Category Archives: Procurious News

Procurement Across Borders – Looking Into The Cultural Mirror

A useful tool for developing cultural intelligence is the Cultural Mirror, which plots culture across nine dimensions…

By tankist276 / Shutterstock

As part of our ongoing article series on Cultural intelligence (CQ) we are discussing each of the four individual components of CQ and how they can be applied to effectively work across cultures. In earlier articles we discussed what Cultural Intelligence is and CQ Drive, which is the motivation that individuals have in approaching and interacting with different cultures. Now we move onto the next component which is CQ Knowledge.

CQ Knowledge refers to your own personal knowledge and understanding of other cultures. Differences and similarities between cultures can be assessed in terms of core values, beliefs, norms and behaviour.

A useful tool for developing CQ Knowledge is the Cultural Mirror, which plots a culture on nine dimensions. These dimensions are based on the work of anthropologist Geert Hofstede, Fons Trompenaars and Asma Abdullah that I amalgamated. The Nine Dimensions of Culture provides us with a continuum of values and by exploring each of these and where a culture sits on the continuum, we are able to gain insight into the culture itself and how it operates. It is critical to firstly appreciate where you sit on the cultural mirror yourself.

Here is the Cultural mirror and the Nine dimensions:

We will look at the first three dimensions in this article and understand what they are, how they are applicable and provide some tips on how to navigate these cultural differences.

Dimension One: Relationships – Task

In some cultures around the world the focus in the early stages of interactions is on building the relationship. In these cultures, getting to know the people and establishing trust is much more important than simply achieving the task. Examples of countries on the relationship end of the continuum are Saudi Arabia and Brazil. In other cultures the initial priority is on getting the task done. This is not to say that the relationship is not important, however the focus is primarily on getting the task done before building the relationship. Examples of countries that are on this end of the continuum would be Australia, Germany and Finland. In both situations, the outcome is to get the task done but the approaches are different.

Tips for those coming from a relationship oriented culture working with a task oriented culture:

  • Be focused and clear on outcomes
  • Give clear instructions about the task

Tips for those coming from a task oriented culture working with a relationship oriented culture:

  • Spend time initially building the relationship
  • Invest in small talk to make people feel more comfortable

Dimension Two: Harmony – Control

This is the view of how humans deal with the environment, nature and with people around us. People from harmony based cultures believe we need to live in harmony with nature and have an external locus of control. They believe in concepts such as yin and yang, fate, destiny and karma. Countries which are more on the harmony end of the continuum include Pakistan and China. Conversely, people from control based cultures believe that you are the master of your own destiny. You are in control of your life and you need to control the environment. Countries more towardes the control  continuum  are the USA and Switzerland.

Tips for those coming from a Harmony based culture working with a Control Culture:

  • Be aware that rigorous debate maybe encouraged
  • Be conscious of delivering on timelines

Tips for those coming from a Control based culture working with a Harmony Culture:

  • Be mindful that open conflict is likely to be avoided
  • Learn how to disagree in a polite manner

Dimension Three: Shame – Guilt

 In shame orientated cultures, avoiding a ‘loss of face’ is important. Thus, what others think of you and how they judge you is a strong motivator. Examples of countries which are more on the shame end of the continuum are India and Japan. Conversely, in guilt based cultures, it is more about up to the individual to judge themselves on their conduct. Guilt based cultures include Italy and Argentina.

Tips for those coming from a shame based culture working with those from a Guilt Culture:

  • Allow time for experimentation and brainstorming of ideas
  • Appreciate that candour may be present and encouraged in discussions

Tips for those coming from a Guilt based culture working with a Shame Culture:

  • Encourage participation through group based tasks to remove attention from individuals which may cause “loss of face”.
  • Do not expect public or rigorous debate

For the three dimensions we have discussed, please consider where your cultural preferences are and how that influences your interactions with others from different cultures?

Is Employee Turnover Killing Your Profits?

It’s a good idea to get the bottom of why employee turnover happens and how to limit it.

By KeyStock/ Shutterstock

Employee turnover costs US businesses more than one Trillion (1,000 Billion) US dollars a year.  That represents about 10 per cent of all US corporate profits, so it is nothing to be sneezed at.  It is therefore probably a good idea to get the bottom of why it happens and how to limit it.

According to the latest statistics from the US Bureau of Labor Statistics, the average US business turned over 44 per cent of its employees in 2018 and in some industries it was significantly higher.  It was 87 per cent in the Arts and entertainment and 75 per cent in accommodation and food services. At just under 15 per cent, Federal government agencies experience the lowest turnover.

Gallup research suggests each employee loss costs the business 150 per cent of their salary.  Deloitte Consulting partner Josh Bersin says his research shows that, depending on the position,  it could be as high as 200 per cent by the time you account for hiring, on boarding, training, ramp time to peak productivity, the loss of engagement from others due to high turnover, higher business error rates, and general culture impacts.

Besides those obvious cost cascades there are some less obvious, but no less important costs.  The significant direct costs put real time pressure on an organisation to hire a replacement and get them trained, settled and productive quickly.  The pressured hiring process can often lead to the new hire not being a good fit for the job and leaving (or being let go) within a year, thus compounding the costs.

The Harvard Business Review says that as much as 80 per cent of employee turnover is due to bad hiring decisions.  Similarly Leadership IQ’s Global Management Survey reported that 46 per cent of new employees turn out to be a bad hire within 18 months and only 19 per cent will turn out to be an unequivocal success.  When it came to teasing out the factors behind the failure they found  a lack of technical skills explains only 11 per cent of new hire failures, whereas coach-ability (the ability to accept feedback from bosses) accounted for 26 per cent of failures. 

Employee turnover is very real and very costly, so doing anything at all about it, no matter how small the impact, is likely to be a good investment.  The research suggests that there are some especially important factors that are key to retaining employees (that you want to retain).

Obviously the first rule is don’t rush.  It is important to ease a potential new hire into a job.  Ensure they have a good sense of who they will be working with and what the expectations are well before they are signed on.  This means going beyond the standard probation period clause and pro-actively ensuring compatibility with your culture and team preferably before they start.  Throwing a new hire in the deep end and hoping for the best is likely to be a bad idea.

Pay is also obviously a factor but the research shows that if the only thing you do is throw money at them, you are unlikely to be able to stop a valued employee leaving. While being paid too little for the role will definitely motivate churn, overpaying will not make up for an unhappy workplace.  A workplace survey by Equifax for example found that 44 per cent of workers who leave within a year take a pay cut. They want to get out so bad, the pay is not enough to keep them there. 

Pay does have an effect but it is relatively small. According to Glassdoor surveys, every 10 per cent increase in pay only reduces the likelihood of an employee leaving by 1.5 per cent.  So if you double their pay they are still 85 percent likely to leave. 

On the other hand opportunities for advancement and training are significant factors in employee retention.  Humans like to feel they are getting somewhere. Research repeated shows that role stagnation leads to turnover.  Glassdoor have even put a number on this, saying that every 10 months at an unchanged role increases the likelihood of an employee leaving by 1 per cent. 

According to exit surveys conducted by Gallup, more than half of all exiting managers say that in the 3 months before they left, no one in the organisation spoke to them about how they were feeling about their job or their future with the organisation.  If no-one is talking about your future with the company, it’s easy to come to the conclusion you don’t have one.

Gallup recommend proactive engagement about an employee’s opportunities for growth are key to retaining valuable employees.  They suggest you know the employee’s long term personal goals, allow them opportunities in roles bigger than their past experience and help them to acquire new skills to advance their careers.  In short, treat them as you yourself would like to be treated.  Let’s call that the Golden Rule for Employee Retention.  You could so a lot worse than applying it in your business.


Supply Chain Pros: Could AI Save Your Day Job?

Supply chain leaders know AI is a game-changer, a technology that will allow them to optimise their supply chain for competitive advantage. But just how much will it impact your profession?

Shutterstock

Today, business leaders are looking to their supply chains to create differentiation and they recognise that data is a key driver. Having said that, only a small fraction of supply chain data is effectively used, and most companies are virtually blind to data that is unstructured – for instance, from social, weather and IoT sources. With limited visibility it’s difficult to optimize supply chain operations, leaving the business exposed to unnecessary disruptions, delays and risks, as well as increased costs. In fact, 87 per cent of Chief Supply Chain Officers say it is extremely difficult to predict and manage disruptions.

Supply chain leaders know AI is a game-changer, a technology that will allow them to optimise their supply chain for competitive advantage. They understand and have relied on descriptive analytics – using massive volumes of data within the enterprise to understand better what has happened in the past and what is happening today. They’re now ready to explore how to use AI to see beyond the four walls of their business; understand how potential disruptions in the environment could impact the supply chain; and act quickly to seize opportunities or mitigate risk.

A new era of AI in the supply chain

Already, AI capabilities in IBM Watson Supply Chain Solutions are moving from descriptive analytics to predictive insights. We’re helping clients look ahead of supply chain events and see likely delays, demand spikes, supply changes and stockouts with new capabilities, such as anomaly detection in supply chain processes and leveraging conversational analytics for response management. Going even further, we are showing clients the power of prescriptive analytics, where Watson evaluates several dynamic parameters associated with a supply chain scenario and in near real time suggests the best actions and can even automatically create supply chain playbooks.

But this is not the end of the journey. We are also creating a plan where Watson adapts on its own, learning what matters to you and developing the capability to show you where to focus your attention to mitigate disruptions and take advantage of opportunities.

Here are some new capabilities available today (and some that are still to come!) :

  • Expanding data sources for Watson – IBM Supply Chain Insights allows us to add new data sources specific to each client’s challenges in as little as five weeks, accelerating the content that Watson draws from to gain intelligence, from basic ontology and supply chain terminology to weather and now many more external data sources. 
  • Anomaly detection – This new capability in IBM Business Transaction Intelligence for Supply Chain Business Network tracks supply chain transactions, spots anomalies and provides early warning signals so you can discover potential problems and take corrective action sooner. 
  • Optimising order and response management – IBM Order Management software uses AI to select the best location to fulfill an order, adjust availability promises and safety stock levels, and empower customer service reps to make more informed decisions and answer questions with greater accuracy and speed.
  • What’s next for AI – In the future, Watson Supply Chain capabilities will include predicting supply chain cycle times, to new frontiers where Watson adapts to your supply chain and users and learns about trends, issues, actions and behaviors to make recommendations. 

Could AI save your day job?

On 30th April I’ll be taking part in a new Procurious webinar: “How AI Saved My Day Job – Confessions from a Supply Chain Pro.” We’ll be exploring the real-life applications of AI in workplaces today and the problems it can solve for supply chain professionals.

How AI Saved My Day Job – Confessions from a Supply Chain Pro will go-live on 30th April 2019. Sign up here (it’s free) to join the Supply Chain Pros group on Procurious and gain access to this webinar.

7 Tips On Mentoring Your Reports In The Art Of Negotiation

We spoke to seven procurement experts to hear their advice on mentoring junior professionals on the art of negotiation…

By Jacob Lund/ Shutterstock

For any junior buyer, going head to head with an experienced negotiator can be especially intimidating. In many cases they are thrown into the deep end without enough preparation and guidance by their colleagues and superiors. For this piece, Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning interviewed seven procurement experts and leaders in their respective industries to find out their advice on teaching direct reports the art of negotiation.

1. Access to training and development programs

Over the 35-years that I have been in the procurement and supply function, I have found the following three approaches in coaching for the preparation of negotiations to be critical in order to become a respected and effective functional leader and a consistently successful negotiator:

The first is to coach “win-win” outcomes in business negotiations, aiming for partnerships with suppliers instead of taking the “arm’s length” approach to relationships that are so common. Secondly, to provide access to training and development programs that genuinely help individuals to strengthen their potential for success in negotiations; not just from a functional or technical perspective, but equally in soft skills. Lastly, to mentor and encourage the development of emotional intelligence (EQ) in how we are perceived in our professional engagements and how this can be leveraged or disable our ability to deliver successful negotiation outcomes. 

Les Ball, Chief Procurement Officer, ABB Motors and Generators

2. Exposure to more complex negotiations lead by experienced sourcing professionals

I use a three-faceted approach when mentoring direct reports to negotiate. Firstly, I make sure that all ‘on-the-job’ elements of negotiation preparation are available, this includes understanding market forces, supplier/buyer strengths and weaknesses, leverage tool kit, leading post negotiation assessments to name a few. Secondly, I want to ensure my more junior direct reports are exposed to more complex negotiations led by experienced sourcing professionals and over time, provide more opportunities in real negotiations to improve their skills in the field. Finally, it is a must to provide high-quality external training to keep learning new negotiation techniques and strategies.

Elodie Cramer, Associate Director of Biogen

3. Negotiating together

I believe in learning by doing. The best way to help and improve the negotiation skills of direct reports is to undertake a negotiation together. Use these opportunities to provide feedback and reflect on what went well and what didn’t. I also believe that after any important negotiation you should have a post-mortem review. Younger negotiators need to have an internal, or external, coach to guide them in preparing and delivering a negotiation. This includes a rehearsal before a big negotiation, which is not often done by buyers.

Guillaume Leopold, Procurement Advisory Partner, Ernst & Young

4. Scenario planning

Scenario planning and role playing can really help accelerate a person’s ability to negotiate. Do they know who is coming and what their expectations are? How are they going to open the negotiation and present their needs? Have they considered what the responses may be to their arguments and how to counter them? Additionally, coaching in other facets such as learning to actively listen and what topics or words not to say are just as important as rehearsing the key arguments. 

Jon Hatfield, Director Global Supply Management, PPG

5. Joint preparation

Spending time with them during the preparation phase gives direct reports more assurance. This is especially evident for complex negotiations, for instance when suppliers may also be customers. Consequently, collaboration becomes an absolute necessity.  As a group, we organise simulations and role plays in order to practice, exchange, discuss, review the negotiations and our performance in them. This team element ensures that they can learn from me and I can learn from them.

Christophe Schmitt, Head of Strategic Supplies, Omya

6. Sharing of current negotiations as a team

I like to set up regular physical meetings with all my direct reports to share and think collectively in a secure environment. By creating a friendly and open-minded atmosphere, we can share our current negotiations, the techniques we used and the challenges we faced. We would discuss the approaches, the outcomes and brainstorm on any alternative ways.

Olivier Cachat Chief Procurement Officer, IWG

7. Role playing acting as the supplier

Role playing is my favourite method. Specifically, I would ask my buyer to brief me on their strategy then, when we role play, I take the role of the buyer and get my colleague to experience how the supplier may feel and react to their argument and proposals.

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

The following 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.

Check out the other articles in this series:

Part One – Seven Negotiation Fails We’ve All Experienced

Part Two – Seven Negotiation Tricks Procurement Procurement Professionals Must Know

5 Reasons Your Organisation’s Travel Spend is Out Of Control

Procurement travel managers have a whole host of issues they need to take into account – from cost, efficiency and payment processing to data security, service reliability and employee safety.

By sergeevana/ Shutterstock

Today, corporate ground travel, both locally and globally, is remarkably complex with worsening traffic and congestion charges adding to the challenge of running a low cost, efficient operation. Meanwhile, employees, who are accustomed to the ease and efficiency of the technology they use outside of work, expect a better travel experience than ever before.

Procurement travel managers have a whole host of issues they need to take into account – from cost, efficiency and payment processing to data security, service reliability and employee safety. However, according to UK Taxi Expenses Review 2017 55 per cent of companies don’t even have a defined travel policy.

24 per cent of financial decision makers rank travel as one of the most difficult operating expenses to control. Here are five factors  that are contributing to the problem…  

1. Wasted time

Think about how many people are involved in each travel expense that an employee submits. Firstly they need to fill out the expense form, which 60 per cent of employees fill out during working hours, spending up to an hour per month on bureaucracy. In 90 per cent of cases, the claim requires approval from a senior employee before it is finally sent to another party to be processed.

2. Cost inefficiencies

That’s only half of it though. Over 50 per cent of employees round their claim up by an average of 25 per cent while a third admit to forgetting the fare before they have made a note of the charge. The subsequent expense claim discrepancies can lead to significant losses.

A number of other factors can also lead to financial losses that are hard to track, such as lack of employee punctuality that causes the overall fare to spike or unreliable travel service providers, which leads to lost business opportunities.

3. Lack of data

Only 31 per cent of companies feel that they have control over their data. This means that the vast majority believe their businesses are in the dark about their travel expenses. This can have a critical impact on productivity, costs and data security.

According to JP Morgan, for 39 per cent of travel managers travel data is necessary to enable successful negotiation with vendors. There are multiple reasons why travel information is vital, but if you don’t have an advanced mechanism that lets you know who is travelling, when and where then it is virtually impossible to manage your travel expenses. In a modern, dynamic business real time data is required to know all of this information and more, including which projects or time periods are travel intensive so you can adjust your travel policy accordingly.

4. Hidden costs

To further complicate matters hidden costs are abound, which complicates a company’s abilities to calculate expenses. This is most evident when employees are abroad. In an unfamiliar environment, employees are far more likely to hail a ride at a taxi rank, which is on average 40 per cent more expensive than doing so on the street or by calling a local service. Equally, ground travel costs are frequently folded into per diem payments so there is no clear data on travel expenses. On a local level, tips can vary widely and impact the bottom line. For example, in London, employees tip an average of 19 per cent and elsewhere, approximately 13 per cent.

5. Inadequate Security

While cost efficiency is an essential aspect of any company’s travel policy, employee safety is also a vital concern. It’s important to provide the highest standards of care to ensure the welfare of your employees. Can you guarantee they are having a consistent and comfortable travel experience? If they are abroad, can you still ensure their security and that they experience the same standards of driver safety, reliability and professionalism.

Clearly, travel can entail an array of unforeseen risks and costs and a lot of companies don’t have a tight enough grasp of what is happening in the business.

What can you do about it?

You need to identify the where and how of your company travel and to achieve this you must think about your current travel needs. The following questions are a great way to get the ball rolling.

  1. Have your needs evolved over time and are you keeping up?
  2. Do you have a defined, company-wide travel policy?
  3. How many of your employees travel and for what purpose?
  4. Do your employees just travel with the city, between cities or also globally?
  5. How are you ensuring the safety of your employees when they travel?
  6. How closely can you track your travel activities and expenditure?
  7. What reporting mechanisms do you have?
  8. Which specific projects, business units or individuals are responsible for peak spend?
  9. How many different service providers are you using and how reliable are they?
  10. How much of your expenditure is accounted for with your current reporting system?  

New Webinar: Rush Hour: High Risk, Hidden Costs and Unexpected Travel Spend

To start getting your corporate travel under control, register (it’s free) for a new procurement webinar,  which covers every aspect of how to manage the the total cost of ownership: Rush Hour: High Risk, Hidden Costs and Unexpected Travel Spend

The webinar will take place at 11am BST on 16th AprilSimply sign up via this form. You will then be added to the webinar mailing list, with details on how to access the webinar before it goes live.

If you can’t catch the live stream, you can sign up at any time and catch the recorded version later via the Procurious site.

Answering Your Burning Procurement Questions

We put some of procurement’s top thought leaders on the spot to find out the answers to your burning procurement questions.

By Kzenon/ Shutterstock

What’s the one word you’d like to ban in procurement?

What’s the most important soft skill?

If you had to choose between experienced hire and upskilling talent, which would you choose?

What’s the least important skill for procurement pros?

How do you successfully negotiate a payrise?

We put some of procurement’s top thought leaders on the spot to find out the answers to these questions. Check out the video interviews below.

Justin Sadler Smith Head of UK and Ireland, Procurement and Supply Chain – SAP Ariba Speaking at Big Ideas London 2019

Quick-fire questions with Justin Sadler Smith

What’s the one word you’d like to ban in procurement? : Procurement!

What’s the most important soft skill? : Stakeholder management and being able to communicate effectively.

Julie Brignac,Corporate Senior Vice President Client Services and Delivery, WNS Denali
Speaking at Big Ideas London 2019 

Quick-fire questions with Julie Brignac

What’s the one word you’d like to ban in procurement? : Transformation

If you had to choose between experienced hire and upskilling talent, which would you choose? : It’s dependant on the talent market. we are currently in a market when the talent is extraordinary, lots of access to procurement and supply chain professionals. Because of that it’s important to hire for experience as opposed to raw talent.

Vishal Patel, Vice President of Product Marketing – Ivalua
Speaking at Big Ideas London 2019

Quick-fire questions with Vishal Patel

What’s the best way to negotiate a payrise? : Going beyond talking about cost savings and show the value of all the things that have been done with suppliers, with innovation and with risk.

What’s the least important skill for procurement professionals? : Tactical operational skills – basic things like approving purchase requisitions. Procurement should focus on other things

Carl Tomaszek, Sales Director – Icertis
Speaking at Big Ideas London 2019

Quick-fire questions with Carl Tomaszek

What’s the one word you’d like to ban in procurement? : Transformation

What’s the best way to negotiate a payrise? : Demonstrate success in terms of what you’ve done to benefit the organisation’s bottom line

Check out more content from Big Ideas London 2019 here.

5 Critical Factors for Improving Employee Retention

It’s normal for businesses to experience some personnel loss each year. However, the goal of retention is to keep that loss at a minimum.

By Samo Trebizan / Shutterstock

Employee retention refers to an organisation’s ability to keep, or retain, its employees and reduce turnover. It’s usually measured as a percentage of the employees who were present from the beginning to the end of the year. It’s normal for businesses to experience some personnel loss each year. However, the goal of retention is to keep that loss at a minimum.

Why is employee retention important?

One of the first, and arguably most important, reasons to put effort into retention is to create happier employees who will work harder, produce better results and ultimately, earn more money for the company. Happier employees are also more likely to feel a sense of loyalty to their organisations and recommend it to others for employment.

Contented employees are vital to a successful business, but retention is also important because of turnover costs. According to a CAP study, the average cost of replacing an employee can be up to 230 per cent of their annual salary for high-level executives, and 16 to 20 per cent of annual salary for low- to mid-tier employees. An executive making $200,000 a year could cost up to $416,000 to replace.

However, this figure doesn’t even include the “soft costs” associated with losing an employee, which can encompass productivity, engagement, training and cultural impacts. Focusing efforts on retention can keep employees happier and save organisations up to hundreds of thousands of dollars per person.

1. Start with onboarding

It may seem counterintuitive to start working to keep employees on their first day or before they’re even hired. However, studies have shown companies lose 25 per cent of employees within their first year, and as much as 20 per cent of that turnover happens in the first 45 days of employment.

Employees get their first glimpse of a company in the onboarding phase. Standardised onboarding processes have proven to result in greater productivity from new employees and 18 per cent higher rates of goal achievement. According to tech leader Mark Hurd, companies must make it easy for new hires to assimilate, especially when it comes to the simplest tasks, like getting an ID card and tools for their jobs, or even knowing where the restrooms are. “All of this stuff sounds so rudimentary, but it was taking weeks for some of this stuff to get done,” Hurd noted, “And in the meantime, the employee is unmotivated and doesn’t understand where the resources are.”

2. Demonstrate opportunities for growth

It’s important for employees to see a clear path for growth within their job right from the get-go. This can start during the recruitment process by highlighting to potential employees some of their prospective colleagues who have already moved up in the organisation. This can show them some potential directions they can take with their own career paths.

A Glassdoor and Harvard Business Review survey found employees who remain in a job for a long period of time without promotion are significantly more likely to seek out other companies for the next step in their career. Conversely, employees who see a clear trajectory for upward mobility have a much higher likelihood of staying with an organisation to work toward their end goal.

3, Offer flexible work arrangements

Flexible work arrangements are one of the most important perks job seekers look for right now. However, providing this benefit can do more than bring a company plenty of applications. It can also result in more satisfied, higher performing employees in the long run.

Offering flex time or a work-from-home policy shows employees their employer is cognizant of their time and is dedicated to creating a positive work-life balance. It also demonstrates a level of trust in each worker’s ability to do their job correctly without in-person supervision.

4. Provide consistent learning opportunities

A Consumer Technology Association (CTA) survey found special skills trainings or professional development programs to be one of the most important factors for retaining employees. Kevin Griffin, an IT advisor at Falco Enterprises, noted, “a commitment to training is seen by employees as an investment in their worth and a powerful incentive to stay at the company.”

By providing ample learning opportunities, companies allow employees to feel like they’re always making progress in their careers. Giving employees the opportunity to attend conferences, or providing regular in-office trainings, can act as major motivators for employees to remain with their employer. However, these activities should be counted as part of the workday rather than something undertaken on the employees’ own time, to prove the business is dedicated to educating their workers.

5. Implement open lines of communication

More employees leave their employers because of poor managerial relationships than for any other reason. Management should pay close attention to how they communicate with subordinates. Managers and supervisors should remain open to feedback and keep open lines of communication at all times.

Workers should feel comfortable and encouraged to speak up during meetings to offer their opinions without fear of backlash. Open channels of communication make employees feel valued, safe, and heard.

Companies that put effort into employee retention will have happier and more motivated employees, which will in turn save money over the long run.

4 Reasons To Get Your Whole Business Doing Procurement

How do you achieve effective procurement by giving all departments the possibility to purchase directly, what the risks of such an approach and how can you reduce them?

By WAYHOME studio / shutterstock

Most mid-sized and big businesses already have a dedicated department responsible for providing a company with everything from paper to spare parts for production line repairs. Why would we offer to involve other employees in the procurement process?  

Let us explain how you may benefit from this approach, what the risks are and how they can be mitigated.

Why involve you non-procurement employees?

When you allow non-procurement employees to take a direct part in the ordering process, here are the gains you get:

1. Enhanced efficiency of the procurement department

Procurement teams frequently get ‘attacked’ with questions from other departments on order status, delivery dates as well as requests to change an order and so on. The involvement of non-procurement employees can help professionals to reduce time spent on low-value, repetitive tasks. And, even in cases when an order still requires approval from the procurement staff, this still decreases the time spent on order processing. It spares procurement professionals from multiple clarifications of order contents and duplication of effort as they don’t have to re-enter the info received from other departments via email or into an internal system to fill in the order documentation.

2. Smarter purchases  

When orders are made by people who need these products and services directly to use in their work, it’s more likely they’ll make smart choices. End users are more likely to know what product model or brand will serve longer and better and won’t require costly rework.

3. Reduced misinterpretations and errors

Misinterpretation and errors may appear when the order info comes through several departments before finally reaching its destination – a vendor. Moreover, procurement professionals often have difficulty understanding the characteristics of specific goods and materials. Allowing non-procurement employees to complete orders on their own, greatly increases the chances that their accuracy won’t be damaged and the requesters will get exactly what they expected.

4. Informed vendors  

Collaborative procurement allows for direct communication between non-procurement employees and suppliers, so it becomes much easier for the latter to get constant feedback from end users and understand what can be improved and how.  

Fears about purchasing directly

However appealing, the idea about involving other departments in purchasing activities may provoke rather disturbing thoughts, such as:  

1. It can result in maverick buying

The more people that are engaged in the procurement process, the easier it is to lose control and face violation of company guidelines and policies, budget exceeds, etc. 

2. It can distract other departments from their job

Employees from other departments may get distracted from their core responsibilities spending their time and effort on the extra procurement activities.  

Fortunately, these are not reasons enough to abandon the idea and forget to acknowledge the benefits that involving non-procurement staff can bring. There are ways to safely mitigate the associated problems with the right software choices.

How you can win with a procurement portal

One of the options worth considering is a procurement portal. A portal provides a possibility to enjoy the benefits while mitigating the relevant pain points you may face. It combines the functionality of a vendor portal and internal procurement software to allow smooth and controlled ‘extended’ procurement.

Controlled buying

To prevent maverick buying, an eProcurement portal uses various mechanisms that ensure a centralised, manageable, and efficient purchasing process. It allows procurement departments to configure the workflows to the specific guidelines and rules of the business, thereby preventing the non-procurement staff from their violation while making orders directly, for example:

  • The portal lets employees access only selected/recommended suppliers approved by the purchasing team.
  • The portal allows employees to purchase only according to the agreed terms.
  • The portal introduces access control with different rights for different employees, departments, and locations.
  • The portal sets up an approval process for either all purchases or specific situations (e.g., budget exceeds) and departments.
  • The portal lets vendors see only approved orders.
  • The portal allows setting up spending limits and sending notifications about all budget exceeds to the procurement and financial departments, etc. 

Intuitive user-centered environment

Easy-to-follow interfaces of modern procurement portals won’t require much effort, time or training to get accustomed.

Final Thoughts

It may be a good step to allow employees to take a direct part in a company’s purchasing activities in order to achieve more effective procurement and supply chain management.

A procurement portal provides good assistance for such an approach. It allows guided buying to prevent violations of the company’s policies and easy-to-follow workflows that don’t require much time and effort to get used to. Moreover, it helps to keep a clear picture of the needs of each department and avoid confusion with future redistribution.   

Yet, in no way do we mean that eProcurement should replace the procurement department. Procurement employees organise and control the procurement process using the portal as a tool for that and get more time to focus on more important activities (for example, strategic sourcing) as well as avoid mechanical and time-consuming work of gathering multiple orders, combining them, seeing to their relevance and working as a service desk for employees afterwards.

Three Ways To Hit 100% Pre-approved Spend

In a perfect business spend management scenario, all spend is digitised. You know what your organisation has committed to spend before a single dollar goes out the door…


By Roman Samborskyi/ Shutterstock

In a perfect business spend management scenario, all spend is digitised. You know what your organisation has committed to spend before a single dollar goes out the door. Pre-approved spend is a critical facet of a digital business spend management strategy because when spending is pre-approved, it means employees are buying from contracted vendors, realising negotiated savings, and complying with internal controls. With high percentages of pre-approved spend, everyone has visibility into spending against budgets and the organisation reduces risk and fraud.

So, what does this look like? In practice, the pre-approved spend process starts when employees submit a requisition and get an approved purchase order for anything they spend money on (besides recurring items such as utilities and leases). Downstream, when an electronic invoice comes in, it matches up with the PO automatically and goes into the queue for payment without anyone having to touch it.

It’s a totally digital process, which should be the ultimate goal of any company’s technology transformation. That’s why pre-approved spend is one of the key metrics we track in the Coupa Benchmark Report, our annual report that looks at performance metrics based on aggregated, anonymised data from our business spend management platform. Our 2019 findings indicate that in top-performing customer companies, 99.8 per cent of spend is pre-approved.

The long-term, positive impact of hitting that key metric goes beyond process efficiency.

It changes the way people can spend their time. Buyers can shift to managing vendors and commodities, not transactions. Accounts Payable can spend time on more strategic activities than chasing invoices. Finance has real-time visibility and control. Compliance is automated. In summary, your company can grow, without adding people to handle paper.

Eventually, your goal is get to a point where every invoice that comes in is backed by a purchase order. It’s a long-term maturity goal, and you need a plan to get both employees and suppliers on board. Here’s what that usually looks like.

1.Corralling “mavericks” by making it easy to follow the rules

Employees don’t necessarily want to be “maverick” spenders. They just want to get what they need quickly and get back to their job. If they search your system and find the right catalog and item, or they can easily find the policy that tells them where to go and what process to follow, they’ll follow the rules. It’s when they can’t find what they need, or the approval process takes too long, that they go outside the process and non-PO backed invoices start showing up.

So, the first thing you need to do is set up your system so that it’s easy for employees to follow the rules. To lay the groundwork for that easy employee experience, you’ll need to consolidate your suppliers and figure out which ones you’ll offer as preferred providers. Since some companies can have tens of thousands of suppliers, most organisations approach this project in tiers, focusing on suppliers with the highest numbers of transactions in the most common spending categories.

Next, you have to configure your policies in the system and set up your contracts and your catalogs. Catalogs go a long way toward providing a consumer-like e-commerce experience that makes it easy for people to find what they want and requisition it.

Finally, make sure that getting a requisition approved and turned into an PO is quick. This cycle time is critical to employee satisfaction and adoption of the system, which is why we also have a benchmark for requisition to PO time: 14.8 hours for best in class companies. Long approval chains are one of the biggest reasons for delays, so as you automate, take a look at your approval chains. Automation helps you increase visibility.

2. Encourage suppliers to adopt your new system

Once employees are reliably going through the purchase order process, you can shift your focus to getting more of your suppliers to submit their invoices electronically. Their participation is critical, because the more suppliers you have enabled, the closer you are to fully automating the invoice process.

Your major suppliers should be enabled in the system when you launch, but over time you will want to review the long tail of the supplier base, working through it in categories and starting with those that are submitting the most invoices in each. How deep into the supplier base you can go is usually a matter of resources. As we grow the Coupa Supplier Network and improve our Community Intelligence capabilities, our supplier enablement team is increasingly able to speed that effort by matching your current suppliers with suppliers already transacting with other Coupa customers via cXML or portal.

It’s pretty fast to set a supplier up; what really takes time is reaching out, following up, and providing any training that your hundreds or thousands of suppliers need. This change management piece is essential to obtaining supplier buy-in. You may want to bring in a partner to help you develop a communication plan around what you’re doing and why.

Explain the options your suppliers have for submitting their invoices, whether that’s by cXML or EDI, supplier portal, or supplier actionable email notification. Also make sure they understand the benefits, which are usually faster payment cycles and the ability to track the invoice status in your system without having to call anyone.

3. Benefits of Pre-Approved Spend Go Beyond AP

There’s a lot of benefit to AP from getting suppliers on board and spend pre-approved, but the best way to look at your digitisation effort is as an interconnected process that benefits procurement, finance, and the rest of the business.

You have to give users to right environment to be able to follow the policy. If the content is not there, and the system is too hard to use, you’re still going to have the same difficulty with people going around the systems, POs going to the wrong suppliers and cycle times remaining lengthy. Invoices still have to be coded and routed by AP, and you don’t get visibility into spending until after the fact.

If you get all of your employees going through the pre-approval process but you don’t have suppliers on board to submit invoices electronically, you’re still going to have a lot of manual work in AP.

When you can pull it all together from both sides, you can institute a “No PO, No Pay” policy. This is the best practice, the ultimate goal, and the reason you’re investing in an automated system in the first place. It’s a process transformation that takes time, but once it is complete it has the power to transform the way the whole company does business.

Learn more about how you can increase pre-approved spend and other KPIs you should be tracking in the 2019 Coupa Benchmark Report.

Out Of Savings Ideas? Here’s How To Unlock A New Level Of Buying Power

If you feel like you’ve exhausted every avenue for finding cost savings, a Group Purchasing Organization could be the answer to your challenge.

By Andrew Paul Deer /Shutterstock

There’s a gripping scene in the last chapters of Jules Verne’s Around the World in Eighty Days where the ever-dapper hero, Phileas Fogg, finds himself on a steamboat from New York to Ireland. Going full steam against hurricane winds, the vessel runs out of coal after a few days but Fogg, desperate to get to London in time to win a wager, buys the steamer from the captain and launches a desperate plan.

He instructs the crew to feed the furnace with all the wooden parts of the ship – the cabins, bunks, masts, rafts, spars were all burned, followed by the decking itself in a “perfect rage for demolition”. By the time they reach Queenstown the steamship has been reduced to an iron hull and an engine.

Procurement and supply management professionals on the never-ending hunt for cost savings can face a similar situation. Through the identification of efficiencies, negotiations with suppliers and more drastic cost-cutting initiatives, the wooden decking of the steamship (your organization) can be rapidly stripped away until suddenly you’re left with nothing but the hull.

In an immature procurement function, it’s very easy for procurement professionals to look good by posting impressive savings figures month after month. But as your function matures and savings opportunities become harder to find, your track record suddenly doesn’t look so hot.

Where to from here? Well, that’s where innovative thinking comes in. Finding further savings after all of the obvious avenues have been exhausted takes creativity and out-of-the-box solutions. If you do plan on going back to your supplier base to negotiate lower prices, you’ll need to offer them something in return for a better deal.

Volume, volume, volume

If you’re in a situation where you need further costs savings, but your suppliers genuinely cannot budge on price, there’s one sure-fire lever to reach for – volume.

Most businesses end up paying more than they need to because they only spend a modest amount in a particular category and will never unlock the power of bulk discounts. But not every organization has the resources – or warehouse space – to ramp up their purchase volume on their own. But what if there was a way to get the discounts of “bulk” without having to buy more?

Joining a Group Purchasing Organization (GPO) gives members access to savings you would never be able to negotiate on your own. Your organization joins a group of others buying the same thing, meaning you can leverage your collective purchase and buy in bulk as a group to create buying power.

GPOs help businesses of all sizes save on indirect and direct spend. The savings are found not just through bulk discounts, but through efficiencies (such as cutting down on search time and issuing RFPs) and administrative cost savings.

Collective buying decreases suppliers’ overheads, which drives further savings for the purchasing organization. Imagine, for example, a cashier who takes five minutes to process an order. 1000 single-item orders would require 5000 minutes of labor, whereas a single order of 1000 items requires five minutes of labor.

Looking for some facts and figures?

We get it – you’re a procurement pro, and procurement pros want to see hard numbers rather than fluffy promises of savings. We can’t speak for every GPO out there, but we can prove the value of GPO membership with our own figures.

UNA is a GPO with a combined $100 billion in buying power. We help procurement professionals:

  • Boost their bottom line with deep discounts we negotiate to save an average of 22% on direct and indirect spend.
  • Gain access to steeply discounted agreements (better contracts) that would typically be out of reach.
  • Unlock exclusive savings on products and services including 80% off office supplies, 26% off hotels, 20% off parcel shipping, and more.
  • Save time through pre-negotiated contracts to get started with new suppliers in 30 days or less.
  • Keep prices stable with agreements to ensure rates don’t increase.
  • We provide a free cost analysis across your highest categories of spend and offer procurement tips and support.

OK, but how much does GPO membership cost?

Every GPO is structured differently. Some GPOs charge members a fee for their services, while other GPOs, like UNA, are paid by the suppliers themselves. We, in turn, use that fee to fund our program, so that it’s always free for our members.

Membership with a GPO creates an advantage for the member that they couldn’t get on their own. If you’re running out of cost savings ideas and want to unlock the buying power driven by bulk pricing, a GPO could be the solution needed to keep your steamship sailing along.

Interested in learning more? Contact UNA to discuss the benefits of Group Purchasing.