Category Archives: Trending

Driving Procurement Power: Strategies in Purchasing

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?

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 -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. 

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.

‘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 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.

tma-export-032779_1100x712 (1)[1]

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!

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.

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


By Gordon Donovan

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?


…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.

Let Me Entertain You (Or Not… Depending On The Party Line)

Customer entertainment, gifts, and freebies are becoming a bigger issue for buyers these days. Increased ‘professionalism’, new company guidelines and a general pressure on how you spend your time is making it harder for this traditional form of relationship building to be effective. Despite this It can still be a very potent force to improve your chances of winning or maintaining business, provided it is used in the right way – and you have thought it through properly.

Having been a sales rep, sales manager, corporate buyer and purchasing director I have seen this problem form both sides of the table. As a rep I have stood in the car park of a customer wondering why on earth marketing think a tankard with our logo on it is going to impress a buyer, and as a buyer I have been helicoptered into a grand-prix (which was nice ). So I have seen the good, the bad, and the just plain naff, of entertaining and gifts. So let’s set the record straight on whether you should entertain, and if so how you can do it to maximum effect.

Across the world it has always been traditional to mark good relations with the giving of gifts. This practice certainly doesn’t appear to have held back the Japanese economy where it is a major force in business. If you don’t think you need gifts or entertainment because ‘our relationship is strong enough’ then just try telling your partner ‘…sorry darling for not giving you any presents or taking you out this year, I think our relationship is strong enough not to need those things – is that OK?’ There is a fundamental misconception over gifts and entertaining. Most people think that they are to do with persuasion, or obligation. If that is your objective then you will fail. The only real objective should be to use them for networking, and even the most ‘bah-humbug’ of buyers can probably see the benefits of that.

Many companies have policies on entertaining. Interestingly most of the big ones have totally different ones for selling and buying. They may well have entertainment days and gifts in the marketing budget, and yet corporate purchasing has a policy of not accepting any gifts or entertainment. The Chartered Institute for Purchasing and Supply (CIPS) is the buying equivalent of the ISMM, and they have a policy. It states that gifts should really be of nominal value, and that entertaining should be managed openly, and not of the type that might be deemed to have had influence on a buying decision. So this still leaves a reasonable scope. There may even be ways around the ‘no gifts’ policy at major companies which we will come back to later. So what makes entertaining both acceptable and effective?

The first rule is line-fish wherever possible. By this I mean that you are meant to be doing something that is attractive to people. Don’t offer them United tickets if they prefer opera, and don’t do a golf day if in reality its just your sales guys who like it. I happened to enjoy my day out at the grand-prix, but when I enquired why exactly they did racing it was because the MD loved it. That really made me feel special. Even if you find your customer has a passion for train spotting, then find a way to get him a day out at Crewe station. The fact that you cant ( indeed would not in any circumstances ) boast about this to your colleagues is irrelevant. Most sales people I met worked on an ‘invite first, ask questions later’ principle, and because of that much of the entertainment these days is ineffective.

The next rule is make it easy to accept. One company I knew had a factory near Verdun – not exactly a romantic location. However to get there from the UK you do have to drive through champagne country. They put on a ‘Quality and Product Development Seminar’ to be held at the factory – mmm, fascinating. There was in fact some real content to this, and at the same time the schedule did call for an overnight stop (both on the way there and on the way back) in the heart of Champagne. They got a good uptake and everyone was (literally) very happy. This probably even got around the ‘no entertaining’ company rules.

If you do have gifts, and your customer is wary of accepting such things, then suggest a charity auction, which even the most hardened would find hard to resist. The process is simple – you give them a load of gifts (NB not ties with the company crest on…) and they then run an auction, or a tombola in-house, with the money going to charity. You get great kudos, they are happy, and a charity makes some money.

If you are able to get some key contacts to come to event then make sure you maximise your time to broaden and deepen your knowledge of your customer. I have been to events where sales guys spend more time networking with their own senior management than the customers. This is great for buyers, it lets them off the hook to go and network with others in your organisation who will probably be less guarded than you after a glass or two of Chablis.

The last key rule is don’t talk business. Entertainment should be just that. Use it to get to know people, understand them, even befriend them. Business should be done later. Not only does it put the customer in an awkward position (they mustn’t be seen to let the event affect their judgment) but also it is rare for these events to pass without someone having a drink. Many have lived to regret deals done after too much wine.

Entertaining and gifts can be great sales tools. They can be great relationship builders. The challenge is to take real care and focus on how you pitch them and how you deliver them. In the same way that a gift to your partner bought at a service station, or an entertainment of two tickets for your own favourite sports team does not hit the mark. As the old adage goes, it’s the thought that counts.

How Can Procurement Increase Health And Happiness?

By delivering social good, procurement has the ability to increase health and happiness.


Procurious has been attending the CIPS Annual Conference in London.

Professor Olinga Ta’eed, Director – The Centre for Citizenship, Enterprise and Governance, who spoke at our own Big Ideas Summit back in April 2015, said that although financial value is still wonderful and still king, we’re more interested in social value. It is essential that procurement (as a function) converts sentiment into financial value.

The Social Value Act was passed in 2012 and allows local and national government to consider the social good offered by bidders during procurement exercises in addition to monetary value.

The Act has been designed to make it easier for charities to win public sector contracts, applies only to procurement exercises worth more than £113,000 if awarded by central government and the NHS and £173,000 if awarded by local councils.

But what do we mean by social value?

“Social value” is a way of thinking about how scarce resources are allocated and used. It involves looking beyond the price of each individual contract and looking at what the collective benefit to a community is when a public body chooses to award a contract. For instance, social value asks the question: ‘If £1 is spent on the delivery of services, can that same £1 be used, to also produce a wider benefit to the community?’

It is now becoming increasingly necessary for social enterprises to report on their social value. Social value should equal happiness – but in order to promote the good you’re going to need happy people, a happy company, and ultimately a happy world. We have to look at ourselves, and how much value we bring to the table as both individuals and as businesses.


Is there a true and fair view of social value?

Olinga points out that there are lots of handcrafted metrics out there, but you need to have a model T Ford. You need a benchmark – the benchmark is critical. It has to matter. You can be doing great things, but you need to be able to articulate it.

Hugh Chamberlain – EMEA CSR Procurement Head, Johnson & Johnson, followed Olinga and explained how his organisation was helping people to live happier lives through the products they bring to market.

Johnson & Johnson has the lofty ambition of ensuring people live longer, healthier, happier lives, it is estimated that around a billion people use its products every day.

Johnson & Johnson’s Credo (a common set of values unifying diverse business) states: “We are responsible to the communities in which we live and work and to the world community as well”.

Hugh wanted to highlight the measurable social impact through procurement Johnson & Johnson was making. For instance it buys the goods and services it needs from organisations that would otherwise struggle to get a foot in the door – and also targets those organisations that employ people who are furthest from the job market.

What you need to know about social enterprises

Social enterprises are businesses that trade for a social and environmental purpose. At the time of writing there are 70,000 social enterprises in the UK, collectively contributing £24 billion to the economy. health and social care, but also in housing.

Social enterprises are growing faster than most SMEs, with more women leading and taking charge.

In-fact research from 2014, showed that that 38 per cent of social enterprises are led by women compared to 19 per cent of SMEs and 3 per cent of FTSE100 companies – and that 91 per cent of all social enterprise boards have at least one female director, compared to 51 per cent elsewhere.

Do you know how much social value can be achieved through buying your organisation’s services? How much emphasis (if any) do you put on delivering social value?

86% of UK Sales & Marketing Teams Say Procurement Hinders Progress

Sales and marketing fails to see importance of negotiating deals with suppliers.

According to new research from eProcurement software company – Wax Digital, sales and marketing is the department least likely to get the best deal from its suppliers, with a massive 86 per cent saying procurement hinders their progress.

The CPO Viewpoint research, surveyed by Redshift, on behalf of Wax Digital, found that over one in three sales & marketing functions place orders and spend budgets with suppliers without any procurement involvement. And only 24 per cent in sales and marketing said that they use formal supplier tender processes managed by procurement, far fewer than other departments such as IT and finance.

The problem seems to be sales and marketing’s negative perception of procurement with only 12 per cent of sales and marketing respondents describing the relationship as ‘very close’ and only a quarter of procurement respondents saying the same.

Sales and marketing appears to view procurement the least favourably, with only 28 per cent regarding it as value adding or critical, compared to 44 per cent of finance having the same view. A significant 86 per cent of sales and marketing describe procurement as hindering progress, and 1 in 5 view it as a ‘necessary evil.’

Dissimilar procurement priorities suggest why the two departments fail to work collaboratively. Procurement sees ‘handling supplier negotiations’ as the top way it can help other departments, but this scored the lowest with sales and marketing – only 4 per cent of them prioritising it.

The two departments also disagree over sales and marketing’s spending priorities. While sales and marketing are focussing on creative communication activities such as advertising, website and branding, procurement prioritises marketing fundamentals such as analytics, data and CRM.

Daniel Ball, director at Wax Digital, said: “Businesses need to bridge this gap between procurement and sales and marketing but it’s often a difficult challenge as the two departments function uniquely. This often places an importance on different areas such as creativity and personal relationships versus best price and supplier risk and compliance, which clearly leads to them clashing and being poles apart.

“Through better communication, sales and marketing could perhaps learn from procurement the importance of negotiating worthwhile deals with suppliers, and how damaging maverick spend with suppliers who are not adequately vetted can be. This could also help procurement better understand what sales and marketing value, hopefully leading to a more balanced set of priorities between the two departments.”