Category Archives: Procurious News

Are Women Better Managers Than Men?

Latest research tells us that not only are women as good as men, most of the time they are better. So what’s holding companies back?

women
By Monkey Business Images/ Shutterstock

There are a lot fewer female managers than male managers. But you’d be wrong to assume that’s because women are not as good at leadership.  The latest research tells us that not only are woman as good as men, most of the time they are better.

According to the latest results from an annual survey conducted by international business advisory firm Grant Thornton, three quarters of businesses worldwide have at least one woman in senior management. 

Notwithstanding that, less than a quarter of senior roles in those businesses are held by women and most of those are at the lowest seniority level.  The glass ceiling for female managers still very much exists. 

While 2 in 5 low level managers are female, just 1 in 20 of S&P 500 CEOs are women.  One in five board members are women and just one in ten are among the top earners in the company.  This is despite women representing 45 per cent of all employees in those companies. 

Men vs. Women – Stereotypical Traits

A recent study in Spanish companies tried to get to the bottom of why by asking workers to evaluate the extent to which gender-stereotypical traits are important to become a successful manager.   Overall the study found what we might expect. 

The workers felt traits normally associated with males (using a standardised questionnaire) such as aggressiveness, superiority and calmness in the face of crisis were important in order to successfully manage.  The respondents also consistently rated males as being stronger in these areas. Unexpectedly, this association was stronger among female employees than males.

But when the Harvard Business Review recently analysed their comprehensive database of almost 9,000 annual management reviews they found that real-life female managers excelled on almost every trait associated with excellent corporate leadership.  

The data comes from 360 evaluations where participants peers, bosses and direct reports are asked to rate each leader’s overall effectiveness and how strong they are on 19 competencies that Harvard’s 40 years of research has shown are most important to leadership effectiveness. 

It showed that women outperformed men on 17 of the 19 traits.  These included traditionally female characteristics like building relationships, teamwork and motivating others but also those normally associated with male leaders, such as driving for results, speed, bold leadership and innovation. 

Females were particularly strong on Taking the Initiative, Practising Self-Development, Honesty and Resilience. Male leaders did better in only two categories, ‘Develops Strategic Perspective’ and ‘Technical or professional expertise’.

A Matter of Confidence?

Interestingly despite being more competent in almost every management facet than their male counterparts the women under 25 were significantly less confident about their abilities than the men.  And their confidence levels didn’t catch up to those of their male colleagues until they reached their 40s.

Other research has shown that women are less likely to apply for a job if they are no confident that they are qualified.  Men and women with the same qualifications may not come to the same conclusion about whether are qualified for a promotion simply due to differing self-assessments as to their abilities.

Added to that, women were much more likely to follow the written rules about necessary qualifications.  Men were likely to apply even though on paper they weren’t qualified. A woman would wait until she was.  The result was that men were frequently promoted more quickly than women even when had equivalent abilities.

The Best Women for the Job

The data tells us that on just about every meaningful criteria, women are likely to be better managers than men, so why are so few of them holding management positions? The Harvard team speculate that besides the tendency to underestimate their capabilities and cultural norms against female leaders -almost all human societies are patriarchal, meaning that men run the show – there’s likely to be a strong helping of conformity to the norm in hiring decisions. 

If 90 out of a hundred managers are male then promoting a women to their ranks is a risk for a hiring manager.   As they say in the computer industry, no-one ever got fired for buying IBM. Perhaps in this case it’s more like, nobody ever got fired for promoting a man.

Hiring decisions like that, could be costing your company money.  According to a large international survey which correlated the percentage female managers with profitability, those that had 30 per cent or more women in the C-suite were on average 15 per cent more profitable.

Hiring more female managers isn’t about being polite. The evidence is in. It’s about better profits and getting the best person for the job – even if she doesn’t think she is.

Building Bridges (Literally) – The Best of Procurement

Challenges and failures are all very well, but procurement only gets to develop if we talk about our wins. And we can all win if we learn from the best. 

By Kiwis/ Shutterstock

The Queensferry Crossing is a magnificent structure and feat of design and engineering. At 1.7 miles (2.7km) long, the bridge is the longest three-tower, cable-stayed bridge in the world. The project features innovative design and forms part of a huge, 13.7 mile (22km) upgrade in infrastructure, including intelligent transport systems and emission reducing technology.

With a project budget of between £1.7-2.3 billion at the pre-tender stage for the Forth Replacement Crossing (including the Queensferry Crossing Bridge and the surrounding infrastructure works), it’s no surprise that procurement was at the heart of the success of the project. Without great procurement and strong contract management, there is little chance that this would have been delivered in the manner it was, and provided the savings it did too. The procurement process itself delivered significant savings resulting in a reduced estimated budget of £1.45-1.6 billion.

An Audit Scotland report into the project undertaken in 2017 determined that the project had indeed delivered value for money, not surprising given that at a total spend of £1.34 billion, it provided an 8-16 per cent saving on the budget at the start of construction.

A number of strategies used by Transport Scotland for the project proved to be highly successful in the procurement exercise, such as the use of an extensive panel of KPIs, as well as allowing bidding consortia the freedom to suggest changes to designs that could potentially deliver savings and benefits.

The quality of the procurement was recognised in 2018 when Transport Scotland won the GO Infrastructure Project of the Year Award and the GO Excellence Scotland Award 2018/19 for the Forth Replacement (Queensferry) Crossing project at the 2018 GO Awards. There was further success for the project at the National GO2019 Awards in Birmingham, where it was awarded the GO Infrastructure Project of the Year.

In order to understand more about just what exactly made the procurement on this project such a success, I spoke to Lawrence Shackman, Project Manager for the Queensferry Crossing and Head of Rail Projects and Technical Services at Transport Scotland. So if you’re looking to learn from the best, now’s the time to pay attention!

What made the procurement exercise such a success to deliver the outcomes it did?

There were many good aspects to the exercise to make it a success. In particular, using the Competitive Dialogue method, which ensured we were able to engage fully with the tenderers in explaining the scope of the project, the reasoning behind the specimen design and the build process, their design and construction proposals and many other which helped to de-risk the project.

This also included supplying the tenderers with full project information, including ground investigation data and specimen designs to give examples of how the bridge, roads and associated infrastructure may be designed to satisfy the requirements.

What was the biggest challenge with the procurement and how did you overcome it?

There was a major risk that we would only be left with one bidder for the Principal Contract, as only two consortia tendered. We overcame the risk by using a Participation Agreement, signed by both tenderers, which guaranteed two things: 1 – that if Scottish Ministers did not proceed with the award of the Principal Contract, the tenderers would be reimbursed with their tender costs up to a value of £10 million; and 2 – if the contract was awarded, then the unsuccessful tenderer would be reimbursed half of their costs, up to a maximum value of £5 million.

This Agreement effectively helped to ensure that the competition remained through to submission of tenders, helping to minimise the risk of us only receiving one bid. That would have required significant additional time to verify that it represented value for money.

What lessons did you learn for future projects?

There are so many that it would be impossible to detail them all here! We intend to publish a Lessons Learned Report in the next couple of months.

If this article publishes after the publication of the report, I will link to it here.

Do you have any advice for other public sector procurement professionals working on tenders or projects to learn from your success?

Again, there are so many lessons we would share, as I have already done with other procurement professionals. Without going into too much detail, you need to ensure that you have good governance, good stakeholder engagement, technical competence, a realistic programme and cost estimating, plus robust risk management. A solid, consistent team is also essential to guide and manage the process.

Apply the Lessons

There won’t be many procurement professionals who have the opportunity to work on a project such as this, but that doesn’t mean to say that the lessons learned here are applicable across the entire profession.

Robust specifications, good stakeholder engagement, good governance and realistic programmes apply to big and small projects alike, and there is always the opportunity to look for more innovative methods to help with risk management or complex tenders.

So let’s focus on the positives, follow the path laid out for us by other professionals who have delivered successful, high-profile projects such as the Queensferry Crossing, learn from them and see what we can do in our own organisations. Remember – there is always someone to learn from who has been there, seen it, done it, so who not learn from them before we start.

Talent And Motivation Are Critical To The Success Of Your Business

Individuals of great talent can have a significant and disproportionate bottom line impact in jobs that are highly complex…

talent
By Dirima/ Shutterstock

According to McKinsey’s global talent survey.  Talent will increase productivity by 800 per cent in jobs that are very highly complex, but by just 125 per cent in high complexity jobs and just 50 per cent in low complexity jobs.

Very high complexity jobs include software developers and high level managers. Low complexity jobs are unskilled or semi-skilled labour such as assembly line workers.

This doesn’t mean the entire team needs to be highly talented.  A highly talented engineer can produce the work of nine average engineers in the same amount of time. 

Even ensuring one in five are highly talented will lift the average productivity of the team in high complexity jobs. It will also significantly reduce the time it takes to complete a project. 

As the late Steve Jobs once famously said after noting that his best engineers were 50 to 100 time more effective than his worst, “Go after the cream of the cream. A small team of A+ players can run circles around a giant team of B and C players.”

Disproportionate Impact

Talented individuals can have a significant and disproportionate bottom line impact in jobs that are highly complex, so, rather unsurprisingly, the competition for talent in those industries is fierce. Almost one third of senior leaders surveyed by McKinsey cited ‘finding talent’ as their most significant managerial challenge. 

And with a predicted shortfall of up to 18 million high skill workers in the United States and Europe by 2020 (and 23 million in China), that is to be expected. 

Based on the labour market sizes, this means 1 in 10 high complexity jobs in Europe and the US, and 1 in 6 in China will go unfilled.  Companies in complex industries will not be able to fill a significant percentage of the high skill jobs at all, let alone fill them with the most talented individuals.

Against this backdrop of significant talent shortage, you might assume businesses were highly skilled at seeking out and retaining talent. And you’d be dead wrong.  According to the McKinsey survey 82 per cent of Fortune 500 executives don’t think their companies recruit highly talented people and just 7 per cent agree with the proposition that their companies retain high performers.

No Engagement, No Talent

Big companies, by and large, are just not good at attracting and keeping talent. This is likely due to a lack of engagement.  A talented individual can work anywhere and usually knows it. If they are not motivated by the job, or engaged with it, they will probably leave.

Gallup conducts an annual survey of employee engagement for US employees.  While the numbers are improving, according to the latest results, more than half (53 per cent) of US workers are disengaged with their work or workplace and an additional 13 per cent were actively disengaged.

A disengaged worker is turning up and doing the minimum required but will leave the company for a slightly better offer.  An actively disengaged worker has a miserable work experience and would quit tomorrow if they had any other choice. These statistics match up to other surveys which suggest about three in four workers are actively looking for another job at any given time.

According to Gallup data, businesses that are in the top quartile for engagement achieve earnings per share growth that is four times that of their competitors in the bottom quartile.  They also experience better retention, fewer accidents and 21 per cent higher profitability.  Attracting and retaining talent by keeping them engaged is a license to print money.  But doing that is far from easy.

According to McKinsey, the key is to correctly identify the roles adding the most value.  Sometimes this is easy. Maybe it’s the engineer who checks in the most code or the salesperson who sells the most but usually its not that obvious.  Companies need to look below the surface for long term value.  Is the code bug-free?  Are the sales repeat business?  Is it actually a brilliant code tester adding the value or an incredible sales engineer?

Honesty Over Money – Honestly!

Once those roles are accurately identified the organisation needs to focus 95 per cent of its retention efforts on engaging and retaining those key individuals.  But it isn’t just about money, according to the McKinsey and Gallup surveys, money is the least important of the four primary motivators for retaining high value talent. 

The other three in order of importance are having inspirational and empowering leaders, working for a company with a reputation for honesty and integrity and having a job that makes a difference (has impact).

In short, don’t employee psychopathic leaders, develop an industry-wide reputation for honesty and integrity, doing something that makes a difference and treat your employees the way you would like to be treated and you will be a long way down the path to attracting and retaining the kind of people who can attach booster rockets the size of a SpaceX Falcon Heavy to your bottom line.

Traditional vs Automated Procurement Process

Got major procurement issues in your organisation? You may well be able to use technology and automated procurement to solve them.

Photo by rawpixel.com from Pexels

The procurement process is much more complex than it looks. The more complex it is, the higher the number of issues. An automated procurement process can help you prevent and resolve these issues. However, many companies still rely on a manual process. 

Let’s understand the challenges of the traditional procurement process and the ways automation can help.

Challenges of Traditional Procurement Process

A company practicing traditional procurement process faces a lot of challenges. Here are some of the major challenges of a traditional approach:

1. It’s Time Consuming

A traditional procurement process consumes a lot of time of both vendors and companies. As a result, it slows down the entire process and affects productivity. In addition to this, it can take days to communicate a single message and get the job done.

2. Chances of Duplication and Fraud

In a traditional procurement process, everything happens on paper so it becomes difficult for your team to keep track of everything. That’s why there’s little to no transparency in the dealings. This can lead to malpractice such as duplication of contracts or fraud. A single incident of fraud can affect your company’s reputation. 

3. Inefficient Data Management

An offline procurement process involves a lot of paperwork, so data management becomes challenging. In addition to that, it also increases the risk of errors. In spite of this, 54% of companies are still using a paper-based invoice process. 

Paper-based records are always vulnerable to tampering or loss of information and data. This can put your company in a troublesome position.

Benefits of Using Automated Procurement Process

Here are some important benefits of using an automated procurement process: 

1. Improves Efficiency and Speed of Procurement Process

By automating your procurement process, you can not only speed up the process but also increase efficiency. This helps your procurement team by saving a lot of their time for other important tasks.  

With an automated process, you can automate all the repetitive tasks. This helps you cut down on the amount of manual work for your team. It allows them to handle much more important and complex tasks. 

2. Creates a Centralised System

As mentioned above, a traditional procurement process can lead to duplication and fraud in contracts. For any company, there’s nothing scarier than this.

However, automation can help you minimize instances of duplication and fraud. It helps you create a centralized system for all of your data and documents. This allows your procurement team to easily track down the required documents.

3. Reduce Manual Errors

Unlike a traditional approach, automation eliminates paper-based documentation and decreases the risk of errors. When you follow a traditional approach, it not only consumes a lot of time but also invites risk.

So, it’s best to automate your procurement process and encourage a paperless process to reduce manual errors. It also allows you to store information and data easily and safely.

Do you want to learn more about issues in the procurement process and how automation can help you fix them? If so, check out this infographic from PurchaseControl.

Major Procurement Issues & How to Fix Them with Technology

Image courtesy: PurchaseControl

Critical Factors for Selecting your Suppliers

What critical factors do you look for in your suppliers? What does an organisation have to offer to get their foot in your door?

When you think of procurement, and get beyond the savings agenda, then the first thing that comes to mind is managing suppliers. While employees may be the life-blood of an organisation, suppliers are definitely the nourishment and support that keep organisations alive.

Without suppliers and their extended supply chains, organisations wouldn’t have any raw materials to make into products, any products to sell, or anyone to deliver much-needed services. That’s why a good supplier relationship (or relationships) can be critical to your daily operations.

However, one bad apple, one flawed contractors could not only stop the seamless functioning of your supply chain. It could also harm those two vital elements for all businesses – trust and reputation.

Your Critical Factors

If supplier relationships are key, then surely procurement should be taking its time selecting the right ones. And given the importance of this, procurement also needs to be applying the right ‘critical factors’ when selecting their suppliers.

As has been discussed in the past on Procurious, there are a number of factors that must be considered when selecting suppliers. The only issue is that these don’t appear to have changed very much over the years, begging the question – is procurement doing everything it can to adapt these criteria in line with the external environment?

Sure, it’s high time that procurement was looking past the traditional criteria of cost and quality when making their assessments. But the truth is, there’s no getting away from them.

However, this isn’t necessarily a bad thing if they aren’t the only factors in the equation. As procurement professionals, you are probably only too aware of the myriad of other factors that you need to be accounting for, from cultural fit and financial stability, all the way through to ethics and sustainability.

So which are the critical factors that procurement should be using? Is there a list that we should all be looking at?

Join our Webinar

Help is at hand in the form of Procurious and Ivalua’s latest webinar, ‘Critical Factors for Selecting your Suppliers’.

Sign up now to join our panel of experts at 11am (BST) on Tuesday the 3rd of September:

  • Tania Seary, Founder, Procurious
  • Stephen Carter, Senior Marketing Manager, Ivalua
  • Fred Nijffels, Accenture Operations ANZ – Procurement & Supply Chain
  • Gordon Tytler, Director of Procurement, Rolls Royce

In the webinar, you’ll hear from a panel of experts on a range of topics including:

  • The importance of cultural fit in your supplier relationships;
  • If sustainability, social value and fair working practices are becoming more prominent for procurement;
  • What your suppliers are looking for in your organisation; and
  • How to start the conversation in your organisation to move away from just cost and quality criteria.

FAQs

Is the Critical Factors webinar available to anyone?

Absolutely! Anyone & everyone can register for the webinar and it won’t cost you a penny to do so. Simply sign up here.

How do I listen to the Critical Factors webinar?

Simply sign up here and you’ll be able to listen to the on-demand. 

Help – I can’t make it to the live-stream of the webinar!

No problem! If you can’t make the live-stream you can catch up whenever it suits you. We’ll be making it available on Procurious soon after the event (and will be sure to send you a link) so you can listen at your leisure!

Can I ask the speakers a question during the Critical Factors For Selecting Your Suppliers webinar?

If you’d like to ask one of our speakers a question please submit it via the Discussion Board on Procurious and we’ll do our very best to ensure it gets answered for you.

Don’t Miss Out!

This webinar promises to provide a fascinating insight for all procurement professionals into the Critical Factors you should be considering in supplier selection.

Make sure you don’t miss out by signing up today!

Navigating the Choppy Waters of the Future – An Expert’s View

Photo by Garrett Sears on Unsplash

The US escalating a trade war with China by imposing additional tariffs on Chinese goods. The ongoing debacle of European trade policies over Brexit. The perennial Middle East crisis over oil. 2019 has not been easy for global businesses and their procurement professionals.

But given that it is only one-quarter of the exhaustion, could we benefit from an expert’s insights and frame strategies such that procurement can navigate successfully through the rest of the waters?

Sure! Zycus got in touch with the CEO & President of SIG, Dawn Tiura soliciting her point-of-view on how procurement professionals can navigate through the uncertain times ahead. Dawn, a former partner in a CPA firm, focused on early-stage Silicon Valley enterprises and high wealth individuals, kindly agreed to explain her actionable list of do’s and don’ts that every Procurement leader can benefit from.

Zycus: What elements should be central to our conversation on procurement in the coming year?

Dawn: One of the important conversations that procurement teams all over the world should reflect on at the moment is their understanding that every dollar-saved might not directly translate into company’s eventual revenue objective but they do improve the bottom line when the focus is consistent. We have the unique ability to impact not only bottom-line savings but also top-line growth. We have insight into all lines of business as they are making decisions, not in the rearview mirror. And, we have relationships with suppliers who are incented to bring innovation to us. If that is not enough, why not use equivalent revenue? That will get the attention of the CFO, CEO, and Board.

Zycus: Most organizations majorly use hard dollar savings as the primary parameter to measure procurement and sourcing performance. Would it be safe to say it is a dated method of measuring current performance?

Dawn: Absolutely. We have to stop using savings as our sole barometer for measurement. Let’s look at an example:

The spend of an organization is $500 million; the cost avoidance from sourcing efforts at 12% comes to $60 million. Net profit margin is 7.5%. The equivalent revenue to generate the same value from sourcing efforts is $800 million (or $60 million divided by 7.5%)

The amount of energy required by the company to generate $800 million in revenue is massive and clearly understood by all members of the C-suite. Therefore, reporting results in terms of “equivalent revenue” instead of “savings” positions the sourcing organization in a more impactful and compelling way.

While you would assume that others will make this calculation and realize this is the case, they don’t, or can’t make the analogy to give us the credit we deserve. We must step up and change the dialogue to get the respect we have earned. 

(Read Dawn’s complete blog that talks about this issue and a lot of others here)

Zycus: So the first focus of a procurement and sourcing professional is getting the C-Suite to shift focus from savings to equivalent revenue, what would you say would feature next in their “things to keep in mind” list?

Dawn: Third party risks. Procurement and Sourcing professionals should be particularly mindful about these threats and therefore should have a foresight aided by technology that would mitigate the potential of loss. A take charge approach towards risks is what the current environment demands. Procurement and sourcing teams all over are responsible for managing goals and key relationships for the organization. It becomes vital for them to work on these objectives while taking into consideration the various risks they might be exposed to. Strategical planning and readiness will help not only tackle these risks better but also ensure the routine operations and performance doesn’t get disrupted.

Zycus: From what we’ve seen, these discussions seem much underrated, what can organizations do to ingrain this line of thought across the team?

Dawn: You make a valid point. However, that is changing. Organizations are becoming more mindful that this change in mindset is long due, and they need to adapt. This is why we’re seeing more and more people investing in education and certifications, so they have the necessary skillset to tackle these changes better.

Zycus: Artificial Intelligence has created a lot of buzz. How do you think that is changing procurement today.

Dawn: There is a breakthrough using Artificial Intelligence to manage risks in tail spend. A lot of companies are still new to the idea of AI, but the use of AI will be a game-changer.

Zycus: Gartner’ predicts, “By 2022, 75% of all B2B tail spend goods will be purchased in an online marketplace.” Do you agree with this?

Dawn: Indeed. As legacy systems continue to phase out, it is only AI that can redeem procurement an improved balance sheet.

Another aspect of change that people might miss out on is accounting regulations changing concerning leases and procurement people need to be aware of the changes and impact on their companies.  While the implementation of the new lease accounting guidance will fall within the accounting department, procurement needs to be a part of this review to provide its perspective on any proposed changes to agreements and to do the cost/benefit analysis.

Zycus: Moving forward, one thing that has always been a concern is how procurement can have a facelift from being a more tactical function to a strategic one. So what steps would you recommend teams take for this significant makeover?

Dawn: A strategic mindset is crucial to this rebranding of procurement. This transition is what will make other functions value procurement’s take on importing sourcing decisions. For this procurement, professionals need to be all eyes on various risks and opportunities. Professionals must be mindful of changing technologies. They need to prepare for it with certification in third party risk management and sourcing professional’s coursework.

Procurement and sourcing teams should consistently measure their contribution to the enterprise. An excellent way to measure one’s impact on to company’s strategic objectives would be to create a chart that cascades from the top management down to the business units, and how at each phase, the person has contributed to every success. On this note report from the Hackett Group also states, “This is a unique time for procurement organizations. Never before have companies been able to derive more competitive advantage from superior procurement capability. The function’s role is shifting from a sourcing gatekeeper to a provider of insight and decision support, made possible by improved access to digital technologies, data, and advanced analytics. World-class procurement organizations consistently get better results with 29% fewer (but higher-paid) FTEs per billion dollars of spend.”

Zycus: One parameter to measure overall procurement impact would be to track contribution in top-level business objectives, what do you think could be other benchmarks procurement teams could use to measure performance holistically?

Dawn:We need to, as proactive procurement practitioners, change how savings from procurement is measured. “Equivalent revenue,” the term will not only consist of hard dollar savings but elements like savings through cost avoidance. Anything that impacts the bottom line and contributes to growth counts!  

Another common and useful benchmark used to measure performance is FTEs. The number of full-time equivalent employees (FTEs) needed to perform a process, or a group of processes is one way to gauge process efficiency. The fewer FTEs required to process purchases, the higher the efficiency and the lower the overall cost of the procurement cycle. However, consider only those who formally report into the procurement organization.

FTEs are employees who devote all or part of their jobs to sourcing activities, and they should factor into the measurement. Meaning, if a non-procurement employee spends a portion of his time to procurement or sourcing activities, he or she is a partial FTE. Their effort will also eventually add up to that of full-time employees.

Zycus: My last question to you is, what are three things procurement should start/stop doing this year?

Dawn: The first thing that Procurement professionals must stop is being transactional and writing checks. The second to stop would be to keep talking about savings over everything else, while the last one would be to learn to communicate in the language of the CFO.

Our Conclusion from the interview

A seemingly strong inference that can be drawn from this interaction is Procurement’s transition from a transactional to a strategic function. This shift in approach has been a necessity for some time now; statements from subject matter experts and veterans advising Procurement professionals advising alignment of goals and their measurement, to learn the language of a CFO instead of focusing on operational goals, go to show how vital that shift is now.

Read our latest eBook “Procurement Experts Outlook 2019” to gain more insights into what eight other experts predict for the procurement future.

References:

–         https://www.linkedin.com/pulse/may-i-vent-lets-change-how-we-talk-procurement-dawn-tiura/

5 Ways To Achieve Marginal Gains In Procurement

By Eugene Onischenko / Shutterstock

At the Big Ideas Summit 2019, Justin Sadler-Smith, Head of UK & Ireland, Procurement & Supply Chain at SAP Ariba shared his view of procurement in an insightful and thought-provoking presentation.

Among the issues that Justin talked about was an ever-decreasing time for procurement to react to the changing market environment and put actionable strategies in place. Because if procurement isn’t fit for purpose, not delivering against stakeholder expectations, then there is the potential for huge, negative impact from a brand and shareholder perspective.

There is a whole mix of uncertainties which are causing people to reassess how they are doing business and then ultimately doing it in a different way. Organisations, and procurement as part of them, need to be looking at what we are doing tomorrow and reinvent ourselves to become more competitive than they have been in the past.

As part of this Justin talked about an issue that is fast becoming a key for procurement to take account of and account for in its day-to-day operations. And that is leaving behind a positive legacy. Here is Justin explaining it in his own words:

Faster Reactions, Greater Purpose

When it comes to procuring with purpose, procurement professionals around the world need to be able to react quicker to changes in order to set the foundation for the legacy we should all be leaving behind.

Justin argued during his presentation that it’s almost as if procurement is in a race. In simple terms, those who are fastest to react, fastest to respond to changing demands are those who will win. It might not even be procurement who are the ones triumphing in the race, and that could spell the end for procurement as we know it.

The issue here is that many procurement professionals just haven’t been trained to do this. Without adequate training, much like an Olympic athlete, or Tour de France rider, there is no chance of being able to meet these demands and deliver what is required.

How do procurement professionals get trained up then? There’s no use knowing that there is a need to change unless there is willingness to do so, as well as more support to implement it.

Help is at hand, however, from an unexpected source. When Sir David Brailsford became Performance Director at British Cycling, he came up with the idea of breaking down the individual aspects of a race and then improving them one by one. The notion of ‘marginal gains’, was that a number of small, 1 per cent, improvements would collectively add up to a major competitive advantage.

It was this thinking that helped British Cycling dominate on the track at successive Olympic Games between 2004 and 2012, and then Team Sky/Ineos win seven of the last either Tours de France (not to mention other events and Grand Tours).

How then do we take this concept and apply it to procurement? Justin has shared his thoughts on this, helpfully broken down into five key areas.

Marginal Gains in Procurement

  1. Data – Where is data stored within your organisation and how easy is it for you to get it? How is HR data incorporated in your function? You need to look after people – those who own the data – as this is the life-blood of the organisation and you need to make the breadth and depth of your data valuable and usable.
  2. Productivity – procurement can drive this in an organisation by looking at different areas of automation that probably haven’t been looked at before. For example, how many people are really looking at AI as a way to change their organisation, without worrying about the spectre of job losses?
  3. Innovation – this is the concept of co-innovation by working in collaboration with suppliers to building differentiation. For this you need to get closer to your supplier base and remove any barriers to working closely with the right suppliers.
  4. Purpose – what do we mean by purpose? It’s the idea of driving social responsibility through supply chains at multiple levels. This is well beyond a tick box exercise now – it’s a must for good business as well as for making a better world. The idea runs beyond risk mitigation and focuses more on building value through sustainability.
  5. Well-being – people are living in a much more stressful period globally. However, by driving these needs and having a purpose, it can change the game when it comes to how people operate and feel. For procurement, this means attracting, retaining and caring for their top talent and nurturing their people.

Procure with Purpose

Procurious have partnered with SAP Ariba to create a global online group – Procure with Purpose.

Through Procure with Purpose, we’re shining a light on the biggest issues – from Modern Slavery; to Minority Owned Business; and from Social Enterprises; to Environmental Sustainability.

Click here to enrol and gain access to  all future Procure with Purpose events including exclusive content, online events and regular webinars.

How To Design An Interview Process That Predicts Performance

Interviews are a useful tool to build rapport, and even start a relationship, with candidates after their skills have been validated.

By ju_see/ Shutterstock

First, let’s get one thing out of the way. Traditional interviews don’t actually predict performance. Rather, the best way to predict performance is to test job-related skills in context. Nevertheless, there is a place for interviews in the hiring process. Interviews are a useful tool to build rapport, and even start a relationship, with candidates after their skills have been validated. They can, and should, also be used to answer unanswered questions from the hiring process. 

Interviewing is often used as a synonym for candidate selection, but it shouldn’t be. Interviews should only comprise a small part of the candidate selection process. In fact, if an “interview process”, a.k.a. a selection process, is designed properly then traditional interviews only need to play a minor role.

Rather than dealing with hypotheticals, I’m going to share a real blow-by-blow story about a recent hire we made. The process included a recruitment agency, marketing, online skills assessment using our own platform, interviews and reference checks. I’ll explain how each step worked and why we did things in a very deliberate order.

Role definition

This is arguably the most important step. If you don’t define the role correctly the entire process will be flawed because nobody will have clarity about the kind of person you’re looking for.

A helpful starting place is thinking about the purpose of the role. Why does it exist? We wanted to hire someone who could help our largest customers get maximum value from their investment in Vervoe. That was our “why” for this role.

We wanted someone who had expertise in assessment and I/O psychology, was a natural with enterprise customers and would thrive in a startup. 

Recruitment agency appointment

We don’t usually use agencies and I’m not advocating for, or against, the use of agencies. It depends on the situation. In this case we were looking for a candidate with a very specific skill set and we were almost certain that we needed to attract passive candidates. The people who met our criteria weren’t necessarily looking and, more importantly, they were probably working with a big company and therefore not looking for roles with startups.  

So we wanted an agency to help with candidate sourcing, particularly market mapping ad outreach. In other words, we wanted the agency to find people and convince them it was an exciting opportunity.

First contact

This fact we were tapping passive candidates on the shoulder influenced the rest of the process. We had to convince candidates to talk to us rather than the other way around. So throwing them into an assessment wasn’t going to work. We had to sell to them

So the agency approached them and had an informal conversation. After that the hiring manager met the candidates. Is this the most efficient use of time? No. But it was necessary given the calibre of people we were trying to attract. This wasn’t a high volume situation.  

The purpose of the conversation with the hiring manager wasn’t to determine whether candidates can do the job. It was to sell to the candidate, get a feel for their motivation and give them visibility over the remainder of the process. It was about buy-in. 

Skills assessment

After speaking to the hiring manager candidates were invited to complete an online skills assessment, known as a Talent Trial. They had to opt into this stage.

We positioned the skills assessment stage as a two-way street. An opportunity for us to see how they perform job-related tasks, and an opportunity for them to get a realistic feel for the role and the product they’ll be working on.

It made sense. Every single candidate we invited to this stage successfully completed their skills assessment.

The interview

Then came the interview. It was a discussion with me and I only interviewed one person, whom we ultimately hired.

I didn’t focus on skills because I already had evidence the preferred candidate could do the job. She performed very well in the skills assessment, which was carefully crafted to reflect the role.

We discussed how we’d work together, including her preferred working style, how we can invest in her, some of the quirks of our team and what she can expect if she joins. It was lighthearted and fun, at least for me.

Reference checks

I’m a big believer in reference checking, but not for the reasons you might expect. References are almost always positive. It’s a rigged game. But, if done correctly, reference checks can be very effective in setting candidates up for success. They help understand what it would be like to work with the candidate, how we can support them and how we can get the best out of them. 

They’re an employee onboarding tool of sorts.

We asked the recruitment agency to conduct two reference checks and send us detailed notes.

Meeting the team

We wanted one more conversation with the hiring manager and the team. At a startup it’s really important to bring existing team members into the process. In fact, I believe it’s important in any company. It increases the chance that existing team members will welcome the new hire, and gives the preferred candidate an opportunity to see who they’ll be working with. It reduces the risk for everybody. 

The offer

A quick offer is a good offer. We didn’t make the offer after the final discussion with the hiring manager and team. We made it during that discussion. After meeting the team, and after everyone gave the thumbs up, the candidate spoke to the hiring manager privately and got the good news. She accepted.

This article was originally published on Vervoe.

How Prepared Is Procurement For The Arrival Of The Tech Disruptors?

If A.I. can’t tell the difference between an apple and an owl, can it really take over our jobs?

By PandG/ Shutterstock

The future has arrived. Technology trends have moved from being forecasted, to disruptors to being, well…here! But how prepared is procurement to step up to the challenge? Will procurement evolve to incorporate and embrace these technologies or will we miss the opportunity to be the next Spotify or Uber.

In this article we take a look under the hood at some of the “it” crowd and see how tech disruptors can be repositioned to be enablers.

Automation

Automation has often been referenced as the reason for mass job losses and replacement of people in the workforce. Is this a realistic view of what automation is?

Automation refers to the systemisation of processes to create efficiencies. It is a programme that executes a particular task that is typically something that is repetitive and monotonous (as opposed to A.I. which is mimicking multiple tasks and is attempts to apply causation responses).

Automation can be used to replace menial tasks and ultimately release people to do other things that are more worthy of their time. Automation can help people to repurpose their time and spend it in other areas of their job that can add more value to the business, like stakeholder engagement for example. This repurposed time enables people to focus on the strategic aspects of their role rather than being purely reactive and task orientated.

Blockchain

Blockchain is effectively a filing cabinet in the cloud. It records transactions (a “block”) and each block forms part of a chain. The chain becomes a valuable information source and creates a collective environment where everyone can access everything. It is this network that can revolutionize how we experience things as it can connect previously unconnected parts of a supply chain.

Some examples include customers being able to trace coffee beans used in their morning brew from plantation to cup. Or the ability to trace the cacao plant to a single chocolate bar.  Procurement could utilise this technology to link supply chains like never before and provide true customer centric solutions (be it internal or external customers).

The applications are endless, but are we ready for it? What steps are procurement taking to ready themselves for potential new ways of working?

Artificial Intelligence (A.I.)

This is perhaps the biggest tech taboo of all, the ultimate fear mongering scenario. The term A.I. can imply to some people that technology will be able to create its own intelligence and that the intelligence may keep on evolving – ruling humans obsolete. This is not correct! A.I. technology requires humans to tell it what the world is. Humans are required to create the codes, algorithms and software that make it work.

There are many things that A.I. automation algorithms can’t always get right, like the infamous owl vs apple fail. A.I. requires a human to tell it what is an owl and what is an apple but there are certain subtleties of being human that simply can’t be trained.

While this provides a hearty belly laugh at the expense of the technology, it helps to demonstrate the gulf that exists between A.I. being able to realistically replace humans. A.I. is not a threat to all people in the workforce.

A.I. can be used to enhance the customer experience for example chatbots. It can also be used to programme population of key contract information instead of someone having to manually type it out. The application for A.I. in procurement would create huge efficiencies to enable us to get on with the real work.

Cryptocurrency

The advent of bitcoin changed the basic concept of how we view money. It combined an old world concept with new wave technology. It didn’t burn out or fade away it is still going strong.

The advent of cryptocurrency helps to pose the question of what could be the bitcoin of the future?

Will procurement be able to trade online for goods and services? Why not! It was impossible to imagine bitcoin taking off many years ago and look where it is now. Will contracts for goods and services be required? If the divide between the supply and buyer side of the fence is dissolving then what purpose will contracts serve in the future.

Sore head?

If you have tech overwhelm, don’t worry. This is all you need to remember:

  1. Humans won’t be replaced any time soon
  2. Technology is here and if you haven’t noticed, you’re probably about to be bypassed
  3. Procurement needs to up its game with the incorporation of technology and see it as an enabler
  4. Creative thinking is the precursor to adopting and utilising technology effectively. Release people from menial tasks and engage them in different areas of the business

But wait, the blockchain action doesn’t stop here! Join us on October 15 with blockchain experts Shari Diaz, Innovation Strategy and Operations Program Director, IBM Watson Supply Chain and Professor Olinga Ta’eed, Director of the Centre for Citizenship, Enterprise and Governance in this webinar brought to you by IBM and Procurious. Click here to register for Blockchain: Supply Chain’s 21st Century Truthsayer.

The Best Procurement – Not Spending Money?

When it comes to getting the most out of your budgets, it’s not enough to just minimise your spend any more. The best approach may actually be trying not to spend any money at all – an anachronism to any procurement professional.

By Fernando Cortes/ Shutterstock

It was the great philosopher, Ronan Keating, who once sang of procurement, “You spend it best, when you spend nothing at all…”. This may be a gross exaggeration (sorry, Ronan!) but even if the words aren’t necessarily true, the sentiment is. Particularly for procurement professionals in the current age. 

We’ve talked ad nauseam about the ‘B’ word (no, not Brexit, the other one), about the issue of budgets (or lack thereof) in the public sector. Not only are budgets shrinking, but for many public bodies it’s become a matter of prioritisation of spending, which is opening up a whole new can of worms. 

In Scotland between 2013-14 and 2017-18, revenue funding from the Scottish Government for Councils fell by 7.1%, compared to the overall decrease of 1.8% for the Scottish Government itself. Surprisingly, for 2018-19, funding has actually increased by 0.3%. 

However, due to the nature of the services being delivered by many Local Authorities, there are still substantial budget holes to be filled. Maintaining, and improving, public services is only the start. In most cases it’s about delivering the same, and often a greater number of, services and all the new ‘one-off’ projects that are becoming prevalent, while managing the same, or smaller, budgets. 

In light of this, professionals have to invest wisely to help future savings targets. It becomes a matter of not only saving at the bottom line, but working hard to add value at the top line. 

Essentially what procurement is trying to do is to squeeze every penny – just maybe not like this…

Spend to Save 

So what are procurement doing in the short-term, or what could they be doing better? One thing that procurement might want to consider is the concept of spend to save. It might seem a bit backwards, but it’s a concept that can work. Let’s put this all in context with an example we will all recognise and be able to relate to. 

Unless you are working for the most progressive organisation in the world, you probably don’t have the latest IT hardware or software in your office. And, as much as you go on about day after day, you realise that this is unlikely to change in the near future. After all, the outlay on new IT equipment looks like a really expensive investment when looking at the bottom line figure. 

And who wants to be the Local Authority on the front page of the paper spending, say, £1 million on new IT when services are being cut, or Council tax is being increased? 

But consider the total cost implications. How much is being spent on maintaining legacy systems? Are browsers and software even supported anymore? And how much time are employees losing to logging in in the morning, programmes hanging or browsers not supporting key websites and applications? 

Consider the time it takes to complete a simple task like creating a spreadsheet, or uploading documents to a web-based portal. It’s hard to quantify how much time this takes over a day, but if this is a repetitive task then that time can start to add up. Lower productivity, lower efficiency and unhappy staff – all as a result of poor IT.

Then consider the efficiencies you could find with better hardware and software. You can give employees the option to work more flexibly and could potentially reduce the onward costs of contracts such as printing, annual maintenance and support services 

All of a sudden, that £1 million investment doesn’t seem so big any more… 

Don’t Spend…to Save 

But if making that outlay is a step too far for your organisation, then what you might need to do is to step all the way back to the beginning. After all, the best saving procurement can make is to not spend any money in the first place. Obvious and not exactly revolutionary, but still a solid strategy when it comes to spend management. 

How do we do it? It requires a strong will to say no and probably a fair amount of senior management buy-in and support. After all, you’ll be saying no to clients and end users and it’s nice to know that your managers and heads of department have your back if it’s taken above your head. 

What it boils down to is separating the wants from the needs, the nice to haves from the must haves. It’s a process procurement can lead on, but it needs support from all stakeholders to make it work. At the outset procurement can create and manage a User Intelligence Group (UIG) within the organisation, getting all the necessary people in the same room to thrash out the details and scope of requirements. 

This not only makes the process more efficient (and saves time and resources), but gives everyone an equal say, a chance to have their voice heard and, at very least, no chance to say they weren’t consulted! From this you can get your baseline specification and then engage with the market to assess the feasibility and see what goods or services are out there that could do the job for you. 

And finally, to link us all the way back to the beginning, you still have the power to not spend if you don’t think the solution is fit for purpose. Because if procurement are going to be the gatekeeper for the organisation’s spend, we should have the power to close the gate before the horse bolts once in a while. Don’t you think? 

I’d love to hear your thoughts on this article and the series of articles on the challenges facing public sector procurement in 2019. Leave your comments below, or get in touch directly, I’m always happy to chat!