Category Archives: Procurement News

Stories from The Source – Part Two: Sanne Gruter

The Source Recruitment Consultant Sanne Gruter gives Hugo Britt her top tips for procurement professionals to excel in their next interview.  The Source Interview Tips

Read Part 1 of this series here.

In more ways than one, Sanne Gruter is the international face of The Source. As part of her portfolio she looks after the fast-growing international sourcing part of the business, reaching out to potential candidates in markets including the UK, China and Singapore. Sanne is also ‘international’ in that she hails from Holland, has a partner from Uruguay, and has found a fulfilling and exciting career here in Melbourne, Australia.

Sanne’s academic history is impressive – she holds a Bachelors degree in Applied Psychology, and an International Masters of Culture, Organisation and Management which integrates anthropological, sociological and psychological approaches to identity, politics and cross-cultural co-operation with management and organisation theory. She enjoys the challenges involved in recognising, qualifying and nurturing top talent.

What made you decide to come out to Australia?

I love to travel, and still take every opportunity I can to see the world. I was out here in Australia travelling as a tourist, and of course I loved the sunshine. Melbourne, in particular, really appealed to me as the home of the Australian Open! So when the opportunity came up to join The Source, I took it.

How do you use your qualifications in your day-to-day role as a recruitment consultant?

My knowledge of psychology helps me be aware of the subjective element in almost everything I do. Recruiters need to remember that they’re dealing with real people, who have emotions and agendas. When I work with candidates I always let them know if they’re coming across as too aggressive or lacking in energy. Usually, people don’t know they’re doing it. Basically, I try to teach people to be convincing in interviews.

Is there anything unique about recruiting for the procurement profession?

Absolutely. I’ve found that procurement professionals are master negotiators – candidates want a lot, and they play hard on the salary negotiations. The clients we recruit for are excellent negotiators as well, and we generally find that they’re prepared to wait for the right talent to become available.

Where do you find your candidates?

Mainly through headhunting and networking. We reach out to people we believe are relevant for a specific role to have a very general career discussion. Usually people are happy to be courted and to join our network even if they’re not ready to move until the right opportunity comes along. This ‘hidden market’ has proven to be very valuable, since the focus is on the candidate.

We’ve also found quite a few people through Procurious, both inside and outside Australia. So be sure to log onto Procurious and connect with me! One of the exciting trends we’re starting to see is more and more people making a conscious choice to come into procurement from other professions, such as finance and law. Procurement functions can always use these diverse skill-sets.

What are the challenges in Australian procurement recruitment?

There’s a huge amount of change going on amongst our client companies. Restructuring and redundancies take place all the time, which means we have to keep on top of what’s happening in a fast-changing environment. Another challenge is that Australia is a relatively small market, which is why it’s important for procurement professionals to know the right people and reach out to organisations like The Source.

What sort of salary levels do you recruit for?

Personally, I mostly look after the mid-level space, which could range from $80,000 to $130,000 (AUD), but The Source team works collaboratively across all salary levels. And of course there’s the international recruitment angle too. UK professionals are in high demand in Australia, along with candidates from China and Singapore.

Can you share some tips for creating a winning resume?

Don’t just describe your role when you write your resume. Make sure you keep track of your achievements, and back up your claims with hard figures. Procurement employers like to see proof. For example, if you’ve achieved some excellent cost savings, make sure you include the dollar figure or percentage.

Start with a succinct personal introduction explaining your background, key strengths, and what makes you stand out for the role. You’ll never be shortlisted if you don’t communicate your strengths.

Frequently changing roles can indicate a lack of commitment, so try to stay in a business for a minimum of three years. Of course, sometimes it’s out of your control. If you are made redundant, don’t be afraid to put it in your resume – recruiters and employers won’t penalise you for redundancies because they’re so common.

Can you share some interview tips?

Make sure you’re well-presented. Read up about the organisation and find out about the people who will be interviewing you on LinkedIn. It’s important not to over-prepare and create a “script”, because it comes across as fake.

Remember to back everything up with examples. Think about the key competencies you’ll be asked about, and be prepared to talk about how you’ve demonstrated these in the past. You need to be able to explain what you do.

Do you have any stories of disastrous interviews?

We had a candidate who was asked to give an example of how she can balance priorities. Unfortunately, the example she gave was how she was juggling three boyfriends at once!

Another candidate took the advice to provide clear “evidence” of her achievements much too literally, and turned up at the interview with an enormous stack of printed-out reports and emails. She’d rummage through the pile to find evidence whenever she was asked a question.

Did either of them win the role?

Unfortunately for them, no!

What’s your advice for graduates considering procurement as a career?

Procurement is a good career. It’s growing fast, with heaps of opportunity to add significant value to a company. It’s a really diverse job. From the analytical side of things, to the sourcing experts, stakeholder relationship management experts, risk gurus – there are so many aspects to being a procurement professional.

The Source - Sanne GruterThanks Sanne, and all the very best for an exciting career in procurement recruitment at The Source!

 

 

The Source is a boutique mid to senior and executive recruitment and search consultancy with national reach specialising in the procurement market. For more details, visit The Source.

How to Get the Most from Your Training Budget

During the financial crisis, many organisations slashed their training budget, classifying this business requirement as ‘discretionary spend’.

Rise in the Training Budget

The classification of training as ‘discretionary spend’ is certainly a topic for further investigation on another day. However, as companies began to re-emerge from the cost constraints that governed their businesses in the years following the financial crisis, we are, thankfully, seeing a marked increase in training budgets.

Forbes outlined that corporate training budgets in the US grew by 15 per cent in 2014, the steepest increase in the last seven years, to over $70 billion USD.

Many organisations have cited skills and competency gaps as the key inhibitors to corporate progress. The severe cuts to training budgets during the Global Financial Crisis recovery period have surely contributed to this problem.

Maximise Your Training Budget

However, as training budgets start to creep upwards once again, how can procurement teams ensure that they are getting most bang for their buck when it comes to corporate training?

1. Determine your budget

It’s important to start with some pragmatic goals around what your organisation is looking to get from it’s training program. Once you have done this, you can then set a budget that will allow you to achieve these goals. Setting a firm training budget and objectives also eliminates the possibility of scope slippage and increases in unplanned spend.

2. Determine where to focus

Successful training is targeted training. There is no point in delivering high-level category management training to a workforce that lacks a sound understanding of the basics. Training needs should be identified at a personal level and should make up part of a broader development and HR planning process. Once the focus areas have been determined the task of prioritising can begin.

3. Before going external, look internally

There is likely a wealth of knowledge that lies within your procurement team. Facilitating and promoting knowledge sharing sessions benefits your firm in two ways. Firstly, you save precious money for other training initiatives. Secondly, at the same time you give your team an opportunity to show their skills and expertise to their colleagues.

4. Understand the external offerings

This one seems simple, but you need to do your research. There are numerous procurement training providers out there. Some are good, others not so good. It’s important to understand what your goals are and search for the most effective and well-regarded providers to help you meet these needs.

5. Train one, teach many

This process involves sending one staff member to a training course and holding knowledge sharing or training session when they return. This way, the lessons learned by one staff member can be amplified to your entire team. It’s a lot more cost effective than sending everyone on the same course.

6. Consider the benefits of eLearning

If your training budget is tight, then you need to look for a way to maximise Return on Investment. There is a wealth of training available on online platforms such as Lynda.com and Procurious. Most of this training is free and comes from some of the top names in education. There is also a potential saving when it comes to time out of the office for employees, and on travel and expenses.

7. Measure what happened

Do you want your training budget to increase next year? The quickest way to make that happen is to prove the effectiveness of the training you undertook this year. Investing in people is the quickest route to success, but if you are unable to track and measure these improvements, promoting the benefits of training becomes a far harder task.

These are just some easy steps you can take to ensure that you are getting the most out of your budget, while still providing the required level of training for employees.

Many employees now cite development opportunities as a reason for looking for or starting a new job. It’s important that your organisation isn’t the one missing out, and by ensuring the availability of quality training, you can work to keep hold of your star players.

The Quarterback’s Code for Strategic Sourcing

When it comes to strategic sourcing, organisations shouldn’t have to choose between standardisation and flexibility. Good technology should allow for both.

The Quarterback’s Code for Strategic Sourcing

Download GEP’s white paper on the role of procurement in the mobile revolution here.

“Omaha!”

A familiar cry to many, but maybe not to those not especially interested in the sport of Football in the USA (aka American Football back home in the UK). “Omaha!” is the often used pre-snap call of one of the sport’s greats, two-time Super Bowl winner Peyton Manning.

But what does “Omaha!” mean? And if it means something specific, how have the competition not worked it out after all these years?  And how come Manning’s former team are as much in the dark as the rest of us?

Context Is Everything

The truth then, clearly, is that it doesn’t mean anything, at least not anything consistent – either from season to season or game to game or even play to play.  As a placeholder, as a piece of gamesmanship, as a way to test the sensitivity of the hair trigger of the opposing defence, it has proven extremely effective, time and again.

Constantly switching up the sequence of calls and preparations and communications to keep the competition on the back foot is smart game play. But to do that without changing the vocabulary is sporting genius.

Without the need to constantly reinvent the language of the game, the effort can be fully devoted to implementation and execution.  Context is everything, and so by using a standard set of tools, a well-prepared team can snap-to and address each play successfully.

This is, in many ways, a model which is familiar to everyone. From Lego bricks to document boilerplates to groceries, we are very much aligned to the concept of creating a range of different outcomes from a standard kit of parts.

Standardised vs. Customised

It is also a model that business processes aim to emulate, but with varying degrees of success.  Sourcing and contracting are cases in point.  It is always a “nice idea” to have a standard set of processes or questions or clauses or whatever, but the reality is that changing circumstance forces a change in approach and time and again RFPs (and the Ps that result) are created from scratch with little reuse and standardisation.

That’s not without good reason, of course. Too much standardisation is a constraint.  A “take it or leave it” attitude to contracts is rarely a workable strategy in the long term. The need to be flexible, and adapt to changing circumstances, is important.

Nevertheless, there is a happy medium between “out-of-the-box” and “bespoke”. Your choice of procurement software should give you the ability to both select from a standard set and customise what you need – at the same time.

It shouldn’t be a question of having to choose between a boilerplate and a custom-built document. You should have the freedom to select which pieces you want to remain standard and which pieces you want to personalise.

Best of Both Worlds

So far, so obvious, I think.  But if that approach is adopted end-to-end in the procurement operation, enabled by the software, such that each sourcing wave, each program of supplier management, and each category are all consistently structured and arranged, then there emerges a common basis on which success can be measured and best-practice shared and transferred from team to team.

Thus a consistent approach and process needn’t be prevented by the requirement to change strategy or tactical game play. At GEP we develop procurement software that is designed around the principles of simplifying the processes and yet permitting maximum flexibility; two aims which can be seen as mutually exclusive. But we don’t believe they are.

If the software is smart enough we think you should be able to get the best of both worlds – a consistent common vocabulary that allows you to communicate effectively with your team mates, but with the ability to react swiftly and specifically to win every play.

Learn more about state-of-the-art procurement software at www.smartbygep.com.

GEP have shared a white paper on procurement’s readiness for the mobile revolution with the Procurious community. Download it at gep.procurious.com.

It’s Not About Procurement – It’s About Problem Solving

Sometimes a different approach to problem solving is required. This is what CityMart are doing with public procurement groups in cities around the world.

Problem Solving in Procurement

Last month, Procurious reported on a new public procurement initiative in Barcelona, and the organisation at the heart of it – CityMart. The company’s progress has been rapid and it is now setting its sights on its next major challenge.

CityMart’s modus operandi is to encourage cities and public servants to readdress the way they approach public procurement processes. At the root of their model is a commitment to involve the community in the civic decisions that impact the city.

CityMart’s founder and CEO, Sascha Haslemayer, stresses that for too long procurement has been telling its suppliers exactly what it wants, rather than taking a problem solving approach, and working collaboratively with suppliers and the broader community to come up with a response.

Stop Specifying

Haselmayer sums this up brilliantly with an anecdote about the different way two cities approached improving the mobility of their blind residents.

St. Paul in Minnesota spent $4.5 million on speaking traffic lights. Despite being designed and developed by public servants, the initiative was deemed by advocates for the blind as largely ineffective.

Stockholm spent approximately the same amount of money, but went to the market with the issue. This open approach (the city essentially said, “we have a problem around how blind people move across Stockholm”) led to the formation of a project team, which included people from both the blind and technology communities.

This group collectively defined the problem, something that St. Paul public servants elected to do themselves. They then got to work developing a solution that would solve the challenges of the city’s blind people. Stockholm ended up piloting a mobile navigation aid that allowed the city’s blind residents far greater independence in their daily lives.

CityMart Take on the Big Apple

CityMart has a solid track record of crowdsourcing truly innovative solutions to civic problems. You can read more about them on the company’s website.

Success in it’s hometown, Barcelona, as well as in large cities overseas like London and Moscow, has brought CityMart’s innovative problem solving approach into the spotlight. The firm now aims to take on the biggest challenge of all – opening an office in New York City.

CityMart is working with New York mayor, Bill de Blasio, and his Chief Technology Officer, Minerva Tantoco, as they review the city’s procurement processes. A recent initiative to improve Internet connectivity in the city, including turning payphones into Wi-Fi hotspots, proved hugely successful.

The project garnered 69 responses from 52 sources in six different countries, many of whom were much smaller than the suppliers that city hall would have traditionally dealt with.

Jeff Merritt, Director of Innovation at the Mayor’s Office of Technology and Innovation, said that he hoped engaging with CityMart would help the city find solutions or providers it would have otherwise not known about.

“When [people] look at a procurement, they think that the actual RFP is sort of the beginning of the process — and in some ways, by that point in time, a lot of the work has already happened. So the early stage is really working with agencies to identify the tough problems, the problems where they don’t know the solution that’s out there,” he said.

“Our goal isn’t to turn every single procurement into a call for innovation. Rather, it is to identify the areas that we think perhaps a traditional RFP might not be the best way to go, and work in partnership with agencies to really flesh out those problems.”

Merritt concluded, “When we put out a solicitation, our partners in the private, non-profit, and academic sectors can really understand what is the issue that government is trying to solve, and what are their ideas and proposals for addressing it.”

We’ll leave you with a quote from Haselmayer. “It’s not about procurement, it’s about problem solving”. Perhaps there’s something we could all take from that.

Adapt and Survive Through Supply Chain Optimisation

The global nature of business in the modern world makes maintaining the integrity of a supply chain a difficult task. This is where optimisation comes in.

Supply-Chain-Optimisation

Risk and disruption are part of everyday business like never before. The interconnected nature of supply chains exposes every player to consequences from a mistake made in an associated organisation.

Meanwhile, customer demands continue to grow. Expectations of instant delivery, product customisation, the use of socially responsible materials or labour, and the ability to adapt the latest technological efficiencies, are all norms businesses must adhere to in their quest to accrue a loyal customer base.

As a result, the cost of doing business and the level of competition are higher, while the margin for error is thinner.

What is Optimisation?

All of this creates a challenge for maximising efficiency and profits. The answer comes in the form of one of the hottest buzzwords in business right now: optimisation. And what better place to start than the supply chain.

Optimised supply chains are able to adapt to demand fluctuations and help manage costs by eliminating bottlenecks and other inefficiencies. When done successfully, the end result is improved customer satisfaction, along with higher capital, operational and tax savings.

Achieving that requires adopting a global mindset about opportunities, while maintaining a local approach to carbon footprints, value chain planning, infrastructure, assets and technology.

Supply chain managers review service models and product characteristics on a regular basis. Planning should involve identifying goals, examining existing policies and programs, assessing day-to-day operations and developing contingencies.

Optimisation also requires identifying risks, data based forecasting, improving inventory management, collaborating with supply chain partners, and implementing a business continuity plan.

Start with Strategy

Given the broad scope of what a supply chain manager can achieve, a logical first step is to determine what to optimise from both a long-term and short-term perspective.

Examine your business goals. Whether it’s making your business more sustainable, enhancing the customer experience or increasing profits, take into consideration the following:

  • Expanding markets
  • Customer service strategies
  • Product returns
  • Value-added opportunities
  • Product volumes

Supply chain leaders should analyse the full potential of their supply network before attempting to reduce costs across the network.

Supply chain optimisation is an ongoing process. The best supply chain networks adapt to market fluctuations, product performance variations and the integration of new technology.

Operations (short-term) strategy involves the nuts and bolts of your operation. This involves mapping out the management of resources and measurement of performance to help your network achieve its long-term goals. Seemingly small tasks such as workload scheduling, freight consolidation planning, and productivity improvements can make a big impact on your operations.

The Four Main Areas of Supply Chain

Both long-term and operational strategies are based on four main decision areas affecting the supply chain.

  • Location: Taking into account production and distribution costs, taxes, limitations and local content, location decisions are the first step in creating an optimised supply chain. The geographic location of production facilities, stock areas and sourcing points lay the foundation for product flow. This then impacts on access to consumer markets, revenue, service levels, and the overall cost of doing business.
  • Production: Making product decisions such as location of production facilities, transportation and distribution, and customer markets, tie into production strategy. Planning for this involves creating a master schedule covering equipment maintenance, workload balance and quality control.
  • Inventory: Inventory management is integral to an optimised supply chain. Holding costs can equal 20 per cent to 40 per cent of the inventory’s value. Maintaining optimum stock levels at inventory locations can have a direct impact on customer service.
  • Transportation: Transportation efficiency is a vital aspect of a successful supply chain, as it represents more than 30 per cent of logistics expenses. Shipment sizes, routing and scheduling are areas that management has to give serious consideration to, as transportation strategy is closely linked to inventory strategy and geographic location.

When each of these areas is optimised, it should align with your organisation’s broader business goals, from decreasing inventory or delivery time, to increasing profits, product quality and customer satisfaction. As with any strategy you will need a start and an end point. However, your supply chain must continue to evolve even after the end goal of optimisation is reached.

The authors of this article, Joe Schembri and David Rice, both work with Michigan State University and their supply chain management programs. One of the best things about working with these programs is the ability to research a wide variety of industries and how supply chain management affects them.

Change In Procurement – Who Are The ‘Change Makers’?

Capturing collective experience and sharing stories from procurement leaders on making change and progress will help shape the profession for the future.

Change-Makers

I remain impressed by those who have driven real and substantial change in the way procurement is done in their businesses. There were some great examples at the recent ProcureCon conference, from the centralisation of both operational and transactional procurement activities by AstraZeneca, to initiatives within Ericsson, Philips Lighting and Shell to name a few.

It’s also understandable, and not a little depressing, to see how many of today’s procurement problems haven’t really changed over the last 25 years. These issues continue to challenge procurement leaders, hindering progress and change.

Change Makers

What remains perennially powerful, however, are the stories we share about what has – and hasn’t – worked so well. Our collective experience helps propel our profession further and faster into an ever turbulent and challenging future. Our people expect us to help prepare them for this path. Our suppliers expect us to be more efficient so they can improve their terms, and our business partners expect us to anticipate, respond and improve the value gained from external suppliers.

To learn from those procurement leaders with tales to tell about the changes they have made in the function we will be running a regular ‘Change Makers’ profile. Our aim is to help capture collective experience and invite your responses comments and contributions to create an essential debate for our industry.

To start with we have asked a few of the Procurement leaders we know well to share their stories by asking a few questions about the biggest problem they had with the way Procurement was operating.

Richard Stewart, Group Head of Procurement, Smiths

Change Makers - Richard StewartWe asked Richard Stewart, Group Head of Procurement for FTSE100 company Smiths Group, to share his experience of creating group procurement expertise in a de-centralised business.

Smiths is a decentralised global technology company with five divisions: John Crane; Smiths Medical; Smiths Detection; Smiths Interconnect; and Flex-Tek. The changes Richard was implementing covered all five of these divisions, no mean feat in a global operation.

Improving Group Procurement

“When I joined Smiths in 2013, my remit was to work with the five divisions to improve procurement across the group. We believed that there was good scope to create greater financial returns from procurement, but also to help us manage risk and improve levels of expertise.

“Smiths is a highly decentralised global technology company, with five different divisions, operating in different markets. So the biggest issue initially was creating connections across the individual teams to work together as a function.

“A key enabler for this was the leadership team. They work together to set direction for procurement across the entire organisation. An early step was to bring this team together to develop a roadmap for the next 2-3 years. As part of this, we invested in key software tools, market intelligence, and spend analysis. For instance, we closely watch volatile commodity prices. Not to mention cost modelling, driving take-up of e-auctions and, in particular, standardised scorecards for all procurement.

Creating Shared Understanding

“A core part of our programme was category management training that involved 90 per cent of colleagues (around 100 people). This has helped helped us foster a procurement community with a common language, which has been vital. Overall, we are aiming to create a framework for procurement,  and a shared understanding of best practice.

“Of course, it’s all a learning experience too – it is important to push forward new ideas but you also need to adjust the speed of proposed change to the pace of the organisation and this requires patience.

“Reflecting on the first two years, I’m pleased with the progress we are making and we have had great support from senior leadership. We’re now aspiring to build links between procurement and revenue growth for the next phase of our development – that’s our ambition anyway.”

Common Language and Shared Experience

Working with Richard we have seen how he has tried to strike the balance between maintaining divisional procurement autonomy, expertise and passion, and leveraging group purchasing power and expertise widely across the different divisions of Smiths, with different cultures and business models.

Using a suite of procurement enablement tools and by implementing a category management toolkit and training he is creating a common language and a set of shared experiences which will maintain the existing strengths but will drive consistency and the ability to collaborate to leverage power and expertise across common categories.

This way of building momentum for change, and a group approach, appears to sit well with Smiths group corporate culture and strategic objectives.

 

Future-Purchasing-Change-MakersFor more on the ‘Change Makers’ series, check out Future Purchasing’s blog.

If you would like to appear in the Future Purchasing ‘Change Makers’ series, please contact Anna Del Mar for details here.

Understanding the Alternatives to Temporary Labour

The hiring and management of temporary labour can be an expensive business. However, there are alternative ways to bolster your workforce, explains Jon Milton, Business Development Director at Comensura.

Temporary Labour

Temporary labour comes in many forms, sometimes to cover permanent workers absent from work, or to fulfil short-term demand. In each case, the hiring manager’s default position will be to hire this resource from an agency. However, just because the need is temporary and use of an agency has always been a sensible approach in the past, doesn’t mean that it’s the way it always needs to be done.

In certain situations there can be more cost effective and flexible alternatives to temporary labour, to supplement the use of agency workers. Here we highlight various options for consideration.

Reassigning a permanent worker

There may be one or more existing permanent employees who can be reassigned, seconded or trained to provide short-term cover. If it’s an important role, some businesses have permanent workers trained to step up when the need arises and their role is then back-filled with a temporary worker.

Your business may also have a number of employees currently facing redeployment or redundancy that may be also seeking new opportunities. Alternatively, the demand from across your business may be stable and large enough to justify and sustain an increase in the number of permanent workers.

Fixed term contracts

The demand for temporary workers may be stable and consistent for a set period of time in the year. In this scenario, recruiting employees to the business on fixed-term contracts may be a viable alternative to temporary labour.

Direct workers

Your organisation may be able to create a database of people who are ready-to-work on a temporary basis when called upon. This approach can be referred to as the ‘staff bank’, ‘internal resourcing pool’ or ‘benched resource.’ It typically uses an internal agency approach and contracts workers to temporary or flexible roles.

This can work well in areas of your business where your need for temporary labour is low but with spikes in demand throughout the year. From a worker perspective it can be a beneficial way to retain the skills and experience of older, possibly retired workers, who want to continue working on a temporary, part-time or flexible basis.

Limited Company Contractors

Another alternative is to contract with workers who set themselves up as a limited company. This works best for highly skilled or project-led assignments where a defined scope of needs can be set and the worker measured and paid against milestones and deliverables, rather than salaried costs. It is important to note that in some sectors, such as IT, the best qualified and skilled workers may only work on a limited company basis.

Welfare to work

Your business may be able to work with Jobcentre Plus and welfare-to-work agencies to offer employment opportunities to long-term unemployed people. These agencies focus on getting candidates job-ready, typically by assessing the specific skills you require and then providing potential candidates with the relevant training and support. This approach can be a useful way to fill entry-level positions.

Apprenticeships

If your business has an apprenticeship programme you may be able to assign the apprentice to a relevant task.

Use of agencies remains a sure fire way of meeting significant temporary staffing demand but it doesn’t have to be your only strategy. These alternative approaches can help remove or reduce demand for pure temporary labour too. The key is to plan for your workforce requirements with an open-mind and evaluate the merits of how and when you use the non-permanent workforce.

Supplier Relationship Management – Stay Ahead of the Curve

What does it take to stay ahead of the curve nowadays? Exploring why successful Supplier Relationship Management (SRM) can help procurement adapt to the circular economy.

Supplier Relationship Management - Ahead of the Curve

As a company it is important to adapt to the circular economy. The limitations and growing problems of the linear economic model, which has served us well for many decades, demands that business ‘as usual’ is unlikely to be a winning strategy in the future. The winning strategy lies within the circular economy.

The Ellen McArthur Foundation defines a circular economy as an industrial system that is restorative or regenerative by design. It replaces the end of life concept with restoration, shifting business towards the use of renewable energy and elimination of the use of toxic chemicals, which impair re-use.

Ultimately, it aims for the elimination of waste through intelligent design of materials, products, systems, technologies and business models. We could call it circular innovation.

Collaboration Is Key

Supply chains are getting more complex every day in terms of the number of involved partners and the quality and degree of interdependency between them. One of the predictions in relation to the integration of the circular economy is that complexity will increase, and collaboration with partners across and outside the supply chain will be crucial in order to stay ahead of the curve.

Procurement plays a key role in the transition. There is, for sure, more to procurement than savings. The world’s leading global companies are looking to the sourcing and procurement function to do a lot more than cut the price of supplies. Procurement needs to broaden its role in the organisation, well beyond the traditional job of negotiating with suppliers.

Suppliers, along with procurement professionals, should be involved in the innovation life cycle, from initial idea, all the way to manufacturing and continuous improvement. Innovation is happening with or without the involvement of procurement. The key question is how procurement can build competences to enable the transition?

Supplier Relationship Management – An Effective Tool

One of the ways that procurement could build competences is through supplier relationship management. Companies that have demonstrated this ability typically generate higher profits, innovate more effectively and are better able to manage risk.

Research done by State of Flux shows that the role of the suppliers will only become more important in the future. Companies are becoming both flatter and this makes them rely more on third parties. As in many other areas of life, you are only as good as the weakest part of the chain. In this case business can only be as good as its worst supplier.

The research also shows a direct correlation between companies that are leading the way in this area and strong senior backing of SRM, with 46 per cent of leading companies saying that SRM has the support of their top executives.

Customer Of Choice = Access To Innovation

Organisations that want to make a real difference with Supplier Relationship Management, or put in other words, any organisation that wants to stay ahead of the curve – need to be led by people who understand its importance. That means recognising that changing business dynamics are giving suppliers more power and choice about who they partner with, and how.

It means in turn recognising that becoming a key supplier’s customer of choice will bring access to a range of benefits, from price advantages to innovation – and that failing to do so will mean such benefits accruing to competitors instead. This understanding must be paired with a board-level commitment to investing in the technology and training that underpin successful SRM and to creating an organisational culture.

How is Big Data Relevant to Procurement?

Or perhaps better still – what on earth is big data?

Big Data

Open up any industry magazine and you’ll inevitably find a story referencing Big Data or the ‘Internet of Things’. Consultants use the terms in their sales pitches and product offerings, but there’s frequently a lack of understanding of exactly what Big Data is, and how it is relevant in a procurement context.

In this series of articles, we are looking at a few questions which should serve to give us a better understanding of this topic, and why and how it is relevant in the procurement environment.

But let’s start at the beginning…

Can Anyone Properly Define Big Data?

After a little research, it seems the answer to our first question is a resounding “No”.

If you were to ask ten procurement professionals what big data is, the likelihood is that you’ll get ten different responses. Ask ten IT professionals, and chances are you’ll get another ten, completely different, responses.

There is a great article by Gil Press on Forbes titled ’12 Big Data Definitions: What’s Yours?’. The crux of this article is that Big Data is, by its very nature, a subjective term.

While writing a much quoted research paper, US-based global consultancy firm McKinsey offered the following definition:

“Datasets whose size is beyond the ability of typical database software tools to capture, store, manage, and analyze,”

This definition came with the following caveat: “This definition is intentionally subjective and incorporates a moving definition of how big a dataset needs to be in order to be considered big data.”

The Oxford dictionary has defined the term as “data of a very large size, typically to the extent that its manipulation and management present significant logistical challenges.”

But the question here remains: what is a “very large size” and who determines if its “manipulation and management present significant logistical challenges”?

Agree to disagree

Regardless of how we define big data, there is a common understanding that over the last decade there has been an explosion of information (most of it digital). As we continue to do business and live our through digital interfaces, that volume of data is only going to grow.

Whether we call it ‘big data’, or simply ‘data’ as we have for the previous few hundred years, is a question for the marketers and tech journalists out there. The fact is that today we have access to more data about more people in more places than ever before.

The challenge is, how do we harness this mountain of data into information that we can use to make better business (or procurement decisions)?

This point was highlighted expertly by group of computer science researchers back in 2008 in this paper. While failing to define what big data actually is, the paper highlights that big data computing will “transform the activities of companies, scientific researchers, medical practitioners, and our nation’s defense and intelligence operations.” Evidently they were correct.

If that hasn’t brought us closer to understanding exactly what big data is, it’s certainly given a broad foundation on which to work. But how does this all relate to the procurement profession? That’s the question we’ll be answering in the next part of the series.

‘Productivity in Pharma’ Procurement Think-Tank

The Beyond Group are excited to announce our fourth ‘Productivity in Pharma’ Think Tank.

Productivity in Pharma

This conclave of senior procurement leaders from the Pharmaceutical industry kicked off in 2013. The aim was to create a unique, mini-MBA style environment, where the most pressing issues facing the function are explored in detail and, from which, key insights and applicable takeaways are derived.

In our first two years we deeply probed two important topics that surfaced in our original “Beyond Procurement” study:

  1. SRM and why it has failed to live up to its strategic promise
  2. Procurement’s role in driving Sourcing Innovation.

Our aim with this article is to share some of the insights from our most recent series, which focused on deeply integrating procurement into the broader productivity arena.

How it Works

We divide the Think Tank sessions into three 1-day sessions, four to six weeks apart. Each session has a particular purpose.

  • On Day 1, we attempt to clearly define the topic we are discussing
  • On Day 2, we delve into the substance of the issues and discuss options for meeting the challenges uncovered on Day 1
  • On Day 3, we try to bring our learnings together to develop applicable takeaways that can be directly applied by attendees

2015 – Outputs and Takeaways

So what were the great insights and outputs from ‘Productivity in Pharma’ 2015? All members from the 12 global Pharma companies present felt that there was increased pressure for procurement teams to step above their traditional role of price management, and build connections with other parts of the company to drive even greater levels of productivity.  The group developed several key observations:

  • Activities aimed at generating greater productivity returns must be cross functional and not purely the remit of procurement
  • Discovering met or unmet customer needs often points towards areas of collaboration that directly create customer value
  • Procurement teams need vastly improved analytical skills and tools
  • Specific tools and knowledge required by procurement teams are LEAN/Six-Sigma, Offshoring and Outsourcing, and Demand Management
  • The strongest path of collaboration for procurement teams would be to work closely with internal teams for project management, LEAN experts, outsourcing, and business analytics

During the second session the group had a chance to further refine the insights from Day 1. They delved more deeply into how other companies were recognising procurement’s contribution to value creation in non-traditional ways.

A highlight from the session was a discussion on how procurement figured into the M&A process and what skills did it need to bring to the table to be recognised as a business advisor. Lastly our Talent Development partner for 2015, Korn Ferry, provided on-line assessment for each attendee to allow individual measurement against the ideal set of skills required for CPOs in the future.

Conclusions

In our closing Think Tank session, there was general consensus that most organisations were demanding much more from procurement teams than in the past. This included operating outside of its traditional commercial/risk management role.

However, no company had fully assembled all elements, forming neither an integrated productivity function nor a consensus on guidance for procurement organisations moving in this direction.

Four key imperatives were generated for procurement teams to consider when evaluating their enhanced role as productivity leaders.

  • Mandate: Procurement teams can lead cross-functional efforts to develop a broader collaborative mandate to drive productivity.  Productivity gains are greatly magnified (sometimes more than doubled) when process are evaluated side-by-side and not purely functionally.
  • Structure: Purely functional structures are beginning to fade.  Procurement teams should embrace agile structures and project roles that attack costs in a multifaceted way.
  • Measurement: Procurement’s yardstick of performance, savings, tells only a small part of the productivity story. New methods of measurement, including the increased value perceived by customers, need to become part of our performance lexicon.
  • Skills: New skills and new roles are required for procurement leaders of the future. Three new roles were specified by the group

The intensity of these sessions left most of our Think Tank members hungry for more.  We concluded our last session recognising that skills and capabilities were going to be a defining element for procurement teams, either being recognised as true business advisors, or as those that have yet to transform.

Next Steps

Our 2016 ‘Productivity in Pharma’ Think Tank will focus on “How to grow the skills to drive next-level procurement”, in order to face the formidable challenges of the future.

We are delighted to announce that Procurious will be joining us in order to chronicle the events, conversations and outputs over the course of the three days. This is a great opportunity for our members to get to know Procurious, but also for members of the Procurious community to gain a unique insight into this event.

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 visit our website or drop us an e-mail.

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.