Category Archives: Procurement News

From Drowning in Paper Contracts to CMS Utopia

Lack of visibility, time-consuming manual processes – it’s an all too familiar story in procurement contract management. One university shares their journey from contract chaos, to CMS utopia.

CMS Utopia

There are few procurement professionals in the world who haven’t dealt with paper contracts at some point. And very few, if any, who would look at this experience with any sort of fondness.

For the longest time, contract management has been a labour intensive process, with myriad issues caused by the use of paper contracts.

Every business suffers from the same issues, but not every business takes the steps to make a real change. We can all learn a thing or two from North Carolina A&T State University.

Drowning in Paper

North Carolina A&T starts as an all too familiar story, as you might imagine. NC A&T is one of the USA’s top historically black colleges and universities. It employs over 2,500 people, and educates over 11,000 students at any one time.

With an award-winning faculty, and programmes that focus on community engagement, it’s very much in demand.

However, it suffered from the same issues as many of its competitors. A manual contract management system (CMS), with little or no visibility on contracts, and an average of over 15 days to execute a contract.

At Next Level 2016, Nikki Williams, Director of Procurement Services at North Carolina A&T, talked candidly, and all too familiarly, about her experience of the process.

This included the process of scanning all the pages of a contract, walking (quite literally) to the third floor for signatures, and, of course, the inability to find a contract when it was needed.

On top of this, 99 per cent of the contracts were fully executed by a third party. Although the university would sign the contract, they would never get a signed agreement back from a supplier, and therefore never have a fully executed contract.

Contracts would rarely come back from the third party, and when they did, there was no repository to store, and find, existing contracts.

Chaos to CMS Utopia

Sharing their journey from contract chaos, to contract management utopia, Nikki explains their key goals were to:

  • Optimise the CMS process by:
  1. Eliminating paper contracts – this was an enterprise business goal for the entire university
  2. Reduce contract execution time from 15+ days to 5 days
  3. Reach 100 per cent fully executed contracts, with signatures from both parties
  • Deliver insights into the CMS process with:
  1.  A mechanism which tracked each contract throughout its life
  2.  Creation of a centralised repository for all contracts

Nikki shared the before and after implementation workflow diagrams – and the differences were startling. Rather than a heady mix of workflow rectangles, decision points and dotted lines, today’s contract workflow is a blissfully simple diagram. There are 4 task boxes, one approve or reject decision point, and only forward motion.

Full Steam Ahead

Using these forms, the procurement team can see that the request template is all ticked green. The form ties all the required, and specific, approvers to the workflow. Best of all, it’s fully automated.

The request form confirms that the supplier is not a student nor an employee (who they are not permitted to contract with), then channels it through the various approvers. All requests are also tracked through TCM (Total Contract Manager) by form number.

Once the request form is turned into a contract, a contract number is created, and tied to the forms so that every stage can be linked together. Once the vendor has signed the contract, it returns to TCM, which acts as the central repository. The system even completes basic information such as vendor names, department names, and approvers automatically.

The university now has a fully complete request workflow. The purpose of contract, department, and other information is contained within the request document. The contract goes to the appropriate person to approve or reject, and on that basis, procurement creates a contract. DocuSign is used to get both parties to sign off on the completed contract.

Challenge of Change Management

Asked about the roll-out of the process, Nikki acknowledges it has been a long one.  “We’re not just changing the workflow process, but we’re changing the contract policy at a Trustee level. Changing contract policy is driving the roll out, then we can rock & roll!”

For more information about Total Contract Manager, please visit SciQuest website or contact SciQuest.

Lisa Malone, General Manager Procurious, was reporting from SciQuest Next Level 2016 last month, bringing you all the best bits.

In Search of Your Perfect (Supply) Partner

With an estimated 200 million suppliers operating around the world, how can you be sure you have the perfect partner? Fortunately, here’s where technology can lend a hand.

Perfect Partner Suppliers

Recent estimates put the total number of suppliers operating around the world at a staggering 200 million. To put this in context, that’s like having every person in the UK operating a supply business. Three times over.

The risks for procurement in this scenario are there for all to see. With an enormous number of potential suppliers, how do you know you are dealing with the right ones? Are you getting the best deal you could?

And with the suppliers you do have on board, how are you driving contract compliance? As well as being expected to deliver the value in the contracts, procurement needs to ensure that objectives are aligned with internal stakeholders, including the CFO.

Innovation in ‘Tail’ Suppliers

Common thinking in procurement now is that the profession can no longer ignore small- and medium-sized suppliers. By continuing to use the same suppliers, procurement misses out on innovation opportunities, as well as savings opportunities.

Traditionally these suppliers have been dismissed as ‘tail spend’, and ignored in terms of strategy. As we experience a period of unprecedented market change and volatility, procurement is now looking to these same organisations to help drive efficiencies, and competitive advantage.

The other factor procurement must take into consideration is how to measure the risk within their supply chain. One slight issue from a first, second, or even third tier supplier, could have drastic consequences for an organisation’s reputation.

Technology as Competitive Advantage

If organisations want to thrive in increasingly volatile climates, they need to leverage their technology. Effectively using IT capabilities and procurement technology can help develop a competitive advantage.

More and more organisations are streamlining traditional procurement activities, and freeing up resources for strategic projects. The ability to do this, while sourcing and managing suppliers, requires up-to-date IT capabilities and analytics, as well as best in class procurement technology.

Oracle’s aim is to provide its client with complete, open, and fully integrated solutions which help to reduce both the cost, and the complexity, of the IT infrastructure.

David Hudson, Business Development Director at Oracle Cloud Solutions, believes procurement needs to realise that the future is now.

“Delivering the right capabilities for Procurement professionals to drive greater collaboration, process standardisation, increased efficiency at a reducing cost remains a big challenge.

“At Oracle, we aim to help our customers achieve great cost savings and overall value, while reducing supplier risk, and increasing compliance. Technology, such as our Strategic Procurement portfolio, can help to deliver these key benefits, particularly when integrated throughout the process, as part of a modern Cloud solution,” says David.

Build Your Competitive Advantage

Procurious Founder, Tania Seary, has previously stated that, “Today’s supply chain executives must be brave and bold. They are expected to handle cataclysmic events and act with extreme agility.

“There’s one qualification – and I would go so far as to say that it’s the defining qualification for today’s supply chain leaders – that separates the highest performers from the herd. And that’s courage.”

This courage can be bolstered by understanding the role and benefits of technology, especially Cloud software and platforms, in procurement strategy, planning and decision making. By being more informed, procurement leaders can make these bold decisions, and ensure they are staying ahead of the competition.

Web

To find out more on how procurement can better manage risk and complexity, and integrate technology to help them thrive in a changing world, join Tania Seary and David Hobson for a free webinar on 7th November. Find out more information and register here.

How to Realise and Unlock the Benefits of Supplier Diversity

New research has revealed the benefits organisations can realise by having a top-performing supplier diversity programme.

Supplier Diversity Programmes

Full Benefits of Supplier Diversity Not Yet Achieved

Historically, supplier diversity programs have focused on a narrow combination of meeting government spend requirements, and participating in corporate social responsibility initiatives with under-represented communities.

For example, survey respondents in The Hackett Group’s 2016 Supplier Diversity Study report that their most important objectives are:

  • Improving the corporate image in the marketplace;
  • Supporting corporate culture around diversity and social responsibility; and
  • Complying with regulatory requirements.
Objectives for Supplier Diversity Programmes
Critical Objectives For Diversity Programmes

However, companies are starting to realise that they will not achieve maximum benefits from supplier diversity programs if their objectives stop there. In fact, by expanding the goals and activities of these programmes, organisations can gain access to new markets, innovative supplier partnering practices and avenues for improved corporate branding.

Several hurdles can prevent procurement organisations from obtaining the necessary support to invest in a supplier diversity programme. Often, business leaders worry that dedicating resources will ultimately mean sacrificing procurement savings.

However, The Hackett Group’s research suggests that not only do procurement organisations with top-performing programmes experience no dip in efficiency, but they extract even more benefits from the programme.

For example, 23 per cent of diverse suppliers often or greatly exceed buyers’ expectations and the majority of remaining diverse suppliers are meeting expectations.

Supplier Diversity Expectations & Ranking
How Diversity Suppliers Rank Against Buyers’ Expectations

Top-Performing Organisations Take Strategic Approach to Supplier Diversity

Supplier diversity is evolving from a check-the-box corporate social responsibility requirement, to a strategic enabler providing access to new and innovative products, and increased market share in new and developing communities.

Top-performing companies recognise this and have begun working toward achieving a broader range of benefits from their programmes. Successful ones typically address three areas: global expansion, supplier partnering and reputation management.

Global Expansion

Supplier diversity programs usually start small and then grow in terms of domestic volume and geographic reach. Our survey found that 76 per cent of organisations have diversity programs that are currently limited to the domestic (U.S.) market.

Of this group, 40 per cent plan to expand their program globally in the next two to three years. Global expansion of supplier diversity brings additional benefits, including investment in global economic development and improved relationships with local suppliers and their communities.

Organisations should be sure to engage the appropriate partners before designing a global expansion of their programme. This can include corporate diversity groups and third-party diversity organisations.

Supplier Partnering

Supplier partnering is the process of developing and enhancing relationships with suppliers. Small and minority-owned businesses can be the source of added benefits, including cost savings, process improvements and product innovations.

Investing in the development of local suppliers helps build productive relationships and prepares suppliers to be successful partners. Buyers should also identify candidates for strategic partnerships.

While this is frequently the most immature area of supplier diversity programs, benefits can be significant.

Reputation Management

Developing a strong reputation for dedication to supplier diversity can result in increased market share and talent retention. There are multiple channels available to facilitate a clear and positive message regarding supplier diversity, including both internal- and external-reaching activities.

Procurement groups should look for reputation management opportunities that align with corporate objectives to increase collaboration between groups.

Organisations with strategic reputation management practices typical utilise some combination of social media and local, in-person interactions to interact with stakeholders and communities.

Programme Objectives Must Come from the Highest Levels of the Company.

Top-performing supplier diversity programs are developed and planned with substantial guidance from executive leadership.

Leaders of supplier diversity initiatives should make it a priority to create a culture supportive of diversity and inclusion, not just in procurement, but throughout the enterprise.

All diversity objectives, including supplier diversity, workforce diversity, and community and market interaction, should have the same strategic objectives in order to take advantage of a larger network and create a more collaborative workplace.

Laura Gibbons is a Research Director for The Hackett Group’s Procurement Executive Advisory Program. She has industry and consulting experience in areas such as purchase-to-pay, strategic sourcing, payment strategies, and organisational and process design. You can contact her on Procurious or via email.

Learn more about Hackett’s Procurement Executive Advisory Program here.

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.