Category Archives: technical procurement

Writing a Brief for the Procurement of Goods or Services

Whether you aim to start your own business or are looking for ways to up your game in terms of paperwork, the procurement of goods and services document is something that’ll inevitably come your way.

procurement of goods
From Pixabay via Pexels

Whether you aim to start your own business or are looking for ways to up your game in terms of paperwork, the procurement of goods and services document is something that’ll inevitably come your way.

According to Convey Co, it is estimated that the global B2C sales will exceed $4.5 trillion by 2021, while at the same time B2B sales are expected to rise to $17.6 trillion. Whether you operate as a small business that handles shipping papers and orders, or as a manufacturer or delivery intermediary, documents pertaining to the procurement of goods and services can often make or break a contract.

While the document is a standard affair for companies that focus on shipping, eCommerce and other trade industries, it may prove challenging to those who are uninitiated. With that in mind, let’s take a look at how you can write a brief for the procurement of goods and services regardless of the type of good or service you intend to procure or ship to a third party.

Procurement of Goods and Services Basics

Before we go any further, it’s worth noting what the procurement of goods and services represents – the process of agreeing to the terms and acquiring goods or services from an external source. The external source in question can be an existing B2B networking partner, an open market bid you’ve made previously, or procurement via tendering.

Generally, the process of procurement involves making buying decisions for your company under certain conditions outlined in the brief and delivered to the external source in question.

Due to the nature of these documents, its good practice to rely on professional platforms such as Evernote (a cloud-based writing and editing service), Trust My Paper (an outsourcing and editing platform), Hemingway (service which is used for legibility optimisation) and WoWGrade (a dedicated writing platform) in your brief writing activities.

Typical briefs for the procurement of goods and services involve clear outlines of all factors pertaining to the sales/purchase contract, including quantity, delivery, handling, discount and price fluctuations, as well as the procurement timeline. These are technical documents that are standard in the corporate, manufacturing and shipping industries, but very important as they legally bind all parties involved to respect their agreed-upon contract.

Advantages of Writing a Procurement of Goods and Services Brief

Now that we have a clearer idea of what briefs for the procurement of goods and services are in practice, let’s take a quick glance at the benefits of their existence in your business’ documentation. Given that businesses typically work as suppliers or buyers with a multitude of other companies and brands, often internationally and at the same time, it can get daunting to manage the paperwork efficiently.

Even though procurement is only one small part of the contractual equation in this sense, it can still take up a lot of your time and even small deviations can cause you to lose trust or much-needed goods, services or revenue if you are a supplier.

In that respect, writing procurement brief outlines in advance can bring several benefits to your business going forward, including the following points:

  • Streamlined operational performance
  • Standardised documentation workflow
  • Improved accuracy and clarity of the procurement data
  • Lowered margin for the procurement error
  • Growth of positive brand reputation and industry authority

Writing Guidelines to Consider

Write a Brief Overview

The first item on your list in terms of writing a brief for the procurement of goods and services is to create an overview of your documentation. This is the segment of the brief in which you are expected to give a short outline of your business, its product portfolio and relevant website links for the receiver to follow up on.

It’s also important to provide a clear description of the procurement items you are requisitioning, as well as a brief summary of their intended purpose and its target audience. These items will allow the reader to quickly discern what the document is about without going over minute details or items in the order itself.

Define your Procurement Method

Depending on what type of goods or services you aim to procure via the written brief, you can propose the procurement methodology personally or ask for suggestions from the target business. It’s always good practice to state which procurement methods you’d like to see in the follow-up letter depending on your own business’ infrastructure and resources.

You should also take potential issues and complications into consideration based on the previous procurement experience in order to anticipate bottlenecks before they rear their head. Data in regards to past procurements or sources of information you are willing to share in regards to the particular goods or services should also be attached in this section of the brief for your reader’s convenience.

Detail your Deliverables

The deliverables section of your procurement brief is self-explanatory. However, it also has to abide by certain standards and expectations. Mainly, your deliverables should be outlined based on quantity and (in case of manufacture) the time you expect them to be completed by.

For example, if you are procuring certain types of pipes for your business, you should note any special requests you may have in regards to their length, custom build, etc. You can also add a small addendum in the deliverables section of your brief that will inform the reader that they can contact you in case of additional questions or concerns in regards to your procurement document.

Outline the Procurement Timeline

The timeline of procurement is one of the most important elements in the outlined brief as it pertains to specific deadlines in regards to your requested goods and services. While not complex or lengthy, the procurement timeline section is essential and should be clearly highlighted for emphasis.

Elements such as a procurement return deadline, procurement decision deadline as well as clarification meeting dates (if necessary) should be included. This section can be capped off with a listing of your contact information, such as email and phone, which the reader can use to let you know if the procurement request was accepted.

Request a Follow-Up on the Brief

Lastly, a formal follow-up should be included as the final element of your procurement brief for the sake of colloquial and professional courtesy. The follow-up request should be in the form of a simple call to action that will respectfully inform the reader of your anticipation of their response in regards to your document.

It’s good practice to repeat the procurement return deadline from the previous section to drive the point of urgency home. After all, it is in both parties’ interest that the procurement brief goes through so that the goods and services can exchange hands as quickly and efficiently as possible.

Creating a Clear and Streamlined Template

Once your brief for the procurement of goods or services is set in stone, you can easily retrofit it for different requests, both as a supplier or a demander. Make sure to brand your document accordingly in order to make it stand out with elements such as business logo, minute visual elements as well as a unique style of writing.

If your requests are within the realm of deliverable possibilities for the receiver, your procurement will always go through, additional clarification or not. Write your procurement brief outline through the set of guidelines we’ve discussed previously and your business documentation will be that much clearer and more streamlined for it.

Why Knowing your Market Can be the Key to Success

Are you dooming yourself to failure in procurement by not knowing your market before you start? Market research and analysis is a key component of the procurement process – but it needs to be done right.

By PHOTOCREO Michal Bednarek/ Shutterstock

When Martin Luther King Junior stood on the steps of the Lincoln Memorial in Washington, D.C., in front of 250,000 civil rights supporters, he knew his audience. He knew that the people he was addressing supported his cause and agreed with his words. The speech was a success and helped paved the way for President John F. Kennedy’s Civil Rights Act.

This is not intended to be a crass use of what is one of the finest speeches in global history, but an example of how success can be tied to knowing how an audience will react to words, proposals and actions. 

Conversely, not taking the time to understand the audience or the market can lead to painful rejection (though in fairness, sometimes the failure to understand the market lies on the other side of the table). Steve Jobs and Steve Wozniak were rejected by Atari and HP in when they presented the concept of the personal computer. Perhaps just as famously, record label Decca rejected The Beatles stating that “guitar groups were on their way out”. 

Both of these cases, and many more, are a prime example of organisations not understanding their market and ending up without that all important ‘win’ in the column.

Criticality of Analysis 

You’re probably wondering how this relates to public procurement. The examples here show how critical it is to know your audience and market, and that the key is that hard work needs to be put in to provide the foundation for success. 

Take a look back at your own career in procurement. How many times have you gone to market on the back of flawed or non-existent market research and analysis? When you have laid your hands on the final draft of a specification, did you always trust that the input was from a good cross-section of the market? 

You may think you lack the time or resources to carry out market analysis as part of your tender process, but the business case for doing it well is there for all to see. Market research can be critical in ensuring that the goods, services or works being procured meet the needs of the taxpayers, at a cost that is acceptable and provides best value. 

Public sector organisations can use market research and analysis to get a greater understanding of their customers (usually the end-users of the services), to analyse the market and the competition in a particular area, and then to test before launching services.

Informed Decision Making

The same applies in procurement, just from a different angle. Procurement gets to understand the supply market, its competitiveness, how mature it is and the key suppliers, some of whom may already be supplying to the public sector.

It creates a level of informed decision-making, rather than approaching every tender in the same way. As it’s put in the Procurement Journey, analysis of key trends and market dynamics and how the goods or services in question sit within this can help to shape a specification, tender and route to market. 

It can also help procurement to understand the role of SMEs in the market and how they could better set out a tender to increase SME involvement. Even down to using market analysis in order to understand how commercial models can be set up and what Community Benefits suppliers would or could offer as part of tender submissions. 

Market Research Favourites

There are a variety of methods available to procurement too, some which are desktop based, others which require direct interaction with the market itself.

A few of the most common are listed below:

  • Prior Information Notice (PIN) – The PIN can be used to gather information on almost any aspect of a tender and allows procurement to understand and gauge the interest in the supply market. The added benefit is that, depending on the type of PIN used, they can also be used as a call for competition and reduce procurement timescales. 
  • Soft Market Engagement – This doesn’t have the formality of a PIN, but can be just as useful. It can be done via email or phone calls and is particularly useful if there is a smaller, known supply market, and the engagement is being done to test the water on a specification or aspect of the Technical or Commercial Evaluation.
  • SWOT, PESTLE, Kraljic – Old favourites for anyone who has ever done courses in procurement! These can provide a picture on the suppliers (SWOT), market conditions (PESTLE) and product category (Kraljic), better informing decision-making and strategy.
  • Applied Analytics – The likes of Dun & Bradstreet and Spikes Cavell provide information on the supply market, from spend analytics to market analysis. All of this data is presented in a usable form, saving procurement from having to carry this out themselves. 

Paralysis by Analysis 

While market analysis is a critical part of the procurement process, it’s important to remember that it’s only one part of a much wider whole. Perfection is the enemy of progress – striving to capture all the information possible, to speak to every supplier and put this all together can lead to stagnation in the process and actively hinder decision making. 

Avoid decision-making by committee at all costs and decide where you, as procurement, will draw a line under the analysis and move to the next stage. Mark this out at the start of the process and stick to the timelines. After all, you don’t want to spend so long analysing the market that you never actually go to market. 

Know your audience, pick your method and crack on! 

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

Procurement Can . . .

To focus on savings alone is to sell procurement short and miss out on its potentially game-changing capabilities.

A good procurement team can save your business money. This goes without saying. Savings are for procurement what risk mitigation is for legal, innovation is for R&D, and new business is for sales. They’re table stakes, just the very beginning of what a well-equipped and well-staffed function should offer the organisation. To focus on savings alone is to sell procurement short and miss out on its potentially game-changing capabilities.

While reducing costs remains the top priority for today’s procurement teams, it’s high time for the function to evolve its objectives and diversify its value proposition. With visibility across the global supply chain, procurement is perfectly equipped to address the monumental concerns that plague the business world. Labour violations, pollution, animal rights, and ethics – they’re all issues as relevant to procurement as cycle times and pricing.

Simply put, procurement is capable of more than saving money. It’s capable of saving lives and it might just help us save the planet.

Procurement Can . . . Save Lives

Stopping Forced Labor

It’s appalling that, in 2019, forced labor is still endemic across various global supply chains. What’s worse is that the United States imports more “at risk” products than any other country in the world. According to the Global Slavery Index, the U.S. brought in more than $144 billion of these products and commodities. They report that electronics, fish, cocoa, garments, and natural resources like gold and timber present an especially high risk.

On a more hopeful note, the nation’s score on the Government Response Index ranks behind just the Netherlands. Still, with as many as 400,000 modern slavery victims within its borders, it’s clear the United States must do more. The scope of the forced labor crisis is such that companies in nearly every industry are touched by it in some capacity. Due diligence has grown both increasingly imperative and increasingly challenging. Organizations like Rip Curl and Badger Sportswear present recent examples of what can happen when an American business fails to gain and sustain visibility across the globe.

Methods for assessing suppliers, monitoring their behavior, and addressing violations must all evolve. It’s more dangerous than ever to settle for a low price or select a provider based on an incomplete set of considerations.  Supplier capacity, for example, is a more nuanced issue than Procurement may have previously considered it. Under-resourced suppliers might partner with unscrupulous organizations if they’re faced with demand that outstrips expectations. The onus also falls on procurement to provide better, more accurate forecasts to avoid such a situation. Data won’t just provide the means to secure better pricing and anticipate consumer tastes, but to eliminate human rights violations.

Forced labor is a shared issue that requires a shared response. It’s up to organisations who purchase high-risk commodities or operate in high-risk regions to collaborate with their competitors. Joining groups like the garment industry’s Fair Labor Association or the Electronic Industry Citizenship Coalition, they can elevate industry wide standards and recognize organizations for setting particularly excellent (or particularly poor) examples.

Supporting Disaster Relief

Few things keep supply chain managers up at night like the specter of extreme weather. As an increasingly volatile climate threatens shipping lanes, roads, and storage facilities, disaster preparedness has become a year-round concern – even for organizations that do not operate in “high risk” areas. In 2018, hurricanes alone caused more than $50 billion in damages throughout the Americas.

Crucially, it’s not just the business world that suffers when hurricanes, earthquakes, and other natural disasters strike. Damaged roads and lost power leave consumers without access to necessities like clean drinking water and medications. Sometimes they’re without these essentials for months at a time. Beyond repairing their own supply chains, well-prepared procurement teams can participate in a broader, more socially responsible form of disaster relief.

Accurate, proactive forecasting makes it possible for businesses to continue serving their communities even in the wake of natural disasters. In addition to avoiding disruptions of their own, they’ll ensure consumers experience minimal disruption. Remember, supply chain hiccups are often more deadly than natural disasters themselves. This was the case when Hurricane Maria struck Puerto Rico back in 2017. Experts estimate the vast majority of deaths were caused by interruptions to the supply chain for health care and life-saving medicines. In a sense, disaster relief efforts failed because of “final mile” complications.

Evolving technologies will prove essential for extending these supply chains and mitigating the human cost of extreme weather. Unmanned aerial vehicles (drones) promise to play an especially active role. While drone-based deliveries for food or Amazon packages tend to dominate the headlines, recent pilot tests suggests they may soon serve a higher purpose. In the aftermath of Maria, non-profit Direct Relief partnered with Merck, AT&T, and other providers to test the viability of medication delivery drones. The drones provide temperature-controlled storage for sensitive materials and come equipped with real-time monitoring to adjust their flight paths as necessary. With each party providing their own expertise and resources, the pilot tests provide a case study in socially responsible collaboration.

Procurement Can . . . Do More                                                                                                                            

In the past, organisations may have neglected to invest in sustainable and responsible initiatives. The fear of higher costs and harder work likely stayed their hands. Businesses need to stop asking whether or not they can afford to behave ethically. They should ask, instead, how much longer they can afford not to. More and more, consumers are growing tired of inaction. They’ve also grown increasingly wary of inauthenticity. Where simple greenwashing might have sufficed in the past, new generations of consumer are increasingly skeptical and unforgiving when it comes to corporate behavior. The most recent Deloitte Millennial survey found that a quarter of young consumers don’t consider business leaders trustworthy, less than half consider them ethical. They’re not the only ones. Across every generation, the desire for ethical, responsible business practices has evolved into a demand.

In my next blog, I’ll look at how procurement teams across the globe can (and already do) lead the way on sustainability. Eliminating plastic, identifying sustainable alternatives, and reducing emissions, the function is equipped to set and enforce a new environmental standard.

In the meantime, why not register as a Digital Delegate for this year’s Big Ideas Summit Chicago? You’ll enjoy the chance to sit in on thought leadership presentations from some of the Supply Chain’s most thoughtful, innovative, and successful professionals – all without leaving your desk. 

4 Terms We Should Ban In Procurement

We asked a number of procurement leaders to reveal the procurement term they would most like to ban, for good!

Every procurement professional has a different opinion on the terms that should and shouldn’t be used in their day-to-day working lives. Some terms are loathed because they undervalue the huge contributions procurement make to the organisation. Others are just downright confusing to anyone unfamiliar with procurement lingo.

Because we quite like a healthy debate, we asked a number of procurement leaders to reveal the procurement term they would most like to ban, for good!

1. Cost-cutters

“This is something I really feel is doing a discredit to the profession – it’s very important we are being seen as value-adding procurement people.”

Amelle Mestari, Head of Procurement – Bouygues Energies & Services

“We’ve been spending a lot of time reeducating the business around the extra value we bring so it’s not simply about getting a better unit price it’s about the wider value we can bring to the organisation.”

Gemma Bell, Head of Purchasing – L’Oreal

2. Savings Targets

“Sure, Procurement has to reduce costs and be financially motivated but you don’t see many organisations mission statements being to save money. Nowadays it’s crucial that procurement is measured on its contribution to delivering organisational goals and not just on savings.”

Chris Cliffe, Director – CJC Procurement



3. RFP

“I think there is still a lot of confusion around RFP as silly as it sounds. It’s something we band about and we know exactly what it means but when you speak to stakeholders it’s always the first thing they ask ‘what is an RFP and what does it mean’ and it actually means different things to different people. So I would there must be a different term we could use or a different way we could articulate what that particular process is.”

Chris Emberton, CPO – Clifford Chance

“If I’m going to speak to one of my stakeholders, if they don’t understand the language I’m speaking, how on earth is that going to help me in the business.”

Lucy Bunting, Head of Procurement

4. Negotiation

“It’s what everyone assumes we do and I think it comes to a point where you always get the hospital pass at the end of the day when someone says ‘I need you to negotiate this’ – so it means you’ve done something wrong.

Matt Beddoe, Head of Procurement – Nestle

These responses were obtained from attendees at Big Ideas Summit London earlier this year. If you’re a procurement leader and you’d like to get involved with similar discussions and networking at Big Ideas Chicago on 18th September, we’d love to have you there!

Big Ideas Summit Chicago 2019

It’s never too late to take control of your procurement career. And what better way to do so than spending a day with the profession’s best and brightest minds. 

At Big Ideas Summit Chicago 2019 we’ll be joined by 50 thought leaders to discuss how to set yourself apart from the pack, the neuroscience of decision-making, the evolving relationship between human and machine and procurement with purpose. 

By enrolling as a digital delegate, no matter where you are in the word, you’ll be able to…

  • Follow the day’s action from the comfort of your sofa
  • Submit questions to our speakers and the 50 CPOs who will be in attendance on the day
  • Gain an insight into the future of procurement
  • Watch video footage from the event including exclusive interviews with our speakers and live-streams of the day in action!

Want to get your wheels turning towards a supply chain career one could only dream of? Then don’t miss our upcoming Career Boot Camp with IBM – a free 5-part podcast series with some of the very best of the best. Check it out here: https://www.procurious.com/career-boot-camp-2019

3 Ways Procurement Can Make A Lasting Impact On The Organisation

Advanced procurement functions, and the CPOs that lead them, can make a significant and lasting impact on the success of their companies, but only by focusing on the real value and innovation that suppliers can bring…

By Jacob Lund/ Shutterstock

There’s no doubt that procurement enjoys a privileged position in a company’s value chain. Sitting between a network of thousands of suppliers and the business, it has clear visibility of customer need, company strategy and the capabilities that exist in the supply base

From such a position, advanced procurement functions, and the chief procurement officers (CPOs) that lead them, can make a significant and lasting impact on the success of their companies, but only by focusing on the real value and innovation that suppliers can bring and how this can support the organisation’s ultimate value proposition.

To do so, procurement must drive change in three broad areas. Firstly, CPOs must address the procurement operating model so it is better aligned with company strategy and end-customer value. Historically, procurement has segmented third-party spend into categories, from raw materials to office furniture to semiconductors and so on, with the ultimate goal of leveraging scale to reduce price, while also managing risk and quality.

Smart chief executives, however, will be far more interested in how suppliers can enhance the product portfolio to maximise the company’s competitive position in the market. Aligning the supply base around that portfolio will enable supplier innovations to feed more successfully into that goal and ensure collaboration with suppliers is more productive and more focused on value creation.

Of course, this isn’t feasible for every last drop of third-party spending so CPOs must differentiate between core and non-core spend, so 100 per cent of the procurement function’s energy can be applied to those suppliers that really matter.

Secondly, for this to be feasible, CPOs must ensure procurement is a frictionless experience for those in the business who buy as part of their role. Every effort should be made to automate through digital technologies and platforms, so the actual buying process is seamless and efficient.

Robust governance and a sophisticated suite of digital technologies that have been designed with the end-user in mind must underpin such an environment. And the ultimate goal must be to reduce the time and resource spent on non-core products and services, without sacrificing low cost, impacting quality or introducing risk.

This laser-guided focus on execution must be a cross-functional effort, so the right specifications are secured and any savings go straight to the bottom line and are locked into the profit and loss.

Thirdly, the very fundamentals of supply markets continue to evolve. It’s clear an increasing volume of the world’s innovation is being developed outside the walls of large corporates and big, traditional suppliers, with smaller, niche companies and startups working on new technologies and approaches that regularly disrupt traditional, incumbent markets.

Further, these non-traditional players work differently, are more agile, less process led, more open to collaboration and come with large amounts of risk. But despite this, corporates cannot afford to close their doors to the innovation taking place within them.

CPOs must develop the capability to engage with these outliers and engineer how the intellectual property they produce can be introduced into their organisation’s value chain, whether through traditional onboarding as suppliers, technology licensing, collaboration with other suppliers in the network or myriad other potential approaches.

In essence, CPOs must build and exploit supply networks, or ecosystems, capturing value during the collaboration that takes place between third parties at all points in the value chain.

None of this is straightforward and few organisations are even close to making it a reality. To be successful, it demands the support of a visionary chief executive who understands the dynamics at play in the supply base and beyond, as well as a procurement team full of intellectually curious, entrepreneurial and collaborative personalities.

But if done well, procurement will evolve from a position of controller to one of value architect, and one of the most critical functions in any modern corporation able to positively impact revenue, sustainability and profit targets.

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

Time to Tune into the Real Social Network

Procurement has not only great power, but also great responsibility to help drive social change. And embedding social value in tenders is only the start.

By STILLFX / Shutterstock



“No fundamental social change occurs merely because government acts. It’s because civil society, the conscience of a country, begins to rise up and demand – demand – demand change.”

Former Democratic Vice-President Joe Biden

Where does the real value of a contract lie for public sector organisations? Is it in achieving a low price for goods, services or works? Or in savings in the ongoing management of a contract? Could it be in maintaining critical services for vulnerable people? Perhaps in creating innovative solutions to issues that improve the lives of all citizens in a Local Authority, or wider, area?

The truth is that it is all of these things and more. Fundamentally, the delivery of services are the lifeblood of public sector organisations and the contracts, be they for goods, services or works, are the foundation of this. But where, in the past, there may have only been a focus on cost and quality, the expectations on and in procurement have changed markedly.

The change is shown in how procurement approach the nature of the total value of the contract. Not just the cost and quality, but what it actually delivers for wider society beyond the scope of requirements. Call it social value, call it social benefits, procurement are front and centre for organisations looking to embed this wider value into their contracts.

Fair Work and Community Benefits

The Public Services (Social Value) Act 2012 was introduced in order to ensure that public bodies consider how the services they commission and procure might improve the economic, social and environmental well-being of their local area. However, it won’t be until later this year that contracts placed by central Government in the UK will have a mandatory requirement for social value considerations.

And this is where part of the issue lies in putting social value considerations into procurement processes. This regulation was only suggested and introduced in response to the collapse of Carillion, with the aim of “restoring trust between government, industry and the public”. Up until this point, any social value considerations had only been a consideration, rather than a mandatory evaluation criteria.

All this means that there are a considerable number of procurement professionals in the UK who have never put social value into their tenders or contracts. Any new measure, as with anything else, will require extensive training for buyers at a time where resources are stretched thin and training budgets are nigh-on non-existent in many cases.

However, there are a number of public bodies, particularly north of the border, who are already doing this. In 2015, the Scottish Government unveiled new guidance on making Fair Work Practices in public procurement. This included considerations on the Real Living Wage and made it a requirement for procurement to consider this as an evaluation criteria for each tender they undertook.

Now, nearly all Scottish Local Authorities have Fair Work Practices as an evaluation criteria in all procurement exercises. At Glasgow City Council, for example, Fair Work Practices has a defined weighting of 5 per cent, alongside Community Benefits as either as an evaluated (weighted at 10 per cent) or non-evaluated criterion.

Benefits for ALL to See

For procurement, Community Benefits and Social Value come in two main guises – what we expect from our suppliers; and what we expect from our purchasing. If procurement truly wants its suppliers to get tuned into this social network, then they need to be leading from the front. This means not only mandating it in contracts, but also engaging with Social Enterprises and running social projects of our own.

Investment in Social Enterprise will help to grow an already thriving sector which employs around 5 per cent of the UK workforce and is worth £60 billion towards UK GDP. The Big Issue, The Co-Op, Jamie Oliver’s ‘15’ restaurant are among the most well-known of these organisations.

(On a personal recommendation, try ‘Street and Arrow’ in Glasgow or ‘Streat’ in Melbourne and you’ll be doing your bit to support social enterprise!)

Beyond this, there are great examples of how large organisations are taking steps further to support social enterprise and add social value to contract. Liverpool Victoria is building extensive work with social enterprise into all of its procurement processes and is encouraging its own suppliers to get involved too.

Time to Grow your Network

Now it’s time for you to get involved and to make sure that you join your fellow procurement professionals in changing the world, one tender at a time. There are a couple of easy steps you can take and you don’t need to start big to get things up and running.

First, search out all the information and guidance you can find on social value, social enterprises and embedding this in procurement processes. Then find out whether or not your organisation is evaluating Community Benefits or Fair Work Practices as part of their tenders. Is it a mandatory criterion? Do your stakeholders even know about it?! Look to see if there is scope to add this, even starting with it as part of a wider question.

Finally (for now at least) you can start to look at contracts that could be performed by a social enterprise. Common ones include office supplies, coffee and catering, but the full list is much longer than that. There’s even provisions in the Public Contracts Regulations (2015) for run tenders for supported businesses only, which could put you well on your way to making a real difference in procurement.

After all, it’s what we’re here to do!

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


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A Cross-Industry Look At Direct vs Indirect Spend

Vishal Patel explores the difference between direct and indirect spend across three different industries…

By jirawat phueksriphan/ Shutterstock

The most fundamental spend categorisation in procurement is the line between direct and indirect spend, but one effort that transcends this split is supplier management. This includes supplier information management, supply chain risk management/mitigation, and supplier performance management.

Whether spend is direct or indirect, supplier information should be maintained centrally and with a high level of accuracy. Who is the supplier, who are the points of contract, what are the terms of service or delivery? How much spend does the company have with the supplier and for what? As long as indirect suppliers are meeting expectations, they are doing what is required. Direct spend suppliers, on the other hand, must deliver a different level of ROI. Meeting expectations is the foundation for strategic partnership and collaboration.

Manufacturing

In manufacturing, materials, components and assemblies that will be sold to customers are direct spend while facilities, equipment, consumable supplies and MRO are indirect.

Direct suppliers often become strategic partners because the company’s collaborative efforts with them have a direct impact on innovative potential. They make it possible to develop products that lead to the expansion of market share and profit margin, both through their product offerings and their ideas. They sometimes participate in the R&D process, adding their IP to the company’s own.

Because of the key contributions these supply partners make to corporate performance, procurement needs to pay far more attention to risk and quality issues – whether they are present in the supplier or in their supply chain. Ensuring continuity of supply is far more critical when a supplier is a strategic partner and difficult to replace.

Most indirect supplier relationships are far more transactional, although services and deliveries still have to be dependable. Customer orders can’t be filled on time if machines don’t run, safety supplies are out of stock or facilities are poorly maintained. While procurement might not consider these relationships strategic, they are critical nonetheless. What you don’t necessarily want to do is separate your direct and indirect supplier information, risk and performance management efforts, ideally, you want to be able to look across all suppliers and spend.

Financial Services

One could make the case that financial services firms have no direct spend. Since salaries are beyond procurement’s purview, nothing the company ‘buys’ is resold to customers. That said, supplier information and relationship management are still high priority efforts. Risk and regulatory compliance requirements span nearly all categories of spend, and address global, high-profile concerns such as bribery, corruption, and data protection and privacy. We’ve all heard of KYC (know your customer) initiatives in banking for example. KYC has now gone beyond verifying and monitoring customers of the financial institution and now also often includes suppliers that provide IT solutions that touch the FI’s infrastructure (and thus their customers) called know-your-suppliers (KYS). For instance, a key piece of information that is often difficult to find but critical is knowing the ultimate parent of a supplier.

Although the vast majority of a financial services company’s spend is indirect, it can still affect the top line. In the case of banks, for instance, property management is critical to securing and maintaining customer loyalty and reinforcing brand identity. The remainder of indirect spend includes the ‘usual suspects’ like office supplies, travel and IT/telecom but often with a heavy services procurement need

Healthcare

Not unlike financial services, procurement teams in healthcare organisations are predominantly focused on indirect spend. The primary exceptions are the equipment and facilities that patients come into contact with. These indirect spend items have a direct impact on patient satisfaction despite not being resold. Machines must be running, supplies must be plentiful, and facilities must be spotless.

For the rest of indirect spend, Group Purchasing Organizations (GPOs) are common, based on the fact that the vast majority of transactional purchases are common across institutions. There are cases, however, where physicians need to have additional selection authority. These non-standard items, often referred to as Physician’s Preference Items (PPI), can present a challenge in terms of finding a qualified source and managing the cost and supply of the items. Those purchases, while indirect, do justify closer and more strategic supplier relationships, similar to a direct materials supplier

Supplier management is spend management – although the information, risks, and relationships vary by category and industry. Procurement’s challenge is knowing which supplier relationships are strategic and deserving of additional effort and which are not (but still knowing who they are) – regardless of the type of spend in question. Overall, having a strong supplier management capability and technology can work as a solid foundation to accelerate and improve digitisation and transformation efforts in all areas of procurement.

Ivalua is sponsoring the upcoming Procurious London CPO roundtable on 29th May. If you’re a CPO and would like to attend one of our roundtables in person please contact Olga Luscombe via [email protected] to request an invitation.

What Every Procurement Professional Needs To Know About Music

How much should you pay for using music in a commercial?

By PopTika/ Shutterstock

Around 70 per cent of TV commercials use music in one form or another. That is a lot of music. And a lot of money being paid by brands and their agencies to the music industry.

Procurement departments ask us three questions:

  • Can you explain to me why we are paying so much for music?
  • Where can we make savings without compromising creativity?
  • How do we know that the music we are paying for works?

Library music (with their regulated rate cards) still often feels like the poor relation to the agency creative team. Fees for commissioned music and new productions can be as creative as the music itself. And copyright owners don’t have rate cards because it is forbidden by law.

So, to a Brand and their procurement departments, negotiation on music rights can feel like operating blindfold. The underlying challenge is that the parties involved all have a different agenda. Procurement needs to work within the budget. The creative teams don’t want to know about budgets – they just want the track that they believe works with their brilliant visuals. And the TV producers have a harder job than David Davis at the Brexit table with a deal that works all round. No wonder there is tension between the will of the agency and the chequebook of the brand.

Giving a straight answer to a brand about buying music usually demands more questions:

  • Do you have a full breakdown of your music spend, beyond a total amount spent?
  • Do you know where you are spending your money and with whom over the last three years?
  • Do you or the people who buy music on your behalf have a music-buying strategy that you have seen and approved?
  • Do you have centralised buying of music across all agencies and all media?
  • Do you ever test the music you buy which goes beyond ‘like’ and ‘dislike’?

It is still common practice for music to be a one-off consideration for each campaign and for each agency production department to negotiate and buy music. Very often, final decisions about the music are left to the last minute in the editing suite, when the creatives make up their minds what works best. But when things are left to the last minute, people are under pressure to negotiate.

And when things happen this fast it is harder to justify taking time to test the resonance of a track with the desired target market.

But these two apparently small steps have vital ramification on the final outcomes. I know of a brand where the music was changed in the editing suite for the sake of saving €15,000. Six months and €7.5 million later, when consumer testing did take place, the brand was mortified to discover that the last-minute music change meant that consumers missed the point of the ad completely – in hindsight, a very expensive cost saving.

It’s natural for people to spend money on the things they care about, whether they are fully aware of it or not. In business, however, we have to be aware and strategic. If buying music is still seen as a one-off transaction and the discussions about the costs feels like one from ‘Groundhog Day’, then something has to change.

There is not one solution for all companies, but having a music-buying strategy is a good starting point. It removes ambiguity and puts measurable systems in place. For the above – mentioned brand, it meant ongoing savings of 25 – 30 per cent year on year with commercials that scored well in post-production testing.

If music is not to be regarded as an expensive indulgence, we need to liberate those involved in the creative process and hand it over to people who are not, but still have all parties’ interests clearly in focus.

Ultimately, having real figures about music spend will make it easier for planning, production, and marketing teams to justify their budget requirements. That will be good news all round.

This article was originally published on Sound Lounge

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

Travel is complex, costly, affects the vast majority of your organisation’s employees, and everyone has an opinion on best practice. It is also one of the most “mature” categories managed by procurement professionals. So why so many challenges?

Travel was one of the very first categories ever formally managed by procurement.  It is what I like to call a “mature category”, which means we should have it well and truly under control…. however…

An eye watering $1 trillion is spent on corporate travel every year. 

It is a category in which the scope has mushroomed to cover not just air travel, transport and accommodation, but also expense management technology, teleconferencing, events – the full end to end complexity of corporate travel. 

Nestled within that, is the specific category of ground transportation. 

The transport industry has changed dramatically over the past fifteen years. The number of daily, corporate rides being booked has increased by 10 per cent since 2010, while personal bookings have increased by 58 per cent.

It is a category notorious for its administrative burden! And therefore, for procurement professionals, it is a category ripe for disruption. As it stands currently, travel costs are 10 per cent of total spend but 90 per cent of the headache. In some cases, it takes approximately 10 minutes to process a single travel expense claim and with an average of 7 receipts per person submitted per month – that’s a lot of wasted time!

By 2020, half of all these business trips will be done by employees expecting a B2C style user experience – online, on-demand, seamless and consistent.  

Blanketed over the broad scope this corporate travel category are some very serious concerns – sustainability, employee safety and cybersecurity.

And so today, as a corporate travel manager, you need to concern yourself with a whole new set of factors including:

  • employee safety
  • technology implementation
  • quality of service
  • sustainability
  • total cost optimisation
  • maverick spend

All this to manage, and we haven’t even mentioned pacifying your CEO’s when they’re bumped out of first class, or their chauffeur doesn’t turn up on time!

In our latest webinar Rush Hour: High Risk, Hidden Costs and Unexpected Travel Spend we explored the different aspects of how to manage the total cost of ownership within this complex, emotional category.

Sign up to listen now as we discuss:

  • Managing the total cost of ownership within this complex category 
  • How AI, IoT, Blockchain and other innovative technologies are transforming the way procurement pros work – improving transparency and mitigating risk in business travel
  • How to ensure corporations deliver a high quality and personalised serviceon a global scale
  • Why sustainability is coming to the forefront of global travel

FAQs

Is the Rush Hour webinar available to anyone?

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

How do I listen to the Rush Hour webinar?

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

Why wait when you can have it now?

No one wants to wait more than five mins for anything these days – least of all for a taxi – or an on-demand webinar recording!

Luckily, Rush Hour: High Risk, Hidden Costs and Unexpected Travel Spend is now available on demand.

Click here to listen as we discuss: