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Tuesdays With Tom: Trump, Trade and Turning Disruption into Opportunity

Institute for Supply Management CEO Tom Derry compares the Trump administration’s trade policies to “self-inflicted friendly fire” in the first of our 10-part Tuesdays with Tom podcast series.

“In military conflicts, one of the outcomes we most dread are instances of ‘friendly fire’, when you mistakenly fire on your own troops. I think the current [trade] policy is almost an instance of self-inflicted friendly fire, from an economic perspective. We might be helping domestic industries like steel and aluminum (although even that’s arguable), but we’re actually damaging the far bigger industries that are consumers of those products; who make household appliances, yellow goods for construction, or automobiles. All of our exports in those areas will suffer with this trade policy.”

In the first of our Tuesdays with Tom podcast series, ISM CEO Tom Derry talks with Procurious Founder Tania Seary about the current raft of trade wars and tariffs that have come about as a result of US policy shift.

Supply management professionals do NOT like trade wars

“ISM publishes economic reports every month for the manufacturing and services sector. Comments have been very consistent: we’re seeing suppliers trying to impose price increases on buyers as they’re buying metals (such as steel and aluminum)”, says Tom. “We’re seeing people anticipating the tariffs, looking to end sourcing from China and look for suppliers elsewhere, and we’re seeing people postpone investments.

“The two most important economic factors in deciding where to locate a manufacturing facility are local taxes and tariffs. If tariffs are uncertain, [companies are] going to postpone decisions about building that next facility, which is not good for the economy in the long run.”

NAFTA renegotiations having an impact

“What’s so interesting about these policy changes”, says Tom, “is that even mere discussion has a real economic impact and causes real dislocation of supply chains. Even before the steel tariffs were imposed, people reacted to the idea of tariffs, and that caused businesses to have to change their plans.”

Historically, NAFTA has resulted in incredibly tightly integrated supply chains in certain industries, particularly the automotive industry. “We do a lot of assembly of automotive in northern Mexico for final sales here in the United States or in Canada, but before you get to that final assembly in those plants, you’ve got components for parts that move across the Mexican/US border four or five times before we get to the final vehicle”, says Tom.

“Imagine what it would be like to impose tariffs in both directions four or five times, and the inspections that would have to go with it, and the country of origin verification that would have to be performed. If NAFTA [fails], it’ll be incredibly disruptive in terms of the auto industry here in North America.” 

Two tips for turning disruption into opportunity

  1. Have a Plan B: “Every good category manger has a Strategy A for expected economic conditions, and Strategy B if there’s an economic downturn or something happens in the commodity markets. You have to have those playbooks thought through and scripted … if you haven’t done that, get to work on that immediately.”
  2. Be prepared to react fast: “If you see a dramatic change, you need to be able to respond to it in the moment. The advantage goes to the company, the organisation, or the individual who can react fastest during times of great change. If you’re late in moving, any potential benefit to be realised will be captured by someone else. Make sure you’ve got that playbook well defined.”

“The advantage goes to the company, the organisation, or the individual who can react fastest during times of great change.”

Tom tells the story of a CPO working at LG Electronics during the 2008-9 recession, who was concerned about securing semiconductors. They were aware that a recession would lead to a drop in consumer demand for electronics and hence a demand for semiconductor chips, so he visited his suppliers in Asia, then managed to convince his executive committee to buy $9 billion worth of semiconductors because the price would never be as low again. LG subsequently posted record profits for 2009 due to that CPO’s business acumen, his understanding of the spot market for semiconductors, and doing his homework. This is how you respond to disruptive events.

“[Procurement needs to] see through the common perception, recognise market opportunities and the dislocation between price and demand, and seize opportunities to turn a perceived threat into a great opportunity for a huge bottom line impact.”


Tuesdays with Tom is a 10-part podcast series featuring exclusive insights from ISM CEO, Tom Derry. Register now to receive an alert whenever a new podcast is released.

Is AI Doing Your Head In?

Seven tips for making headway with your cognitive sourcing project.

I will never forget visiting the Smithsonian National Air & Space Museum in Washington for the first time 30 years ago and seeing the Apollo capsule. Like so many others, I was amazed at how basic the technology was that took us to the moon.  I remember saying to my travel buddy, “Hey, this looks like my 1969 Toyota Corolla!” (my first car). Of course, back then, that was the very latest technology when humanity had its first “moonshot” opportunity.

My point here is that as procurement professionals, we may be sporting 30, 40 or 50-year-old hardware (our bodies!), but we need to make sure we are using 2018 software (our brains and capabilities) to get the very latest technology embedded in our organisations.

I mean, if cognitive is here, and it’s our moonshot opportunity to change the trajectory of the profession and there’s millions of dollars waiting to be saved, we don’t want to be left back on the rocket staging launch pad as an observer!

The challenge for all of us is to determine whether and how we implement this hot new capability.

Step one is to be clear about your corporate drivers. In my experience, companies are always going through one of six phases (please note the “status quo” is never one of them). Sometimes, they are going through multiple phases at the same time!

These directions are set from the top… hard coded. So if you want to get your cognitive sourcing project off the ground, you are going to have make sure your project aligns with one of these corporate objectives.

One of the key movers in the space, LevaData, is offering a hard ROI of 10 to 30% incremental cost savings, guaranteed. I asked them how we could link cognitive projects into the generic 6 corporate phases and this is what they had to say :-

  • Efficiency – massively reduce manual data validation, spend analysis, and sourcing event preparation activities
  • Compliance – engage approved vendors and qualified alternate sources of supply through auditable RFX process (vs. email and spreadsheets)
  • Transformation – elevate procurement and strategic sourcing as internal orchestrators, working cross functionally with engineering, finance, manufacturing, and sales to managing emerging supply risks and opportunities
  • Innovation – accelerate new product introduction and optimize cost and risk through the product life-cycle
  • Cost-down – improved negotiation insights lead to sustainable cost management year over year, capturing cost reduction opportunities as well as minimizing cost inflation risks
  • Growth – enable scaleability and responsiveness to forecast and market changes from months to weeks or days.

Getting BIG, innovative ideas and game-changing concepts through BIG Companies is not easy.  To successfully land cognitive technology in your organisation, you’ll need to:

1. Have courage and commit yourself. It’s important to have full confidence in your cognitive project and be prepared to put your credibility on the line and stand up for it at all costs. Once you’ve decided that it’s worth committing to, give it everything and don’t give up.

2. Do your homework.Make sure your cognitive sourcing project is closely aligned with a key corporate objective. Collect and scrutinise the data on the benefits of introducing cognitive and make sure your business case is bullet-proof. You need hard-nose, quantifiable benefits to support investing in the cognitive project and these numbers need to be backed up by the people who count (predominantly operations and finance).  Do your pre-work, build your support team. As you work your way around the organisation convincing people of the need to change, refer to your support network often: “Johnny in finance is firmly behind this, he helped me with the numbers”.

3. Think Big, Act Small, Accelerate Fast. Keeping the vision in mind, find a small representative project, experiment and demonstrate the ROI with Cognitive capability. Sell the outcome and accelerate fast. I would encourage you to think about what that project might look like and figure out ways to get it off the ground.

4. Pick a sponsor (carefully!). Think carefully about who would be the best sponsor for your cognitive sourcing project.  Make sure they have power and influence – and make sure they are supporting you for the right reasons and believe the project is important for the business. Try to avoid sponsors who are purely supporting cognitive for their own career advancement (I know this is hard to uncover at the outset). This is because your project will be dumped as quickly as it was taken up if it suddenly falls out of favour – which is another reason to make sure your project is aligned to key, quantifiable business objectives.

ONLY refer back to your sponsor when you reach a critical deadlock at an important milestone.  “Keep your powder dry” throughout the project, otherwise you will be too much of a drain on their time.  You need to make it easy for them to be your sponsor. Bring them in for the photo opportunities and the critical decision points.

5. Create a support network. I’ve often said procurement can be a lonely place, because you may be the only person in your company, or even in your industry, doing what you do! That’s one of the many reasons why I started Procurious, to help people connect and learn from each other.

Procurious is the perfect place for reaching out to others leading the cognitive journey within their own organisations. Over five thousand Procurious members visit our discussion board every month to share ideas and offer advice to their peers. Our blogs are read by thousands of professionals daily and spark debate, with members feeding their own commentary and ideas into the global community.

Our digital Big Ideas Summits, along with all the other networking, discussion and eLearning on the site, inspire a global generation of procurement leaders and business intrapreneurs, challenging them to take a more innovative professional approach.

Your network is also a powerful tool for endorsing what you are recommending, for example you can refer to your network – “I know Janie at ABC company (our competitor) and they are already implementing cognitive”.

6. Be human(!) in all your interactions. Up, down, and across the supply chain, it will be interactions between people that will be the real determinants of success and failure in an increasingly robotic era. To prosper in this next Industrial Revolution, we need to play to our human strengths – collaboration, connection, innovation, influence – the things only we humans can do.

7. When you get knocked down, get back up again. If you’re going to succeed in getting your big idea through a big company, you have to be incredibly resilient. You will have nay-sayers telling you why cognitive is not going to work, so keep going back to the data that demonstrates how this will support the business objectives. That is your strongest defence.

So, like any other project that is doing your head in, the implementation of cognitive can best be tackled by breaking it down into distinct steps. It’s going to take grit and more than a little determination, but the potential rewards are stratospheric.

Tania Seary will deliver the closing keynote at LevaData’s Cognitive Sourcing Summit on 13th September 2018 in Santa Clara, CA. Find out more.

5 Nashville Chartbusters For Procurement Professionals

How are the smash-hit singles of Johnny Cash, Willie Nelson and Dolly Parton relevant to procurement? Let’s find out.

Procurious has landed in Nashville! This iconic town is everything we hoped for – the neon lights, the honky-tonk venues, the gift shops brimming with cowboy boots and sequin-studded denim jackets. But Nashville is also known as Music City, so as ISM2018 gets underway, let’s explore some of the smash-hit tunes that this city has gifted to the world – and find out how they relate to our profession.

1. Johnny Cash: Folsom Prison Blues

I’m stuck in Folsom Prison / And time keeps draggin’ on…

Unfortunately, procurement is one of the top business functions where fraud takes place, mainly because the nature of the profession means the opportunity – and temptation – often exists. Organisations fight fraud by removing this opportunity through policies, processes, strict ethical standards, audits and (increasingly) tech solutions.

Corruption, procurement fraud and other ethical breaches aren’t just bad for the companies involved – they also tarnish the reputation of the profession as a whole and undo a lot of the work we’ve all done to build the profile of procurement as a trusted business advisor. So, take Johnny Cash’s advice: Walk The Line in supply management if you want to stay out of Folsom!

2. Dolly Parton and Kenny Rogers: Islands in the Stream

Frequently nominated as the best country duet of all time, this song describes how two lovers’ affection for one another is strong enough can withstand anything life can throw at it (the stream).

From a procurement angle, let’s flip this concept upside-down. Imagine that the ‘stream’ is your supply chain – whether it’s a small creek or a raging torrent, ideally it will keep flowing without interruption, day and night.

Now – imagine that the ‘islands’ are the disruptive forces that threaten to choke and block your supply stream. From natural disasters, to disruptive technologies, to bankrupt suppliers, disruptions really can feel like a huge boulder has been dropped out of nowhere, causing chaos and delays. Let’s hope you’ve got a plan in place in case an island threatens to block your stream.

3. Willie Nelson: On the Road Again

No road-trip is complete without this classic from the great Willie Nelson. It resonates strongly with procurement and supply managers simply because we’re one of the most well-travelled professions out there. Aside from attending must-see events such as ISM2018, we’re always on the road visiting suppliers, dropping into our organisation’s different sites, and even traveling overseas to review critical parts of complex global supply chains for ourselves.

I know a few CPOs who don’t want to see certain team members in the head office for more than one day a week – in fact, they’re of the opinion that if a supply management professional spends most of their time at their desk, they’re not doing their job properly.

So – pack your travel case, put Willie Nelson on Spotify, and get on the road again to see your supply chain for yourself.

4. Dolly Parton – Working 9 To 5

Still working 9 to 5? It’s 2018! Most workplaces have introduced a little something called flexibility. A long time ago I worked in an office full of clock-watchers. You could work until 6.30pm in the evening and no-one would even blink, but God help you if you walked in five minutes after 9.00am the next morning. Luckily, most managers now recognise that it’s outputs that count, not the time spent sitting at one’s desk.

Flexible working hours are especially important if you interact with global supply chains. Chances are you’ll need to be on the phone at least once a week with overseas suppliers late into the evening or at the crack of dawn. That’s time on the clock – so if you want to front up at the office a little bit later the next morning, you’ve earned that flexibility.

Flexibility is also crucial for driving gender equality in the workforce, bringing talented new parents back on board after parental leave, and a source of competitive advantage when it comes to attracting the best young talent to work with your team.

5. Billy Ray Cyrus – Achy Breaky Heart

Gotta love that mullet, Billy Ray.

Have you ever had to ‘break up’ with a supplier? Just like splitting up with a significant other romantically, things can get messy. No matter how gently you break the news, the meeting can become emotional – particularly when both sides have invested heavily into the relationship.

Avoid giving your suppliers an achy-breaky heart by establishing and maintaining a strong feedback-loop throughout the relationship, and give them as much warning as possible that you won’t be renewing their contract.

This topic is worthy of its very-own blog article, as there’s no shortage of break-up songs from Nashville! Runners-up include Roy Orbinson’s It’s Over and Brenda Lee’s Break It To Me Gently.


Are you at ISM2018? Visit Procurious in the Exhibitor Hall – Booth #207!

Don’t miss out on Procurious Founder Tania Seary’s inspirational & informative ISM2018 Session on Tuesday 8th May, 3.45-4.45:

From the Amazon to the Moon: The Possibilities for Procurement

Revealed: 4 Things CFOs Really Want From Procurement

Ever get the feeling you’ve been barking up the wrong tree? Let’s cut out the second-guessing and focus on the four essentials that Chief Financial Officers want from procurement.

Krasimira Nevenova/Shutterstock.com

Andrew Porter values having a good night’s sleep. As CFO of the Australian Foundation Investment Company (AFIC) and President of the G100, the peak body for Australian CFOs, Porter knows that the presence of dark circles under the eyes of C-level executives are linked directly to how the business is tracking.

“The CFO’s job is to help the CEO – and the Board – to sleep well at night”, he says. This concept also applies to the relationship between CPO and CFO, and the people reporting to the CPO, and so on all the way down the organisation.

“I’ll pay a little bit more for security of supply knowing that our strategic suppliers are happy, reliable, and we’re not going to be exposed as a business with a supplier that feels cheated”, Porter says.  “I want to know where the supplies are coming from, and know that they’re quality, and know that it’s not going to come back and bite the business later on.”

So – what exactly do CFOs want from their CPOs in order to help the business grow?

  1. They want to trust that everything is under control

CFOs, says Porter, worry about keeping three succinct groups happy: investors or shareholders, customers, and employees. It’s a delicate balance, because an initiative that benefits one group can have a detrimental effect on the others unless it’s been carefully thought through. Procurement practitioners have the ability to help maintain this balance, not in the least by keeping customers happy through the timely sourcing of goods and services. “If the job is being done well, it’s one less thing for the CFO to worry about”, says Porter. “But if procurement tries too hard and is seen to be screwing down the supplier, then you’ve undone all that hard work, shifted the balance, and suddenly the investors are unhappy.”

As all CFOs know, you can’t improve margins and grow your business without first being sure that you can rely on your bottom line. “In order to grow, you’ve got to have trust in your subordinates – and that cascades all the way down.”

  1. They want to be kept informed

“What CFOs really want is a crystal ball that works 100% accurately all the time”, says Porter. CFOs need to understand all sectors of the business – what’s firing, what isn’t firing, and (importantly), they need to know about roadblocks and other issues in advance. If procurement becomes aware of an upcoming issue, the CFO, CEO and the Board need to be informed of it before it happens, and be presented with a list of solutions.

“The board doesn’t want to see problems – they want to see solutions”, says Porter. “A good CPO should be putting themselves in the place of the person they’re reporting to. What does he or she need to know? What are the questions they’re going to ask, and how am I going to get those answers to them before they have to ask?”

  1. They want their CPOs to think outside the box

What does disruption actually mean in terms of supply for your organisation? Where will this disruption be coming from? Are there different, innovative ways of sourcing goods and services? Porter comments that although innovation isn’t always an immediate priority, the C-suite will inevitably ask what procurement is doing to drive innovation.

Part of thinking outside the box means broadening your field of vision. “Look globally as well as domestically for best-practice, and ensure you’re part of a good forum where you can share information with your peers.”

  1. They want to see purpose-led strategy

Are the procurement team’s KPIs in accordance with your organisation’s purpose-led strategy?

“A nightmare scenario involves the CPO chasing the wrong KPIs”, says Porter. “Ill-chosen KPIs can sometimes be at odds with the purpose and strategy of the business, and fail to align with the KPIs of the wider organisation. They need to be parallel all the way down. Everyone needs to absolutely understand what their role is in the company.”

But, Porter warns, you need to have sensible targets. “If CFOs start forcing CPOs and their teams into impossible targets, that’s when people get disenfranchised – and suppliers get hurt.”


Andrew Porter is the CFO of Australia’s largest Listed Investment Company, Australian Foundation Investment Company, known as AFIC. He is also CFO for Djerriwarrh Investments Ltd, Mirrabooka Investments Ltd and AMCIL Ltd, all other Listed Investment Companies. He is the current President of the G100, the peak body for CFOs, and the current Chair of ASIC’s Standing Committee on Accounting and Auditing.  He was formerly a non-executive Director of the Royal Victorian Eye & Ear Hospital.

Porter will deliver a keynote presentation at The Asia-Pacific CPO Forum, the region’s premier procurement event dedicated to accelerating commercial leadership at the highest level. Held at Melbourne’s Crown Conference Centre over two days, it is a once-a-year opportunity for leading Chief Procurement Officers to engage with peers and like-minded business leaders in an intimate and interactive setting. Click here to learn more.

4 Ways Diversity Makes A Rock-Solid IMPACT

Cultural diversity – whether it’s racial, ethnic, gender, or sexual – is an increasingly hot topic that shows no signs of slowing down. Let’s examine why diversity in the workplace has gone from a “nice-to-have” to a critical business imperative.

  1. Diversity leads to a higher market share

While communities are becoming increasingly culturally diverse, businesses need to mimic the communities they serve by bringing together individuals from different backgrounds and experiences. Put simply, people want to engage with companies that employ people similar to them. This enables companies to capture a greater share of the market by marketing more genuinely to diverse communities, communicating effectively with their diverse customers, and understanding their needs.

Looking for proof of the above? Research from McKinsey revealed that companies in the top quartile for racial and ethnic diversity are 35 per cent more likely to have above-average financial returns, while companies in the bottom quartile were less likely to achieve above-average results.

  1. Diversity supercharges problem-solving

Institute for Supply Management CEO Tom Derry told Procurious that cultural inclusiveness is no longer an idea, but an expectation. “Your team needs to be diverse – in fact, you’ll look impoverished if you don’t have that. The benefits include being able to tap into a diversity of experience and opinion to solve challenges. This creates a truly attractive environment for top talent.”

If you lived in a dystopic Brave New World scenario where every member of your workforce had identical cultural backgrounds, education and work experience, it’s highly likely that each individual would come up with an identical set of solutions when presented with a problem. That’s why it’s imperative that any group includes people with culturally diverse backgrounds and highly varied work experience who can bring entirely different schools of thought to the table, and hence a wide variety of innovative solutions.

  1. Diversity in the workplace helps you become a more effective global professional

Supply management professionals are increasingly working within the global supply chain, which is why being about to communicate effectively in different parts of the world is a must-have skillset. Having high cultural intelligence (CQ) means knowing how to create relationships, understand cultural nuances and adapt your approach to suit cultural differences in foreign countries.

Shelley Stewart, CPO and VP, DuPont, told Procurious that “A diverse workplace provides a wealth of varied experiences that are crucial for supply management organisations to operate even more effectively in the global economy.”

How? Because an inclusive and diverse business will increase the empathy (and CQ) of all employees as cultural tunnel-vision is reduced. In short, everyone benefits from a higher appreciation of different outlooks and an increased understanding of others. Armed with these skills, a supply management professional is much less likely to suffer culture shock or put a foot wrong when interacting internationally.

  1. Diversity will help you attract and retain the best talent

If your company has built a solid reputation as an organisation with a truly diverse and vibrant workforce, it will attract the very best and brightest in the market. Companies that fail to recognise this are missing out on top talent, as potential candidates may have the perception that your company simply doesn’t tend to hire people from their cultural background. To state the obvious, companies should be making every effort to widen, rather than shrink, the talent pool.

There’s evidence that businesses which fail to foster inclusive, diverse workforces suffer from higher turnover rates, as a hostile work environment forces employees to leave. High turnover leads to avoidable costs, which is another reason why cultural diversity positively impacts your organisation’s bottom line.

More resources on Diversity from ISM:

How to Make Sure You’re Not Being Sold Smoke And Mirrors

Can you spot the difference between theoretical and real ROI? Basware’s Eric Wilson gives the run-down on preventing value leakage in Purchase-to Pay. 

Register now free of charge as a digital delegate for Big Ideas Chicago!

Buying enterprise software is no easy undertaking – there’s a lot of factors to consider, multiple stakeholders to please and a lot of due diligence that must happen to ensure you can get the ROI that is being promised. Unfortunately, in the world of Purchase to Pay (P2P), most systems available today cannot truly deliver the ROI that is being touted across marketing channels and promised by sales reps because of inherent limitations in the solution.

So, how can you be sure that you are looking at real numbers when comparing P2P solutions and not some fabricated figure that is only attainable on paper?

Ask these two questions

There are two primary questions you should ask when reviewing solutions and providers:

  1. Is the ROI real, or is it fabricated?

Often what happens in the solution seeking process is that a business case is written, either by an internal person, or a consultant, or a solution provider.  The business case includes all kinds of detail about the cost savings and efficiencies the company will achieve by implementing the solution. In the case of P2P, these cost savings are in things like reducing off-contract spend, negotiating better pricing, taking advantage of terms discounts, eliminating paper from the process, reducing or redeploying accounts payable (AP) processing headcount, and similar cost efficiencies. But there are real obstacles to achieving the level of savings being promised, and organisations need to choose a provider that can meet those challenges with real answers (more on overcoming these obstacles later).

2. Will the solution continue providing value in the future, or will it be a short-term win that sends you searching for a replacement system in a few short years?

Too often we are only looking five inches in front of our face when making a technology investment decision. The organisation is only looking at the current problem, not the long-term value. Little functional enhancements in P2P may offer some incremental value, but are not what the future of P2P is about. The future of P2P is all about deriving more value from centrally capturing and leveraging all that transactional data, all those POs and invoices, across millions of organisations. The future of P2P (and even today to a large extent) is about using applications sitting on top of that transactional data to create a competitive advantage. Apps like these will empower you to answer questions like: How am I doing against industry benchmarks? Are there opportunities for better leveraging spend in buying groups to get better pricing? Can I fund company growth initiatives through working capital optimization solutions?

Find out if the solution can process 100% of your transactions

Back to the obstacles we mention above – where do those come from and how can you overcome these challenges? Obstacles arise because of one simple factor: all the cost efficiencies in the business plan are assuming you get 100% of your purchasing and accounts payable (AP) transactions running through the system, and most P2P systems cannot accomplish that level of automation.

You must choose a provider that can help you achieve:

  • 100% Supplier On-Boarding

First, you have to get all of your suppliers connected to your P2P system.  If you don’t, you can’t access all available terms discounts; you can’t truly eliminate paper; you can’t achieve all of the supply chain efficiencies from the business case. Most P2P systems are only designed to connect to the sophisticated suppliers, who can send XML or EDI transactions. What about that long tail of mid-size and small suppliers, who aren’t that technologically advanced? What about those suppliers that still send paper invoices? You must have a solution for connecting them to your P2P system, and it has to be easy for them to do so.

  • 100% User Adoption

Secondly, all your procurement must be processed through the P2P solution, which means the end users have to use it – not just some of the end users, or most of the end users, but truly all of your end users have to be putting 100% of their purchasing through the system. You can’t achieve that status by mandating it, and you can’t even achieve it by having a procurement system that is “user friendly.” The P2P system has to actually be designed to fit seamlessly into the way that end user is already doing their job. In other words, employees use the procurement system because it is truly the easiest way to get the stuff they need, not because it’s been mandated by the procurement department.

  • 100% Spend Visibility

Lastly, all your invoices – for both direct and indirect spend – must be running through the P2P system. This is very rare in the reality of most P2P systems. Most P2P systems are only good at automating the invoices that originated from the indirect procurement solution. What about all your direct invoices? What about all your non-PO invoices, facilities invoices, invoices generated from manufacturing? If the P2P system can’t effectively handle 100% of your invoicing transactions, your ROI just got reduced tremendously, or perhaps even eliminated. The AP side of the P2P system must be a true AP transaction hub for all your invoices, regardless of type of invoice.

So, what does all of this culminate to in the end? One word: data. If the system you choose can deliver real ROI, you begin building a critical asset – a data set of all your financial data in one single location. Then, you can begin using innovative add-ons, like predictive/prescriptive analytics, robotics, artificial intelligence, etc. and see that ROI multiply.

Interested in getting started with Basware? Register for our weekly demo to see how Basware can help you build the business case for real ROI.

Register now  as a digital delegate for The Big Ideas Summit Chicago!

Is the era of the fence-sitting corporation over?

Corporate CEOs have historically remained silent on politically divisive issues to avoid a potential backlash from consumers and their own employees. Last week, this rule was turned on its head.

Three high-profile advisory councils were disbanded by U.S. President Donald Trump last week after a cascade of CEO resignations over his response to the Charlottesville “Unite the Right” rally.

Mr Trump dissolved the American Manufacturing Council and the Strategic and Policy Forum after it was leaked that the remaining members of the two councils were planning a press announcement on Wednesday 16th August about disbanding the groups. High-profile resignations up to that point included Kenneth Frazier (Merck CEO), Under Armour CEO Kevin Plank, Intel Chief Executive Brian Krzanich, ADL-CIO’s Richard Trumka and Thea Lee, the Alliance for American Manufacturing president Scott Paul, Campbell Soup’s Denise Morrison and 3M’s Inge Thulin.

A similar revolt in the President’s Committee on the Arts and Humanities took place two days later, with 16 out of the 17 members quitting, leading to the White House stating that the committee’s executive order would not be renewed.

Is the line between politics and business dissolving?

Michael Maslansky, the head of a language strategy firm that advises major companies, told the BBC last week that “the era of the fence-sitting corporation is over”.

In an unprecedented situation, the moral compass has now been placed in the hands of business leaders, who are coming under increasing pressure to comment on political events. Donald Trump’s tweet about “pressure on the businesspeople of the [councils]” gets this absolutely correct.

Many of the CEOs who resigned from the advisory councils made statements along the lines of having “no choice” about the matter. In other words, Trump’s response to Charlottesville put them in a situation where their connection with the president contradicted their company’s corporate positions on race, diversity and equality.

Even CEOs without a formal position on an advisory board, including Apple’s Tim Cook, spoke out in condemnation last week. In the past, it was seen as safer to remain silent, or risk the wrath of customers (and employees) from the other side of the political spectrum.

Why is this happening? “If you’re silent about an issue, then each side will assume you’re on the wrong side. You end up really having to choose”, says Maslansky. Another sentiment that was frequently expressed after Charlottesville was the idea that silence in the face of injustice (including racism) is tantamount to complicity.

Ideally, every company would have a Values Statement which would dictate the CEO’s response to any relevant issue. This means the “choice” doesn’t come down to the personal whim or leaning of any individual business leader.

Where will this end? With political divisions only increasing, will we see consumers do business only with companies that reflect their political views? This is already happening on the fringes, with regular calls going out from both sides to boycott various companies (think #DeleteUber, or #AnywherebutTarget). Terms for this include “dollar voting”, “ethical consumerism” and “moral boycotting”.

For procurement and supply managers, daily buying decisions could become so fraught with larger implications that it will become hard to keep track. But if the end customer expects organisations to make purchasing decisions that are in line with their own values, this is certainly a space to watch.

As for CEOs, the era of carefully-worded, politically-neutral statements may be over. When a new CEO steps into a role, their customers, their employees and the Board will want to know where they stand politically and how this will influence the corporate culture.

To quote a meme that’s currently doing the rounds on social media: sitting on the fence only gets you one thing: splinters.

The vanishing line between business and politics will be one of the topics under discussion at the Chicago Big Ideas Summit on Thursday 28th September. If you’re a CPO and located in or near the Chicago area, there are still some seats available (limited to 50 attendees). If you’re not quite CPO-level (yet) or based on the other side of the globe, don’t worry – we’ve got you covered. Simply register for free as a digital delegate on Procurious, and we’ll bring all the Big Ideas from Chicago to you! Click here to find out more.


 In other news this week:

Australia to develop anti-slavery legislation

  • Australia’s Turnbull government will soon require companies with an annual turnover of at least $100 million to publish “Modern Slavery Statements” on a publicly accessible central repository.
  • The statements will include measures companies are taking in their supply chains to combat modern slavery, including human trafficking, debt bondage and forced labour.
  • The government is also considering drafting a Modern Slavery Act and an independent anti-slavery watchdog to investigate complaints and educate businesses.

Read more in The Age.

 The City of Los Angeles is looking for a CPO

  • The city of LA is seeking a CPO to fill a newly-created position created as part of a wider local government remodelling.
  • The new CPO “will be responsible for the development of a plan to strategically leverage the city’s spend, identify cost savings, employ long-range operational policies and procedures that align with industry best practices, increase transparency, and reduce time to contract with the city”.

Read more at Supply Chain Digital.

IBM Global Procurement’s Radical Transformation

Transformation has become the new norm as organisations respond to an onslaught of shocks. But is there a best-practice way to go about transforming a procurement function? We interviewed Procurious Partner, IBM Global Procurement, to discover why they’ve been recognised on the global stage for their approach to the challenge.

If you were to stop any procurement professional on the street and ask what their function is currently up to, you’re unlikely to hear the reply, “Oh, you know – business as usual”. Instead, you can expect to hear a description of some sort of transformation. Whether it’s enterprise-wide or procurement-led, everybody’s doing it. In fact, you could argue that the process of transformation itself has become business as usual, especially if you’ve ever worked in a company where one transformation follows another, ad nauseum.

Where once your organisation may have needed to reinvent itself every few decades, today, an onslaught of shocks – technological, cultural, economic, and regulatory – is forcing companies to transform every few years. Five to ten years ago, your CEO might have become a business icon through a single transformation. The minimum requirement now is being able to execute multiple transformations, while success today is measured in your ability to foster a culture of continuous reinvention.

Showing how it’s done

IBM Global Procurement recognised the need to transform as market dynamics put increased pressure on its customers, which consist of internal IBM business units and external clients. Graham Wright, Vice President, Global Procurement and IBM Procurement Services, described some of these pressures. “We realised that our internal and external clients needed less complexity, more transparency, consistent processes executed with speed, and new solutions. The challenge was to find new ways to stay relevant and be successful – that’s why we launched a radical transformation not only to address the needs of the business but to keep pace with smaller, more agile competition and remain an industry leader”.

The team went about this by ramping up activity across three key areas:

1.Innovation: Leveraging strategic partnerships and key relationships to drive innovation.

The team unlocked the value of supplier innovation by implementing a state-of-the-art Supplier Enabled Innovation (SEI) program and using new, engaging tools, including cognition. The SEI initiative included 3rd-party ‘Voice of the Supplier’ surveys, supplier incentives including annual awards, and clear performance metrics.

2. Engagement: Delivering simple, engaging user experiences.

After identifying key client pain points around complexity, slow execution and delayed problem resolution, IBM Global Procurement followed a mantra of speed and simplicity to improve visibility, enhance workflows and reduce cycle times. Innovative engagement solutions, such as an “Ask Procurement” chat function for clients, have contributed to an impressive improvement in client satisfaction. The chat application is highly intuitive – it suggests self-service solutions for users, and provides direct access to live agents who can answer questions simply and quickly.

3. Analytics & Cognitive: Capitalising on foundational analytics and cognitive solutions.

No mention of IBM Global Procurement would be complete without a reference to its not-so-secret weapon – the Watson Cognitive Platform. Through catalog data enrichment and cognitive procurement solutions which provide users with refined real-time data for risk mitigation, market and supplier insights, pricing information and recommendations, the team realised significant efficiencies including hand-free POs and greatly improved process compliance.

As an extremely positive side-effect of this transformational effort, Wright reports that the team’s efforts are being recognised within the wider organisation. “The transformation has helped change the perception of procurement evolving from a cost centre to a value centre.”

While internal recognition of the procurement team’s value is gratifying, the Global Procurement Team was even more delighted to see their efforts celebrated at Procurement Leader’s World Procurement Awards, where the team won the award for “Transforming External Partnerships (Pioneering Business Impact)”. The team’s submission went through a rigorous 3-stage judging process including online judging, peer review and a face-to-face regional debate.

And that’s not all – amongst 350 submissions across 15 categories, IBM Procurement was short-listed for each of the 6 entries it entered a submission for, and picked up 2 major awards – the Transformation award, and another for Risk Mitigation.

Procurious is working with our Knowledge Partner, IBM, over the next 12 months to promote cognitive procurement to our global community. To learn more about IBM Global Procurement, click here.

Trump Has Exposed Corporate America to a Carbon Tariff

Putting aside the issue of catastrophic global warming for a minute, let’s look at a very possible consequence of the U.S. withdrawal from the Paris Agreement – retaliatory measures from other nations in the form of a carbon tariff on American products.

Well, there goes the planet.

Trump’s withdrawal from the Paris Agreement has dominated the headlines all weekend, and rightly so – it’s regarded by many as the most devastating decision of his presidency so far.

Rather than dwelling on what has already been covered – the diminishment of U.S. moral leadership, short-termism, isolationism and the rejection of science – let’s examine the very real threat of economic countermeasures from other nations.

The idea of a carbon tariff was first suggested by former French President Nicholas Sarkozy in November last year. “[If Trump] won’t respect the conclusions of the Paris climate agreement … I will demand that Europe put in place a carbon tax at its border, a tax of 1-3 per cent, for all products coming from the United States, if the United States doesn’t apply environmental rules that we are imposing on our companies.”

Writing for Forbes last week, London Business School’s Ioannis Ioannou suggested a similar course of action:

“Countries and transnational institutions should seriously consider and carefully evaluate potential sanctions or economic countermeasures. A tax or import tariff on U.S. made products and services would account for carbon emissions used in the manufacturing process or, more ambitiously, incentivise leading companies to move parts of their business out of the U.S.”

Leading U.S. CEOs alarmed

As part of a last-ditch plea from Corporate America to dissuade Trump from his decision, an open letter was published last week in Washington, D.C. newspapers and signed by companies including Apple, Google, Facebook, Microsoft and Unilever. Amongst the warnings listed in the one-pager, the risk of retaliation was called out:

Withdrawing from the agreement will limit our access to [clean technology markets] and could expose us to retaliatory measures.”

It’s not just the dot coms who have come out in support of the Paris Agreement. Oil giants ExxonMobil and ConocoPhillips made the case that the U.S. would be much better served by having a seat at the table to “safeguard its economic and environmental best interests” – i.e. retain a veto – in future climate negotiations.

The fairness argument

Trump used the word “fair” and “unfair” multiple times in his speech:

“The bottom line is that the Paris Accord is very unfair at the highest level to the United States.”

“…Negotiate our way back into Paris under the terms that are fair to the United States and its workers.”

“…Under a framework that is fair and where the burdens and responsibilities are equally shared …

“We want fair treatment for its citizens and we want fair treatment for our taxpayers.”

The decision to withdraw, however, means the U.S. will have the fairness argument thrown back at it. As trade partners including Canada, Mexico, China and the EU implement carbon trading systems and caps, resentment is likely to grow towards the world’s second-largest emitter of carbon dioxide. For countries looking to address this disadvantage, a carbon tariff would serve to level the playing field.

Dirk Forrister, International Emissions Trading Organisation president and CEO, made the point that the Paris Agreement was designed to avoid this situation from occurring:

“The notion of a trade battle over climate change is something everyone’s tried to avoid for two or three decades. That’s why we have an international agreement to put everyone in the same frame.”

Here’s the good news

Trump wants to renegotiate his way back in. While Trump’s apparent willingness to re-enter the Paris Agreement on American terms shows some promise, it may not be possible. Christiana Figueres, the former UN official who led the negotiations, said this isn’t how international agreements work. “You cannot renegotiate individually,” she said. “It’s a multilateral agreement. No one country can unilaterally change the conditions.”

Other nations are rallying: There has been some commentary after Trump’s announcement that the Paris Agreement is actually stronger without U.S. participation. While many of the arguments inevitably read like sour grapes, two points ring true: firstly, the announcement appears to have strengthened the resolve of other nations to meet their targets. International leaders are lining up to not only condemn Trump’s decision, but to reaffirm their commitment to the Agreement.

Secondly, the Trump Administration’s rollback of domestic climate policies, including gutting the Green Climate Fund and hobbling the EPA, means that the U.S. was highly unlikely to meet its climate targets anyway. Australian International Relations and Environmental Policy export Luke Kemp argues that this would have set a poor example: “Other countries [would have been] more likely to delay or free-ride on their pledges if they [saw] the US miss its target.”

U.S. states, cities and corporate leaders are embracing a low-carbon economy, despite (or to spite) Trump. Examples include Californian leadership in reducing emissions, and the Mayors of 61 cities across the U.S. pledging on Thursday to meet commitments agreed to under the international accord.

The transition to the renewable economy is gathering pace. The economics of higher energy efficiency, falling renewable energy prices, abundant natural gas, and the rise of electric vehicles and smart grids will continue to displace coal and oil.

November 3rd, 2020: The rollback of the Paris Agreement and other climate initiatives will take years, as will any retaliatory measures (such as tariffs) put in place by other nations. Could the 2020 election become a referendum on the Paris Agreement?

Image: Shutterstock

Colin Powell Talks Security, Trade and Trump at #ISM2017

While many attendees at #ISM2017 were waiting to hear what General Colin Powell would say about President Trump, the former Secretary of State also provided some valuable insights into supply management.

“An army marches on its stomach,” says Powell to a packed ballroom at #ISM2017. “It’s the logistics that allows you to face an enemy.”

Powell draws on his experience in the Vietnamese jungle 55 years ago to illustrate how dramatically the military supply chain has improved. “We just didn’t have efficient supply systems then.” The young Powell was eating plain rice 21 times a fortnight with the occasional slaughtered pig thrown in, because the supply chopper would only come once every two weeks.

Fast-forward to Operation Desert Shield and Desert Storm, the biggest military operation since the Normandy landing. “We realised that it was logistics that would matter. We had to change some rules of behaviour.” Powell talks about some of the creative solutions to logistical challenges in the Gulf, including sourcing trucks from Egypt to move American tanks, early adoption of bar-code tech and using GPS to track those trucks (“we cleaned out every Radio Shack in America”), water scarcity and a vast amount of mail for 425,000 troops that had to be flown in: “I had to get three extra C5A’s, just for the mail.”

Powell believes there’s a lot the military and commercial worlds can learn from each other. “Both sides have to learn what’s going on the world today in terms of speed, service, quality of product and keeping up with the information revolution.” 

On Global Security

“America is not facing existential risk to our existence as it was in the Cold War,” says Powell. “There are problems that are real, but they’re overplayed and blown up.”

Powell gives North Korea as an example. After noting the poor state of their missile technology, he says there simply isn’t going to be an attack. “Give me a strategic reason why North Korea would shoot a missile at Honolulu or San Francisco. What would that achieve apart from ensuring the destruction [of Pyongyang] the following day? All that counts there is the preservation of the regime.”

Similarly, Powell believes concerns around China are overblown. “China won’t be an enemy. They won’t block the routes … It’s a nation that’s extremely important on the world stage. They want to create more influence around the world, [and they’re doing so by] building train systems in Africa, Latin America, the third world. They’re building because they want influence.”

Powell also points out that China is holding a trillion dollars of US paper. “It’s a complex country, but we have to welcome their products and an open, fair trading relationship. China has brought 400 million people out of poverty, not by raising taxes or invading people – they did it by selling stuff. Predictably, as people became more wealthy, they want more. Chinese labour costs will rise.”

On Trump

“I think what Mr Trump has to do now is reverse some of the campaign promises he made that frankly could never have been implemented, such as declaring China a currency manipulator,” says Powell, noting that Trump is maturing in his understanding of these issues.

“It’s in our interest to see him do well. Countries around the world [are] waiting for stability and clarity,  and for these campaign promises to settle down. The rest of the world wants to see coherence and consistency over time in what we say and do.”

Responding to a question about the political and economic impacts of withdrawing from the TPP, Powell says it was an unfortunate decision. “It was in our interest and would have benefited us over time.”

Powell says that the real beneficiaries now will be the Chinese, who are putting together their own trade agreement. “All our [trade] allies are joining China, and we’re standing aside.”

“The world is globalised. I’ve watched our factories going up in China – that’s just the nature of it. Success [can be had] by playing in that game, not wishing it would go away.” Speaking of globalisation in general and NAFTA in particular, Powell says that being mad about problems with trade doesn’t get you anywhere. “Fix it, but don’t throw it away.”

On Generation Next

“I have faith in the millennials and faith in the kids coming afterwards,” Powell says. “I do a lot of work with youth. I can’t change the past, I can [only] watch the present, but I can influence the future through the hearts and minds of young people.”