Category Archives: Procurement News

Disrupting or Disrupted? Why The Status Quo Won’t Do Anymore

If you’re not disrupting, then you are being disrupted. If procurement doesn’t get to grips with the right technology, then the profession’s future path is uncertain.

Watch our free webinar, ‘200,000,000 to 1: Using Technology to Find Your Perfect (Supply) Partner’, here.

The current pace of change around the world is unprecedented. Procurement and the wider organisation are quickly recognising that maintaining the status quo will not suffice in staying ahead of the pack.

However, that’s not to say that simply implementing a technology solution will solve every problem. No technology is perhaps better for the long-term health of an organisation, than a poorly chosen technology, implemented poorly.

Procurement 4.0 is a term many of us are using to encapsulate the changes Industry 4.0 is making in the supply chain. Also known as the fourth manufacturing revolution, Industry 4.0 marks the convergence of physical and digital manufacturing capabilities, where increasing automation and computerisation allow us to create so-called ‘smart’ workplaces.

Technology is at the core of the Industry 4.0 changes. Procurious hosted a webinar last week, in conjunction with Oracle, to discuss the critical role technology will play in the evolution and advancement of the procurement profession in this “brave new world”.

Ask the Experts

We invited David Hobson, Business Development Director, Cloud Solutions at Oracle, and Darryl Griffiths, Enrich Director of Delivery and Presales, to help us answer the tricky questions.

The discussion covered four key topics and challenges that face procurement, and provided some solutions as to how the profession can deal with them in the future.

Innovation

“IT is only ever an enabler for change.”

Procurement is under a lot of pressure today to find suppliers who will deliver the ground-breaking innovation that will give their company a huge competitive advantage.

However, real innovation is now coming from smaller, more agile companies, which procurement hasn’t traditionally worked well with. Traditional procurement structures and processes have been designed to work with large strategic suppliers, and are now inhibiting innovation.

We heard:

  • Why most rationalisation and standardisation efforts in the supply base have failed.
  • How the right technology or platform can ensure that performing supplier relationships are fully leveraged.
  • Why the challenge for business is to be able to adapt and apply new solutions and technology for competitive advantage
  • Why highly customised legacy systems, fragmented data, complex integrations and inefficient processes are hindering the digital innovation agenda.

Predictive Analytics

“Increasingly the evolution of the procurement function is to more proactive, rather than reactive.”

Spend management and standardising processes can come across as a pretty uninspiring (yet essential) part of what we do. Technology, innovation and digital strategies are where people want to be, but it all comes undone if we’re not managing risks in the supply chain.

On the table in this topic was:

  • The question of are procurement using the right tools in the right way?
  • The vast array of data available for tracking compliance, and how organisations can best leverage this.
  • How automating non-differentiating processes will free up time for value creating parts of the business, such as gathering insights into changing market dynamics.
  • Why many organisations are still grappling with getting data into a structured and accurate form that they can use for predictive analytics.

Streamline Processes

“Organisations that are effective in integrating data outrank their peers by 70 per cent across revenue and margin.”

If procurement can get its processes frictionless, we could then focus on the sexier, more value-adding, parts of procurement.

Standardised processes are a huge enabler for this. And, of course, technology plays a huge role in helping realise the benefits of standardised processes.

We found that:

  • In the past, often the best the system ever was on go live day, thanks to sporadic, or non-existent updates
  • Few organisations are entirely harmonised across business operations, as result of M&A, divisional evolution and conflicting business demands.
  • People tend to underestimate the complexity of stitching together the myriad vendor solutions as they aim for a more B2C-type interface
  • We will see gaming industry concepts and increasing virtual representation as part of Industry 4.0

Implementation

“The journey to Cloud is often viewed as a when, rather than an if.”

Time and time again, we hear stories about how the business case a software solution hasn’t been realised due to a failed implementation.

Among some of the most common reasons for this are a lack of understanding that this is a change management process, not just a technology roll-out, and cuts to budget for training and support.

Our experts also argued that:

  • Solutions providers need to move from being software companies, to being service companies, or risk losing their customers.
  • Grand technological visions of the past failed as the solutions we too far out of line with the business needs
  • Regardless of solution some common foundations exist for any project success which include rubbish data in means rubbish data out.
  • Change management is vital in implementation, or people will revert to old habits
  • Focus needs to be on proving the tools first to help quickly establish credibility

Watch Now!

These are just some of the highlights from the webinar. You can catch up with the full discussion by signing up here.

And the learning doesn’t stop there. If you have any questions, please let us know below, and we’ll make sure it gets passed along to the experts.

For more information, and to watch the full webinar, visit our dedicated page.

How Can Procurement Break the Chains of Sole Sourcing?

Whether its design specifications, or traditional attitudes, sometimes procurement gets painted into a sole sourcing corner.

Kenishirotie/Shutterstock.com

This article was first published on Future Proofitable.

I am jealous of those who have never had to deal with true sole suppliers. I think IT buyers will understand me best. It’s just not that much fun. Let’s take a closer look at what sole or single sourcing is, and how best to deal with it.

I will cover the subject in two articles. The first one covers what it is, and the second will contain tips and hints how to deal with these situations.

Spot the Difference

If you there are a few suppliers in the market who you could buy from, but you choose to stick with one supplier (leaner supply chain, eliminated duplicating logistics and management, administration costs), you have a classic single source situation.

If there is only one supplier in the market, and no alternatives, you have a sole sourcing situation.

Real-life Examples?

There are many office cleaning services providers out there in the market. However, for a list of very good reasons, you choose to outsource it to one service provider. That would be single sourcing.

Now, imagine five different suppliers working on your ERP system creation and implementation at the same time, doing the same job for the same part of scope. Not fun.

Or imagine that your supplier comes up with exactly the product you need for your manufacturing process, but patents it and keeps on increasing the price at every opportunity. Even less fun.

How Does It Happen? 

For single sourcing, the option is deliberate choice. There are many advantages to it:

  • You keep the competition, because the supplier can be easily replaced. Negotiation leverage is at its maximum level like this.
  • At the same time, you spend less time for supplier management and supply chain administration.
  • You have consistent quality of items or services delivered. Or, if not, deal with it in one go.
  • You eliminate all non value-adding activities (some examples here).
  • The supplier will be more willing to work with you on various cost reduction or services improvement initiatives.
  • The threat of losing business in the future will be a big motivator to not overcharge you.

There are a variety of reasons why a sole supplier situation can form. Some are more to do with perception and resistance to change, while others are truly sole supplier situations. They can be categorised in three ways.

1. True Sole Sourcing

Where your company might depend on one supplier without any escape routes. For example:

  • Market monopoly – utilities (water, gas, electric); Governmental services.
  • Patents – technical designs; chemical formulae.
  • Lack of supply alternatives.

2. High Exit Barriers

There are situations when due to various barriers (most often financial – switching costs) competitive situations turn into sole supply situations. For example:

  • Equipment investment – when supplier provides plastic granules storage and supply systems; cleaning chemicals’ supplier provides funds for equipment.
  • Digital solutions (and their switching costs) – you may have had big leverage during first negotiations, but once the initial contract period is over you find yourself dependent. The supplier is technically not sole source, but switching costs are so painful that it gradually turns into one way street of constantly increasing maintenance bills.
  • Manufacturing supply chain integrations – this can often happen naturally, or through pre-existing relationships between different tiers of suppliers. Along the way, one supplier is sold to another, or bought out, and a partnership is ended even though production lines are tied together.
  • Industry regulations (or agreements) – for instance, in order to be able to insure cash in a safe, an insurance company might require a specific quality certificate from a very specific certification organisation. In this case, there is really only one option for supply.

3. Pseudo Sole Sourcing Situations

Frequently, evaluating the situation in the business is more about perception and will, rather than based in fact. Identifying these can bring big benefits.

  • Business users’ preferences – surprisingly, there are quite a few categories of spend where business users are permitted to have preferences. Next time you complain about resistance from stakeholders, consider the number of colleagues who work with particular safety equipment, or similar. And yes, over time, people tend to form preferences for brand name products. Implementing any change might be challenging.
  • Historical heritage – the classic “we’ve always done it this way” situation. It always been bought from this supplier, and only this supplier.
  • Business’ requirements – technical specifications, prepared by engineers. Delivery requirements, set by business users. Packaging requirements, defined by operations or logistics or marketing.

 So now you know how these situations may occur. The question is, can you do anything about it? And how? You’ll have to come back to find out more!

Why Procurement Can’t Have Its Head in the Cloud Anymore

Cloud computing is set to dominate every aspect of our personal and professional lives. So why do we still understand so little about it?

rangizzz/Shutterstock.com

Download ‘Parting the Clouds‘, Smart by GEP’s latest whitepaper, to understand the difference between Cloud Solutions and SaaS Software.

The world’s biggest search engine provides a great window into human psychology, at least of those humans that it’s algorithms decide are sufficiently similar to oneself.

Try it, it’s fun.

Today, if I type “how” it immediately offers me “how…to roast pumpkin seeds”.  Interesting if not immediately an issue.

“Should” suggests “Should…I text him?” Oh, the angst of so many web users! The answer is, of course, no. But will that stop you texting? Of course not.

And “Did” rather disturbingly suggests “Did the killer clown purge happen?”

I’m not sure whatever happen to incredulity and scepticism but people will literally believe anything these days, it seems. And, apparently, the clowns are coming to get us all.

Cloud Computing – Why…?

As so often happens, all of that came about because I got side-tracked while typing another question into my search bar, “Cloud computing, why…”

I was intending to research why a cloud was first adopted as the symbol for the distributed computing concept as opposed to, say a web. But instead I was offered, “Cloud Computing, why…”:

  • do we need it?
  • use it?
  • it matters?
  • is it important?

These are all equally fascinating questions, and clearly asked sufficiently frequently to reach the top of the suggestions list.

Like so many rapid developments in technology such fundamental questions tend to get over-ridden by the pace of change and adoption.

Do we need it? It’s a bit late in the day to ask that question when increasingly we have no choice.

Why use it? Same answer, perhaps.

It matters because virtually every aspect of our lives is in some way connected to it and that in itself answers the fourth question.

Before the most basic of questions can be even asked, the offered answers already indicate some kind of fait accompli.

An even more basic question, that begins “Cloud computing what…” tellingly generates as its top two suggestions:

  1. Cloud computing what…is it? (naturally); and
  2. Cloud computing what…accountants need to know

Well, I wasn’t expecting that.

Cloud Computing – What Procurement Should Know

But it is perhaps an indication of where we are in this particular technology revolution. Cloud computing is set to dominate every aspect of our interaction with the world and traditional ways of doing business are being shaken up and transformed before we can even get satisfactory answers to the most basic of questions.

In our world of procurement the future seems certainly to be in the cloud.  All the software vendors, like ourselves are offering cloud solutions.

But does that mean procurement professionals know everything they need to know about what that means? Is it even relevant? Should you care whether your software is in the cloud or not? Does it matter, as long as it works?

In principal you shouldn’t have to worry about any of it.  But when it comes to making a decision, it’s probably best to be informed.

Cloud, it turns out, is very loosely defined and when selecting a “cloud” solution it’s important to know what you’re actually going to get.  Without a doubt the most important factor is what the software can do for you in delivering maximum value to the organisation. But just as important is knowing what questions to ask to find the best solution for you.

After all, if the internet is to be believed at face value we’re about to enter a new phase dominated by an even more terrifying technology. Clown computing anyone?

Do you know there was a difference between Cloud solutions and Software-as-a-Service? With all the Cloud technology available, sometimes it’s hard to keep track.

Download Smart by GEP‘s latest whitepaper, ‘Parting the Clouds to find out all you need to know.

The Efficiency Value of a Marketplace Approach

Procurement talks a good game when it comes to efficiency. However, few are walking the walking when it comes to taking real action.

This is the second in a three-part series of posts. If you missed my first, ‘Instant Access to Supplier Information a Step Change for Procurement Productivity’, click here to read it.

In that post, I presented a challenge to anyone who assumes that having technology guarantees progress. Make sure your technology is earning its keep and not just putting your inefficient, manual methods online.

In this post, I’m going to take the same approach to efficiency.

What is Real Efficiency?

We talk a lot about efficiency in procurement, but we take very few steps to actually improve it. Real efficiency is more than doing more with less. It is also about timing. Sometimes, doing the same task at a different time increases the impact potential of the effort behind that task.

Take risk management or risk mitigation as an example. Addressing risk should be an active part of the sourcing process, not something to be managed afterwards. While risk information is readily available, sometimes what procurement really needs to know what their peers think of a supplier.

That is why tealbook combined internal supplier knowledge, data from Dun & Bradstreet, and aggregate intelligence from your industry peers into each supplier profile. Adding a peer view to the supplier discovery process not only makes it more robust, it significantly increases the trust factor for everything procurement learns.

Addressing risk early is critical. Two of the first opportunities procurement gets to mitigate risk arise during the supplier discovery process:

1. Inviting more qualified suppliers to participate in the sourcing process improves the final award decision.

You’re always going to lose some suppliers to disqualification or elimination. Investing in the discovery process up front decreases the fall-off rate, and ideally presents the team with a larger number of more qualified suppliers to negotiate with and consider for contracts.

2. Looking at supplier-related risk factors before the sourcing process begins makes it possible for procurement to push back on requirements if they are too confining.

Procurement tries to be good about collecting risk information in RFx’s, but many times it is too late to change the direction of a project based on what the team learns from suppliers.

By doing an early assessment of the available pool of suppliers and their relative risk before going to market, procurement creates an opportunity to widen the pool of prospective suppliers.

Making Efficiency Proactive

In addition to thinking about the timing of tasks and what impact that has on efficiency, procurement needs to look for opportunities to combine activities.

If you are going to conduct a supplier discovery exercise anyway, why not search a platform that incorporates third party risk data in addition to supplier information and buyer knowledge? tealbook incorporates D&B information into supplier profiles so procurement see which suppliers offer the product or service they are looking for in one place.

Taking efficiency to a more proactive level, why not pre-vet hundreds (or thousands!) of suppliers across a wide range of categories? With the right technology and information, procurement could, in essence, create a custom virtual marketplace of suppliers that are ready to bid at any given time.

A broad approach drives efficiency because the suppliers are already vetted and risk is moved up in the process without adding a step or a delay. This is an ideal application of technology because it enables something procurement can’t do on their own on the same scale.

Value creation goals notwithstanding, good procurement teams want competition as well. Without the supplier discovery pre-work being done, procurement is stuck with the same old suppliers time and time again.

And there is nothing efficient or strategic about that. Marketplaces are certainly not a new idea, but they are a path to efficiency that we should look for ways to improve.

Now that I’ve shared my point of view on scalable technology and marketplace efficiency, I’m going to wrap this series of posts with an optimistic view of procurement’s forward looking potential.

Gregg Brandyberry is a recognised pioneer in procurement and sourcing technology. He has over 40 years experience in industries such as automotive, textile, manufactured goods, electronics and healthcare.
He is the former Vice President of Procurement – Global Systems and Operations for GlaxoSmithKline, and a Senior Advisor for A.T. Kearney’s Procurement and Analytic Solutions organisation.

Procurement Translation? Now You’re Speaking My Language

Sometimes in procurement it feels like you’re speaking a different language to the rest of the business. 

Qvasimodo art/Shutterstock.com

Procurious is at ProcureCon Europe this week. Stay up to date with what’s happening on Procurious, and by following us on Twitter.

If we’re perfectly honest, procurement wasn’t the first thing on everyone’s minds this morning. With both media and social media, dominated by US Election coverage, you might have been forgiven for not having your eye on the procurement ball.

However, if you didn’t, then you were likely to miss some great nuggets of procurement knowledge on Day 2 of ProcureCon Europe.

Do You Speak the Language of the Business?

A prevailing theme at the conference has been communication and collaboration between procurement and the rest of the business.

Kristian Saksida’s gave a Finance to Procurement perspective yesterday in his keynote. Today gave us the Engineering to Procurement perspective from Gordon Tytler, Director of Purchasing at Rolls-Royce.

It’s worth noting that none of these speakers have used this as a criticism of procurement. In Tytler’s case, his Engineering and Supply Chain background gave him a broader perspective both inside and outside the profession.

According to Tytler, Procurement as a role and a function is appreciated but, crucially, not fully understood by the rest of the business. If procurement is too insular, then it can’t be sure it’s delivering what the business actually wants.

However, by communicating well (and speaking the right language), procurement can be sure it’s meeting the strategic needs of internal and external stakeholders.

Fly the Plane While Fixing It

Collaboration was also picked out as a vital part of procurement transformation and procurement excellence.

Thibault Eissautier, CPO at pladis (a newly formed organisation in the FMCG industry), was discussing the factors procurement must consider when choosing its operating model. He highlighted collaboration between functions as the only way to definitely deliver significant value.

Procurement needed to speak the language of the business to make sure that senior managers were on board. From Decentralised, to Centralised, to Centre-led, there was no way that procurement could operate in isolation.

The current POM is often defined by the maturity of the organisation. However, many organisations will be changing their POM, while still trying to deliver for the business. Eissautier likened to “flying the plane while fixing it” – not really an image you want with a flight back to the UK later on!

The Future of Air Travel?

The flight metaphor leads nicely into an afternoon session on the construction of a new airport in the Netherlands. Not your common fare for procurement, but there were some amazing insights into the potential future of low-cost air travel.

The Royal Schiphol Group has been charged with the project to build Lelystad Airport by 2018. Two of the team, Budi Darmadi and Peter Mustert, showcased the very different approach the Group is taking to the project’s procurement strategy.

Competition in the sector is fierce, and Lelystad Airport is aiming for the low-cost market, so needs to price accordingly. Given a $58 million maximum budget to work with, Mustert said that they knew a best-value approach would be needed.

For this, they needed to work with experts, but first they needed to identify them using a 4 step model:

1. Approach the Experts

Using a functional, rather than technical specification, and a maximum budget for a ‘good’ solution.

2. Assessment

Experts are asked to supply a 6 page only bid. This is to focus on proven performance and results.

3. Clarification

Following selection, the two parties discussed unclear items, risks, etc. to form a contract.

4. Execution

Let the supplier do their job, procurement is not to interfere. A weekly risk report helps to ensure that there are no blockers for the supplier in completing the project.

And that was it! There was no question of SRM, or partnerships, or even the endless meetings usually associated with contracts. The process aimed to have all parties working together in an open, functional way.

Whether this proves to be successful, we’ll have to wait until April 2018. But if it is, Lelystad Airport will showcase the future of the form of travel. Fully automated, simple, but highly innovative designs, all aimed at providing customers what they need, and want, from low-cost travel, and nothing more.

And who knows, maybe if this is a success, then best-value, non-interference contracts will become the norm. A great vision of the future (so long as you don’t manage contracts…!).

Why Some Supplier Relationships Are More Equal Than Others

All suppliers are equal, it’s just that some supplier relationships are more equal than others. It’s just one of the challenges facing procurement.

Procurement in the public sector can provide its own set of unique challenges. Learning from the experts is one of the best ways that professionals can aim to overcome them.

Marea Getsios is the Coordinator of Procurement at Kogarah City Council in New South Wales, Australia. Marea has worked with both Local and State Government departments in Australia over the past 20 years.

This has given her an in-depth understanding of the procurement process from a strategic leadership perspective, as well as what it takes to drive procurement success.

Ahead of her appearance at the 3rd annual GovProcure 2016 conference, Marea highlighted some of the key challenges she faces in her current role, and the ways she has overcome them. She also shared some tips on the practical side of procurement, including best practice in supplier relationships and risk management.

What qualities and capabilities have you built that supported you in achieving better procurement outcomes?

I’ve used my sales and marketing background to communicate, and engage, with stakeholders more effectively, in order to achieve better procurement outcomes. It’s been important to educate stakeholders on the differences between a procurement and a purchasing role.

By communicating the procurement cycle, and discussing the importance of good procurement practice, it’s been much easier to achieve better governance and practice amongst my colleagues.

The other area I focus on is the importance of planning your procurement program. It is important at the beginning of every project to sit down with key stakeholders and work out the key objectives and risks of the project.

It sounds like you are really harnessing your strengths and experience to minimise setbacks at your organisation!

What would you say the biggest challenges you and your organisation are facing in procurement at the moment? Do you feel that these challenges translate to local government at large and why?

At the moment the most challenging aspect of my role is amalgamating two very different frameworks into one. You have to methodically go through each process and work out which method is going to work best for the new entity going forward.

It’s a good opportunity to look at what has worked in the past for both organisations and decide what will be the most effective in the new framework going forward. Many Councils are presently going through this process, and its not any easy one.

In addition to trying to amalgamate the differing key procedures and policies, the most challenging factor is the culture, and trying to break down the silo mentalities of individuals who are adverse to change.

Interesting you mention the change adverse cultures that exist in business. We know that procurement operations within local government can have far-reaching, visible impacts on the community.

Can you tell us a bit more about the key procurement trends that might impact procurement and supplier relationships at the local level? How you can make the most of these challenges and opportunities?

Obviously we are embracing cloud-based networks to streamline ordering processes. We also have lots of new technological platforms that can automate certain procurement functions, including spend analysis, contract management, and saving trackers.

I don’t believe local government has embraced enough of these opportunities, but they are beginning to play in this space. There is opportunity now to start implementing some of these platforms and managing the workflow more effectively.

The other area I believe could also be embraced better is social media, especially where the engagement of both the community and suppliers is involved.

Procurement technology with built-in social collaboration tools can encourage innovation through improved collaboration with suppliers and other stakeholders. At the same time it can minimise risk, and enable effective decision making.

Moving outside your business to your external suppliers. Do you have any advice or key lessons learned from your supplier relationships and risk management strategies?

I believe if you are fair and transparent, and allow all suppliers and contractors the same opportunities, you will be successful in developing good supplier relationships and managing any potential risk to your organisation.

I try where possible to give suppliers the best insight to the business and our requirements in order to allow them to work out if the organisations requirements are a good fit for their business. This way they don’t waste their time or our time.

It’s important to be clear at the beginning of any relationship, and to set expectations at a realistic and achievable level. I have found that problems arise if suppliers feel they have entitlements, or are basing their livelihood on anticipated revenues.

As long as the communication is clear, it enables the supplier to work out whether they are able to service or supply your organisation accordingly. If they feel they are building their business fairly, then they will do whatever they can to grow their business and in turn provide a good service to your organisation.

It’s important not to treat suppliers and contractors with contempt, or as if they owe you. This can create issues and open up the organisation to unnecessary risk.

It’s been wonderful hearing from you, your insights are extremely useful and there are many thought starters here!

How can attendees benefit from your panel participation at the GovProcure 2016 conference?

The GovProcure conference is a good opportunity for procurement professionals to get access and exposure to a variety of principals and processes that operate across the three levels of government.

It’s interesting to see where there are alliances in the various government sectors and it’s a good opportunity to share ideas and network with other likeminded procurement professionals.

My contribution will have a strong Local government focus, but I also try and talk about how my sales and marketing background has helped me promote procurement in my sector. Much of my procurement practice focuses on the engagement of stakeholders, which I believe is the foundation for success in the procurement sector, and all other sectors for that matter!

Too find out more or to download a brochure, visit the event website.

Take the Disney Approach to Procurement

Take some advice from Disney – storytelling lies at the heart of every successful change programme.

Here’s a little-known fact – I used to work for the Walt Disney Company. Over twenty-five years ago I was a Marketing Co-ordinator in Disney’s International TV Department based in Soho Square, London.

The rest of the team (not me, unfortunately) used to travel to Cannes for the TV Festival each year to support our roll-out of Disney Clubs. It was all very glamorous (for some) and very educational for me.

In one way (at least), I was a perfect fit for a job with Disney. If you’ve ever caught one of my podcasts here on Procurious or elsewhere, you may have heard my voice.

Let’s just say it’s “unfortunate” – quite high in pitch, scratchy…not pleasant! Some of my friends at the time claimed that my role with Disney was actually as the voice-over for Minnie Mouse. Cruel, but understandable!

I learned so much during my time there, but today I want to focus on what I picked up by experiencing the Disney marketing machine first-hand. I am sure many of you have heard about “the Disney formula”, which involves a core asset (the story) being rolled out and leveraged in its many formats.

My short-hand way of summarising this phenomenally successful technique is to categorise the formula into “the book, the movie, the merchandise, the ride – and the tweet”.

Drive Procurement Change Programmes like a Disney Executive

CPOs today are paid to drive global change – but are the programmes we put in place really that effective? Deft change management is what separates the good from the great.

I want to encourage you all to take a very professional, systematic approach to driving change with this Disney-inspired formula.

The Book

At the heart of every Disney project lies the book, or the original script. For CPOs, our “book” is the business case for the change program. This proposal, or argument for action, is the foundation of your change programme that must win the endorsement of your senior leadership team. Without the business case, your campaign has no foundation and will always be on shaky ground.

My advice is to treat your “book” the same way that the world’s best authors approach their craft – write, re-write, and re-write again until you’re 100 per cent confident that you’ve created a rock-solid, engaging business case that meets your organisation’s requirements.

The Movie

Think about some of the lengthy classics that Disney has converted into film. Whether it’s The Jungle Book, The Hunchback of Notre-Dame or Treasure Island, the editors have managed to bring the story down to an average of 1.5 hours. Your “movie” is the public, dramatic expression of your story.

Not everyone will have the time, nor the interest, to read the business case for your change programme, so it’s important to condense it into a version that’s palatable for all. In the corporate world, this is often referred to as “the deck” – or even just a snappy executive summary. 

The Merchandise

Disney has always done an amazing job of licensing their characters to consumer goods companies. Procurement, on the other hand, is notoriously poor at marketing themselves internally.

I’m not suggesting that you order in a range of paperweights or mousepads to promote your change management programme, but it’s worth considering an effective logo or even a slogan that will encapsulate and amplify your message.

Why not reach out to your colleagues in marketing for their creative input? 

The Ride

When I worked at Disney all those years ago, the most profitable part of the business was their theme parks. As part of their marketing formula, amusement rides were based on Disney’s most popular movies and TV shows. But how can this be applied to your change management programme? 

Well, I once heard that if you want to get a message across to employees, you need to communicate it eleven times before it’s absorbed. Why eleven, I have no idea! This is where the ride comes in.

Once you’ve converted your “book” into a “movie”, hop on “the ride” which will repeat the same message over and over again until your program has been accepted.

It doesn’t necessarily need to follow the same track – best-practice communication involves delivering your message via multiple platforms (newsletters, emails, the company intranet, posters and social media) to keep the message fresh and engaging.

A Modern-Day Addition: The Tweet

When I was at Walt Disney, there was no social media. I’ve just checked the #Disney hashtag on Twitter and it’s incredible to see how many accounts they’re running concurrently: @Disney, @DisneyPixar, @WaltDisneyWorld, @Disney Channel, @DisneyMusic. This doesn’t even cover the individual hashtags dedicated to each new movie, along with a legion of unofficial, fan-based accounts.

Disney understands that social media is essential for getting their message to where their audience spends its time. CPOs need to take the same approach. Social media, used intelligently, is an irreplaceable tool in their global change management kit.

Yammer, Procurious and LinkedIn are just some of the many platforms that can be used to engage and influence your team to help them understand the why – and the how – of your change program.

I’ve looked to Disney for my inspiration due to having first-hand experience with their marketing techniques all those years ago in Soho. However, they certainly aren’t the only organisation with a magic formula.

If you’re considering a change management programme, save yourself some time and energy by finding your own inspirational company who demonstrate best-practice, steal their formula, and get to work!

ProcureCon Europe, now in its 17th year, is Europe’s most strategic procurement conference for CPOs and senior procurement executives. See the full range of topic and speakers at the event here.

Will Procurement Have a Fight to Stay Relevant in the Future?

Is procurement facing an uphill struggle to stay relevant? Could strategy and technology hold the key to both destruction and survival?

Procurious is at ProcureCon Europe this week. Stay up to date with what’s happening on Procurious, and by following us on Twitter.

It’s the end of Day 1 at ProcureCon Europe, and the Procurious team are looking forward to winding down with the best Berlin has to offer. First, though, we’re reflecting on what we heard from the speakers and delegates at the conference.

Procurement’s Burning Platforms

After fortifying ourselves with the great coffee on offer, Procurious stepped into the conference hall to listen to David Noble’s ‘State of the Profession‘ address. The CIPS CEO was positive about the situation procurement currently finds itself in, but had words of warning for the future.

One particular quote stuck in our minds as we considered the question of how procurement could remain relevant:

“If we don’t show our true value, our profession will cease to exist in its current form.”

Noble outlined what he termed as procurement’s “Burning Platforms” – those factors the global profession needs to be aware of now, and in the next few years.

First, the spectre of supply chain risk. Global risk is at its highest level (a peak of 80.8 in CIPS’ Risk Index in Q2 this year) since 2013.

Second was ethical supply. Linked heavily to supply chain risk, it appears that procurement is still struggling with transparency and ethics. Only 57 per cent of buyers have visibility of their Tier 1 and Tier 2 suppliers, and the percentage drops to single figures when it gets to Tier 3 and beyond.

The final burning platform was professional relevance, and how procurement could embed strategies to remain relevant. Noble touched on the ‘gig economy‘. This area is a double-edged sword, giving procurement the opportunity to train those not in the profession, but also challenges in maintaining the profession’s reputation.

Innovation & Frank Assessments

Automation and technology was a topic covered by a number of keynotes (more on that in the near future). However, it’s worth touching on a couple of areas of innovation, particularly in the area of stakeholder engagement.

JJ van der Meer, Partner at PA Consulting, outlined some of the activities that procurement can do to bring stakeholders on board. He and his team have coined a new word, “entreprocurement”, as a way of describing this innovation. While a bit unusual, it’s a term that’s likely to stick in the procurement world, we’re sure!

Innovation, and the drive to do better and better, was also the focus of Kristian Saksida’s keynote. Saksida, CPO at Solvay, offered a refreshingly honest assessment of his team’s transformation journey.

He was open to admitting the mistakes they had made while striving for more, but it was clear he wanted the room to have the benefit of this knowledge to avoid the same pitfalls.

Saksida’s background in Finance helped put an interesting spin on his material. However, he made some key points about the need for procurement to be speaking the same language as the business.

For two functions which have often had a troubled relationship, Saksida’s keynote gave a sense of positivity for the future at Solvay.

Sport and Procurement – A Creative Mix

Lastly we stopped in on Celia Sanchez San Juan’s interactive case study on optimising business partnering. Having seen Sanchez San Juan in a panel earlier, it offered a chance to dig deeper into Adidas’ fledgeling procurement team.

You may not see how sport is relevant to business partnering, but the link was far from tenuous. Adidas look at sport as having the power to change lives, and approach their procurement in the same way.

Sanchez San Juan offered Adidas’ maxim, “The Guiding Principle is Helping to Make a Difference, in the Game and in the World”, by way of explaining how the company puts its people at the heart of its change in procurement.

The journey to becoming a strategic business partner drew on the ideas of insights, impact, and innovation. Moving procurement from ‘Support’ to ‘Creator’ drives greater collaboration, and ultimately delivers greater value for the customer. In the world of sport and procurement, it was all about playing on the same team.

Isn’t that a good thought to finish the day with!

Don’t Discount the Outliers – Steal Knowledge From Them!

Outliers are frequently discounted in statistics. But in procurement, it’s worth being more open minded – they may have great knowledge to share.

The Faculty is excited to share its “Outliers” Best-Practice Case Studies paper here on Procurious.

Stealing from your peers may sound ethically questionable at best. However, in today’s fast-paced and increasingly frenetic business environment, individual CPOs simply do not have the time or resources to develop their own solutions to every challenge.

That’s why peer groups such as The Faculty Roundtable exist. They provide a forum for collaborative learning and knowledge sharing around best practice procurement.

Identifying the Outliers

How do we identify best practice? In statistics, an “outlier” is defined as a data point that is a considerable distance from the rest of the observation points. Depending on circumstances, statisticians often choose to exclude outliers from the data entirely so they do not skew the results one way or another.

At The Faculty, we take the opposite approach. We see outliers as an opportunity to celebrate success, set the standard for the industry and, most importantly, learn from best practice.

The Faculty Roundtable’s recent Benchmarking report measured performance across multiple procurement practice areas, including:

  • Corporate Sponsorship,
  • Strategy,
  • Team Structure,
  • Communications,
  • Environment,
  • Innovation,
  • SRM,
  • Systems, and
  • Training and capability.

Our latest research paper contains a series of case studies highlighting some of The Faculty Roundtable members’ approach to common challenges across many of these practice areas.

Case study participants were selected due to their “outlier” status in specific benchmarks, or because they have taken an innovative approach to problem solving, demonstrating excellence in one or more areas.

Learn from the Best

The six case studies cover best-practice solutions to the following shared challenges for CPOs and their teams:

  1. Influence is Everything: Executive Support in Action at Broadspectrum

Learn how Broadspectrum CPO Kevin McCafferty ensured that Procurement gained recognition at the highest levels of the organisation as a team that creates shareholder value.

  1. A Partnership of Equals: Procurement and Environment at Australia Post

Australia Post’s Head of Environmental Sustainability, Andrew Sellick, explains why a partnership with Procurement is the most impactful way for the Environment team to meet and beat the organisation’s carbon reduction targets. 

  1. Taking the Leap: Moving from Operational to Strategic SRM at Energex

It’s easy to get bogged down in the detail. Brett Mann, Group Manager Procurement & Supply at Energex, explains why you need to have the right people in the room to facilitate a strategic level of discussion with suppliers.

  1. Do CPOs Even Need a Communications Plan? Rethinking Stakeholder Communications at Santos

Santos CPO David Henchliffe argues that a communications plan is only required with stakeholders whom Procurement doesn’t have a working relationship with.

If Procurement is intimately involved in the business, then senior executives (and their teams by extension) will know all about your function’s value contribution, upcoming projects and challenges.

  1. Planning for Success: Executing Locally Crafted Strategies in a Globally Owned Enterprise at BP Asia-Pacific

Even in an internationally-owned business with global category strategies, local planning is more important than ever. This is the view of Lauren Feery, Asia-Pacific Strategy and Performance Manager for downstream procurement at BP. Find out how to connect parallel local and global planning processes. 

  1. Keeping Your Eye on the Prize: Working Towards a Unified P2P System Across 30 countries at Australia and New Zealand Banking Group (ANZ)

ANZ has taken on the challenge of unifying, streamlining and simplifying P2P systems in its offices across the entire Asia-Pacific region. From Melbourne to Auckland, Singapore to Manila, the rollout has required best-practice change-management to ensure every end-user is on board.

The purpose of these bite-sized case studies is to enable CPOs to learn from the region’s best-in-class procurement teams and take proven methodologies back to their own organisations.

  • The Outliers Best-Practice case studies are available to download now from Procurious > Groups > Benchmarking.
  • The Faculty Roundtable’s full Benchmarking report is also available here on Procurious > Groups > Benchmarking.

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About The Faculty Roundtable

The Faculty Roundtable is comprised of an influential group of procurement leaders in the Asia-Pacific region. These leaders gather to share their experiences and insights, to achieve greater commercial success for their organisations.

Through The Roundtable, members have access to leading-edge thought leadership and commentators, a ready supply of valuable expertise through exclusive market intelligence, as well as networking and professional development opportunities for themselves and their team members.

Meetings are held throughout the year in Melbourne, Sydney, Brisbane and Singapore.

For more information, please email [email protected] or call +61 3 9654 4900.

Business Backwards – Putting the Customer at the Heart of Procurement

Everyone knows that the customer is always right. And it’s time for procurement to put them at the heart of their work.

Procurious is at ProcureCon Europe this week. Stay up to date with what’s happening on Procurious.

They say every day is a school day. And today is no different for the 250 procurement and supply chain professionals in the room.

Far from focusing on the supplier relationships (though there is plenty of that too), one panel discussion got the assembled masses considering a relationship that doesn’t always get the focus in procurement.

The internal customer interactions have not traditionally treated procurement well. Blamed for late deliveries, for complicating processes, and for being a “roadblock”, the profession takes its fair share of flak.

However, a change of thinking, to put the customer at the heart of the relationship, could change all this.

Don’t Stray too Far from the Customer

Titled ‘5 Changes to Make to Your Procurement Teams to Transform to a Higher-Performing Organisation’, the discussion showcased some great ideas about how procurement could change its focus.

The panel, chaired by Richard Beaumont, former CPO at Prudential Digital Services, consisted of:

  • Antonia Wanner – Director Global Commodities Procurement at Nestlé
  • Axel Horst – Operational & Commercial Excellence Manager at Shell Global Solutions
  • Celia Sanchez San Juan – Director Group Procurement at Adidas

The overwhelming message from all three procurement leaders was that there needed to be a greater focus on the customer. According to Sanchez San Juan, the right business plan should put customers at the centre. If procurement is too far from its customers, then it’s too far from the core of the business.

Antonia Wanner gave an example of the focus that Nestlé gives to its customers in procurement. In the past, the organisation had used 10 types of topping for its chocolate ice cream (competitors used 2).

However, procurement established that its customers were more interested in having natural vanilla in the ice cream, than the chocolate toppings. By reducing the number of chocolate toppings, it allowed Nestlé to procure the natural vanilla, ultimately meeting an important customer requirement.

Business Backwards

Axel Horst then shared the strategy that Shell are using the help drive a customer focus – “Business Backwards”. The strategy takes the traditional top-down process model, and turns it on its head, starting with the customer requirements.

Once these are known, strategies can be defined as to how to deliver this, and then finally, leaders know what they need to do to make the strategy a reality. And it’s not just in process that Shell are demonstrating the drive for serving the customer.

Each Shell employee, including the procurement function, is required to work one full day each quarter on the retail site. According to Horst, this helps each employee understand the customer more, and, for procurement, what they need to consider when buying for the retail side of the business.

Advice from the Future

Beaumont finished the panel by asking the three leaders what advice they would give to their past selves. Though they focused on the key to current success, all three showed that customers were still at the forefront of their thinking.

Wanner highlighted the constant innovation required to stay ahead of the game, with the key being to “try, fail, and learn fast”. Horst built on this by saying that if you were going to fail, fail fast, so that innovation wouldn’t be held up.

Finally Sanchez San Juan said that she would tell herself to push harder for what she really believed in, which was key to driving great innovation across the business.

Will customer-centric procurement really take hold? Or will we be looking back in three years at an opportunity lost? Sadly, without a crystal ball, only time will tell.

ProcureCon Europe, now in its 17th year, is Europe’s most strategic procurement conference for CPOs and senior procurement executives. See the full range of topic and speakers at the event here.