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Cloudy Future for ERP Based Procurement

Traditional ERP systems just don’t do the job for procurement. However, an integrated, Cloud-based approach could be the answer the profession is looking for.

Cloud & ERP

This article was written by Daniel Ball, director at eProcurement specialist, Wax Digital.

The benefits offered by best-of-breed eProcurement technology are well documented. Procurement professionals don’t need much convincing of the advantages of using them.

However, for some organisations, stepping away from using their Enterprise Resource Planning (ERP) system’s in-built purchasing tools isn’t always an easy option.

Modern ERP systems offer organisations a way to manage, collect and interpret data from a variety of business activities across seemingly all business functions, from purchasing and finance to HR and customer service. They also integrate all internal data-collection systems so that all business functions rely on one single database.

This one source of real-time data can help businesses to make decisions based on facts rather than assumptions. To coin a well-used phrase, they could be considered something of a panacea capable of eradicating all business process ills.

There is another way…                                                                                                             

However, for all of the many benefits ERP offers to the organisation as a whole, it’s not uncommon for procurement teams, amongst others, to be frustrated by its rigidity and functional limitations. While core functions such as Finance, Manufacturing and HR are well supported by ERP systems, Procurement, it would seem, is often less so.

Procurement teams will therefore inevitably face the choice between continuing to use ERP, or move to an alternative best-of-bread solution. Today this almost invariably means a cloud-based system that needs to integrate seamlessly with ERP.

The Integration Challenge

But how can procurement convince the rest of the business, and especially the IT department, that the existing functionality on offer to them is no longer adequate for their needs and that moving to a cloud-based system that can be integrated with ERP can be done easily and securely?

We’ve seen many of our customers seek to replace the procurement modules offered to them by their ERP systems but who have been stopped by the integration challenge. They have faced concern from IT managers that integrating with a remotely-hosted, third-party system may pose a risk to the organisation, especially when business-critical master data and finance systems are concerned.

However, the tide is now turning. Some cloud-based eProcurement solutions can securely integrate with ERP and their finance systems. This offers users freedom of choice and the ability to automate, improve, and better manage many of their day-to-day procurement processes.

Feasibility of Integrated Systems

A platform which comes with its own ready configured Integration Platform as a Service (iPaaS) is certainly a major step forward in convincing the finance and IT departments and using a separate but integrated system is not just possible, but advantageous.

We’ve worked with many procurement teams in leading organisations who’ve decided to reject the functionality on offer to them from ERP, and integrate cloud-based eProcurement.

One of our customers uses JD Edwards’ (JDE) ERP system for finance, and had used its procurement module for over ten years to raise purchase orders and approve invoices.

The system wasn’t very efficient or easy-to-use so certain departments chose to bypass it all together, preferring instead to manually process their orders.

However, the complexity and limited functionality of the existing system was preventing the organisation from making wide-scale purchasing efficiencies and not giving a clear view on organisational-wide spend.

Deciding to integrate a new eProcurement system with the JDE finance system that would enable a number of efficiencies including better spend control, more efficient order processing and payments, the organisation decided on a hybrid cloud approach allowing us to host our cloud-based service from within its data centres.

Wide Reaching Benefits

At another of our customers the procurement team was keen to make efficiencies to the management of its indirect spend across Europe.

Multiple systems were being used across the region for indirect purchasing, and these were largely manual, paper-based processes that did not provide full visibility and control over expenditure.

As a result, collaboration between the purchasing teams and finance, as well as with suppliers, was not integrated and could have lead to duplication on spend, or even the business purchasing goods or services it didn’t need.

In order to improve indirect purchasing across Europe, the organisation chose to move its entire European operations to a single, cloud-based eProcurement system to integrate with SAP.

Best-of-breed cloud-based, eProcurement solutions offer a host of benefits across the business, that are far reaching and extend beyond the walls of the procurement department.

Australia’s Love of Credit Set to Continue

Australia’s love of credit isn’t likely to fade anytime soon, a conference in Sydney was told last week. But that’s no bad thing.

Love of Credit

The Banking and Financial Stability Conference, hosted by the University of Sydney Business School, brought together senior representatives of the US Federal Reserve Bank, the Reserve Bank of Australia, the Australian Prudential Regulation Authority, the Bank for International Settlements, and The Bank of Finland.

The one-day conference also discussed:

  • The current global obsession with monetary policy;
  • The constant pressure banks face from new fintech players; and
  • The Brexit vote and what its broader impact could be.
“Over-exuberant Lending”

The Reserve Bank of Australia’s Head of Financial Stability Department, Luci Ellis, spoke on the topic of ‘Financial Stability and the Banking Sector’.

Ellis told the conference that Australia’s ongoing need for credit can mean that the value of a well-functioning creditor sector is sometimes under-appreciated.

“Especially since the (global financial) crisis, the dangers of too much credit have become all too apparent. Over-exuberant lending and borrowing can mean that some people are getting loans that they have little prospect of being able to repay, even in good times.”

Importance of Credit

Less well appreciated are the costs of having too little credit available, Ellis added.

“The point here is simply that in recognising that too much credit can be dangerous, we should not instead fall into the trap of thinking of all borrowing as illegitimate, or somehow immoral. Less credit isn’t always better,” she said.

“The low credit levels available in regulated past decades are not the benchmark we should be evaluating ourselves against now, when trying to assess risk in the system. Some activities can and should be financed with at least some debt, even in bad times. And even thought there are plenty of others that should not.”

While Australia doesn’t have this problem, some recent examples overseas show the damage that can be done when there isn’t enough credit available, Ellis told the audience.

“Australia is one of the more bank-orientated financial systems when it comes to providing credit, but it is hardly alone. Some of the countries at the lower end of the range, such as the United States and Canada, are there partly because their governments support the securitisation market in various ways.

“These interventions allow banks to take some exposures, particularly mortgage exposures, off their balance sheets. In some cases they also allow some non-bank loan originators to operate at larger scale than might otherwise be possible,” Ellis says.

Broader Brexit Impact

Conference Co-Chair and Associate Professor in Finance at Sydney Business School, Eliza Wu, says pull-back in bank lending to Asia-Pacific by global, and in particular European, banks can be expected as a result of the Brexit. This is a major concern for the region’s investment and growth.

“This trend started with the GFC, continued into the European debt crisis, and now with Brexit,” Wu says.

Wu told the conference that, “enhancing financial stability in the face of unprecedented monetary policy regimes, and new risks that have developed, will remain a major challenge for policy makers and conference attendees alike.”

Associate Professor within the Discipline of Finance, Professor Suk-Joong Kim, added: “The most immediate concern is the increased level of uncertainty and volatility expected, and experienced, in the international financial markets due to the Brexit vote. Brexit has cast doubt over London as the world’s most important financial centre, and the future of the international banks that operate there.”

Regulation & Supervision

Luci Ellis also spoke on the role that major banks will play in the future. In a world where banks are central to financial stability, they will always need to be regulated and supervised.

“The Australian financial system has managed to weather the external shocks of the past two decades reasonably well. Strong prudential supervision has helped achieve that positive outcome.”

However, supervision goes far beyond ensuing that banks have enough capital, she added. History shows that banks can have much higher shares of capital in their liabilities than we see nowadays.

“We should remember that the policy measures that safeguard the liquidity of bank deposit liabilities, such as deposit insurance and liquidity provision by the central bank, can create incentives for banks to take those risks,” Ellis said.

“If the ultimate goal of financial stability policy is the real economy, it isn’t enough to require banks to hold enough capital to absorb losses, while disregarding the scale of those losses. The losses themselves can represent distress in the economy. The holders of capital are often part of the same economy, so absorbing the losses does not make them go away,” she says.

“Absorbing the losses, and thus avoiding a collapse of the banking system, prevents knock-on effects to other parts of the economy, which is better than nothing. But it would be irresponsible to disregard the risk profile of the banking system’s assets, as long as banks have enough capital to cover those risks,” Ellis says.

How to Ensure High Performance Procurement Contracts

If you want your business to thrive, sticking with the status quo isn’t enough. Ensuring high performance in procurement is the only way to stay ahead of the competition.

High Performance

With a volatile economy, the need for superior supply management and increased organisational efficiency is vital. Organisations feel the pressure to contain costs while maximising results.

However, incremental improvement won’t work. For long-term success, a transformation of key processes is required. Supply chain managers must accept nothing less than adopting the methods that can make their organisation best in class.

How Well is Your Company Covering the Basics?

While innovative solutions will be important going forward, the foundation of high performance is mastering the basics. Ensuring contract procurement efficiency based on solid core processes will lead to savings in both time and resources, driving better outcomes.

According to data collected by the Aberdeen Group, 70 per cent of procurement executives cite addressing and streamlining indirect spend processes as a top focus for controlling and reducing costs.

While many procurement executives have found ways to rein in cost inefficiencies in direct spend, they are also finding that tried-and-true techniques for reducing costs aren’t working.

So, how can you ensure high performance in your procurement contracts? The following areas contain some of the most targeted ways to achieve success:

Making Use of Mobile Apps to Expedite Processes

Employing the use of mobile apps can help with contract execution.

Mobile apps allow your employees the ability to use real-time information. This will help managers rapidly adapt to the changing procurement environment around them.

Dole Foods is a prime example of how mobile technology can expedite key business processes. The company created a mobile app to streamline key components of logistics and workflows.

Case Study: Dole Foods

Dole Foods is currently the world’s largest producer of fresh fruits and vegetables as well as high-quality packaged foods. The organisation markets and sells their products in over 90 countries.

However, today’s economic conditions along with changing consumer preferences, rising competition, and new regulatory hurdles caused the company to seek new ways to support continued growth.

Their partnership with SAP for core operations was already proving extremely effective; however, accessing the tracking and management software from laptops and desktops alone was becoming cumbersome.

The solution was a user-friendly mobile app, allowing Dole employees to stay productive while on the go. Now, purchase orders can be addressed and managed on their smartphones and tablets.

The ready-to-use P.O. Approval app is fully integrated with Dole Foods’ on-site SAP system. The result is seamless performance.

Employing Multiple Communication Channels

While face-to-face meetings are ideal, they are not always possible. This is where communication software can be invaluable.

Its cloud-based capacity allows for instant communication, the inclusion of multiple collaborators, and permanent record keeping of all communications.

Internally, your team may want to use Slack. This ensures all relevant parties receive the information in a timely manner. And, when everyone is knowledgeable, the risk of errors and legal concerns are reduced.

Automation: Now is the Time

Companies should consider automating to help accelerate key processes. Automated template management can provide a major time-saving benefit. It deploys unlimited customised office templates to all employees.

A contract management template ensures that all the necessary language and concepts are included in your contracts. You can create boilerplate documents that can be easily personalised for special circumstances.

Seamless Supplier Onboarding

Document management is key to never misplacing a critical item. Create a central repository to store all important compliance and legal documents related to each supplier.

Establishing a contract repository provides organised storage of documents. Furthermore, contracts can be securely shared. Permission settings allow for even more in-house confidentiality.

Ensure High Performance

In today’s economy, high-performance procurement contracting is essential. Accuracy and efficiency can lead to significant time and cost savings. Take your business procurement performance to the next level.

Has Procurement Got Its KPIs Right?

As the Procurement function evolves, its KPIs remain old-fashioned. Bertrand Maltaverne explores the surprising results of a Procurement KPI survey.

Procurement KPIs

In a rather interesting coincidence, just as ProcureCon Europe was releasing a benchmarking paper called Procurement Challenges, we released a white paper that also focuses on one of the most fascinating challenges in the industry: The Direct Material Procurement Challenge.

More than a coincidence, this is a sign of the times as the role of Procurement and its position in organisations rapidly becomes quite a recurring hot topic.

Before going into the specifics of ProcureCon’s report, the challenges that Procurement faces stem almost entirely from the transformation Procurement  is going through as a function.

Value vs. Cost reductions

“As businesses emerge from the recent recession into a fragmented supplier ecosystem, a normal approach to creating value through cost saving alone is no longer relevant.”

ProcureCon’s report is not the only one to highlight the current gap between a value-­based Procurement approach and the actual KPIs that most organisations track, specifically:

  • 91 per cent of surveyed organisations have cost savings as a KPI;
  • 76 per cent have cost avoidance as a KPI.

KPIs for value metrics like quality, risk, and cycle times languish respectively in 5th, 8th, and 12th place! Fewer than 50 per cent of companies track these measures.

More troubling: only 30 per cent track Procurement ROI as a KPI. ROI (Return On Investment) or VFM (Value For Money) is actually the main KPI that all organisations should aim for as it synthesises the ratio between value generated and energy or resources employed. Or, in other words, a measure of the effectiveness and efficiency of a Procurement organisation.

Supplier Management Core Procurement Activity

Among the many interesting insights in the report, there are two aspects related to supplier management and stakeholder management that are kind of interesting. They both relate to the qualification of suppliers and are quite revealing.

Procurement still operates too much in a silo

“Procurement typically take the lead when it comes to the qualification of contractors and suppliers during the bid process.”

Decisions regarding sourcing have to be cross-­functional. Not only to ensure that all aspects have been looked at but mostly to ensure adoption of the decisions. Involving other departments in the decision-­making process is critical.

Even better, involving them in the early stage of defining a category’s strategy is vital to define the value that they expect suppliers to deliver. This may not be low prices alone.

Procurement still sees suppliers as trading partners, not business partners

There are also a couple of surprises when it comes to the dimensions Procurement looks at when assessing new potential suppliers. We assume this also reflects the KPIs tracked afterward.

Not surprisingly, financial stability comes first. As a former purchaser, I can say this fits with the practices I have seen on the field. This is not without inherent risk: “conducting a single financial stability check (e.g. D&B check) before engaging a supplier could provide a false sense of assurance.”

More surprisingly, CSR-­related themes like sustainability and safety stand squarely in the middle of the list. Around 50-60 per cent of respondents say they include these factors in their assessments. A notable exception is diversity, which comes last on the list with only 20 per cent of respondents taking this into account.

Issue of Supplier Innovation

But, very surprisingly, competent advice is a criterion that is at the bottom of the list, covered by only 29 per cent of respondents. This is especially surprising considering the focus on the role of Procurement in organisations, and its impact on innovation. The lack of attention on this area is rather troubling.

As we understand it, if organisations do not measure if suppliers could be a source of new ideas and suggestions, it means that they do not expect suppliers to be able to participate in their innovation process. This quite a self­-centred view of innovation!

In conclusion, there seems to be a consensus within the Procurement community that Procurement is not in the place it deserves to be, and that, in the future, its importance will grow. For example, ProcureCon’s report says that 62 per cent of respondents to their survey estimate that Procurement will move towards making board-level decisions in the next 3 years.

But, as far as their report and many others show, there is still a gap in capabilities and delivery that needs to be bridged before we get there.

Now is the time for Procurement to evolve!

British Businesses Need to Respond to Brexit Now

British businesses can’t afford to wait before they take action and respond to the post-Brexit situation in the UK.

British Businesses Brexit

With uncertainty still abounding, and business implications not yet fully understood, two separate reports have confirmed that British businesses need to be taking action to prepare themselves for the Brexit.

Slowing UK Economy

The Markit/CIPS Purchasing Managers’ Indexes for both construction (weakest performance in seven years), and services (lowest growth in just over 3 years) showed that the UK economy was already slowing down before the Referendum took place.

The economic uncertainty following the June 23rd vote is likely to lead to further falls for July. Experts have advised that businesses need to take immediate action to mitigate these falls, particularly in the service sector.

And despite a fall in purchasing associated with these industries, companies also reported on-going supply chain pressures, including lengthening lead times linked to transportation delays, and lower supplier stocks.

Challenges for British Businesses

At the end of last week, the Institute of Directors (IoD) launched a paper outlining a wide-ranging assessment of what the Brexit means for British businesses.

While the IoD suggested that the UK will most likely retain access to the single market for goods, albeit with some concessions, the real concerns raised were also for the service industry.

The report highlighted that 83 per cent of IoD members had a link with Europe, whether via export, import, supply chain, staff or otherwise, and that these businesses needed to begin conversations with EU clients and supply chain to clarify what these changes will mean.

However, the IoD paper also offered the following thoughts:

  • The UK is unlikely to be able to deal with new trade partners whilst re-negotiating with the European Union and amending existing third-party arrangements.
  • Passporting for financial services will be difficult to negotiation, as remaining EU members will see this as an opportunity to shift business to European cities.
  • The IoD expects EU nationals living here to be able to stay once the UK has left the EU, but called on politicians to clarify this status as soon as possible.

In the immediate aftermath of the referendum vote, IoD members considered the key priorities for the Government to be:

  • Take steps to stabilise the economy in the face of any negative reaction in financial markets.
  • Securing a new trade agreement with the European Union.
  • Prioritise new UK trade agreements with high growth markets and ensure preferential market access to third countries (via existing EU trade deals) is maintained
  • Clarifying the status of EU citizens in the UK, and UK citizens elsewhere in the EU.
Coherent Response

Simon Walker, Director General at the Institute of Directors, stated: “In the wake of the EU referendum vote, we now need politicians to respond coherently to provide stability as we work out our future path. We must not lose faith in the ability of British businesses to overcome these challenges. 

“The IoD is resolutely positive about the opportunities that globalisation brings. We were promised an open and outward looking country after Brexit. Whoever ends up in charge must deliver on that pledge – a Britain that continues to play an outsized, global role in a world that is coming together, not moving apart.”

Allie Renison, Head of Europe and Trade Policy at the Institute of Directors and author of the report, added, “In the wake of the referendum, the most pressing concerns for businesses are responding to the short-term consequences stemming from disruption to financial markets, and preparing for longer-term ramifications, and maximising any opportunities that a post-Brexit landscape stands to offer.

 “With such a high degree of integration into EU markets, British businesses need to consider the possible outcomes of negotiations and whether we have access to the single market. There are a number of areas outlined in this report where we can forecast a range of potential changes to policy that firms should take into account when making any adjustment plans in the wake of Brexit, with both short and longer-term perspectives in mind.”

Throwback Thursday – 4 Challenges Procurement Faces & How to Overcome Them

Ask the question, “What are the challenges procurement faces?” and you’ll get the same responses time and again. So how do we overcome the key challenges and move on?

4 challenges procurement faces

We’re looking back at some of Procurious’ most popular content from the past 12 months. First up, we revisit an article on the 4 challenges procurement faces, and how to overcome them.

Why? Well, the nature of these challenges never seems to change, so by shining a spotlight on them again, we aim to start a conversation on how to finally put these challenges to rest!

Challenges Procurement Faces

Results from a newly published study shine a light on an assortment of internal challenges facing the procurement function, as well as its changing role as we enter an uncertain future.

Xchanging has issued the first results from its 2015 Global Procurement Study of more than 800 procurement decision makers. 

These first set of results look at internal challenges and the new role of procurement, covering misaligned KPIs, lack of internal engagement, capacity issues and skills gaps.

Challenge #1: Misaligned KPIs

Despite the now wide ranging responsibilities of procurement decision makers, 47 per cent name ‘cost savings realised’ as their number one KPI. The top four KPIs listed are all cost related. CSR/Sustainability impact, by comparison, is ranked as the least important at just 1 per cent.

Chirag Shah, Executive Director, Xchanging Procurement comments: “These results strongly indicate that there is a problem with the current KPI structure. Procurement teams are responsible for many business critical functions. From risk management to sustainability impact, procurement is engaged in activities that far surpass its cost-cutter legacy.

“The metrics against which organisations track procurement’s performance do not line up with what procurement actually delivers.”

Challenge #2: Lack of Internal Engagement

63 per cent of procurement decision makers globally identify ‘internal stakeholder engagement’ as a challenge, with 14 per cent claiming it is as an extreme challenge.

Shah explains: “Procurement’s strategic capability isn’t being understood and because of that, it isn’t appropriately valued. Not only is this causing problems for procurement performance, it is also restricting business success. By not engaging with the procurement team and fully understanding what it can deliver as a strategic partner, companies are limiting their potential for growth.”

CPOs clearly feel more internally valued than procurement middle management. 60 per cent of CPOs feel that procurement is a C-level priority in their organisations, compared to 37 per cent of procurement middle managers.

Shah makes a number of recommendations based on the findings: “To improve internal engagement, and properly communicate the value of procurement, procurement departments need to consider tactics such as introducing governance boards, using score cards to track deliverables, leveraging analytics and reporting tools to demonstrate results and even re-labelling team members with non-cost centric job titles that relate to their roles, for example ‘Risk Manager’ or ‘International Consultant’”. 

Challenge #3: Capacity Issues

According to Xchanging’s numbers, 80 per cent of procurement decision makers identify ‘procurement team time pressures’ as a challenge, and 20 per cent as a major challenge. This implies that the majority of procurement departments are facing major capacity issues.

Surprisingly, in comparison, ‘talent shortage’ is considered an operational challenge by far fewer respondents, with 59 per cent citing it as a challenge, and only 12 per cent as a major challenge.

The number citing talent shortage as a concern drops to less than half (40 per cent) when asked if it’s a problem for the industry as a whole.

xchanging

Challenge #4: Skills Gap

The skills considered most important for procurement professionals are ‘relationship management’ (88 per cent consider important, 59 per cent very important) and ‘negotiation skills’ (88 per cent and 58 per cent).

Significantly, these are also the areas where procurement decision makers identify the greatest gaps in skill set provision; around a quarter cite ‘relationship management’ (26 per cent) and ‘negotiation skills’ (23 per cent) as areas with the greatest gap in skill set provision. 23 per cent also name ‘project management’.

Want to read more about the challenges procurement faces? You can download the full report here.

The Surprising Truth – Apps Are Not Enough for Enterprise Mobility

Apps are all the rage, and businesses realise the benefits of having one. But many don’t realise that they need to go beyond an app for true enterprise mobility.

Apps for That

This article was first published on the Coupa Blog.

Apps have been closely associated with mobility since they exploded onto the scene with the launch of the Apple iPhone in 2007, followed by its app store in 2008.

Soon “there’s an app for that” became a running joke, denoting that just about anything that you wanted to do could be done on your phone using an app. We hit peak “app for that” when the American Dialect Society voted app the word of the year in 2010.

There are now millions of apps, and while it’s still true that you can do an amazing number of things with them, it’s also become clear that they have their limitations, especially for business.

Enterprise mobility requires more than just apps. So, when I hear companies announcing a new app with great fanfare, and sweeping claims that this innovation makes their product or solution mobile, I want to sit them down for a chat.

Mobility is a work style, not an app

Here’s what I’d tell them. An app is a must have, but enterprise mobility is a work style, not an app. More than sixty percent of workers are now working outside of the office at least part of the time. Apps are just one way of enabling them. True mobility is about letting people do business in the fastest, most efficient way possible, wherever they are, and that’s not always by using an app.

Apps present opportunities and challenges for the enterprise. A really good app, one that transforms a business process and makes it dead simple, can be highly addictive.

For example, I am on the go constantly. I couldn’t live without the Amazon app, because I place an order almost every day. I don’t even have time to even go to a local store for books and scissors for my kids, so I use the app to order wherever I am when I realise I need something.

My friend Lynn is also an Amazon fan, but she works from home or Starbucks, and uses one-click ordering on her laptop. She has never even downloaded the app.

Real challenge of enterprise mobility

It’s the same in the business world. This is the challenge of enabling true enterprise mobility: it’s multi-faceted.

Yes, you have to have a mobile app, and you have to invest in making it awesome, but an app can never match the desktop experience for managing a complex business process end to end.

And, if people still need to log in to the desktop application for all or part of a process, there has to be a really compelling reason for them to also download and use an app. If they can do something in some other way that is easier and faster than installing an app, they will.

On the other hand, for people who have to perform a particular process every day, or multiple times a day, downloading the app will seem like a small price to pay for a big increase in efficiency. They will naturally want to use it, and they’ll be raving fans.

Outside of these power users, the app will be irrelevant and they’ll never even download it. That’s why you have to give them other mobility options, such as mobile responsive design for tablets, smartphones and wearables, and my favourite, actionable email notifications. Yes, email.

Killer apps

What’s so great about email? You’d be hard pressed to find a business person who doesn’t have it on their smartphone and use it every day. So, if you can serve up something in an email and the user can take action without logging into a software system, and without having to set up a new account or go to an app, that’s a great mobility experience for most users.

We see this reflected in platform usage data at Coupa. Approving purchase orders is a common mobile use case. Not requiring approvers to be in the office to approve purchase orders has a huge impact for most companies, cutting PO turnaround time from an average of two or three weeks to 17 hours, the average across all our customers. But our data shows that most approvals are done via email, not by app, even though we offer both choices.

The same holds true for suppliers. The vast majority of suppliers only get a few POs from a customer, and invoice once per month. For these suppliers, downloading an app to turn a PO into an invoice is an exercise that adds to enablement effort without yielding benefit. If you give your supplier an option to get all the data they need, at their fingertips via email, without requiring an app, the vast majority of suppliers will choose this option.

Does that mean the app is no good? No. But why go to another app to do what you could do in the app you’re already in? Most people won’t do it.

Quest for Innovation

But for people who do have dozens of purchase orders to approve every day, or business traveler who have multiple expense items to upload, it’s a different story. They use the app because it’s more convenient, and less error-prone, to have everything in one place and process everything at once.

That’s why for the enterprise, equating an app with mobility is wildly optimistic and naive. Innovation in 2016 is not about having an app. Simply having an app for this or that will never be enough.

In this age of personalisation and consumerisation, innovation means continually thinking about end-user experiences and using the latest technology to make business processes easier through any number of channels. It’s giving people options to work how they want, when they want and with as little friction as possible.

That is true enterprise mobility, and so far there’s no app for that.

The Internet of Things Driving Procurement Change

In the business world, organisations are waking up to the possibilities afforded to them by the Internet of Things, connectivity and Big Data.

Internet of Things

The 2015 Gartner CEO and senior business executive survey found that technology-related change was viewed as the primary tool to achieve growth in 2015 and 2016.

37 per cent of respondents to the survey highlighted customer engagement management as a key technology priority, with 32 per cent highlighting digital marketing. Cloud-based business also had high recognition, as CEOs came to realise that the Cloud is where new disruptive industry platforms (think companies like Coupa) get created.

However, on the other side of this were concerns about potentially increasing levels of risk that are seen in line with increased connectivity. 77 per cent of survey respondents agreed that the digital world was creating new risks for businesses. However, 65 per cent also felt that investment in risk management practices was not keeping up with new and higher levels of risk.

Cloud Security – Or a Lack of It

This is a key area for procurement to consider when using Cloud-based technology and Big Data. You’ll all have seen reports and stories in the press about hacking and cyber security problems. This is frequently raised as one of the key issues with moving from traditional systems, to Cloud-based software.

It’s estimated by HP that around 70 million ‘smart’ devices have serious vulnerabilities, including privacy concerns, lack of encryption, inadequate software protection and insecure web interfaces. Worse still is that individuals and organisations either aren’t aware, or don’t have the capability to secure their systems.

The current state of Internet of Things security seems to take all the vulnerabilities from existing spaces, e.g. network security, application security, mobile security, and Internet-connected devices, and combine them into a new (even more insecure) space, which is troubling. 

Internet of Things Driving Change

A number of senior procurement leaders we have spoken to over the past few months have highlighted the potential issues of developing and managing suppliers as we move to operating in an era of the Internet of Things.

The growth of new technology and digitisation of processes mean that traditional procurement methods for managing suppliers need to be changed and updated. While in some cases, long term contracts of 3 years or more may be applicable, but there are certain areas where this cannot be the case.

More than ever, we are actually buying technology more so than the actual product or service. Think about driverless mining trucks – we’re really buying the technology to manage and maintain these vehicles, more so than the trucks themselves.

As technology increasingly becomes the product, we need to keep our options open in order to take advantage of the frenetic pace of change. Our tenders and contracts will need to more broadly define the functionality and utility we require of a product or service, rather than the exacting specifications we know today.

We will also need to ensure we keep our minds, doors and sourcing processes open to engage new suppliers with break-through technologies. Where contracts are 3-5 years long, CPOs will need to build optionality into their contracts to ensure they have the agility and can be opportunistic in adapting and adopting new technologies.

Changing Supplier Engagement

The alternative is to use different supplier engagement processes, potentially dynamic purchasing systems, or supplier panels, or ensuring that you are working closely with the suppliers in order to build innovation into your contracts.

New technologies aren’t necessarily going to be 100 per cent applicable to you, but your suppliers should be able to help with new product development and innovation.

But they will want security in this to know that they are not going to outlay a vast sum of money for development, only for the contract to be taken elsewhere under 3-year procurement processes (where they exist). In this way, Supplier Relationship Management will become even more critical.

Brexit: Reflections of a Procurement Professional

In the cold light of day, and after a weekend’s reflection, a procurement professional reflects on the implications of the Brexit.

Procurement & Brexit

Following my pre-referendum thoughts on supply chain trade and the EU, I was looking forward to the event itself.

A severe weather occurrence, disrupted travel during a six hour journey from Guildford to Norwich, and with the Mission Impossible theme tune on repeat in my head – this was my voting experience on the 23rd June.  I made it to Norwich to vote #Remain just in time before the polling station closed.

Storm on the Horizon

The real storm was not the weather. it was the result to come in the dawn with the UK #Brexit result.

My initial, personal, reactions on June 24th were of shock, anger and fear.  The value of the £ tumbled and the FTSE100 index crashed.  The ‘Leave’ campaign ideas, clearly taken by some as Brexit ‘pledges’, are already confirmed as “mistakes” or not “realistic”.

But time, even a few short hours, is a great healer. The £ and the FTSE both recovered a little on the 24th after their initial crashes.  My optimism and positivity is also slowly returning. The UK now has a fantastic opportunity.

Staying United

The first opportunity is to stay united. “IndyRef2” is already on the table, and the Northern Irish might follow suit. I doubt if many voting to leave the EU anticipated the potential break-up of the UK. Is this really an ‘unthinkable’ now?

The focus is now on what happens next. If there’s one thing I’ve heard through all of the interviews and opinions in the past few days, is that no one really knows what the future looks like now.

No state has left the EU before. The process is set out, yet it’s not tried or tested.  We have to find a new Prime Minister, and possibly face a General Election, to appoint the team to lead the UK through this.

Procurement & Strategic Relationships

There are uncharted and uncertain waters ahead. Procurement and Procurement Professionals can shine through and add the value we’ve all talked about for years and now have the opportunity to deliver.

Keeping in close contact with strategic suppliers and working together to build certainty in existing trading relationships might be a crucial first step to steady the ship.

Businesses need to keep focus on their mission, vision and values, and make sure they are still relevant in a post EU, UK. Most will need to adapt, and Procurement needs to ideally provide, or at least proactively source, the help and guidance to do that.

Procurement must not sit back and wait any longer for the invite to the table it has been waiting decades for. At the Big Ideas Summit in April, we heard lots about Procurement being the source of talent within organisations – it’s time to step up.

I expect we’ll all be revisiting our segmentation matrices and risk maps this week for starters! We should rapidly review processes and procedures ready to make ourselves, our teams and our businesses as agile as we can, ready to adapt to the changes as they unfold.

A wiser man than me said “agility is core”.  Let’s make this work team UK.

Turning Point in SE Asia Supply Chain Challenges

A turning point has been reached in the challenges facing the South East Asia supply chain, say global consultancy Crimson & Co.

South East Asia Supply Chain

In the light of economic growth, rising affluence and booming consumer demand, many international businesses are seeking to capitalise on the growth in South East Asia’s developing markets.

The challenges in the South East Asia supply chain have reached a turning point. This is down to the scarcity of supply chain professionals, increased consumer diversity, and fragmented supply chains.

The many layers of suppliers, localised delivery and route to consumer practices, and lack of transparency and consistency in information flows, make it incredibly difficult for businesses to achieve the next wave of global growth.

SE Asia Supply Chain – Huge Promise

There is huge promise but transforming supply chains to reach market potential, handle diversified products, and provide outstanding quality and service to customers is a mammoth task. The businesses best able to overcome these challenges can transform their South East Asian supply chains to become a source of competitive advantage, and drive global growth.

With rising labour costs and the move away from an export-based economy, changes in China are creating opportunities for South East Asia in global manufacturing. This also positions global businesses to capitalise on growing demand in these markets.

For most companies the potential is clear. The challenge is how to address it.

The Time is Now

Richard Smith, Director of Crimson & Co Singapore, argues that the time to transform supply chains is now:

“South East Asia is an incredibly attractive region with rapidly growing markets and low cost operations. The challenge is how to address fractured supply chains and the shortage of supply chain skills.

“As companies move their factories from China to South East Asia, they should grasp the opportunity to carry out a full supply chain review to identify how they should configure their supply chains to better deliver on their current and future business strategies. Due to the significant costs involved in the transformation, businesses need to assess the real benefits and ensure it will deliver against objectives.

“Companies can accelerate their supply chain transformation by bringing best practice from elsewhere in their organisation, other industries and innovative local supply chain practices. Through understanding their businesses’ maturity and readiness to change they can identify where sustainable improvements can be made and how to leverage disruptive technologies to drive business performance.”

Challenges Remain

However Smith warns that a number of challenges remain across the South East Asian supply chain, such as high staff turnover, with employees quick to leave for higher salaries, as well as a lack of experienced professionals with supply chain knowledge across manufacturing, distribution, planning and supply chain management.

In order to ensure successful transformation, Smith also warns that knowledge and awareness of local culture and business landscapes is critical, with a long term focus on developing local supply chain knowledge and people capabilities. This can be done by establishing a physical presence in the region, and developing region-specific leadership and training programmes.

Smith concludes: “Opportunity abounds in the South East Asia region with unrivalled chances for market growth, logistics, sourcing and manufacturing. The time to reinvent networks and processes is now – transforming the South East Asia supply chain into a source of competitive advantage.”

Crimson & Co is a global supply chain consultancy, with a scope spanning supply chain strategy, planning, procurement, manufacturing, logistics and customer channels.