Category Archives: Procurement News

Changing Times for Low-Value Procurement Processes

Old practices die hard, particularly in low-value procurement. However, an Australian start-up aims to change this.

Low-Value Procurement

The dubious, but common, practice of ‘get three quotes but still use the same suppliers’ is firmly under the spotlight. And, thanks to public scrutiny and increasing procurement governance, it might soon be gone for good.

A growing number of Australian Governmental agencies and private sector organisations are looking to make their spend more transparent. And many of these organisations are turning to a Melbourne start-up to increase their accountability.

Ending Entrenched Procurement Culture

Award-winning platform VendorPanel is revolutionising decentralised sourcing in corporate Australia, with growth in the past two years exceeding all expectations.

Launched in 2008 by James Leathem, VendorPanel has been through a number of iterations over the years. It aims to put an end to the corruption-riddled ‘three quotes and no change’ procurement approach that has become entrenched in Australian corporate culture.

The platform is used by hundreds of Australian organisations, predominantly government agencies, to increase transparency, compliance, and savings in quote and tender-based purchasing from their approved suppliers and the marketplace.

Leathem explains that low-value procurement had been largely ignored across public and private sector organisations in Australia. This represents a multi-million dollar risk for procurement professionals, with massive corporate financial leakage, and formal governance processes being allowed to fall through the cracks.

“It’s confusing and difficult for buyers. Traditional procurement systems and processes are complex. Buyers are left to navigate preferred supplier panels, approved contractor lists and the market with no real assistance. This complexity serves to make processes slow and painful, so buyers often just go with what they know,” he explains.

“Problems are compounded when staff are dealing with arrangements managed by multiple external departments or organisations, and where contract information is accessed via multiple websites, documents and intranets.”

Undetected Low-Value Procurement Expenditure

Most low-value procurement expenditure remains undetected. This is because it’s either hidden in email, or the transactional amount is too small for management to bother scrutinising.

This makes it pretty easy for an employee get away with giving low-value contracts to the same business every time, instead of a better performing, or cheaper, company.

“It’s not necessarily full-on corruption, but a ‘better-the-Devil-you-know’ approach of using familiar suppliers. Either way it can land professionals in hot water, particularly in government when it’s public money being spent,” Leathem says.

While the broader procurement industry complained about the issues that came with low-value procurement, nothing was being done to bring about change.

“There was a quiet acceptance that things were never going to change. Procurement professionals appeared resigned to the fact that a solution was impossible, because the problem was too big and messy. This was especially the case for procurement of Services.”

VendorPanel Leadership Team (L-R): COO David Bubner; CEO James Leathem; Commercial Director Matthew Clyne.
VendorPanel Leadership Team (L-R): COO David Bubner; CEO James Leathem; Commercial Director Matthew Clyne.

Procurement Match-Making

Leathem set out to disrupt the market after working with a professional services firm for corporate clients such as ANZ Bank, Fairfax Media, Macquarie and GE.

As part of his role, Leathem was involved in sourcing and engaging with supplier markets. The approach being taken was the best available to anyone at the time. It was a mostly manual approach using a series of internal databases and search processes.

“I saw an opportunity to automate the procurement match-making process by creating a honey pot that attracts the right people to you, rather than buyers always having to scour the market for what they’re after.”

Leathem started out by working with the local government sector, with the rationale that if it could work there, it could work anywhere. He secured a pilot across 155 local governments, and based on its success, VendorPanel was rolled out nationally across 550 local governments within 18 months.

The platform’s growth comes as the broader procurement industry searches for better, more efficient ways to tackle their role.

However, VendorPanel then had an unexpected challenge of showing the rest of the market that the technology was transferrable. Several years down the track this has been achieved, with hundreds of organisations now using the platform.

VendorPanel has now processed more than AUD$1.3 billion worth of sourcing from organisations’ own preferred suppliers, plus an undisclosed amount of public tenders and marketplace sourcing, making it one of the fastest growing technology companies in Australia.

The Benefits Procurement Can Realise from RPA Adoption

Understanding the benefits of Robotic Process Automation (RPA) can help sell adoption to the rest of the business.

RPA Procurement Automation

In our first instalment, we described the fundamentals of robotic process automation (RPA), how it is typically used, and some pricing trends.

Here, we discuss some of the benefits of RPA, as well as what to think about as your organisation considers adoption.

The RPA Value Proposition

Purchase-to-pay organisations that are implementing RPA expect benefits in higher productivity and lower operating costs (Fig. 2).

RPA
Fig. 2 – Benefits Expected By Purchase-to-Pay Organisations with RPA

These improvements are realised in a number of ways, including:

1. Ability to bypass the IT department

Because RPA does not require IT development resources, and calls for a very limited technical infrastructure, businesses are able to undertake these projects by themselves.

However, a big lesson learned from early pilots is that IT needs to be involved in some capacity early in the project, even though this may bring in extra bureaucracy and potentially slow down progress.

Getting IT to sign off on performance demands, system availability, security infrastructure, etc., will pay dividends later when RPA is in production.

2. Shorter, less expensive development cycle time

The typical timeline to develop and deploy RPA is six to eight weeks, dramatically less than traditional, IT-led application integration projects. The latter’s cost to design, program, test and maintain system interfaces is significant. In some instances, it can exceed the cost of the software itself.

The ability to link systems through the user interface layer in a non-invasive way, without these costs, is core to RPA’s value proposition.

3. Labour Cost Savings

RPA vendors claim to deliver as much as 60-80 per cent in savings. Feedback from participants in interviews conducted by The Hackett Group indicated that returns are much more modest, but still significant at 20-30 per cent.

4. Increased Auditability and Consistency with Fewer Errors

Routine tasks executed by humans are prone to errors and inconsistent application of rules. Robots apply the same set of rules consistently and operate without errors.

Furthermore, all tasks executed by robots are recorded, and these execution logs are auditable.

5. Improved Scalability

Human capacity is difficult to scale in situations where demand fluctuates, leading to inefficiencies such as backlogs or overcapacity.

In contrast, robots operate at whatever speed is demanded by the work volume. Multiple robots can be deployed when demand exceeds the capacity of a single one.

However, an RPA must still work within the performance limitations of the software with which it is designed to interact.

Looking Ahead

We predict that RPA may have an impact on the number of people needed to perform mundane, repetitive tasks. Ultimately, this is a good thing, because many of these resources can be reassigned to more rewarding activities and job satisfaction will increase.

Fortunately, this shift in the profile of source-to-pay talent is consistent with the direction that procurement has been heading in for some time, moving away from transactional work, to more of a trusted advisor and partner to the business.

This will require complex problem-solving abilities, interpersonal skills, emotional intelligence and intellectual curiosity. There will also be a strong need for people who understand how to orchestrate a combination of automation solutions to obtain the best results.

Patrick Connaughton is the Senior Research Director, Procurement Executive Advisory Programme at the Hackett Group. He has published groundbreaking research in areas like spend analysis, contract life cycle management, supplier risk assessments and services procurement. You can contact him via email or on Procurious.

You can also learn more about Hackett’s Procurement Executive Advisory Program here.

The Human Side of Procurement Decision Making

No matter the sources available, procurement professionals trust above all else peers when it comes to information and supplier intelligence.

Peer Recommendation Supplier Intelligence

Earlier this year, I participated in research that explored current trends in supplier intelligence. More specifically, tealbook wanted to know what sources of information are the most trusted when finding new suppliers.

Here is what they learned:

Procurement professionals trust their peers, whether internal or industry colleagues, over any other source of information or intelligence.

In fact, 83 per cent of the survey participants held this opinion. Not only does this finding indicate that procurement should find and invest in efficient ways to access and centralise the knowledge of their peers, it offers procurement a secondary lesson about our own stakeholders and the best way to reach them.

Procurement can be an ‘acquired taste’ for some functions and business units. We can put out mission statements, tie our objectives to theirs, and endlessly share positive results and sometimes they still don’t come around to our way of thinking.

Are We Effective Message Carriers?

Maybe the problem isn’t the thought process. Perhaps, as we learned in the research about trusted sources of supplier intelligence, the issue is the messenger.

If that is the case, how can procurement go about finding other, more effective carriers for our message?

I am a huge fan of the town hall meeting format. Town halls are an effective way to speak to the organisation at large about strategic sourcing and procurement and emphasise that we are a collaborative partner ready and willing to add value.

About 6 months after I joined FORMA, I had a procurement town hall I presented as a ‘Lunch and Learn’. People either called in, participated via video conference, or sat in the auditorium area.

Our main messages to them were: “Here are some of the things that procurement has done. Here is how you can engage with us. Here is how you work with procurement.”

The Power of Testimonials

By far, the most impactful statements in the town hall were not made by procurement at all. They were testimonials made by procurement’s key internal stakeholders directly to their peers.

I had invited five key stakeholders at the VP level and Senior Director level, very high level representatives in the organisation, to come up and talk about what their experience had been with procurement.

They shared where they had found benefit, how had procurement helped them, and under what circumstances they would actively engage us again.

Those testimonials spoke louder, and reached further, than anything that I, or my team, could have said to help us with stakeholder engagement.

Once the audience members began to hear and understand the different ways procurement was able to provide support, they became more creative in their thinking. “Well, you know what? I have this project that’s coming up next week, or two months from now…”.

Or, “Here’s an initiative I never thought you could help me with, but I guess you can…”. It created a lot of momentum and opened a lot of doors. It was an extremely positive way of enticing engagement from our stakeholders.

Trusted Sources of Supplier Intelligence

Mary Kachinsky
Mary Kachinsky

When a town hall meeting isn’t a possibility, technology can often be called in to bridge the gap. This is why platforms such as tealbook fill a unique gap for many procurement teams. They offer a place where teams can store supplier provided information with their own notes and opinions.

This sits alongside commercial data from Dun & Bradstreet’s global database and aggregated intelligence on suppliers from industry peers. Having all of this information in one place is like being able to call a town hall to order anytime and any place. And there’s the additional bonus of not having to provide lunch!

The fact of the matter is, people want to get information and opinions from the people they know and trust. It is true in the case of procurement and it is also true with our internal stakeholders.

At the end of the day, we are all people that put more faith in recommendations from our peers than we do in a distant process mandate or firm that says, “This is the supplier to work with” or “Procurement has your best interests in mind – trust us”. We ultimately want to hear from our peers.

If you are interested in more about tealbook’s research into supplier intelligence, knowledge and discovery, you can download it here.

Mary Kachinsky is a member of the tealbook Advisory Board, and Vice President of Strategic Sourcing and Operations for FORMA Therapeutics

She brings over 25 years’ experience as a strategic partner and business leader in the research, development and manufacturing procurement functions spanning across the pharmaceutical, biotech and consumer electronics industries. Mary is a Certified Professional in Supply Management (CPSM) and a Lifetime Certified Purchasing Manager (C.P.M.).

How Does it Feel to Be a Supplier to You?

Being a customer of choice in procurement is important. Ensuring your supplier feels part of the team is also important.

Supplier to You

As procurement professionals we care about the quality, delivery, cost, innovation and sustainability performance of our suppliers. These are usually wrapped up in Key Performance Indicators (KPIs), a key tool within the procurement community.

Now that we as a population are facing resource scarcity, what sort of questions should we start asking ourselves to ensure that we continue being the ‘customer of choice’, and make the supplier feel that they are a prime source of value to our organisation?

Why ‘Customer of Choice’ is Important

Every day, news headlines and scientific reports reflect a world increasingly impacted by unsustainable trends and catastrophic climate events.

Oceans are becoming more acidic, with devastating results on coral and connected ecosystems. The air in major cities is full of dangerous particulates. Crop-growing regions for key commodities are shifting. Sea levels are rising.

All this could potentially lead to resource constraints and risk in the supply chain which procurement, amongst others, should mitigate.

The essential questions procurement should be asking itself are:

  • How can organisations possibly develop a ‘single point of truth’, which is reliable and up to date?
  • How can they manage contracts and monitor KPI’s?
  • How can they handle data and information and avoid rework and duplication and look at the relationship from the supplier’s perspective?

Key Questions for Your Supplier

It starts with the sourcing process where the supplier is evaluated, perhaps even audited, and then at the end when a contract is developed with them. Suppliers will evaluate whether these selection processes run fairly and competently.

In the on-boarding and the execution part of the relationship, the supplier will most probably evaluate how the communications went, how easy it was to create and implement changes to the administrative routines, and how the on-boarding was tackled.

When the relationship starts out, the evaluation will typically be how time consuming or complicated it is to deliver goods and services, and whether the same information is requested by different people.

When it comes to the strategic relationship, a key question to ask yourself is whether you ask your suppliers their opinions about issues that might affect them, including issues around risk.

And then, when you ask them, are you then open to new ideas, new products, and new ways of doing things?

Organisational Benefits

How would this benefit organisations? The time it takes to manage the relationship should become more effective. So should the visibility from spend analysis to sourcing exercises to strategic relationship management.

As a result it should help drive better relationships and help achieve competitive advantage for both parties. And this should of course be linked to your company’s sustainability journey.

Maximising Scientists’ Most Precious Resource – Time

Latest Enterprise Reagent Manager (ERM) system streamlines procurement processes and user interface, freeing up scientists’ valuable time.

ERM - Scientist Time

In the pharmaceuticals and life sciences business, time is the most precious resource. The more time available to be spent on research, the more ability scientists have to innovate. To support this, procurement processes need to be accurate, swift and robust.

Mid-way through their Next Level 2016 event, SciQuest announced the release of the latest version of Enterprise Reagent Manager (ERM).

ERM is a chemical inventory management software module that gives researchers and scientists full control over research inventory, from sourcing and purchase, through tracking and disposal.

Differentiated by it’s offering as the first and only triple-federated search functionality, SciQuest’s ERM is used by 8 of the 10 top global pharmaceutical companies.

Dynamic & Responsive Interface

According to SciQuest, ERM allows users to check material availability from suppliers in real-time, and to search across all internal and external sources simultaneously.

“ERM 9 is up to 90 per cent faster than previous versions,” says Raj Aggarwal, SciQuest Product Marketing Manager. Aggarwal adds, “Users can only search chemicals not only by supplier, or text description but also by molecular structure.”

So what has customers excited about the new version? Raj explains it’s all about the new user interface, speed and the three-way search.

ERM’s speed comes via a more dynamic and responsive user interface. Raj explains, “One-click tiles speed up navigation to important tasks, while status icons display user actions, like items in a shopping cart, or requesting a container for use from inventory.”

Bruce Cherrin, Chief Procurement Officer at the University of New Mexico confirms this. He believes the new look and feel of the system will, “Drive higher adoption among users campus-wide and streamline our procurement processes.”

Fast, Real-Time Availability Checks

In addition to the search feature, the upgrade includes the following features:

  • Real-time material availability check from suppliers: Users can now search across all internal and external sources simultaneously.
  • Web service integration: External inventories and catalogues can now be incorporated into ERM’s search function.
  • To Do List: Researchers can checkout and manage items from labs or self-service areas, and conduct a transfer of ownership and update usage without a scanner.
  • Held Cart: Allows administrators to control purchases of high cost and/or hazardous materials from non-authorised personnel.

“Since ERM closely integrates with procurement, pharmaceutical manufacturers can control complex inventories with reduced general spend and disposal costs, optimised inventory use, and increased regulatory compliance while managing the risks associated with hazardous materials,” said Stephen Wiehe, President and CEO of SciQuest in their announcement.

SciQuest NL 16

Aligning ERM with Unlocking Value

It’s these sorts of enterprise wide business challenges that are driving SciQuest’s product strategy. We asked Raj how the new release of ERM aligns with this mission to unlock more value. Raj offered four reasons:

  • Expense Optimisation – The inventory system allows users to order from stock, rather than placing new orders for expensive reagents from scratch, and efficient, safe disposal.
  • Compliance – Scientists often deal with hazardous materials. Certification is required to purchase, store and use many of the reagents used. The system provides for more than just internal compliance. ERM also allows research institutes to ensure suppliers are meeting their certification and storage obligations
  • Safety – Maintaining safe labs is a paramount concern in the life sciences industry. With greater visibility, users can see what’s coming in before it arrives and make plans to safely store and manage their liability.
  • Compliance and Approvals – ERM has a robust permissions system which allows users to lock access to different levels by putting reagent requests into held carts. Approvals can then be granted based on spending limits that get put in workflow.

Regardless of the industry, leveraging information more effectively for the business is a clear mandate for the product team at SciQuest.

Raj concludes:  “ERM will help get inventory information out where users can see it, create ad hoc reports, and use this to anticipate, plan and mitigate. And most of all, it puts time back in researchers’ hands to innovate.”

For more information about Enterprise Reagent Manager, please visit SciQuest website or contact SciQuest.

Lisa Malone, General Manager Procurious, is reporting live from SciQuest Next Level 2016 this week.

The Big (and Alarming) Procurement Disconnect

Chris Sawchuk reveals an alarming disconnect between the most pressing issues for Procurement, and our ability to address them.

Big Disconnect

The number one priority for Procurement leaders this year? “Reducing Costs,” says Chris Sawchuk, Principal and Global Procurement Advisory Practice Director of The Hackett Group.

Before you stifle a yawn and declare this a no-brainer, it’s actually the first time since the depths of the Global Financial Crisis that Cost Reduction has been back at top of the heap in The Hackett Group’s annual Key Issues Survey.

“For some years now procurement’s top priorities have been about growing the top line, increasing influence and becoming a trusted advisor to the business,” explains Chris. He notes a clear shift in 2016. “It’s back to basics and the enterprise needs help to remain cost competitive in an ever volatile world.”

Speaking at SciQuest Next Level 2016, Chris doesn’t find it surprising to see Cost Reduction back at the top of the list. Particularly when more than half (55 per cent) of companies have a major enterprise cost reduction initiative planned this year.

However, Chris is quick to note the second highest priority for procurement leaders is driving top line growth. This is also consistent with the fact that nearly half of all enterprises have a major sales and marketing strategy optimisation initiative planned for the coming year.

Within The Hackett Group’s top priorities, the big mover is tapping supplier innovation. This has taken a significant leap up the list of ‘must-dos’ for procurement leaders this year.

“Increasing spend influence is always fairly close to the top, but more and more innovation is being looked on as an enabler for driving top line growth – as well as cost competitiveness,” says Sawchuk.

The Big Disconnect

So far its been a compelling whirlwind of data points, but it’s Chris’ next slide that has me concerned. This is where the disconnect lies.

It shows those priorities Procurement leaders think are most important to address, mapped against those which we also think will be most difficult to do.

These are the priorities that alarmingly fall into Chris’ ‘Red Zone’ – that dangerous, “Important, but rather tricky to do” box:

  • Tap supplier innovation
  • Improve agility
  • Increase spend influence
  • Elevate role of procurement as trusted advisor

Undoubtedly these are tough issues to address, not only for their complexity, but because they require Procurement to look well beyond it’s traditional value lens. They demand more than the ‘bread and butter’ cost-analysis and sourcing skills for which procurement is renowned.

So with a deep breath and a can-do attitude, Chris walks us through how Procurement leaders can get a handle on these important ‘Red Zone’ priorities.

Chris Sawchuk
Chris Sawchuk

Enough buzz words! What does it take to be a Trusted Advisor?

First up, Chris addresses what it actually means to be a ‘trusted advisor’. According to The Hackett Group’s annual survey, the top criteria determining what makes a trusted advisor are:

  • Consistently deliver on the basics (77 per cent)
  • Hire and retain high caliber staff (64 per cent)
  • Increase agility (61 per cent)

The main point to note here is there has to be consistency to this. “Procurement needs to do what it says it’s going to do,” says Chris. “Building trust takes time.”

When it comes to identifying high calibre staff, Chris doesn’t so much see a problem with the depth of the talent pool, but more with how we engage and retain top talent.

Chris also linked back to a concept discussed during Sigi Osagie’s earlier SciQuest keynote. Putting people at the centre of your strategy, really engaging them and helping create an environment where people thrive, is the real challenge.

Improve Agility  

Next up, agility. This has been a key thought leadership theme for Chris and The Hackett team over the past 12 months. “Procurement can’t be a hammer going about looking for a nail, we need to listen to our customers. What do they need? And if what they need is outside our portfolio, find out what we can build to help them.”

Again, drawing on Sigi’s presentation, Chris reminds us it’s all about ‘delighting the customer’.

Undoubtedly future leaders must be able to deal with ambiguity, provide differentiating intelligence to the business, make and implement decisions quickly and forecast and plan continuously to mitigate future risks.

“We need to think about how we weave agility into every aspect of what we deliver back to the business,” challenges Chris.

Hear more from Chris about Making Agility Core to all procurement activities.

Increase Spend Influence

Chris keeps this point brief. “As Procurement leaders, we cannot continue to fish in the same pond,” he explains. “We need to find new ways to source of value.”

A classic case of diminishing returns, if you will. To this he adds that we also need to improve the quality of our influence, not just the quantity.

Tap Supplier Innovation

As the biggest mover on the list of procurement priorities, Chris believes that the best way to encourage innovation is to make it part of the job and reward contributions.

Finding ways to support and encourage intrapreneurs – those people inside your business who can drive innovation and lead change – is how the most successful businesses of the future will steal a march on their competition.

Naturally Chris also advises that Procurement leaders need to be aware and up-to-date with innovations and trends occurring in the market place. “Get knowledgeable about big data, robotics, cognitive computing, mobility, cloud and social media, if you want to get ahead.”

Like anything that’s new, it’s going to require courageous leaders to address this gap between procurement priorities and preparedness. Chris suggests a good place to start, “Ask yourself, are these things we’re focused on? Should they be? And if not, why not?”

SciQuest Next Level takes place from August 21 – 24 2016. For more information on agility and the big procurement disconnect, visit www.sciquest.com or Tweet SciQuest via @SciQuest.

Lisa Malone, General Manager Procurious, is reporting live from SciQuest Next Level 2016 this week.

Uber: The Great, Untold Procurement Story

Addressing 800+ delegates at SciQuest Next Level 2016, Stephen Wiehe’s enthusiasm for design, disruption and innovation is infectious.

Overcrowded Uber

Stephen Wiehe, CEO at SciQuest, is clearly a man who likes to ‘make stuff’. A tinkerer, a designer, an ideas-man, maybe a little bit of a tech-head.

Opening Next Level 2016 with a take on ‘Procurement’s Future in the Era of Disruption’, Stephen starts with some alarming, if increasingly familiar, facts and stats:

  • We are experiencing the fastest technological change the world has seen
  • Interest rates are at their lowest since records began
  • Market volatility has doubled
  • We are seeing unprecedented, rising geo-political instability
  • 40 per cent of companies will be extinct in 10 years

It’s not long, however, before he pivots towards his passion for design, innovation and customer connectivity.

Stephen points to GE’s First Build R&D facility as an example of how businesses are going straight to the customer for their next great innovation.

A darling of the corporate crowdsourcing movement, First Build aims to invent new home appliances by creating a community of home enthusiasts, designers, engineers, and makers who share ideas, try them out, and build real products.

“Once upon a time, R&D facilities were hidden and process driven,” says Stephen, “Today, GE have flung open their doors to anyone who has a good idea. Customers with an idea can quite literally walk-in, use the machines and GE will help you build it.”

No Industry is Immune to Disruption

As a London local and 4.8 star rated Uber user, it still comes as a surprise when I meet someone who has never used this global phenomenon before. For me, Uber has transformed the way I move about the city, track payments, and even the amount of cash I need for a night out.

So when Stephen flicked up a slide of yellow taxi cabs, I must admit my first thought was, “Ok, here we go, Uber. Heard this before.”

But Stephen takes the analogy much further: “Uber is not a technology story, it’s a procurement story.

“The whole process of getting an Uber is really a procurement process. First you request an Uber – not dissimilar to filling out a requisition form. Next, there’s a sourcing event – Uber drivers, armed with your passenger rating, your location and destination, bid to win the job.

“Then, the passenger accepts the job, confirming they are happy with the driver’s rating and location. A contract is formed – we accept the job and the mode of payment is agreed. And finally the AP process occurs seamlessly and conveniently with your stored credit card details.”

Uber in a Traditional Procurement Lens?

Uber even provides a handy Spend Management Tool allowing the user to see their complete driving, payment and ‘performance’ history. Particularly handy for parents of teenagers, as Stephen points out!

The penny drops. I’ve not thought of Uber in this way before – a fully automated Source-to-Settle process.

But Stephen pushes us to go one step further. “Imagine if Uber had approached their business from a traditional procurement lens.  We’d have the lowest vehicles, more passengers per vehicle and cheaper drivers.”

True – Uber’s open network has flipped the transport industry on its head. Stephen explains that Uber looked at the cab industry from the customers’ perspective and wondered what total transparency, real time data, and an open and connected network could deliver.

And I for one am thankful they did.

disruption
Stephen Wiehe – CEO, SciQuest

The Disappearance of the Back-Office

Just like Uber, which has automated the entire administration process of booking and paying for cabs, Stephen predicts the concept of procurement administration will disappear in coming years.

The issue for most businesses is that they are trying to do the same things over and over, and (not surprisingly) seeing only incremental value delivery.

Stephen told delegates that businesses will only see a step change when they start to simultaneously use procurement automation, collaboration and insights to drive decision making.

When it comes to procurement, our customers want a simple, straight forward way to connect with suppliers, get what they need, and make a payment. Fairly or not, Procurement is all too often accused of being slow, cumbersome and hard to deal with. Not the ideal adjectives for a ‘Business Partner’.

Maybe Stephen is right. Maybe the key to unlocking innovation and value will come from the customer. Just like Uber and GE, is it time to put sourcing in the hands of the customers and people who need the products? It’s certainly time to think differently.

SciQuest Next Level takes place from August 21 – 24 2016. For more information on procurement and disruption please visit www.sciquest.com or Tweet SciQuest via @SciQuest.

Lisa Malone, General Manager Procurious, is reporting live from SciQuest Next Level 2016 this week.

Your Must-See Agenda Picks at Next Level 2016

In a packed conference, you need a cheat sheet, a list of must-see keynotes and sessions. Here is the pick of the pops at Next Level 2016.

SciQuest Next Level 2016

Before attending a conference, I like to put together a “cheat sheet” so I can stay on track and use my time efficiently to fully maximise my conference experience. And Next Level is no different!

With such an extensive role-based agenda, top notch featured speakers, plus fun Nashville activities, there is something for everyone, from the CPO to administrators.

To help you make your choices, here are some of my must-see Next Level sessions to include in your itinerary!

Next Level – Monday, August 22

Spend Analytics in State Purchasing: The Georgia Experience (Hermitage E, 11:00-12:00pm)

Join the State of Georgia, who will take you through real-life Spend Radar experiences, and how to get to those golden nuggets of spend wisdom.

Walking through the purpose behind the analysis, the panel will explore massaging the data to be more useful, how to find meaning, and what the end results can accomplish.

Reverse Auctions in Sourcing Director: The What, Why and How (Cheekwood GH, 1:30-2:20pm)

Reverse Auctions let buyers conduct fast-paced competitive bidding events where multiple suppliers place bids on one or more items.

During the auction phase, suppliers receive feedback on the competitiveness of their bids in relation to bids submitted by other participating suppliers.

This session will review when a reverse auction should be used, the configuration details critical to the construction and administration of the event, and how a buyer can track key bid data while conducting a Sourcing Director reverse auction event.

Putting it all Together in the Real World: A S2S Case Study (Tennessee B, 2:20-3:30pm)
Fred Hutchison Cancer Research Center
Fred Hutchison Cancer Research Center

Inspired by business process optimisation concepts used in the military, Mark Burch, Director of Materials, has applied them to procurement at the Fred Hutchinson Cancer Research Center, where they are waging a war on cancer.

In a nutshell, materials management is about getting everything that’s needed at the right place at the right time. Whether you’re fighting a disease or just the inefficiency gremlin, Mark’s ideas and processes can help.

Come see how the implementation of SciQuest’s full source-to-settle suite is helping to optimise processes, gain insights into the organisation’s spend and deliver a high return on investment.

People, Process and Technology: A Real-World Case Study (Tennessee B, 4:00-5:00pm)

Georgia Institute of Technology procurement team will discuss their approach to managing both spend and spend systems by following this mantra: people, process, technology. They’ll discuss challenges and processes around initial roll-out, expansion into new modules and growing users.

They’ll share key performance metrics used to determine ongoing system performance, as well as to measure overall return on investment.

Tuesday, August 23

NAEP Innovators Forum: Strategic Supplier Relationship Management (Tennessee A, 1:30-2:20pm)

Procurement and supply chain teams invest considerable time and energy negotiating exceptional contract terms with key suppliers. Many teams consider their work complete when contracts have been executed.

However, there is evidence that much of negotiated value will leak away unless it’s carefully managed over the contract life. This places a premium on the ability to manage supplier agreements. But who has this responsibility and what goals and objectives should be pursued?

NAEP Director, Doreen Murner, and University of Colorado’s CPO, Sandy Hicks, examine this topic, which was first presented in the NAEP Innovators Forum: Strategic Supplier Relationship Management White Paper.

Real World ASO War Stories (Cheekwood ABC, 2:30-3:30pm)

Illinois Tool Works

Illinois Tool Works (ITW) is a Chicago-headquartered diversified manufacturer with 49,000 employees and 90 divisions in 57 countries.

In this session, ITW’s Strategic Sourcing Center of Excellence team will discuss their journey from a single-person pilot to a powerhouse for sourcing events with more than 200 events and hundreds of millions of spend competitively bid through Advanced Sourcing Optimizer (ASO).

If you’ve ever wondered what makes or breaks a COE in global, multi-business unit organisations, this session is for you.

Analysing eProcurement Business Success – Building Your Business Case & ROI (Hermitage B, 2:30-3:30pm)
Pierre Mitchell
Pierre Mitchell

No-one recognises the need for a strong business case and ROI analysis when considering large dollar purchases more than procurement professionals.

Whether you’re considering the purchase of a full source-to settle or P2P solution, or simply want to demonstrate to your leadership the value of your existing solutions, you will find this session to be beneficial.

Pierre Mitchell, Chief Research Officer and Managing Partner at Spend Matters, will explore several facets for building successful business cases. This includes knowing your approval process and audience, key items for consideration in the business case, and methods for demonstrating success following implementation.

P2P and Beyond (Hermitage B, 4:00-5:00pm)

PayStream Advisors Research Director, Jimmy LeFever will moderate a panel featuring representatives from Florida International University, University of Colorado, Ball State University and Liberty University.

This all-star panel have implemented a procure-to-pay solution and are looking to go beyond eProcurement and accounts payable. The session will start at the beginning of their journey and discuss the individual drivers that ultimately led to implementing a P2P solution.

Topics will include panelists’ experiences before, during and after implementation, benefits achieved, ways to benchmark goals and tips for achieving post-implementation procure-to-pay excellence.

The second part will focus on the future roadmaps of these innovative organisations. Panelists will discuss what their organisations are planning in terms of strategic initiatives, including:

They will focus on planning for strategic change, increasing stakeholder buy-in and ensuring success in change management.

What sessions are you looking forward to at Next Level 2016? Tweet us and use #NL2016!

What Procurement Needs to Know About Robotic Process Automation

Just what is Robotic Process Automation? And what should procurement know about it before putting anything in place?

Robotic Process Automation

Robotic Process Automation (RPA) vendors emphasise their product’s capacity to replace human operators, using phrases like “digital workforce.” In simple terms, RPA is a software application that runs on an end user’s computer, laptop or other device, emulating tasks executed by human operators.

Its purpose is to integrate or automate the execution of repetitive, rule-based tasks or activities. RPA does not require development of code, nor does it necessitate direct access to the code or database of the applications.

Current Robotic Process Automation Use

Most current RPA implementations are in industry-specific processes such as claims processing in insurance, and risk management in financial services. These processes, and their associated tasks, are usually high-volume, structured, repetitive and implemented on old technology.

Normally, the processes are extremely stable. There is no technology migration or modernisation roadmap involved, and IT-led integration would be difficult and expensive.

At present, the leading non-industry-specific RPA application is the financial close and consolidation process. According to our purchase-to-pay research, 23 per cent of companies are at the earliest stages of adoption, i.e., either in a pilot or with the technology partially rolled out (Fig. 1).

Robotic Process Automation
Fig. 1 – Robotic Process Automation Trends in Purchase-to-Pay

The remaining 77 per cent have no immediate plans for Robotic Process Automation adoption. Despite the low take-up level today, 45 per cent of purchase-to-pay organisations believe RPA will be one of the areas with the greatest impact on the way their work gets done in the next decade.

The Best Processes for RPA

It is not the type of business process that makes for a good candidate for RPA, but rather the characteristics of the process, such as the need for data extraction, enrichment and validation.

Activities requiring integration of multiple screens, as well as self-service inquiry resolution, are also ripe for RPA. The key is that RPA is best deployed in a stable environment where no changes to the systems are on the horizon.

Other possible choices include processes requiring multiple software applications to execute different, but repeatable, activities and tasks.

RPA Pricing Trends

The pricing model for RPA is still evolving. Today, vendors are pricing RPA based on the cost of the full time equivalent (FTE) staff member it is replacing. For example, an RPA vendor may quote a price per robot that is one-third the cost of an offshore resource doing the work.

Onshore FTE pricing is being quoted closer to one-ninth, or 11 per cent, of the cost. This pricing model, developed to compare the cost of outsourcing a process versus automating it with RPA, essentially positions Robotic Process Automation as a service, not a software solution.

In our view, this model is inconsistent with industry standards governing the way software is typically priced. Therefore, we encourage buyers to seek an alternative gainsharing model where possible. This will both mitigate the risks of early adoption, and provide a strong incentive to the supplier to deliver results.

Patrick Connaughton is the Senior Research Director, Procurement Executive Advisory Programme at the Hackett Group. He has published groundbreaking research in areas like spend analysis, contract life cycle management, supplier risk assessments and services procurement. You can contact him via email or on Procurious.

You can also learn more about Hackett’s Procurement Executive Advisory Program here.

How Procurement Will Get Its Mojo Back At Next Level

Today’s procurement space is rapidly changing, yet something is amiss. Join us as Next Level keynote speaker Sigi Osagie describes how Procurement will get its mojo back.

Sigi Osagie

Procurement is rapidly evolving from what was once a manual laden process, to one where technology is enabling practitioners to deliver enhanced value contribution to overall business success.

Becoming a value creation function involves change. So how does Procurement manage change successfully and gain a better reputation across the wider enterprise?

To answer this question, SciQuest selected leading procurement effectiveness expert and writer, Sigi Osagie, for one of the keynote sessions at Next Level 2016.

Sigi knows a thing or two about procurement success. He wrote ‘Procurement Mojo – Strengthening the Function and Raising Its Profile, where he shows how to get a Procurement function firing on all cylinders.

Roberta Patterson checked in with Sigi to get a preview of what he will be talking about during his presentation.

I love the name of your book, Procurement Mojo. Has Procurement lost its mojo?

From the perspective of Procurement’s positioning in the enterprise way back when a move into the “Purchasing Department” was, in effect, a relegation to the backwoods of organisational existence, you’d have to say Procurement has come a long way.

Today, some Procurement functions are doing a fantastic job supporting the profitability and strategic goals of their organisations.

But if I aggregate my experience with clients, discussions with Procurement people in different regions and insights from trade articles, online forums, blogs, etc., it’s clear that many Procurement functions are still struggling.

Quite often the difficulties that hinder their success are “soft” issues – organisational challenges like senior executives who just don’t “get it,” territorial stakeholders, or ineffectiveness within the Procurement function itself.

Such Procurement functions lack a credible “Procurement brand.” Unless they change their approach, their Procurement mojo will remain a mirage.

During your Next Level session, you are going to speak about change management. That seems like a tall order. Do you have any tips on how a Procurement department should start?

The most fundamental requirement is effectiveness; which is more important than efficiency. You can be very efficient at the wrong things. A bit like the guy who’s very fast at climbing up a ladder, only to get to the top and discover that the ladder is leaning against the wrong wall.

Focusing on Procurement effectiveness forces us to think about what the department wants to achieve and the requisite actions to attain those end-goals.

Getting from where you are today to where you want to be is where change management comes in. Many of us in Procurement are versed in the technical aspects of the job but often lack change management know-how.

Our ability to navigate our way through change, against a backdrop of the organisational dynamics I mentioned earlier, is crucial for Procurement’s success and reputation in the wider enterprise.

So Procurement functions must centre their efforts on effectiveness and leverage robust change management. It’s impossible to do this without sound leadership. A fish rots from the head down; so having an effective Procurement leader is key – leadership is the glue that binds everything else together.

How do you build a Procurement brand?

In Procurement Mojo I use real-life examples to explain the four foundational actions Procurement functions must take. The first is building an effective organisation. It’s paramount, because people are the fundamental creators or destroyers of performance success.

The other key actions are deploying enablers (processes, systems and tools) that are fit for purpose, managing the supply base robustly, and applying an appropriate performance management framework. Everything we get right in these four areas helps nurture our Procurement brand.

Additionally, it is imperative to foster positive perceptions of Procurement in stakeholders’ consciousness, through effective communications, good (internal) customer relationship management, and smart PR.

Combining the four foundational actions with these stakeholder management approaches is how we build and sustain a great Procurement brand.

What are your suggestions for making the case for technology investment and getting executive buy-in?

Sigi MojoA solid business case is vital, but it’s not just about data and facts. It’s really about selling, and being organisationally savvy. You’ve got to read the organisational landscape and identify the right “hooks” that will resonate with executives.

Getting executive buy-in is part of good change management, thus getting your Procurement mojo back! I’m looking forward to sharing more about this at Next Level 2016.

Sigi Osagie is a featured speaker appearing on Monday, August 22 at Next Level. Follow him on Twitter!