Category Archives: Procurious News

4 Steps For Sourcing Pros To Win The Hearts Of Marketers

There are four steps sourcing professionals can take to win the hearts and minds of their marketing colleagues…

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“Once upon a time, Martians [men] and Venusians [women] met, fell in love, and had happy relationships together because they respected and accepted their differences. Then they came to Earth and amnesia set in: they forgot they were from different planets.” “And since that day men and women have been in conflict.” 

These passages from John Gray’s best-seller “Men Are from Mars, Women Are from Venus” could be applied to procurement and marketing. It can seem at times as if they are from different planets.  And the result is a relationship that is often tenuous at best. Marketers see procurement as an overbearing watchdog that must be kept on as tight a leash as possible. Meanwhile, many sourcing professionals view marketing as the poster child for undisciplined spending. This disconnect exists because of fundamental differences between the two functions. They have different goals and objectives, different mindsets and different business cultures.  So, is there a way to bridge the gap between procurement and marketing? Improving the relationship ultimately requires the commitment of both sourcing professionals and marketers, but there are four steps sourcing professionals can take to win the hearts and minds of their marketing colleagues.       

These passages from John Gray’s best-seller “Men Are from Mars, Women Are from Venus” could be applied to procurement and marketing. It can seem at times as if they are from different planets.  And the result is a relationship that is often tenuous at best. Marketers see procurement as an overbearing watchdog that must be kept on as tight a leash as possible. Meanwhile, many sourcing professionals view marketing as the poster child for undisciplined spending. This disconnect exists because of fundamental differences between the two functions. They have different goals and objectives, different mindsets and different business cultures.  So, is there a way to bridge the gap between procurement and marketing? Improving the relationship ultimately requires the commitment of both sourcing professionals and marketers, but there are four steps sourcing professionals can take to win the hearts and minds of their marketing colleagues.       

1. Make the Goals and Objectives of Marketing Job One  

The starting point for sourcing professionals is to recognize that marketing is all about revenue growth. Marketers live and breathe revenue growth and other growth-related objectives. As a result, they tend to value effectiveness over efficiency when thinking about marketing programs and investments. This creates a potential flashpoint with sourcing professionals, who are trained to focus on cost efficiency.  So it’s critical for sourcing professionals to position their role in the right way. They need to make it clear that they understand that marketing’s goals and objectives are paramount to the company’s survival, and that the role of procurement is to support marketers’ efforts to achieve those goals and objectives.  

2. Focus on “Optimizing the Budget”  

Marketers often believe that the primary objective of procurement is to cut costs, regardless of the consequences. In contrast, the objective of conscientious marketers is not to spend less, but to spend better. Therefore, it’s important for sourcing professionals to emphasize that their purpose is to help marketers optimize the marketing budget and obtain the greatest possible value from every marketing dollar that is spent.  In fact, it’s a good idea for sourcing professionals to drop the terms “cost cutting” and “cost savings” from their vocabulary entirely when dealing with marketers.  This approach is more than a communication tactic. Most marketing expenditures should be viewed as investments, not as “garden variety” operating expenses. Therefore, they should be evaluated by the return or value they produce, as well as their costs.      

3. Recognize that Marketing is Different 

As a sourcing professional, the second key to building an effective working relationship with marketing is to recognize that the marketing spend category is different from almost every other category that you encounter. Then you need to make sure that your marketing colleagues know that you know they’re different. What separates marketing from most other spend categories is the degree to which intangible and subjective factors play an important role in purchase decisions. When marketers are selecting an agency, for example, two of the most important factors in the selection process are how well each prospective agency understands their company’s brand and the quality of each prospective agency’s creative work. Both of these factors are intangible, and they must be evaluated subjectively. This is a case where proposal cost and the results on a vendor scorecard are less important than other factors in the ultimate purchase decision. There are also, however, some types of marketing purchases that are suitable for typical procurement processes. One example is the purchase of printed marketing materials. Advances in print production technologies have transformed printing from a craft to a manufacturing process. So it’s now possible to obtain work of comparable quality from several commercial printing firms. It addition, the specifications for printed products can be defined in detail, which makes it easy to compare proposals from multiple printing firms. Under these circumstances, obtaining competitive bids from a group of pre-vetted printing firms is just good practice and helps ensure that marketing is buying printed materials at competitive prices. The important point here is that sourcing professionals must recognize that many marketing purchase decisions will not follow typical procurement norms, and they must be prepared to adjust their expectations and processes accordingly.       

4. Land and Expand  

In any relationship, it takes time to develop trust and confidence, especially if some level of skepticism exists when the relationship begins. Therefore, when sourcing professionals first begin to work with marketing, it’s important to take a “land and expand” approach.  By land and expand, I mean that sourcing professionals should first seek to work with marketing on “low risk” purchases. Marketers may perceive purchases as low risk because of the dollars involved, or because the transactions don’t have major or long-term strategic importance. Once the working relationship is established – and once trust and confidence have developed – sourcing professionals will have a better chance to become involved with larger and/or more strategic purchases.  Sourcing professionals and marketers can build a productive working relationship if they make the effort to understand each other. If they are willing to respect each other’s legitimate goals and objectives, the four steps I’ve just described will enable sourcing professionals to jump start the relationship and build a successful joint outcome. 

This article was originally published on Future of Sourcing.

Procurement Experts Outlook 2019

An interview with the Senior Research Director at The Hackett Group, Jimmy LeFever.


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Welcome to Zycus Procurement Experts Outlook 2019. In this interview, we have Senior Research Director, Procurement Advisory Practice at The Hackett Group, Jimmy LeFever.

Zycus: What is the most prominent trend visible in 2019?

Jimmy LeFever: Digital transformation is the ruling trend which Procurement has to continue focusing on to develop strategic roadmaps. While some organizations have significantly outperformed others, some organizations have are fast gearing up for digital transformation.

Zycus: As you mentioned, digital transformation does give an organization an edge over others. What is it that best-in-class organizations do differently to stay ahead of the curve?

Jimmy: Best-in-class organisations have a focus on talent and skills. They are rethinking their approach to attract talent, invest in development, and plan better retention strategies. Some organizations are even beginning to create new roles, e.g., procurement-specific data scientists and digital specialists. Many organizations have implemented advanced data, analytics, and visualization tools. The focus on digital skills is as strong as the focus on storytelling and explaining complex concepts helping businesses find the right market solution.

Zycus:  Do you mean that along with attracting the right talent pool, organizations should also focus on talent retention to benefit in the long run?

Jimmy LeFever: Absolutely! I can see more and more companies focusing on stakeholder experience. This means Procurement is going beyond delivering primary responsibilities to the stakeholder and moving towards improving the stakeholder experience via streamlined processes and promoting the wellbeing of the business.

Zycus:  Most people consider procurement, tactical and technical. But when you talk about stakeholder experience, it is beyond technology and strategy. Do you think Procurement requires rebranding?

Jimmy LeFever: The brand perception that Procurement has is myopic around savings and savings alone. Such knowledge holds people back from seeing the strategic impact procurement can have in the organization’s overall objective. The function can play a massive part in making the organization more agile during times of unpredictable changes. However, to change this perception of a rigid, slow, and tactical function, Procurement needs to take a few steps in the direction of rebranding itself.

Zycus: Procurement’s scope of work is changing and expanding, but the image transition hasn’t been proportional to this. What are some things Procurement can do to rebrand or reinvent its image in an organization?

Jimmy LeFever: First and foremost, organizations should strive to build a strong brand identity, brand value, and brand goal. Then, all the teams should work in sync to deliver the goal. For example, many organizations are moving towards more sustainable ways of doing business. As supply-chain and procurement professionals, we can provide that brand value by adopting a sustainable procurement model. Such a change in behavior will significantly impact both the global economy as well as the environment.

Zycus: Since we are talking about sustainability, what suggestions do you have for procurement teams when they look into the market for a source-to-pay provider?

Jimmy LeFever: My suggestion will be that they should select a vendor who can make a difference by employing rigorous standards. They should look out for providers who can assess the way they operate and do business, and affect their local communities and the environment. Many organizations are also looking to grow their supplier diversity programs to be more inclusive of underrepresented groups within their supply base.

A provider with stringent practices and standards will be impactful when measured consistently. Benchmarking is another way, a systematic method of regular monitoring to discover best practices and improve continuously. As you’re probably aware, The Hackett Group is the leader when it comes to process and technology benchmarking. For Procurement, it is to critical benchmark and measure to identify problem areas, weak links, and modification and debugging of the current strategy.

Zycus: What are procurement benchmark metrics that a procurement leader should track to measure his team’s performance effectively?

Jimmy LeFever: The two primary measurements that have long been at the forefront are the cost of Procurement and the cost savings that Procurement can achieve. For procurement leaders, those should continue as great metrics.

Zycus: We often see Procurement Leaders focused on just savings as a holistic parameter to measure performance effectively. Do you think the result garnered would be the complete picture? What other things can we consider?

Jimmy LeFever: Yes, organizations overlook two other metrics. I have already discussed stakeholder experience, and the second one is ROI. ROI is an excellent performance measure because it looks at cost and cost savings holistically. Stakeholder experience is a little tricky because it isn’t easily quantifiable. What can drive value for the business is to acknowledge Procurement’s role aligned with business objectives. Focusing on cost savings alone will rarely line up to meet the broader goal.

Zycus: As we conclude, what are the three things procurement leaders should start/stop doing in 2019 to achieve the goals you have informed us?

Jimmy LeFever: First, stop pushing out information that nobody cares. Second, stop focusing on just savings and widen your scope. Third, for an organization to value Procurement’s efforts, staff should be aligned with the business objectives.


From this interview, we can conclude that if Procurement has any directive this year, it is to widen its horizon! And to do so, organizations need to-

  • Move from tactical to strategic, which is more value-based
  • Align goals with their brand value
  • Adopt sustainable Procurement

Following these three will not only rebrand Procurement’s image as a strategic partner but will also increase its impact and value within the organization.


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

Captain Planet, Power Rangers, Voltron … and Procurement

A chain is only as strong as its weakest link, but the whole is greater than the sum of its parts. It’s time for procurement to consider a procurement strategy angle it has never thought of before.

By Sean P. Aune/ Shutterstock

“Earth. Fire. Wind. Water. Heart. Go Planet!” “By your powers combined, I am Captain Planet!”

If you were a child of the 80s or early 90s, there’s a fair chance that you are familiar with these words. They are, of course, the words used to summon Captain Planet, via the power of five magic rings wielded by his “Planeteers”. The cartoon acted as an advocate for environmentalism and even spawned a charity.

What, I hear you cry, does a distinctly average 1990s cartoon have to do with procurement strategy? It’s not about how procurement can help to promote environmental sustainability. Need another clue?

Cast your mind back to settling down in front of your TV on a Saturday morning in the 1980s or 1990s. Did you ever watch Voltron? How about Power Rangers? If you did, and remember how our mighty heroes defeated their nemeses, you might be beginning to get the idea.

For the Power Rangers, it was creating the “Megazord”; in Voltron it was the combination of 5 robot lions (or 15 smaller vehicles depending on which series you preferred…). As we alluded to in our introduction, when people or organizations operate alone, they can be ignored or out-maneuvered. When they team up with others, then they wield much greater power that can be leveraged to create great benefits.

From Purchasing to Strategic Sourcing

Procurement may not face overwhelming opposition in the form of giant dinosaurs or evil polluters, but it faces its fair share of challenges. Elements such as maverick purchasing and non-compliance with processes serve to undermine procurement’s position as a strategic sourcing partner to the organization.

There is also the issue for small organizations that their procurement teams are seen by suppliers as non-strategic. Through this they may lose the opportunity to negotiate better terms in a contract, or end up being so far down the supplier’s priority list that they will never be viewed as an important customer.

A wealth of literature exists on why procurement should be creating better relationships with suppliers. Why shouldn’t procurement be looking to create closer relationships with other procurement departments and work together to improve their own strategic buying potential?

Think of your procurement team as one small part of the Voltron robot. If you join together with other small parts to create a procurement mega-bot, there’s little that will be able to stop you from achieving your goals. It’s no coincidence that we often refer to Group Purchasing as procurement’s “secret weapon”.

Here are the some of the benefits that can be reaped by combing your (purchasing) powers with other procurement organizations:

  • Scale or Spend Leverage: Probably the most obvious benefit based on using greater, combined volumes to drive a better price. Also known as “buying power”.
  • Price Alignment: Where one organization is paying more for a specific product than another organization, but then align their prices to the lower one. By working together and aligning prices, Police Forces in the UK have saved over £237 million ($339.5 million) in 3 years.
  • Collective Negotiation: Similar to the idea of Collective Bargaining between organizations and employees, but in this case, procurement with other procurement teams. It extends the idea of leverage, giving even the smallest organization presence at the negotiating table.

The Power of Many

Centralized procurement is usually focused within a single organization, but who is to say that you couldn’t have centralized procurement activities as part of an overarching procurement strategy? The options are there that could make this a reality and turn your procurement team into the organizational equivalent of a power ring.

If you’re not sure where to start, then you don’t need to look much further than the potential for outsourcing procurement via one of the many procurement consulting houses. Or, if you are after procurement solutions that enable your organizations to keep more control, you may choose to investigate the option of a Group Purchasing Organization (GPO).

A GPO can offer organizations the benefits outlined above and can back up all of this with hard facts too. Savings on direct and indirect sourcing, access to pre-negotiated contracts and linking up with other organizations to really leverage scale and volume to create tangible savings.

As Captain Planet said at the end of each episode to the viewer at home, “The power is yours!” Now it’s up to you to decide how to use it and if you’ll join forces to overcome the myriad challenges facing procurement today.

Want to know more about GPOs? Contact UNA to discuss the benefits of Group Purchasing.  

The 4 Fundamental C’s of Success – Part 4: Consciousness

How do you thrive in the new world where we need to be in control of our mind and embrace technology as it becomes more powerful. In a new article series we explore the four fundamental C’s of success.

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How do you thrive in the new world where we need to be in control of our mind and embrace technology as it becomes more powerful. In a new article series we explore the four fundamental C’s of success. In this final article, Charlotte de Brabandt explores the importance of consciousness.

When people talk of consciousness, they also mean awareness as they are more or less the same thing. But what exactly is awareness? It’s the ability to know and perceive events around you. When you are in a state of awareness, you are alert, understand why things are the way they are and are able to come up with solutions

Of course we all have awareness to a degree, only some people use it for their good and some people let it slip by. If you want to improve your awareness of things and use it positively, you must first be clear on your intentions with what you’re looking to achieve. Then secondly you must focus on these things and learn as much as you can about them.

Everybody has unconscious thoughts and actions as well as conscious ones that hold us back from improving our lives and reaching the next level. Take a look at your life as if you were somebody else looking inside your brain. Think about what thoughts and actions you do automatically every day. Some will be positive and some will be negative. These negative thoughts and actions are the ones holding you back and they need to be stopped. Whereas the positive thoughts and actions you have and do every day need to be magnified and multiplied. This will then help you improve your life in a positive way and reach your next level. The more positive thoughts and actions you use daily and the less negative ones will mean the more you are capable of achieving no matter what your goals are, whether they are financial, physical or any other type of goal you want to achieve.

Sit down and think about what you really want to achieve then write down some positive phrases that will help you make positive steps towards your goal. Think about what positive thoughts and actions will help you. Think about any negative thoughts or doubts you may have and write down positive ones to counteract anything negative. Say to yourself from now on you will only think about positive thoughts and forget about all the negative ones.

If you want to make more money, then think about what you are going to do to achieve this goal. Understand ways how you can make more money. Write down the ways and positive phrases that you will use to make more money, get clear on exactly what you are going to do and every day start reprogramming your mind by repeating the ways and positive phrases that you have written down.

Eventually you will learn off by heart the ways you will use to make more money. You are now starting to change your life. Next imagine that you are implementing those ways you have chosen to make more money and you are already being successful in making more money. You are installing positive conscious thoughts into your mind even before you’ve done those tasks. In effect, you are normalising the act of being successful and making money. This will enable you to achieve your goals of actually making money without backing down or having doubts and settling for less. You will learn to believe that these are your goals and you can achieve them and you will not back down until you are successful.

You now know you will be successful. There is no doubt and no room for failure. Close your eyes and visualise yourself having been successful in making lots of money. You are able to afford the things you desire such as a big house or a nice car. Visualise yourself driving that shiny new car or living in that spacious new house. Keep visualising it until it seems real. Eventually your mind will not know what is real and what is not and you will really believe you have a big house and new car. It’s what you deserve because you are so successful and anything less is not an option.

Now you are in the correct state of positive consciousness your vibrational frequencies will shift and you will find that you start attracting the right opportunities and people to help you attain your goals and achievements. You will have the correct consciousness for success and it will come to you.

Competence Is Context Dependant

It’s easy to associate competence with job titles in a generic sense. However, given people’s performance will depend on the context in which they operate, all notions of competence should take context into account…


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The same, but different

Is a graphic designer at a major accounting firm the same job as a graphic designer at an early-stage startup? There is an obvious overlap is functional skills, but that’s where the similarity ends. 

A designer at startup will have limited resources and even less time. They’ll be required to “ship fast” because the clock is ticking and everything is an experiment. Management will have a relatively high tolerance for mistakes, and decisions will be made on the spot. 

Conversely, a large accounting firm will be far less tolerant of risk, decisions are made by committee, perfection will be prioritized over speed and autonomy will likely be low. 

How similar do these roles sound now?

While the fundamental craft is essentially the same, the context is entirely different. Success is measured differently, and the respective operating environments have very little in common.

Context is everything

It follows that the best person to do the job at the accounting firm is probably not the best person to do the job at the startup. In come cases the same person might be able to excel at both roles, but they’ll need to apply themselves and behave quite differently. 

This means that competence is dependent on context, something James Clear emphasizes in his book Atomic Habits

There is no such thing is a “good graphic designer”. Rather, there is a good graphic designer in your particular context. That context might be unique to your company, or it might be broadly applicable to companies in your industry or of a similar size, for example.   

This is a departure from the way many companies, and indeed many talent acquisition professionals, think about competency frameworks. It’s easy to associate competence with job titles in a generic sense. However, given people’s performance will depend on the context in which they operate, all notions of competence should take context into account.

How to build context into your recruitment process

When filling a role, it’s important to think of what it takes to be successful in that role at your company. It’s helpful to divide the requirements into two components. The first is the skills that are specific to the role itself and would likely be required in any context. In other words, what does the person in the role need to achieve? The second component is the skills that are unique to your context. In other words, how do you expect the person to approach their role? This can include cultural aspects, attitude, behavior and so on.

The next step is to come up with a way to test candidates for those skills. Following this logic, a generic “graphic designer test” doesn’t make much sense because it only addresses the first component. In order to identify someone who will excel in a role in your context, the test must take into account both components. It must be context-dependent because competence is dependent on context. 

Thinking about candidate selection in this way will help you identify people who are more likely to be successful in your environment. This makes sense because it’s also unlikely that the people who want to work at a startup will also want to work at major accounting firms, and visa versa.

This article was originally published on Vervoe.

Procurement Across Borders – Are You Aware Of Your Surroundings?

Are you aware of what is going on in a cross-cultural situation? How do you use that awareness to adapt and manage these situations effectively? 

By Nicoleta Ionescu/ Shutterstock

In this series of articles we have been discussing the importance of Cultural Intelligence when working across culture, distance and time. Using and developing CQ is a highly effective way to achieve better outcomes and smoother business interactions. We have already looked at two of the four components of CQ, which are CQ Drive and CQ Knowledge and defined some of the characteristics that influence these areas. We will now move on to the third component of CQ which is CQ Strategy.

CQ strategy or meta cognition refers to the extent to which you are aware of what is going on in a cross-cultural situation and your ability to use that awareness to adapt and manage the situation effectively. Employing CQ strategy, requires us to consider diverse encounters ahead of time, during the encounter and after they have occurred. CQ strategy is comprised of three elements, these are planning, awareness and checking.

Planning requires us to take into account the nine cultural dimensions we discussed in earlier  articles as well as any other factors. Some of those factors may include the organisational culture as well as economic, political, social and administrative aspects. By understanding some of the challenges you may face and strategizing actions and behaviours that are appropriate for dealing with the situations you will encounter, you are well placed to anticipate and mitigate tensions and misunderstandings. Some questions or prompts you may like to consider when planning include:

  • What are my goals?
  • What are my client’s/partner’s goals?
  • How will my client/partner’s cultural values and beliefs guide their communication, behaviours and decisions?
  • What do I already know about this person and cultural setting that could guide me?
  • What past experiences can I draw on to assist me?
  • What else do I need to know to achieve my goals?

Awareness relates to what you are doing during the interaction. It is about being present and mindful of what is occurring around you whilst engaging in a cross-cultural situation. This includes looking for expressions of interest and scrutinizing facial expressions and non- verbal communication as well as verbal communication. Are you understanding what is being said and being understood? Some questions to consider for yourself in relation to awareness in cross-cultural situations are:

  • Am I achieving the goals I need to?
  • What is confusing or unclear for me/my client/ partner?
  • What other questions are being raised?
  • What questions are not being raised?
  • What am I doing that is working/not working?
  • What could I be doing better?

Checking is the third aspect of CQ Strategy. We have mental models, where we make certain assumptions based on our previous experiences. We need to be alert to check that our assumptions are correct. This requires being cognizant and checking in on what is being communicated verbally and non-verbally.  Checking is a key part of evaluating the situation and judging how successful your cross-cultural interaction is. Some questions to consider in regard to checking are:

  • What helped or inhibited my performance?
  • What were my strengths and weaknesses?
  • Did I try anything new? Did it work?
  • What did I find easy?
  • What was most challenging?
  • What did I learn from the encounter?
  • How will I do things differently next time?

These three components of CQ Strategy- planning, awareness and checking provide a useful framework to analyse performance and progress when carrying out cross-cultural interactions. They also provide an opportunity to assess and improve our on our ability to utilise CQ strategy .  When entering new relationships, using these steps can be particularly helpful as a guide to navigating the situation and getting off to a good start that can lead to positive and mutually beneficial outcomes.

Human Rights Falter In Grey Areas Of Procurement Policy

Workers are often the victims when there are gaps in legal procurement and ethical procurement, but businesses nowadays have a lot to lose as the lines between profit and social conscience are no longer so easily defined… 

Back in 2010, rotten Apple stories started flashing up on smartphones everywhere. Forget tales of environmental unsustainability, these concerned social injustice: poor pay, unhealthy conditions and worryingly low levels of worker welfare. Then came the shocking news of staff suicides.

Attention focused on a prime link in the Apple supply chain: a vast 1.4-square-mile megafactory complex owned and run by Foxconn Technology Group, a Taiwanese multinational contract-manufacturing company, specialising in electronics.

Dubbed ‘Foxconn City’, the mini metropolis housed almost half a million workers on a giant industrial park in Shenzhen, China.

Fast forward to 2019 and Apple is still sourcing from Foxconn, across various sites. The roll-call of Foxconn manufacturing, present and past, still reads like a who’s who of the tech world, and includes other monster brands such as Google, Huawei, Microsoft and Sony, to name but a few.

So, given that Apple was soon to become the first public company on the planet worth $1 trillion, how did it get embroiled in such a dubious ethical sourcing saga in the first place, plus seemingly fail to crisis-manage its public relations effectively when the story broke?

The simple, grim fact is that Apple and the tech community are by no means alone in this. The recent history of procurement by global consumer brands is littered with the reputational detritus of bad ethics and selective legality.

Fast fashion, in particular, has struggled to keep its name out of incriminating headlines, with ethical procurement issues ranging from ongoing stories around ‘dirty’ cotton, through ‘cry for help’ labels sewn into high street clothes, to the tragic Rana Plaza factory collapse in 2013, where 1,134 lost their lives.

Sourcing scandals also continue to flood out of food and agriculture. Ethical issues served up for public consumption range from TV exposés of supermarket chicken suppliers tampering with ‘kill dates’, to the abuse of water rights by industrial-scale avocado farmers in Chile.

Across all sectors and societies, employment remains the most mapped, but least navigable, legal and ethical intersection.

Figures from the International Labour Organization (ILO), released most recently in 2017, revealed that more than 40 million people worldwide were in modern slavery in 2016, including around 25 million in forced labour. Of those in forced labour, some 16 million were being exploited in the private sector. Furthermore, there were more than 152 million estimated victims of child labour, almost half of whom were aged between 5 and 11.

Ethical procurement is essentially a people business, affecting lives and livelihoods, for good or ill, says group director at the Chartered Institute of Procurement & Supply (CIPS), Cath Hill.

“Applying rigorous ethical standards to your supply chain is not just about compliance or completing necessary paperwork, but implementing good governance and preventing exploitation of human beings across the globe for the sake of profit,” she says.

In international waters, though, standardisation is a slippery fish.

If not a definitive and demonstrable difference, often at least, there exists a commercial and cultural tension between the norms of legal and ethical procurement. Discrepancies abound in a grey area between the two disciplines and, if unchecked and unpoliced, carve out a policy gap where human rights fall down.

Legal standards can lag behind best practice, especially in relation to global companies with complex supply chains, explains Martin Buttle, strategic lead for general merchandise at the Ethical Trading Initiative (ETI).

“A company that meets local labour laws in one country could still breach international minimum standards. The UN Guiding Principles on Business and Human Rights make it clear that businesses have a responsibility to respect human rights even in countries where national law is weak, or poorly enforced,” he says.

Based on ILO conventions, the internationally recognised ETI Base Code of labour standards has been designed to tackle exactly this kind of cross-border inconsistency and jumble of jurisdictions, representing a commitment to ensure all workers are free from exploitation and discrimination, paid a living wage and enjoy conditions of safety, security and equity.

Stepping out of the moral maze for a moment, there are also many bottom-line business-case benefits to be gained by adopting such an ethical approach, suggests Mr Buttle: “It can maintain the supply of goods, increase productivity and quality, and enhance a company’s reputation with its customer base, which is increasingly expected by consumers.”

However, it is often the pressure of competitive marketplaces and overly aggressive procurement practices or pricing policies that result in damaging knock-on effects, he says.

“Brands should understand how their actions impact on their suppliers’ ability to uphold labour rights. For example, a company with poor purchasing practices, such as unrealistic deadlines or unit prices, can cause challenges for its suppliers, leading to increased risk of poor wages and excessive working hours. This is particularly the case if a supplier feels forced to accept orders below the cost of production to win contracts.”

All too often, there is little communication and accountability, says Alex Saric, smart procurement expert at Ivalua: “Cost is the only discussion point and data isn’t shared effectively, while risk and CSR assessments can be a ‘tick-box’ exercise, meaning transparency initiatives end up half-baked.”

Weaknesses notwithstanding, big brands can still set a positive agenda for supplier behaviour, beyond compliance. “If suppliers see that being responsible is more likely to win them a contract, ethical practices change from a minimum requirement to a valuable key differentiator. They must operate sustainably, or face losing out to more ethical competitors,” Mr Saric says.

While any ethical shift is relatively slow and undoubtedly late, legislative momentum is only pushing in one direction and businesses would do well to watch this space closely, suggests Lee Rubin, counsel and global sourcing expert at international law firm Pillsbury Winthrop Shaw Pittman.

“When it comes to lawmaking, legal and ethical considerations are merging, typified by the Modern Slavery Act. While not all sections of the Act are directly applicable to business, the provision around ‘transparency in supply chains’ impacts the largest brands and companies.”

Serious money is also flowing more towards the good and the green, adds Mr Buttle: “Many investors understand that poor human rights practices in the supply chain can put their investment at risk. With a growing interest in social impact, we are starting to see the investment community influencing business decisions.”

All in all, this collective chorus calling for ethical procurement is simply becoming too important to ignore, says Ms Hill: “It is not only the right thing to do, but also the lines between profit and social conscience are no longer so easily defined. News travels fast and bad news travels at lightning speed.”

The heat is most definitely on, says Shaun McCarthy, director at leaders in sustainable procurement Action Sustainability: “These days the court of public opinion is an unforgiving place and brands need to be aware they are playing with fire when it comes to ethical procurement.”

Ultimately, therefore, brands that muddy transparency, frustrate traceability and neglect communications get burned, concludes retail expert and consumer champion Martin Newman: “Consumers will shop with their feet and their mouse. If you pay this lip service or they think you’re being disingenuous, they will not only not buy now, they’ll never come back; and they’ll tell all their friends and family about it.”

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

How Public Sector Procurement Can Have Social Value

With public sector organisations becoming increasingly aware that their procurement decisions have an impact on local communities, some are rethinking how they award contracts.

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Both private and public sector entities are becoming more interested in how their organisations impact society. Whether it’s in contributing to the community or managing the impact on the environment, organisations recognise they can change their local communities through who they pick to deliver goods or services.

Traditionally, it had been assumed that choosing a supplier that added social value may mean compromising for a sub-standard quality product or service, but views are slowly starting to change.

“They recognise the benefits of working with social enterprises, but are ruled by the need to mitigate risk and deliver efficient and economic services,” says Beth Pilgrim, co-founder of Supply Change.

“Often companies will just go to suppliers they know. What we are trying to explain to the public sector is that adding social value into your supply chain doesn’t have to be difficult or require extra work.”

Ms Pilgrim established Supply Change in 2018 with colleagues Aoise Keogan-Nooshabadi and Verena Wimmer after the trio conducted a series of research studies on the public sector procurement process. They found that while public sector bodies were keen to award contracts to social enterprises, they struggled to do so.

“One of the key themes that came out of our research was that social enterprises struggle to navigate public sector procurement processes,” Ms Pilgrim says. “The existing portals are not really tailored towards them, so they don’t get good visibility.”

In 2013, the UK government’s Social Value Act came into force, obligating public sector bodies to look at the social and environmental benefits of awarding a contract to a supplier, as well as the economic ones.

Heralded as a game-changer by the then-government, the Act has nudged public bodies to look more closely at the attributes of companies bidding to win work.

Despite this, some experts say that the legislation doesn’t go far enough, with a company’s social and environmental points score only accounting for a very small percentage of the overall total, and the outcome weighted towards other factors such as quality and cost.

“A number of leading authorities have recognised this and increased the social value element of their contracts,” says Ed Cross, executive director at procurement advisory group Odesma.

Mr Cross says that upping consideration of social value attributes could be good news for smaller businesses competing for contracts, but adds that the public sector still has some way to go.

“There seems to be a lack of trust in smaller enterprises, particularly social enterprises, from the public sector,” he explains.

“Part of this is down to the false assumption that social enterprises working with volunteers or part-time employees aren’t as reliable as larger organisations with full-time, paid employees.”

Mr Cross’s sentiments are shared by many, who feel that smaller enterprises can often face a real battle just to get an initial foot in the door.

“One of the biggest challenges smaller businesses face when it comes to gaining access to contracts that offer social benefits is the tick-box process of tenders for contracts, as well as how public sector guidelines are inflexible,” says Craig Knowles, marketing manager at procurement software group Market Dojo.

“The tick-box approach often means small businesses that might not fit specific criteria are left at the door before they’ve even been given the chance to prove themselves.

“There needs to be a change in attitude on taking “risks” on small business as many, often wrongly, believe they don’t have resources to work through big tenders when in reality this couldn’t be further from the truth.”

Despite widespread concerns that social enterprises and small and medium-sized enterprises (SMEs) are still missing out on contacts from the public sector, there is evidence of innovation.

Supply Change’s Ms Pilgrim says initiatives at some local authorities show how awarding contracts to smaller, local businesses can be transformative for the local community. She cites Preston in Lancashire as an example.

In 2013, the council brought in external consultants to evaluate whether it would be possible to redirect some of its annual contract-award budget to local businesses which had clear social impact objectives. Since doing so it has stimulated the local economy, putting money into local firms and increasing employment.

“We have seen how that can be a real success story,” says Ms Pilgrim. “Preston has a strategy of spending money within their local economy to build up SMEs, social enterprises and the voluntary sector as much as possible. It has resulted in a turnaround in the local economy.”

Similar projects are now underway across the UK, with Manchester City Council and Birmingham City Council among the larger authorities to consider how they can alter their approaches.

For SMEs and social enterprises looking to get a piece of the action, Malcolm Harrison, group chief executive of the Chartered Institute of Procurement & Supply, says small firms should play to their strengths.

“SMEs and social enterprises need to work hard to showcase the flexibility, innovation and financial rigour they can provide,” he says.

“To help SMEs, government should do more. Simpler language, less jargon and the chance for an open dialogue all help SMEs to compete with large companies. SMEs can themselves take charge and become more visible to potential contractors, and websites such as Contracts Finder and Compete For can be a great way of finding opportunities.”

One of the biggest challenges smaller businesses face is the tick-box process of tenders for contracts, as well as how public sector guidelines are inflexible.

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

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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