Category Archives: Procurious News

Where Does Your Supply Chain Begin and End?

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

By releon8211/ Shutterstock

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

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

If only it were that easy. 

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

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

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

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

How to improve your supply chain

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

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

Technology in the supply chain 

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

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

Global supply chains

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

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

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

The SCOR Model

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

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

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

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

What Can Yoda Teach Us About The Kraljic Matrix?

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

By Yuri Turkov/ Shutterstock

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

A Procurement Transformation

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

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

The Next Evolution Of The Kraljic Matrix

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

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

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

Evolve Or Stay In The 80s

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

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

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

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

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


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

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

The keys to effective procurement Transformation

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

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

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

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

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

His advice to plotting your path to successful transformation:

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

Delivering a story with style

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

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

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

David also shared his advice for delivering a story with style

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

Cyber Security – are you prepared?

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

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

Key motivations for targeting

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

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

How To Stand Out Through Radical Optimism

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

By Dean Drobot/ Shutterstock

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

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

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

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

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

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

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

So how do we do that?

Change your information diet

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

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

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

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

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

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

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

Use optimism to stand out

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

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

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

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

The positive alternative

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

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

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

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

Optimism in procurement

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

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

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

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

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

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

Procurement Across Borders – How To Navigate Cross Cultural Situations

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


By Daniel Jenny/ Shutterstock

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

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

Dimension Four: Collectivism – Individualism

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

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

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

– Have a point of view on topics

– Be willing to speak out and challenge in meetings

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

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

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

Dimension Five: Religious – Secular

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

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

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

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

– Avoid bringing up the topic of religion unless asked

People coming from Secular cultures working with religious cultures should:

– Have an appreciation of how religious beliefs impact thinking

– Respect different belief systems

Dimension Six: Hierarchical – Equality

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

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

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

– Learn how to express ideas with those in senior roles

– Be courageous to challenge ideas and address others as equals

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

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

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

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

The Moment When You Become Your Worst Customer

What happens when the shoe is on the other foot? What can you learn from being the customer?


By Billion Photos / Shutterstock

Recently I found myself buying graphic design services and it was a very interesting and informative experience. From the outset and initial engagement I was clear on the base concept and the output that I needed, but through the design process I found myself to be indecisive and part way through I completely changed track.

I’m sure we can all relate to these customer types that the company PATlive have coined.



  • The Complainer: A business’ greatest ally, this customer has a lot to be unhappy about and you’re going to hear all about it
  • The Overly Agreeable:These types will yes you to death and you never get to the root of their issues
  • The Expert: They know way more about your job than you do. Trust
  • The Pessimist: There’s a dark side to every solution. Well, the pessimist believes that’s true
  • The Staller: Hard to convince and hesitant, the staller can be a major toughie

In my experience, as the customer I became The Staller. It was such an unusual feeling for me and it made me think about communication styles and how we treat our stakeholders.

Stakeholder management

What is a stakeholder? Ultimately it’s someone that you need to work with from another part of the business in order to get things done. But really a stakeholder is just a person and the quickest way to keep things moving in your project, is to understand that person, what makes them tick and what world they operate in. You then need to adapt yourself in order to reach a successful outcome.

As a function, procurement can sometimes be considered a Dictator. Most of us would certainly never treat our customers that way, but, ultimately we are operating within a “rules” environment whether we are public or private sector. No matter how agile, flexible or creative we are, our game is managing risk. This can cause procurement people to put themselves in a position that is above the customer or stakeholder, in the earlier example we become “The Expert” and we expect the business to simply trust us based on our job title, our communication style can sometimes be influenced by this subconscious expert bias.

The mash up

In an information rich world, and information rich sector, overlaying customer types and communication styles can be a helpful way to ensure that we are efficient and effective. There are oodles of four box diagrams of stakeholder management, positioning, market dynamics, the list goes on and while this is interesting to understand categories of spend / suppliers and our business – it is largely academic. Just because a supplier sees your company as a “cash cow”, doesn’t mean that the relationship manager (who may be a “pleaser” type) will be seeking to exploit the contract. I find it much more effect to break down companies, contracts, teams and relationship contact points in to communication and customer types and to be open and receptive in stakeholder meetings

Back to basics

Tips for effective stakeholder meetings:

1. Prep

  • Be clear on what your questions are, what are the gaps that you need to know?
  • Be clear on your recommended way forward but be genuinely open to new ideas
  • Know the patterns of the business unit, the trends, what they’re likely to do and have plans A, B and C ready to go
  • Decide what you’ll concede on and what you will not

2. Chat

  • Meet face to face, or at least on the phone. The more connection the better!
  • Be open, be collaborative
  • But don’t be a pushover

3. Handshake

  • Agree what the actions are in a follow up email. We all know the people that smile and nod in front of you but run off and do the opposite! Take the time to follow up a summary of agreed points.

Learnings

By objectively observing my own recent experience, I was able to deepen empathy and understanding of what is like to go through a process you don’t understand or buy something that you’re not an expert in.

My designer being the super cool professional that she is, had me well and truly covered and had already seen my curve ball coming. Such is the role of any professional, she:

  • Know’s her stuff (technical knowledge)
  • Learned me as a customer
  • Interpreted my future needs to future proof hers
  • Led me through the process in collaboration even though she knew that I would land on the final concept right from the beginning

So what did I learn from this process?

It allowed me to fully understand that customers don’t always deliberately drag the chain, they don’t wake up in morning with the intention to delay the project, or with the sole purpose to throw out my work programme. That dilly dallying is not a sign of weakness. And that sometimes, I simply do not know better than my customer!

Although the above answers are tongue-in-cheek, there is some undercurrent of truth that I think we can all confess to thinking from time to time and so I encourage you in those moments to stop and consider how you would feel as your customer.

Extra for experts

When I was writing this it brought to mind the communication style toolbox “StraightTalk” this company has been around for awhile but for good reason, their communication styles make sense and they present them in a box diagram – procurement folk love a good box diagram!

Take their quiz and see what type you are!

Do You Know What Your Procurement Function Can— And Can’t—Do?

Leaders who know more about their procurement functions are more realistic about what procurement can do—and how much more it can achieve.

By RZ Images/ Shutterstock

For many business leaders, the procurement department may seem to rank low on the list of worries. In many companies, procurement accounts for less than one percent of the total functional budget, so it may not attract the same attention as functions with larger budgets. More importantly, however, we find that executives see procurement as purely a transactional function that executes commands and delivers goods, rather than a potential source of value.

But that myopia has consequences. The Global Procurement Excellence survey, encompassing more than 1,100 organizations worldwide, shows that the best-run procurement organizations have a far more accurate understanding of their own capabilities than other businesses have (Exhibit 1). Procurement followers, by contrast, are especially prone to overestimating their procurement skills.

Overestimating existing capabilities blinds companies to the need for improvement. And where is that improvement needed most? Certainly, procurement functions need to get the basics right in category management, global sourcing, supplier development, and risk management. But the survey data show that single most important driver of procurement performance isn’t in these “hard” metrics, but in “soft” metrics regarding the people in the procurement department (Exhibit 2).

Talent management is an especially major challenge, showing significant gaps between procurement leaders and followers. Scores were especially low on procurement career paths, consistent with perceptions of procurement as a field with limited advancement potential. Organizations that created selective job-rotation programs within procurement were more likely to be procurement leaders, as were those that made sure that high performers were well rewarded and moved on to other parts of the business.

Exhibit 1

Procurement leaders invest in talent management and set high aspirations

Exhibit 2

Procurement leaders are accurate in their self-assessment while followers fail to see performance gaps

Furthermore, with digital proving just as critical in procurement as in any other part of the organization, talent attraction and retention are becoming even more important for the future. Only by hiring, training, and retaining people with digital skills will procurement be able to deliver in an increasingly disrupted and competitive landscape.

These findings illustrate how important it is for businesses to keep procurement from becoming a backwater. It’s worth management attention, and it’s worth investing in procurement’s people.

This article was written by Riccardo Drentin, an associate partner in McKinsey & Company’s London office and Fabio Russo, an engagement manager in the Milan office.

Redefining Procurement Excellence At The World Procurement Awards

Earlier this month Procurement Leaders hosted the World Procurement Awards 2019. And the winners are…


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Earlier this month Procurement Leaders hosted the World Procurement Awards 2019. The winners joined the ranks of the trailblazers before them and received the opportunity to proclaim their excellence to the world.

Now in their 13th year, The World Procurement Awards, in association with SAP Ariba, are the most celebrated and sought-after awards in procurement, recognising the most progressive people, projects and organisations across the globe.

The 2019 winners were announced during a prestigious ceremony hosted by Great British Bake Off presenter, Sandi Toksvig at the InterContinental London, The O2. The ceremony brought together 1,000 procurement elite and closed out the inaugural World Procurement Week, following the new Indirect Category Leadership Forum and industry-leading World Procurement Congress.

The independent regional judging panels were highly impressed with the quality of this year’s submissions: “The quality of the submissions is deeply impressive! What comes across clearly in almost all submissions is a
play-to-win mindset. We are fortunate to have that many top-notch procurement organizations across the globe creating real value for their companies.” Thomas Rothe, SVP, Procurement International, Strategy &
Governance, Bayer AG.

“It’s been an honour to serve as a judge for the awards. The process has been eye-opening as to the incredible progress being made by leaders of the function in areas from CSR to digital transformation, and becoming trusted advisors to their business stakeholders.” Howard Richman, CPO, Citrix Systems

All entries endure a thorough three-stage judging process, to ensure complete transparency and guarantee that the winners really are the best of the best. As another judge, Cindy Elliott, VP – Global Strategic Sourcing
at The Clorox Company explains: “To achieve the honour of being on the shortlist of winning entries, your submission is among the best-in-class of procurement being judged by leaders of multiple companies in a rigorous 3-step process! Congratulations!”

Other judges on the 2019 panel included senior representatives from Bugaboo International, Cisco, IBM Corporation, Mondelēz International, Novozymes, Siemens Healthineers, Swiss Re, and many more global leaders.

Congratulations to all winners and finalists and thank you to everyone who took the time to enter. We were overwhelmed with the sheer number of entrants and the evident innovation and passion displayed through these submissions.

World Procurement Awards 2019 Winners

Procurement Consultancy Project Award
Winner – MyBiz Solutions
Highly Commended – PwC

Procurement Technology Award
Winner – GEP
Highly Commended – Scoutbee

P2P Specialist Provider Award
Winner – Ivalua
Highly Commended – BuyerQuest

Corporate Social Responsibility Award, Partnered by EcoVadis
Winner – Mars Incorporated

Innovation Award, Partnered by Ivalua
Winner – Tomorrow Street (joint venture between Vodafone and Technoport)

Cross-Functional Collaboration Award
Winner – Mondelēz International
Highly Commended – GSK

External Collaboration Award, Partnered by Vizibl
Winner – China Mobile

Future Leader Award, Partnered by Capita Procurement Solutions
Winner – Cate Warman-Powell, BT, London

Risk Management Award, Partnered by IntegrityNext
Winner – Clariant

Supply Chain Initiative Award, Partnered by Maistro
Winner – IBM

Talent & Development Award
Winner – Turkcell

The ConnXus Supplier Diversity & Inclusion Award, Partnered by ConnXus
Winner – UNOPS

The GEP Procurement Team Award, Partnered by GEP
Winner – Heineken

The h&z Transformation Award
Transforming External Partnerships
Pioneering business impact Partnered by h&z

Winner – Vodafone Procurement Company

The h&z Transformation Award
Transforming External Partnerships
Pioneering business impact Partnered by h&z 

Winner – Vodafone Procurement Company

Internal Transformation
Establishing the function Partnered by h&z

Winner – Adidas

Cross-Functional Transformation Developing strong internal relationships Partnered by h&z 
Winner – Save the Children International
Highly Commended – Zalando

The SAP Ariba Procurement Excellence Award, Partnered by SAP Ariba
Winner – Vestas Wind Systems

The Smart Cube Procurement Leader Award, Partnered by The Smart Cube
Winner – Gary Foster, Highmark Health

Lifetime Achievement Award
Winner – Robert Monczka

Is Artificial Intelligence Destroying Your Job?

Just because a machine can learn from mistakes doesn’t mean it is self-aware and about to deploy robots to destroy humanity throughout time and space.  But it does mean that increasingly, machines can take on more and more human work.

By Leremy / Shutterstock

On 11 February this year, President Trump signed an executive order directing US government agencies to prioritise investments in Artificial Intelligence (AI) research and development. There isn’t any detail on how the AI Leadership executive order will be paid for, but as a statement of intent right from the top, it’s pretty powerful.  So, is this something you need to worry about?  Will robots be taking your job next Tuesday?  Probably not, but the answer is not as reassuring as it sounds.

When we think of AI, we probably think of Skynet (the evil computer that hunts humans in the Terminator films) or the similar tricked-up calculator that is the meanie in the Matrix films.  But real AI is a little more mundane.  It is more likely to be making sure your car headlights are on when you need them (and not on when you don’t), sending a nuisance spam call to your voice-mail or suggesting the next thing to watch on Netflix.  AI is the catchall term for software that can solve problems based on rules rather than a linear set of fixed instructions.  Really advanced AI can modify the rules based on how things turned out the last time or patterns that it detects in the environment.

Just because a machine can learn from mistakes doesn’t mean it is self-aware and about to deploy robots to destroy humanity throughout time and space.  But it does mean that increasingly, machines can take on more and more human work.  In recent decades we have seen this kind of automation steadily eat away at assembly line jobs as increasingly AI driven robots replace workers performing limited and repetitive functions.  A robot can sort big apples from small oranges more efficiently than a human and it never needs to take a break (or be paid). 

As the technology advances, it’s starting to creep into areas we might have thought of as immune from automation.  Medical diagnosis is increasingly the target for deep learning AI, the kind that recognises patterns and makes predictions based on those patterns.  During their career a doctor might see a few thousand x-rays or MRI images and get better at noticing patterns.  But AI software can review every x-ray ever made before the doctor has finished her morning coffee. 

A recent study, for example, compared the diagnostic precision of AI software with that of teams of specialist doctors from all over China.  The AI software was 87 per cent accurate in diagnosing brain tumours in 15 minutes.  The doctors could only diagnose 67 per cent and needed twice as much time to do it.  The AI increased precision and saved time because it was able to learn from a much larger base of experience than any individual doctor or team of doctors ever could. It uses like this that are why AI is predicted to add $15 trillion to the global economy by 2030.

President Trump joined the 18 other countries that have announced AI strategies since March 2017, because he wants the US to be a leader in AI rather than a follower.  And it is why investment in AI based startups jumped 72 per cent to almost $10 billion in 2018 alone.  

And even though some analysts are predicting 1.8 million jobs will be lost to AI in 2019 alone, those same analysts are predicting that the AI industry will create 2.3 million jobs in the same timeframe.  You can’t buy buggy whips now because the industry that created them was destroyed by Henry Ford, but there are many more jobs in the automobile industry he created than there ever were in the one he killed.

When analysts from McKinsey looked at the employment impact of AI in five sectors last year, they concluded that jobs which use basic cognitive skills, such as data input, manipulation and processing will likely decline, while demand for higher cognitive, social and emotional, and advanced technological skills should grow, as will the number of jobs that require customer and staff interaction and management.

If your job could be classified as administrative support then the future does not look bright.  And even if it requires you to do years of training so you can manipulate or recognise patterns in data, like those Chinese doctors, a financial analyst or a military strategist then AI will be coming to a workstation near you within the foreseeable future.  Humans are still a little too messy and unpredictable for the average AI bot.  So, if your job needs you to interact with humans and please them, such as in direct sales, management or counselling, then you are probably safe, for now.  And of course, if you are writing the programs that drive the AI then your career is assured.

AI is rapidly changing the face of the modern workplace.  And while nothing much will change by the end of the year, by the end of the decade, most jobs will be unrecognisable.  You’ve been warned. It’s time to transform yourself from a data geek to a people-person, before your computer takes your job.

7 Ways For Procurement To Drive Innovation 

How can procurement professionals drive innovation within their organisation, by working closely under the CEO.

By jamesteohart/ Shutterstock

 “Conformity to the present is invisibility to the future.”  

Stefan Molyneux

Innovation is anything but business as usual. As procurement professionals, we are responsible for thinking of new ways of creating value, thereby bringing innovation into our organisations. We also have access to the most internal functional stakeholder teams and often act as a bridge between different departments on communicating key strategies. We have access to the outside world via our external supplier database. This puts us in a unique position to drive innovation even for new product development or ideas, in addition to bringing in supplier driven innovation

Have you read the fascinating fable centered around innovation called “How Stella saved the farm”? It is loosely inspired by the George Orwell classic, ‘Animal Farm’. It illustrates a framework of not just thinking about innovation, but also implementing it. Innovation is not a person or a department. It is a mindset. The approach outlined in the book can be replicated across any organisation that is willing to learn by doing.  In the book, the CEO, Dierdre appoints a horse called Mav as the ‘Innovation Leader’. As per a recent data from Entrepreneur magazine, 61 per cent of CEOs consider innovation a top priority and describe a lack of resources and a structured process as top challenges. I could not help but wonder if procurement can help organisations overcome these challenges due to the extended role we play as a “harbinger of innovation”.

The fable is about a mare called Dierdre who inherits her father’s profitable animal farm as the CEO and must find breakthrough new business idea to survive beyond the next few years. She is chosen to run the farm by her father over “The Bull” who learnt everything from her father and worked exactly like him. The Bull is naturally dissatisfied at not being chosen to run the farm. Stella is the bright, young sheep who travels the world and brings a new idea of running luxury wool (derived from Peruvian alpaca) business to the farm. Thus, begins the journey of implementing this idea with the help and expertise of all animals in the farm.

Here is my hypothesis on how Procurement can drive this process in the organisation, by working closely under the organisation’s CEO.

1) Need for Innovation:  In the words of Albert Einstein,” If you always do what you always did, you will always get what you always got.” The first step in the process of implementing innovation is the realization and honest acceptance that you need it. This understanding must be reflected unanimously across the organization.

2) Process for getting a breakthrough idea: The second stage is obviously pitching for “breakthrough” ideas to unleash creativity without defining restricted metrics. And what better way to get it than from your team and key internal stakeholders who know what a breakthrough can be, with the least effort and investment. Here, it can be procurement’s job to engage all departments. This exercise should lead to a creative dialogue to evaluate the ideas holistically and end with the selection of the right best idea to focus collective organisation energy on.

3) Communication to the right channels at the right time: As they say, ‘Finding the right idea is only the beginning’, so an organisation working on a new idea would allocate resources towards it and communicate the priorities to the different departments and across the hierarchy. This is easier said than done, as many changes will occur during the project and the communication on changed priorities will often end up making teams confused on what roles they need to play for the idea. Procurement can ensure that changes are articulated clearly and explained to everyone throughout the idea execution so that everyone is involved in playing their roles. Thus, leveraging our project management skills and providing stewardship.

4) Flexible organisation structure to facilitate new areas: During innovation, it becomes important that organisation structure is not set in stone and can change as you discover the bottlenecks in the implementation. Procurement can be proactive in identifying these bottlenecks by working across departments and suggesting corrective changes. 

5) Facing Reality of what the customer wants: Sounds like the most obvious one, though it could be an acid test to know if you are producing what you can, or are you producing exactly what the customer wants you to produce. At the time of idea testing, procurement can engage its external resources to do a deep dive on the customer need and provide concrete data on the idea. If the data suggests that the idea should be modified or changed to meet market requirement, then procurement would need to influence a change in strategy in line with customer needs.

6) Organisation culture issues: These are bound to happen for an organisation trying to embrace change. It would involve “letting go of control” for some team members and it is one of the most difficult tasks to do in the way of change to make an inclusive environment. Procurement’s role could be to team up closely with CEO and HR to resolve these issues timely.

7) Measuring the Innovation:  Procurement pros need to work on defining metrics for measuring innovation such as defining a clear hypothesis, identifying most critical unknowns while planning, analysing results and deciphering the lessons learnt. These will help drive innovation culture within the organisation in the long term.

Organisations can reflect on below questions more objectively during a new idea development or innovation process- 

Is our idea a breakthrough idea? Are we making something that the customer wants? Do we have the right team structure? Are we communicating enough and well? Are we learning to innovate? Are we measuring innovation in the right way?

They would often discover that what they assume to be a fault with the idea, is sometimes more a fault with the execution. This is where giving clear ownership to procurement as ‘Innovation Leaders’ would help as procurement brings in its existing skills and develops further its skills of cross-company collaboration, communication and influence.  

What do you think about procurement playing the role of ‘Innovation Leaders’ for new products or ideas in your organisations?  What could be the challenges we face if we take up this role? How do you think we can overcome those challenges?