Today we released the results of our How Now? The Supply Chain Confidence Index. The research reveals that nearly all (97%) of the 600+ professionals we surveyed experienced a supply chain disruption related to COVID-19. In response, the majority (73%) of organisations are now planning major shifts in supply chain and procurement strategy post-pandemic, including supply base expansion (38%), reductions in supply chain globalisation (34%) and increases to inventory levels (21%).
When asked where COVID-19 had the biggest single impact on their supply chains:
31%: Decreased demand for products and services
26%: Lack of available supply due to production downtime and shutdowns
21%: Logistics and transportation slowdowns and delays
“We expect to see seismic strategy changes in the months ahead that fundamentally alter the makeup of global supply chains,” said Tania Seary, founding chairman and CEO of Procurious. “For decades, low-cost country sourcing and offshoring was the foundation of global supply chains. The pandemic has many executives considering reducing globalisation—and for good reason. But these changes won’t come easy.”
Reflecting on lessons learned, 39% of those surveyed said they were blinded by a lack of supplier and geographic risk and 29% said they didn’t understand the upstream supply chains of their suppliers. Fifty-nine percent of respondents believe the Fortune 500 should reduce globalisation by localising supply chains and bringing manufacturing back home.
Confidence Remains High, Despite Looming Uncertainty
Uncertainty around when the disruption will peak continues to loom. Procurious found that while 34% of business leaders believe the worst has come and gone, nearly half believe the peak impact will occur within the next six months.
“The message from frontline practitioners is that the end to these supply chain disruptions is not near. Most professionals believe the crisis will peak in or after June,” said Seary.
As a result, supply chain and procurement teams will continue to play a key role in recovery and resiliency initiatives. During the crisis, 40% of respondents said their recommendations were solicited more than usual internally, and 22% said they now have a seat at the executive table.
This growing platform has inspired a new generation of professionals to further pursue careers in supply chain and procurement. Procurious found that 62% of all respondents and 71% of millennials said their interest in procurement and supply chain has increased as a result of the pandemic.
“We found that most practitioners stepped up in a big way and responded effectively to a crisis that literally brought the world to a halt,” said Seary. “The spotlight on performance will lead to increases in budgets, tech investments and board-level involvement, and create new opportunities for practitioners to make their mark at the executive level.”
Analyzing employment trends, Procurious found that 20% of supply chain and procurement departments experienced job cuts and 23% of departments were forced to take pay cuts. However, go-forward job confidence remains high. On a scale of 1 – 5, weighted job confidence for the next 12 months is a 3.96—meaning employees are more confident than not.
The full report, which dives deeper into COVID-19’s effect on supplier payments, technology investments, jobs and supply chain and procurement operations, as well as plans and predictions for the future, is now available for download.
As we emerge from lockdown and leave the safety of social isolation, we will need to drain what’s left of our almost empty resilience reserves to return to – or look for – work. Feeling anxious? Well, you are not alone … but the good news is that resilience is a learnable skill and boosting it could help you cope with the current crisis in confidence caused by the coronavirus.
If your resilience reserves are running low, you are not alone.
Mental health issues were already at epidemic levels before the coronavirus pandemic – and Covid-19 has only made them worse.
So, if you are worried about losing your job (or no longer have one), are feeling isolated and unsupported or are fearful about your health or that of a loved one, you will inevitably be feeling stressed – in the UK alone, half the population say their anxiety levels are “high”.
In the USA, 33 million Americans have already lost their jobs as a result of the pandemic, and although 8 in 10 are hopeful they will be re-hired, the coronavirus crisis has left 9 in 10 stressing about finances.
While in Australia, 1 in 4 say they are overwhelmed by loneliness when working from home, -with half of those economically impacted due to reduced hours or loss of job and stressed about job security.
So, this is a global problem – and one that affects professionals across all sectors. Those working in procurement and supply, which have seen dramatic shifts in supply chains as well as working practices, are not immune and are understandably feeling the strain.
Accept that this is the ‘new normal’
Right now, the only thing that is certain is uncertainty. So, it’s important to be kind to yourself and understand that the coronavirus crisis will inevitably take its toll on your mental wellbeing.
This is not a sign of weakness. It’s biology. In response to high levels of stress and anxiety, cortisol and adrenalin will pump through your body and your brain will start to function differently.
Blood flow will be directed to your flight or fight system priming you to run way from danger and, as a result, you will become more reactive and emotional and make decisions that are less rational and logical. No wonder we are all feeling unsettled.
Awareness of your mental state is key
So, the first step is to understand that there are physical – as well as psychological affects – of the coronavirus crisis.
To really understand how this is impacting you, use the heart rate monitor on your fitness tracker (if you use one) to see when your pulse spikes. Is it just before those chaotic conference calls where everyone is clamoring to be heard? Or does it spike when you wake up, check your emails and realize that you face yet another day of uncertainty?
According to Track Record, which uses Olympic training techniques to teach execs about stress, the key is to look at your heart rate variability not just the heart rate itself.
A sleep tracker is another useful tool. Poor sleep is a key indicator of high levels of stress and also shows that your body and mind is not getting a chance to recover from the pressures of the day. Recovery is key to boosting resilience but it is hard to find time to “get away” from the Covid crisis particularly as news of the latest infection rates and deaths is streaming 24/7.
Accept that your mental resilience important
At the same time track your mental state – many of us are hooked on fitness right now logging our times on the running machine etc. So just add this to the list. Note your feelings and what triggers you to feel stressed and anxious.
This will help you to monitor how your resilience is fluctuating. As with any exercise program (mental or physical) it is important to know where you are starting from so that you can track your progress as you build your mental toughness.
That’s why The Road to Resilience: Mental Toughness leadership series for The Faculty Management Consultants starts with self-awareness, to measure your MTQ (using a mental toughness questionnaire).
The Faculty (which works with Australia’s leading procurement teams and – like many of us – has adapted to the “new normal” by running everything online), now has a special focus on emotional resilience, in addition to technical skills, because it’s so important as we navigate this period of uncertainty.
So why does it matter? Well, being aware of where you sit on the resilience scale enables you to not only improve your score, it enables you to be more emotionally intelligent.
“You can become more aware of how tough or sensitive you need to be in any given situation – when to flex the toughness muscle, or give it a rest,” says Sally Lansbury, memberships director at The Faculty. “Remember, there are circumstances where having mental sensitivity is required… particularly right now.”
In addition to being self-aware and adapting your mental toughness to different situations, it is important to be risk-aware – something that the intrepid explorer Charlie Walker talked about in Procurious’s recent Virtual Future Leaders Roundtable in the UK.
Called “Rapid, Risk Aware and Resilient”, Charlie talked to procurement professionals about training to have fast reactions and training to deal with moments of risk. And while procurement professionals are not facing the challenge of a 43,000 mile bicycle ride across 60 countries (just one of Charlie’s many feats of endurance) they can train to boost their 3Rs, including resilience.
…and that you don’t have to struggle
We all know that some people are more resilient than others. However, what you might not realize is that you can change where you stand on the mental toughness scales – that’s because resilience is a plastic personality trait which means it can be developed.
So, in addition to being aware of how mentally tough you are – and how tough or sensitive you need to be at any given time – you should also understand that mental resilience can be learned and that now is the ideal time to start boosting your MT score.
The first step is to understand what it really is:
Mental Toughness describes the quality which determines, in large part, how we respond to stress, pressure and challenge … irrespective of the prevailing circumstances. – Dr Peter Clough.
Much of what we do is habit and that includes our response to stress and pressure. In the definition of MT “how we respond” are the three key words.
As part of your awareness exercise – which will help you to identify when you feel less resilient and when your stress levels spike – also take a note of how you respond to change and challenge.
Do you feel hopeless? Or overwhelmed? Perhaps you are angry or anxious?
Once you are more aware of your default setting in terms of “how you respond”, then you can start to change these automatic behaviours to the ones you want to adopt.
Changing any behaviour pattern takes time, but right now you can start with the first step: awareness.
This year’s Career Bootcamp is designed to ‘Power Your Mind’ and set you up with the skills to innovate, play to your strengths, and be more resilient. Register for your digital ticket here.
What does best practice supplier relationship management look like? Not like this…
With sales at her company in freefall due to the Covid-19 crisis, the pressure was on for Sally’s* procurement team to reduce costs. In a desperate pitch to do what she could, Sally decided to issue a letter to all suppliers, asking for an overall price reduction of 5%. In exchange, Sally dangled the carrot of ‘to-be-determined’ commitments that the business would fulfill post-Covid. These could include, she thought, accelerated payment terms, additional volumes, or contract extensions.
What could possibly go wrong, she thought, as she hastily finalised the letters and forwarded them on. Even if most say no, some might say yes and procurement will be lauded as heroes.
We’ve all been in Sally’s position – or if we haven’t, we certainly can imagine being put in it. When faced with the pressure that a crisis brings, isn’t it always the best idea to at least try to reduce costs by asking for a discount? On the surface, it seems like a logical approach – all you need is for one supplier to agree and your effort pays off. But is it possible that taking such a black-and-white approach can end up costing you more than it saves you?
Issue 1: Vague notions of success can’t be measured
In Sally’s situation above, you could argue that ‘success’ looked like one supplier agreeing to discount. But what if they agreed to a 1% discount, would that suffice? Or if they agreed to a 5% discount without complaint, would you ask if you had done more?
The problem with a strategy of ‘doing something and hoping for the best’ is that there really is no benchmark for what ‘the best’ is and whether it has been achieved. This leads to issues with measuring success internally, and naturally, the same question is always asked: how has procurement added value here?
Issue 2: No discount is as simple as asking – negotiation will be required
If achieving a 5% discount was as easy as sending a letter, then procurement would likely be out of a job. Herein lies another problem with Sally’s strategy – it’s unlikely that vendors would respond with a simple ‘yes’ or ‘no,’ leaving her to need to negotiate for whatever she could get.
And these negotiations would not be simple. Those suppliers who may be inclined to agree would expect more clarity and certainty on any future commitments from the company, which could turn discussions sour, quickly.
Those on the other end of the spectrum, however, may feel the need to explain why they can’t offer a discount, and may enter the conversation feeling defeated or exposed.
Whichever way these discussions transpired, they would certainly be time-consuming. In an environment where time is money, you have to ask yourself what the small percentage gains you might secure are really worth. .
Issue 3: Your supplier is in a crisis, too
Supplier Management 101 tells us that we should treat our suppliers like we’d like to be treated. But is sending out a generic request the way we’d like to be treated, especially if we’re in crisis too?
The answer is a resounding and obvious no. Any suppliers that Sally is dealing with would also be deep within this crisis, and may in fact be considering a price increase to save themselves. On top of this, a lack of personalised correspondence could be perceived as insulting to the relationship. The request might net a discount, but it would cost far more than that in future relationship capital.
If Sally’s plan wouldn’t work, then what would?
Step 1: Shore up your fundamentals
In times of crisis, and indeed, in ordinary time procurement must have a clear goal and an execution plan for what is needed for the business operations to continue undisrupted (or minimally impacted) and more importantly, for creatively increasing value to the organisation.
These are essentially the fundamentals required to maintain a strong supplier base and elevate procurement. From a pure supplier relationship perspective, engaging strategic suppliers to assess their crisis preparedness and ability to continue to serve the organisation is the first step.
Step 2: Creatively and empathetically engage your suppliers
Once you’ve got your fundamentals organised, you need to engage your suppliers in strategic conversations about how to creatively increase efficiency, optimize processes quickly, reduce waste (of time, resources and costs), and where possible, decrease costs and deliver additional value.
Beyond this, you also need to discuss with them what value is added, how much, for how long, what are the contingencies. This will help you establish a win-win approach with short and long term impact.
The idea is that a continuation of a growing partnership will drive the right behaviours, not just during this crisis but in the future. Supplier-driven innovation should always be a top priority to both procurement and the entire organisation.
After you’ve finished your initial discussions (and note, these type of discussions should always be ongoing) use learnings from them across all other supplier segments. The behavior you want to drive here is ensuring suppliers not only want to continue doing business with you but are eager to strategize with each other during the crisis.
Going back to Sally’s situation, this approach works for a number of reasons. Even if suppliers couldn’t immediately offer reductions they will be clear on expectations and will be committed to perform at a high level and produce ideas for the company, while increasing supplier engagement and value as a byproduct. Suppliers will be willing to explore solutions to avoid disruption, which is exactly what the business needs. In addition to this, the effort expended is targeted so no time will be wasted and in fact, the time spent may even produce market intelligence that can be brought back to the business to refine their own mitigation strategies.
Also, finally and perhaps most importantly, the role of the procurement will be elevated to a truly strategic function (with lasting impact) to the organisation.
Continue supplier relationship best practice?
For procurement professionals that realised early that Sally’s approach wouldn’t work, none of the advice here on how to rectify it should come as surprise: it is, quite simply, supplier relationship best practice to treat your suppliers in this way.
In fact, for organisations that already implement supplier relationship best practice, they may not even need to take these steps – throughout this crisis, their suppliers may already be knocking on their door with creative mitigation strategies. They may even be using this crisis to bring the relationship to the next level.
But for those who are yet to establish supplier management best practice, this example provides the perfect reason why you need to. Supplier relationships are a key enabler to business success, and when they are strong, the risk of business disruption is greatly reduced.
What have you done to strengthen supplier relationships throughout this crisis? Let us know in the comments below.
Innovation and change – we know we need to do it but taking the first step is always hard. However, waiting until change is forced upon us could lead to even more pain.
“Execution is all about timing – people don’t want to do things differently…until they have to”
James Varga, CEO – DirectID
Change. It runs against our very nature to accept and embrace it, even when we know it’s for the best. People will rail against it, undermine it, challenge it or be completely apathetic to it. That is until something forces them to accept it and the need to do something differently.
That’s exactly the issue facing global procurement professionals at this very moment. The COVID-19 pandemic has forced each one of us to reconsider the how our jobs are done and how we help our organisations. Fortunately, we have a group of leaders whose first thoughts on change are how they can make it happen, to rely upon.
Procurious is one of those organisations considering how to provide its service in the current climate. Faced with not being able to have CPO Roundtables in person, we grasped this opportunity to connect our leaders virtually, ensuring that our CPOs still had the chance to gather and share their ideas and experiences. Because at times like these, as Helen Keller once said, “Alone we can do so little, together we can do so much.”
Pragmatism over Pomposity
Although the Roundtable took place against the backdrop of COVID-19, the discussions on the day had a far greater focus on the future than the present. Procurement not only faces the challenges of global supply disruption while ensuring that employees can operate in a safe environment, but also ensuring that the profession is well prepared for what comes next.
Part of this preparation is bringing innovation back into the everyday conversation about how procurement looks, feels and operates. This is not innovation as a management buzzword, but as a practical concept that helps realise real change and sets procurement up to face any and all future challenges. As one of our speakers, Gareth Hughes, Director of Property and Procurement at Whistl noted, “We need pragmatic procurement, not pompous procurement terms”.
Innovation here is about finding the areas where change can make a lasting difference. It’s also about ensuring that, even though the timing may not seem quite right, having the tenacity to make ideas a reality is critical for procurement’s future success.
With that in mind, we’ve picked out our three key messages from the Roundtable for you to take back to your organisation.
1. Supplier Innovation – Fit for the Future
“We need to focus on the positives that have arisen from the COVID-19 experience.”
Ian Thomson – Regional Director UK and Nordics, Ivalua
Innovation is a fleeting concept. A brand new, imaginative and forward-thinking idea one day can quickly become obsolete before we even have a chance to do anything with it. The trick is to keep challenging the idea that things need to be done in a certain way and not to ignore the ‘hard’ challenges for fear of rejection.
This is the mantra of Ian Thomson of Ivalua, who chose to look for the positives for procurement in the challenges posed in the current global climate. What is striking, according to Ian, is how traditionally adversarial relationships – competing organisations; buyers and suppliers – are changing for the better as people pull together.
This not only provides an amazing opportunity to develop long-lasting leadership and trust, but also opens the doors to supplier-led innovation. This can be achieved by having greater pragmatism when it comes to new ideas, as well as increasing our appetite for risk to embed real change.
2. Volatility requires flexibility
“Businesses are operating in massively changed contexts. To use foresight, we need to develop multiple long-term strategies.”
Jessica Prendergast, Freelance Foresight Consultant at Future Insights
An organisation’s appetite for risk is one key to successful innovation. Being too risk averse can stop worthwhile ideas in their tracks but failing to fully plan for future risks can be just as bad. That’s why Jessica Prendergast, a freelance Foresight Consultant, believes that the one-dimensional continuity plans that most businesses have belong in one place – the bin!
According to Jessica, in order to innovate and predict the future, organisations need to develop multiple scenarios to cover all possible eventualities. ‘Foresighting’ is how the thought process for this starts, helps us to understand the role of automation and technology and how we can learn and apply today from these techniques.
Jessica used the example of our changing ways of working recently. At the beginning of the year, widespread Working from Home would have been unthinkable for most organisations. Now it is the ‘new normal’. Good leadership and community spirit have made these changes easier to implement, and has highlighted how organisational planning can be helped by taking a broader view.
3. Timing is everything
“An idea isn’t great until you prove it, an idea can be in the wrong place at the wrong time.”
James Varga, CEO – The ID co.
Planning multiple scenarios, being more accepting of risk and working more closely with suppliers to innovate is only half the battle. Getting people to accept an idea at the best of times will always prove tricky due to people’s natural aversity to change. Even the most innovative idea ever may struggle to gain traction if the timing is wrong.
However, there are ways to tips the scales in your favour. James was able to share his top three with the assembled group:
Be tenacious – make the most of issues facing the organisation to highlight innovation and make change happen;
Don’t assume – not everyone will think your idea is great, you’ll need to test and measure to prove its worth;
Accept a bit more risk – moving smaller suppliers and accept more risk in our new normal, you never know where it will lead.
The underlying key to these three points is removing the blockers to innovation by focusing on adoption of ideas. Then your focus can be coming up with one great idea and making it work, rather than lots of ideas that may ultimately deliver less for your organisation.
Collaboration is King
However, your organisation is approaching the current situation, it is always worth remembering that there will be life (and work) on the other side. Taking time to focus on the future at a point when many of us have the time to do this could make a critical difference to how procurement looks and operates at the forefront of public consciousness.
Not every problem can be solved. Sometimes it’s about mitigating the impact, which can be helped by planning out your multiple scenarios and accepting a bit more risk to be open to new ideas that can have a positive impact.
And, no matter what you do, it’s important to remember that you are not alone – there are thousands of procurement professionals tackling the same issues who are willing to share their thoughts and approaches. As the world changes the way we work, it’s time to collaborate as much as we can and become the leaders who are facing change head on.
If you’re interested in accessing market-leading industry insights and networking, express your interest in joining Procurious’ Roundtable Program here.
The coronavirus pandemic disrupted Procurement in unimaginable ways. Running Procurement from home is possible, but is it sustainable?
The coronavirus pandemic has disrupted the workforce in ways we have never experienced, affecting also Procurement departments and Procurement Outsourcing (PO) providers. Shared service center locations first across Asia and then the rest of the world became hot spots, leading to a rush of company initiatives to enable procurement professionals to productively work from home. IBM was successful in moving 99% of its Procurement Outsourcing teams from 60 centers across 40 countries into a home office environment in only 10 days without service degradation (1), proving that running a Procurement business working from homeis possible and productivity can be maintained when a business can react quickly, but is it sustainable? Have critical activities just been postponed or is this is the new business as usual? Three considerations for sustained resiliency.
#1. Make regularly working from home part of your team’s DNA
While many of us are used to working from home in some capacity, over 80% of our procurement professionals have never done so on a regular basis. And just because our workforce can work from home does not mean they are able and willing to do so long-term.
But returning to the office means finding the balance between safety and productivity for our teams, and deciding whether to aim for a quick return to the office or a more comprehensive re-modeling toward “borderless workplaces” where staff works from a combination of office, client site and/or home. Returning to the office is based on smart, quick and simple fixes: social distancing, mask wearing, and setting up sanitation protocols, such as rethinking where and when we eat and gather, how we open and close doors and use elevators. Re-modeling more fundamentally looks at how we work and defining what the worker’s purpose and intent is inside the office. Buildings become much more purpose-driven; deliberately sought out for team meetings, new employee onboarding, and collaboration sessions, with more hot desks and larger shared spaces, instead of being the default place to go for work.
But no matter in what capacity we return to the office, working from home regularly or even primarily will have to become part of our DNA going forward, as future infection waves are likely to force us out of offices again multiple times over the next few years.
Achieving this will require us to focus more than ever on internal communication. We have already seen a personalization of written communication over the past few months, with people expressing genuine care for each other, but we need to also listen to our employees and keep an eagle-eyed focus on engagement. By taking time for one-on-one discussions, acknowledging everyone’s individual challenges, ramping up appreciation and recognition, and ensuring we create virtual spaces for socializing we can maintain a sense of belonging and feeling of pride. On a collective scale, short pulse surveys can be a simple way to gauge the team about how they feel and adapt measures for greater engagement and productivity.
Ultimately our teams and their willingness to be flexible will be the first line of defense for sustained productivity in the new world.
#2: Bootstrap adjustments in operating models to accelerate your digitalization journey
Just a few months of working from home on a large scale have successfully increased the sense of urgency for digitalization and more intelligent end-to-end workflows. IBM and our clients have already seen an explosion of home-grown dashboards and trackers, aimed at gaining more visibility into procurement operations, allowing for more granular insights and daily views of the business. In the spirit of agility, we should initially allow for the creation of these “quick and dirty” data collection and visualization tools, even if it is manual and there is duplication. As we learn more about what our post-COVID-19 world will look like and the effort required to maintain a plethora of semi-manual tools becomes a burden, we can start distilling down to only a handful of tools and a new operating standard, creating the enablers for a broader roll-out of “no touch” procurement solutions, including traditional tools like catalogs, as well as newer solutions like marketplaces, chatbots, guided buying assistants, robotic process automation, and analytics to accelerate speed to insights and decision making.
Even more delicate and trust-based processes like Category Management and Strategic Sourcing can benefit from digitalization, for example by running “Virtual Sourcing Bootcamps” with business stakeholders using a series of video calls to map out purchasing plans, identify additional addressable spend and define more robust category wave plans for the year.
Additional incentives can be created for those internal clients or BPO customers who are resistant to a more permanent work from home delivery environment by redistributing real estate charges and differentiating expected employee productivity to create a price differential between home- and office-based setups.
#3: Learn to build trust virtually as a buyer and a seller
Until recently, meeting face-to-face was a non-negotiable prerequisite for the signing of large contracts, which we at IBM have experienced both as a supplier of Procurement Outsourcing, but also a buyer agent with our own and our customer’s suppliers. Finding a way to make customers comfortable pulling the trigger on multi-million-dollar contracts with little to no human contact is going to be a key success factor for our new future.
In the outsourcing world, visiting one or more delivery centers is a staple in every sales pursuit, but with increasingly distributed teams and a desire to reduce non-essential business travel, we are now showcasing our teams and their capabilities virtually. Using a mixture of live and pre-recorded videos, online whiteboarding tools and virtual roundtables with practitioners we have been able to create an authentic virtual delivery experience to aid in the sales process.
Experiment with virtual collaboration tools not just internally, but get comfortable using them with clients and suppliers to co-create, or hear from experts and practitioners that wouldn’t otherwise have been flown in. Focus your travel dollars and effort on one key meeting or workshop and augment it with a few virtual “visits” to round out the picture.
Leading a borderless workplace Procurement team is possible and can even deliver superior results if employees are engaged, but ensuring sustainability requires active shaping of your team’s DNA, a more digitalized operating model and the confidence to build trust in a virtual environment. Sometimes creativity requires constraints to really flourish, and let’s use the existing restrictions as an opportunity to emerge from this crisis stronger than when we entered it.
Footnote: (1) IBM Services blog, “Building operational resiliency for anytime, anywhere and any situation”, May 4, 2020, https://www.ibm.com/blogs/services/2020/05/04/building-operational-resiliency-for-anytime-anywhere-and-any-situation/
NOW is the time to start a robust process to select, fund and implement a new technology system.
Your CFO needs some love right now – supply chain isn’t something they’ve had to worry about much before…because you had it all covered!! For the first time in their careers they’ve had to get into the details of how you keep it all going. Your poor pandemic-battle-scarred CFO is now looking for some new ways to mitigate future business continuity risks.
Procurement and supply chain leaders around the world have the answers to future potential business disruption woes – what’s needed is some serious investment in technology!
COVID-19 has placed the risk of future global supply chain disruptions at the top of the C-suite’s agenda. Not wanting to be caught out again, company leaders are desperate for a better, faster way to recover the next time a crisis strikes.
Their eyes are firmly fixed on supply chain.
So, it’s time to wipe the dust of all those technology business cases – and get on Zoom, pucker up to the c-level and ask for the cash.
It’s the right time
The pandemic caught us out. It stripped away the luxury of time, revealing the real supply chain risks that we knew had been lurking just below the water line for years.
The tide went out and our weaknesses were exposed – a lack of visibility into our multi-layered supply chains, an overdependence on single geographies and single supply source and a lack of agility to pivot and close the supply gaps.
As we move forward, supplier risk, supplier collaboration, value analysis, cost reduction, quality, and compliance will be more important than ever.
NOW is the time to start a robust process to select, fund and implement a new technology system.
How to pucker up
But how can you make sure you select the right system and construct a convincing business case, especially when budgets are being slashed across the board?
Here’s your guide to technology selection and adoption, pulled together from years of experience.
Step One – make sure you meet the business needs
It starts with understanding needs. As procurement and supply chain pros, we all know how to run a solid needs analysis….so I don’t need to labour this point.
To decide what works for your company and suppliers, remember the 80/20 rule. For example, if 80% of your spend is on contingent labour, you are better off looking at a system that specialises in that functionality.
What system is best?
Once you know your company needs, it’s time to narrow down the provider playing field.
This can get confusing, because you might pick your top three and accidentally end up comparing apples to oranges. One system could be a full end-to-end suite, and you’re comparing it to a contract management point solution and a sourcing tool!
It’s easy to get overwhelmed; there are literally hundreds of e-procurement technology suppliers in the marketplace right now.
About 10 years ago we saw a big push towards ‘best of breed’ solutions. There were very few fully-integrated suites that were intuitive and easy to use. Plus, a lot of companies had budget limitations, so they looked to point solutions for contracts, P2P, sourcing, supplier management, analytics, etc.
That worked for a while, but then it became a nightmare to maintain all those integrations and the systems lacked true interoperability.
Then came the race for fully integrated suites, which led to the likes of SAP Ariba, Coupa, Ivalua and Jaggaer who emerged to lead the pack today.
Will the strong preference for the fully integrated suites continue? That remains to be seen. One thing is for sure, we will see a thinning out of the market as some of the best of breed start-ups struggle for cash.
But only you will know what’s right for your company.
Finding the love…and the cash
Once you’ve chosen your tech system, it’s time to get senior-level buy-in. How can you make your case convincing?
It comes down to giving a clear, compelling ‘why’. Why now? Why this system? What will it mean for the company?
Some great messaging that would resonate with the c-suite right now would be:
Systems give transparency
Systems give control
Systems give confidence
As well as these overarching messages, you should tailor specific business case messaging and justification for investment in your system for different members of the c-suite. For example:
Chief Executive Officer – mitigate business continuity risk and future profitability
Chief Financial Officer – cost control and visibility
Financial Controller – well, it’s obviously about control!
Another tip for developing your business case messaging is to reach out to your online peer community and look through social media, to find stories that support your reasons for investing in tech.
There’s nothing the c-level likes more than to do better (or avoid the same mistakes) than the competition. Your stories and examples on how peers are handling problems will be a powerful tool for motivating your senior leadership team to invest in your recommended technology.
Keep a c-suite huddle
It’s critical to ensure you have a wide base of support across the senior leadership team so that your project has strong foundations.
Stay close to the c-suite throughout the project. Don’t ever assume the support you secure today will endure. Keep them regularly updated to ensure your technology project stays top of mind (and the corporate strategic priority list!).
Also, beware the trophy-seeking sponsor who could be using your supply chain technology project as a pawn in their political power play. It is always difficult to pick these people, but the wrong choice could threaten your project’s success. You don’t want everything to go down the drain when your board sponsor’s career bets don’t pay off.
Ensure change management isn’t funded out of small change
Business cases for tech have always focussed on headcount reductions (hard numbers based on FTEs taken out of Accounts Payable, administration etc) and efficiencies (more of a soft number) on the value side, and licensing and implementation on the cost side for investment in technology. Don’t forget to also factor in the total cost of ownership. Customisation costs, implementation, and productivity losses and gains are all important financial considerations.
All of these cost and other benefits are important, but you must ensure you include a significant budget for change management, training, user implementation.
As a profession, we have not had enough focus on how to implement technology; that’s our weak point. It’s difficult to ensure the organisation is gaining the full benefit of the system they have invested in – and for the most part, we do a pretty lousy job of it.
That’s because these are change management projects, not technology projects. It’s so little about systems and so much about the people who use them.
Too often, the implementation budget is the first thing to go when CFOs want a quick financial win. Don’t fall prey to their argument that people will work it out, or that it’s all straightforward. That logic is precisely how and why many technology projects fail.
Fiercely guard your change management budget, and make sure you have a dedicated project team to make it a success.
You can do this
This is your chance to step up and lead, showing your potential for a more senior role.
Given the high failure rate of these systems right now, it may be a high-risk strategy to take on the leadership of a procurement or supply chain technology implementation. But with risk comes reward; your successful project will be a great asset to your career progression and increase your visibility.
More importantly, it will prove that you understand the business and know how to solve complex issues.
As we work our way through this latest supply chain disruption, we are (sadly) capturing the real costs of this pandemic and will have much stronger financial proof points for investment in technology.
If this kind of disruption happens again, we know the magnitude of what it is going to cost. So we must put systems in place that will respond much faster to mitigate these potential losses.
Now is the time to step up and put forward your argument for investment. We may never have such a fertile and receptive audience as we do right now.
Act now, while the spotlight is on supply chain. Don’t waste a crisis.
Don’t get caught out by using a template without thinking! The result can give you nightmares!
I was recently asked to describe the worst procurement project that I had been involved in. While not the worst, this story certainly highlights the importance of engaging procurement teams early and not blindly following templates!
I was in the role of a buyer supporting an internal customer and I took over a project at evaluation stage. The evaluation team had individually assessed the bid responses and the team had convened to discuss their findings. A weighted attribute model had been selected to help identify what criterion was valued over others.
The template bites back
The ranking of the bidders evaluation scores were revealed and the project lead was shocked. “This isn’t what we expected? These aren’t the best proposals that meet our needs, these are the weaker ones?!”
The problem became obvious. The boilerplate RFP template had been used without tailoring it to the business problem they were trying to solve. Most critically, the evaluation criteria percentage hadn’t been adjusted at all. Innovation was set to a default of 10% whe,n in fact, it was the most critical factor the project!
What is a weighted attribute evaluation model?
A weighted attribute model is one of the most common evaluation models used in procurement. It helps to identify the proposals that best meet the most important buyer needs. This could be requirements like: methodology, project management, resources or capability and capacity.
A typical weighted attribute model looks like:
Project team and key personnel
There are many different ways to approach the weighted attribute model. (Top tip, don’t put the percentages too close together otherwise there will be nothing distinguishing one bid from the other!)
What would you do if you inherited a project at evaluation stage and the RFP didn’t actually ask the market for the complete picture that you wanted? And worse, that the evaluation criteria didn’t match the most critical elements of the project?
These were my options:
Cancel and start again – this wouldn’t be fair to the bidders who had already put in the time and effort to respond.
Reissue parts of the tender questions – the submission deadline had already passed but we could seek further clarification responses. This would risk our reputation in the market.
Create a second stage and interview each bidder to better understand their proposal and see if they have the capacity and ability to scale up to our desired needs.
We selected option number 3 and ran a second stage process. The presentations enabled us to drill down into each proposal and meet with each company face to face. They were able to better understand the objectives we were seeking and we were able to better understand the solution they were putting forward.
3 lessons that changed the way I approach evaluation
One size doesn’t fit all
A template with a generic model can’t be assumed to meet the needs of every project in every situation. It’s important that the needs are thought about carefully and that the right model is chosen for the project.
Clunky RFP processes aren’t always right – especially where innovation is required
Consider what parts of the process must be executed e.g. notice to market, instead of paper based responses – ask the bidders to complete a simple two pager, then hold a dialogue to flush out the rest of the solution.
Think carefully about what is important to the success of the project
The commercial team could have determined what was most important to the project. Pairwise analysis is a great tool to help with this!
The traditional RFP model’s days are numbered and will hopefully soon become a thing of the past. It does not suit all processes and yet it’s still frequently used. If the entire process can’t evolve to be more efficient, then we have to change the way we approach evaluation to ensure we’re selecting the best company for the job, rather than the company that can write the best response.
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Businesses across the UK who are making efforts to get back to business are facing a new uphill struggle – employees claiming stress and anxiety or are simply requesting outright to be furloughed for another 3 months.
Workers who were furloughed back in April are being gradually invited back to work, although some are being asked to work from home. However, many small businesses are reporting major issues in getting staff back to their roles, after 3 months being at home.
“It’s crazy to think that after all this uncertainty and worry – that happy time arrives when you can invite staff back to work and that they don’t want to actually come back!”, says Jonathan Ratcliffe who runs office space company Offices.co.uk
Reports from SMEs across the UK include:
Workers being too scared to come back to work and are being signed off due to anxiety
Staff not wanting to come back to work, who would rather be furloughed for a bit longer
Employees deciding to have a change of career
“Those struggling mentally you can well understand and have my sympathy, but we have seen first-hand staff simply asking if they can stay on furlough for a bit longer, it’s crackers, I couldn’t believe my ears”, adds Ratcliffe.
Businesses must tread carefully and understand the employee’s rights. Employers now face the daunting challenge of rebuilding businesses across a wide variety of sectors with a lack of motivated staff due to the long spell of lockdown.
The issue is complex, and the situation is unique for every type of business and every employee. However, as companies see demand for services increase over the next month, the issue of reintroducing staff from furlough into a routine of work is going to be a challenging one.
“I totally sympathise with everyone who has been furloughed, it’s a tough time, but we must realise the scheme cannot go on indefinitely. We want to welcome employees back with socially distanced open arms and build our way back out of this mess”, Ratcliffe from Offices.co.uk concludes.
COVID-19 is permanently redefining the role of procurement organisations…
Transformational procurement trends that were already underway are now rapidly accelerating due to new working realities. Procurement organisations will be expected to play new roles as companies respond to and recover from this pandemic and its fallout. Organisations will need to actively identify and contain various sources of risks while strengthening their competitive advantage as economies and supply chains recover. Those who learn from the COVID-19 crisis and quickly meet these challenges will forge a competitive advantage.
As corporate leaders’ expectations from Procurement significantly increase—both for the new normal and future challenges—Procurement leaders should deploy six tenets in order to successfully position their organisations:
Become leaders of scenario and contingency planning
Improve real-time visibility into supply chain risk
Develop ability to rapidly deploy cash controls
Increase P&L contribution beyond historical norms
Accelerate digitalisation efforts
Invest in talent
1. Become leaders of scenario and contingency planning
COVID-19 has highlighted that most companies were not prepared to address a catastrophic event and the ensuing economic uncertainty. Going forward, organisations need to assess supply chain vulnerabilities, develop scenario models, and update associated corporate protocols and risk mitigation strategies. Externally, this means developing macroeconomic and supplier-specific assessments of event likelihood and impact and detailed reaction plans to mitigate potential fallout. Internally, it means identifying how policies affecting employees (e.g., travel, remote working model, supplier engagement) need to evolve to promote safety and productivity.
Procurement organisations will be expected to continue playing a key planning and coordination role, ensuring close engagement with other functions to increase the speed and effectiveness of required actions. Leaders should direct their teams to codify the learnings of this crisis, develop scenarios and contingencies, and establish dedicated Centers of Excellence.
2. Improve real-time visibility into supply chain risk
Having real-time visibility into evolving sources of risk is critical for initiating mitigation plans on time. Procurement should deploy permanent control towers to monitor specific risks (e.g., financial, operational, geopolitical) to identify early warning signals and deploy the appropriate responses. This includes re-examining the company’s risk of supply across suppliers, geographies and facilities, and proactively identifying supply alternatives, strategic alliances, and hedging strategies should a catastrophic event impair access to critical inputs.
Additionally, organisations must develop the necessary processes to monitor key suppliers at a detailed level – tracking financial viability, operational capacity, talent management, transportation networks, etc. These metrics can be used to establish a supplier risk score to assist in response prioritisation and supplier segmentation.
3. Develop ability to rapidly deploy cash controls
Having free cash flow is vital in times of crisis. Procurement will need solutions to rapidly slow cash outflow while minimising operational and cultural disruption.
Having hypervisibility into spend allows companies to quickly distinguish between essential and discretionary spend in times of systemic shock. This allows Procurement to deploy the right processes—with senior leadership support—to control all substantial discretionary spending, establishing criteria to allow, deny, or delay expenses. Further, organisations should take a more nuanced approach to payables, adopting different terms based on suppliers’ financial position and criticality.
In parallel, companies should optimise inventory, increasing cross-functional demand planning, portfolio simplification, and material substitution plans. Doing so will allow for better use of current inventory and free cash for other uses while minimising production disruption.
Delivering savings is the core mandate of procurement teams, and many are feeling increased pressure to further deliver to alleviate financial hardships.
Externally, this requires prioritising actions and suppliers based on a keen understanding of market changes (e.g., commodity and labor rates, supply base changes). Procurement also needs to create new sources of leverage using a holistic set of tools, including e-auctions, product teardowns, should cost models, and stronger collaboration with strategic suppliers.
Internally, Procurement is well-positioned to play a critical role in aligning leaders to reset company behaviours, including identifying places where historical consumption patterns have been wasteful. Such moves require organisational trade-offs, so Procurement must identify the least disruptive actions and lay out the costs to enable informed decision making. For most organisations, this requires an unprecedented level of transparency and an ability to influence internal clients and leaders beyond what has been required.
Those that exercise these capabilities—while working closely with leadership, the business, and other functions—will see step changes in savings. By doing so, they will help their companies better absorb shocks and reinvest in corporate priorities.
5. Accelerate digitalisation efforts
Diligent use of technology has supported procurement functions navigating COVID-19. Going forward, many companies will need to accelerate on-going digitalisation efforts and adopt well-established technologies like P2P automation. It also means accelerating the use of more advanced technologies to monitor risk, analyse spend, surface savings opportunities, onboard and manage suppliers, and conduct market events electronically. Having these capabilities in place will ensure procurement teams remain effective and agile in times of crisis – working remotely from peers, clients, and suppliers.
6. Invest in talent
As Procurement takes on more responsibility, roles and required capabilities will evolve. Procurement will be at the forefront of strategic thinking, cross-functional management, and external alliance management. New skills will be required – including management of AI, automation, and data science. Procurement leaders need to rethink their talent management strategies, create new roles, increase training, and ensure adequate talent pools.
Path forward: COVID-19 has redefined the role procurement organizations need to play in times of crisis and recovery. Given the severity of COVID-19, the long recovery ahead, and the potential of other such events reoccurring, the expectations of procurement organizations will remain higher on a permanent basis. Procurement functions face a key decision point in where they go post COVID-19—those that rapidly learn from the experience and pursue a “new normal” will be well-positioned in the long term, achieving outsized returns.
This article was originally published on LinkedIn on 24 April 2020 by Daniel Weise. It has been republished here with permission.
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Have you been furloughed during the coronavirus crisis? Many people have. Here’s a searingly honest account of what it feels like.
Matt* was suddenly and unexpectedly furloughed from his job as a sourcing consulting director at one of the US’s most recognisable businesses. He has shared his story here on the condition of anonymity.
Life has a funny way of throwing us curveballs, hey? Just last weekend, I found a list of goals I’d made, sometime after the new year when the enthusiasm of resolutions had yet to wane. I’d included the good old standard goals, something like ‘get fitter,’ ‘scroll less!’ ‘don’t get hung up on things you can’t change!’ but there was also a solid few career ones in there. None of them, I might add, included being sent home from work, suddenly and unexpectedly, with no return date and no certainty there would even be a job to return to. But then again, was a pandemic really in anyone’s plan? I’ve since heard that some people believed it possible, but to be honest I never really gave the idea much thought.
I’m a sourcing consulting director by trade, and I love – or, I loved – everything about my job. Helping clients transition and transform their businesses was my bread and butter, and I enjoyed the variety and challenges it afforded me. On a daily basis, I’d be confronted with new and different projects; no two clients were the same. As a natural people-person, I found the client contact invigorating and the problem solving even more so. I was often jet-setting around the country and seeing different cities while living out of a suitcase and it suited me just fine. It enabled me to get properly embedded in my work and give it my all.
Around January, I remember seeing eerie photos of Wuhan and thinking how strange it looked and seemed. I think I saw a photo of a door welded shut on an apartment block and I reflected on how grateful I was for American freedoms, and how I never thought something even resembling a lockdown could ever happen here. Boy, was I wrong. Our doors might not be welded shut but we sure are trapped in another way.
Have you seen the movie the Lion, the Witch and the Wardrobe? If you haven’t, it’s where four English children go through their wardrobe into a land completely unrecognisable to them, called Narnia. ‘Virus life,’ to me, felt like Narnia, but not in a good sense. When the Covid-19 pandemic hit, it felt like we were safely in the wardrobe one day and then a place we truly didn’t want to be the next.
From a work perspective, when the pandemic did hit hard, I was immediately concerned about the travel side of my job, but not my actual job, interestingly. But as a business, we were shocked at how quickly things exploded and started having an impact. Somehow, stil, I wasn’t worried. But then.
When they told me, I didn’t really react much. I was shocked, I think, maybe a little numb. I’ve always been a risk-averse person, always doing the right thing, always trying to get a stable job and succeed at it. So when I heard I was being furloughed, I kind of got this sense of, but I’ve always done the right thing? I certainly wished it wasn’t me. In a rational sense, I got it, of course I did. I understood the dynamics, I knew that things were unstable now and changing fast. But still.
Since being stood down from my role, time has taken on a strangely elastic sense. Sometimes days go fast, especially when I get really engaged in playing games with my family or staying up late watching a movie. I know some people’s children have driven them crazy, but I’ve honestly enjoyed my family dynamics and our closeness so much. But when I do find a minute to myself, I can’t say my mind is completely clear. My business has told me, ‘as far as they know’ that I’ll be back, but I can’t help but wonder. A few of my colleagues have been laid off and I now see the fear and dread in their eyes as they confront America’s most challenging job market. Sure, in procurement we’re weathering the storm well but nothing is for sure. I try not to think about being fired. Now I’m not ‘present’ at work, I do feel genuinely worried.
Being furloughed has been a great time for personal reflection. Fortunately, I was in a relatively secure financial position prior to this and so far, money hasn’t been a real issue – but I know for so many people, that simply isn’t true. I’ve also paused and reflected on what is an ‘essential versus a ‘non-essential’ business – something I’d never really thought about before. All things being equal, if I was ever offered a job again, I’d definitely preference an ‘essential’ business as having a stable job is critical to me. Despite my relative financial stability, I’ll also be more conservative with cash. You truly never know what is around the corner. That’s what this pandemic has taught me.
In life, I’ve always been used to knowing what’s coming next. It’s such a strange feeling to wake up and not have to plan anything past my morning coffee. But at the same time, it’s nice to take a breath. The future is unclear, but I feel, in procurement at least, that there’s hope.