We’re so excited to finally share Big Ideas Zurich with you. This truly digital event addresses what skills you need to perfect in order to drive peak performance in your career; what’s the latest intel on blockchain and how to close the gender pay gap in procurement.
“Procurement itself – let’s face it – isn’t going to light the world currently, but I believe it will be the new instrument in 2030 to change the world.” – Olinga Taeed, Visiting Professor in Blockchain at Birmingham City University
As we hurtle towards the new year, you might be starting to look ahead and reflect on your personal and professional development goals.
But why wait until January 1st to put your plans into action?
Next week, we’ll be addressing a huge range of critical areas for procurement and supply chain professionals at Big Ideas Zurich.
If there was ever a time to register for one of our summits, it’s now. Featuring presentations and interviews from some of Europe’s top procurement leaders, we’ll be discussing procurement and supply management towards 2030, the future of talent, automation, blockchain, diversity and so much more.
Check out our teaser trailers below for a little sneak peak of what’s to come.
Procurement isn’t lighting up the world
“Procurement itself – let’s face it – isn’t going to light the world currently, but I believe it will be the new instrument in 2030 to change the world.”
Olinga Taeed, the world’s first Professor in Blockchain and Social Enterprise, reveals how blockchain can be used for social good, why procurement isn’t currently lighting up the world and when that’s set to change.
On December 10th discover…
What skills you need to perfect to drive peak performance in your career
The latest intel on blockchain
How procurement can close the gender pay gap
The latest updates on game-changing technology
How to develop strategic partnerships
Why supplier diversity is best for business
What procurement and supply chain will look like in 2030
How to stand on your supplier’s shoulders
How to make your key business stakeholders love you
The ways to shift your procurement mindset
The importance of having a digital endgame
Win a Parrot Bebop drone worth £450
We know that everyone loves a prize. And believe us when we say we’ve got prizes falling from the tops of the Swiss Alps.
As a registered digital delegate you’re in with a chance of winning one of eight amazing giveaways including the big-ticket item – a Parrot Bebop drone worth £450.
Plus, we’ve got Patagonia t-shirts, a Fjallraven backpack, stashes of Swiss chocolate and Herschel beanies up for grabs.
We’ll be doing eight prize giveaways throughout today with winners selected every half an hour. To put yourself in the running you simply need to get involved on the digital delegates group – posting your comments, insights and questions.
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.”
We know that procurement professionals like to get the latest intel on the hottest topics from the best in the business – so we’ve sorted you right out. Your big procurement questions: answered.
What are the surefire ways to speed up procurement processes?
Can procurement ever completely eliminate maverick spend?
Why shouldn’t procurement simply squeeze their suppliers for every dollar they’ve got?
What technology will be the most game-changing for procurement?
What’s the best question to ask a candidate during a job interview?
Procurement questions as big as these require big answers from people who know their stuff. Happily, we gathered 50 of procurement’s top influencers and thought leaders in Chicago last month for Big Ideas Summit 2018 and managed to steal a few quiet minutes to put some of them to the test.
Pat McCarthy, SVP & GM – SAP Ariba
Pat on eliminating maverick spend…
“Procurement can [eliminate maverick spend] but it has to make the purchasing process a destination people want to come to”
Pat on supplier relationships…
“You have to have a great relationship with your suppliers, one where they benefit and you benefit so that making a profit and you fining value in their solutions is the right balance.”
Pat on his favourite job interview question…
“I love to ask candidates about the last book they read because I’m most interested in curiosity – are they curious, what are they curious about – it tells me a lot about them.”
“I think there are certain people, especially executives, who are special and they will always go around the system. If you had the power to say only those that are in the system will be paid then perhaps you [could eliminate maverick spend] but i’ve never seen a situation that had 100 per cent compliance.”
Doug on his favourite job interview question…
“My go to question is – what are two or three things that you’re really really bad at? What I’m looking for is A) what they’re really bad at but more importantly the degree of introspection they have. If they’ve been honest with themselves and done a real inventory of what their areas of development are, what are their weaknesses then they’re somebody I can trust and work with. If I hear somebody say that they don’t have any then they’re not going to be a good fit for us”
Daniel Perry, Global Alliances Director – EcoVadis
Daniel on eliminating maverick spend…
“I don’t think procurement can necessarily eliminate all maverick spend, buyers find ways around any rules that you might put in place. But if you can provide a very strong vision and mission for procurement and the company in general as to why you are trying to avoid maverick spend, if you can align it to your company’s sustainability mission or the fact that you want to try and avoid using suppliers that use modern slavery then it gives the buyer another cause for pause before going off and doing maverick spend.”
Daniel on game-changing technologies…
“Transparency is really changing the way that business is being done these days – there is much a higher expectation for businesses and their supply chains, who they work with and who they’re associated with so I think the technology around due diligence, around assurance, around using companies that are reputable is going to be a big game changer in the way that companies decide which suppliers to use.”
Contingent Labour represents an ever-increasing proportion of our workforce, and it’s not hard to understand why. What is challenging for procurement teams, however, is effective management of their organisation’s contingent workforce…
“Depending on whose data you believe, the contingent workforce now makes up from 20 per cent  to 40 per cent  of the global workforce, with some analysts estimating that it will reach 50 per cent by the year 2020,” says Doug Leeby, CEO – Beeline.
Procurious caught up with Doug ahead of his keynote presentation at Big Ideas Summit Chicago to learn more about the state of contingent labour in the workplace today and to pick his brains on how procurement teams can best manage, and leverage, their ever-evolving workforce.
The rise of the contingent workforce
“It’s easy to understand why contingent labour is growing,” explains Doug. “Most companies are under intense pressure to improve their bottom line and usage of contingent staff, contractors, freelancers, and consultants is an excellent economic model that can be deployed to both accomplish discrete projects and assist an organisation during surge periods of work.”
“There is an enormous economic benefit in being able to ramp up key areas of the workforce during heavy times and down in lighter times. Additionally, the enterprise can complete important project work by hiring external experts rather than having to bring highly specialised skills into the organisation. The short-term costs may appear high but the total cost to production can, in fact, be much lower.”
“Traditionally, companies have looked to the contingent labor population for work that is less strategic, saving that for FTEs. However, more and more, we are seeing a hybrid approach. Successful companies in which HR and Procurement are working together have figured this out. Most of us can’t afford a team of data scientists but we can contract a team for a specific goal. That’s a very strategic example whereas the contingent workforce can produce extraordinary value.”
The challenges of contingent labour
Employing a large proportion of contingent labour to your organisations presents a whole new set of challenges for both procurement teams and HR. But, as Doug advises, it is specifically in-effective management of contingent talent that will lead to enormous problems and risks for your organisation.
“Companies may be operating out of compliance, exposing themselves to severe penalties. Additionally, improperly managing this talent can lead to overpayment or under-delivery of results. Metrics and KPIs are critical to ensure that the program is properly managed. Everyone has heard about the now-infamous ‘war on talent.’ It isn’t subsiding. Not having a smooth-running program to manage contingent labor invariably leads to losing great talent to those who do have solid programs.”
Part of the difficulty with managing contingent labour is procurement’s failure to work constructively and efficiently alongside HR departments.
“Asking the two departments to take time to think about optimising their workforce is a tough ask,” explains Doug.
“This is not a small undertaking nor is it something that can be accomplished in one meeting, or even a series of meetings. It is transformational, which means it requires a significant investment of time and resources, but I believe it will happen as the focus on talent comes into greater view at the C-suite. HR has an outstanding opportunity to look at talent holistically and work with Procurement to ensure that it is sourced and managed properly. This will deliver tremendous value to the organisation.”
Using tech to manage contingent labour
“Technology today is an enabler,” Doug explains. “However, with the progress being made in AI and machine learning, it will soon become far more than just an enabler – it will become an advisor.
“Technology shouldn’t just be about workflow and reporting. Rather, it should act more as a subject matter expert or concierge helping procurement and HR to analyse their workforce and make strategic decisions.
“The challenge with this transformation is that it depends on organisations getting all their data into the technology and most still have a way to go. At a minimum, they need get all of the contingent labor into the system – complex, statement-of-work (SOW) based, milestone-based services as well as contingent staff.
“VMS technology can manage not only who the contingent workers are, where they are, what they are doing, and what facilities and data they have access to, but also how well they perform their assignments.”
The future of the workforce
“The workplace and workforce model that has been in place since the Industrial Revolution, designed for stable markets and long-term business planning, is giving way to a new model based on constant change and adaptability,” Doug believes. We asked Doug to outline what he believes will be the key features of the workforce of the future…
1. Talent first
Over time, I believe organisations will adopt a “Talent First” approach that will be led by HR. Procurement will remain a solid partner, but HR will need to lead the initiative within the organisation. They will work, proactively, with department heads and finance to figure out the best way to achieve desired outcomes.
2. The human touch
Some outcomes will be handled via artificial intelligence and robotic process automation, but much will still depend on people. Competitive organisations will focus on optimising their workforce. They will then focus on how to source this talent holistically.
3. Talent pools
Talent sourcing won’t be done in silos anymore. Organizations will establish private talent pools and work to attract talent, both FTE and non-FTE, to their pools. Then, they will be able to hire/engage known talent which leads to a higher propensity for success.
Companies will make use of functionality like our Self-Sourcing. In other words, they will go directly to the contingent talent rather than through intermediaries. This is already being done with freelancers, but we will see more of this with contractors and consultants.
Now, more than ever, it’s important for the profession to put sustainable procurement at the front and center of business.
Daniel Perry, Global Alliances Director – Ecovadis believes that the role of procurement is evolving. Evolving from being “primarily focused on cost savings and operational efficiency, to a more strategic and central player in risk management and value creation.”
Now, more than ever, it’s important for the profession to put sustainable procurement at the front and center of business.
“Stakeholders, including end consumers, B2B customers, shareholders etc. are demanding that businesses take responsibility for practices all the way into their value chain. They’re driving transparency and, ultimately, a positive impact by working with high-integrity partners. And it’s procurement teams that are in the ideal place to meet these higher stakeholder demands.”
“The power of the spend that procurement controls (often between 50-70 per cent of turnover) puts procurement at the crossroads of not only risk management and brand protection, but also as internal partners for driving value creation. Of course they want the value chain to be resilient – to avoid interruptions or damage to their company’s reputation – but they also want to provide supplier-driven innovation and support for transformative business models and offerings. –
“Procurement teams focused on sustainability do this by selecting and working with the best suppliers in a way that goes far beyond price, quality and delivery, to include performance around environmental, social and labor and ethics practices.”
The value-add of sustainability programs
It’s all too common to hear an organisation defend their lack of commitment and lack effort in this space. “It’s too expensive”, “it’s too difficult”, “it’s too time consuming” or “we’re just not ready” are typical refrains.
“The benefits and ROI of sustainability include not only operational savings, but strategic outcomes. A well-developed Sustainability and Corporate Social Responsibility (CSR) program that is integrated into the company values, and is driven with executive support, can drive key business performance metrics such as:
Sales and reputation: A burgeoning wave of consumer sentiment is cresting. More and more customers are comparing the sustainability details of products and services, and it is changing their purchase decisions. Companies making the right sustainability investments can realise a possible increase in revenue of up to 20 per cent.
Employee morale and productivity: Sustainability programs can do wonders to improve employee satisfaction, reducing a company’s staff turnover rate by up to 50 per cent and increasing employee productivity by up to 13 per cent. Integrating CSR practices in your company and brand also has a hugely positive impact on recruiting. If your company has a better sustainability reputation, it often generates more interest from applicants, allowing you to be more selective and choose higher quality candidates.
Increased market value: Sustainability programs can increase a company’s market value by up to 6 per cent.
Innovation: With more power comes more responsibility…and more options. Many companies are pursuing sustainable procurement strategies in order to find innovative suppliers that will help them differentiate their product or service offering.
Dupont, for example, changed its innovation strategy to embrace a “sustainable growth” mission, saying “If we bring the solutions to the market sooner than our competitors do, we will be more successful in continuing to grow the company.”
Making sustainable procurement work
“One of the biggest challenges companies face in sustainable procurement is measuring and understanding current performance within their supply base, in the context of global standards and benchmarks. It can also be challenging to engage suppliers as collaborators in their mission. And to get there requires a mix of expertise, the right technology, change management and process integration backed by executive commitment.
“First, the organisation needs a clear mandate from the executive team, which makes the sustainable procurement program an integral part of the function’s mission and values. This is embodied by investing in change management and communication programs and taking steps towards implementation and company-wide adoption.
“Success also requires reliable, agreed-upon indicators for sustainability performance that both buyers and suppliers can understand, and that are actionable. Many companies collect lots of unvalidated data, but buyers rarely have the CSR expertise or time to validate or interpret it – and this is where a standardised, evidence-based, and analyst-generated rating – like EcoVadis provides – comes into play.
“Additionally, CSR criteria and performance indicators must be integrated across the procurement function and include the use of clear and enforceable codes of conduct, contract clauses and tender criteria. Buyers need to believe in and leverage these criteria in their supplier development and sourcing activities., And, procurement groups should agree on, measure and reward on the critical CSR / sustainability KPIs in the same way they track cost savings or other key metrics. These all drive adoption in the organisation and make sustainability inherent to the procurement role.
“Increasing the benefits to a single company, a mutualised platform can make it much easier for suppliers to share the same scorecard results with all their customers, enhancing transparency and collaboration to drive network effects for maximum improvement and impact.”
Procurement with purpose is often perceived as rainbows and fairytales. But it only sounds that way when we fail to connect purpose with real business results.
Most procurement and supply chain professionals initially gravitated towards their profession because they like to understand how things work; they like to figure out how to make things work better and because they like taking the complex and making it simpler.
Perhaps comparatively few professionals embarked on these careers thinking that they would change the world.
But times have changed. As digital technologies reshape the world around us procurement has brand new opportunities to make the world a better place and many procurement teams are seizing these opportunities.
Indeed, procurement and supply chain pros are starting to ask more of their suppliers:
Does my supplier have the governance structures in place necessary to root out forced labour from the supply chain?
Does my supplier follow an ethical, sustainable approach to the environment? Is it a good neighbour? Is it responsible in its stewardship of natural resources?
Can my supplier verify the provenance of conflict-free minerals?
What steps does my supplier take to embrace diversity and inclusion in its workforce and supply chain?
These questions, and hundreds more like them, are now so much easier to answer thanks to digital networks, transparency and accountability. And this is important because shareholders, analysts and customers are increasingly demanding that the brands they support, and invest in, actually stand for something.
How Technology Can Democratise Procurement
Digital networks offer the breadth and scale necessary to monitor these things adequately, helping us to get our arms around ethical business practices from all the organisations that we do business with.
For most organisations, keeping track of the first-line suppliers is difficult enough. Tracking the full supply chain of their suppliers, and their suppliers’ suppliers, would naturally seem impossible. But technology has changed all this.
Take the following example scenario as an example. Imagine you’re a category manager and you want to know if there is a high risk of forced labor anywhere in your supply chain. You log into your dashboard and can see all of your suppliers globally and where you might be exposed.
If you wanted to look specifically at North America you might zoom in and see that Carbo Ceramics, a critical supplier, has risk exposure.
Further investigation would reveal that two of the categories you source are indeed at high risk for forced labour: electronic fuse and electronic display unit. The proximity of forced labor to your source of supply is high, and there is also a high likelihood of exposure to the supplier you source them from.
So now you’ve got the insights and the transparency you need to take action. You can ask further questions of the supplier, make a site visits and even consider finding an alternative partner.
In less than two minutes, you’ve gained all the information you need to detect and mitigate slavery in your supply chain and make a major impact; not only in your supply chain and business, but to the lives of others. There’s incredible peace of mind in that.
Digital procurement also extends opportunity to historical underrepresented groups of business owners. On a network, you size up a supplier based on the data, based on the value it can lend your supply chain, not based on gender, race, national origin or sexual preference.
Technology can be incredibly democratising. It democratises opportunity and extends it outward from the few to the many.
Journey from Chief Procurement Officer to Chief Purpose Officer
It used to be that CPOs who embraced purpose-led procurement as a core part of their job description were the exception. Now we’re seeing the role of the Chief Procurement Officer evolving into the role of the Chief Purpose Officer.
Procurement with purpose is often perceived as rainbows and fairytales. But it only sounds that way when we fail to connect purpose with real business results. It happens when we neglect to point out the measurable outcomes for our customers.
We need to do a better job of explaining procurement with purpose, of spreading awareness that, through transparency and accountability, supply chains can meaningfully improve people’s lives. Procurement professionals can markedly improve people’s lives.
Thanks to digital networks, procurement professionals are spending less time chasing down data, and more time acting on it. We can let go of the traditional tactical tasks to focus instead on creating value for our organisations and propelling them forward.
That reality, that authenticity, aided by AI, blockchain and other emerging cloud based technologies reinforces what an organisation stands for. It deepens an organisation’s positioning and it widens an organisation’s visibility and sharpens its competitive advantage.
What are the three essential factors for effectively addressing the shifting conditions of sustainability risks and opportunities?
This year has provided plenty of examples of why organisations need to better manage or participate in more effective sustainability and CSR initiatives to better manage risk, and purchasing and supply chain managers are finding themselves at the forefront of these initiatives, as keepers of the risk management keys. While hot button issues like worker safety and reputation risk are only increasing in importance, transparency and sustainability are reshaping consumer demand, and intelligence trumps data in supply chain risk management.
Luckily , this emphasis on sustainability and CSR is breathing new life into purchasing and supply chain teams, giving them a renewed sense of urgency to establish or expand supplier assessment programs and position themselves as greater strategic assets to their organisations and industries.
After reflecting on the variety of new supplier sustainability programs EcoVadis has helped launch or evolve, our experts have discovered three key factors as essential for effectively addressing the shifting conditions of sustainability risks and opportunities.
1. Program Reach and Depth
When setting up a supplier monitoring system, the assessment methodology should cover all key themes in sustainability and Corporate Social Responsibility. It’s common for homegrown or initial assessment programs to start by tackling just one issue, like environmental sustainability or human trafficking. To truly have an impact and effectively manage risk, however, the system should cover criteria across environment, labor and human rights, ethics/anti-corruption, and the supplier’s own sustainable sourcing practices.
Geography is also a significant factor when designing and implementing a program. Most modern supply chains span over 100 countries, so the assessment methodology should be appropriately adapted to cover this spread, engaging and supporting suppliers in local language wherever possible and taking into consideration variances in regulations and culture, at least for the top regions.
Finally, the size of the suppliers/third parties you are working with is another important dimension to examine. Many of them will be small- or medium-sized enterprises (SMEs) that are not listed on any stock exchange, and with little required reporting or public information. The monitoring system and methodology should be adapted accordingly to measure these SMEs.
2. Seamless Integration: Change Management and Processes
To make sure your teams and partners have the best chance of success with a new or changing sustainability and CSR initiatives, the methodology and processes used to both collect data and adopt performance indicators must be integrated into current, familiar processes and workflows.
There are two elements to this:
It is essential that the supplier sustainability monitoring solution vendor be able to support you and your team in the required change management program that will drive adoption of the initiative. This could include consulting on strategy and rollout, program branding, communications and supporting content development, training, support/helpdesk, onboarding services and reporting.
System and process integration
A key enabler to maximizing the impact of sustainability criteria on purchasing behavior is to integrate the assessment system into the current supply chain management platforms such as e-Sourcing, e-Procurement, CLM, SRM or similar platforms.Supplier monitoring solutions that come with an API that can be used to integrate the CSR indicators to other platforms are a huge advantage here. This way, you can give buyers and category managers access to current and complete sustainability data within the tools they are using today.
No matter how thorough or amazing the assessment solution, it will only be effective with supplier participation. Here are a couple key ways sustainability monitoring programs can provide value to suppliers, which is vital to engagement and the ultimate success or failure of the initiative:
Alignment with relevant labels, certifications and standards
Suppliers will always care about compliance and a core feature of any monitoring system is to ensure suppliers adhere to the relevant global, regional and/or category-specific labels, certifications or standards. Examples might include FSC for fiber-based products, REACH registration of chemicals in Europe, or EnergyStar for appliance makers in North America, and so on. There are thousands of such labels, certifications and standards across the 120+ countries touched by global supply chains. A comprehensive supplier assessment program must take into account all relevant assessments and maintain an annually updated list in each major region/country. In doing so, suppliers can ensure that their efforts are “valorized” in the monitoring process, making it more efficient for them to participate.
Actionable results, benchmarks and feedback
The results of a sustainability assessment should be digestible and actionable by both the buyer’s side (procurement and supply chain, EHS&S, risk), but also for the supplier. Visually exhausting spreadsheets of checkmarks, or a list of documents from a supplier is often hard to understand and thus not actionable by a purchasing or category manager. These roles want instead to understand how suppliers’ sustainability performance compare to their peers and what the norm for the industry or geography is. Also, being able to also clearly understand performance over time is another vital part of any system. Solutions that make the short list should provide actionable results and indicators, benchmarks for comparing performance, and feedback on areas of improvement.
Do you know who your non-employee workers are? Where they are? What facilities, networks, and data they have access to? If not, chances are very good that you need a Vendor Management System.
For most organisations, human capital expenses constitute the largest single cost of doing business, often up to 70 per cent of operating expenses. Human capital is also a growing source of concern for executives who fear they don’t have – and can’t acquire – the top-tier talent they need to compete and succeed in an increasingly on-demand world.
Companies that have traditionally relied on internal workforces of direct employees are increasingly adopting a more flexible, extended workforce approach that lets them adapt quickly to market changes while effectively managing their fixed costs.
To manage this extended workforce, companies increasingly employ sophisticated vendor management systems (VMS). These VMS solutions can do much more than simply automate the contingent staffing process. They can source and manage all types of talent and deliver a wide range of insights to help organisations make better workforce decisions.
Where does VMS fit in your procurement picture?
Simply put, a VMS is the software that automates the hiring process of an organisation’s non-employee workforce. It is often a web-based application that helps manage and procure staffing services, from requisition through billing.
Most VMS tools are delivered through a Software-as-a-Service model. A VMS provides significant improvements in reporting and analytic capabilities that far outperform manual systems and processes. VMS tools are typically operated externally by a Managed Service Provider (MSP) or self-managed by a program office within the organisation.
This structure enables a streamlined and automated process with real-time of all contingent labor: who they are, where they are, and what access they have to your facilities, networks, and data. A VMS allows you to see all relevant job orders and accurately assess labor services spend and performance, often leading to significant cost reduction.
Should you implement a VMS?
Typically, large organisations, or companies who employ more than 100 contractors at a time will benefit greatly from a VMS solution. Companies with non- employee workers in multiple countries and varying labor classes can also streamline their hiring, management, and payment processes with a VMS.
Below are some of the top reasons to implement a VMS for your organisation:
Cost savings: A VMS helps eliminate rogue buying of labor and maverick spend. You can gain hard dollar savings by consolidating suppliers and benchmarking rates to gain negotiated savings or volume/early pay discounts, as well as soft dollar savings through process improvements like consolidated invoicing, reduced timecard and invoice errors, and compliance tracking.
Visibility: Cost savings from a VMS are driven by the analytics and reporting, which help reveal where and how you are spending money on contract and project-based labor in order to make better decisions for the future.
Compliance: Transparent analysis of all stages of the procurement lifecycle provides greater control and ability to enforce procurement strategy and policies. By implementing a VMS and gaining full visibility into your staffing spend and activity, you can ensure that all labor is properly categorized and mitigate risk of potential exposure to co-employment and tenure litigation.
Quality: A VMS allows you to measure and monitor the performance of your suppliers and non-employee workforce to ensure there is an efficient process in place for acquiring the best talent at the best rates (through self-sourcing or using staffing suppliers) and a strong program for sourcing and managing statement of work (SOW) contractors.
Operational efficiency: By implementing a VMS, you can automate many steps in the procurement process.
How to select a VMS provider
There are many VMS providers in the market today, ranging from software solutions offered by MSPs or ERP providers to independent contingent workforce specialists. Make sure you choose wisely.
Here are eight things you will want to consider when selecting your VMS provider:
Trusted partner commitment: It is critical to find a partner that is willing to invest in a relationship with you, to work with you, and to support your program’s changes, including geographical or labor category expansions.
Financial stability: Your VMS provider should be a viable choice for today, tomorrow, and over the next decade.
Flexibility: VMS providers should understand trends, emerging talent acquisition models, and how best to facilitate sourcing talent.
Expandability: The tool should have the ability to accommodate all labor categories and easily expand to include SOWs, not just contractors on a time and materials basis.
Global reach: Select a provider who understands the tax and labor laws in all geographies where you do business.
Visibility: Robust reporting and analytics capabilities are critical to maximising the value of your investment.
Ease of use: The tool should be intuitive enough so that users can learn about 90 per cent of the functionality on their own. Training, online help, online tutorials, and help desk assistance should be available for the remaining 10 per cent.
Technology compliance: The vendor you’re considering should be certified by an independent service auditor to ensure they have undergone the most rigorous data security assessments and compliance
Now more than ever, contingent workforce managers, procurement teams, and human resource professionals need a significantly enhanced toolkit to address business executives’ priorities. They need innovative solutions that can dramatically lower costs while boosting productivity. They need to find and engage the right people with the right skills – quickly – to deliver better customer value in an on-demand world.
Most of all, you need solutions that will help your companies turn your workforce into a competitive advantage, differentiate your business, and set up your organisations to win. A VMS is that kind of a solution.
For information about the value a VMS can offer your business and how to build a winning business case for a VMS in six easy steps, click here.
Doug Leeby will be speaking at Big Ideas Chicago on 27th September. To follow the action live from wherever you are in the world, register as a digital delegate.
We interviewed some of procurement’s most influential leaders to hear their advice for the global procurement community. Here are there 6 top tips…
Are we running out of humans who can get the procurement job done?
Is the future office-free?
Should every procurement team have a Chief Data Officer?
How do you sell yourself, your team and the profession to the stakeholders that really matter?
Can procurement teams make themselves indispensable?
These are some of the questions that we addressed at last week’s Big Ideas Summit in London, where we brought together the top procurement minds to connect, collaborate and innovate.
Couldn’t join us on the day? Not a problem! We’ve documented all of the highlights for our digital delegates and pulled together this list of 6 top tips for procurement pros from some of the function’s most influential leaders.
1.Become an essential partner to the business – Bob Murphy CPO, IBM
IBM’s CPO, Bob Murphy, believes that while procurement leaders “need to be able to use technology to get the insights and knowledge, their focus should be on developing their emotional intelligence (EQ) rather than their IQ, and their ability to talk to clients in a consultative manner. Listening is critical – When we’re talking, we’re not learning.”
“Project management, empathy, innovative thinking and an agile mind-set are also critical skills at IBM.
“You hear a lot of people talk about procurement leaders becoming “trusted advisors” to their businesses, but I think we need to take it to the next level and become ‘essential partners.’
2. Procure with Purpose – James Marland Vice President, SAP Ariba
James Marland, Vice President – SAP Ariba argued that it is an exciting time to be part of procurement an professionals should seize this opportunity. Procurement professionals are often told that they’re the ones who save the money, deal with suppliers and cut purchase orders.
But now procurement can have a new agenda; bringing to the table initiatives that achieve crucial social goals such as eradicating slave labour, improving sustainability and creating an inclusive and diverse workforce.
3. Engineer Serendipity – Greg Lindsay, Urbanist and Futurist
Greg Lindsay, Futurist, Urbanist, Journalist and Author, is a firm believer in the fact that innovation is fundamentally social. Indeed, case study after case study has demonstrated that the best ideas are more likely to arise from a casual chat around the water fountain than in any scheduled meeting.
They are the result of serendipity – a chance encounter at the right time by the right people, regardless of their rank, affiliation, and department or whether they even work for the same company.
The most innovative companies in the world are busy engineering serendipity and harnessing social networks and new ways of working designed to cultivate the discovery of new ideas. And that’s exactly what procurement should be doing!
6. Prepare for the worst – Nick Ford, Co-Founder Odesma
Nick Ford, Co-founder – Odesma discussed how procurement professionals can help turn Brexit into an opportunity for their organisation.
It’s an uncertain time for procurement professionals; who must consider how the function will be impacted by an increase in the cost of imported goods, freedom of movement (or lack thereof!) and a potentially depleted talent pool.
As businesses prepare, the role for procurement teams is increasing dramatically and it’s a real opportunity to put procurement at the front and centre of organisations. We just need to prepare!