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7 Ways To Influence Your Internal Stakeholders?

For most, influencing externally comes easily. But when you have to influence internally, there is a mountain of factors and intricacies to navigate…

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This article was based on research conducted by Conti Advanced Business Learning (www.cabl.ch), a Swiss training company that specializes in Negotiation & Influencing training.

Seven procurement experts share their advice on how they creatively influence their internal stakeholders to come to agreements and a consensus for any different challenges they or the company faces.

1. Matching their requirements

Carefully! The ability to influence internal stakeholders is about knowing what is important to them and finding a solution that matches their requirements. If you do not know their goals,objectives or challenges, how can you know whether your idea will help or hinder them? Spend time with the key internal stakeholders, determine what their priorities are, look at your needs and understand how you can help your stakeholder.

Susannah Gooch, Vice President, Direct & Operations Purchasing & Supplier Management, AbbVie

2. Be proactive: point out the things most important to them

We influence stakeholders by tailoring the message to them and pointing out the things that are most important for that individual stakeholder. While preparing for a large negotiation we had to have senior executive’s approval of our strategy. The decks we prepared for these meetings were all different, but all came to the same conclusion (i.e. our strategy). This approach worked beautifully as we were able to show each senior executive that our strategy would match exactly with his goals.

Lukas Wyder, Director, Rogers Communication

3. Pinpoint you ‘must-wins’

By knowing what’s their purpose and what is a must win. R&D departments are not truly impressed or motivated by good economic deals! However, a company’s reputation and innovation are definitely buzz words for them. To keep them on your side of the table and prevent them shaking hands with suppliers before procurement does, it’s important to anchor them on their principles and gain their trust to act freely and move ahead with suppliers.

Alessandra Silvano, Category Director CAPEX and MRO, Carlsberg Group

4. Create opportunities to emphasise your decision-making powers

This is different to “asking what they want” or “receiving instructions” from the business. The greatest success I had was the formation of a “Procurement Steering Committee” where I, as CPO, was the secretary and ran the agenda. It was chaired by the CEO, with the COO and CFO in attendance. These were contracted signatories to deals so it was my opportunity to put forward the deals and proposals I would place with the market, to test their risk appetite and proposed BATNAs in exchange for commercial (and price) advantages. The meeting encouraged healthy debates and discussions and it got the senior leadership team involved in the contracts themselves, aligning with their expectations. It also had the advantage of delegating myself certain decision-making powers in order to secure deals on what was agreed. The process was sped up and it circumvented multitudes of stakeholders with differing views. It helped focus on the “important”, and not the “nice haves”. 

Alan Hustwick, Senior Executive Global Supply Chain, SCCR Pty Ltd

5. Find common interests

It is always tempting to try to convince internal stakeholders about the strategic importance of procurement, as we are so convinced about it. We like to convey our passion and vision. Also, and more often than don’t, the naïve belief that the internal stakeholder will share the same passion. Seldom do they!

The best way to convince internal stakeholders is to identify common interests. Certainly, this means that we need to know what their challenges and issues are, and how we can help them best. If they are convinced that there is something for them in the story, then and only then, will they start to listen to your ideas, and getting their support becomes much easier.

Bérénice Bessière, Director, Procurement and Travel Division Private and Public Organizations, WIPO

6. Confirm your reasoning with 3rd party information

Typically with objective facts. More often than not, 3rd party confirmation of your analysis is needed, for example, these may come in the form of outside analysts or consultancy organizations. Strangely, internal stakeholders often give more weight to outside opinions than colleagues, especially from other functions. They assume there are inter-departmental politics instead of seeing the cross-functional benefits and expertise of the whole company. I frequently refer to or copy and paste graphics or statistics from outside analysts when influencing others. 

Michael Hauck, Director Global Procurement, Tetra Pak

7. Speak their language and incorporate their needs into your communication

A good starting point is to look at the deal from their perspective and understand how I could get them to choose in their own interest what I want. Talking their own language also helps and this applies to all Procurement communications. I remember a mistake I made over ten years ago. We had just completed a Temporary Labour project and proudly presented the results, mentioning that we had delivered 2.4 million of cost savings, streamlined the process and improved the service levels. It would have been much better to put the focus on the process and service levels improvements and then mention that we also saved 2.4 million. 

Giuseppe Conti, Founder and Managing Partner, Conti Advanced Business Learning

Do you have ways to influence your internal stakeholders? If so, share in the comments below!

These answers were collected by Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning (www.cabl.ch), a consulting firm that specialises in negotiation & influencing. This article is part of a series aimed at collecting real-life negotiation experiences from Procurement executives.

Supplier-Enabled Innovation Is An Opportunity To Add Value

Businesses are tapping into the expertise of their supplier network to bring new products to market faster and streamline their processes.

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Where do new ideas come from? For many organisations, the answer is research and development. But imagine if the R&D department included not only your own people, but those from hundreds or even thousands of your suppliers too.

This is the promise of supplier-enabled innovation (SEI), which enables companies to tap into the expertise of their supplier network to develop new products and services or refine existing ones.

It’s not exactly a new idea, but according to David Rae, head of the Supplier-Enabled Innovation Center, it is an underutilised one. “If you have thousands of suppliers and a portion of them have R&D divisions focused on your sector, then you’d be mad not to tap into that resource,” he says.

Companies that combine their innovation efforts with those of their suppliers typically bring products to market faster, giving them a competitive advantage. The inevitable risks and costs of developing new products or services are also spread among a wide network of stakeholders. And due to their specific expertise, suppliers are often able to suggest product improvements that are unlikely to occur to internal teams.

It makes sense to partner with companies specialising in a particular area, says Omer Abdullah, co-founder and managing director of The Smart Cube, which provides procurement, analytics and research expertise. He uses the example of a packaging supplier to illustrate the point. “They’re the ones who have a vested interest in knowing what the latest packaging types are, what the latest packaging sizes are and what are consumers demanding,” he explains.

That’s certainly true in the case of Bayer, which works closely with suppliers such as Schott to find the best packaging for specific drugs. By collaborating early in the ampoule or vial selection process, with Schott contributing its expertise in how certain active ingredients interact with different types of containers, new medication can be brought to market in a quick and safe manner.

The procurement team are ideally placed to drive the innovation partnerships behind SEI, acting as the link between internal R&D, sales and marketing teams, and suppliers. Johnson & Johnson, for example, has focused on turning procurement into a team of “innovation scouts”, seeking out suppliers who understand emerging trends and plan their business accordingly.

This is one of the vital elements of SEI: if you can’t find innovative suppliers to work with, then the whole concept quickly falls apart. If you’re interested in using SEI to improve your R&D function, for example, “you need to take into account things like what percentage of their [the supplier’s] revenue they are putting towards R&D, their strategic goals and where they’re actually headed as a company”, says Mr Rae.

It can be tempting to focus on the current supply chain when selecting SEI partners, but this may not offer the kind of cutting-edge innovation that will really expand internal capabilities, says Simon McGuire, health systems leader for Philips UK and Ireland. “I believe a good procurement team will ensure any supplier activity is initiated with clear alignment and agreement on capability gaps and unmet customer needs, together with an ability to secure the required technology and skillsets from the marketplace,” he says.

An awareness of market trends and shifts, competitor moves and the company’s own patent pipeline is also a key part of an informed view of what suppliers might be able to offer. “For me the most essential element of a good supplier partnership that will deliver is the strong alignment of goals and visions, with clear definitions, responsibilities and objectives from the start,” says Mr McGuire.

Online platforms are a relatively common way of communicating innovation challenges to supplier networks. Philips, for example, has an open innovation portal called SPICE, which allows suppliers, companies and individual inventors to collaborate to both view Philips innovation challenges and suggest ideas of their own. But the success of these platforms depends upon suppliers receiving relevant, timely feedback on their ideas and transparency around the development of any proposals.

Indeed, the trust at the heart of any good partnership flows both ways. “Surprisingly, suppliers do not always take their innovation first to their largest or even their most profitable, highest-margin customers,” says Clive R. Heal, a procurement innovation expert who leads Voicinn, a group of global innovation keynote speakers, and founded and led the Roche Innovation Center of Excellence. “They target customers with whom they have the closest relationships and see the best longer-term growth opportunities.”

Both companies should also be clear about who will own the intellectual property (IP) for any new products or services before embarking on a partnership. For instance, would a licensing approach, with the company granted exclusive rights to use a particular technology or service for an agreed period, work best? Or is a joint IP model the better option? Many innovation partnerships fail to clear this hurdle due to competing interests, Mr Heal points out.

Regardless of which ownership approach is agreed, successful SEI initiatives nearly always follow a long-term approach to innovation, focusing on mutual benefits for both customer and supplier. In other words, a true partnership that runs counter to the “not invented here” syndrome still found in many businesses.

“Overcoming this is difficult,” says Mr Rae. “But with the disruption now happening – the platform business models cropping up, the growth in startups, the fact that innovation is taking place everywhere and not just in R&D labs – companies will have to change, otherwise they’re going to get disrupted too.”

This article, edited by Peter Archer, was taken from the Raconteur Future of Procurement report, as featured in The Times.  

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What Makes A High Performing Team?

How do you build and nurture high performing teams?

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Recently I realised that my management brand is being built whilst I’m busy planning how I want to be a better manager. In other words, it’s the small daily interactions of how I show up in the world that count, not the long term plans yet to be actioned.

Big gestures show your leadership style, sure, but where people really form an opinion of the type of leader you are is how you greet them in the morning, how you handle stress, how you help them when they are stressed, how you organise yourself and the team in the small ways. How you back them when it counts, or if you back them at all.

I realised I am working in the opposite way to how I have been generally managed in the past and the management styles I have seen around me. If building high performing teams is seen as a strength of mine then what is that I do?

Getting back to basics

  1. Present, informative leadership

Heads of departments or general managers will be exposed to lots of high level information, often well above the relevancy and pay grade of most general team members. When managers share the information down the line it helps to build a common vision and brings all levels along for the collective ride. It also helps contextualise what being busy really means. It helps each person prioritise according to the organisation’s higher goals or hot topics of the day and helps build meaning.

2. Flexibility (true flexibility)

Flexible working arrangements are often talked about but rarely effectively executed by management. It requires someone to let go of the need to control every aspect of how they feel the work environment should run. It requires shifting to an outputs frame of working rather than presentism and hourly bum-in-seat time. Showing decency and respect to team members will render more tangible outputs then say, denying annual leave requests and privately rescinding public approvals for people to work from home. All this does is build a culture of hierarchy, need for control and lack of trust.

Respect and trust breeds loyalty and which produces higher output, care and pride for one’s own work.

3. Developing through empowerment

Development is an eye roll producing topic for most managers and even employees – but it is really important and it doesn’t have to be a tick box exercise, it can be genuine and effective with little effort.

Hacks for a procurement development plan, review in detail the follow areas:

  • Technical experience related to their job
  • Cross agency and cross team learning
  • Focus on commercial and supplier management (or other specific area in the sector)
  • Formal training, courses or workshops
  • In-house learning
  • The procurement lifecycle for gaps in their knowledge
  • Build their strengths
  • Look at procurement trends, what can they research or learn and become the team expert in

But here’s the thing, you actually have to complete the tasks and have the meetings! If these two things are executed it will evolve naturally, it can be this simple.

4. Building people’s strengths

The concept of playing to your strengths is not a new one but because of the human tendency to want to be good in all areas of our work, it’s pervasive and needs to be called out frequently.

5. Hiring a blended team

Part of making a high performing team is understanding the types of roles, personalities and levels of technical expertise that you will need for long term success. What isn’t required or even possible, is having all of the types of roles, personalities and levels of expertise. This is a utopia view that is probably rarely going to happen. Instead try to balance out the management style first e.g. a creative, fire type needs more structured staff to offset this nature. Then expand from there matching the roles in the team with what they will need to be successful, pair them off.

You’re dreaming mate

I can already hear my hairdresser in my ear saying… “this is all very well but it relies on people not taking the p*ss and having a good team to begin with. It relies on people wanting to do good work in the first place and not just focusing on getting out of the office fast enough to make Friday happy hour (on a Tuesday).”

Yes it does.

I have only worked in one place in 10 years that had such a degree of toxicity that none of these tactics would have worked. Maybe it’s because I do my homework first before applying for jobs and I research culture, leadership styles and team dynamics. But I would like to think that in the profession of procurement, most people are highly intelligent, capable people that just need a bit of trust and support to flourish and meet their highest potential.

My final tip: tell your team and your staff they are doing a good job – you’d be amazed at how this makes people feel.

Shifting The Dial In Procurement

Procurement has an opportunity, indeed an imperative, to transform from an enabler of cost reduction to a creator of sustainable competitive advantage.

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Traditionally procurement has been the efficient workhorse for organisations, driving cost savings percentage point by percentage point, contract by contract. Yet despite the tremendous impact that strong spend management can have in value creation, the reality is that in many sectors, procurement is still primarily a transactional function with a limited scope of influence. Minimal deference is currently given to a function that, in light of the unprecedented rate of change in the world today, could in fact unlock distinctive competitive advantages for their organisation.

There are major shifts taking place globally today to which procurement must respond: value chains are becoming more complex and volatile, with increased risks and opportunities that accompany that complexity; developments in digitization, automation, and analytics that can unlock previously untapped potential; and acceleration of technological advancements and innovations are now more difficult than ever to keep pace with without external partnerships. This rapidly changing setting brings an imperative to change how procurement operates as a business function, as well as an opportunity to extend the scope of procurement’s influence in an organization.

Winning in this more complex and digital future will require a complete transformation of procurement as a function: having a broader mandate, way beyond just cost reduction; investment in digitization, automation and analytics; and rethinking the procurement organization.

So, exactly where should procurement leaders start to transform their functions? As a starting point, let’s take a closer look at the most important global shifts, and the corresponding implications.

Volatility brings risks—and opportunities

Since 1980, global inter-regional trade has increased eightfold, making supply chains more global and interconnected. However, with rapid growth across emerging markets, ever-increasing talks of trade wars, and intensifying concerns about sustainability, global supply chains are becoming more complex, more volatile, and more risky. Procurement functions need to be more adaptable as ever to respond.

Recent changes in trade policies are forcing large multinationals to rethink their supply strategies. By some projections, for example, Brexit could cost automakers in the UK billions of dollars in additional tariffs, and potentially force some to shift production elsewhere. Many other industries are also experiencing significant upheavals due to the changing nature of trade relationships between the United States and other countries.

At the same time, by 2025, emerging regions are expected to be home to almost 230 companies in the Fortune Global 500, up from 85 in 2010 (Exhibit 1). In a rebalancing global economy, procurement teams need to look beyond traditional low-cost locations in China and Latin America and explore new emerging markets in Africa or Southeast Asia, which have become attractive for new global sourcing opportunities.

Increasing corporate attention to socially responsible practices adds another challenge in managing complex global supply chains. Greater transparency—and greater expectation to be transparent—means unethical behavior in even a tier-2 or -3 supplier has reputational impacts on the purchasing organization. While ethical sourcing isn’t a new trend, the extent to which consumers are now making purchasing decisions based on this is. And companies are responding: in the 2017 McKinsey Global Survey on Sustainability, respondents across all regions reported significant increases in the adoption of sustainability-related technologies.

Take, for example, the use of blockchain for the mining of cobalt, a critical mineral for the automotive and mobile-device industries. Reports of labor abuses in cobalt mines have led producers and customers to deploy blockchain technologies: each bag of cobalt is sealed with a digital tag that ensures full traceability to compliance-accredited mining locations, creating a new source of competitive differentiation.

This article has been reproduced with permission from McKinsey & Company. It is co-authored by Tarandeep Singh Ahuja, a partner in McKinsey’s Melbourne office, and Yen Ngai, an expert in its Sydney office, and originally published here.

New Zealand Government Procurement – A Temperature Check

A lot has been going on in New Zealand Government procurement, compounding one after the other. Where to start?

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When you’re in the thick of something it’s harder to take the moment to carve out enough perspective to say something meaningful. A lot has been going on in New Zealand Government procurement, compounding one after the other. Where to start?

The Ardern effect

The Ardern effect started long before our Prime Minister was elected, it was coined during her election campaign as a way to explain (or criticise, depending on what side of the fence you are on) the undeniable, charismatic ability she has to lead and relate to people. Jacinda Ardern has gained a lot of notoriety for all of her firsts: youngest Prime Minister, first woman to be pregnant during her elected term, her partner is the primary carer – shock horror, they are unmarried to, although recently announced their engagement.

The Ardern effect has continued to follow her and is not just isolated to her election campaign as they are values that are inherent to her as a person, she does not switch them on and off. She is a leader that feels, this is perhaps the rarest thing about her. Perhaps this is the real “first”.

A leader with feels headlining at the UN

Ardern took these values and headlined them in her statement to the United Nations in September 2018 where she called out politicians and governments to respond to the “… growing sense of isolation, dislocation and a sense of insecurity and the erosion of hope.” New Zealand is a country where the Prime Minister’s response to this was to publically declare that we as a county are pursuing kindness.

The Ardern effect is a bow wave waiting to hit

I had never really seen values, emotions or concepts of a collective “betterness” be voiced in this way by a leader of our country in the theatre of politics, let alone on an international stage. I have watched with active interest how this would play out and trickle down into my day job – this vehement passion is bound to impact.

Positive warning shots

  1. Broader Outcomes

The New Zealand Government Procurement website states that government procurement can and should be used to support wider social, economic and environmental outcomes that go beyond the immediate purchase of goods and services. The Government agreed on 23 October 2018 to a set of priority outcomes for agencies to leverage from their procurement activities and identified specific contracts or sectors for initial focus.

Although the broader outcomes initiative is targeted to four priority areas, it sets the tone and the expectation that this the lens in which all government spending should be filtered through.

2. Wellbeing budget hype

The much anticipated, much talked about Wellbeing budget did not under deliver on its promise. New Zealand is the first western country to design its entire budget based on wellbeing priorities and instruct its ministries to design policies to improve wellbeing.

It’s not like Social Procurement hasn’t been done before, it’s happening in many areas, many businesses and many government agencies but what is different is the government which is leading, the context of what has happened in New Zealand recently and how you cannot move without being hit by social responsibility.

Added context

New Zealand has had a big year, here are some snippets that add to the contextual tapestry of our country:

  • The “I am hope” grass roots campaign by Mike King, New Zealander of the Year ignited the fight against mental health issues in NZ. Mental health continues to be a hot topic in our country and politics.
  • The Rainbow flag that symbolises diversity and inclusion was painted at the Airport of our capital city, welcoming people for the International Lesbian, Gay, Bisexual, Trans and Intersex Association (ILGA) showing that we accept and support everyone.
  • The horrific terror attacks and our response as a country to love more.
  • The first country in the world to bring in a Domestic Violence – Victims’ Protection Act that brings in new rights for employees affected by domestic violence. It gives them the right to take paid leave and to have flexible working arrangements to support them during this time.
  • NZ Government Procurement ranks number one in the world! Following research conducted by Oxford University

Poised

With our strong values based leader that is internationally recognised, our standing within the international procurement sector, the focus on broader outcomes and wellbeing for our citizens in NZ. It’s no wonder the trickle down effects are starting to make themselves known. It’s an exciting time for those of us that are passionate about social values.

Nine years of a government focused on infrastructure has been reflected in the hotness of infrastructure as a cool kid procurement job. It’s not too far off for the social warriors to get their turn to roar, conscious buying within the framework of government seems like an exciting challenge to me.

Who is ready to step up to the challenge?


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Where Does Your Supply Chain Begin and End?

Supply chain professionals are no doubt an important link in any supply chain but it is but one link in the end-to-end process.

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Working in any supply chain management role can be all-consuming as well as challenging -but we can’t work in a vacuum. Supply chain professionals are no doubt an important link in any supply chain but it is but one link in the end-to-end process.

In the simplest type of supply chains, items and services are sourced from suppliers and converted into products and delivered to the customer or end-user.  During this process, both products and information move forward through the chain.   In the same way, products and related information move back up the chain.   

If only it were that easy. 

Any supply chain involves interactions between people, entities, information, and physical resources that combine, hopefully harmoniously, to sustain a company’s competitiveness.  It also has an objective to reduce overall costs and speed up the production and distribution cycle. As supply chain professionals know very well, if a supplier is unable to supply on time, and within the stipulated budget, business is bound to suffer losses and gain a negative reputation.

Q.  What is the main goal of an efficient supply chain?

A.  To get the customers what they want, when they want it, at least cost.  

If a company fails to focus fully on the consumer or end-user its ability to surviveis severely at risk. 

How to improve your supply chain

Sourcing is an early activity in the supply chain but demand planning comes first. By sharing projected requirements with your suppliers you can assist them to manage their own sourcing process and their inventory. Any forecasts that you supply them may not be cast in stone but they help to take the guesswork out of your order process.    Your Tier 2 suppliers, i.e. your supplier’s suppliers, are the ones that provide the items and services needed to fulfil your orders.  What products do they supply, what are their costs and what are their lead times?   

 The automotive industry is particularly good at this.  Modern vehicles are made up of more than 30 000 component parts.  Most leading vehicle manufacturers have a close grip on their Tier 2 suppliers: the parts suppliers for engines and equipment and computer software and hardware needed to make them run.

Technology in the supply chain 

The use, speed, and capabilities of technology are defining the trends in modern supply chains.  The cost of these technologies is starting to decrease making automation more affordable for mid-size companies. 

Demanding and techno-savvy customers are effectively re-shaping supply chains in the e-commerce world.  Customers expect to receive their order within a day or two whether it’s food, fashion or new bed linen.  They can choose not only what to buy, but who to buy it from and how to buy it.  E-commerce is creating new challenges throughout the supply chain from demand planning through procurement to warehousing, distribution and logistics.  Whether a customer is shopping in-store, on their laptop or mobile device, they expect their experience to remain the same, wherever they are in the world.  Retail companies that can adapt their supply chain operations to the new era of e-commerce will have the best chance of success.  

Global supply chains

Global supply chains are becoming very fragmented and dispersed and so require lots of resources and technologies to function well. Complex supply chains such as those in aerospace, hi-tech, chemicals and pharmaceuticals are becoming more difficult to design and manage.   According to Gartner, some of the most efficient global supply chains are in fast-moving-consumer-goods (FMCG) companies such as Unilever, Nestle, Nike and Inditex (Zara).  These companies have close relationships with their suppliers, even owning some of them, which is contributing to their successes. 

Johnson & Johnson is a confirmed leader in the healthcare industry due to its on-going focus on its supply chain capabilities such as end-to-end visibility.  The company prides itself on being a customer-centric organization.  It is an early adopter of new technologies such as 3D printing which it is using to enhance its manufacturing and distributions operations and unlock new opportunities.  Its global team has played a large part in streamlining the sourcing processes for both ingredients and packaging.    They realized that their supply chain was not as nimble and agile as it could be, and they weren’t leveraging their global scale in sourcing enough.

The professional association for supply chain management and the leading provider of research and education (APICS) provides a supply chain operations reference model (SCOR) on which you can assess your current abilities. It identifies steps in four measures:  process, performance, practices and people.    

The SCOR Model

APICS proposes that to improve your supply chain you need to:

  • Analyse your supply chain business processes and their dependencies with the SCOR framework in mind
  • Document and design your supply chain strategy, processes, and architectures to increase the speed of system implementations
  • Design internal business processes while taking organizational learning goals into consideration
  • Simulate the process to identify bottlenecks, gaps and process enhancements to improve supply chain performance

Underlying any successful supply chain is a strong organizational structure, up-to-date technology and strong leadership. An organisation’s supply chain is a significant source of competitive advantage and business leaders are embracing it as a strategic capability. 

If you’d like to read additional related content or get involved with thought provoking discussions check out the Supply Chain Pros group – a one stop shop for all your supply chain needs.

What Can Yoda Teach Us About The Kraljic Matrix?

The Kraljic Matrix revolutionised Procurement in 1983. Now the world looks very different. Is it time for an upgrade?

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The year was 1983. This was the year that the Internet was created. Bill Gates unleashed Microsoft World on the market. Star Wars Return of the Jedi was playing in the cinema. I was nine. And a director at McKinsey in Dusseldorf wrote an article that would change Procurement forever. The author was Dr. Peter Kraljic. The article, published in the Harvard Business Review, stated: “Purchasing Must Become Supply Management“.

A Procurement Transformation

Kraljic recognized that the world was changing fast. He saw that if Procurement continued business as usual, it would expose itself to competitive pressure. If it was to survive, it would have to move into strategic supply management. This was the dawn of the Kraljic matrix. It would have a transformative effect on Procurement. The philosophy (that remains valid today) is that not all spend, all suppliers, all customers & are the same. So, Procurement needs to build tailored and differentiated strategies, notably taking into account profit impact and supply risk.

Fast forward to 2019. A lot has changed. The Cold War is history, and the Internet dominates the globe. The iPhone in my pocket has way more computing power than my first computer, a Commodore 64, also from 1983. Since Kraljic published his famous article, world trade has quadrupled and globalization has exploded. Procurement is operating in a much faster, bolder world than it was in 1983. It faces new challenges like Corporate Social Responsibility and ethical supply chains. In short, our current environment today is more “VUCA” (Volatile, Uncertain, Complex, and Ambiguous) than it ever was.

The Next Evolution Of The Kraljic Matrix

“Since the early 1980s, pioneering individuals and companies such as Peter Kraljic, Michael Porter, and A.T. Kearney have pushed procurement professionals to think more strategically about the art and science of strategic sourcing. […] But times have changed. Today’s environment is more dynamic and is filled with greater uncertainty. The tried and true tools and tactics adopted over the last 30 years as the “gold standard” are not as effective as they once were.” Strategic Sourcing in the New Economy: Harnessing the Potential of Sourcing Business Models for Modern Procurement by Bonnie Keith, Kate Vitasek, Karl Manrodt, and Jeanne Kling

In some ways, the Kraljic matrix still works well. The segmentation at the heart of it remains valid. But the world is so complicated now, the matrix becomes more like a Kraljic Rubik’s cube. There are many more dimensions and parameters to take into account than there were back then.

Procurement now needs to win the Holy Grail of strategic supply management: value. Take Total Value of Ownership (TVO), for instance. Before, sustainability and risk were considered as nice-to-have, but not necessary. The TVO model places non-price information firmly within calculation of cost. This is a concept of sourcing in which the buyer has all the cards in their hand. But more than that, TVO enables the buyer to create bonus-penalty systems. In effect, it is a calculation of value that enables Procurement to identify how they can increase value after the award has been made.

Evolve Or Stay In The 80s

“My colleagues developed [the matrix] further and experimented with a nine-box version that allowed more flexibility. But always it must be adapted to the characteristics of the company where it is being used.” Dr. Peter Kraljic

The evolution of strategic supply management is challenging. Seeing the Kraljic Matrix as a Rubik’s cube is one thing. Solving the cube is something else entirely. Collecting the enormous amount of information and data that you need for this is almost impossible on your own. However, the change that makes the world so complicated also gives us the tools we need to keep pace: technology. Procurement must have a digital transformation strategy.

Also, and beyond tools like Purchasing Portfolio Analysis matrixes (that needs to evolve to be subtler), it is critical for Procurement organizations to look beyond the technical aspects of the profession. Procurement activities encompass more “soft” activities that require interpersonal skills. It is all about relationships and, even if tools help in defining the right type of relationship to build in a specific context, they fall short in delivering the “human” dimension. Also, that same dimension should be integrated in the tools and models we use.

The “experience” of working with procurement (for suppliers and for stakeholders) is as essential. Procurement delivers a service in a human-to-human context and becoming the supplier/customer of choice requires more than just tools. Digital transformation is not just about tools!

Therefore, just like Yoda “burns” the Jedi Books in “The Last Jedi” to teach Luke a last lesson by symbolizing the need to be able to move forward while being mindful and even respectful of the past, it may be the time for Procurement professional to “burn” the matrix.


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Minding The Procurement Gap: Where You Are Vs Where You Think You Are

To meet the ever growing list of procurement objectives, procurement leaders must effectively transform their organisations. While most organisations have begun this journey, many hit roadblocks along the way, which could easily have been avoided. During our latest CPO roundtable in London, sponsored by Ivalua, Arnaud Malardé, Senior Product Marketing Manager – Ivalua discussed how to map a path that enables you to rapidly progress to best-in-class procurement, and beyond, to establish a true competitive advantage for your company.

The keys to effective procurement Transformation

To meet the ever growing list of procurement objectives digital transformation is critical to success. But less than 30 per cent of procurement organisations have digitised more than 50 per cent of their processes. And a great deal of technology initiatives that are implemented fail to deliver.

According to a survey commissioned with Forrester, who surveyed over 400 procurement practitioners, those that have switched eProcurement technology, list the following three reasons for failure:

  • Supplier onboarding 30 per cent
  • Poor user adoption 27 per cent
  • Implementation issues 25 per cent

Of course, the obstacles to your digital transformation success differ depending on how far along you are on your journey. Beginners are more likely to suffer with insufficient budget or lack of executive support whereas teams in the advanced stages might find integration of S2P tools or procurement’s change resistance the most challenging areas.

Arnaud believes there is a gap between where procurement think they are and where they actually are. True digital transformation is a long way off for most.

His advice to plotting your path to successful transformation:

  • Don’t overestimate your maturity
  • Successful leaders focus beyond procurement
  • Evaluate technology carefully: avoid the key obstacles, assess based on today’s and tomorrow’s requirements

Delivering a story with style

As we grow older we increasingly feel as though we’ve lost our ability to trade freely in stories the way children do. But that’s not entirely true. Story telling expert, author, actor and inspirational speaker David Gillespie believes that we don’t ever lose our story-telling skills, just the confidence to use them. But it’s so important to see storytelling as king and queen because it is at the heart of everything we do in our personal and professional lives.

David revealed the seven basic plots of storytelling, one or more of which can be applied to any story. Try it for yourself!

  1. Overcoming the monster
  2. The quest
  3. Voyage and return
  4. Comedy
  5. Tragedy
  6. Rebirth
  7. Rags to riches

David also shared his advice for delivering a story with style

  1. Structure is essential – We can’t all be like Charles Dickens or Stephen King who don’t know how their stories will end when they start writing. A good place to start is the end. Decide where you want to take your audience to and work backwards to find the middle and the beginning – the set up, confrontation and resolution. Get your framework right to hang the narrative on
  2. Take your audience on a journey – You’ve got to take the audience on a trip. If you don’t there’s not sense of movement and no change affected. The point of stories is to effect change by taking your audience from point A to point B
  3. Fluidity of the journey – best stories are fluid and easy to follow – you shouldn’t be asking readers to connect from one point to the next
  4. Edit, edit and edit again – When in doubt chuck it out. that’s what the mantra of storytelling should be. As humans, we tend to hang on to things even if it’s not serving the plot. Take it out!
  5. Bring the story to life – All the best stories deserve to be told with the same passion and enthusiasm as how we conceive them

Cyber Security – are you prepared?

There are more reasons every day for organisations to consider the implications of a robust Cyber strategy but many are not sure where to start. There are more reasons every day for organisations to consider the implications of a robust Cyber strategy but many are not sure where to start. Mark Raeburn, CEO – Context discussed how we can manage cyber risk, avoid potential breaches and deter, detect and respond to the most sophisticated cyber-attacks.

Mark talked through the threat spectrum, which plots the desire of certain groups or nations to commit cyber attacks versus their capability to execute these attacks. Russia are by far the most capable foreign power and they have intent. In general, people are fearful of terrorism and, of course, they are massively keen to exploit cyber security but at the moment they are not capable. A big concern would be if ‘hackers for hire’ start working for terrorists.

Key motivations for targeting

  • Prepositioning and disruption
  • Intellectual Property Theft
  • Espionage
  • Stepping Stone Access

If you’d like to find out more about sponsoring or attending our CPO roundtables please contact [email protected]

How To Stand Out Through Radical Optimism

Is your news stream flooded with negativity? Do you unknowingly pass this negativity on to others? Perhaps it’s time to try something radical and be optimistic.

By Dean Drobot/ Shutterstock

As a species, the human race is hard-wired to react more strongly to fear and bad news than to positivity.

If you think back to our ancient ancestors living as hunter-gatherers, this biological reaction made sense. It was necessary to keep them alive in the wild, where curiosity about an ‘unknown’ within their environment was more likely to lead to death than it was to a positive experience.

In today’s world however, such life-threatening situations are rarely experienced, yet we still find our monkey brains on high-alert, fed by stories of drama, outrage and anxiety via social media and 24/7 news feeds.

These dramatic, fear-based headlines that are so common in today’s media prey on our anxiety and insecurity and leave us cautious at the best of times.

We find ourselves unable to think rationally or creatively or produce solutions that might otherwise benefit those around us.

I recently discussed this issue on my Inside Influence podcast with Dr Angus Hervey and Tane Hunter, the co-founders of Future Crunch.

Future Crunch believes that if we want to be more influential in our work environment, to think more creatively and produce solutions to problems that might otherwise remain unsolved – we need to become more conscious of maintaining a ‘healthy diet’ when it comes to the information we consume and share.

So how do we do that?

Change your information diet

The first step is to think of your consumption of news in terms of a diet.

Negativity is like junk food – it’s fine to consume every so often but indulge too much and your mental state will start to suffer.

Just like the physical body, the majority of your mental diet – the information you consume each and every day – should consist of healthier options that nurture, nourish and energise you rather than prey on your mental fears and anxieties.

Remember, all media news feeds (including newspapers) as designed to ‘feed’ us information that we have shown interest in in the past. Each and every time we click on headlines that promote anger, outrage and drama we’re telling these companies that we want to see more of the same.

It’s essential that we make a more conscious choice around the ‘information diet’ that we consume, to minimise the negative information stream and make sure that we’re staying in a productive and healthy mindset.

Now – let’s be clear – this does not mean ignoring important information in relation to your field, industry or the world at large. It helps no one to stick your head in the sand and pretend that bad things aren’t happening.

What this means is that – if you can maintain a healthy balance in what you consume – you will be more resilient when the bad things appear on the horizon. This means you will be able to easily think of effective and creative solutions. As opposed to being so beaten down and overwhelmed – that a fast and considered response is impossible.

Use optimism to stand out

Politicians from Julius Caesar to Donald Trump have always known that fear, drama and outrage are an incredibly effective tool for capturing the attention of others.

Take the rise of automation, for example. How many headlines have you seen out there that focus on the negative possibilities of robotics, such as mass unemployment or even an existential threat to the human race? Good news stories about how robotics will improve our quality of life tend to be lost among the negative noise because – again – we are hard-wired to pay attention to bad news.  

But here’s the secret. If a single person in your network, your organisation or your team chose to reframe these developments. Took the time to research, communicate, or write a list of exactly what opportunities these situations might create – would they stand out?

The answer is absolutely yes. To stand against this negative tide and broadcast their message through optimism and positivity – they’ll get noticed. Not only that – but my money is that that person will be the one invited to the table, offered the promotion or requested at the next high-level meeting.

The positive alternative

Overcoming our hard-wired preference for negativity isn’t easy, but it can be done.

Environmentalists around the globe are today coming to understand that they’ve made a critical error in spreading the message about global warming through a narrative of fear – talking about the disastrous consequences of climate change certainly won everyone’s attention, but progress has been slow.

Compare that to the new messages that are now appearing – where we’re being shown the limitless possibilities of renewable technologies and a greener world. Where we’re being given real and actionable ideas to help the situation.

Now that’s an approach to influence that will change things.

Optimism in procurement

Most procurement professionals will one day face the challenge of trying to get their business stakeholders on board with some sort of change agenda – whether it’s getting them to use a new system, reducing maverick spend, or simply engaging procurement earlier in their decision-making processes.

There are two ways to get people on board – through fear or positivity.

It’s a bit more complex than the carrot versus stick approach, but it boils down to replacing threats and cajoling with a positive, what’s-in-it-for-you message.

Instead of telling stakeholders that failing to engage with procurement will risk their project or earn them a slap on the wrist, educate them instead about the benefits – lower costs, higher savings, and better outcomes that align with their goals.

In the end, you want stakeholders to come on board with your initiative out of enthusiasm rather than out of fear.

In short, be aware of the power of fear and replace it with positivity wherever you can. Most of us made a 2019 New Year’s resolution to improve our diet – now it’s time to pay just as much attention on the fuel we give (and offer) our minds.

Procurement Across Borders – How To Navigate Cross Cultural Situations

Tom Verghese shares his advice on how to navigate cross cultural situations with different attitudes to hierarchy, religion and collectivism…


By Daniel Jenny/ Shutterstock

In our last article, we began looking at CQ Knowledge which refers to your own personal knowledge and understanding of other cultures. We introduced the idea that differences and similarities between cultures can be assessed in terms of core values, beliefs, norms and behaviour and provided a cultural mirror which plots Nine Dimensions of Culture.

Having already discussed the first three dimensions, this month we will move onto the fourth, fifth and six dimensions and explore their application and give some tips and ideas on how to navigate these dimensions in cross cultural situations.

Dimension Four: Collectivism – Individualism

In Collectivist societies, people are concerned about the impact of their behaviour on other people and are more willing to sacrifice personal interest for the attainment of collectivist interests and harmony. Group harmony, loyalty and unity are emphasised. Examples of countries with a stronger preference for collectivist beliefs are Japan, Ecuador and India.

Individualistic societies tend to use personal characteristics and achievements to define self-worth. Free will and self-determination are important qualities. Individual welfare is valued over that of the group and everyone is expected to look after themselves and their family. Examples of countries with a stronger preference for Individualistic beliefs are The USA, Australia and Germany.

Some tips for people coming from a Collectivist culture working with an Individualistic culture are:

– Have a point of view on topics

– Be willing to speak out and challenge in meetings

Some tips for people from an Individualistic culture working with a Collectivist culture are:

– Think more from a ‘we’ than ‘I’ perspective

– Ask more questions to engage and get of sense of people’s thinking

Dimension Five: Religious – Secular

In religious cultures, religion plays a part in the everyday practices of life. This can include things like prayer, eating certain foods, observing special religious holidays etc. In these countries work and religious practices are intertwined. Countries that can be considered to have a stronger religious preference are Saudi Arabia, Indonesia and Israel.

Secular cultures believe that there needs to be a separation between state and religion. These types of societies believe that decisions, work and public activities should be free from the influence of religion and religious practice. Some examples of Secular countries are Australia, Mexico and Denmark.

People coming from Religious cultures and working with Secular cultures should:

– Appreciate that others may not share the same beliefs as you

– Avoid bringing up the topic of religion unless asked

People coming from Secular cultures working with religious cultures should:

– Have an appreciation of how religious beliefs impact thinking

– Respect different belief systems

Dimension Six: Hierarchical – Equality

In Hierarchical cultures, inequality is seen as normal and is accepted as part of life. Titles and class position are very important and those in authority tend to exercise power in an autocratic and paternalistic manner. People in these cultures feel dependent on those in authority and are cautious about challenging or disagreeing with them. Countries with a stronger preference for this type of culture include Korea and India.

In Equality based cultures, value is placed on minimising levels of power. People expect to have more control and to be involved in the decision- making process. Young people are treated as equals and adults expect to be treated in the same way as those in leadership roles. Countries with a stronger preference of Equality based culture are Denmark and Switzerland.

Tips for people from Hierarchical cultures when working with those from Equality cultures:

– Learn how to express ideas with those in senior roles

– Be courageous to challenge ideas and address others as equals

Tips for people coming from Equality cultures when working with those from Hierarchical cultures:

– Respect titles, age, qualifications, positions and appreciate where you fit in

– Learn how to adapt your tone of voice, pitch and language depending on who you are speaking with.

By taking into account some of the different values and beliefs that cultures may have, we are able to increase our agility and better manage and understand some of the challenges we may face in cross cultural situations. In particular this leads to better results and fewer tensions in the work place.