Category Archives: Procurement News

Productivity in Pharma – Growing Next Level Procurement Skills

What are the skills required to drive next level procurement? This is what the Productivity-in-Pharma Procurement Think Tank aims to uncover.

Next level procurement

This is the fourth year that the Beyond Group is holding its Productivity-in-Pharma Think Tank and it’s just a few days away. On April 26 in Basel, Switzerland, the first session of this year’s event will bring together more than a dozen Pharma companies to discuss the most pressing issues facing procurement in the industry.

This year’s event is titled “Growing the skills needed to drive next level Procurement capabilities”.  It builds directly upon last year’s sessions, where the topic was “How does procurement step above its traditional role of price management, and build connections with other parts of the company, to drive even greater levels of productivity”.

From that discussion, senior leaders of procurement, representing a broad cross section of the Pharmaceutical world, recognised that in order for procurement to accomplish this feat, new skills, capabilities and knowledge were required. By general demand, the group suggested that this year’s topic tackle this issue head-on.

We divide our Think Tank into three, one day sessions that are spaced four to six weeks apart. Each session has a particular purpose. On day one we attempt to clearly define the topic we are discussing, on day two we delve into the substance of the issues and discuss options for meeting the challenges discovered on day 1.

Lastly, on day three we try to bring our learnings together to develop applicable takeaways that can be directly applied by our Think Tank attendees.

Building Intrapreneurialism

So what are those skills that teams will need in order to reach next level procurement, and equip them to face a future that is more complex, more unpredictable and laden with technological changes?

As experienced advisors to the industry, we hear more and more about organisations attempting to build agile skills into their procurement teams and imbue them with a greater sense of intrapreneurialism. There is also an increasing recognition that many procurement teams are unprepared for this rapidly changing future.

In addition specific business skills are becoming more and more important in the framework of the procurement function. Even more critical is the need to understand how effective procurement teams of today will identify, recruit and challenge the next generation of professionals.

This year we will specifically focus on skills for new roles and capabilities which are critical to position Procurement as an end-to-end contributor. This include:

  • Business Partnering
  • Cross-Functional Project Leadership
  • Alliance Management

These skills, which have been identified as critical for tomorrow’s business landscape, will leverage the function’s unique position internally and externally, and turn it into a magnet for high-potential talent, seeking to accelerate their career towards business leadership positions.

In order to advance this conversation, and provide the very highest level of content that will challenge our membership, we have teamed up with a group of experts from industry, consulting, HR/recruiting, and academic institutions to provide the fullest and most use insights and immediately applicable takeaways for our member companies.

Kicking off in Basel

We are proud to welcome to this unique conclave, Ernst & Young consulting, Langley Search, Customer Value Management, Old Street Labs and as out academic partner, The Fraunhofer Institute/Technical University of Dortmund.  Our media partner for this event is Procurious who will be following the events and challenging our membership to bring their best game to the table.

Our first session kicks off on April 26 in Basel Switzerland, with 13 of the 15 membership slots already confirmed. If you are in the Pharma procurement field and are interested please drop us a note at info@thebeyondgrp.com.

Productivity in Pharma - Giles BreaultGiles Breault, co-founder of The Beyond Group AG, is an acknowledged expert in the field of Global Procurement, Productivity and Offshoring/Outsourcing. He has strategic and operational experience in the Pharmaceuticals, Electronics, and Aviation industries.

Productivity in Pharma - Sammy RashedSammy Rashed, Principal and co-founder of The Beyond Group AG, is a procurement strategist and productivity advisor with 25 years experience in senior management, primarily focused in the Pharmaceutical industry. He has become a recognised thought leader on growing procurement into a broader productivity champion.

Contract Lifecycle Management: Stop Being Foxed by Your Suppliers

Daniel Ball, Director at Wax Digital, explains how organisations can minimise supply chain risk through effective contract lifecycle management.

Outfoxed Contract Lifecycle Management

Today’s businesses are increasingly reliant on global, multi-tiered supply chains. While they can contain the essential ingredients for competitive advantage, cost efficiency and innovation, supply chain complexity also contributes to greater supply chain risk.

Consequently, contract lifecycle management (CLM) has become progressively crucial to organisations as they attempt to keep track of suppliers and their sub-contractors. Analyst group Gartner claims that no organisation is immune to the complexities of today’s contracts, or the pace at which businesses operate in the global economy.

Regardless of the sector you operate in, for anyone with a growing and increasingly complex supply chain, CLM has become a critical business process.

Mitigating Supplier Risk

You don’t need to search very hard to find examples of organisations whose complex supply chains have caused them significant issues, affecting both their reputation and bottom-line. Tesco’s infamous horse meat scandal is a classic example of how uncontracted and unvetted suppliers can become part of your supply chain and cause unforeseen damage.

The store was left at the mercy of the public and the media for months after the scandal broke causing huge reputational damage and financial loss to the organisation. Unfortunately for Tesco, the complexities of its supply chain meant that visibility was restricted, and it was unaware that one of its suppliers was sub-contracting work to an unknown and unvetted supplier.

Supplier risk can raise its head in many forms. The importance of ensuring all your suppliers have the necessary certifications required to work with your organisation shouldn’t be understated.

It’s irrelevant whether they are supplying food, people, commodities, electronics, or complex mechanical parts. Take the construction sector as an example. A building company’s supply chain manager will diligently vet all contractors required onsite to ensure they have the necessary health and safety certificates and public liability insurance details in place, as part of the supplier on boarding process.

But when pressed could they honestly claim to know when each of these certifications is due to expire, and that when that contractor is next onsite, his certifications are all still in date? If the answer to these questions is no, then an organisation could find itself in a very vulnerable position if an accident occurs, and the contractor’s health and safety certifications have expired.

Contract Lifecycle Management & Legal Compliance

What’s more, new sentencing guidelines have been introduced to create a more consistent and proportionate approach to sentencing for those individuals or businesses convicted of health and safety, food hygiene offences or corporate manslaughter. These new guidelines mean that all organisations should be looking to assess risk, both internally and across their entire supply chain, to ensure standards are maintained at all times.

Legal compliance with legislation such as Sarbanes-Oxley or ISO standards can also be monitored as part of CLM. The healthcare, financial services and manufacturing sectors are all subject to compliance demands. Stiff penalties can be applied if an organisation is found to be non-compliant.

Contract Management Databases

Contract management databases play an essential role in ensuring organisations know exactly when their suppliers’ contracts are up for renewal. No-one wants a contract which is no longer valid for your current business needs to roll over for yet another year. As important as that is, arguably the main benefit contract management offers is complete visibility of supplier performance and compliance.

Moving all contracts to a secure, electronic contract management database enables an organisation to practice effective contract lifecycle management and keep a firm eye on its entire supply base – both direct and indirect.

A contract management database that hosts all of an organisation’s contracts, and details on the criteria (certifications, regulatory requirements and SLAs) that its suppliers are contractually obliged to meet, enables organisations to quickly identify specific types of supplier able to compliantly fulfil a project.

It also allows organisation to identify their business-critical suppliers, and ensure their necessary certifications are in place and that any KPIs agreed at the start of the contract are being met. Some systems can even offer visibility into tier two suppliers. This is extremely beneficial if your supply chain is becoming increasingly complex, and can help identify who your critical suppliers are sub-contracting to.

Visibility at Your Fingertips

The benefits delivered by CLM are undeniable as it becomes increasingly important that organisations ensure that their compliance procedures are in place. Contracts filed away, stuffed in drawers or indexed on a spreadsheet can’t issue an alert if they’re about to expire. Nor does it make life very easy if you’re looking to identify which of your suppliers has the right credentials in place to fulfil a certain role.

Storing all suppliers’ contracts in a secure, manageable database, that is quick and easy to access, ensures that you have supply chain visibility at all times. Should the time arrive when you need evidence to defend your organisation, or pinpoint the cracks in your supply chain, you’ll certainly be glad to have this level of visibility at your fingertips.

The Evidence Behind Using DPS in Procurement

Increasing use of Dynamic Purchasing Systems (DPS) could mean the end of frameworks in public procurement. But is there empirical evidence supporting the benefits of these systems?

Evidence for DPS

In the first part of this series, we discussed the benefits and drawbacks of Dynamic Purchasing Systems for public procurement. Some of the benefits discussed were:

  • Increased Competition and Competitive Pricing
  • Spreading and Minimising Risk
  • Bridging the Talent Gap

But what is the evidence for these benefits? And will this help to lead to an increased use of Dynamic Purchasing Systems in public procurement?

Research Findings

Research published by PwC in 2011 provides some empirical evidence regarding the use of Dynamic Purchasing Systems in the EU. At this time only 1.1 per cent of procedures were DPS, with the greatest use being in Greece and the Czech Republic. Where there was joint purchasing, DPS was used less and this could be one reason why take up in the UK has been low as there has been a focus on collaborative purchasing arrangements across the public sector.

Looking at the recent contract notices (including PIN’s) on Sell 2 Wales, Contracts Finder and Public Contracts Scotland, there is evidence that Dynamic Purchasing Systems are currently being used across the public sector to source a wide range of goods, services and works. From this crude research by far the most popular category to apply a DPS to is transport with the majority of these contracts being for home to school transport.

Transport accounted for 34 per cent of the DPS contracts that were found on the above mentioned sites. Other categories where there were several DPS contracts in place included Care (12 per cent) and works/maintenance (12 per cent).

From the research it was clear that DPS is more widely used in England than in Wales and Scotland. Only 4 of the 65 contracts found were in Scotland and Wales. Possibly devolution and the application of national purchasing policies which often promote collaborative purchasing has affected this.

There was evidence of the DPS being used across the various types of public sector organisations including central government departments, local authorities, housing associations and colleges. It was the local authorities that accounted for the majority of the DPS’s that were in place, this could possibly be due to their responsibility to provide the home to school transport that made up over a third of these contracts.

From the research conducted there were no examples found within the NHS, this could possibly be due to the low number of suppliers available for some specialised products.

Industry Case Studies

Two case studies give us a more in-depth look at the use of DPS. Local Authority 1 (LA1) had set up one DPS contract for home to school transport for children. Local Authority 2 (LA2) had set up three DPS contracts, the results here focused on the health services DPS. Both Authorities stated that greater access to new suppliers and allowing suppliers to enter the system at any time were the main reasons they had used the DPS.

This was particularly important to LA2, as the contract was for the purchase of a new category area, for which new suppliers regularly entered the market. For LA1 increased competition in the market was the driving force and an increased number of suppliers would help to achieve this.

Disadvantages stated by LA1 included the need for extensive training for buyers and the market place as well as the need to resolve IT issues quickly. On a similar note LA2 stated that the resource intensive nature of dynamic purchasing systems was a downside.

Both stated that they would consider using DPS again in the future; indeed LA2 already had more than one live DPS. LA1 noted that DPS is now considered as part of their category management approach and that the changes to the procurement regulations had assisted in this. LA2 considered dynamic purchasing systems to be a valuable procurement option.

It is difficult to tell if there has been an increase in the use of DPS since the regulations changed. All of the contracts that were found during the research process were procured after 2011 when the PWC research was published and this research only covers the UK. An analysis of the number of new DPS contracts advertised in the ten weeks before the regulation changes was compared with the number in the ten weeks after the changes.

In the ten weeks before there were eight new contracts advertised but in the ten weeks after there were thirteen. This does suggest that there could be an increase in the use of the DPS however it is very early days. What it does show however is an appetite amongst public sector professionals to use this type of procurement vehicle.

In Conclusion

The practise of adding or removing suppliers to a framework is not a stranger to our private sector colleagues. However, frameworks are entrenched in the culture of public sector purchasing and, more recently, the collaborative procurement vehicles that have sprung up. In terms of the affect of the new regulations, it is still very early days and so it is difficult to tell whether the changes will drive an increase in the use of DPS.

The benefits of using a dynamic purchasing system appear to far out weigh the disadvantages, if applied to a suitable category of spend. These tangible benefits could very well pave the way for Dynamic Purchasing Systems to begin to form a more prominent role in public sector purchasing strategy.

Dear Boss, I Quit! Why Good Leadership is Key

Looking for the real reasons your staff are leaving? Instead of focusing on the ‘business’, you may want to take a look at your leadership.

I Quit - Leadership Key

This article was first published on Boxchange.

I’m sure that you, like me, are saddened every time someone in your team has resigned, (apart from the one or two rare exceptions when I have actually danced a celebratory jig around my desk, but that’s for another article!).

Mostly, my natural reaction has always been a human one I suppose. “Why would they do that?” or, “What’s wrong with them?” or even, “The fool must be leaving for money!”

But as the years rolled by I have become much wiser.

Lack of Leadership

Experience tells me that people don’t change jobs solely for money, and they almost never resign on a whim or in a fit of anger. People joined your company because they believed it was right for them, and they desperately want it to be right.

However, something, at some point, makes it wrong and if you are able to uncover their real reasons for leaving, and you should, you will find that it’s not ‘the company’ they blame. It’s not the location, or the team, or the database or the air-conditioning…

…it’s the leadership!

Of course they very rarely use that word. They may not mention management at all.

Instead they talk about “morale,” or say “communication is poor”, and, when they express frustration at the lack of clarity for their career progression, they are telling you that it’s the leaders they are leaving. After all, leaders are responsible for morale, communication and career path.

Discover the Real Reasons

And don’t be fooled by the results of your employee engagement survey – they rarely get to the heart of the matter. A ‘company’ is just a legal entity and a ‘business’ is simply a building containing a collection of desks and computers. No one resigns because of that.

It’s the decisions, the motivation, the atmosphere, the ethos, the support, the training, the vision, the inspiration and the direction set by the leadership that your employees will follow…or leave!

Take the time to have an honest look at your business or department without further delay. If you’re losing too many people, (or have high absenteeism), you need to discover the real reasons why.

If you’re not sure how to get to the root cause then ask. My colleagues and I are happy to offer our free advice, and it could transform your performance and results in 2016.

Boxchange offers a fully integrated business change solution that fits almost every conceivable change challenge your business may, or is currently facing. We focus on delivering value, return on investment & ensure effective knowledge transfer throughout.

Transforming the Procurement Function from Within

It’s a tall order to come in and completely transform the procurement function within an iconic global company.

Kelly Irwin - Head Procurement Function Holcim

But Kelly Irwin didn’t beat around the bush when she started as Head of Procurement at the Australian subsidiary of Swiss group at Holcim (which has since merged with the French group LaFarge) five years ago.

The company, which is a leading supplier of aggregates, concrete and concrete pipe and products, had plenty of room for improvement. In fact, the company’s procurement department was mostly handling complaints, rather than handling strategic buying for their future.

The 20+ year procurement industry veteran soon realised the magnitude of the role, so set about implementing improved systems and processes for the procurement function. The first step was to establish a centralised purchasing model, then build a talented procurement team to support her role.

“It was a very dysfunctional team that had little direction, that wasn’t aligned with the company’s strategic directions,” Irwin says.

Building an Effective Team

Today, Irwin heads of a team of 34 people and manages a mind-boggling AUD $900 million budget. She has implemented and centralised structure and processes within the procurement function. She has previously worked in procurement for Qantas and building firm Boral, though this role with Holcim Australia is her first where the procurement buck stops with her.

With those changes bedded down, her remit is again broadening, and she will now handle all buying across New Zealand for the company, with a recent trip across ‘the Ditch‘ to establish processes there.

Not only this, Irwin has developed a highly effective procurement team, which has been awarded the Internal Customer Excellence Award for Holcim Australia for three years in a row.

Her approach has transformed the procurement function for the company, with her team has an 80 per cent engagement score, which was the highest in Holcim Australia in 2015.

Irwin has strong capabilities in building effective working relationships with teams, development of Procurement strategy, management of supplier and keyholder expectations, highly developed negotiating skills, contract management, risk management and compliance expertise and operational experience through the implementation of change initiatives and process improvements.

Irwin was also recently awarded the CIPS Procurement and Supply Chain Management Professional of the Year.

Building Individual Engagement

Irwin keeps staff informed on all aspects of the business, has an open door policy, and doesn’t mind being contacted after hours.

“I recently read that people play harder when they know the score. This is something Holcim Procurement do well. Not only do we have clear goals, (quantitative, savings targets), but we have the measurement tools the accountability element to keep score on how we are tracking.

“I believe this shared goal, as well as individual accountability to reach this goal builds individuals’ commitment to team uniformity direction, and overall engagement,” she says.

To emphasise her point, she recalled talking to someone in procurement who had major issues trying to speak to the head of the department. This was slowing down their ability to tackle their own role.

“This person would need to book a meeting with their superior two or three weeks ahead, and it was usually a walking appointment as he was always in between meetings. I honestly don’t know how someone can be that busy, that they’re practically unavailable for their own staff. You’ve got to make sure your staff feel engaged and supported, and that you’re a team.”

Nearly 70 per cent of her team is degree qualified, though that wasn’t a prerequisite when she entered the industry more than two decades ago.

“I always look to hire people that complement the skills we have, and find people who have talents in areas we need to improve in.

‘Be Inquisitive Problem Solvers’

Like so many working in procurement, it was never a deliberate decision to follow this career path.

Irwin deferred university and entered the workforce before stumbling into a procurement role, with the sound of buying things for a living appealing to her. She’s since completed a number of qualifications, certificates and management courses that support her role.

“Procurement is one of those professions that you’ll excel in as long as you’ve got the right soft skills.”

Irwin describes herself on being approachable, down to earth and honest. And she doesn’t take herself too seriously.

“Though depending on where you’re standing, that can be a bit rough as well,” she admits.

Procurement professionals need to be inquisitive problem solvers with strong communication skills, she says.

“While your superiors might be great at what they do, with all due respect, they don’t necessarily know more than you about your function within the business. Realising that you could well have a far better idea of the best approach than other senior people within your business can be professionally liberating.”

As far as the future goes, Irwin says the procurement function has an increasingly broadening remit.

“Procurement was entrenched in a brown cardigan mentality in the past, but that’s changing, and we’re now a business function that’s well respected across the globe.”

Kelly Irwin is one of the leading Australian professionals to speak at the second annual Women in Procurement 2016 event, which inspires leadership, advances careers and drives innovation in procurement, and supply chain function and practice. The event will be held in Melbourne in 21-23 March. Book your ticket here.

5 Crippling Beliefs Keeping Suppliers in the Poor House

Suppliers may feel they don’t get treated fairly in the procurement process. But are there actions they could take to attract procurement’s attention?

Customers and Suppliers

This article was first published on LinkedIn.

Before the jackpot of the internet, purchase research involved, for me, accessing supplier directories such as Kompass (who are still going strong), putting up with pesky sales reps with inadequate brochures extolling the virtues of their products/services, trawling exhibitions, and leaning on colleagues and contacts.

Now, not so much. Although I’m still leaning on colleagues and contacts!

A while back I was involved in putting together a Preferred Supplier List for a bunch of equipment spend categories. The starting point was finding ‘someone’ to research suppliers online globally.

Here’s what drove me bananas as I tried to collate a long list of suppliers to invite to enter a procurement process:

1. A belief that ‘build it and they will come’.

Getting on that front page of Google is critical. Of course, I’m a professional and searched and searched pages. I was focused on finalising, quickly, my long list of ten or twenty suppliers, per category. Those early pages were my key hunting ground.

2. A belief that the lingua franca of international business is [insert local language].

Are you wanting to sell your goods internationally? Language content options are a must have. I’m being open. If there wasn’t an English option I moved on. Maybe a missed opportunity for me – and definitely a missed opportunity for an aspiring supplier.

3. A belief that website content full of fancy jargon and TLAs* will get the sale.

Tell me in ten words or less what you offer and who you help. Right up front on your first page – front and centre. I’m happy to take a deep dive into the details later on my ‘journey’, but for now I just want assurance you sell the category of equipment I’m interested in.

4. A belief that it’s all about social media engagement.

Contact details – your phone number and email. Please. Everywhere, every page, very visible, consistent and definitely including an email address, which, ideally, is a local market email addresses that doesn’t say info@. Make it as easy as possible for people to contact you directly.

By the way, thrilled with all those Instagram and Pinterest and other social media followers – how’s that working out for you? And while I’m here, are we absolutely sure about that contact form? I can see why YOU want my name, role, company, email, phone number, I’m just not so sure what’s in it for me.

5. A belief that having a unique, quirky website design will really drive business.

Let’s talk website design, which is not my thing. I’m just a victim of it from firms all over the world. When I’m buying internationally for a major client, I don’t want quirky (ok, maybe I’ll be accommodating if I’m buying creative services or wanting local supply chain).

Mainly, I’m craving surety that this website reflects an international supplier. Give me a nice clean corporate-looking website – make me feel comfortable and open to trusting you.

Am I asking for too much? Really? Please note, this is not an exhaustive list!

Action: Go have a look at your website, right now, and see if the 5 beliefs stand scrutiny. Your website is (probably) the first contact for your target customers – make it easy for them.

After all, you don’t want to end up in the poor house.

*TLAs = three letter acronyms; in fairness, Procurement’s not short of them either!

Is Your Company’s Product Responsible Enough to Buy?

Is your company’s procurement ‘responsible’ enough? Which pressures and stakeholders are the most powerful ones for your company?

socially responsible procurement

According to a 2012 study by Procurement Leaders, 61 per cent of organisations are driven by end-customers. Governments and regulations represent the second-most influential pressure that organisations face, followed by 48 per cent of organisations that embed CSR principles in order to meet employee expectations of working for a responsible company.

The above underlines that if you do not have CSR activities in place in the procurement function (and the company in general), then you take the risk that your end-consumer will abandon your brand. Conversely, there is also a business opportunity, as consumers are becoming increasingly willing to pay a premium for CSR labelled products.

What does responsibility mean?

Responsibility, or in procurement terminology Responsible Procurement Management, can be divided into 3 main categories: environmental, social and economic.

Practically speaking, Responsible Procurement is about defining a set of mutually compatible requirements, specifications, and criteria that favour protection of the environment, social progress, and economic development. You do this by identifying resource efficiency, improving the quality of products and ultimately by optimising costs.

In short, you could say that Responsible Procurement is about increasing a company’s profit, improving its strategic supplier relationships, and strengthening its brand, while remaining vigilant towards competitors and revolutionising their procurement strategy.

What does this mean to your company?

From an environmental point of view, your company should ensure that natural resources that are extracted and processed into goods and services are consumed in a more efficient way – getting more out of less. By changing the way we produce and consume goods, we can still limit the impact that climate change is bringing about.

From an economic and social perspective, your company has to ensure basic human rights and economic development, regardless of age, gender, nationality, religious belief or economic status.

How could your company get started with the journey?

Risk in Responsible Procurement is the probability that there will occur violations of the company’s or its key stakeholders’ values and perceptions. Determining a company’s risk profile is specific to each particular company.

Some companies will choose to focus on suppliers where the company has some bargaining power, or suppliers who have a strategic importance to the company. Others choose to target all of them.

Creating the risk profile must then take into account the following:

  • Risk level: Is it a strategic or an operational risk?
  • Probability: Indicate the probability of the risk occurring. Do you consider this as high, medium or low risk?
  • Impact: What impact on the organisation would there be in the event of the risk occurring? Again use high, medium or low.
  • Risk treatment: You should indicate the appropriate treatment for the risk. This could be: avoid risk, reduce or control probability, reduce or control the impact, transfer risk or accept risk.
  • Owner: The owner is the person who is accountable for taking action or carrying out the risk treatment.
  • Current status: Detail the current status of the risk. For example, has vital information been gathered?

Start managing your risks

Following the risk assessment the next natural step will be to look for ways to manage the risks. Risk management options will be particularly affected by the following factors:

  • What bargaining options does your company have over your suppliers?
  • Is your company a major customer or just one among many?
  • Who are the drivers of the value chain; is it producer or consumer-driven?
  • To what extent are subcontractors used, and how big a role do they play in the manufacture of products: for example, in situations where the supplier is a wholesaler, it may be necessary to identify the actual manufacturers.
  • How many financial and human resources is needed to work with it?
  • How far back in the chain will it be necessary to manage the risks?

Don’t give up – though the picture must be right

When Procurement Leaders carried out their research in 2012, they asked participants how important CSR was currently in their respective organisations. 42 per cent of the respondents said it was ‘Very Important’, while 38 per cent said it was ‘Important’.

When asked about how long their CSR policy had been in place, 36 per cent stated 1-3 years, while 30 per cent stated 4-6 years. What was clear from the research was that nobody wanted to be left behind, nobody wanted to be seen as a laggard in this field. Appearances matter.

The most important message is, though, that the actions you take must be equal to the picture you draw to the public.

Why Automation Can Help Procurement Achieve Its Goals

Automation is frequently talked about in manufacturing, but rarely in the field of procurement. Could it be the key to helping procurement achieve better outcomes?

Automation and Robotisation

Download GEP’s white paper on achieving P2P Excellence through Procurement and Finance alignment here.

Czech writer Karel Čapek was the first person to use the term “robot”.  In his 1920 play “Rossum’s Universal Robots”, he conjured the image of synthetic humans, carrying out the tasks that original humans no longer cared to do, yet remaining largely happy in their work. For a while.

Inevitably things went South, so to speak, and the robots learned to resent their drudgery.

Stories of automation leading to unforeseen misfortune are at least as old as Goethe’s 1797 poem, “The Sorcerer’s Apprentice”. Yet automation remains a goal, if one that is not without challenges.

Automation in Procurement

Automation is often seen as a good thing, because it accelerates processes (sometimes) and frees up valuable human resources (sometimes). In the context of manufacturing, introducing automation has been hugely successful because of the requirement for a production line to continually repeat identical tasks within exact specifications. Automation is therefore understood to be just that, the effective ‘robotisation’ of a process.

In a sense this is also desirable in Procurement because a good percentage of the tasks and processes are repetitive and of the same type. However, that is not the same as being identical, and it is often less than desirable to force a range of different variants into a single model.

Thus, what we need is the acceleration of the process and the reduction in administrative overhead but still maintain the unique aspects of each event in the process. This is where automation gets tricky.

Importance of the ‘Right’ Process

From the perspective of software design, the practitioner must be able to automate those parts of the process which are identical time after time, and permit the customisation of those parts that are unique, whilst accelerating the whole.

This is where an understanding of Procurement (and associated processes) is key in the design and implementation of the software.  As one of our senior project managers put it, “It is not a good idea to use automation to accelerate a broken process.”

What he means by that is this: whereas in manufacturing, the process of machining a particular widget by hand is already the ‘right’ way to do it, and automation simply repeats the task; in Procurement it cannot be taken as read that the sourcing methodology, contracting process or requisition-to-invoice workflow, are in any way the ‘right’, most efficient, or best, way to go.

In reality, then, for procurement software to provide a solution it must involve not only automation, but transformation. Using the imposition of an automating technology to review where the challenges in the current manual processes lie is a vital part of any such program. That way the eventual automation of the task will be more accurate and, ultimately, more useful.

Accounting for Whole Process

Another key consideration is best made with a manufacturing analogy again. If the entire process from raw material to finished goods is automated, then the rate of arrival of the end-product at the packing and shipping station will be considerably greater than in the pre-automation set up. If account hasn’t been taken of the impact ‘downstream’, then one can foresee the conveyor belt of products backing up and overflowing.

In Procurement this can be a real issue. Accelerating the order-to-invoice process is all very well for purchaser and supplier, but if Accounts Payable are periodically swamped with invoices to be paid, there can be significant impacts on administration overheads and, indeed, cash flow.

Furthermore, an accelerated sourcing process only works if the suppliers are on board, and a super-efficient bid-to-contract process will only work if the company’s attorneys buy in to it.

Thus automation is far from being a matter of “install software, use software, improve efficiency, get ROI”. Get it wrong and it can be a matter of “install software, use software badly, make matters worse, stop using software, can project, start again”.

But get it right and the “automation” program can see dramatic impacts on time to reach savings goals, supplier engagement and performance, and cash flow management downstream.

GEP have produced a white paper on the challenges facing the marriage of convenience between Procurement and Finance which explores these ideas further. You can download it here.

Is It All About The Money?

Money has been at the heart of business since the beginning. But as more start-up businesses take shape, we have to ask, “Is it all about the money?”.

Money

This article was originally published on LinkedIn.

Being at JP Morgan, the annual conference where the worlds of biotech and investment collide, gave me the opportunity to catch up and bump into many colleagues and friends. Everyone had a chock-a-block schedule, trying to squeeze in as many meetings as possible with current and potential partners, and money was a top conversation subject.

Of course money is needed to build and grow businesses, but does it define success? Being in San Francisco and talking to many people over the past week has made me think about purpose. All this talk about money made me wonder if it was really the driver. If it was, I am not sure success would be possible.

One could debate that money equals success or success equals money, but I really believe that it takes a lot more than the desire to make money to be successful.

What Drives Individuals?

For example, I caught up with a CEO that recently made an exceedingly large amount of money, but within just a few days of acquisition is already building another biotech company. I spoke with a VP of sales on his fifth successful startup who is working around the clock to grow yet another company’s revenue.

I met a successful physician that has been developing a product for the past 10 years, with a dream to see it approved and change the standard of care. I met with an investor with a very successful track record, diligently meeting with multiple prospects to identify his best new investments. Even without knowing each individual’s personal situation, I can safely say that the main driver is not money.

So what drives them?

I think it is passion. For some, it’s the rush that comes with seeing businesses grow. For others, it’s a desire to see their idea change the status quo. I can easily identify with that feeling.

I could have been satisfied with Matchbook, my successful and growing nine-year-old consulting business focused on providing procurement and sourcing support to fast-growing small biotech companies. I could have also chosen to be home with my three daughters. Although I have other options, I have chosen to work around the clock for the past 18 months to build tealbook.

Supporting Passion

What drives me to make so many compromises and remain so focused on building this business? It is passion for seeing tealbook come to life and become a market leader in providing supplier information. This passion is supported by many factors, and every crazy entrepreneur has his or her own list.

Here are a few of mine:

  • I believe in the idea: I strongly believe that tealbook can help clients significantly reduce time spent identifying the right suppliers and increasing cost efficiencies.
  • I want to solve the problem: I’ve seen firsthand the challenges of inefficient supplier information while supporting sourcing needs for large number of pharma and biotech companies. There is a solution!
  • I see the market opportunity: So many software companies have focused on developing Procure to Pay solutions and back end financial analytics. But compliance of the tools and user experience has not been done successfully. Technology is only as good as people using it and its data. User experience and compliance is at the top of our list when it comes to gathering and accessing supplier intelligence.
  • I want tealbook to be a market leader: We have developed smart and user friendly technology. I know we can give clients access to supplier information better than anyone else – we have talked to enough people to validate this statement both in the life science industry and beyond. We can own this position and easily become the most used front-end platform to significantly reduce the time spent identifying the right suppliers.
  • I made a commitment: I have made a commitment to myself, clients, suppliers, my team and the rest of the industry. Once I decided to launch tealbook, I made a promise to see it come to life, change the industry and make it a success.

One day, I hope to spend more time with my girls before they get too big. But, I can’t see myself stopping with tealbook. What drives me comes from inside and continues to grow with each interaction and success, small or large.

Although money certainly allows us to properly support our customers, grow our technology, generate more visibility, provide employee security and remain  attractive to potential investors or partners, I strongly believe that if we are truly passionate and motivated about growing a company, money will be an outcome.

You can’t put a price on the exhilaration of success!

ISM & Procurious: Leveraging Social Media in Procurement

Ahead of his keynote address at the Procurious Big Ideas Summit 2016, ISM CEO Tom Derry discusses ISM’s new partnership with Procurious, as well as the power of leveraging social media in procurement.

Leveraging Social Media

ISM and Procurious recently announced a new partnership, as ISM became a Procurious Foundation Partner. This will increase Procurious members’ access to ISM’s highly regarded research, events and educational offerings, from certification programs to the newly launched ISM Mastery Model™. ISM members will also benefit from the rich educational resources and networking opportunities on Procurious.

Leveraging Social Media

Over the last several years, social media has become crucial for connection professionals in all fields — especially procurement and supply chain. I honestly don’t see how anyone can expect to be successful in this day and age without leveraging social media.

Social media gives you access to a broader network than could ever be obtained face-to-face. You have the opportunity to tap into the global repository of procurement knowledge. Why would anyone choose to miss out on this competitive advantage?

Not only that, social media can serve as a news channel providing real-time updates and alerts. How powerful is it that you can be updated on market trends, natural disasters, geopolitical events and much more — all with a tool you keep in your pocket. It’s the agile organisation that survives and thrives in today’s environment, and you can’t be agile if you’re not plugged in to real-time events.

Procurious and ISM

When I first learned of Procurious, I felt it was a no-brainer. Procurious enables the supply management professional to leverage the immediacy of a social network in a in a professionally appropriate medium.

With the focus solely on supply chain, this platform connects professionals working on similar projects and initiatives globally. This adds value in two distinct ways: your building your own knowledge base, but also your personal professional brand.

When I tell colleagues about Procurious, I often hear, “How is it different from LinkedIn?” While there are many similar features, Procurious provides additional advantage for procurement and supply chain professionals. In addition to connecting you globally with those in the field, it gives you the upper hand through education, blogs, event calendars and my favourite — the Discussion board.

Discussions and Communication

I think we have all experienced our work being halted by a roadblock we have not faced before. As procurement professionals, we are often the experts in our organisation, making it feel like this is our mountain to climb alone. Instead of banging our head against the wall, we have somewhere to turn.

Whether you are looking for the right SRM system or a need career advice, the discussion board immediately connects you with others who may have the answer you need. There is strong, practical value in the communication on the discussion boards. One recent post was looking for advice on how to manage stakeholder expectations on procurement lead times.

Professionals from around the globe weighed in with advice on how to communicate the value procurement adds beyond simple considerations of speed and price. It’s just one example of how practitioners can leverage the experience of their peers to facilitate real results.

Looking to the Future

ISM is becoming more engaged with Procurious. We will be launching an ISM group this month. This group will add another place for those connected with ISM to go for networking and and for those new to ISM to discover and connect with us.

I am looking forward to watching the ISM community grow and develop on this platform. I see this being a great place for our members and nonmembers to connect. With more than 50,000 ISM members globally, there is a great opportunity to be had from potential collaboration.