Tag Archives: collaboration

Renegotiating Mindsets From Competitive To Collaborative

When you change from seeing your top suppliers as competitors to enablers, and take a collaborative approach, how you negotiate with them will change dramatically.

This article was written by Sarovar Agarwal, Partner, Communications Media and Technology Practice at A.T. Kearney. 

Procurement leaders are facing more pressure than ever in the current business environment. In the wake of prevailing disruption and increased competition from nimble technology-focused companies, the c-suite have become eager to see procurement leaders make their function deliver more and add value to the organisation.

However, the 2016 Return on Supply Management Assets (ROSMA) Performance Check Study, “What Good Looks Like,” released by A.T. Kearney at the end of last year found that only 15 to 20 percent of procurement functions deliver high value to their organisations.

The study revealed that there is a top-tier of standout performers, a middle-tier delivering value, but performing well below the top tier, and a large group of bottom-quartile performers that add limited value. For procurement leaders focused on becoming top-tier performers and adding significant value to their organisations, we suggest the following approach.

Work smart, not hard

There has been an organisation-wide push toward productivity improvement by businesses, especially by harnessing the power of technological advancements. Procurement functions should be looking at this as a great opportunity.

Historically, procurement has focused on the smaller 2000 suppliers since this is the area of least resistance. In productivity terms, this is like the tail wagging the dog, rather than the other way around. With resources squeezed, procurement leaders are now irrevocably turning to the top 20 suppliers, rather than the complete 2000, because these are the mega vendor agreements that can affect the organisation the most, and where the most value can be added if managed effectively.

Meanwhile, technological advancements (like RPA) are now enabling automation of the large volumes of transactional activity that goes on in procurement, especially for the smaller group of suppliers, to ensure the function remains effective and productive.

If we apply the 80/20 Pareto Principle to procurement, a shift in focus to the top twenty suppliers, nurturing those relationships and making them more effective, will result in better deployment of resources and so more peas – or greater results. One key thing to note is that simply switching focus to the top 20 suppliers isn’t enough, you need to nurture those relationships too, which requires a change in mindset.

Competitive to collaborative

When you change from seeing your top suppliers as competitors to enablers, how you negotiate with them will change dramatically.

When you move into the top 20 suppliers, you are dealing with strategic categories which if led and managed well can make a significant impact on the business. The challenge for procurement leaders is that the relationship status with these suppliers is often complicated.

For example, in the telco world, Cisco is a supplier to every telco’s network, they are also a sell-through partner, and a competitor for the sell-through business.

Which is why it’s very surprising that all too often procurement brings a toolbox – for example RFP, vendor management, basic category management etc – to the negotiating table. This industrialisation of the procurement process is useful for the tail end – those 2000 suppliers with low resistance – but it cannot be used for the top 20 suppliers who have the potential to impact your business and your role in such a way.

The tools to handle these special relationships put better collaboration and engagement of vendor partners at the forefront of the strategy:

Top-to-top engagement: The biggest critical differentiator for the collaborative sourcing approach is top-to-top engagement between the company and the partners – that enables proactive involvement of the c-suite. This can help establish the right leverage and also enable internal visibility.

Business led: A high degree of involvement from the business owners will further align procurement’s interests with the business challenges and opportunities. This requires great communication and trust between functions and top-line management.

Strategic alignment: Procurement functions should start with an open mindset, rather than spell out all the asks at the start. All too often, the cookie cutter approach takes over, which doesn’t deliver the right long-term solutions. This will help deliver tailor-made solutions based on vendor insights.

Collaborative solutioning: Procurement departments should adopt transparent and collaborative solutions. They should conduct design and immersion workshops with partners, to take them along on the journey. 

Involved facilitation by procurement: Finally, they should drive proactive governance and risk management.

Procurement leaders are best placed to play the Lead Orchestrator role to this new way of thinking about the top 20 vendors. For those procurement leaders who are aiming to become a sustainable source of value for the business, the top 20 approach is smarter, more productive and gets better results for your function and for your position in the business.

The first step is changing your culture and mindset towards the top 20 from competitive, to collaborative; from contracting, to partnering – and this is often the hardest!

A.T. Kearney’s Enrico Rizzon will be speaking  at The Big Ideas Summit Melbourne. Join us LIVE to discuss the big-ticket trends affecting procurement – grab a ticket here to secure your seat!

Big Ideas Summit 2016: Big Idea #33 – Sharing Knowledge Openly

Collaborative working and knowledge sharing benefits everyone in procurement. It’s time to learn from one another.

At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.

From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.

Harnessing Knowledge Sharing

Nicola Robinson, Knowledge Manager at CIPS, says that procurement professionals have a huge knowledge collateral at their disposal. And she also believes that by sharing this knowledge openly, everyone can benefit.

CIPS have led the charge at bringing trusted sources of information to the procurement profession. Nicola believes that the profession can bring all their collective knowledge together, harness it, and all learn from one another.

Catch up with all the delegates’ Big Ideas from the 2016 Summit at the Procurious Learning Hub.

Want to find out more about Big Ideas 2016? And maybe what we have planned for 2017? You can visit our dedicated website!

If you like this (and you haven’t done so already) join Procurious for free today. Get connected with over 19,500 like-minded procurement professionals from across the world.

Happy Birthday – Procurious Is Two!

It hardly seems like any time at all, but it’s been two years to the day (nearly!) since the launch of Procurious. While wishing the site a happy birthday, we look back at how far we’ve come.

2nd Birthday Cake

On May the 14th 2014, the Ebola epidemic was sweeping through East Africa, Ukraine was on the “brink of civil war”, Scotland had scored a chart double with Calvin Harris and Paolo Nutini at number 1, and Donald Trump was still considered a celebrity/businessman, rather than a US Presidential candidate.

And under the shadow of the Sydney Harbour Bridge, at the 7th Annual Asia-Pacific CPO Forum, hosted by The Faculty, Jack Slade stood up and announced the launch of Procurious to the assembled audience.

Getting Started

In the room that day, amongst a Who’s Who of Asia-Pacific CPOs and Procurement leaders, were two future Procurious employees, and a host of people who would be the site’s first movers. At the time, the site was just finding its feet as a community-based, niche network for Procurement and Supply Chain professionals.

The idea of Procurious, originally conceived as a procurement news service, took flight in late 2013, and was steadily developed and streamlined until the site you see today was formed (well, the first iteration at least!).

It took just under 6 months for the site to add its first 2000 members, with first movers coming from across the globe as the word spread. By Christmas 2014, the site had over 3000 members, was engaging with professionals from around the world, and over half of these members returning to the site on a monthly basis.

Making Strides

From that point on, there’s been no stopping Procurious. Earlier this year we celebrated our 10,000th member, but didn’t stop there. As it stands now, the Procurious community numbers nearly 14,500 people from over 140 countries, at an average of 6 per cent week on week growth.

You can see some of our stats in the infographic below:

Happy Birthday Procurious

At the heart of Procurious we want to help build the image of procurement, share learnings and provide a platform for information gathering and collaboration. In the past two years we have seen the following on the site:
  • A truly global community of over 42,000 people across Procurious and our social media channels
  • Coming up on half a million unique sessions from over 220,000 users
  • Over 2 million page views since May 2014, and over 690,000 page views since the start of 2016
  • Over 1,000 high-quality, original blog articles published on topics ranging from procurement systems and sustainability, to community empowerment and breathing techniques
  • 771 discussion questions asked; over 3,500 community answers provided
  • Over 100 free eLearning resources published to the site (with over 100,000 views on YouTube collectively)
  • Over 600 procurement and supply chain events listed

And that’s not to mention two very successful, and well regarded Big Ideas Summits in 2015 and 2016, with more events to follow this year, and Big Ideas 2017 already in the works!

The Future

We’re already excited to see what the next year has in store for Procurious, and are looking forward to taking the site to the next level with your help.

All that is left for us to say is thanks for all your help in making Procurious what it is today. Join us in making a Happy Birthday toast to Procurious, and have a glass of bubbly and a slice of virtual cake on us!

Innovation and the Shifting Technological Landscape

Innovation is more important than ever before. The technological landscape is currently undergoing a shift three times the size of the industrial revolution.

Lego Car Innovation

This is according to Steve Sammartino, an expert on the digital revolution and disruptive technologies. Steve has worked in marketing for the world’s largest companies, founded and sold his own start-ups, is a business journalist, and thought leader in the start-up & technology arena.

And amongst all this, Steve still found time to make news headlines by designing and building a fully functional, air-powered, 500,000 piece Lego Car!

Ahead of his keynote address at this year’s CPO Forum event in Melbourne, Steve talks about the changing structure of the economy and the Supply Chain, and the importance of innovation to procurement and its future leaders.

Why is focusing on innovation more important than ever before?

We are living through a radical change 3 times the size of the Industrial Revolution. It’s 3 times bigger because this time it involves the entire globe, not just the developed economies. Here’s a fact to blow your mind in this regard – there are currently more mobile phones in use around the world than toothbrushes!

Technology and access to it is now seen a primary life improver for people in developing countries. It means that what worked and what mattered yesterday, won’t be a valid strategy today. Innovation is not just a matter of a company’s survival in disruptive times, and not just a way to outgrow your competitors.

And the thing that is different is that it isn’t just at the consumer end that innovation needs to occur. It’s an entire supply chain reset. A new infrastructure is being built, and major innovations are happening in areas customers never see. 

What are some of the ways multinational companies can adopt a ‘start-up mindset’?

More important than anything else, big companies need to learn how to fail, and that failing is not bad. They key to startups is that they move quickly, and cheaply, to find out what works.

Big companies also need to decentralise decision making, as many of the Industrial era efficiencies are now being usurped by nimble and local connections. In a world where one size no longer fits all, we need to remember that this applies to local operations as well. Lots of small mistakes lead to better outcomes in a connected world. 

How can businesses cultivate a more innovative and collaborative workplace culture?

Businesses just need to do one thing – remove the layers of authority, and become a horizontally focused organisation, not a vertical, hierarchical one. This will help to create an environment where frequent small risks are rewarded.  

What tips do you have for current and emerging leaders to stay ahead of the curve, and be equipped to lead their companies to future success? 

Staff need be interested in change. Be students of change and be the person who introduces ideas to colleagues, don’t wait for management to know what is coming. The other thing to remember is that being innovative isn’t about inventing the technology, but more about working out how to benefit from the changes. It’s not a technological process, but one of courage and creativity.

We need to love our customers more than we love our infrastructure, especially in times when infrastructure is reset. We can do this by thinking of applications to serve our customers, rather than ourselves.

Also, given most large companies are fearful of change, it only takes an open mind to get a few steps ahead. It’s not about guessing what’s next, but adapting faster when ‘next’ arrives. 

Why should businesses invest in social impact and change?

It’s vital because it is what we value as a society. But it needs to be more than donating to charity, or triple bottom line reporting. Our responsibility needs to be designed into our supply chain. Businesses need to go to market with a net positive social outcome, not white-wash bad behaviour after profits are made.

It’s a very important part of brand building. Organisations that make products that benefit society save costs on things like advertising. Just look at Tesla – a $30 billion company that doesn’t spend a cent on advertising.

You can hear more from Steve on these topics at the CPO Forum 19th of May in Melbourne. At CPO Forum 2016, the line-up of inspirational speakers will reveal how procurement leaders can “crack the code” and harness the game-changing power of supplier innovation.

For more information, including how to register for CPO Forum 2016, visit the website.

Is collaboration really necessary?

If you’re a procurement professional, then you probably hear the word collaboration more than you’d like to. Collaboration has rightfully earned its place in the hall of fame of executive buzzwords. But as most practitioners know, the reality of collaboration is often unglamorous.

Is collaboration really necessary?

So why this gap between the ideal world and reality? One root cause is that very few people actually follow collaboration best practices. The side effects of ineffective collaboration are further magnified when different departments within an enterprise have to work together, which is often the case when procurement is involved.

The truth is that collaboration works if and only if the answer to all of the following questions is a resounding YES:

1. Is collaboration necessary?

Too often, committees get formed and the overhead of having to communicate to several (overextended) people often outweighs the benefit of their participation. Ask yourself whether you really need others’ help or input.

2. Does everyone know what they’re doing?

How many times have you been in a meeting where half the participants look disengaged or confused? Collaboration is an active process and everyone needs to be all in and know what they are responsible for delivering. And this needs to be true at every point throughout the project lifecycle.

3. Is the end goal clear to everyone?

Often, collaborative projects kick off with a grand vision, but weeks later, the harsh realities of having to deliver by a certain deadline often muddle that vision. This causes confusion (at best) and severe productivity loss and frustration (at worst). Ask yourself whether you know where you’re going. If you don’t, then the odds are that you’re not the only one.

4. Does everyone know what the action plan is?

This is especially critical to complex projects with multiple stakeholders from various departments (which covers most Procurement projects). This type of project requires constant reallocation of resources and more than a few last-minute changes to the grand plan. Has the entire team been made aware of these changes? And more importantly, does the entire team know what the plan of action even is?

5. Are we actually using the right tools?

Despite the recent rise of collaboration and social media tools, most procurement professionals rely on email and Microsoft Excel to manage an increasing number of highly complex projects. Whatever the tool, it must be easy enough to understand at first or second glance, and it must add value immediately. The benefits of leveraging social technologies to collaborate effectively are huge.

A recent McKinsey study titled The social economy: Unlocking value and productivity through social technologies makes the case that social technologies can aid collaboration and improve the productivity of interaction workers by 20 to 25 per cent.

Bottom line – collaboration can be incredibly valuable and almost always results in a superior work product and better outcomes for all if practiced correctly. Next time you start a project, don’t forget to review the five questions above!

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