value

Four Reasons Why Value Is the New Procurement Normal

We’re all talking about delivering value these days in procurement, aren’t we? But with so many definitions around, how do we maximise its impact?

value
Photo by Riccardo Annandale on Unsplash

We’re all talking about delivering value these days in procurement, aren’t we?  Value is now the new normal.  And everyone has their own take on what delivering value for the business really means.  There’s no single definition.

So Procurious were delighted when our November Roundtable sponsor Ivalua asked us to use value as our theme. Here are some of the great insights that speakers shared with attending CPOs on the day.

Stakeholder Value – an idea whose time has come?

In August, Business Roundtable CEOs made the announcement that value is about more than just shareholders. It’s this idea that we should be focusing on going forward.

And they were clear that value, rather than maximising return to shareholders, is now “the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders.” 

But what does this mean in practice for procurement? And how can we demonstrate stakeholder value? Stuart Woollard has been at the forefront of pioneering work in this field for many years, assessing the measurement of factors beyond cost. 

Stuart had a warning for the CPOs too that, “being purpose driven is not enough”. He urged a move away from a focus solely on output metrics, and encouraged them to take a balanced multi-faceted approach. 

Stuart and his organisation, The Maturity Institute, has a tool that they’ve been using to achieve this balance for many years. But just because there’s a method of measuring value doesn’t mean this shift will be easy.

Finally, Stuart reminded the CPOs that, “Without support from the CEO and your Board, you may not achieve the shift to value that you need”, bringing home the point that buy-in is needed across the leadership team and beyond, in order to ensure success.

The value in your supply chain comes from people

If changing to a value-based model will require a mindset change at the top is there anything CPOs and their teams can do right now?

Nadia Youds, from UK retailer John Lewis & Partners, told our CPOs that an approach targeting employees is a great way to deliver value back to the business. “Job design in our supply chain is as much about the business relationships procurement has put in place as it is about the suppliers themselves.”

Nadia is clear about the connection between the buying organisation and the way employees in the supply chain are treated, and the work they’re expected to deliver. 

Although Nadia and her team have developed an assessment process that moves away from the standard suppler audit, she was keen to stress that the process needs to move away from compliance as a ‘tick box exercise’.

Using an approach that focuses on people and jobs, particularly in the manufacturing industry, can help suppliers develop and retain their workforce. This will lead to them ultimately being more competitive in the market.

Winning the war for talent – could value be the key?

Many CPOs are facing huge challenges in talent recruitment and retention. Procurement is still keen to learn from the best. And so a chance to see what the Tech industry does to source and retain the right people was an eagerly anticipated agenda item. Andrew MacAskill, from Career Jump and Finlay James was the person for the job (as it were!).

“We’ve still got a long way to go to attract the brightest minds in the industry,” Andrew mused. He reminded CPOs we can learn a lot from the Tech industry where “talent has become the customer”.

One tactic Andrew urged CPOs to consider is to build their own online personal brand. Many of his candidates select roles based on a leader, not a brand. “They’re asking themselves the question – do I trust this person to take my career forward?”

The issue of whether the talent wants to work for us led Andrew to suggest a reverse interview process:

  1. Sell your vision to the candidate – why should they want to work for you;
  2. Conduct a balanced interview – make sure the process and discussion is equal between recruiter and candidate;
  3. Open up the floor – give the candidate the chance to sell themselves to you.

Andrew shared that testing for the candidate’s attitude, cognitive aptitude and habits is the norm in tech recruitment processes. He urged CPOs to consider this when they’re recruiting team members to help them deliver their vision for value.

Value remains the same throughout history

Looking back through history shows that data gives procurement a head start when it comes to delivering value. Ivalua’s Stephen Carter has studied the impact from medieval times right up to the present day.

“There’s a lot we can learn from history about how we can exceed our stakeholder expectations” explained Stephen, “and a good overview of your data can provide the key.”

Even in the late 17th Century, procurement used data to provide insight into what their stakeholders needed. Looking at past spending trends, conditions and requirements, military campaigns were won due to the foresight of procurement in providing equipment not in the client’s original scope of requirements.

From history to the modern day, the value that procurement can deliver comes from insights that organisational data provides. It’s clear that whether our focus is strategic or operational, within our team or in our supply chains, delivering value is fully embedded as the new procurement normal. 

And as we set ourselves a new target to deliver value, there are no better words than those of the final speaker on the day, adventurer George Bullard.

“Research your goal, make sure you are prepared and fix a time to start.” Words to live and work by.

In 2020, we will be holding CPO Roundtable events in London and Edinburgh. If you are interested in attending one of these events, please contact Laura Hine by clicking here.