Tag Archives: big ideas summit 2019

New Goals for Procurement – Driving Revenue Growth Through Supplier Collaboration

Procurement professionals need to think in more innovative ways about how we can drive competitive advantage and shareholder value for our organisations.

By Greg Epperson / Shutterstock

In my recent article, I talked about “the Art of Procurement”, and suggested that the time is right for procurement to move beyond our traditional focus on transactional improvement and basic cost reduction. Whilst remembering those are still important aspects of the role, we need to think in more innovative ways about how we can drive competitive advantage and shareholder value for our organisations.

Revenue growth is one key factor that determines shareholder value and organisational health generally. While profit is of course important, and the procurement goal of cost reduction plays a key role here, “you cannot cut your way to growth” (or ultimate success), as the saying goes. Growth is vital, and stock markets arguably value growth more than absolute profit levels or even margins.

So, firms can grow revenue through a variety of activities, for instance;

  • Finding new customers for existing products
  • Improving existing products (so the firm sells more)
  • Introducing new products – either totally “new”, or line / range extensions and additions
  • Improving the efficiency and effectiveness of sales and marketing activity

In every case here, it’s clear that procurement has a potential role to play. Even in terms of the “improved sales / marketing” route, there are possibilities – maybe procurement can work with the marketing team to find innovative suppliers in areas such as digital marketing? 

For one European bank, the capability of their internal procurement team has become a customer benefit that is winning new revenue.  Potential business customers – particularly small and medium sized firms who may not have much internal capability – are offered access to a set of procurement tools, templates and good practice guidance developed by the bank’s procurement team, who are also available for telephone consultation if the clients want that too. In a market where the core banking service on offer from every competitor is very similar, this has proved to be a differentiator that has won new business for the firm.

When it comes to improving existing products (or services), suppliers are often better placed than the business itself to identify opportunities. Procurement can really come into its own by supporting that supplier-driven innovation and improvement. But in many cases, it is not simply about identifying the innovation or improvement – it may well be that the firm gains revenue and advantage through the speed to market compared to the competition.  

That was highlighted in a recent webinar I enjoyed, which featured my old friend and ex-colleague Jason Busch of Spend Matters as well as KPMG and Ivalua. But the highlight was hearing from Mark Gursky, Director of the Procurement Center of Excellence at Meritor (a $4 billion global manufacturer of automotive components). He explained how procurement in that business was contributing towards ambitious targets for growth via new product launches.

The key was (and is) enabling more effective working between Meritor and key suppliers, who are supporting the drive for growth. That change in the whole working relationship between buyer and suppliers, needed to support Meritor’s goals, has itself been supported by technology (that’s where procurement technology firm Ivalua comes into the picture).

It struck me that the technology achieves two goals. First of all, to really make the most of what your suppliers can offer, you need to manage the basics of supplier management well. That means supplier master data management; spend and contract analytics; risk management and so on. Putting it simply, if you don’t have a grip on who your suppliers are, what they’re doing with you, where in your organisation they are already working, and how they are performing, then impressive sounding “supplier innovation programmes” will be built on sand.

Then, having got the foundations in place, technology can support the actual collaborative development work. Gursky talked about using the Ivalua platform to manage all the work between the firm and key suppliers. Information is captured in one place rather than emails flying around between lots of different people. Complex requirements can be quickly translated into bills of material, then suppliers can respond rapidly to requests and questions. Projects can be tracked, data and information exchanged securely between the parties, and outputs tracked and monitored via the platform. Information is easily shared, but proper controls are managed too, important when we’re talking about potentially innovative new products.

You can still access the webinar here to find out more about the Meritor story; it’s a great example of procurement looking beyond the norm, and really contributing to those wider goals such as revenue growth.  And at the Ivalua Now “Art of Procurement” conference next month, I’m expecting to hear more examples like that of procurement moving beyond our traditional heartland of cost control and transactional management.

You can book for that here, and join the firm, key clients such as Total, Suez and Deutsche Telekom (and me) in Paris for what should be a stimulating couple of days – maybe see you there!   

Ivalua are sponsoring today’s Big Ideas Summit in London. Sign up now as a digital delegate to follow all the action wherever you are in the world.  

Procurement Pros: You’ve Got A Friend In ROI

How does an organisation know that the procurement initiatives, projects, efforts really result in a quantifiable benefit to the business?

By Mercury Green / Shutterstock

As both a former CPO and consultant, I’m often asked about the strategies I have employed to grow, reach and deliver results. Yes, I can tell you stories from past lives of wooing reluctant stakeholders and setting savings records year over year. Actually, the secret to my success in procurement is much less glamorous, and I’d like to share that with you: 

Effectively planning and prioritising initiatives and meticulously tracking ROI through a rigorous project benefit validation process and governance framework are the best ways to increase your organisation’s credibility, dependability, and recognition.

Procurement plays a critical role in the cost management of an organisation.  This is why many organisations are quick to tout the cost savings and bottom line benefits generated by procurement’s efforts. Procurement’s maturity journey, when done right, can last months to years, and often requires significant investments – consultants, technology infrastructure, headcount, and support services. How does an organisation know that the procurement initiatives, projects, efforts really result in a quantifiable benefit to the business? Furthermore, how can the organisation fully appreciate procurement’s value? When the results are not tracked, reported, and kept as the focal point, procurement’s full impact can be overlooked, or underappreciated at best.

ROI is your friend

Procurement intersects across the business’ most strategic functions: operations, finance, legal, while managing critical external supplier and partner relationships. This broad exposure is combined with well-honed skills in cost control, analytics, process, research, contracting, and negotiation, as well as a deep knowledge of the business and company culture. Yet, we are often not given the respect we deserve as a key trusted business partner. Why is that?  Procurement teams tend to sell themselves short by not forecasting ROI and tracking quantifiable benefits for all value-add initiatives.

Identifying project benefits and estimating an accurate return on investment (ROI) can be very challenging for organisations. There are several possible reasons why ROI often goes unmeasured:

Being satisfied too early

Some organisations are satisfied with the general improvement in their financial statements after formalising a procurement strategy, because now a methodology in which to quantify “savings” or “value” has been defined.  When this journey begins, controls are strengthened, initiatives are defined, “low hanging fruit” is addressed, resources are deployed, and as a result, the organisation performs better as a whole. 

Focusing on tactics

Some companies focus intensely on training resources and executing projects in the early stages of a procurement journey, and place secondary emphasis on measuring ROI, believing that the benefits will come.

Can’t find the right formula

Some companies attempt to measure ROI, yet they are unsure how to quantify project benefits generated from procurement, especially if there are multiple ways to measure a successful procurement effort. It is evident that, even considering how well-known or understood the procurement function is to the world, there is still a significant knowledge gap. How can procurement quantify project benefits and truly link them to a company’s financial performance?

The well-reported results of industry pioneers that are more mature in their procurement function, as well as the pressing need to reduce costs and improve productivity, have encouraged company leaders to push their teams to undertake even more procurement initiatives. Sometimes, after an initial burst of enthusiasm, these efforts languish over time, or procurement becomes less engaged than they once were. This can often be because benefits have not been accurately estimated or verified as impacting the bottom line. In some cases, benefits can be reconciled as tangible contributions to the income statement; but in others, benefits may not be so evident during a reconciliation process.  A critical key to success is to ensure that procurement does not miss an opportunity to bring true credibility to their efforts is to implement a process that directly reconciles project benefits to the company’s accounting and reporting systems.

The tools you need: project selection, benefit validation and governance

A strong project governance process is key to the successful project execution and results. A comprehensive project governance process encompasses how projects are identified, selected, executed and reported. However, in most project governance processes, a key element is often forgotten: benefit estimation and validation.

While most organisations recognise the value of properly vetting project ideas and opportunities prior to launching a project, many fail to follow the process religiously for every initiative. Some may launch projects before a proper prioritisation effort has taken place, or others may spend too much time in the idea generation phase. Often, organisations fail to estimate potential benefit prior to project chartering or prioritisation of projects.

Experience has shown that the pressure to get started, or to drive quick results, pushes teams to launch projects without taking the time to adequately plan or determine probable benefits. This ineffective approach to project selection and prioritisation means that projects are often executed without being fully linked to the organisation’s overall strategic goals, and as a result, too many projects are chartered, and few are completed to the company’s expectations.

Not only does a project benefit validation process help with initial benefit estimation during project selection, it adds rigor during project execution by defining project benefits with more accuracy and clarity. This facilitates credible benefit reporting, and establishes a foundation for post-project benefit reconciliation, where benefits can be reconciled to the organisation’s financial statements. Simply stated, the benefits driven by the procurement effort can now be fully understood as to their impact to the business.

A strong project benefit validation infrastructure can support the procurement function as it matures an evolves to take on more challenging value-add activities for the business. It provides not only the basis for identifying and approving projects, but also serves to maintain the momentum and retain ongoing management and stakeholder support to build the brand, extend your reach, and deliver better results year over year.

WNS is sponsoring Big Ideas Summit London on March 14th. Sign up now as a digital delegate to follow the day’s action wherever you are in the world.  

Forget Procure-to-pay – The Future Is Procure-AND-pay

How can virtual card payments improve the procurement experience?

By Gorodenkoff / Shutterstock

Traditional card-based solutions link one card to one individual. Virtual card solutions, on the other hand, link one ‘virtual card’ to one transaction. It’s a technology that has the potential to add real value to corporate payments – especially as controls on credit limit and dates of use can be set per transaction – but it’s one that is yet to be implemented across the entire corporate environment.

Integrating for efficiencies

The key to unlocking the full potential of virtual card solutions is about partnerships with existing procurement systems, especially in meeting the needs of multinationals.

“In B2B payments, we’ve had good traction for [our solution] in mid to large corporates, but utilisation for the very largest multinationals has been limited, and that’s because of their significant investments in sophisticated procure-to-pay (P2P) software,” says David Price, Managing Director of Client Coverage at Barclaycard .

Those systems allow businesses to procure in a compliant and cost-effective way, and provide a good experience for the user, except when it comes to payments.

The impact on buyer experience

Previously, procurement teams had to step outside the P2P environment to complete payment through a separate portal. Now virtual card platforms are being integrated into procurement systems including Coupa, adding ease of use and another option for users within a technology that is already trusted and familiar.

“From procure-to-pay to procure-and-pay”

“As soon as transactions are authorised, virtual card payments are triggered automatically so there’s no need to leave the environment or to process payment manually,” says David. “The common terminology is procure-to-pay; through integrations, it’s a move towards procure-and-pay.”

Integrated solutions have the potential to improve the buyer experience further, bringing additional benefits to the business such as greater efficiencies, control, data insights and cash flow flexibility.

Onboarding efficiencies

End-to-end procurement costs are often high because of bureaucracy and paperwork, with efficiency gains made elsewhere in the process lost at the point of payment. That’s especially the case in the tail-end spend of large volumes of small-value transactions. When suppliers are paid using a virtual card platform, there’s no need for a business to run lengthy due diligence checks or set them up on internal finance systems – typically saving them 3-5 hours per transaction for a new supplier.

“Virtual card platforms can help to streamline a business’ payment system.” They can also be used to make payments directly into suppliers’ bank accounts meaning they can be paid using the platform even if they don’t accept card payments.

“That’s the through the card piece in procure-to-pay that we are addressing,” notes David. “Precisionpay, [Barclays virtual card platform] helps to streamline a business’ payment system and also allows payments to be automatically reconciled to invoices and purchase orders, creating further efficiencies.

Flexible controls

Authorisations and controls are fundamental to the procurement department, as it looks to avoid uncontrolled or rogue spend. The result can be over-engineered and over-complex control policies, with a bias towards the buyer rather than supplier benefit. Such an imbalance can make it challenging for procurement to negotiate the best deal.

“Objective advice to create sustainable long-term relationships.”

“Therefore, what we suggest is adjusting your policy so that your authorisation and control strategy is reflective not just of a desire to create control but is also proportionate to the supplier you’re working with. As procurement functions start to implement appropriate, supplier centric payment strategies, that’s when some of a virtual card platform’s capability becomes even more valuable.”

Moreover, by using a virtual card solution, companies can flex cash flow, much as a consumer equipped with a credit card could. Payments made today, for instance, can be repaid as per the billing cycle, plus an additional 28 days after the equivalent of a credit card statement has arrived.

Building a strategic partnership

It’s unlikely a virtual card platform would be the right payment vehicle for all suppliers. It’s important to figure out where best to deploy virtual card technology. By analysing a client’s account payable file and understanding their business strategy, it can provide recommendations for different categories of spend and which result in the greatest benefit for the buyers, such as where to quickly drive efficiencies through volume.

Barclaycard are sponsoring Big Ideas Summit London on March 14th. Sign up now as a digital delegate to follow the day’s action wherever you are in the world.  

4 Factors To Consider When Upgrading your Procurement OS

An upgraded operating system (OS) takes the procurement function out of the traditional back-office role, and into that of a valued strategic business partner.  

By Preechar Bowonkitwanchai /Shutterstock

That little flag in the corner of your laptop screen, the red exclamation mark on your phone, the middle-of-night system message. You know what it means- it’s time to upgrade your operating system.

Yes, it’s painful to exit your programs, save your work, and sadly close all 35 of your vacation-planning web browser tabs.  You sit, you wait, then you reboot and possibly even get reacquainted with your digital systems again. No one wants to do it, but in the end, we all are all thankful to those glowing, pulsing indicators for pushing us and guiding us through the process for that much-needed refresh.

Things run so smoothly now, don’t they?

What if we received the same upgrade reminders in real life?  What would your red exclamation mark tell you about your procurement operating system? Is it time for an upgrade?  Almost definitely! An upgraded operating system takes the procurement function out of the traditional back-office role, and into that of a valued strategic business partner.  

The transformation, however, can neither happen overnight nor without setting the right goals and planning.  You’ll need to close some browser windows and maybe lose a few saved files in the process. In our decade-long process of co-creating this operating model with leading global companies, we have identified four key enablers required to help you upgrade. Read on and trust me, it will all run so much more smoothly in the end.

Structure of Upgraded Procurement OS

1. Strategic Category Management

At the heart of the transformation is the shift that procurement has to make from being reactive problem solvers to proactive solution providers. This is not possible without category managers or business-aligned spend managers aligning with the business, understanding strategic priorities and building relationships with stakeholders. When category managers proactively reach out to the business, they begin to demonstrate value and finding a place at the table will become easier.

Building a centralised Center of Excellence (CoE) can help category managers develop the required skills. The CoE can provide the necessary support such as tools, methodologies, templates, market intelligence and coaching.

2. Centralised Procurement Help Desk

On any given day, procurement functions are inundated with queries and work requests. As procurement transitions to operate more strategically, it is critical to find an effective way to service internal and external stakeholders.

Setting up a centralised procurement desk can help channelise the requests to various specialist teams such as:

  • Strategic support team that can be responsible for services such as market research, category strategy development, stakeholder workshops and portfolio development
  • Source to manage execution team thatcan manage the execution of activities such as creation of request for proposals, supplier management and contract authoring
  • Transactional execution team thatcan manage back-office operations such as purchase order management and invoice-to-pay processing

3. Technology Accelerators

The digitisation of transactional and repetitive procurement activities is a low-hanging fruit for organizations as it will release the bandwidth of resources for more proactive, strategic planning. Further, digitisation can help identify patterns, norms and trends leading to a procurement playbook.

Supply chain management is experiencing a quantum shift because of emerging technologies such as internet of things, artificial intelligence and advanced analytics. Adoption of these technologies, is critical to upgrading procurement’s operating model, but it should be planned well. It is necessary to define the overarching vision and strategy, and to then evaluate how technology fits into the roadmap.

4. Implementation Approach

The final piece of the puzzle is the actual re-organization of the procurement function into the new operating model. It is a myth that technology by itself will be enough to integrate all processes. Putting together the right team, getting executive sponsorship, ensuring alignment with the vision and finding collaborative external partners are all critical success factors in upgrading to the optimal OS for your organisation.

This is where the smart phone operating system analogy falls a bit short- unfortunately, we, as the procurement team, can’t expect to wake up to a fully-restored bug-free system- good results take time. It is necessary to plan for adequate time required for the new model to mature and assimilate into the organisation’s new way of working.  If this is done correctly, your stakeholders will certainly experience the thrill of a significantly improved experience. 

Now is the time to upgrade your framework and develop the future infrastructure for procurement operations.

Are you ready to push the upgrade button? Learn more by reading WNS’ Next Generation Procurement Model Whitepaper.   

WNS are sponsoring Big Ideas Summit London on March 14th. Sign up now as a digital delegate to follow the day’s action wherever you are in the world.  

Taking Control Of Your Supply Chain With Blockchain

Organisations are increasingly striving to develop a supply chain that adheres to their brand’s sustainability and ethical standards. Here’s how blockchain can enable this…

By Demkat / Shutterstock

As our global supply chains become more and more complex, ensuring that contractual commitments around sustainability and ethical practices are met at each stage of the supply chain has become extremely challenging.

Along with this increased complexity, the economic and reputational cost of a lapse in compliance is increasing as well. Organisations want to be part of the solution, not generating bad headlines and being seen as part of the problem.

As such, organisations are increasingly striving to develop a supply chain that adheres to their brand’s sustainability and ethical standards. Starbucks, to name one example, has set a 2020 goal of ensuring all tea and cocoa is ethically sourced. Johnson & Johnson has publicly stated its commitment to determining the use, country of origin and source of 3TG minerals (Tin, Tungsten, Tantalum and Gold) used in its global product portfolio. Such commitments require extreme and committed due diligence in supply chain management.

One way that forward-looking businesses are achieving such diligence is with enterprise contract management. For the first time in the history of commerce, contracts are being completely digitised. This enables procurement organisations to identify, assess and automatically mitigate risk through advanced capabilities like automated supplier checks and region-based regulatory compliance. And emerging technologies like blockchain and artificial intelligence (AI) are poised to dramatically increase the benefits of an enterprise contract management platform.

Today, we at Icertis are working with customers on solutions that will allow them to utilise smart contracts that use a consortium blockchain to create an immutable ledger of transactions. Under such a system, a customer and its suppliers will place their contracts on the blockchain, thus ensuring that the required terms are present in all the related contracts. Once on the blockchain, AI will verify that all necessary contractual obligations are present in the documents. This will ensure the tracking of commitments across a consortium of suppliers, enabling a new level of commercial collaboration, visibility and accountability.  And to ensure sensitive information is not exposed, visibility of contracts in the chain will be restricted based on privileges that allow only contracting parties to see their contract, preserving the sanctity of the supply chain.

This technology turns contracts into living business assets to achieve once-divergent goals.

Manufacturers can ensure their suppliers comply to standards and contractual commitments around privacy, sustainability and labour laws. Suppliers, meanwhile, can prove that they comply, while not exposing the details of their subcontracts within the supply chain.

And it’s not just about tea, cocoa or conflict minerals. This technology can also enforce compliance requirements like data privacy (including GDPR), information security, ITAR (International Trade in Arms Regulation) and other regulations.

We are entering a new era of commerce, when contracts stop being static documents forgotten about after execution and actively start reducing risk and creating value for enterprises throughout their lifecycle. Smart contracts powered by AI and blockchain can protect and optimize businesses in ways never before possible, including in their supply chain.

Icertis is sponsoring Big Ideas Summit London on March 14th. Sign up now as a digital delegate to follow the day’s action wherever you are in the world.