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The Secret To Unbelievable Engagement

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Earlier this week at eWorld Procurement & Supply we were lucky enough to sit in (and participate) in Christopher Barrat’s thought-provoking workshop on communication tactics.

Christopher benefits from real life experience in the procurement world, having been a procurement director for a major blue chip organisation. For the last 12 years he has spoken and worked with companies all over the world to help them with commercial communication skills.

At eWorld Christopher explained the key role that networking and collaboration play when working to undo entrenched behaviour.

Christopher’s steps to success:

Gathered in groups of 8-10 we were told to think of someone, (preferably at work but it can be from home life too) with whom we were having a challenging time.

If we didn’t feel comfortable being open about who this person actually way, we could have given them a pseudonym. 

Now we had to think of some specific circumstances where we interacted with this person – we were told to be quite detailed – i.e where/when/what exactly happened on this occasion. This didn’t necessarily have to be a big or dramatic event, just something that was meaningful and challenging to us.

Having thought about this, we then had to consult a diagram that had been placed on our tables. The diagram in question is shown below:

PAC Diagram

Looking at the aforementioned PAC diagram, we were told to think about the position we were going to adopt (as well as the position our antagonist took).

In order to help us gather our thoughts, PAC can be broken down into these respective behaviours/attitudes:

P: This is our ingrained voice of authority, absorbed conditioning, learning and attitudes from when were young. We were conditioned by our real parents, teachers, older people, next door neighbours, aunts and uncles. Our Parent is made up of a huge number of hidden and overt recorded playbacks.

A: Our ‘Adult’ is our ability to think and determine action for ourselves, based on received data. The adult in us begins to form at around ten months old, and is the means by which we keep our Parent and Child under control. If we are to change our Parent or Child we must do so through our adult state.

C: Our internal reaction and feelings to external events from the ‘Child’. This is the seeing, hearing, feeling, and emotional body of data within each of us. When anger or despair dominates reasons, the Child is in control.

Note the adult position – Christopher suggested that if we both ended up on this then maybe we should think again…

Armed with our positions we laid out the PAC circles on the floor, and in our groups discussed each of our difficult interactions. The next step was to physically stand on the relevant descriptor and talk through the sorts of things you would say (and do) from that position, as well as how the other person would be responding.

Finally, we moved ourselves to the Adult position. If we had adopted this stance at the time of our difficult exchange, what would be going through our minds? And how would we have talked and interacted with the other person knowing what we now know?

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Next time you are trying to deal with a difficult colleague, why not go through the steps outlined above? Try and control things, so ultimately you’ll both be able to see eye-to-eye.

Five Reasons Why Procurement Savings Don’t Stick

How to make your savings stick

The latest research from The Faculty, which is now available for download exclusively through the Procurious community feed, has highlighted that more than 50 per cent of savings negotiated by Australian procurement teams do not make their way to company’s financial bottom line.

This raises a very simple question. Why can’t we get our savings to stick?

Below, I’ve outlined the five reasons that, according the research team at The Faculty, are causing organisations to miss out on millions of dollars of negotiated but unbanked savings.

  1. Organisations lack enterprise wide alignment and ownership with procurement targets. Without a commonly accepted benefits realisation program implemented across the organisation, procurement teams will always struggle to get buy-in and adherence to the savings they have negotiated. Eva Wimmers the CPO at Deutsche Telekom AG highlighted that at her organisation, business unit leaders and CPOs have joint benefits realisation targets,. These are agreed up-front and managed together through what she described as the “tandem principle.”
  1. Silo-style environment that stifles cross-functional collaboration. Procurement teams cannot be seen as the sole custodian of a benefits realisation program. Procurement teams need to open communication lines between all business functions. Similarly, leaders from all functions should be willing and able to highlight the benefits of instilling a cost conscious culture to their team. As a 2014 Ernst and Young report stated: “The procurement team should not be the ‘sole owners’ of savings. Instead the focus of the team should be on facilitating and driving initiatives. They should also be accountable for the governance function through recording, measuring and reporting savings.”
  1. Maverick spend and non-compliance undermines procurement gains. Maverick spend is the enemy of benefits realisation. The hard work done by a procurement function is immediately undone if staff members are spending outside of contracted or agreed rates. According to The Faculty, there are three key drivers that cause staff to spend outside of contracted rates. 1. An overly complex or manual procurement system 2. A lack of input in the process of selecting the contracted supplier 3. An ignorance of the benefits that can be realised from leveraging contracted rates and service levels.
  1. Unclear definitions measurements and validation create confusion around negotiated savings. As Andrew Bartolini commented in his 2014 CPO Rising report, savings are an inherently complex metric to understand. Today it seems there is greater disparity amongst the definitions used by procurement teams and the broader business. Until organisations can agree and work towards a clearly defined set of savings definitions and measurements, there will always be leakage between negotiated savings and what actually hits the bottom line.
  1. Immature cost conscious cultures limit CPO-level efforts to expand the value that procurement can contribute to an organisation. Implementing change across an organisation in no mean feat. The results of the “Making it Stick” research suggest that cost savings are still the primary benefit valued by procurement and its stakeholders. This demonstrates that the function’s core role is to ultimately control the commercial purse strings of the organisation. Before CPOs can broaden their function’s value offering to include strategic initiatives, an organisation-wide cost-conscious culture simply must be in place.

How Can Agility Unlock Success In Procurement?

When it comes to procurement – don’t underestimate the value of agility.

Why it's important for procurement to be agile

As a startup we’re always banging on about agility… we believe that by their very nature startup companies need to be nimble, be willing to adapt to changing market conditions, and fail fast (if something isn’t working). That’s why Procurious was particularly enamoured by The Hackett Group’s opening address at eWorld Procurement & Supply in London this week. Indeed, agility (and what does it mean for procurement specifically) was one of the sticking points in Chris Sawchuk’s keynote…

Agility equals relevance

Chris noted fairly early on that perhaps the greatest challenge facing procurement today is staying relevant in the face of other business functions. It is imperative that procurement finds new ways to create value, not to mention justify its existence as departments across the board vie for slices of the budget. Hackett made this recommendation as far back as 2013, demonstrating that by breaking down traditional borders, procurement could become an enabler of internal business functions thanks to its intelligence around suppliers and markets.

So far, so good (you’d think) But fast-forward to 2015 and it seems that procurement has stalled somewhat – with the function uncertain what it should be doing to innovate (and thus adding value). What then needs to happen?

The problem stems from the fact that sometimes procurement’s idea of innovation comes from a very different place to what the business believes needs to happen. Procurement needs to be on the same page as its stakeholders and be seen as trusted advisor

To do this effectively procurement can’t sit still, it needs to be constantly looking at the market, identifying issues that could lead to business concerns and being perceived as having a sincere interest in helping stakeholders achieve their business goals. How will procurement achieve this? Through being more customer centric and ultimately (yep, you’ve guessed it) – more agile.

Chris Sawchuk

Customer centricity is king

To this end we need to take a view of what procurement organisations can do differently. You don’t need to look far to see that professional organisations are starting to spend more time aligning with their internal stakeholders – services like Uber are already doing this (meeting and exceeding SLAs etc.), and this practice in itself is generating more value.

As a function procurement needs to make the customer central to everything it does. But in order to do this successfully and improve the customer experience, procurement needs to put a structured approach in-place.

Hackett suggest that procurement needs to (over time) build a more holistic approach which incorporates things like channel management, governance, service design, and relationship management.

The first step to making this happen is to begin mapping out the influence and importance of key stakeholders. What criteria do we look at to determine who we measure? They are not all equal, for instance, suppliers can fall into several different camps – there’s strategic, then your preferred etc. Can you identify which of your suppliers represent risk, who are innovating? Likewise, can the same thinking be applied to the customer side? These are all important factors that procurement departments will need to take into account when deciding upon their implementation.

You’ll also fairly quickly come to the realisation that you don’t have the necessary resources to treat everybody the same (or survey thousands). Hackett note that crucially, a one size fits all approach won’t work.

Executives aren’t likely to respond to a survey. How then do we engage with them? The answer is a multi faceted approach. If you’re going to carry out a survey there has to be something in it for them, give something back. Why not provide them with the results?

To round things off Hackett left us all with five quick steps to help getting started (presented below). Hopefully you’ll be able to recognise the value in such an exercise, and in-turn begin to be more agile in your approach going forwards.

  • Define a customer-centric mission
  • Identify key stakeholders
  • Schedule/plan check-in meetings
  • Assess the broader organisation’s view
  • Take steps to ‘market’ procurement’s new mission

If you want to hear more from Chris, you’ll be pleased to learn that he appeared at our very own Big Ideas Summit in April of this year.

Watch the whole thing – here.

WHY And HOW Procurement Must Change

‘Innovation’ – the action or process of innovating.
“Innovation is crucial to the continuing success of any organisation” – it’s a new method, idea, product, etc.
innovation-box-purchased-no-credit

We’re here at eWorld Procurement & Supply in London and Alex Saric – Global Vice President, Marketing, Ariba, wants to talk about innovation…

While ‘The Innovation Imperative’ sounds like an episode title from The Big Bang Theory, today we were told about a different sort of evolution. Alex wanted to drive home the message that in order to truly transform the function into a strategic value driver, procurement leaders need to innovate.

And while it’s all well and good that we toot our own horn, when we’re talking about innovation it is critical that everybody thinks about procurement, and in-turn goes about their job differently.

Why now? The screws are tightening… Today there’s increasing pressure on companies thanks to increased competition. Just look at new players like Uber who have introduced wildly new business models. But, as Alex notes, whenever there is a great challenge, there’s also great opportunities. As such there is a need to embrace these changes, but to do so, procurement needs to rethink its entire approach.

Crucially procurement (as a function) is in a prime position to take advantage, it needs to strike while the iron’s hot as no-one else has really stepped up to the challenge (yet).

What can procurement learn from Uber?

In order to successfully innovate we need to recognise that procurement is becoming embedded in other parts of our organisations – and in doing so, it is also playing a more strategic role.

Here Alex pinpoints four areas where we can add value:

  • Product innovation
  • Market expansion
  • Working capital management
  • CSR/Regulatory compliance

With all these in mind, what do we need to enable procurement innovation?

People: people need to want to develop. Here we are provided with the example of people not willing to use social media at work, while they are more than happy at home (in personal time). It’s this shift in attitudes that needs to be addressed and adjusted in order to progress.

Automation: the automation of processes will enable you to free your capacity to concentrate on other things.

Connections: in order to drive innovation you are going to be talking to a lot of suppliers (but you need to be talking to the WORLD). Expand your connections by whatever means necessary.

Business networks: Business networks are simplifying business collaboration and delivering benefits across all network participants. In this example procurement isn’t the only function that wins, benefits will be felt across the entire organisation when you open up the communication channels.

Wrapping up a very packed session, Alex reminded us that innovators are already starting to reap the rewards. For instance, Staples has reduced its processing costs and Cisco is making savings across its services. Along with the aforementioned Uber and Amazon, innovation is starting to drive key changes across the world’s stage… The question is what are you doing to follow suit? Isn’t it about time you caught the innovation bug too?

Predictions For The Next Decade Of Payment Innovation

Industry experts predict how we will pay (and be paid) in 2025.

Payment innovation

A UK payment infrastructure provider has published a collaborative whitepaper – titled Moving Money 2025 – which has gathered the leading voices in the payments industry together to predict how payments could change by 2025. 

Contributors who gave their views to this report included Nationwide, Toynbee Hall, Tooley Street Research, Consult Hyperion, Financial Fraud Action UK and the UK Cards Association

The results have clearly demonstrated that, whilst we are a nation that is still getting to grips with a whole host of new ways to pay, the appetite for innovation is accelerating.  

Greater security demanded – but flexibility over identity authentication is expected

However we end up paying for things in 2025, security is the number one concern for consumers – 65 per cent identified this as their number one priority when it comes to financial transactions. Contributing experts to the paper agreed, predicting that by 2025 there will be multiple ways of authenticating identity before payment can be made. In fact, as smartphone security increases, physical payment cards are expected to become obsolete since account details will be stored on the device itself. We’ve already seen a glimpse of the impact that biometrics-initiated mobile payments could have in the future and VocaLink’s research has found 1 in 4 UK consumers would consider using biometric technology to access banking or payment services.

Advanced biometric authentication and dominance of real time payments expected to become the norm in ten years.

However, by 2025, some experts believe biometrics will be the principle method to authenticate our identities, with the usage of facial recognition in particular significantly reducing fraud and time/hassle constraints in making payments.

Real-time payments will offer certainty

Over the next ten years we will likely see an increase in adoption of immediate payments, via the Faster Payments system, as well as new innovations which build on this existing infrastructure. Larger transactions will become available on an immediate basis, particularly as the value limit on transactions rises past the current level of £100,000. This has obvious benefits for SMEs who will make and receive payment quicker, providing greater cashflow certainty and enhancing growth potential. Paying staff salaries will also be increasingly easy, as a payment can be made at the end of a week to reflect the exact hours worked with the employee receiving their salary immediately.

Empowering payers to make informed purchases in a way that suits them  

Flexibility in how we pay is already an acute need for many today. The employment market is changing with a growing number of workers reliant on multiple income flows, rather than having one steady and periodic source of income. One prediction regarding this issue is that by 2025 incomes could become even more erratic so should be met with technology that offers the necessary agility to accommodate these customers.

Similarly, another contributor to the Moving Money whitepaper believes that one of the most successful future innovations will be to make it easier to quickly ‘undo’ payments made in error to the wrong person or organisation.  This is a problem nearly 1 in 4 people in the UK, (rising to 1 in 3 for those under 45), have already experienced according to VocaLink’s consumer research. Of these, approximately three quarters eventually got their cash back whilst the rest simply did not see their money again, highlighting the need for a universal process to be devised and adopted in the event of erroneous payments.

Chris Dunne – Director at VocaLink commented: “The UK is in a fantastic position to make real time payments and all these other predictions a reality over the next decade. We have a world class digital payments infrastructure and this puts us at a distinct advantage – however if we are to stay ahead of the crowd, it is vital we start laying groundwork for the future now.”

“The collective insight of this whitepaper has shown us what we could and should be able to achieve in the payments sphere. Disparate corners of the UK’s society and economy will benefit hugely if we can map their needs against the evolution of the UK’s payment system and the burgeoning technology that supports it. This collaborative effort is only the beginning; we are keen to catalyse discussion across all relevant parties about what comes next and set the wheels in motion to make future payment technology a reality.”

Market Intelligence: How to Find Information to Supercharge Your Sourcing

How to Find Information to Supercharge Your Sourcing
Supercharge your sourcing!

By Connor Cantrell, The Hackett Group Strategy & Operations Consultant.

Gaining market intelligence is a recognised way to both develop and support strategic sourcing decisions that will ultimately pay dividends for an organisation. However, the ability to gather market, supplier and industry information that is both accurate and timely is a challenge many organisations face. Understanding the core components, and creating a library of tools and resources to effectively collect this information, will enable an organisation to promote a culture of informed decision-making and support efficient third-party supplier relationships.

Core Components of Market Intelligence

Three types of intelligence can be collected to optimise your strategic sourcing and business performance: market research, competitive intelligence and market intelligence. Market research covers a broad range of applications and techniques for gathering, storing, analysing and providing access to data, while competitive intelligence is the process of obtaining information for strategic purposes. Although, understanding and applying all 3 areas will ensure optimised decision-making, for purposes of supercharging a company’s sourcing processes, this article will focus on market intelligence.

Market Intelligence

Developing market intelligence includes elements of market research and competitive intelligence, but is largely defined by the process of gathering and analysing information relevant to a company’s supply markets, specifically for the purpose of supporting accurate and confident decision-making in the procurement process.

The potential benefits can be “bucketed” into 2 main categories: gaining external awareness and developing data to better support internal planning. It is imperative that an organisation has the ability to view the external marketplace in order to gather data on supply market capabilities, observe how the competition is developing and managing their supply base and supply chain, as well as understand key trends impacting or occurring within the market. On the flip side, it’s critical that an organisation effectively synthesises the external environment to refine internal product plans, identify competitive opportunities and execute enhanced sourcing strategies in support of the organisation’s stated strategy and business requirements.

The ability to simultaneously pair the external awareness capability with internal planning allows an organisation to effectively leverage buying power, which in turn will provide a competitive edge in the marketplace.

Market Intelligence: How to Find Information to Supercharge Your Sourcing

Library of Tools

While the benefits of market intelligence are visible and apparent, a common struggle for many organisations is finding pertinent information from credible sources. These difficulties may include: supply data for spend categories not readily available, biased information or a lack of knowledge on where to begin. Luckily, market research sources exist across multiple dimensions and avenues. There is not a “golden rule” on how to start or where to research. Several examples of sources and types of research are outlined below:

Market Intelligence: How to Find Information to Supercharge Your Sourcing

These resources are not all-inclusive, and as you define your research process, you can customise the process to fit your organisation’s needs and extend your reach. A great way to grow your resource base is to review known sources for additional material. For example, what sources are cited in a quarterly report on a particular commodity or service – where do they get their data? However, it is important to keep in mind not all of these resources will be in-scope. Also, remember to prioritise resources in a way that enables you to identify useful, timely research in a cost-effective manner.

Market Intelligence: How to Find Information to Supercharge Your Sourcing

Going Forward

Market intelligence allows category managers to make credible, data-driven strategic sourcing and supply base decisions by leveraging a wealth of market facts and data. We can’t do our jobs effectively without constantly staying abreast of relevant industry, market and competitive developments. If you want to test your knowledge on a particular commodity – go back to the home page of Spend Matters and type the commodity name (goods or services) into the search bar. See what comes up, who is publishing it, and what is happening that is relevant to your work. It’s a great starting point for developing your subject matter expertise!

In summary, it’s important to explore the plethora of resources available in order to categorise and tailor your research to meet the specific requirements of both your commodity/service and the organisation. Your team will increase its strategic sourcing capabilities and buying power by supercharging your market intelligence and continuously updating its market, industry and competitive knowledge to create value for the organisation.

What Can Olympians Teach CPOs About Leadership?

CPOs and Olympians gather to discuss leadership.

Taking the road less travelled
Success is about taking a path you believe in.

During the month of August, The Faculty Roundtable once again took to the road. Sessions were held with leading Australian CPO’s in Melbourne, Sydney, Brisbane and Perth. What stood out from this series of events was the changing role of the CPO. As we highlighted in this article, the rapid change of pace in the procurement landscape is challenging CPOs to lead and motivate their teams in entirely new ways.

During its August session, The Faculty Roundtable brought together a group of elite Australian CPOs as well leaders from the business world and the sports field to discuss the changing face of leadership in Australian procurement.

The points below present a summary of these discussions.

An Olympic Perspective

Jenn Morris, the guest speaker at our Perth event, has a truly impressive record in leadership. Jenn is currently a partner at Deloitte, a director at the Fremantle Dockers Football Club, the Commissioner of the Australian Sports Commission and a dual Olympic gold medallist. So when Jenn speaks about leadership, she is provocative, challenging and it pays to listen.

Drawing on fascinating examples from both her corporate career and time with the Olympic gold medal winning Australian hockey team, Morris’s discussion on leadership highlighted some truly valuable lessons for Australian CPOs. She spoke on the importance of leaders setting the bar for performance within an organisation. It is the responsibility of CPOs to define what ‘high performance’ is and ensure the workplace is structured in a way to deliver this kind of performance.

Morris also described the importance of leaders sticking to their guns, suggesting that it takes courage to develop a plan and stick it through thick and thin. This statement was given some context with the example of the Fremantle Football Club, a team that for 15 years was perceived to be underperforming. The organisation undertook a top-to-bottom strategy change. Many of the decisions made in this process drew criticism from the clubs fans and footballing media. However the leadership team stuck to their plan and this year the team has finished the season on top of the ladder. Morris, a director at the club, emphasised the importance of not being distracted as a leader, suggesting that success is about setting a path that you believe in and having the courage and faith to stick to it.

New Projects that Challenge Procurement’s Traditional Modus Operandi 

Perhaps one of the most innovative initiatives we’ve seen come out of the Roundtable in recent times was a project that saw a number of firms in the same industry (traditional competitors) working together to develop a joint supplier pre-qualification process. The CPOs involved in this fascinating project were able to put traditional rivalries behind them and work together on a project that would be mutually beneficial for all involved.  This project perfectly highlighted the need for CPOs to challenge their traditional thinking to come up with solutions that will provide optimal benefit for the business.

Hurdles to effective leadership

A dramatic discussion in Sydney led by managing director of Transfield Holdings, Luca Belgiorno-Nettis, highlighted the role that external forces (such as governments) play both in hindering and enabling corporate leadership in Australia. Belgiono-Nettis is a passionate follower of disruptive models and spoke of his work in exploring random citizen selection as a community change tool that challenges traditional notions of power in the political process.

CPOs discussed the challenges that they felt stood in the way between themselves and optimal leadership. Belgiorno-Nettis challenged CPOs to try and understand what is was that brought people together in a collaborative manner and to harness a culture that encouraged this. Also highlighted, was the fact that true leaders are unfazed by taking new approaches to old problems. Drawing references to current political systems, Belgiorno-Nettis suggested that sometimes a complete rethink of power and leadership structures is necessary to impact positive change.

Linking Procurement Activity with Board Strategy

Annabel Chaplain, a non-executive director at Downer, highlighted that as procurement continues to move into the corporate spotlight, the function’s leaders are realising the importance of taking actions towards achieving corporate objectives set by the board rather than their own ‘procurement objectives’. Knowledgeable boards are now seeing procurement as a legitimate avenue for competitive advantage and the CPO is viewed as the conduit between board level objectives and procurement activity. It is the leadership of CPOs that will ensure corporate objectives are met.

Chaplain’s presentation pointed out that the leadership qualities shown by CPOs need to go both up and down the chain. Truly successful CPOs are able to lead their teams to achieve corporate goals but are also able to educate board members about the opportunities and challenges that lie within the businesses they are tasked with guiding.

IT departments revealed as ‘maverick spenders’

New research suggests IT decision makers like to go it alone when making purchasing decisions.

IT departments are to blame for maverick spending

According to a recently-published survey, billions of pounds of business IT spend is being put at risk annually by IT teams that skirt corporate procurement rules and processes. The survey reveals that (crucially) most IT leaders dismiss the value of the procurement function out of hand.

In the Procurement Perceptions research, which surveyed 200 procurement professionals and their colleagues by Redshift (on behalf of Wax Digital), an overwhelming 78 per cent of the IT professionals surveyed suggested that procurement hindered rather than helped their department, with one in three admitting to bypassing official purchasing processes as a result.

Where procurement is involved in the process only 19 per cent of IT respondents said that the procurement team actually led on IT cost savings initiatives. This is compared to 43 per cent of procurement claiming that they did. 

The two departments are also found to have a polarised view of spending priorities for IT, as procurement focuses its support on front-end technology devices and hardware, while IT places greater importance on infrastructure and security.

In a spend category which typically deals in high value multi-year agreements, supply chain risk was at least one area where IT and procurement teams are more closely aligned. Almost half (46 per cent) of IT respondents identified the most important contribution from procurement was in the areas of supplier risk and negotiation. 

Daniel Ball, director at Wax Digital, comments: “IT is a complex spend area, but that is all the more reason that procurement expertise and rigorous policies are brought to bear here. The fact that IT departments often spend without procurement’s oversight makes maverick over-spending likely and could open the organisation up to severe financial and reputational risk. Let’s face it, it’s an industry littered with project failures, therefore it’s critical that these two departments look to collaborate more effectively than is obviously the case in many organisations.”

Why It Makes Sense To Do Business In Africa

Sitting amidst the buzz of 300+ SME exhibitors in the Enterprise Development Hall in Johannesburg, it’s not hard to see why Harvard Business Review (HBR) believes Africa’s time is now.

Doing Business in South Africa

Here to attend and speak at the Smart Procurement Conference, this has been my first trip to South Africa and I’ll leave tonight with an overwhelming sense of four things:

  1. The warmth and friendliness of the South African people
  2. Their relentless desire to connect and learn
  3. An all pervasive energy to try new things and support the country’s growth
  4. The truly excellent beef. Really, it’s delicious!

It was very good fortune then that as I was about to make my way back to the hotel, I happened upon Selven Moodley’s presentation in the Knowledge Hub, titled: Doing Business in Africa.

As Selven explained, two years ago, Harvard Business School, identified 7 Reasons Why Africa’s Time is now. As you’ll see below, all continue to apply:

  1. Africa has huge market potential

There are 52 cities on the continent with populations of 1 million or more – the same as Europe. And don’t be fooled by outdated misconceptions – there is a middle-class here which is bigger than India’s and who need everything from healthcare, to retail, to telecommunications.

  1. The region is increasingly stable

Africa appears to have entered a modern era of greater stability, particularly in Sub-Saharan content, with a declining number of coups. Though moving at different rates across the continent, political reform is also underway.

  1. Africa has the world’s largest workforce

By 2035, Africa’s workforce will outnumber China’s and this paired with the Government’s growing investment in education, could prove game changing.

  1. Mobile traffic exploding

Mobile penetration, which stood at 2 per cent in 2000, has increased to half a billion subscribers (just shy of 80 per cent) in 15 years. As handsets become more affordable and the internet is democratised through low cost data for rich and poor, this trend will only accelerate.

One quick word of warning: Don’t necessarily expect your African procurement or supply partners to be on WhatsApp just yet. Smartphones remain very much in the minority, making up only 15 per cent of overall mobile phone usage so you may need to figure out how to do business with non-smart phones for a time yet.

  1. Intra African trade is in its infancy

Intra-African trade currently only accounts for 11 per cent of South African trade. With Government mandated investment in local content and a subsequent boom in SMEs, there is enormous potential to move the needle on this.

  1. Increasing Government spend on education

On average, African countries spend nearly twice what OECD governments spend on education.

  1. Africa contains most of the world’s arable land

A fact that surprised me, were you aware 60 per cent of the world’s uncultivated farmland is in Africa?

Of all these reasons, Number 5, the potential for Intra African Trade cannot be understated.

Selvern offered the example of one of his Ghanaian clients who imports large quantities of copper cabling from China. Selvern queried the origin of the copper, only to discover it is mined in Zambia, before being taken to China, made into cable and only then sent back to Africa. Imagine the benefits – cost, speed, continuity etc. – if Africa was able to produce the wiring in-region?

Number 6, Education, also feels to me to be a tipping point. Although secondary school enrolment remains low across the region by world standards, the talented individuals I met at Smart Procurement World were truly exceptional and I’ve never felt a stronger thirst for learning at a procurement conference before. If Africa can develop skills in those areas that will drive the economy, then when paired with the size of its workforce, will eventually challenge China and India for supremacy in this area.

Without getting into the myriad of environmental issues that accompany the destruction of natural habitats for farming, Africa clearly has the potential to become an agricultural powerhouse. Add to this oil, gas and her other natural riches, and it’s safe to say that if Africa is not already part of your supply network (or even consumer market), it almost certainly will be in the near future.

Speaking with the entrepreneurial business owners in the Enterprise Development hall, I am struck by the fact that to be successful here in Africa, foreign investors must use local businesses, hire local people, and likely, produce for the local market. To do otherwise, will not only short-change Africa but deprive your business of the experience, innovation and local know-how that exists here.

While Selven’s advice was directed to SME owners, I have a feeling his tips are just as applicable for Procurement professionals looking to do business for the first time in the region (or any new geography for that matter).

Selven’s advice follows:

  • Understand market you are operating in
  • Understand the logistics of operating in Africa
  • Familiarize yourself with trade agreements, export processes, workforce agreements
  • Interact regularly in your field to learn and determine if there are opportunities as both buyers and suppliers to ‘hunt in a pack’
  • Understand the support mechanisms offered by Government incentive schemes, NGOs, insurance businesses etc.
  • Get out from behind the desk, go work in the field. Link up with a partner in country to accelerate your learning

Naturally this last piece of advice is music to my ears, highlighting yet again, the value of building your global procurement network here on Procurious!

If you are one of our new African members to Procurious, don’t forget to join the African Procurement Professionals Group here.

What is causing Aussie CPOs to lose sleep?

What’s causing Aussie CPOs to be sleep-deprived? Talking-points from The Faculty Roundtable’s latest round of discussions reveal all…

What's keeping CPOs awake at night?

Following on from the success of Tania Seary’s recent article ‘The Five Disruptive Forces that will Keep CPOs Awake at night in 2015,’ The Faculty Roundtable (a series of CPO meetings held in Australian capital cities and in Singapore) decided to put the same question to some of Australia’s leading CPOs.

The issues below are summary of the discussion that took place on this topic in the recently completed August Roundtable series.

  1. Cost vs. Customer Centricity Dichotomy

In Roundtable meetings across the country, CPOs discussed the challenge they faced in finding a sustainable balance between meeting the expectations and requirements of its internal customers, while at the same time ensuring corporate cost cutting objectives were achieved. CPOs discussed how providing value-add services often flew in the face of traditional cost-saving procurement and that one of their greatest challenges was to navigate this tricky dichotomy.

One Sydney CPO highlighted creating close links with the C-Suite as the best means to achieving this balance. He linked the challenge to a business analogy discussed in the Harvard Business Review, claiming that CPOs needed to have a sound understanding of the legwork and operational challenges their team faced while stressing the importance of taking a step back and viewing the team’s performance “from the balcony” and linking every activity and strategic decision directly to corporate objects.

CPO discussions in Perth centred on the increased spotlight the procurement function has found itself under since global commodity prices started to slide. CPOs there said they had been asked to not only cut costs but also to identify and define new revenue streams.

The discussions in Perth covered the necessity for procurement teams to drop the procurement lingo and start speaking about the business more broadly. Melbourne Roundtable members suggested procurement teams need to address how we as a function can help achieve organisational success not procurement metrics. Perth Roundtable presenter and 2015 Procurement Leader of the Year, Kylie Towie has previously discussed this on the Procurious blog.

  1. Developing Talent

Talent continues to be a major cause of concern for Australian CPOs. One CPO went so far as to say “Capability building is the biggest issue facing Australian procurement.”

Throughout the roundtable series, CPOs discussed the fact that as the role of procurement continues to grow and change within our organisations, so too does the required skill set of procurement teams. A Brisbane CPO claimed that attracting and retaining top corporate staff needs to remain a top a priority for procurement. He went onto to say; that while the functions image is improving the battle to attract top corporate talent is as ferocious as ever.

Another Brisbane-based CPO made gave some interesting insights into the disconnect between talent management theory and practice. He claimed that theories alone couldn’t motivate teams to do something; only actions can do that. The same CPO claimed that implementing talent management processes required constant attention and commitment. The example of a mentorship program was used to describe the challenge. The organisation had decided that implementing a mentoring program would be a great way to motivate and develop junior staff. This was in fact true. However, the challenge lay not with motivating junior staff to participate, but rather in encouraging senior staff to act as mentors. Many leaders either were unable to see the value in the project or did not feeling comfortable acting as a mentor.

  1. Proving Procurement’s Worth

This fear has long been with the CPO and it seems it’s as strong today as ever. Across the country, CPOs highlighted the constant need to validate and prove their worth. There was general agreement amongst the Australian procurement leaders that this will (and should) continue to be the case.

CPOs, particularly those working in the resources sectors, mentioned that they were under increasing pressure from CEOs to not only identify savings, but to track these benefits all the way through the P&L. To this end, CPOs expressed great interest The Faculty’s upcoming research paper “Making it Stick” which is designed to ensure that CPOs and procurement teams realise all negotiated savings. The paper, which will be release on 17 September, highlights that more than 50 per cent of savings negotiated by procurement teams fail to find their way to the bottom line. The report provides a road map and points out pragmatic strategies that procurement teams can implement to ensure these savings are realised. Stay tuned to Procurious for more information about this highly anticipated research paper.

  1. Managing the Rate of Change

“The pace of change is so intense, it can be a struggle just to keep up,” claimed one CPO. This sentiment was echoed by most of the CPOs we spoke to as they discussed the importance staying on top of technology trends and tried to understand how this rapidly changing environment might impact their operations.

Discussing the need to leverage new technologies, a Brisbane based CPO claimed, “its not enough to just carry on running tenders, we need corporate game changers.”

The CPOs went into some detail discussing the challenges procurement teams faced when it came to adopting new and disruptive technologies. A lot of it boiled down to procurement professionals having a strong fear of failure.

“Some of our staff are scared to fail and this impacts what we can achieve,” said one CPO. While this aversion to risk may be beneficial in many areas of procurement, when it comes to implementing new ideas or ‘game changers’ its can hinder progress.

Pulling reference from the tech and start-up sectors, one CPO stated that, “In order to take full advantage of new technologies and operating processes we need to be ready to fail fast and fail often.”

The Faculty Roundtable comprises of an elite group of Australian and Asian procurement leaders who gather to share their experiences and insights, to achieve greater commercial success for their organisations.

Meetings are held throughout the year in Melbourne, Sydney, Perth, Brisbane and Singapore. To find out more or to get involved click here.