. The Talent Equation
3. Automating Procurement out of a Job
4. Time Enough at Last: where would top practitioners focus energy if tactical elements of procurement were automated?

Prizes for procurement pros – WIN Parrot Bebop drone worth £449.99

You probably don’t need any added incentive to sign up, but everyone loves a prize, right? And believe us when we say we’ve got prizes falling from the mountaintops.

We’ll be doing seven prize giveaways throughout the day to digital delegates actively participating in our online discussions. And, by joining the group you’ll be automatically entered into our prize draw to win  a Parrot Bebop drone.

To be in with a chance of winning…

Step 1: Sign up as a digital delegate for Big Ideas Summit Zurich

Step 2: Get automatically entered into our prize draw to win a Parrot Bebop drone worth £449.99

Step 3: We’ll reveal the winner during Big Ideas Summit Zurich on 10th December

6 reasons to become a digital delegate

Registering as a digital delegate for Big Ideas Zurich is totally free and will give you access to the entire day’s event. Here’s what you can expect from the day:

Drive your peak performance 

As we charge towards the new year, this is your final chance in 2018 to fulfill your personal development goals. Learn how YOU can reach the summit of your career in a whole range of critical areas, from business partnering to engaging with the latest game-changing technology.

Watch from anywhere 

We’ve pushing the digitisation of this event to the limits! Big Ideas Zurich will be streamed on Monday 10th December via Procurious. Become a Digital Delegate to watch from wherever you are, whether you’re at the office, on the bus, or at home enjoying a glass of wine.

Win a Parrot Bebop Drone worth £449.99 

All Digital Delegates that engage in the Procurious Big Ideas Zurich Group on Monday 10th December will go in the running to win a drone! Procurious will also be giving away a whole range of prizes on the day – but only to those who get involved! Follow Procurious on social for more details on prizes and giveaways.

Get the latest research

Be one of the first to get hold of Procurious and Michael Page UK’s final installment of the Procurement 2030 report. This much-anticipated research paper will be released on Monday 10th December, with a live discussion of the findings with one of the report authors.

Engage with the hottest topics facing procurement and supply 

What skills do I need to drive peak performance in my procurement career? What’s the latest intel on blockchain? What steps can I take to close the gender pay gap? Digital Delegates tuning into Big Ideas Zurich will hear about the latest, hottest topics that are challenging procurement and supply professionals around the globe.

Hear from procurement’s top thought leaders

Watch presentations and interviews with inspirational speakers including blockchain guru Olinga Ta’eed, gender equality champion John Everett and supplier innovation expert Jeurgen Nelis. But that’s not all! This event will be packed with bite-sized content including research updates, top picks from the Procurious Blog, and CPO interview compilations.

FAQs

When is it?

10th December 2018. But a lively conversation has already begun on Procurious! Expect to see most of the action between 10am-3pm GMT when we’ll be streaming all of the action from Zurich.

Where is it?

Although our top influencers will be meeting in Zurich, due to its digital nature Procurious members across the world can watch the whole event from the comfort of their office, armchair or even from the beach!

How can I join?

Simply sign up to Procurious to become a digital delegate. You’ll instantly gain access the Big Ideas Zurich Group and the live stream on the 10th December

Does it cost to attend as a digital delegate?

It is completely free to join Procurious and to be a Digital Delegate! Simply sign up or enrol here.

Do I have to be a member of Procurious?

Yes. Participation as a digital delegate is free and open to all members of Procurious. You’ll be joining a community of 32,000 like-minded procurement peers and gain access to all Procurious’ free resources.

Help – I can’t make the live-stream on 10th December!

No worries! If you can’t join the action on the 10th December, you’ll be able to catch up when it suits you, on demand, via the digital delegates group.

Sign up as  a digital delegate for Big Ideas Zurich (it’s free) 

How to Reign In Even The Wildest Maverick Spenders

A candy fix. Underwear from Victoria’s Secret. An obsession with purple. Real maverick expenses from the front-line of procurement, and how to reign them in.

Image: Jackson Stock Photography/Shutterstock

Anyone who works in an office environment has experienced a scenario that goes something like this:

There’s something you need to do your job, so you just go out and get it – the quickest and easiest way you know how – and then expense it back to the company. Maybe that means buying a notebook from the store around the corner or ordering computer accessories from Amazon.com. Maybe you’ve booked your own travel for a business trip or called up a good friend to get her events management company to help with a corporate event.

Using these shortcuts may feel like you’re doing yourself and your company a favor, but most employees have no idea just how counterproductive this “maverick” spend behavior can be for the organisation’s ability to accurately analyze spend, supplier management, and procurement’s overall strategy.

When employees go rogue, purchasing goods or services out of contract or from unapproved suppliers, the company will miss out on certain discounts they worked hard to negotiate. Worst case, it can damage relationships and impact future contract terms with preferred vendors and even open the door to unethical business practices that taint the organisation’s reputation.

What’s scary is that these scenarios mentioned are all too common and appear to be relatively innocuous, believe it or not. In my 20 years of experience in procurement leadership roles, I’ve seen it all. Some of the craziest purchases I’ve seen employees make on behalf of their companies have been things like:

  • Buying candy for the “office” candy dish… you know, just in case a guest might want to help themselves to some. In reality, the employee that purchased it, ate it all.
  • Purple pens to match purple highlighters, purple pads of paper, purple post-it notes, you name it… simply because purple was this employee’s favorite color.
  • Items from Victoria’s Secret which were expensed as “marketing apparel.” Enough said.

So what needs to happen to reign in this type of behavior, both the common and unwitting cases, as well as the rare and extreme? Simply put, you need to make it fast and easy to place and receive the orders.

Start by putting a system in place for better control and compliance– one that simplifies and automates the purchasing process, regardless of the product/service, approval process or supplier. This makes the entire process a lot more efficient by governing requisition, approvals, buying, receipt, reconciliation and reporting. It streamlines even the most complicated workflows, making it much easier for employees to comply.

These systems should also have intuitive and easy-to-use interfaces (think of the way consumer e-commerce sites are designed) so that employees actually want to use them to make purchases, and not just because they have to.

Lastly, and most importantly, take maverick spend seriously. Maverick spend can still sometimes happen even with the most sophisticated and intuitive systems. Keep a close eye on spend analytics to track exactly where rogue spend is coming from, so you know when and how to enforce spending policies that prevent future rogue behavior – and those surprise expense requests.


To learn more about maverick spend and how to set your key initiatives in the coming year, join Basware and The Hackett Group on November 7th for Ramp Up: Planning Your Key Improvement Initiatives in the Coming Year with Amy Fong of The Hackett Group and Nancy Jorgensen of Basware.

5 Challenges in Indirect Procurement

Indirect spend is a notoriously difficult area to bring under control, but it also offers enormous saving potential … if you can get it right!

There’s a lot of buzz online at the moment about indirect spend because we’re barrelling towards one of the major events for indirect on the U.S. procurement calendar: ISM INDIRECT2018.  We’ll have a look at the conference line-up in a minute, but first, let’s review some of the enduring challenges for those tackling indirect spend. 

Five enduring challenges in indirect

Real change happens when CPOs get involved and influence buying behaviour across the entire organisation – and in every category. But the hurdles they face include:

  1. Lack of investment: Indirect procurement is typically under-invested, especially given its potential to create significant savings for organisations.
  2. Lack of capacity: The indirect procurement team has to focus on sourcing commonly purchased and high volume goods and services, as well as transaction processing.
  3. Lack of mandate: The primary responsibility for most indirect procurement categories often lies within the business units. For some categories, such as travel, it may not even be clear as to who actually owns the policy.
  4. Lack of awareness and low visibility of indirect procurement: Indirect procurement is often seen as less important than direct procurement in the eyes of senior executives. It is seemingly even less important at the business unit level. Many stakeholders view an indirect procurement professional’s role as the ‘rubber stamper’ at the end of the process.
  5. Organisations lack the skills required for effective stakeholder management:The indirect procurement function has to find ways of working more effectively alongside the various business units and stakeholders within each business unit.

INDIRECT2018

What happens in Vegas … will definitely need to be brought back to your organisation and implemented at the earliest opportunity!

ISM’s INDIRECT2018, running from 7-9 November at the ARIA Resort & Casino in Las Vegas, is being billed as the essential educational event for indirect procurement professionals.

Speakers include:

  • Rahul Vijay, Head of Global Tech Sourcing at Uber – Telecom, Internet of Things and Sourcing: Powering 10 Billion Uber RIdes
  • Karen Fedele, Head of Procurement Centre of Excellence, Shire – Stakeholder Engagement: Unlocking Procurement’s Value
  • Jessica Rosman, VP Procurement at Caesars Entertainment – Sourcing in a unique and challenging environment – while sustaining the environment

Also on the program:

  • The future of indirect technology
  • Transportation costs in a challenging economy
  • Balancing successful travel relationships
  • Techniques for complex supplier negotiations
  • Reducing risk exposure
  • Roundtable discussions
  • Supplier showcase

INDIRECT2018 also includes a strong focus on nurturing the up-and-coming generation of indirect procurement gurus, with five student presentations and thee announcement of 2018 scholarship winners.

Register now for ISM INDIRECT2018

Food Allergy Deaths Avoidable With Blockchain

The recent cases of tragic deaths caused by food allergies has opened afresh the debate on fully transparent supply chains.

Many of you will have seen or read news reports in the past couple of weeks regarding the tragic deaths of two women due to severe allergic reactions to eating pre-prepared food. In both cases, the food in question was purchased from the same retailer, though the resulting actions from the cases have been markedly different.

The cases have highlighted industry-wide issues regarding food packaging and labelling relating to allergens, as well as reigniting the debate on where the responsibility lies for food content and allergen checks within the supply chain.

Inadequate Labelling and Mis-sold Products

The first incident occurred after a woman ate a pre-prepared baguette that had sesame baked into the product, but had not been listed on the product’s ingredient list on its packaging.

A recent inquest found that the retailer had “inadequately labelled” its products, failing to highlight the presence of sesame in the food. While the organisation agreed with the coroner’s verdict, it has thrown a spotlight on industry packaging requirements, particularly when it comes to listing potential allergens.

The second death was as a result of a severe allergic reaction to the presence of dairy protein in a pre-packaged sandwich. However, unlike in the first case, the retailer has pointed the finger of blame squarely at one of its second-tier suppliers, claiming it was mis-sold a guaranteed dairy-free yoghurt.

The supplier in question, with whom the retailer has since ended its relationship, has rejected the claim that its product was to blame. They had their own supply chain issue in February 2018 when they were forced to recall some of its products due to undeclared milk, resulting in it ending a relationship with a third-party supplier. The supplier has denied that the recalled product is the same product as caused the allergic reaction, though the retailer and two independent authorities have conducted tests showing that the yoghurt in question had levels of contamination.

Where the fault lies for the contamination will be established in due course. And though this ultimately pales in comparison to the tragic loss of life, it does raise a couple of serious questions: Where does responsibility lie for ensuring product quality in the supply chain? And what can organisations AND suppliers do to ensure full supply chain transparency?

Introducing Blockchain to the Food Industry

The debate on the first question will continue to rumble on. In reality, the responsibility lies with every party, irrespective of which tier they are in the supply chain. That said, the buck ultimately stops with the end user, retailer or seller to ensure products are fully labelled and they are satisfied they are selling a quality (and safe) product.

The answer to the second question may be closer than you think, however. Blockchain has been discussed at length on Procurious and its applications in the supply chain are well documented.

Plus it helps that the world’s largest retailer, Walmart, has just unveiled its new food industry blockchain ambitions in China. The retailer plans to use the existing, proven, technology to ‘overlay’ the supply chains in the notoriously complex industry.

And with major producers such as Dole, Nestle and Unilever on board, as well as IBM as a technology development partner, this does have the signs of being the first step on a (long) road to success.

Success that could usher in new processes for how food information is obtained, stored and shared, allowing all parties to track the provenance of food from farm to table. This will give all levels of the supply chain the transparency required to know products are both safe and of the highest quality.

With what has been in the new recently, with impacts that none of us can predict and that potentially extend further than any of us know, this may also represent the first step to ensuring the similar tragedies don’t happen again.

Read more on Walmart’s food industry blockchain ambitions here.

Why Out Of Date Procurement Models Are Worse Than Useless

Manufacturing and procurement technology has moved so fast in recent years that it’s entirely possible the trusty maturity assessment you’ve always used is now hopelessly out of date.

Image by Stokkete /Shutterstock

The other day, someone showed me a quiz from a 1960s Cosmopolitan with a title along the lines of How Good a Housewife Are You? The subject-matter, of course, had not aged well. The reader had to answer questions about what they did when their husband comes home from work – do they put dinner on the table straight away, or fetch his pipe and slippers first? For the 21-century reader, every question in the quiz came across as outdated, and you’d never dream of using it for its intended purpose (unless it was for a laugh).

Things change – whether it’s women’s equality, social mores, or technology. The point of the story above is that the way we measure performance must keep pace.

In the procurement world, maturity models are one such tool that can become obsolete.

Conventional maturity models for direct materials sourcing usually evaluate procurement in terms of outdated capabilities and enabling systems. You know the ones – they focus on concepts such as “upstream versus downstream” and rely on traditional metrics like spend under management. What they don’t do, however, is address the tremendous advances in technology that have transformed the manufacturing world in the last ten years. Nor do they address impaired agility and opportunity risks hidden by siloed data, fragmented ERP systems, and different product management systems. 

A contemporary maturity assessment

Cognitive sourcing advisor, LevaData, were motivated to build a Cognitive Sourcing Maturity Assessment after their 2017 cognitive sourcing study revealed the following trends:

  • Only 13 percent of companies continuously engage their suppliers; the average organization engages with only 52 percent of their suppliers once a year.
  • Outmoded enterprise analytics and sourcing tools lead to reactive, inward-looking decisions, rather than proactive insights that identify market risks and opportunities before they become a problem.
  • Compared to an average organisation, the most advanced procurement teams use technology to speed up their prep and negotiation time by a factor of ten.
  • Only 5 percent of organizations utilize a purpose-built platform for direct materials sourcing operations.

Proof of LevaData’s Maturity Model’s currency is the fact that it takes into account so many of the aspects of Industry 4.0. Founder and CEO Rajesh Kalidindi said the Model is “unique because it captures the impact of contextual market intelligence on sourcing professionals’ decision-making and their ability to leverage open-source analytics, machine learning, and AI-enabled insights with cross-functional teams”.

The survey takes about 10 minutes to complete, and will provide you with a summary report with recommendations for near-term improvements. Kalidindi explains: “This maturity assessment enables companies to quickly and easily close the performance gap. It offers an objective, third-party perspective of an enterprise’s strategic readiness and visibility into actionable business intelligence. C-level executives and board members who may not be familiar with these issues gain a clear picture of resources and processes needed to improve outcomes in increasingly volatile global markets.”

Click here to take LevaData’s Cognitive Sourcing Maturity Assessment.

Don’t miss out on the 2018 Cognitive Sourcing Summit

LevaData will host the 2018 Cognitive Sourcing Summit in Santa Clara, CA, on September 13, 2018.

The event is expected to attract 150 attendees, with speakers and panels exploring how to accelerate the journey towards cognitive sourcing, with a focus on the latest trends in digital transformation and the adoption of AI among procurement teams.

Attendees can expect to hear insights from executive leaders from the high tech, industrial equipment, medical device, telecommunications, and consumer products industries, along with industry analysts and thought leaders from IDC, Supply Chain Insights, Gartner, Chainlink Research, and Spend Matters. Presentations and workshops will include:

  • Cognitive Sourcing: Maturity Model, Innovation and Competitive Advantage
  • Digital Procurement: Building a Successful Roadmap
  • Driving the Transformation: Making the Case and Enabling Change

Participants will also hear from Fitbit’s Kevin Purser and others regarding their successful digital procurement journeys and recommended best practices.

Here’s the really exciting part – the closing keynote presentation will be delivered by Procurious’ very own founder Tania Seary, who will discuss:

  • How to formulate an action plan for when delegates return to the office.
  • The attributes needed to successfully orchestrate, collaborate and negotiate within a complex, technology-enabled global supply network.
  • The uniquely human skills we’ll need to untangle the gridlock of competing interest and find a resolution to the supply challenge in an AI-boosted environment.

Interested in learning more? Visit www.levadata.com.

Register now for the 2018 Cognitive Sourcing Summit.

Procurement 101: Why We Need Data Analytics

Do you want to leverage big data in procurement but are unsure how to article the benefits? Here are four ways data analytics is changing the procurement profession.
 

1. Supply Chains Will Be More Transparent

Data analytics will make it possible to have visibility of more factors than humans could ever analyse on their own. With customers demanding the country of origin and the practices surrounding the acquisition of everything in the products they buy, data can help track products through the supply chain. Additionally, procurement professionals can find ideal suppliers with predictive data. Doing so will make it easier for products to adhere to a specific code of ethics throughout the supply chain.

2. Risk Focus Will Shift

As more information trickles through the supply chain, the timeline of risk will shrink. With more visibility, you’ll be able to concentrate on immediate disruptions in the supply chain and respond to those.

Tracking weather, traffic conditions and other disruptions that could affect your supply chain will allows for more rapid adjustments, which will in turn lead to fewer disruptions in the supply chain and of the business. Planning for these factors becomes easier with data analytics that can juggle far more pieces of information than humans can.

3. Procurement Professionals Will Become Knowledge Leaders

The information procurement professionals will use will make them knowledge leaders for the entire company. For cost savings, the data used in procurement will be invaluable. To take one example, a commercially sold multivariable freight optimisation program saved one industrial company 25 per cent on its air freight costs. The marketing department may consult with the information procurement professionals gather from social media to determine demand.

4. Automation in the Supply Chain Will Gather Pace

The Internet of Things (IoT), which combines sensors and data analytics, will ramp up automation in the supply chain. Automation will ease the supply management professional’s job, as much of the ordering becomes part of the system. Sensors on store shelves can measure how fast a product is selling, then alert the manufacturer to adjust the amount to deliver to individual stores — or even the total number of products to produce. The head of JDA Labs, an operations planning software company, describes big data and sensors as answering manufacturers’ demands for product placement information. The sensors show where stores place products on their shelves, and informing manufacturers of their product placement is the first step toward automation of meeting consumer demands.

Implementing Data Analytics for Procurement

Walter Charles, CPO of Biogen, advises companies to include data analytics in their processes and claims businesses do not need a large team of scientists. All they need are a category manager and a group of six to 10 people who know how to use the software to examine bids.

Charles used such a team to work with $12 billion when he was at Kraft Foods and had a similar group for $10 billion in work at Kellogg’s. Ernst & Young, EY, suggests the team members know how to work with quantitative data since quantitative risk management will become a critical part of procurement. With the right people and software, you can make data analytics a reality for your business.

Analytics will make use of unexpected data. Ernst & Young predicts that by 2025 social media, mobile technology, big data and the cloud will be the primary sources for data analytics in procurement. Analysing this information will be necessary with the right software and people to unpack it.

Security and Big Data

Part of using shared information in the cloud and big data will be keeping the information and your company secure. You cannot ignore the problem, so make sure you always have updated virus screening software. Additionally, keep a firewall for your business. When in doubt, hire a trusted IT security professional to keep your information secure.

Is Data Analytics the Future of Procurement?

Data analytics will become an integral part of the future of procurement and the supply chain. If you don’t start the process of implementing it in your operations today, you could be behind tomorrow. The information from this process will save you money and make your business more efficient. Data analytics is one investment where the ROI will continue to benefit your business for years.

Supply Chain Cyber Attacks On The Up

Software supply chain cyber attacks look set to be one of the biggest cyber threats facing organisations in the coming years. This week, the US intelligence community issued a new warning regarding future attacks…

Varlamova Lydmila / Shutterstock

The US intelligence community has issued a new warning on cyber attack risks.

The Foreign Economic Espionage Report, which was published by the US’s National Counterintelligence and Security Center (NCSC), warns that China, Russia and Iran are most likely to be behind future attacks.

“Software supply chain infiltration is one of the key threats that corporations need to pay attention to, particularly how software vulnerabilities are exploited,” William Evanina, the NCSC’s director and the US’s top counter-intelligence official, told the BBC.

“To get around increasingly hardened corporate perimeters, cyber-actors are targeting supply chains.

“The impacts to proprietary data, trade secrets, and national security are profound.”

The report details that despite the opportunities that technologies including AI and the IoT offer, they will also introduce vulnerabilities to U.S. networks – for which the cybersecurity community is not prepared.

The severe impact of cyber attacks was in evidence in June last year following the NotPetya attacks, ,  which cost nearly a billion dollars in collective damages. The White House called out Russia following these attacks issuing the following statement – “In June 2017, the Russian military launched the most destructive and costly cyberattack in history. This was also a reckless and indiscriminate cyberattack that will be met with international consequences.”

Experts believed that Russian hackers launched 2,000 “NotPetya” attacks in the early hours of June 27.  NotPetya was designed to masquerade as ransomware, but was soon revealed to be wiper malware with the purpose of destroying computer systems, erasing data and disrupting business operations.

Cyber attacks on the rise

One of the consequences and subsequent risks of living in a hyper-connected world is an increased vulnerability to indiscriminate cyberattacks.

According to Chain Store Age, “nearly 80 per cent of IT security professionals across the United States, Canada, UK, Mexico, Australia, Germany, Japan, and Singapore believe software supply chain attacks have the potential to become one of the biggest cyber threats over the next three years. Yet, few organisations are prepared to mitigate the risks.”

Whilst many organisations have response strategies in place to deal with cyber attacks, they are not necessarly holding external suppliers to the same security standards.

Tesla Asks Suppliers for Cash Back

  • Tesla sent a memo to some of its suppliers, asking to return cash to the automaker, The Wall Street Journal reported. Tesla did not respond to Supply Chain Dive’s request to confirm the memo
  • The automaker told the Journal it is looking for price reductions from some of its suppliers to improve competitive advantage.
  • Since the beginning of the year, “we’ve seen a huge run up” in the amount of money due to suppliers, Bill Danner, president of CreditRiskMonitor, a financial risk analysis and news service, told Supply Chain Dive. The figure, however, isn’t unexpected as Tesla ramps up production of the Model 3
  • At the end of the first quarter of 2018, Elon Musk assured Tesla shareholders he’s feeling “quite confident” the auto company will have positive cash flow in the third and fourth quarters of the year

Read more on Supply Chain Dive

‘Change public procurement rules in response to heatwaves’

  • In a report on heatwaves, the Environmental Audit Committee (EAC) said “extreme temperature events” in Europe were now 10 times more likely than in the early 2000s
  • “The government should make businesses aware of the developing threat of heatwaves and the economic consequences,” said the report
  • “Procurement rules should be updated so that schools and the NHS do not spend public money on infrastructure which is not resilient to heatwaves
  • “Research on the economic consequences of heatwaves concluded that there was a more significant cost to the economy than benefit,” said the report

Read more on Supply Management 

Record-breaking Prime Day’s aftermath

  • Now in its fourth year, Amazon Prime Day has grown into a major shopping event that not only drives online sales but creates ripple effects throughout the entire retail industry
  • But suppliers and retailers must prepare for a surge in consumers returning goods — or risk products turning in to “dead money”
  • Amazon recently announced it had sold more than 100 million products on Prime Day 2018, making it the biggest on record since it started the event in 2015
  • But now in the middle of its 30-day return period from Prime Day, Amazon and several retailers are likely fielding the return of hundreds of thousands or even millions of products

Read more on Supply Chain Dive