If AI is the light at the end of the tunnel, why are there so few success stories to be found? How do we enable smart procurement?
Success with today’s broad set of complex objectives requires Procurement leaders to think strategically and process ever greater volumes of diverse information. Unfortunately, this is an area with significant room for improvement at most organisations. A survey of over 400 procurement leaders by Forrester found their top priority to be “improv[ing] business insight on purchasing activity through reporting and analytics.”
The obstacles to more informed, strategic decision-making are quite consistent. The study, entitled “Enabling Smarter Procurement” found three common issues
1. Firstly, despite efforts at automating processes, too much capacity is still consumed by operational or manual activities. Teams must free capacity to work on new projects, conduct analysis and plan, but are struggling to do so.
2. Secondly leaders struggle to access relevant insights when and where they are needed. The volume of information now available is of little help if not digestible, simply leading to information overload.
3. Compounding this, respondents also cited poor data quality as a key challenge. Duplicate supplier records, inaccurate data and poor integration between systems all were cited as sources of data quality issues.
Fortunately, new technologies are available that can empower procurement to address these and other challenges and rise to the occasion. AI in particular is finally coming of age and often viewed as the answer to many of Procurement’s challenges. The same survey found that 71 per cent of business leaders plan to adopt AI in procurement over the next 12 months. Yet if AI is the light at the end of the tunnel, why are so few success stories to be found?
A key reason is the approach taken to implementing AI solutions to date. As vendors struggle to burnish their innovation credibility, there has been significant marketing ahead of capabilities which has led to unmet expectations post implementation. As capabilities are now coming in line with past marketing, this problem will subside. Of greater concern, the innovation race has led to nearly an exclusive focus on the algorithms, leading to poorly designed implementations. Less innovative but equally important areas, especially data quality, are being ignored. AI relies on a solid foundation of data, in terms of volume and quality, so solutions that offer clever applications alone are sure to disappoint.
To remedy this problem, organisations must implement AI in conjunction with cleaning up their data, rather than using poor data quality as an excuse for inaction. Source-to-Pay suites that are built upon a unified data model partially address the challenge by generating clean data that can be mined by AI applications across all processes. For example, suites with a single supplier record can provide true 360 degree visibility of supplier performance and activity, and enable AI applications to predict potential risks.
That still leaves issues with existing data or data in other systems. Here, master data management solutions should be leveraged that can actually fix issues in back end systems, linking vendor and item master records across systems. This further improves visibility and the potential for new and better insights.
Empowering procurement to make more informed, strategic decisions is no longer an option. There is simply no other way to effectively meet the broad set of objectives now expected. Fortunately, new technologies are finally reaching the level of maturity where they can have a transformative impact. By implementing AI applications in parallel with initiatives to improve their data foundation, leading organizations are both enabling smarter procurement today and ensuring they are well positioned to leverage tomorrow’s innovations.
Ivalua sponsored today’s London CPO roundtable. If you would like to attend or sponsor a Procurious roundtable please contact Olga Luscombe via [email protected]
Procurement professionals are in a unique position to step up and make a positive impact. Here are three areas where procurement professionals should direct their attention…
In an age when people want to work for companies who are doing good in the world, when consumers vote with their wallets and achieving supply chain transparency is easier than ever before there has never been more pressure for procurement professionals to commit to, and prioritise, making a difference in the world with the work that they do.
Tom Derry, CEO – ISM, discusses three areas where procurement professionals should direct their attention…
There was a time when sustainability was merely a PR strategy with minimal corporate effort put behind it. But those days are long gone and we’re at the tipping point where businesses can finally see the financial benefits of operating sustainability.
“I’m familiar with the CPO of a major food manufacturer here in the United States,” says Tom. “One day the Rainforest Action Network was protesting on their corporate campus. It came down to the sustainable sourcing of palm oils, which is a major food ingredient. What we’re realising now is our supply chains can create unexpected consequences. In this case, palm oil was being sourced from Indonesia, which incentivised local farmers to burn down the rainforests in order to plant palm trees. The food manufacturer was jeopardising the existence of this incredible biodiverse resource, without any sense of the consequence of sourcing palm oil to make their products.”
Tom also mentions the importance of catering to customer demands. “My own daughter makes her consumer purchase decisions based on how she views the sustainable practices of the companies. Companies have realised that if they lose that customer, consumers walk away and you never get that business back.”
But, according to Tom there’s another reason key you have to take sustainability seriously. “In the stock market, companies like JP Morgan are publishing reports on companies based on ESG – which stands for Environment, Sustainability and Governance. So it’s no longer just financial metrics that are driving stock prices. It’s your score on your environmental performance, how sustainable you are, and your governance around your sustainability strategy.
“When that starts to drive stock price, that gets everyone’s attention. Believe me!”
2. Modern slavery
With 21 to 46 million people in slavery around the world, procurement professionals have a huge responsibility in weeding it out of their supply chains?
As Tom points out, it’s a sobering statistic but companies are beginning to do amazing things. to tackle modern slavery. “Nestle, for example, investigated their own supply chain for fish used in pet food products and found that the Thai fishing flight was using impressed labour. They identified the problem and proactively went out to address it rather than waiting for someone else to discover it.”
This approach allows companies to avoid appearing defensive and reactive and Tom believes we’ll see more and more companies taking that kind of stance, “because they have to!
“It’s not just about protecting your company’s reputation, but it’s also a recognition that we all share as humans that it’s a morally reprehensible practice – and none of us want to be a part of it.”
3. Diversity and Inclusion
A third way procurement and supply chain professionals can make an impact in their organisations is to improve supplier and workplace diversity.
“We need to make sure our supply bases reflect the kinds of communities where we do business,” argues Tom. “We also need to make sure our teams, internally – and our leadership teams – reflect those communities too.”
“Diversity broadens our point of view. We become more sensitive to cultural issues.”
Remember the backlash last year when PepsiCo released an ad featuring Kendall Jenner that somewhat insensitvely echoed a Black Lives Matter protest? Criticised for trivialising and exploiting the movement the ad was soon removed but not without significant damage to the PepsiCo brand.
As Tom points out, “a diverse team will heighten your awareness to those issues before they get out into the public domain and embarrass you. You have a multitude of perspectives on how to solve problems.”
“ISM has got a long standing leadership position in this area . We’ve got a formal statement on the value of diversity to the profession we organise a conference and sponsor a certification to help people become leader of diversity efforts.”
Part 3 of Tuesdays with Tom is available now. Click here to sign up and hear ISM CEO Tom Derry talk on sustainability, modern slavery, and diversity.
Just as the organisation’s CIO has been struggling with “shadow IT” the CPO is now faced with similar challenges as company employees armed with a credit card and a browser can buy almost anything online.
For years the enterprise CIO has been struggling with Shadow IT which has been described as “IT systems or solutions used within an organisation without the approval, or even the knowledge, of corporate IT” . This is often referred to as the consumerisation of IT.
Various IT industry analysts reports state that Shadow IT is somewhere between 30-50 per cent of the total IT spend in large organisations and this is a large number considering that this is IT spend that has not gone through the sanctioned IT function.
Shadow IT has transitioned into Shadow Procurement thanks to the rise of digital cloud marketplaces
The ‘shadow’ problem is no longer confined to the CIO with
the CPO also facing a growing population of enterprise staff
that procure and subscribe to many services in the cloud that havent been through the sanctioned process and often they are not allocated to the correct budget codes.
Thanks to the public cloud there are many new digital marketplaces that have lowered the barrier to entry for the end user for procuring a range of products and services (e.g. Amazon, eBay, Alibaba, Google, Rackspace, Microsoft, even crowd sourcing).
Also of concern is that shadow procurement can also include the teams of people hired by the business to provide various services across the business (often these costs are hidden in project budgets or expense codes and not shown against the correct budget categories).
While the CPO aims for compliance the shadow procurement means a further loss of control
For the CIO the issue of Shadow IT often means they are excluded from the decisions of how the IT services are supported as well as assessing the risks of what is being purchased such as security.
Similalry for the CPO the issue of Shadow Procurement often means that they are excluded from important commercial decisions particulalry when the staff member blindly clicks the “accept terms and conditions” button when buying products and services online. These online terms will always favour the supplier and may not satisfy the commercial appetite or the target price point. Only when things come unstuck will these accepted terms and conditions see the light of day.
The rise of shadow procurement flies in the face of the respected analysis of CPO surveys over recent years that continue to place “Procurement Compliance” as one of the top three challenges that the CPO is focused on addressing*.
When Procurement is seen as beeing a blocker then Shadow Procurement is likely to be, or become, an increasing problem
While I have discussed that the rise of the easily accessible digital marketplace has contributed to the increase in shadow procurement there are likely to be a range of other factors that will also determine the size of the problem in your own organisation:
Business and Procurement mis-alignment
Where procurment is seen as a blocker and the process takes too long then the employees will find a way to work around Procurement to achieve business and project goals
Lack of clear roles and responsibilities and an inneffective governance structure
Where the roles are not clear and the governance is inneffective, or not well understood, then the employees may take this as a green light to hire a shadow team within their project or business unit. In some organisations it can become an unnofficially sanctioned fixture
Many organisations are decentralised and large programs/projects operate separately to the Business-as-usual functions such as Procurement
Because many companies are decentralised and indirect spend is spread across departments and projects, there is typically little input from procurement.
Little or no use of big data analytics to understand the indirect spend occuring as part of the Shadow Procurement problem
Indirect spend is often very difficult to understand as the shadow procurement buyers don’t use a formal process in purchasing goods and services for the indirect spend. indirect purchases are often made off contract.
Therefore spend data is not effectively leveraged or analysed, or spend data is typically incomplete and not coded by the commodity or category.
Instead, spend data is linked to accounting or expense codes, and purchase orders are either not created or if they are created they can be vague or created “after the fact.”
Procurement have not leveraged digital disruption putting themselves in front of employees like their “shadow suppliers” have done
If your employees rely on digital and mobility solutions to buy, then you have to have a procurement solution that is mobile-centric and digitally-enabled
Automation of a quicker quoting and approval process is just one key factor
The Bottom Line For The CPO
Partner with stakeholders to better understand their needs, supplier relationships and processes. Show them that you’re not just trying to find a lower price at the expense of their quality requirements, supplier relationships or the time they have available to move
Embed procurement staff into their project teams to bridge the misalignment gaps
Adopt an “agile procurement” approach to shorten the time it takes to complete the procurement cycle. An RFP is not always required and there are many opportunities to leverage flexible and agile thinking
Invest in big data analytics to understand the company’s indirect spend amount, categories and how many suppliers are currently being used in each category. Leverage consultants spend analysis tools or request data from suppliers to achieve better visibility into your spend data
Implement an eSourcing tool to better manage indirect categories supported by automated processes
Going to Market (Place) : The Future of Procurement goes live on 13th November. Sign up now.
Could a B2B e-marketplace transform the lives of your procurement team? What are the key benefits of using a marketplace and why are some procurement leaders reluctant to take the leap?
We hear from Molly Dobson, Head of Enterprise Customer Success – Amazon Business and Mary Hetherington, Director of UK Group Procurement – AXA to get the low down on the future of marketplaces, how they can benefit procurement professionals and what reservations are still held by the profession.
Whist digital marketplaces have evolved over time, and come and gone with varying success, the core functionality remains in that they are a central place where people gather to buy and sell goods and services.
“The digital marketplace isn’t a revolutionary concept.” explains Molly. “But it definitely has been more prevalent in our personal lives than our professional lives – e.g. Uber, Airbnb and Amazon.”
Having said that, “early innovators really did introduce a concept in procurement that still underpins the business marketplaces of today. These are capabilities like electronic procurement, reverse auctions and buyer discovery.”
Molly outlines the three core components of any procurement marketplace:
Breadth of choice
The first core characteristic of a marketplace is having that “wide range of choice within a single interface, which is why we all like to use marketplaces within our personal lives. Within a marketplace like Amazon Business you can access 250 million products from toilet paper to precision test and measurement instruments, to professional medical supplies.”
“Users of a marketplace get access to multiple sellers for the same offer. Each of these sellers is competing against one another to get your business and with this competition you can have reduced commitments to some of those long, inflexible contracts. We like to talk about a marketplace being dynamic in that sense.”
“In a marketplace you can have transparency of product and seller reviews and pricing and delivery options. You really get the capability to compare all of your options and make informed buying decisions.”
“In the procurement space, in particular, you have additional requirements with things like the ability to integrate with other procurement applications.”
Marketplaces and maverick spend
Mary recently began piloting a marketplace at AXA.
“In the short space of time that we’ve been [trialling a marketplace] it has really surprised me the depth of information that we can attain about who’s buying what, the types of goods and services we’re buying, at a very low level which hasn’t always been that transparent in the past.
“This is really useful for a large organisation like mine where we’re supporting several different business units with very diverse sets of requirements and lots and lots of small purchases. It gives us the opportunity to consolidate information and identify rogue spend very quickly.”
Measuring marketplace success
AXA has been measuring the success of its marketplace with three metrics; customer satisfaction, billing and fulfilment and management of information.
Customer satisfaction on the solutions and the process around Amazon Marketplace is one metric AXA have been using to measure success.
“We all know that Amazon is the go to place for purchases. We use it in our private lives and people like that experience so we want to try and give our business customers some of that experience and flexibility when dealing with business purchases.”
2. Billing and fulfilment
Making sure that billing and fulfilment of the goods is effective, [that it] interfaces neatly with our purchase to pay solutions [and] that we get the granularity we want on our invoicing.”
3. Great management of information
It’s important to ensure procurement leaders can make well informed decisions about their future spend and future requirements.
“It can take some work to get [a marketplace] off the ground, [fitting into] your strategy [to a point where multifunctional leaders can buy into it.”
So what’s holding procurement teams back when it comes to adopting marketplaces. Mary Hetherington, Director of UK Group Procurement – AXA believes part of the challenge is procurement’s need to achieve a healthy balance between enabling the business and applying controls.
“We need to show flexibility but also proportionality when we’re looking at different sizes of purchasing,” she argues.
“The challenge with a marketplace is ensuring we determine the appropriate level of control that gives that flexibility to the business but doesn’t compromise any of our existing preferred supplier arrangement or bypass certain checkpoints of governance as a finical services organisation that we need to carry out.
“The key here is pitching it at the right level to ensure both the procurement team and the business get the solution they want.”
Are marketplaces the future of procurement? What are the pros and cons? We discuss in new Procurious webinar. which goes live on 13th November. Sign up now (it’s free!)
Are we facing a future where automation displaces the human mind and traditional procurement and finance careers?
Technology is used to consolidate and analyse all finance and procurement information. It also offers insights to the new generation of professionals in their decision-making process and tasks that require abstract thinking rather than computation.
The worlds of finance and procurement are about to change forever, and we are now at the turning point of this revolution. Often regarded as the most conservative echelon of the modern enterprise, today’s CFOs and CPOs are embracing new technologies, deploying automation, deep analytics and machine learning techniques to simplify financial and procurement operations and spend smarter.
As technology advances into the workplace, the traditional roles of finance personnel are changing as more processes are automated and data “crunching” takes the heavy lifting out of day-to-day routines. The change challenges professionals too, whose previous core competencies are now the primary remit of AI algorithms.
The concern for many is whether we are facing a future where automation displaces the human mind and therefore the traditional careers within finance. A major challenge for the modern CFO and CPO is to transform teams to take advantage of these new technologies. Employees in our industry are concerned that jobs are threatened, but the upcoming era of artificial intelligence will enable a new partnership between mind and machine that liberates humans’ natural skills through superior intuition and decision-making.
The concept of Superfinance looks to the visible horizon of the future and defines a modern finance and procurement function that is based on a Mind-Machine partnership. Here, technology is used to consolidate and analyse all finance and procurement information. It also offers insights to the new generation of professionals in their decision-making process and tasks that require abstract thinking rather than computation.
Humans remain valuable because of our ability to reason in a way that goes beyond executing calculations on available data. Many examples exist where this new combined man-machine hybrid has been more powerful than either human or computer alone.
What we can do that computers can’t is combine information from AI with the information coming from the real world, apply creative and critical thinking, make decisions and take care of customers.
Making better decisions
So, the combination of Mind and Machine holds considerable potential to expose, streamline and automate financial operations from their current state, from purchasing to payment, and offer new levels of competitive advantage.
Of course, digitisation of business processes isn’t anything new and has been around for some time now. It has already dramatically changed how businesses operate and professionals perform. Finance and procurement functions have already been permanently affected by this change. So, what does the future of mind and machine really look like and what should industry professionals do now to prepare for the evolution?
Digitisation of finance and procurement is evident within distinct phases:
At the heart of financial digital transformation is, of course, data. By consolidating procurement and finance information into the cloud, the power of machine learning can be deployed to create impactful results. This data provides the foundation for automation. Many businesses have already embarked on this journey of standardisation, simplifying and outsourcing financial processes for greater efficiency and cost savings.
The final step involves insights-driven Purchase-to-Pay: Here, the result of automation is aggregated data from the entire Source-to-Pay business process, which is changing the trajectory of finance and procurement.
We are now entering the phase of cloud-based big data, predictive analytics, artificial intelligence and machine learning. Professionals are already equipped with the timely, accurate and complete data they need to make better decisions and support business agility.
So, with the era of data-driven finance already here, does the increased amount of information really help us make better decisions?
Even with the advantage of data at our fingertips, our human condition can still get in the way when we approach decisions, and we may often look for confirmation instead of confidence. Our gut feel is so real it can often override data-driven insights and enable us to make important decisions instinctively, and then retroactively fit information to support our conclusions.
This behaviour hampers business results more than we are willing to admit. So, to make data-driven finance real, professionals have to become behaviourally aware and refrain from asking for the wrong answers from AI. AI can arrive at different results than we as humans would from the same data. Our role therefore is to try to connect the real-world phenomena into the results provided by the data, and make decisions that best benefit customers, as well as the business itself.
While the data era is making big promises about what the future may hold and what people and companies can do with the unlimited power of information at their fingertips, there are still many unknowns about what this will look like in practice.
But there are areas where finance and procurement professionals can focus to begin preparing for this future and developing our uniquely human talents. To achieve true Superfinance, finance teams need to upskill and develop in three specific new areas:
From a technology perspective it requires Automation through data, analytics, AI and machine learning. In terms of skills, behavioural awareness, data analysis and new job requirements are needed, before considering the final element of ‘Transformation’, which includes managing change, cultural shifts and talent development.
On a more granular level the following is a good roadmap for the transformation:
Improve data: Collecting and aggregating 100 per cent of financial data is always the first step to being ready for the future, as emerging technologies feed on that data. But presuming you’re doing that today, the next steps are cleansing and augmenting that data. This includes purchase orders, invoices, collaboration between suppliers and customers, and supplier information. All of this data can be improved by creating a team structure for data ownership, delegating maintenance to the data owners and augmenting the data sets with third party data for completely new insights.
Leverage cloud solutions: As businesses get a unified and accurate view of their data, they will be better equipped to answer new questions and challenge their colleagues with better reasoning. You can build confidence using cloud-based solutions so that procurement and finance professionals rely on their data and analysis of that data to make decisions and recommendations.
Become a business partner: Having data is one thing – using it effectively across the business is another. Data must be properly analysed for the right insights before collaboration across finance, procurement and business units to effectively deliver that information in a meaningful way – building and nurturing relationships across the business to hit strategic goals.
Make unbiased decisions: People often interpret information in a way that confirms their preconceptions today. It’s important to educate your teams to be aware of their biases and the right way to approach data analysis. This involves applying scrutiny and objective reasoning to the data-driven insights.
Manage talent: Moving from siloed execution to collaborative data-driven finance requires proper development and management of the right skills. You need to systematically manage talent, endorse an analytical mindset and improve financial processes and job descriptions to put data at the core.
Nimble and adaptable businesses that follow these steps will thrive, having rapidly sensed and responded to opportunities, and seized the advantage in the AI-enabled landscape.
Over the next decade, AI won’t replace people, but people who use AI will replace those who don’t. The future will transform us through organisational change, digital operations and better human capital management. Following these steps is a good start to building the foundation for a mind-machine partnership of the future, and hopefully making data feel inspiring as we celebrate the benefits of being human in an automated world.
This article, written by Louis Fernandes, VP & UK Country Manager, UK & Ireland – Basware was originally published here.
Advocacy increases inclusion. Being an advocate makes a difference and you can increase inclusion by using your voice within your network…
Small acts of advocacy are all it takes to make a social movement. The #metoo movement was for the 12 years prior to last year’s Harvey Weinstein scandal a very small force for change. It wasn’t one single event that caused the social explosion. But it was when sufficient people acted in concert that it became a social movement.
And it certainly isn’t just about hashtags. With the current US President’s finger firmly on the Twitter trigger, you might think It is. There are so many more voices advocating publicly for their position. That makes it even more important to make your advocacy effective, not just noisy. I’m not ruling out social media as a tool for advocating, but it’s a means, not a message. I’m going to rely instead on a Gandhian approach – ‘be the change you want to see in the world’.
Advocacy increases inclusion. You can increase inclusion by using your voice within your network. By speaking out more about the importance of inclusion, you can create more inclusion. More people will feel included and more people will join you to advocate for inclusion. If you raise your voice with confidence you will be a social force for change. People will feel included and experience a greater sense of belonging.
Being an advocate makes a difference, yet many leaders don’t feel comfortable advocating.
Some people don’t advocate because they think that saying it once is enough. If you say it once, everyone will get it. If you’ve got or work with kids, you’ll see through that one straight away! It’s not that different if you work with adults.
Another reason we don’t advocate is because we believe others are advocating, their efforts will be enough for the message to get through. It won’t make any difference whether or not I do.
Still others don’t advocate because they don’t think their single voice has much weight; it doesn’t seem worth it.
The harder thing that stops people advocating is that they don’t believe they can be powerful enough to make change: a social movement seems to take a lot of effort to organise without a guaranteed outcome; it all seems too much.
Hannah Gadsby’s Nanette is an example of using your own story to advocate for change. Not all advocacy needs this degree of personal disclosure to be effective.
Advocacy that resonates with those around you is like a swarm of starlings, a murmuration. When the individual birds come together they create a powerful and amazing sight. The magic of it is that this happens because each bird pays attention to just seven of their neighbours. Starlings are ordinary birds, all it takes is for seven of them to pay attention to each other, to get in sync, and they create something extraordinary.
Just like the starlings don’t have to influence the whole flock, don’t try to influence a crowd. Focus on seven key people around you, and magically, you too will influence a social movement.
Jason Ng explores the power of intent when it comes to embarking on a procurement career…
In your career, you will come across procurement professionals with finance and accounting qualifications ranging from CPA, CA or even CFA – all of which are complimentary to procurement however unnecessary to enter.
If you dig a bit further and have a conversation with one of these professionals, you’re very likely to find out that they “accidentally fell into procurement” or “didn’t really know what procurement was, and before they knew it X years had passed”. These answers, although interesting, trigger a multitude of questions about the level of passion and commitment to the profession.
Do they like procurement? Or are they just happy with the pay check? Would this have changed if they were properly informed at the start and consciously chose procurement rather than have procurement choose them? Of course, the power of hindsight is a powerful thing unless you are early in your career and have the greater power of choice, which I am hoping you have at this point of your journey.
During my seven years in procurement I have come to realise that I am certainly part of the minority of people who embarked to learn and understand the profession before seeking a career in it. This has set me apart from my peers as the drive to understand what more I can learn about procurement excites me way more than waiting for my pay check as a means to an end.
As procurement is not a mainstream profession (unlike finance, accounting, law, marketing or economics) it took months of research, following industry news and embarking on a Masters of Supply Chain Management before I made the leap to switch from a money markets dealer on the trading floor of a major Australian bank to being a junior burger again in the procurement world.
Some of the articles I came across at the time included procurement divisions literally saving struggling companies by negotiating better deals and contracts with their suppliers.
It became very clear that during the tumultuous times post-GFC, procurement functions were leaned upon to save companies’ backsides by reigning in corporate spend to make them profitable and stay afloat (Profit = Revenue – Costs. Through reducing the costs components of this equation, companies stayed afloat). This intrigued me immensely as it was prevalent in grocery stores, department stores, aviation, banks, pharmaceuticals, car manufacturing, telecommunications, hospitals etc.
What I was seeing was that this function called procurement was a critical part of organisations whenever the proverbial sh*t hit the fan. It also made me imagine what it would be like to work for a famous brand like Microsoft, Louis Vuitton, Walt Disney or Starbucks because procurement was seemingly in every organisation. My imagination went wild with the ‘what if’s’ and lead me to my path of further discovery and thirst for understanding more about procurement.
If you have just started in procurement or have stumbled upon this article in your quest to understand more about a career in procurement, then what I leave with you is the power of intent. The intent to forge a procurement career will create an inner drive of learning and ultimately succeeding in this field that far outweighs the three lettered qualifications from people who fall into procurement.
Just to put into perspective how far procurement reaches, everything needs to be bought, whether it’s the seat you sit on in a plane, the parts that go into a McLaren on the F1 track, or the food to stock the shelves at the supermarket. Everything has a price and in this profession it is the role of procurement to negotiate what that price looks like and the terms around it.
Is your career giving you the horrors? In this spooky Halloween-inspired article, Bennett Glace reveals the signs that you’re miserable at work, and what to do about it.
If you’ve ever seen a haunted house film, you’ve probably found yourself asking one question of the characters on-screen: Why don’t you just leave!? Unexplained sounds, cold spots, even disembodied voices – whatever the spooky happening, you can count on a horror movie’s protagonists to try and explain it away. It’s probably just the house settling, right?
We ask this question – with increasing intensity – because we’re confident we could never be so foolish. Surely, we’d recognize the telltale signs and pack our things right away. Blood dripping from the walls? Time to see about a hotel.
Though we shout these thoughts at the screen and use them to poke holes in cinematic logic, we rarely put them into practice in our professional lives. Last year, Mental Health America reported that nearly three quarters of Americans are unhappy in their jobs. A paltry 19% said they “rarely or never” think about quitting.
Everybody has bad days at the office. Like bumps in the night, they’re usually nothing to get too alarmed about. On certain occasions, however, things are as scary as they seem. Sometimes that voice telling you to run for the hills isn’t just in your head.
Here are four unmistakable signs that your job is haunting your life.
Workplace Culture is Toxic
You don’t have to enjoy lifelong friendships with your co-workers, but you shouldn’t dread interacting with them. Tyrannical leaders, incessant gossip, silos, and self-interest – it can all make the daily grind a terrifying affair. It’s usually easy enough to ignore a single toxic peer or take the necessary steps to address their behavior. In many cases, there are opportunities to exorcise any animosity and work together toward creating a more respectful, productive environment. When toxicity permeates the culture, however, it’s time to make like Daniel Kaluuya and get out.
You’re Bored to Tears
We spend a third of every weekday at work. Shouldn’t we strive to spend this time doing something that challenges, excites, and inspires us? This year’s Gallup poll on employee engagement suggests very few of us (only 34%) do. Want to hear something really scary? That’s an all-time high. When you aren’t tuned-in, you’re not just wasting your own time and resources. The same poll estimates that disengaged employees cost American businesses between $450 and $550 billion dollars each year. If you spend most of your day wishing you were anywhere else, find somewhere else to go. Don’t wait around for dispassion to curdle into despair.
You Have to Justify Your Job
Even the best haunted house movies tend to follow a predictable pattern. Bit by bit, ghosts and ghouls begin to wreak havoc. The victims, for their part, look for ways to explain away the hauntings. This often means emphatically reminding a supporting character how the old house isn’t really so bad. They’ll eventually learn they were mistaken, but this realization almost always comes too late. People sound pretty similar when they’re stuck in bad jobs. “Yes, the pay sucks. No, I don’t get along with my boss, but . . . ” whatever the excuse, looking for the bright side in a job you hate is like staying put in that haunted house because it’s got a big yard.
There’s Nowhere to Go
If, “Why don’t you just leave?” is the most popular question for horror skeptics, “Why are they running up the stairs?” is probably a close second. You don’t have to know Mike Meyers from Michael Meyers to recognize this trope. Pursued by an assailant, our hero decides to run deeper into their house rather than make a break for an exit. Here’s where horror movies and the professional world differ. Whatever you industry or experience level, everyone wants to ‘run upstairs’ professionally. Opportunity for growth is a major selling point for applicants and a major sticking point for unhappy employees. And advancement is much, much more than a new title or a bigger salary. It’s a sign that you’re valued and respected, that you’ve made a difference within an organization. Horror movies might recycle the same narratives again and again, but your work life shouldn’t.
Quitting your job isn’t a decision to make lightly. Where possible, do what you can to address your problems at work. Look for opportunities to clean up the cobwebs and soothe any unruly spirits. Burning sage won’t help, but sometimes a frank conversation is all it takes to make things right.
If your efforts come up short, don’t be afraid to make a break for it and write a sequel elsewhere. You’ll rest easier.
Bennett Glace is the primary contributor and Editorial Lead for the Strategic Sourceror. A prolific blogger and Procurement storyteller, he is responsible for advocating the function’s value in podcasts, whitepapers, and other impactful, accessible content.
ISM CEO Tom Derry urges procurement leaders not to let perfect be the enemy of good – make decisions and move on!
When Tom Derry, CEO – ISM attended Procurious’ Big Ideas Summit in Sydney this week he came armed with a stark warning for the procurement professionals in attendance. “If you’re the steward of a process, then your job will inevitably be automated.”
Concerned? You should be. Because, as Tom points out, there are an awful lot of procurement roles that fit this bracket. In the very near future, for example, every sourcing event is likely to be automated.
This article is a compilation of Tom Derry’s comments from his appearances at both the London and Sydney Big Ideas Summits in 2018.
Adapting to the pace of change
Procurement has changed dramatically in the past decade, and will change even more so as we move into the robotic era. Tom believes that we’re facing more disruption and a faster pace of change than ever before. “Most of us operate within a context or a framework that we’re familiar with – the established rules of the game. But when the rules get thrown out, how do we operate?
“Being comfortable with ambiguity is a rare skill, especially amongst executives,” he argues. But he reminds procurement leaders not to let perfect be the enemy of good, urging them to: “Make decisions and move on. If we don’t, our competitors will. Being able to move on and know that there are going to be times we don’t win is important. Accepting that as the cost of being in the game and having the opportunity to win is the reality we are in.”
“We can’t anticipate every possible scenario but what we can do is be ready for multiple scenarios and recognise that when we face an unfamiliar scenario we’ve built up some skills and reflexes that we can put into play.”
Of course, as Tom admits, it’s human nature to react in fear to such rapid change. But “there’s always opportunity when there is inherent change and risk.” The skill is in recognising where that opportunity lies. And that, according to Tom, “comes from a deep understanding of what creates value. The source of value might shift but it is still there somewhere.”
Making procurement indispensable
What key skills should aspiring procurement professionals be developing in order to make themselves indispensable?
“The CPO of the future possesses an openness to change, an openness to developing and an openness to sharing.” says Tom.
To improve business-wide understanding of procurement’s value offering it’s vital that procurement leaders allow their people to reach their full potential and move on. “Maybe it’s within your company, and now you’ve got evangelists in other functions who understand the importance of procurement, or maybe it’s outside the four walls of your company. There’s no better reputation to have than being seen as a cultivator of talent, both inside and outside the company”
Tom also highlights the following three skills as critical attributes for procurement professionals.
1. Understanding Markets
“This is about more than just the price,” asserts Tom. “Procurement professionals must understand the dynamics that drive the price whether it’s short supply or supply disruption, new technology that disinter-mediates an old technology.”
2. Strategic Acumen
Procurement leaders must ask of themselves “where am I going as a business? What’s important to my business in the next two to-three years?”
3. Financial Savviness
Procurement teams must accept that they really are driving financial results for their firm. “Sometimes we are a bit too afraid to engage with financial metrics and the traditional income statement or balance sheet. But we must embrace engaging with that income statement and balance sheet in order to understand how what we’re doing in procurement is driving financial metrics such as earning per share and driving revenue growth . We must not focus on metrics that are largely discredited like cost avoidance.”
The future of professional associations
[ISM has] been around for over 102 years and so future-proofing professional associations really matters to Tom. “For 102 years we’ve been very successful but you can’t continue to execute that playbook and expect to still be around.”
“An association used to function as the place where people felt obliged to belong,” says Tom. But nowadays he doesn’t believe procurement professionals feel such a sense of needing to belong to an association just for the sake of belonging. What people need and demand from associations like ISM is “value for money and the provision of tools and skills that enable them to be successful at a critical moment in their career.”
Another key evolving role for associations, according to Tom, is their role as data brokers. “We’re able to reflect back to the profession everything we learn about the profession because we deal with all industries and all geographies, we have a broad view of what’s happening.”
A candy fix. Underwear from Victoria’s Secret. An obsession with purple. Real maverick expenses from the front-line of procurement, and how to reign them in.
Anyone who works in an office environment has experienced a scenario that goes something like this:
There’s something you need to do your job, so you just go out and get it – the quickest and easiest way you know how – and then expense it back to the company. Maybe that means buying a notebook from the store around the corner or ordering computer accessories from Amazon.com. Maybe you’ve booked your own travel for a business trip or called up a good friend to get her events management company to help with a corporate event.
Using these shortcuts may feel like you’re doing yourself and your company a favor, but most employees have no idea just how counterproductive this “maverick” spend behavior can be for the organisation’s ability to accurately analyze spend, supplier management, and procurement’s overall strategy.
When employees go rogue, purchasing goods or services out of contract or from unapproved suppliers, the company will miss out on certain discounts they worked hard to negotiate. Worst case, it can damage relationships and impact future contract terms with preferred vendors and even open the door to unethical business practices that taint the organisation’s reputation.
What’s scary is that these scenarios mentioned are all too common and appear to be relatively innocuous, believe it or not. In my 20 years of experience in procurement leadership roles, I’ve seen it all. Some of the craziest purchases I’ve seen employees make on behalf of their companies have been things like:
Buying candy for the “office” candy dish… you know, just in case a guest might want to help themselves to some. In reality, the employee that purchased it, ate it all.
Purple pens to match purple highlighters, purple pads of paper, purple post-it notes, you name it… simply because purple was this employee’s favorite color.
Items from Victoria’s Secret which were expensed as “marketing apparel.” Enough said.
So what needs to happen to reign in this type of behavior, both the common and unwitting cases, as well as the rare and extreme? Simply put, you need to make it fast and easy to place and receive the orders.
Start by putting a system in place for better control and compliance– one that simplifies and automates the purchasing process, regardless of the product/service, approval process or supplier. This makes the entire process a lot more efficient by governing requisition, approvals, buying, receipt, reconciliation and reporting. It streamlines even the most complicated workflows, making it much easier for employees to comply.
These systems should also have intuitive and easy-to-use interfaces (think of the way consumer e-commerce sites are designed) so that employees actually want to use them to make purchases, and not just because they have to.
Lastly, and most importantly, take maverick spend seriously. Maverick spend can still sometimes happen even with the most sophisticated and intuitive systems. Keep a close eye on spend analytics to track exactly where rogue spend is coming from, so you know when and how to enforce spending policies that prevent future rogue behavior – and those surprise expense requests.