Category Archives: Trending

The Song Remains The Same

What can John Lewis’ Christmas campaign teach us about Procurement?

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The well-orchestrated PR ‘rumours’ were confirmed when John Lewis’ Christmas campaign was launched, sound-tracked by a cover of a classic song – “Half The World Away”, written by Noel Gallagher of Oasis.

On cue, industry pundits considered if the brand’s longstanding music strategy still works, or if consumers will tire of slow, breathy female-vocal renditions of songs whose original versions had more bite. Retail analysts will no doubt pore over John Lewis’ Christmas trading figures in the New Year; this may provide an answer.

The Cost of Music

For the Procurious community, the key issue here is ROI. Will investment in the campaign, of which music is a key part, deliver a quantifiable uplift in profits? It’s a question I’ve asked marketing directors when considering the cost of music recommended by their agencies.

In advance, it’s almost impossible to know – and in hindsight, few brands carry out the post mortem. If you’re in marketing procurement with a remit to support your marketing colleagues, where do you begin?

At a presentation to ISBA members earlier in the year, it was clear that many marketing procurement executives didn’t feel confident to challenge their agencies on music costs. A common concern was:

“I just don’t know which questions to ask”.

Typically agencies present a single figure for music in production estimates with no breakdown or explanation of how the deal was negotiated. Without an understanding of the fragmented nature of music rights, marketing procurement teams are in the dark. So, here’s some light on the issue:

Separate copyright exists in

  • The song aka “publishing rights”, and
  • The sound recording aka “master rights”.

These are usually controlled by respectively by music publishers and record labels. Brands, or their agencies, are solely responsible for securing approvals and negotiating sync licence fees before any usage takes place in a campaign.

Jargon Alert!

‘Sync’ (short for synchronisation) is the act of dubbing music to moving images.

The sync licence approval chain often leads back to the same people when the songwriter and artist is the same person. Had John Lewis wanted to use the original Oasis recording of “Half The World Away”, the sync licence requests would have been as follows:

  1. Song/Publishing Rights via music publisher: SonyATV Music Publishing > Artist Management > Noel Gallagher (songwriter)
  2. Sound Recording/Master Rights via record label: Sony Music > Artist Management > Noel & Liam Gallagher (artist: Oasis)

In this instance, Noel Gallagher would receive the sync requests via two avenues, his music publisher and record label.

Value Versus Price

Here’s where value and price come in. Would Noel Gallagher place a greater value on his song or his recording?

In practice, the music industry prices them at parity using Most Favoured Nations (“MFN”) – an upwards-only price equalisation device. “Half The World Away” reached number 3 in the UK single charts in 1994 and became the theme song for BBC sitcom “The Royle Family”. Mr Gallagher would therefore place a very high value on both song and recording.

However, the new John Lewis campaign doesn’t use the original Oasis version. Instead, it follows the established strategy of using an emerging artist to record a new cover version of the song. In this instance it’s a Norwegian singer called Aurora, signed to Universal Music imprint Decca Records. So how does the approval chain look now? The song remains the same, but the recording is different.

  1. Song/Publishing Rights via music publisher: SonyATV Music Publishing > Artist Management > Noel Gallagher (songwriter)
  2. Sound Recording/Master Rights via record label: Universal Music > Artist Management > Aurora Aksnes (artist name: Aurora)

What does this mean for Procurement?

As we’ve discussed, Noel Gallagher will place significant value on this song. His managers will dictate that his music publisher demands a premium price for the sync licence. Remember that Mr Gallagher didn’t write his song to be used in a commercial, and he doesn’t need the money or profile.

In contrast, the artist Aurora will greatly benefit from the exposure in the John Lewis campaign. For the artist, her manager, and her record label, the value is in the promotional opportunity, not the sound recording. This will be reflected in a much lower-priced sync licence, provided that the record label waives any MFN provision.

Key Learnings

If your agency presents you with a single budget figure for a licensed music track, don’t just accept it, ask these questions:

  1. Is it an original artist recording or a cover?
  2. If it’s an original artist recording, is the artist also the songwriter?
  3. Is the artist proven to be famous?
  4. Is the song or songwriter proven to be famous?
  5. Which music publisher controls the song? (It can be more than one)
  6. If the recording is a cover, is the cover artist famous?
  7. How will the cover artist benefit from awareness through the campaign?
  8. Can promotional value be traded against sync licence price?
  9. Will the record company who controls the cover recording waive MFN?

Whilst these issues are a whole world away from the schmaltzy, perfect Christmas conveyed in the new John Lewis campaign, smart marketing procurement executives can take control of price by better understanding value and the complex music rights landscape.

Although the song remains the same, alternative cover versions can offer cost efficiencies if you know the right questions to ask.

Richard Kirstein is a Founding Partner at Resilient Music, which aims to shed light on the complex landscape of music procurement, and delivers a smarter way for brands and agencies to buy music talent and rights.

Is Twitter losing its ‘Star’ Quality?

Twitter’s latest change to its user interface, replacing its ‘Favourite’ star with a ‘Like’ heart has raised the ire of its community. Has the social media giant made a huge misstep in the battle to remain relevant? Twitter-Heart-1

To the casual user, this might not seem like a big deal, but to seasoned users of the social media platform, it represents a change that no-one expected, or even wanted.

The chances are fairly good that the furore about the change will die down in the near future as users become accustomed to it, but there is also a chance that a very human resistance to change could ultimately cost Twitter some users.

New Users

In an explanation of this move, Twitter posted a blog stating that the change was to “make Twitter easier and more rewarding to use” and removing any confusion about the star for newcomers to the site.

The heart, in contrast, is immediately recognisable for what it signifies, has the same meaning in many different cultures and Twitter also stated that the new idea had gone down well in testing.

And it is new users that Twitter is aiming for in what is becoming a fiercely competitive social media market. It might seem strange that a company valued at approximately $22 billion, with over 1.3 billion accounts and over 300 million monthly active users, would be worried about its user base.

However, for many people, Twitter is actually falling behind in the market, with user numbers actually in decline. Twitter is also falling behind Instagram (now owned by Facebook) in terms of active users, while lacking the development of other sites (think Facebook ‘Dislike’ button).

Changes at the Top

Twitter permanently re-appointed Jack Dorsey as its Chief Executive back in June, and he immediately set about making changes, including letting go 8 per cent of its workforce.

Twitter also appointed Omid Kordestani, a former Google Executive and the Internet giant’s 11th employee, as its Executive Chairman in August. Both men have been charged with turning the platform around, increasing profitability and gathering new users.

It is thought that Mr Kordestani will look to target countries where Twitter is currently unavailable or blocked, such as China, in order to boost the site’s user numbers.

Simplicity vs. Usability

The major challenge Jack Dorsey appears to have, is in making the platform more user-friendly and accessible for its members. When even your Executive Chairman says they find the platform “intimidating” and has only ever sent 9 tweets, you know you have a problem.

For many, the simplicity of a chronological news-feed in 140 character bursts is also the biggest drawback of the platform. By presenting the tweets in chronological order it doesn’t show the information individual users want to interact with or value being able to see.

There is functionality to create lists, as well as use tools like Nuzzel and Tweetdeck, to organise tweets into a more valuable resource format, but users want the same functionality on the site itself, rather than having to set up accounts elsewhere.

It remains to be seen what impact today’s change to the interface will have, if any, in the long run on active users, and if it will ultimately be a success.

As active Twitter users ourselves at Procurious, we would love to see the platform develop, while still retaining the essence of a short-message news feed. Just as procurement professionals are beginning to see the benefits the platform offers, it would be a shame to see it fall by the wayside.

If you want to join the debate, follow Procurious on Twitter – we don’t mind a few extra likes!

How Productive Are Your Teleconferences?

A recent project has prompted me to focus this month on the efficiencies of teleconferences. 

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Lack of agendas, side conversations, inaudible background noises, late attendees, accent and language difficulties, alongside poorly facilitated calls that seem to go in circles, are just some of the everyday teleconference challenges.

Although teleconferences are not a new phenomenon, somehow we tolerate the inefficiencies and frustrations that they entail.  Why is this?  Over time we become unconscious and unmindful of the bad habits and irritations that ‘creep in’. We often accept them as ‘normal’ and for the most part we ‘switch off’ and allow apathy and stagnation to set in, without us possibly even realising it.

For many global project teams teleconferences are the most common meeting format. They are a critical mode of communication where key decisions are made and everyday production, innovative and creative ideas are thrashed out. Something worth reminding ourselves of is that the success of teleconferences directly impact overall project outcomes, timelines and ultimately budgets.

Preparing Your Teleconference

Here are some simple reminders of things to be aware of when facilitating and participating in culturally dispersed teleconferences:

  • Ensure that the agenda has been circulated at least 24 hours prior to the meeting

It is particularly useful for those in other locations whose native language is not the language that the meeting is being conducted in.  This provides all participants an opportunity to plan what they will say or questions that they want to propose.

  • Be mindful of the dynamic

When most of the participants are in the same room it can be difficult for the remote participants to engage in the conversation.  They are not privy to the same group/room dynamic.

  • Be mindful of different cultures

Remember that in some cultures people wait to be invited to speak rather than speak up whenever they have something to contribute. Be specific and invite people to speak at various intervals.

  • Ensure everyone identifies who they are before they begin speaking

Don’t assume that everyone knows each other.  It is not uncommon for offshore project teams to have new staff joining the team at different times. Maintain the practice of introductions at all meetings.

  • Use diagrams and visual aids where possible

They can be of great benefit as an alternative mode of demonstration and explanation, especially for offshore teams.

  • Ensure Understanding

If you are having difficulty understanding language, accents, dialects or tone, speak up. Let people know.  Chances are that they are having difficulty understanding you also.

  • Don’t confuse silence with agreement

Take the time to ask each person one by one to give their opinion or share their concerns before making a consensus decision.

Please click here if you would like to read or follow our Cultural Intelligence Blog.

Driving Procurement Power: Strategies in Purchasing

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This article was originally published on Tradogram.

Your eyes are locked on the road directly in front of you. White-knuckled, you jerk the steering wheel into obedience to keep the tires away from massive potholes.

One wrong move or missed sign, a bad assessment of the immediate situation, and your car goes over a cliff. The likelihood of this outcome could be greatly reduced if you had the foresight to anticipate the road ahead.

Definitive Strategies

How can definitive strategies be applied to scenarios that seem so distant and unknown, especially when there’s always a more urgent task demanding attention? You don’t have to be navigating a treacherous mountain pass to consider the benefits of strategic thinking.

The business of procurement needs leaders who understand what it means to implement purchasing strategies. This is easier said than done – what exactly does “being strategic” entail, anyway? From a general perspective, it involves critical analyses, interpreting data, executing decisions, continuous learning, and the ability to align employee’s divergent agendas (including those that remain hidden; peripheral vision is an asset, both behind the wheel and in the boardroom).

Where Procurement Comes In

Specifically, strategic procurement is when companies are able to plan and schedule group buying well in advance of deadlines. They centralize this process with the intent of gaining transactional efficiencies (and as a result, savings), ideally through the use of an ePurchasing solution. Communication between internal and external stakeholders is continuous, effective, and secure.

Global suppliers are selected from a database that provides comparative formats, customisable to the buyer’s unique needs (ranging from negotiating an optimal price point to managing user approvals and more). When this list of components synchronises, an organisation’s gears can shift smoothly; at the right moment, this is the difference between a brilliant hairpin turn and crashing into a rock wall.

Be The Driving Force

If this criteria seems daunting, rest assured that when a company is still struggling with the interpretation of “strategic”, there’s no reason to even think about enacting such an approach. Market research is overrated! One product or service is just as underwhelmingly adequate as the next! The CEO left for a business meeting with her tennis racket! Why should we create performance anxiety over a bulk order of sheet metal?

Sure, a purchasing department might be successful upholding mediocrity, but when opportunities exist for improvement, why not take advantage? Especially when such purchasing improvements serve to directly benefit those doing the purchasing. Be the driving force behind strategic procurement – what happens further down the road is worth putting the pedal to the metal.

Breelyn Lancaster is the Marketing Coordinator for Tradogram, a cloud-based procurement platform which aims to help buyers take control of their sourcing processes and aim for cost-effective solutions.

Future Technology That May Change The World

As Artificial Intelligence and Digital Currencies (like Bitcoin) seek to transform our lives, what effects will these new advances have on commerce and the world’s supply chains?

Future technology that will change supply chains

There’s a change happening on factory floors the world over, as robots and automation increasingly replace the manual (human) workforce of old.

With the recent innovations in artificial intelligence, will the supply chains of tomorrow be at the mercy of robotic overlords? If so, do we have anything to fear?

Elon Musk has previously aired his own warnings while giving a talk to students from Massachusetts Institute of Technology (MIT), saying:

“I think we should be very careful about artificial intelligence. If I had to guess at what our biggest existential threat is, it’s probably that. So we need to be very careful… I’m increasingly inclined to think that there should be some regulatory oversight, maybe at the national and international level, just to make sure that we don’t do something very foolish.”

Of course it’s perfectly natural to fear change. We must also be mindful that artificial intelligence is still very much evolving, and at this stage it’s an unknown quantity. There are some camps that fear the worst, that AI represents the destruction of mankind, with robots and humans embroiled in a bitter battle for survival. Flesh vs. circuits, the human condition vs. sentience…

Future Shocks

Not so according to Mustafa Suleyman – Head of Applied AI at Google DeepMind, who instead believes that this modern intelligence will help tackle some of the biggest problems facing the world today (think access to clean water, financial inequality and stock market risks). Indeed, the work of DeepMind was something Wired Editor David Rowan touched on at Procurement Leaders’ London gathering earlier this year.

David told us how DeepMind had created a “generalised artificial intelligence” – the earliest example of which was able to not only play Space Invaders, but master it to become the best player in the world. While this demonstration is certainly impressive, how can it translate to real-world scenarios?

The answer lies in Big Data as DeepMind observed: “We have global information overload from overwhelming systems complexity – they’re so complex and interlinked it’s possible that the US financial crash in 2008-9 caused the Egyptian revolution” [a time of widespread corruption and a stagnant economy that led to a national bread shortage].

If all of this (Big) Data is just sitting around, waiting for consumption, then why shouldn’t we make it available to robots for analysis and dissemination?

A Calculated Risk

Indeed, the significance of Big Data has not gone unnoticed by procurement’s leading lights…

A 2010 paper entitled ‘Artificial intelligence in supply chain management: theory and applications’ reviewed the past record of success in AI applications to SCM and identifies the most fruitful areas of SCM in which to apply AI.

Similarly, author of Supply Chain Visability.com -Jonah Saint McIntire, observed: “In time, as new generations of the AI are deployed, something truly game changing will occur. This is because machine learning will cross human learning capabilities fairly slowly. Remember that intelligence is modular and, as a result, machines may exceed humans in some forms of learning while lagging in others. The real breakthrough occurs when all necessary forms of learning are dominated by AI rather than human intelligence.”

If AI can help us realise that we have a problem, why then should we be fearful of this new technological dawn?

John McAfee – infamous programmer and creator of the world’s first antivirus software, has long insisted “that if you are a ‘routine cognitive worker’ following instructions or doing a structured mental task,” then it is your job that’s most at risk from the inevitable rise of the machines…

Payments Are Going Digital Too…

Bitcoin is an online payment system that is perhaps more widely recognised as the first decentralised digital currency.

Supported by open source technology, Bitcoin is not owned or operated by one individual or organisation. It is free to use (apart from an optional transaction fee) and can reduce the costs of transactions for merchants compared to credit cards.

The technology behind it is referred to as ‘blockchain’. The blockchain records all the transactions in a publicly available ledger. The ledger keeps track of what users are spending, provides authentication and keeps track of where the currency is.

Safety In (Digital) Numbers

New electronic payment systems and virtual currencies are expected to make paper currency the horse and buggy of the 21st century.

In a report commissioned by HP, the Ponemon Institute has made a number of interesting finds. Its “Security & Compliance Trends in Innovative Electronic Payments” paper reveals that support for digital currencies and new electronic payment systems are perhaps stronger than originally thought. And while 79 per cent of the US organisations that took part in the research plan to adopt digital currencies, a key barrier to the adoption of innovative electronic payments remains. Namely: the issue of security.

While new payment models are evolving, the same security fundamentals for maximum protection in the underlying payment process are still needed. The most critical are one-time passwords or tokens, federated identity and authentication systems and multi-factor authentication.

There is also the perception that the pressure to quickly migrate to the use of innovative electronic payments is making it difficult to address the security and privacy issues.

Digital wallets (or e-wallets) are used to hold virtual currency – and high profile names in technology like Google and Apple already have solutions in place to drive the adaption rate.

In-fact belief is so strong that almost half (46 per cent) of respondents predict that virtual currencies will overtake paper currencies within the next five years.

Perhaps there’s some truth in this… we are increasingly looking to financial institutions and credit card companies to make the inroads needed to take such practices to the next level.

They’ll be the ones to create new approaches to the security and privacy of the electronic payment platform. These organisations are closer to the consumer experience with electronic payment systems and might have a greater incentive to innovate and improve both security and privacy.

Transparency In The Digital Age

Is it such a leap to suggest that Bitcoin technology has the ability to transform the future of digital payments and aid supply chain transparency?

We already know that it’s possible to adapt Blockchains to keep track of what is going into a product, who has handled it etc. Using an app or website, an individual could stand in a shop holding a piece of clothing and be able to trace it all the way back to the farm that supplied the cotton. The information could be used to highlight working practices on the farm, use of pesticides, Fairtrade considerations and more, leading to far greater transparency.

Tracing the supply chain through the use of a ‘product passport’, showing the change of ownership of items through the supply chain and highlighting each step in the process would ultimately help to facilitate an understanding of the transactions from end to end.

What do you make of this brave new world: is more time needed to fully realise the benefits (and drawbacks) of such innovations?

The Role of Social Media in Supply Chain Intelligence

The value of the social economy is estimated to be $1.3 trillion U.S. dollars annually. 

 

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This article was originally published on the Fronetics website.

Social media is more than a collection of personal commentary, photos, and inspirational quotes. Increasingly, social media creates an opportunity to gather information, and social media is becoming a useful tool for businesses to connect with other businesses and clients. Although Facebook is notorious for gathering information, social media companies are not the only companies who can gather intelligence.

Data Gathering

Gathering of intelligence has never been easier. Although there are still traditional indicators of sales and traditional feedback loops, the age of social media allows for swift collection of intelligence. According to McKinsey, “Analysts typically spend 80 percent of their time gathering information before they begin to analyze it. Social intelligence radically alters this process. Numerous tools allow analysts to create dynamic maps that pinpoint where information and expertise reside and to track new data in real time.”

Capturing the Consumer

Collecting information from your consumers online— the good, the bad, and the dirty— can help you understand consumer sentiment around brands. By searching for key words or terms you may improve sales strategies, product placement, or understand demand cycles.

Do you want to see what clients and consumers say about you and your products, about their reliance, frustration, appreciate of your role in the supply chain? You should! But you can also have a look at what is trending, what your competitors are doing, and how you can gain traction through social media. The window is a unique opportunity for you. If your competitors are garnering more views, figure out why. Do they highlight their employees? Do they link directly to items for purchase? Do they use keywords you’re not using? Are they presenting themselves as leaders in the industry by blogging?

Storm Surge

Storms happen, and they’re stronger than ever. Natural disasters will never cease. Accidents happen. There’s no fix-all, no cure for these things, but there are new ways to manage these challenging moments when they strike. In March 2012, the Red Cross announced the creation of a social media crisis monitoring center called the American Red Cross Digital Operations Center.

When Hurricane Sandy hit the Eastern Seaboard, the Red Cross was able to see how valuable social intelligence can be. According to an article in Fast Company, How the Red Cross Used Tweets to Save Lives During Hurricane Sandy, “During the week of Hurricane Sandy, the Red Cross tracked more than 2 million posts and responded to thousands of people. In the end, 88 social media posts directly affected response efforts—a fairly significant shift of resources.”

While people lost power during Hurricane Sandy, many still had internet access on their phones. They could access news updates, connect with loved ones, and ask for help through social media. According to the Pew Research Center’s Project for Excellence in Journalism, more than 20 million tweets were sent about Hurricane Sandy in the span of 6 days.

The intelligent thing to do for your company just might be to explore social media intelligence.

Kate Lee is the Senior Director of Research and Strategy at Fronetics Strategic Advisors, a leading management consulting firm that specialises in the identification and execution of strategies for growth and value creation.

Procurement Makeovers – Tales from the CIPS UK Conference

We all need a makeover from time to time, and I am sure that we’re all in agreement that procurement’s image (like anyone’s!) can always do with some fine-tuning. Makeover-or-Transformation-Dressing-Your-Truth

‘Procurement Makeovers’ sounds more like the name of a cheesy TV documentary you would watch on a Sunday afternoon while the roast dinner is bubbling away in the cooker, than what it actually was – the discussion topic for a panel I participated in at the CIPS UK Annual Conference in London last week. 

The panel was hosted by the esteemed CIPS economist, Dr John Glen, from the Cranfield School of Management. My co-panelists were the charming Mr. Miguel Caulliez, Head of Global Procurement, Nokia Networks and Simon Harnett from National Grid.

It was really inspiring to chat with both Simon and Miguel prior to, and during, the panel discussion and learn about their respective procurement change management journeys.

Miguel’s LinkedIn profile reveals an impressive blue-chip pedigree working high-profile organisations all around the world. All this great experience was channeled into some very powerful leadership insights around staying laser-focused on the end-goal.

It was interesting to be reminded of Nokia’s amazing ability to move in and out of businesses and continually transform, adapt and thrive. National Grid’s contract management overhaul reinforced the value of a well-planned and well-executed process for change.

The panel was in violent agreement about some of the fundamentals of a successful change program:

  • Having a vision
  • Communicate, communicate, communicate
  • Getting some quick wins (this wasn’t unanimous).

The two thoughts I would like to share are, that during change you need to make sure people understand the why, and to remember that change is very much a political campaign.

Understanding the Why

The most important element of a change program is for people to understand why they need to change. We get these questions every day – Why should Procurement get involved in social media? Why should we collaborate globally on-line?

  • Procurement needs to be “the smartest guy in the room” – our profession needs to be up to date with the latest news, eLearning and be able to ask questions in a trusted environment
  • Respond to disruptions – an online community provides the profession with a vehicle to create global information streams and collaborate together to respond to crises
  • Adapt Quickly – Jack Welch stated – “If the rate of change on the inside is slower than what it is on the outside, the end is near”. With the Internet of Things upon us, the procurement profession needs to be moving ahead of the technological curve if we are to thrive in the digital economy
  • Promoting the profession – I learned early in my career that, in managing any change, it was important to shine a light on the work that others were doing to progress the cause forward.

If we are going to fight back against the out-dated stereotypes of our profession, we need to individually and collectively do more to “make ourselves famous”. We need to make sure the global business community knows the role that procurement plays.

Interesting stories amplified through social media will get our profession noticed and help you build your influence too.

Don’t just stick to talking about the serious stuff either. Procurement has great stories and content to share, and often the best stories in the organisation – from buying gulf-stream jets in the first week on the job, to buying a plane ticket for a rattlesnake.

Change is a Political Campaign

The second point I would like to make on change is to address that time-old question on whether you need support from the top.

Yes, of course you need support from the top, but, if you are going to be successful, grassroots campaigning is also critical – because you can’t make change without support from the bottom.

Be ready – your biggest dissenters may come from left field and may actually be your peers, or worse, your own team!

Consider the Netflix series, “House of Cards”. The protagonist, Frank Underwood, successfully navigates the halls of power in the Capital, keeps his campaign sponsors happy, all while dealing with powerful external stakeholders, his peers and his own grassroots – his electorate in Gaffney, Georgia.

In managing change, you need to work in all directions, both inside and outside your organisation, to be effective. Don’t underestimate the effort required to win the campaign!

And you need to use the full artillery of communication vehicles to deliver a consistent message, delivered in an interesting package, across every format available.

Transforming Procurement

Procurious is leading a major global procurement transformation. The community spans 125 countries, has 7,500 stakeholders and impacts up to 2.5 million professionals.

The goal is to change the image of procurement. Like many of you, our team is tired of talking about the outdated perceptions of procurement and wants to do something about it.

Our transformation effort here at Procurious aims to take the procurement profession from being a disconnected group of individuals, to a continent-straddling network, comprising the great and the good of the procurement world.

We are using social media (LinkedIn, Facebook, Twitter) as our delivery channel, but at the same time, running social media workshops, meeting individuals and speaking at conferences, in order to champion the benefits of social networking and encourage the ‘uncontactable’ to poke their heads above the parapet and truly become part of the conversation.

The transformation has definitely begun, but we have a long way to go in connecting the entire global procurement community to collaborate online.

So, help us complete the procurement makeover! Join Procurious www.procurious.com today and help make the change a reality.

Future Proofing Procurement: Leveraging Innovation in Supply Networks

Eva Wimmers the Former CPO at Deutsche Telekom, is currently in Australia running a series of procurement innovation workshops.

This ground breaking project is being delivered in conjunction with The Faculty and brings together Australia’s top procurement teams, with the goal of unlocking and leveraging the untapped potential that lies within our supply networks.

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In this post, Eva provides some insight into the need for procurement innovation and highlights what she’ll be covering in The Faculty’s Innovation Workshops.

The whole world is digitalising, as all industries are affected by the rapid changes that the Internet and its services are producing for our every day lives. This means that Procurement needs to change and learn how to procure such products and services.

Often these are not only provided by the big established companies, but increasingly by small- and mid-size innovative players – this produces a bunch of new challenges for Procurement teams around the world:

  • How do we find these innovative solutions and companies, as they tend not to just apply for an RFQ with us?
  • How do we protect our companies against the risk that these smaller organisations might bring?
  • How do we lead our teams into this new world?

I am very excited that The Faculty invited me to discuss such topics in a Pop-Up Work Shop with CPOs in Melbourne and Sydney, Australia, that runs under the title of Innovation Procurement.

For the Australians amongst you: today was the Melbourne workshop that was received very well by all participants! But you can still register for the Sydney workshop on October 20th with The Faculty – see you there or follow us on procurious.com!

Click here to register for Sydney Procurement Innovation Workshop

How Will Technology Transform Procurement Operations?

New research claims Automation and Internet of Things (IoT) will have biggest technological impact on the function.

How technology will change procurement functions

In its third set of results from its 2015 Global Procurement Study, Xchanging assesses the impact new advances in technology will have on procurement.

Technology Adoption

Savings tracking (77 per cent) and spend analytics (76 per cent) technologies are the most widely implemented, in the context of a tough economic climate where spending cuts and streamlined processes remain top priorities for businesses.

This mirrors respondents’ answers about the KPIs on which their procurement functions are measured – the top four all being cost related (47 per cent cite cost savings realised as their most important KPI, 19 per cent revenue impact, 16 per cent cost savings identified and 14 per cent cost avoidance). 

Over half of companies questioned also already have automation (68 per cent), reporting dashboards (68 per cent), contract management (67 per cent), supplier performance management (64 per cent), market intelligence (60 per cent), eSourcing (59 per cent), predictive analytics (54 per cent) and Internet of Things (54 per cent) technologies in place.

In general, the organisations most likely to have the above solutions in place were:

  • In the U.S.
  • Larger, with 3,000+ employees
  • In retail, consumer goods or manufacturing industries
  • That outsource parts of their procurement operations

U.S. companies are 8 per cent more likely to have all of the listed technologies in place than those in mainland Europe.

Overall, supplier performance management software and predictive analytics are the technology solutions most likely to be implemented in the next two years (both cited by 12 per cent of respondents), whereas 46 per cent claimed they are unlikely to ever implement online auctions.

Technology Impact

Predictive analytics and the Internet of Things (IoT) are expected to be the most revolutionary technologies for supply chain operations, with eight in 10 respondents (80 per cent/79 per cent respectively) stating they will have an impact, and nearly a quarter (23 per cent/24 per cent) expecting them to have a major impact.

A report issued by DHL and Cisco in April this year estimated that by 2020, 50 billion devices will be connected to the internet – an increase of more than 300 per cent from today’s 15 billion – and that IoT will generate $1.9 trillion across the supply chain and logistics operations industry, with warehousing and freight benefitting the most.

Luke Spikes – Xchanging’s Procurement Technology spokesperson, provides the following insights on the research:

On high technology adoption rates:

“When analysing the data, it is key that we consider how ‘technology’ is being interpreted by respondents. It’s surprising that over half of all companies surveyed said they already have the majority of the listed technology solutions.

“A notable 76 per cent reported having spend analytics technology, but we need to question what technology they are actually using. Are they really utilising a solution that analyses all spend data – how much is spent, on what, with whom and by whom – and transforms this data into actionable business intelligence? Or are they simply using Excel spreadsheets?

“It’s also important to note that there is a big difference between having the technologies in place, and using them to their full advantage, to enhance performance and improve the bottom line. There needs to be a drive on education around technology applications for them to deliver real benefits.

On IoT, predictive analytics and future technologies:

“The supply chain landscape is increasingly global, and IoT can enable businesses to track the exact whereabouts and the condition of goods in transit, automatically monitor inventory levels to manage cash flow more efficiently, and remove human error from the process.

“Predictive analytics will drive a far more strategic approach to sourcing – for example, enabling hedging on the price of raw materials to become a daily part of the procurement process – as well as creating further opportunities for automation to increase accuracy and efficiency.

“Procurement leaders ignore technology-driven progress at their peril. If they don’t seize the opportunity, they will quickly fall behind their competitors. The adoption of new technologies – alongside a continued focus on the value and expertise of procurement professionals – will ensure the function remains a strategic, indispensable part of their organisation.”

The study is a major international project that surveyed 830 procurement decision makers across the UK, Europe and North America.

“Because In A Split Second, It’s Gone”: Lessons Learnt From Formula 1

ayrton-senna

Can you remember where you were on 1 May 1994? I know I was at home, my parents’ house, and I was sat in the front room watching, the San Marino Grand prix. The reason that I remember, is that this was the day that Ayrton Senna, one of the greatest racing drivers ever, died when he crashed at Tamburello corner. The reason that I start with this is two-fold.

1) Lewis Hamilton has recently equalled Ayrton’s win total and pole position total, and 2) recently I attended a training course called Performance at the Limit; it was delivered by a facilitator called Richard West. Richard has been a senior figure within the Formula One sport for a number of years and the program was about identifying the common traits of high performing teams set in the context of the high performing teams within F1.

It was an excellent program – there were lots of transferable learning points that I wanted to share with you so here goes… (I’ll point you to the books and TV programme at the embedded links below).

Focus on…

Richard described the safety record in F1, specifically with regard to the death of his friend (and one of my favourite drivers) Ayrton Senna. Richard was working with Williams at the time, and if you have seen the film Senna, there are some references to him in it. Flashback a few years previously to the same corner at Monza, and Nelson Piquet crashes and car stops at the same place that Senna fatally crashes. Flash forward a number of years after Piquet and Gerhard Berger crashes and suffers burns as a result of the crash at the same corner.

The point here is that on each occasion, indeed after Senna’s crash also, racing resumed with a focus on performance and going faster, rather than looking at the bigger picture. The big takeaway for me is that too much focus on one area will lead to the ignoring of some critical issues (safety etc.)

With our internal and external relationships, are we guilty of too much focus on a particular area at the expense of something else?

Group v Team

What’s the difference? One of the activities on this training course was called the pit stop challenge. Essentially, the “group” was challenged to change the tyres on a F1 car during a pit stop. We used a real F1 car from 2009 and we were split into teams for each of the wheels. Great learning point here is that whilst you may be quick at your particular activity, it’s the whole team that counts, and what’s the best way to ensure cooperation?

pitcar

…It reminds me of something I read a while ago;

A group is a gathering of people, each with their own established roles. As companies grow large, practicality dictates that responsibilities must be divided up. But this is the point at which many employees begin to think that their job is just fulfilling their own individual roles. Some even go so far as to think that stepping outside their established roles is wrong. This is not a team. This is group. Indeed, this is a herd of sheep. It will never be successful.

To be a team, each individual in the organization must act beyond their own responsibility and in the furtherance of others. For each individual on a team, every job is a kind of war, every job is a competition. Unless you win, nothing has meaning. To be successful, each member of the organization must cultivate the mindset that they alone hold the fate of the organization in their own hands.

Only a group of people sharing that mindset can be a team.

Hiroshi Mikitani – CEO, Rakuten Inc

So what type of relationship do you want, one where you act as one team, or two groups both vying for the best outcome for themselves?

Change starts with why

During the program we discussed leadership and the need for employees to feel motivated to work for the organisation and to understand why they were being asked to do something. In other words any change must start with why the change. This immediately made me think of Simon Sinek and his remarkable Ted talk that I had recently seen.

Do we communicate well with our team members and our suppliers to demonstrate why we need to change and what the end goal must look like, do we lead effectively (e.g. Inspire others to be high performing, or do we lead efficiently (e.g. inspiring others through objectives and KPIsI)

There is no silver bullet

Richard described visiting Mercedes team garage and he found that there wasn’t one thing that they were doing differently than anyone else, but it was a whole lot of little things just done better. In other words there was no silver bullet. Sometimes we try and focus on doing one thing to make things better. An example of this is development. How many times have we either conducted or been in our reviews with team members and asked about development, then immediately focussed upon training?

What about all the other learning opportunities? At the CIPS Australasia conference, I attended a session where Craig Lardner said that “mistakes are an investment in getting better”, in other words, learn from mistakes, not just yours but others. Do we share lessons learned amongst ourselves.

You may be aware of the 70/20/10 learning principle. Essentially this suggests balancing learning through the following;

  • 70 – Experiential/Experience – learning and developing through day-today tasks, challenges and practice
  • 20 – Social/Exposure – learning and developing with and through others from coaching, exploiting personal networks and other collaborative and co-operative actions
  • 10 – Formal/Education – learning and developing through structured courses and programs

I encourage everyone (managers and team members) to look at this model as a way of developing themselves and their teams. The better outcomes take a little of everything and just do it a little bit better.

I will leave the last words to Senna.

My biggest error? Something that is to happen yet.