Tag Archives: future of procurement

Attention All Employees: Report For Microchipping

Does the idea of a corporate microchip implanted into your body make you squirm, or are you fascinated by the possibilities?  

“Hold your breath – one … two … [stab].”

A Wisconsin-based marketing company (Three Square Market) recently hired a piercing professional to inject microchips into 50 of its staff. The radio-frequency identification (RFID) chips are encased in glass capsules about the size of a large grain of rice. They were injected into the fleshy part of participants’ hands, between the forefinger and thumb.

Sounds like something from a corporate dystopia, doesn’t it? Don’t worry, all of the microchipped individuals were entirely voluntary – along with a handful of journalists who were eager to see what it was like.

What can the microchips do?

At present, not much. It’s entirely internal to Three Square Market’s office, where microchipped staff can wave their hand to open doors, unlock computers and pay for items in the kiosk, provided the systems have the software installed and a contactless chip reader.

But in the future, the possibilities of human microchips are only limited by the scale of the technology’s implementation. Scannable items such as passports, drivers’ licenses and credit cards would no longer be necessary. Car keys could become a thing of the past, and of course home automation systems would be operable with a wave of the hand.

There’s a good example of microchips in play in Sweden, where a company named BioHax has implanted nearly 3000 customers with chips that enable them to ride the national rail system without having the show the conductor a ticket.

For data analysts, the potential flood of information from microchip use within a company is alluring – data could be collected every time an employee makes a purchase, enters the building, or uses a photocopier.

Can microchipped people be tracked remotely?

Not yet. The microchips aren’t a GPS device, but are entirely passive until they come within a few centimetres of a compatible reader, just like a bank card. Pet owners familiar with the technology know that microchipped pets can’t be located remotely if they go missing – instead, owners must wait until their pets are handed into a vet with a chip scanner.

Will employee microchips one day be compulsory?

At Three Square, over 60% of the company volunteered to be microchipped. The remaining 40% had a range of reasons for demurring, including a dislike of needles, a fear of having foreign objects in their bodies, and privacy concerns.

The concern is that if this technology becomes mainstream, a refusal to allow your company to embed you may lead to losing out on a promotion, raise, or simply being seen as “not a team player”. Forward thinking legislators in Pennsylvania have already introduced a bill to outlaw mandatory chip embedding, with a spokesperson saying: “If the tech is out there, what’s to stop an employer from saying either you do this, or you can’t work here anymore?”

Another issue is that with an increasingly mobile workforce, a chip that only works within the walls of a single organisation would become useless once that person leaves. One day, perhaps you would simply have your chip deactivated upon your exit interview and re-calibrated by your next employer, but this isn’t yet the case. Of those 50 volunteers at Three Square Market, it’s likely that a handful will move on to other roles within the next few months, but what becomes of their chips? The company won’t be happy with non-employees being able to open doors with a wave of their hands, so will the chips be (painfully) removed? Perhaps they will simply be deactivated, meaning users are left with a useless piece of “abandonware” technology embedded in their hands.


In other procurement news this week:

Are emerging professionals being paid more than experienced hands in procurement?

  • Based on 3808 responses across the United States, ISM’s 2017 Salary Survey revealed that emerging professionals (with under 9 years’ experience) are earning nearly $5000 more per annum than experienced professionals (with 9+ years).
  • This suggests that organisations are having to offer higher salaries to attract new talent.
  • The survey also revealed the following average salaries: CPOs – $259,340, VPs – $135,757, Directors – $153,347, Managers – $109,401.

Coupa appoints new Chief Marketing Officer

  • Cloud-based spend management company, Coupa Software, has announced that digital marketing executive and veteran software industry marketer Chandar Pattabhiram has joined the company as its chief marketing officer (CMO).
  • Named one of five CMOs to follow this year by LinkedIn, Pattabhiram has more than 23 years of experience in both fast-paced and large technology companies including Marketo, IBM, Badgeville, Cast Iron Systems, Jamcracker, and Anderson Consulting (now Accenture).

Intel to build a fleet of self-driving cars

  • Intel announced last week that it will build 100 high-automated cars to test self-driving technology.
  • The project will showcase Intel’s $15 billion acquisition of Mobileye, which closed this week. Israel-based Mobileye makes technology that helps vehicles “see”; collecting, analysing and transmitting data about the outside world.

Long Tail Spend 101: New School Approaches

Procurement ought to care a whole lot about long tail spend and lay out the best way to manage it in the “consumerisation of tech” era…

I have no doubt that agility, innovation, and adding value to the business should be of paramount focus to procurement teams evolving beyond cost-center status. Who wants to be in the back office pinching pennies while the rest of the business struggles to keep up with the new rules of the digital revolution? But as leaders keep one eye on those critical matters, the other must still cover the basics of the procurement practice to deliver the right experience and results. That means continuous tracking and improvement of spend influence, which includes long-tail spend management.

Long tail spend 101

Long tail spend is not strategically managed or under management. This means any spend without a contract framework agreement or negotiated work order. In organisations that have invested significant effort into strategic category management, managed spend tends to be around 80 per cent of all expenditures, leaving long tail spend at 20 per cent. It also includes a small, but significant amount of spend with managed suppliers, which is known as hidden tail. This spend includes purchases made from managed suppliers, but these purchases are outside existing contracts.

The remaining tail spend tends to come from roughly 80 per cent of the total number of suppliers. Often this will be fragmented: ad hoc purchases from multiple suppliers, low-value transactions at one-time vendors, non-purchase order spend, off-contract spend, etc. When all the long tail spend is added together it becomes the biggest overall supplier! This biggest supplier costs you a lot of effort and time, which is not clearly visible within the organisation.

What is the business value of tail spend management?

Until recently, the generally accepted figure for how much sourcing organisations can save through managed tail spend has been 1 – 5 per cent (the less mature the organisation, the more the saving). However, analysts at The Hackett Group, concluded that this figure might be higher: as much as 7.1 per cent. High-value maverick buying that should have been strategically sourced was cited as a factor in raising this figure (30 per cent of respondents estimated 10 per cent or more in savings). This underlines the importance of gaining visibility of tail spend.

Apart from up to 7 per cent  savings, what are the other benefits of managing long tail spend? First, by better managing long tail spend, you can significantly reduce the number of transactions and the related costs of procurement, and in other departments such as finance. This will help minimize the number of internal resources (sometimes senior) working with tail spend suppliers to further reduce procurement costs. These savings can be significant considering that the administrative cost of each pound spent can be as high as 35 per cent. Improving the visibility of low-value spend suppliers will create opportunities to identify sourcing savings and supplier consolidation.

Second, increasing strategically managed spend, and managing long tail spend, will result in increased contract compliance, leading to further savings. Added to this, suppliers are more likely to offer increased discounts when they are the sole providers for a specific category, or when a set volume of purchases is guaranteed.

Third, beyond cost savings, managing long tail spend helps eliminate noncompliant suppliers and consolidate larger suppliers, which leads to reduced business risk, and a reduced risk of fraud across the supply chain. This also increases the chance of your organization being compliant to external legislation.

The visibility challenge

One of the main difficulties with long tail spend management is poor data visibility, caused by factors such as complex supply chains; different IT systems and data sources; and, fragmented and disconnected business processes such as sourcing, contract management, and procurement. Also, the sheer number of suppliers, items, transactions, and the high number of business stakeholders can simply overwhelm some organizations.

There are often not enough available resources with the right skills to analyse the problem and set a corrective action plan. Unfortunately, neither strategic category managers nor operational procurement agents tend to have the knowledge or skills to handle the long tail. Organizations that don’t have clearly set policies or well-defined processes are more likely to lack effective control. Part of this process must be constant maintenance to prevent slippage. A good analogy for this aspect is that of keeping a garden. Just as a neat and orderly garden will become overgrown if neglected, maverick spend will creep into the spend cube. This results in a higher percentage of noncompliant purchases, often with low-value transactions and small-volume suppliers.

Finally, there is often a lack of adequate tools to help the organization analyze and manage long tail spend in an efficient manner. A purely manual approach to tail spend management quickly becomes cumbersome and error-prone without the right tool support. There is no quick fix for overcoming these obstacles, but the benefits of doing so are estimated by different sources to be between 15 – 20 per cent through reduced procurement cost, increased efficiency, supplier consolidation, additional sourcing savings, and decreased business risk.

The smart approach to long tail spend management

Organisations should first analyse their spend data with a thorough spend and supplier assessment. This type of spend analysis exercise helps gain an understanding of the current state and will serve as a foundation for a business case in readiness for the next step. The next step is to gain top management and stakeholder backing. To be successful with a long tail spend management initiative, it is necessary to have the buy-in of your C-suite, i.e., the CPO and CFO, by means of a solid business case and clear description of the savings outcome.

Establishing the support of top management will also help with the third step, which is to set-up clear policies and processes to drive the long tail management initiative. This includes compliance policies, preferred vendor lists, no purchase order–no pay policies, etc. The processes should also include automated procurement, with catalog suppliers, as well as spot buy, and free text orders channeled through a tactical and operational procurement team. The next step involves, selecting and implementing the right tool to the complete solution for long tail spend management. Consider an easy-to-use eProcurement system with a good search engine featuring rich content, efficient buying channels, and support for spot buy and tactical eSourcing.

Finally, setting up a dedicated team to monitor long tail spend suppliers is key to a complete solution for long tail spend. Spot buying and operational-free text orders at preferred suppliers will run more efficiently with a dedicated group managing the process. It is also possible to outsource this work to an external team.

In closing, it is important to realise that there is no silver bullet to managing long tail spend. Without clear policies or processes to guide an organisation on what to do and who needs to do it, there’s little that can be done to optimise and manage tail spend. By combining the right tools with the right approach, you can gain an additional level of visibility and savings, and, in turn, greater spend influence.

This post was adapted from the IBX Business Network white paper, Using Long Tail Spend Management to Achieve Savings, published in 2016. Tradeshift acquired IBX in early 2017.

7 Ways IoT Is Already Changing the World

From connected healthcare to retail and water management, the IoT will revolutionise the way we live. It’s already having some pretty major impacts…

This article was written by Gauri Bapat.

The wave of connectivity had extended beyond phones, laptops, and tablets and is permeating into our daily lives. With an explosion of connected devices in the market and a healthy adoption rate, we can safely assume that we are taking confident strides into the ‘connected life’ made possible by the IoT.

A report by Gartner suggests that by the year 2020, the number of connected devices across technologies will touch 2.6 billion. As we move towards an increasingly automated world, this technology will be used to improve the productivity and quality of life and industries alike. The IoT is poised to grow from a technological phenomenon to one with a more global and social impact…and the cogs are already turning in that direction. Things that we once saw only in sci-fi movies and Steven Spielberg specials are a reality today.

Let’s take a look at how the IoT is already changing the world we live in.

Manufacturing

IoT in manufacturing is ushering in the fourth Industrial revolution (Industry 4.0) that aims to make manufacturing smarter. Smart manufacturing involves the use of sensors that are retrofitted on existing manufacturing equipment to improve efficiency and performance. Siemens ‘ PLC manufacturing plant in Amberg, Germany, has implemented the principles of Industry 4.0 and has completely automated the production of their automation systems. Post this implementation, they witnessed a 99.99885 per cent “perfect” production quality rate. Now that’s impressive!

Airlines

The airline industry has seen massive adoption of the IoT in order to increase operational efficiency and drive the age of ‘connected aviation’. Virgin Atlantic has every single component of its Boeing 787 attached to a wireless airplane network. These incredibly connected airplanes use IoT data to evaluate everything right from the airplane’s performance to issue identification.

So, if a Virgin Atlantic jet reveals low-performance mid-flight, this information is related to the ground staff real-time. Thus, when the flight lands, the airport engineers are ready to solve the problem. Other airlines such as KLM, Qantas, Lufthansa, and Delta are also using IoT to improve aircraft performance, discover new business insights, and maintain greater efficiency.

Airports such as Miami airport, London City airport, Helsinki Airport, amongst otherS, use IoT to track passengers, prevent bottlenecks and queues, offer personalised services to the customers, track assets and also deliver location-based services to the travellers.

Water Management

One of the areas where IoT has made a tangible difference is in water management. Proper use and management of water have been a problem that many cities across the globe have been battling. IoT has been put to work in cities such as California and Bangalore in India to not only identify the cause of water shortage but also to identify avenues as to how water management can be optimised. The Bangalore Water Supply and Sewage Board (BWSSB) employed an IoT monitor to manage the complex water distribution system by creating an operational dashboard using IoT. They realised that almost 45 per cent of the water supplied by BWSSB is unaccounted. San Francisco employed smart meters to measure water consumption and notify their customers when their water consumption exceeds the specified limit or if, for example, the water is left running continuously for 24 hours.

Retail

The retail industry has witnessed a huge adoption of IoT. IoT implementation in retail has been done to not only improve the supply chain or to create more engaging and tailored marketing campaigns, but also to make shopping a more interesting experience. Retailer Rebecca Minkoff created the ‘connected store’ using RIFD tags on each piece of clothing and used smart mirrors in the dressing rooms. The customers could try on the product, and also take a look at other looks, available colors and sizes without even leaving the dressing room!

Target has been using beacons across 50 stores to provide personalised offers and present their customers with hyperlocal content to make shopping more exciting for their shoppers. Ralph Lauren’s Polo Tech apparel, which is a smart workout shirt, monitors vital activities of the user on a real-time basis and enables ongoing health monitoring.

Connected Energy

2016 saw us looking towards connected energy solutions to help us save energy. IoT products such as Google Nest, ecobee3 thermostat, the heating system Hive by British Gas have seen huge adoption to track and measure energy consumption. 46 per cent of technology enthusiasts in Germany and 42 per cent in the US already own a connected energy solution and save almost 72 per cent on their monthly utility bills – that amounts to a USD $80 reduction in the monthly bill.

Lighting Control

Moving beyond the smart lights of a connected smart home, smart lighting control can generate huge financial savings by controlling street lights. Mayflower CMS successfully employed IoT to control and monitor an excess of 180,000 street lights, bollards and signs in the UK and Ireland with its largest installation in Hampshire that has over 90,000 nodes. The Hampshire City Council has been able to reduce energy consumption by 21GW/hr per annum which is a reduction of 40 per cent and has successfully reduced carbon emissions by approximately 4000 tons per year.

Connected Healthcare

The global IoT healthcare market is expected to touch USD 160 billion by 2020. The last few years healthcare has witnessed wellness sensors to surgical robots to improve efficiencies and better patient outcomes. Ingestible sensors help measure if patients are taking their pills on time and helps medical practitioners manage their patients remotely. Barton Health, a 62-bed health system in rural Lake Tahoe, California, is one of the first users of the ingestible sensor by Proteus Discover, a Digital Medicine to help patients suffering from diseases of the central nervous center such as schizophrenia and place the patient in the driver’s seat regarding their health management with the help of technology.

“When wireless is perfectly applied, the whole earth will be converted to a huge brain, which in fact it is, all things being particles of a real and rhythmic whole. We shall be able to communicate with one another instantly, irrespective of the distance.”– Nikolai Tesla

This famous statement by Nikolai Tesla predicts the invention of the smartphone at a time when the mere thought of such an advanced device was nothing but unimaginable. Take a closer look at the statement and you can see that Tesla foresaw the impact of the Internet of Things (IoT)… a world that becomes so connected that it becomes one ‘huge brain’.

What Tesla spoke of decades ago, we are experiencing today

Gauri Bapat is Director, Strategic Business at Inteliment. This article was orginially published on LinkedIn.

The Impact Of Blockchain On Procurement

Blockchain won’t wait for you to be ready for it, which means it’s time to brush up on your knowledge and understanding right here, right now! 

Blockchain technology will not only impact procurement and procurement professionals but is expected to be more pervasive in our business and personal lives than the internet itself. To put the enormity of impact on procurement and procurement professionals in perspective picture yourself twenty years ago trying to explain how the Internet is going to change things. Where would you even begin?

Like the Internet the Blockchain is a network. In the case of Blockchain comprised of decentralized “ ledgers”, many are referring to it as Internet 2 or more commonly the Internet of Value or Internet of Trust.

The benefits

The most important thing to understand is that Blockchain addresses many of the most critical problems we’ve encountered doing business on the internet.

1)  Security: Practically speaking the Blockchain is unhackable.

2)  Transactions are verified by network participants (consensus), eliminating the need for third-party intermediaries’ (banks) costly, time-consuming and predominantly manual settlement processes. In addition to slowing down our supply chains banks alone have estimated these processes are costing them more than $20 billion annually.

3)  Eliminating high transaction processing costs for high volume/low margin retailers who accept credit cards could significantly add to their bottom line.

4)  Once transactions are verified they are secure and immutable. (unchangeable)

5)  The immutability of the Blockchain means that supply chain provenance can be assured. This is particularly important for conflict minerals, pharmaceuticals, food and many other supply categories where provable chain of custody is critical.

6)  Payments can be made directly from buying entity to selling entity “ledgers” by-passing intermediaries (banks, brokerage, clearing houses, title companies, etc.)

7)  Payments can be automatically triggered based on the codified terms of “ Smart Contracts” stored in transaction blocks.

8)  Blockchain capabilities will change, if not eliminate the role of accounts payable and accounts receivable departments.

9)  Blockchain enables the concept of micro-units and micro-payments. It is estimated that approximately one -third of the world’s economic opportunity exists for products and services such as energy or digital rights where backend settlement costs currently constrain those markets.

10) It is also estimated that 25 per cent of the global population does not participate in the global economy because they have no bank accounts and/or credit cards. Without these tools they cannot participate in the Internet economy. The primary reason they do not have these economic tools is because they cannot prove their identities. Immutability of the Blockchain can enable these people.

What do I need to understand?

The capabilities I’ve outlined just scratch the surface on how Blockchain impact all of us. Aside from the aforementioned, as a procurement professional are several important things to understand.

1)  Blockchain is a much wider and more pervasive concept than Advanced Cognitive Systems, Big Data, Predictive Analytics, Robotics, 3-D Printing or even the Internet of Things. In fact these technologies will become infinitely more practical and secure because of Blockchain.

2)  Do not think of Blockchain and BitCoin, FinTech or Crypto Currencies as synonymous. They are not.

3)  Do not think that it will take 20 years to mature and be mainstream. The estimate is 5-7 years for full maturity.

4)  Do not assess progress by the US/Euro FinTech Community. While they were the first to recognise Blockchain’s inherent value and arguably have the most to gain by adopting it, they also have the biggest hurdles to overcome and could very well be last to cross the finish line.

5)  Don’t make the mistake of waiting to become knowledgeable about Blockchain; it is the most highly disruptive technology we’ve seen since the Internet and it won’t wait until you are ready for it.

Michael Shaw is CPO and Executive Board Member of Sourcing and Procurement Executives (ACSPE) and Chief Information Officer at Blockchain Executive.  This article was originally published on LinkedIn.

Is P2P Keeping Us Stuck In The Mud?

Still debating maverick spend in your organisation, griping about tail spend or struggling to implement the right systems? Perhaps P2P is holding you back!

This article was written by Eva Milko. 

Is it me or has not much changed in the world of Purchase-to-Pay (P2P)? Twenty-five years have come and gone and yet we continue to discuss maverick spend, we gripe about tail spend and struggle with the right systems and the right processes to enable the simplest of transactions a company has in its portfolio: buying stuff.

In the meantime, those who realised that their value sits in higher areas of supply chain opportunity are doing wonders to automate, digitiSe, codify and outsource P2P work to those who have become transactional experts. Entrusting a part of your procurement house to others is not an easy task, many failing in the process, but I argue that it is somewhat necessary when the world is getting more complex, challenges more broad and opportunities often surpass the risks.

The CPO seat belongs to the one who carefully coordinates all aspects of the source to pay process with a keen eye on what can be standardised, outsourced, digitised, robotised and automated, balancing that with strategic decision making on where to place their precious human resources.

P2P buying systems remain a mystery. They are the most disliked, worked-around and challenged factor by employees in almost any company.  Our research found that only 36 per cent of stakeholders find procurement systems favourable and comfortable enough to engage with.  Our internal stakeholders are screaming “make it easy for us” and yet we continue to throw them into the bowels of twenty process steps, multiple buying channels and layers of authorisations. That’s not to mention lost time and corporate energy.

Procurement Prime

Molson Coors Procurement Office recently hosted an Executive Roundtable on this very subject and we challenged ourselves to envision a world of guided buying where the stakeholder is not exposed to procurement rigmarole but interacts with an intuitive and interactive set of buying steps. We called it Procurement Prime, taking our inspiration from the most admired ordering system in the world; Amazon Prime.

Many procurement executives and their friends in finance will say to me “but wait, we need to mitigate and monitor supplier risk” …..True, and it  is possible with a set of algorithms and predictive tools embedded into your P2P ordering process, alerting the requisitioner at the time of purchase of the supplier’s health status, including fulfillment capabilities, shipping disruptions, banking and payment alerts, further yet, providing alternative solutions.

If you can imagine it, you can plan it. If you can plan it, you can get it done.   Paying attention to how your corporate buyers embrace the P2P steps (or not), diving into their buying methods, listening and empathising will go a long way. Interestingly enough, we found that Procurement functions aligned to the Chief Supply Chain officer have much greater alignment in their organisations than those who report to the CFO. Is is time to change alliances?  Not so fast! Here are a few enablers to make such transformations possible.

Changing your functional and corporate mindset

Let’s start by recognising that your procurement value does not reside in chasing requisitions around the office and beating internal stakeholders into procurement policy submission.  Successful companies are taking a much more customer-centric approach, focusing on relieving the organisation of procurement jargon and building sophisticated systemised methods, especially for more repetitive buying.  Think Guided Buying and think Procurement Prime! This is your future and #tomorrowstartsnow

Changing your skill set

This is pivotal to opening up these conversations and imagining the possibilities.  In procurement, we do not hire enough creative people who are empowered to challenge the status quo and bring forth cool solutions.  We need more inventors, technology savvy, stakeholder centric entrepreneurs who are bold, persuasive and get things done! Yes – these transformations take money, take energy and take skilled resources to get it done, but thinking long term possibilities versus short term barriers will unshackle the organisation from procurement processes horrors and free up resources to address much more interesting issues.

Changing your focus

In our recent study, we found that 84 per cent of procurement organisations remain firmly rooted in functional effectiveness and cross functional collaboration buckets. What goes with that are correlating trends of declining year on year cost savings, the most admired and used procurement metric on the planet.  Enhanced value, total shareholder return, enhanced recognition, awesome jobs and great pay will not come from these areas.

Getting rid of the important but non-essential procurement work and entrusting it to someone much more capable is part of the transformational focus that all CPOs need to consider embracing.  Successful partnerships are built on a shared long term vision, shared values and a solid long term plan.

In our research, we found that that introducing robust supplier collaboration, supplier enabled innovation and total value chain coordination is where procurement can truly make a difference for the organisation.  Some organisations have made the leap but many struggle to make ends meet.

My prediction for these organisations is bold:  transform or die – become de-prioritised, outsourced or automated. #tomorrowstartsnow

This article, by Eva Milko, was originally published on LinkedIn. Eva is Managing Director at Procurement Leaders. 

Best of the Blog: You Appointed WHO As The New CPO?!

Increasingly, companies are appointing CPOs from outside of the supply management profession. What does this tell us about C-level expectations of procurement, and why are supply management professionals missing out?

Everyone loves a good throwback article, which is why we’re hopping in our time machine to bring you back some of the biggest and best Procurious blogs. If you missed any of the golden oldies, look no further!

This week, we’re revisiting an article which featured some exclusive insights from Deb Stanton, Executive Director of Research and Benchmarking at CAPS Research and former Global CPO of MasterCard. Deb highlights how company expectations for CPO’s are evolving and what this means  for the security of your future jobs!

This is the moment you’ve been waiting for. Years of hard work and a brilliant career in supply management has brought you to within a hair’s breadth of fulfilling your dream – to become the Chief Procurement Officer of your company. Starting at the most junior level, you’ve worked your way up the ladder to your present position as second-in-charge of the procurement function. Your boss announced his retirement last week, and you’re quietly confident your turn has come – after all, there’s absolutely nothing about the organisation’s supply chain that you don’t know.

You step into the meeting room where the out-going CPO and two other executives are seated around a table. Disconcertingly, they stop talking when you walk in and look at you guiltily. Getting straight to the point, they tell you they’re excited to announce the new Chief Procurement Officer is … Jennifer from Marketing.

Is Procurement Being Usurped?

Has this happened in your organisation? There’s every chance that when it comes time to choose a new CPO, the C-Suite will appoint someone from a non-supply background. This means that a colleague of yours in a completely different department may one day swoop in to steal the job that you’ve been working towards for years.

While CEO-level expectations of the CPO continue to blur and broaden, the skill-set required to meet those expectations can now potentially be found in any department. The fact that supply managers are still reporting difficulty in educating their businesses on the value procurement can bring to an organisation doesn’t help the situation. If a CEO (wrongly) believes that a supply manager has spent his or her career focused solely on cost, then they are likely to look elsewhere for candidates for the top job.

Deb Stanton, Executive Director of Research and Benchmarking organisation CAPS Research and former Global CPO of MasterCard, has observed the trend of CPO appointments from outside of the profession. CEOs are no longer as interested in appointing CPOs who possess the traditional skill set that is earnt over years working in supply chain. A savvy marketing professional, or a cost-conscious operations manager who understands how supply management works, makes a very attractive candidate for CPO.

So, what does this mean?

1. CEOs are looking for a different set of skills for the next CPO

The CPO of the future may have little idea how a tender is run, but they must:

  • Be business-savvy and understand the organisation as a whole
  • Know how procurement works from a customer’s perspective
  • Be completely aligned to overall business strategy (not just the supply management strategy)
  • Have a strong knowledge of the business’ finance function
  • Be focused on the core customer and external audiences
  • Embrace changing technology and external disruptive forces
  • Be an influencer and relationship management expert.

Deb referred to CAPS Research’s “Futures Study 2020”, which projects the skills required to manage a procurement function into the future.

2. The CPO doesn’t necessarily need supply management expertise

The complex and varied skill-set picked up through a career in supply management may no longer be enough to satisfy the requirements for the job of CPO. CEOs may even regard procurement’s traditional audience of stakeholders, end-users and suppliers to be too focused.

That being said, technical procurement skills do matter, and are still vital for any procurement team’s success. In the example above, the disappointed candidate who missed out on the top job can still play a vital role in educating and supporting the outsider CPO with their supply management knowledge.

What’s the solution? If you believe the CPO role rightfully belongs to you, rather than someone from a completely different department, then make sure you broaden (rather than narrow) your focus as you move upwards in your organisation. This means familiarising yourself on a macro level with the whole business, bringing the core customer into every decision you make, and being known as an influencer who can clearly articulate the value you, and your function, brings to the business.

As Deb points out, procurement professionals are in a unique position to overlook an entire business. They’ve got every chance of seeing where the opportunities are so let’s use it and not lose it!

IBM & SAP Ariba Join Forces To Transform Procurement

Procurement today needs to be about insights and intelligence. Will a new SAP Ariba and IBM collaboration be the function’s force for good?

Last week, tech giants IBM and SAP Ariba made the announcement that they would be joining forces to transform the future of procurement.

Together, the two will launch a hub for delivering cognitive procurement solutions to redefine the source-to-settle process. Additionally, the companies will launch a Cognitive Procurement hub to further the development of intelligent procurement solutions and services.

SAP Leonardo, IBM Watson and SAP Ariba will be used  to pool together intelligence from procurement data and predictive insights from unstructured information.

Procurement, according to IBM, is about to get smarter, faster and more efficient.

“Today marks a major milestone for procurement,” said Alex Atzberger, President, SAP Ariba. “With the deep horizontal integration capabilities native within SAP Ariba’s mature platform and the innovative capabilities of SAP Leonardo and IBM Watson delivered by the industry’s most experienced and trusted providers, companies can realise an even more intelligent source-to-settle process for managing all categories of spend that creates value across the entire business.”

What does the future hold for IBM & SAP Ariba?

IBM Watson represents a new era in computing called cognitive computing, where systems understand the world in a way more similar to humans: through senses, learning, and experience. Watson solutions are currently being built, used and deployed in more than 45 countries and across 20 different industries.

On the SAP Ariba Network, buyers and suppliers from more than 2.5 million companies and 190 countries can discover new opportunities, collaborate on transactions and grow their relationships.

By partnering, SAP Ariba and IBM will use their data insights to increase procurement efficiency and intelligence, as well as improving spend visibility.

“We’ve built a cognitive procurement platform trained specifically to understand procurement transactions and unstructured data such as weather, non-standard part numbers in contracts and complex pricing structures,” said Jesus Mantas, General Manager, Cognitive Process Transformation, IBM Global Business Services. “By combining the power of IBM Watson on the IBM Cloud with SAP Ariba, we are leaping existing procurement benchmarks and delivering unprecedented value to our joint clients.”

Watch below to hear Jesus Mantas and Alex Atzberger discuss the partnership in more detail:

What’s the media saying?

IBM Emptoris customers are sure to be questioning what this announcement means for them.  Part of the deal includes IBM gradually retiring Emptoris products over a multiyear timeline and encouraging its customers to migrate to SAP Ariba.

As Jason Busch points out on Spend Matters “it is clear that the partnership provides significant time for current IBM Emptoris customers to fully evaluate all of their options, including the potential to transition to SAP Ariba or to select other providers.”

An IBM spokesperson, speaking to The Register,  commented that “we are encouraging Emptoris clients to transition to SAP Ariba. We will work closely with them providing support and transition services. Clients can continue to use Emptoris.”

Duncan Jones, Vice President, Principal Analyst at Forrester Research questioned the details of the announcement.  He wrote, “the press release does not say when the collaboration will deliver anything that customers can actually implement.  SAP has a long history of premature announcements and releases, so I’ll wait to see actual software being used by real customers before I get excited about this initiative.”

What do you think about SAP Ariba and IBMs’ partnership?  Is it something to be excited about or are you, like Duncan Jones, a little skeptical? Let us know in the comments below. 

In other procurement news this week…

The Future Belongs to AI

  • 19-year-old world champion Ke Jie upon commented that the “future belongs to AI” after losing a game of ‘Go’ to Google’s AlphaGo robot
  • Go is an incredibly complex Chinese board game whose conquering by computers is seen as kind of a holy grail, and was not expected to be possible for another decade
  • The AlphaGo robot “learned” by speeding through the equivalent of playing 80 years straight to develop its technique and strategy
  • A robot that can learn from experience to handle new situations can tackle any problem a human could

Read more at The Hustle 

Slavery Referrals On The Up

  • Kroll’s analysis of National Crime Agency data found there were 1,575 referrals for labour exploitation in 2016
  • 70 per cent of these (1,107) were adults and 30 per cent (468) were minors
  • Kroll said the increased numbers cast a spotlight on an issue that is of increasing concern to businesses, particularly in sectors such as retail and manufacturing
  • Under the Modern Slavery Act 2015 businesses with an annual turnover of £36m or more must make public the steps they are taking to ensure modern slavery is not taking place in their business or supply chain

Read more on Supply Management 

Amazon to Open First Store in New York

  • Last week Amazon officially opened its first brick-and-mortar store in New York City – its seventh in the US
  • The physical location uses millions of Amazon customer ratings and reviews as its guide to providing customers with a unique shopping experience
  • The shop houses 3000 books organised into categories that you wouldn’t find at your typical bookstore such as  “Books with More Than 10,000 Reviews on Amazon.com”
  • Amazon Books is planning to open five more locations soon, including stores in New Jersey and another in New York City.

Read more on UK Business Insider

Best of the Blog – 3 Ways To Build A Match Fit Procurement Team

You never know what’s on the horizon, so you need to be prepared for anything. For procurement that means staying agile and always being match fit.

Everyone loves a good throwback article, which is why we’re hopping in our time machine to bring you back some of the biggest and best Procurious blogs. If you missed any of the golden oldies, look no further!

This week, we’re revisiting an article about procurement agility in the digital age, featuring advice from Chris Sawchuk, Principal and Global Procurement Advisory Practice Leader at The Hackett Group.  

Given the pace of change in the external environment, being agile means constantly changing, never standing still. It’s not about putting out fires, it’s about ensuring that fires never start in the first place.

For procurement, this means creating and maintaining agile teams, and staying match fit for what comes next. Staying ahead of the curve, be it change, risk or technology, is critical for the future of the profession.

Procurious has spoken to Chris Sawchuk, Principal and Global Procurement Advisory Practice Leader at The Hackett Group on a number of occasions about why procurement needs to put agility at the centre of all its activities.

This year, Chris took the conversation one step further, discussing ways to enable agility through digital transformation and creating an agile team. However, to do this procurement needs to ensure it’s thinking ahead, not just looking at the problems it needs to solve now.

Chris outlines three top tips below on how procurement can be prepared to handle any future issues.

  1. Be Match Fit

As we’ve said above, the key to being agile is ensuring flexibility. A quick way to lose agility is to create a rigid environment that doesn’t allow trying new things.

Define what procurement can and can’t control, and what activities it can drive. Make sure that your procurement team is aligned to the corporate strategies and objectives. It’s a good way of making sure that new ideas will be fully considered as part of the overall organisational strategy.

For example, if Procurement decides they want a diversity programme and the CEO isn’t behind it, it will never reach its full potential. The same goes for technology. If the CEO isn’t invested, the project will never get off the ground.

But even if your company isn’t focused on technology yet, you can be sure it will be in the future. It might be six months, or it might be five years, but it’s better not to be forced kicking and screaming into this new era.

Procurement needs to be ready to go when the business is. You don’t want to be asking for six more months of planning if your CEO wants a transition now. Be ready – have a list prepared of the top three initiatives for technologies, and how they will be implemented. That way you won’t be caught short.

  1. Educate Yourself

If you want to be prepared, you need to be in the know. Don’t be scared of new technology and bury your head in the sand – be aware of what’s out there. Have a list of the most relevant and best technology and know what it can do for you.

Part of that awareness is also preparing for new technology. Procurement teams need to know what’s happening in the market place, and how it impacts them. You don’t need to know everything, but you at least need to be cognizant of it.

That way, procurement can look at the big issues in organisations through the lens of how technology can help. Is there a technology out there that could help with this issue?

If global collaboration is a major issue, there are social platforms that could help connect all your teams to each other, and even their suppliers.

Maybe there’s a technology that could augment (not just automate) a procurement activity that you are performing today. You might finally have access to all kinds of data, but it’s about knowing what you can do with it to extract competitively differentiating insights.

  1. Create Agile Teams

If you aren’t agile then you can’t prepare for any of this. In fact, it’s unlikely you’re even in a position to be ready to start preparing.

To create agile teams you need to have the basics in place, get ahead of these issues, and aim to be predictive. If you knew what was going to happen (sadly crystal balls are in short supply), you would have the ultimate level of agility, and be able to get ahead of any issues.

However, it’s critical that procurement retains the ability to deliver against organisational objectives at the same time. There’s no use being agile if it means that procurement fails to deliver on the basic requirements.

If you can’t get the basics done, then there’s no point in even trying the ‘fancy’ stuff.

Reimagining What We’re Trying to Achieve 

The main problem at the moment is that we can’t even imagine what is going to be possible in the future. The pace of change is so fast that technologies are adapting and evolving in a matter of months, rather than taking years as it did in the past.

It is critical that procurement becomes more adaptable, and ensures that professionals are as informed as possible. Until you have this understanding of technology, you’re losing out. It’s not about the problems you want to solve, it’s also about the problems you’ve not even thought about yet.

The future is an ‘Unknown Unknown’, but with a match fit, agile procurement team, at least you’ll be prepared for what comes next.

Best of the Blog: Beware The Scary Old Word CPO

Is your career in the grips of a scary, old-world CPO? How do you recognise if your boss is one, and what can you do about it?

Everyone loves a good throwback article, which is why we’re hopping in our time machine to bring you back some of the biggest and best Procurious blogs. If you missed any of the golden oldies, look no further!

This week, we’re revisiting Tania Seary’s top advice on how to avoid the scary old world CPO!

Beware the Jabberwock, my son!

The jaws that bite, the claws that catch! 

– Lewis Carroll, 1871

You’ll know a scary, old-world CPO when you see one.I had almost forgotten about them until I found myself in a meeting with one last week. Somehow in recent times I have escaped the horror of hearing such old-world, closed network thinking like:

  • “I don’t want my team on social media, someone may poach them”
  • “We’re too busy working to be looking at what’s happening in the rest of the world”
  • “We know our business best”
  • “What if my team spends all day on social media?”

To the team at Procurious, these comments are like blasphemy. We’re on a mission to change the face of procurement, and give the images associated with the profession a makeover. We want to replace the old brown cardigan-clad stereotype, with fresh images of procurement as the “smartest guys in the room”.My meeting with this archetypal nemesis reminded me of all the reasons why we founded Procurious. It gave me increased motivation to continue our mission, and gave rise to an overwhelming urge to protect all the amazing rising stars in procurement from the soul-crushing dictatorship of a scary, old-world CPO.

The Old-World CPO

Let’s face it, if your personal characteristics and actions portray an image that you’re living in the past, the chances are good you are. People don’t leave companies, they leave bosses.As such, we want to reward the great bosses, those leading by example, keeping their teams energised, investing in individuals’ careers, and continuously pushing procurement to excel.What are the tell-tale signs of a scary, old-world CPO? The next time you’re going for an interview, or looking at your current boss, don’t fall for the flashy suit, big title, or even the big brand name they represent.If the person opposite you falls into one of these categories, the chances are your career development will come to a screeching halt under such a draconian regime.  

The (Digitally) Invisible Man…or Woman

Check whether this CPO has any sort of online presence. Tell-tale signs of invisibility include profiles with no photos, or inappropriate photos, scant, or no, information, and no visible mentions in a Google search.There may have been a freak internet-cleansing event, wiping out all references to this person, but the reality is that they probably haven’t spoken at any events, written anything interesting, taken the time or effort to understand social media, or understand the fact that you will be researching them online.Also, beware those CPOs who have fewer than 500 connections in their network. Some CPOs do make the case of quality vs quantity. But, if you’re working in a large company, have a large team, and work with an extensive supply base, shouldn’t 500 quality connections be expected?You (and the majority of your peers) want to work for someone who is an influencer. You want a leader with a wide range of connection they can introduce you to, and broaden your horizons. Working with someone with a limited network can be a road to nowhere for your career prospects.

Robinson Crusoe – the Loner 

This CPO really is an island.They don’t believe in networking, collaborating, or outside knowledge flow, and believe information is for their own personal advantage to build their power base. The Robinson Crusoe profile can physically manifest itself as an executive sitting in a corner by themselves, with their back to the team.This information block exists not only within their psyche, but extends to the procurement team itself. This old-world CPO has particularly old-world views, and creates a knowledge hierarchy, where they take all the great (and politically advantageous) ideas as their own.Another problem with this approach is that it encourages working in a closed network as part of the norm. These scary old world CPOs end up staying in the same profession, peer group, company, or industry, invariably associating with people they already know. This peer group continues to reinforce their outdated approach to management, and their thinking is never challenged.The new world CPO is collaborative, a “true influencer” and shares their knowledge freely and widely.My view is that a CPO’s main job is to not only drive change and innovation (and make a couple of deals on the side), but to give their team the opportunity to access tools and discuss ideas with other professionals, thought leaders and experts from around the globe.Yet I still see CPOs encouraging teams to work in isolation, unaware that there is whole universe of knowledge to help them grow and excel in their jobs.

The Devil Wears Prada – The Career Crusher

Their desk calendar reads 2016, but their attitude towards employees is stuck in the 1950s.Yes, your boss should have an overall plan for how their team is delivering against the overall business strategy. But they should also have a plan for you – both for what you need to deliver, and how you need to develop in the future.They should be committed to diversity and promoting young talent, to making sure their team reflects this commitment and is generating opportunities for the next generation of talent.The best CPOs are obsessed with finding the best people and helping them develop. They send their people out to be trained in the skills they need, expose them to new opportunities, and build peer networks that will develop leadership skills.The worst CPOs keep their category managers locked away from the rest of the world in fear that their people will be poached. A great CPO doesn’t need to worry about this. They know that they have developed a great employee value proposition that keeps their team engaged and retained.

Reverse Mentoring

Let’s not be too hard on these talented Heads of Procurement. They can’t all be cut from the same cloth.Why not get on the front foot and try and initiate some reverse mentoring. With a few polite, and well-placed pointers, I am sure you could help turn your scary, old-world CPO into a procurement rock star.Sharing your skills and knowledge could help your CPO become increasingly tech savvy and an advocate for technology, including social media, for procurement. And just in case you need some more points, you can find a 5-point checklist on being a great procurement boss right here.We look forward to seeing you both on Procurious soon!

What’s The Catch-22 In Procurement Technology?

From here to eternity: what does the future of procurement technology  look like? Download Wax Digital’s Procurement 2020 report here

Procurement technology has undergone a long road of change that has consequently altered procurement functions, processes and the very nature of the business itself. But while we spend much of the time understanding how technology is governing what we do today, it’s how technology is shaping the procurement role in the future that should be our focus.

There is a widespread belief that procurement ‘intelligence’ could significantly change the goalposts for the profession, and go beyond informing and processing data, to predicting, learning and deciding.

Procurement technology’s Catch 22

With analytics and intelligence comes a dilemma. Do you outline the questions you need to answer before you perform analysis, or use the data to work out the answers to ‘what you didn’t know, you didn’t know’? It’s a catch 22 scenario.

Thanks to big data and artificial intelligence (AI), this dilemma is becoming easier to manage. A procurement system using intelligence exhibited by machines can learn from users’ mouse clicks, purchases, and line of information to make its own choices, rather than requiring approval from users.

That doesn’t necessarily mean that procurement skills and knowledge will become any less sought-after. But those in demand are likely to change, perhaps even for the better, if cognitive technologies allow experts to think, consult and use their human skills more wisely.

Our panel’s three key intelligence priorities were:

  1. Anticipating supply and demand decisions

    The power of big data enables procurement systems to foresee the needs of the business, such as anticipating demand based on historical spending or seasonal demands. And the data that systems are based on will only expand as new internal and external dimensions are added to the mix, such as social media and newsfeeds, assessing demand more accurately. Intelligent systems may then begin to question human decisions, such as the validity and need for supplier orders and assessing the risk and ongoing performance of suppliers. Supercomputer IBM Watson’s ability to answer questions shows AI’s and sophisticated analytical software’s ability to surpass a human’s ability to answer high-functioning questions, and to work as an instructor to human processes.

  1. Uber-personalisation

    From marketing to IT, departments across the organisation use purchasing systems, meaning that there are different roles and backgrounds to accommodate. Through machine learning, procurement could lead the way in uber-personalisation, in which its systems are integrated with others such as ERP and CRM to determine and define each users’ preferences and needs.

  1. Intelligent supply relationships

With the introduction of AI comes a potential new landscape of supplier management, as eTendering, eSourcing and contract management have the potential to become more automated. This could see systems monitoring supplier behaviours and performance based on buyer feedback, or keeping a close check on adherence to contract terms; and possibly even interpreting eAuction behaviours and leading negotiations to make sourcing decisions on the procurement professional’s behalf. 

Even with vast use of intelligence, the procurement department will still require human involvement. While intelligence can be used to purchase everyday office products such as paper, strategic projects like building a new office will require procurement’s involvement in business planning and meetings, meaning that procurement professionals should strengthen their strategic skills in this area to ensure that they’re indispensable. But a new type of ‘colleague’, which is highly efficient and has extreme attention to detail, could well be on the way. Combining intelligence with vital people skills is how you can make procurement a strong and effective force in the business.

Learn more in Wax Digital’s Procurement 2020 report, a set of future gazing in-depth interviews with global senior procurement professionals and experts.  Integration of procurement technology in the wider business was the first topic.