Tag Archives: future of procurement

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. 

Digitalisation – Making Procurement 4.0 a Reality

Procurement is dead, long live Procurement 4.0! Digitalisation represents a fundamental, but inevitable shift for the profession.

Download your copy of ‘Procurement 4.0 – The Digitalisation of Procurement’ on the Fraunhofer IML website.

Throughout this series of articles, we have discussed the evolution of Procurement to Procurement 4.0. From trying to establish a single definition, to outlining the challenges the profession faces, the journey promises to be difficult.

However, the benefits and advantages that at the end make this particular journey worthwhile. Using the findings in BME’s survey, we’ll look at how digitalisation will help to shape the profession.

Digitalisation of Procurement

According to BME, the digitalisation of procurement is key for the profession to maximise the value it delivers to the organisation. Procurement needs to digitise all its manual processes and focus on the strategic ones.

Big Data plays a major role in this, and procurement can use existing knowledge to drive activities in this area. However, to fully realise this, organisations need to understand the role their staff will play. This is not only in how their roles will look, but also how they will need to be trained to carry them out.

“Existing fears based on the changes expected seem to be resulting in a passive approach. Even the very consideration of the immense changes that we may face as a result of Industry 4.0 is creating a sense of paralysis.”

Management of the cultural change, and setting of a concrete roadmap will help these activities. And once this is complete, procurement’s work can begin in earnest.

Digital Procurement Portfolio

The digitalisation of the procurement portfolio will have a key impact on the value the profession brings. The changes to the portfolio will be impacted both by digital technology, and changes to the supply chain in Industry 4.0.

New raw materials, assets such as 3D Printers, and new tools will all fall into a much-changed procurement portfolio. This will require both newly adapted process, and new skills for the professionals running them.

  • Respondents to the BME survey highlighted the following areas as key in Procurement 4.0:
  • Procurement will need to improve internal (vertical) networking with other departments.
  • Procurement will then use external (horizontal) networking with suppliers in order to source the correct products.
  • Further qualifications are essential to build knowledge of products and technology. This will enable procurement to act as an equal in vertical and horizontal networking.
  • An expanding supplier portfolio will make horizontal networking more critical than ever.
  • Procurement need to source innovation from suppliers. This will reduce time to market, access state-of-the-art technology, and overcome any missing skills in-house.

Developing Organisation 4.0?

In order for all of this to succeed, organisations as a whole must recognise the need to change. Functional working and silos will stand in the way of development and knowledge sharing, both fundamental to successful working in Industry 4.0.

Digitalisation is only possible if procurement can then forge strong, lasting relationships with internal and external stakeholders. People are critical to this, and organisations must provide up-skilling opportunities in line with this.

“The successful implementation of Procurement 4.0 stands and falls with its employees. Employees must be involved in times of upheaval and appropriately qualified. If this is ignored, it can be assumed that the company will fail.”

While this may take time to come to full fruition, there’s little argument among experts that this is necessary. The future lies before procurement, but it’s down to the people in the profession to help it walk this path.

The Association Supply Chain Management, Procurement and Logistics (BME), founded in 1954, is the leading professional association for supply chain managers, buyers and logisticians in Germany and Central Europe.

Fraunhofer IML, founded in 1981, is a global expert on all fields of internal and external logistics. The Institute also currently heads up the largest logistics research centre in Europe.

To download your copy of the report, visit the Fraunhofer IML website.

Transparency is the Key to Overcoming Hurdles to Industry 4.0

Procurement’s journey to Industry 4.0 will be far from smooth, with numerous hurdles to leap. But transparency could hold the key to making this jump.

Download your copy of ‘Procurement 4.0 – The Digitalisation of Procurement’ on the Fraunhofer IML website.

In our previous article, we touched upon the challenges procurement will face in its Industry 4.0 journey. Perhaps one of the biggest challenges will come from the people side, and assurances of roles in the digital era.

However, as with many challenges and roadblocks, communication is crucial to overcoming resistance. And, according to BME, for Industry 4.0 and procurement, transparency and knowledge sharing could be the key the profession is looking for.

“The key to success is to provide companies with the knowledge about opportunities and benefits by Industry 4.0 and to underline these with appropriate use case.” says Prof. Dr Michael Henke,  Head of Enterprise Logistics at TU Dortmund University.

Lack of Transparency Major Hurdle

Within the ‘Management and People’ area, four major hurdles to procurement’s Industry 4.0 journey were highlighted. They were:

  • A lack of transparency and knowledge;
  • No active attempts to explore Industry 4.0;
  • The shaping of cultural change and the involvement and qualification of staff are already a burden in the minds of those responsible;
  • A lack of willingness to take risks or to invest.

These hurdles were seen as the key reason procurement was holding back on Industry 4.0. There were also concerns that if they weren’t tackled effectively and quickly, it could hinder procurement’s strategic journey too.

However, this is not necessarily a hurdle that organisations can easily overcome. The lack of clear definition of both Industry 4.0 and Procurement 4.0 present a major problem. This has a knock-on effect in terms of building a knowledge base for organisations, and then passing this information to employees.

And in turn, it also stops organisations being fully aware of the benefits and advantages available within Industry 4.0. Improving transparency in this respect, and gathering greater levels of information can aid procurement overcoming this hurdle.

Investment in Data

One other hurdle facing procurement can be linked to both management and technology. Big Data is frequently cited as one of the key aspects of procurement’s future, particularly in line with new technology. However, organisations as a whole are yet to fully establish how to collect data effectively, and then put it to good use.

Current systems used in procurement are capable of handling certain levels of data, but nowhere near those levels needed in Industry 4.0. Procurement need to invest in new systems, but overall investment has slowed in this area.

There are three possible reasons outlined by the respondents to the survey. Firstly, many companies lack the funds to actively invest in new systems. Secondly, organisations are already unsure about the return on investment on new systems, as cost-effectiveness has yet to be proved.

Finally, there is a lack of clarity and transparency in the procurement technology supply market. The array of systems available can be confusing, and leave organisations in the dark about which supplier will best meet their needs and requirements.

Prof.  Dr Henke believes that “If procurement wants to lift its role to another level in the future, it can be characterized by agility and speed. But procurement can only do this if he is able to interpret data from different systems correctly,”

Leading Not Following

Procurement definitely needs to be a driving force, otherwise it will be forced back into its old performing role.

Overcoming these hurdles is, of course, vital to procurement playing its part in Industry 4.0. The profession cannot afford to be a follower, or risk remaining a transactional function, with little strategic influence, and probably a short shelf-life.

Within the survey, the majority of respondents stated that procurement needed to be an active influencer, and provide innovation to the organisation.

However, at the same time, it was felt that procurement wouldn’t take the lead on these strategies. Responsibility, it would seem, would lie with a management team, but with procurement acting as an enabler.

The journey to Industry 4.0 will require procurement to make changes, but also step forward and grab its opportunity. How Procurement 4.0 will come into being will be the topic of the final article in this series.

The Association Supply Chain Management, Procurement and Logistics (BME), founded in 1954, is the leading professional association for supply chain managers, buyers and logisticians in Germany and Central Europe.

Fraunhofer IML, founded in 1981, is a global expert on all fields of internal and external logistics. The Institute also currently heads up the largest logistics research centre in Europe.

To download your copy of the report, visit the Fraunhofer IML website.

The procurement function must adapt and evolve to accommodate technology changes and be ready to embrace what we’re calling Procurement 4.0. The question is: Are We There Yet?

Join the conversation on our Big Ideas Summit 2017 group to find out everything that went on at last week’s event. 

Industry 4.0 Will Change the Very Nature of Procurement

Automation and digital technology will change supply chains. But, Industry 4.0 looks set to change the very nature of procurement.

Download your copy of ‘Procurement 4.0 – The Digitalisation of Procurement’ on the Fraunhofer IML website.

So far in this series we have looked at the concepts behind Industry and Procurement 4.0, and the start of procurement’s journey. Now, with the idea that digitalisation is inevitable, we look to explore how it will change the nature of procurement.

As the manual processes are removed, or made more efficient, procurement professionals will tackle a much-changed role.

Setting New Objectives?

The BME study looked at four key areas of procurement that will be impacted by Industry 4.0. These are: technologies and systems; organisations and processes; management and people; business models.

The study highlighted key procurement objectives for leaders within each area.

Technologies and Systems

  • Real-time and better data availability
  • Improved data quality
  • Data access from all locations
  • More transparency of data and across the supply chain
  • Quick response to market changes

Organisations and Processes

  • Standardisation of processes
  • Faster, more efficient processes
  • Increased efficiency
  • More flexibility
  • Better global networking

Management and People

  • Improved human resources planning
  • Strategic placement of procurement within the company
  • Bigger savings
  • Creating synergies
  • Tapping into strategic markets

Business Models

  • Preserving competitiveness
  • Easier communication with customers and suppliers
  • More customer-oriented business models
  • Stronger development into a service provider
  • Creation of new networks

The objectives range from the strategic, to the vague. They also fail to really provide a focus for what procurement needs to achieve. Additionally, the objectives could well have been set without a consideration of the impact of Industry 4.0.

And without due consideration of what the future will look like, procurement seems destined to stand still in a fast-moving world.

Changing Procurement’s Nature

Although it seems to be procurement’s nature to revisit ‘traditional’ objectives, there is a chance that change will be forced upon it. And as the role of procurement changes, so too will the role of the procurement professional.

Prof. Dr Michael Henke,  Head of Enterprise Logistics at TU Dortmund University believes that “Procurement professionals need to move away from old management structures. Procurement 4.0 requires rethinking and thus also a management 4.0.”

Even although there is an inevitability about this change, there is resistance to it. Could this resistance be mitigated, or even overcome, by improving education on benefits and advantages to organisations?

If digitalisation can help achieve proper efficiencies, and help procurement deliver on objectives, then the profession can continue to evolve. But even as procurement evolves, there will still be a place for people in the process.

People’s Place in Procurement

According to the survey, the general feeling is that much of procurement will be automated, and will therefore require fewer people to manage it. Companies may even outsource procurement in a way more commonly seen with services.

However, the smaller number of procurement professionals will be highly skilled, well-qualified, and much sought after. ‘Purchasers’ will work with complex data, and interact with departments more as consultants. But it’s the focus on people that will remain, regardless of other changes.

People will still be involved with negotiations, and in management of relationships. Irrespective of how processes are managed, strategic relationships will underpin procurement activities, and, because of this, will need human involvement.

Exactly how this will look is still unclear. And there is certainly discussion required in this area. Both the human factor, as well as resistance to change need to be considered as the first hurdle for procurement to overcome. That will ultimately give a much more solid platform to develop from.

We will consider the challenges for procurement in Industry 4.0 more closely in our next article.

The Association Supply Chain Management, Procurement and Logistics (BME), founded in 1954, is the leading professional association for supply chain managers, buyers and logisticians in Germany and Central Europe.

Fraunhofer IML, founded in 1981, is a global expert on all fields of internal and external logistics. The Institute also currently heads up the largest logistics research centre in Europe.

To download your copy of the report, visit the Fraunhofer IML website.

The procurement function must adapt and evolve to accommodate technology changes and be ready to embrace what we’re calling Procurement 4.0. The question is: Are We There Yet? Join the conversation and register as a digital delegate for The Big Ideas 2017 in London. 

Resistance Is Futile, Disruption Is Coming!

Massive changes are coming to procurement pros, whether they like it or not! Is it high time we started embracing, instead of resisting, them?

Mark Stevenson is one man who understands the key trends heading our way. An expert on global trends and innovation, he will be setting the scene with our opening keynote at the Big Ideas Summit 2017 in London.  We caught up with Mark ahead of the event to get to know him a little better!

Tell us a bit about yourself?

I’m an entrepreneur, an author, an occasional comedy writer, a musician, and, as some people like to define me, a futurologist, but I’m not at all keen on that particular term.

What don’t you like about the term Futurologist?

I think it’s a fairly dodgy profession overall if I’m honest. There are no qualifications required and it’s often associated with prediction and, of course, you can’t really predict the future, you can only make it. Also people who identify themselves as future-experts are as apt to be shaped by the culture in which they are embedded or dogged by their own prejudices and wish-lists as the rest of us, and tend to predict accordingly. For instance many futurologists are overly tech focused. My work is more about the questions the future asks us about the interplay of technology, economics, society and politics. My job is to help people and organisations to ask the right questions about the future and then convince them to answer those questions in a way that makes the world more sustainable, humane, compassionate and just.

 What are the key challenges procurement and supply chains face in the next decade?

Supply chain issues are hugely important at the moment and supply chain professionals are having a lot of questions asked of them.

The first challenge to overcome is achieving greater supply chain transparency. Plenty of procurement professionals, particularly in larger organisations, have no clue where they are actually buying from. When the Rana Plaza building in Bangladesh collapsed in 2013 killing over 1,000 factory workers, many high-street brands were called out and, it materialised, ignorant of their involvement. Tragedies like this have forced high street companies to better audit their supply chains but there’s still a long way to go.

Secondly, organisations need to make their supply chains more sustainable by adopting science-based targets – addressing agricultural sustainability and reducing carbon emissions to give a couple of examples.

You’ve often advocated science-based targets in the past. Could you explain the concept in more detail? How could procurement apply these targets?

Science-based targets are a really simple idea and a very good way to think about sustainability. When it comes to dealing with environmental sustainability companies tend to say ‘this is what we can do, this is what we’re aiming for’ but, in reality, it doesn’t mean a whole lot when a multinational organisation vows to reduce its carbon emissions by 10% by the year 2034! That’s a recipe for planetary disaster.

Instead, organisations must figure out what they have to do based on scientific facts. The Science Based Targets campaign (a partnership between

Carbon Disclosuse Project, UN Global Compact, World Resources Institute and WWF) helps companies determine how much they must cut emissions to prevent the worst impacts of climate change. Coca- Cola, Walmart and HP signed up to this and if they can do it, anyone can.

And, by saving the world you’re also saving your business. Companies who take this stuff seriously will out-perform because they’ll become more efficient and they’ll attract the most forward-thinking, young talent who want to work for companies of which they are unashamed.

In your experience, how open are organisations to new technology trends?

Not very! Organisations tend to be comfortable operating as they always have done.

Upton Sinclair put it well: ‘It is difficult to get a man to understand something when his salary depends on his not understanding it.’ Take Blockchain, it could take away the untrustworthy parts of banking: bankers, who will naturally resist this particular technology!

Another example is driverless tech- it doesn’t take an expert to predict that the 3.5 million US truck drivers would be wary of such an advancement – and rightly so. So we have to find a transition plan for them – which culture resists. But it’s a business responsibility to prepare for the changes and approaching transitions, you have a duty of care to your employees and not being future-literate is a dereliction of that duty. Remember, Blockbuster, the DVD rental company went bust the same week that Netflix released House of Cards.

If you had one key message for our delegates at Big Ideas, what would it be?

Wherever you work and wherever you end up in the next 15-20 years, remember that it’s going to be a very turbulent time. Massive disruption lies ahead and the bad news is that our current institutions and businesses are unfit for purpose. Ask yourself: what’s my best effort for myself, my family and for society (and remember they’re all related). If you don’t, you can prepare to be very irrelevant and very unhappy!

Join the conversation and register as a digital delegate for Big Ideas 2017

Why Procurement Needs Clearer Insight into Industry 4.0

The impact of Industry 4.0 is already being felt. But procurement needs greater understanding in order to thrive in the digital era.

Download your copy of ‘Procurement 4.0 – The Digitalisation of Procurement’ on the Fraunhofer IML website.

In our previous article we introduced the concept of Procurement 4.0 – the profession as it might look in Industry 4.0. The key findings of BME’s study into the impact of digitalisation highlighted that procurement faces some major changes in the coming years.

And alongside those changes, there will be an array of challenges, and also benefits, to be faced. In this article, we’ll examine the significance of Industry 4.0 in procurement, but also why the profession needs to find consensus.

Industry 4.0 – Scope and Impact

The BME and IML study showed that many procurement leaders believe that Industry 4.0 has a very high influence on their organisation. Equally, they expect this influence to increase in the next few years.

There is consensus from survey participants that digitalisation will have a huge impact on the organisation as a whole. However, there is less agreement of its overall impact on the procurement profession itself. For many, continuing to look at procurement as a separate entity is impossible in the digital era.

But could this lack of consensus stem from a lack of a common definition of Industry 4.0? When we have discussed the fourth industrial revolution in the past, concepts such as ‘automation’, ‘robotics’, ‘digital’ and ‘technology’ have all been used.

However, similar terms have been used in the past to describe Industry 3.0. BME have concluded from this that the line between 3.0 and 4.0 is not clear, which may be causing confusion. There are two interesting quotes in the report worth considering to highlight the differences of opinion:

“Industry 4.0 is not a thing of the future – it already exists in the present day!”

“The next revolution, which will completely transform our cooperation on every single level.”

Neither one on its own appears to be unusual. However, when seen side-by-side, they serve to highlight two distinct groups. One which sees the changes already taking place; the other which sees them as a future occurrence.

How Organisations Have Prepared

Has your procurement organisation started its digital journey? How confident would you be at pinpointing the changes so far?

If these two, polar-opposite, opinions exist, in a small sample, it highlights a level of unpreparedness in the profession. In the study, only 5 per cent said that no digitalisation activities had taken place. But, interesting, a quarter of respondents claimed the first steps were now being taken.

However, without a pre-defined starting point, then some activities that are already in-progress may be overlooked. Some organisations may be making progress in Industry 4.0 without realising it, or considering it relevant.

Something as simple as an e-procurement system, or digital P2P process, might not be considered as an Industry 4.0 change. Particularly if this change happened a few years ago.

Prof. Dr Michael Henke, believes “Companies often attribute these developments to the third industrial revolution and do not realize that this was nevertheless an important step towards industry 4.0.”

Impacting Procurement Strategy

Currently, it is unlikely that you will find either Industry 4.0 or Procurement 4.0 contained in strategy documents. However, there is likely to be mention of digital transformation, digitalisation, and innovation.

Contained within these objectives will be more common procurement strategies for realising these objectives. Within the BME study, over half of organisations were accounting for digitalisation in procurement strategy.

However, only 20 per cent claimed to have fully explored the impact of Industry 4.0 on their organisations. In spite of this, nearly half of the organisations have a department dedicated to ‘Industry 4.0’. This is a central team, usually comprising of senior management level employees.

“The companies that have already included Industry 4.0 in their company strategy are often already more advanced in the implementation of Industry 4.0 as a company without a corresponding strategy ” Prof. Dr Henke continues.

Taking Procurement Forward

As with most activities, the incorporation into strategy is not sufficient for action. Digitalisation needs to have a specific roadmap, complete with action plans, timelines, and responsibilities.

As well as this, the activities need to be seen from an organisation-wide perspective. Consideration of this topic without full functional input will only hinder coordination.

The perception of these strategies is also key. Though many of the participants considered digitalisation to only be playing a supporting role in order to move procurement forward.

The Association Supply Chain Management, Procurement and Logistics (BME), founded in 1954, is the leading professional association for supply chain managers, buyers and logisticians in Germany and Central Europe.

Fraunhofer IML, founded in 1981, is a global expert on all fields of internal and external logistics. The Institute also currently heads up the largest logistics research centre in Europe.

To download your copy of the report, visit the Fraunhofer IML website.

The procurement function must adapt and evolve to accommodate technology changes and be ready to embrace what we’re calling Procurement 4.0. The question is: Are We There Yet? Join the conversation and register as a digital delegate for The Big Ideas 2017 in London. 

Procurement 4.0 – The Future of Digitalisation

Procurement 4.0 is real. But opinions differ as to whether it is a key opportunity for the profession, or a supporting tool.

Liu zishan/Shutterstock.com

Download your copy of ‘Procurement 4.0 – The Digitalisation of Procurement’ on the Fraunhofer IML website.

The fourth industrial revolution is a reality. Over the past year we have heard experts discuss Industry 4.0 and its impact on global supply chains. Now, our attention is being turned to the concept of Procurement 4.0 – what it means, and the challenges and benefits facing the profession.

What is clear is that Industry 4.0 offers procurement a great opportunity to cement its strategic role in organisations. However, even now the role that digitalisation will play is still up for debate.

A pilot study from the Association Supply Chain Management,
Procurement and Logistics (BME) has highlighted a difference of opinion between procurement leaders on the role of Procurement 4.0. On one hand, some believe it will help drive procurement’s strategic presence. On the other, however, some also believe that it is no more than a supporting tool, rather than a driving force.

What is Procurement 4.0?

The concept of Procurement 4.0 encapsulates the array of terms being used to describe changes to global supply chains. One of the key changes is the increasing digitalisation of the profession. From the creation of digital networks, to the increasing use of technology in all facets of business, it represents a sea change in how businesses will run.

According to Prof. Dr Michael Henke, Head of Enterprise Logistics at TU Dortmund University, who helped to conduct the study with BME, so far procurement is lagging behind.

“In the fields of production and logistics, for example, the topics of Production 4.0 and Logistics 4.0 have already been a focus of discussion for several years. As a result, logistics is now often referred to as the area of application for cyber-physical systems and a driving force behind the fourth industrial revolution.

Henke continues, “The field of procurement, on the other hand, is barely ever mentioned in such discussions. This needs to change! As the business area with the most interfaces both within and outside of a company, procurement also needs to be a leading authority for questions concerning Industry 4.0 and its implementation alongside its current role as an innovation scout and expert for technology and management in the future.”

Procurement 4.0 – Starting the Conversation

As Professor Henke notes, this current situation needs to change. In order to create the conversations needed to do this, BME announced a pilot study on the digitalisation of procurement.

Procurement managers and CPOs from 25 organisations, as well as two universities took part in the survey. You can download a copy of the study’s findings at the Fraunhofer IML website. The key findings are also summarised below:

  • Procurement is shrinking, and operative procurement is becoming autonomous in most areas.
  • The demands placed on, and expectations of, strategic procurement are growing. And the demand for a higher value contribution is therefore increasing.
  • In the future, procurement will take on a completely different form, and traditional purchasers will be a thing of the past.
  • Personal relationships will also continue to be extremely important in Procurement 4.0.
  • Procurement is not fully responsible for the implementation of Industry 4.0, but it does play an essential role.
  • The changes taking place relate to all relevant dimensions: technologies and systems; organisation and processes; management and people; and also business models.
  • Creating transparency is the most important requirement in order to be able to implement Industry 4.0.
  • Big Data and data processing technologies are key technologies involved in digitalisation, and play a decisive role above all in connection with networking.
  • Procurement needs to adapt its own structures and processes to suit digitalisation.
  • Procurement needs to manage a procurement portfolio that has been partially modified and is becoming increasingly digitalised.
  • Vertical and horizontal networking (by means of technologies) facilitates the transformation from a functional perspective to a process-based perspective. This open up the possibility for the unrestricted digitalisation of procurement and the entire procurement portfolio.
  • Procurement is a driving force behind horizontal networking.

Big Ideas and Digitalisation

Though there is not a consensus on the role of digitalisation in procurement as yet, the pilot is sure to kick-start conversation in this area.

As part of Procurious’ lead in to the Big Ideas Summit 2017, we will be exploring the key findings of the study with help from BME. Over the course of this series of articles, topics will include:

  • The changing nature of Procurement in Industry 4.0
  • The continuing importance of personal relationships in Industry 4.0
  • The changes involved in implementation of Industry 4.0
  • Why transparency is important in implementation
  • The changing procurement portfolio

The Association Supply Chain Management, Procurement and Logistics (BME), founded in 1954, is the leading professional association for supply chain managers, buyers and logisticians in Germany and Central Europe.

Fraunhofer IML, founded in 1981, is a global expert on all fields of internal and external logistics. The Institute also currently heads up the largest logistics research centre in Europe.

To download your copy of the report, visit the Fraunhofer IML website.

Join the conversation and register as a digital delegate for Big Ideas 2017 in London.

Throwback Thursday – Who Gives a Tweet? Social Media for Procurement Executives

Still not sure about giving a tweet? Procurement professionals and executives need to be on the social media front line – and here’s why.

This article was first published on taniaseary.com.

Will I ever get on top of social media? Slack is the latest team collaboration tool that my 25-year-old whiz kids are pushing me into now. It’s a never-ending cycle of trying to keep up with the Jones’s (in the social media sense).

Since posting my “Who gives a Tweet” blog a few months ago, I think I’ve heard just about every reason why procurement professionals are finding it hard to “pick up the slack” and get social.

We’ve been really fortunate on Procurious to build a strong community of procurement professionals committed to sharing and building the knowledge base of the profession. However, there is still a lot of opportunity for more involvement.

Avoid the Excuses

For the uninitiated (and probably the offline) there are many excuses offered for avoiding being online.

But the most popular excuses are lack of time and not knowing what to talk about.

So, I’m putting forward a “Seary Theory” that is the “Two T’s” – Time and inTimidation (OK, not quite a second T) – are stopping more procurement professionals for being on-line. But more on that later…

procurement-executives

First, let’s all agree that social media is not going away.

I don’t need to explain to this educated group how social media is “disrupting” and “enabling” just about every type of business on the planet. We’ve seen retail, banking, communications and entertainment, and we will soon be finding out what it means for supply chain and procurement…

The way I look at it, social media is something we need to take VERY seriously.

The procurement profession is hosting conferences focussing on digital disruption and talking about the speed of change in today’s world. But I need to ask – are we walking the talk?

Yes, social media could be a fad, but then again, it could be the new way of doing business and therefore we need to embrace it.

I know a lot of procurement professionals think that social media is something that other people do. It’s all selfies on Facebook, cat videos on YouTube, and a plethora of Kardashians on Twitter. All true.

But the reality is, it’s not just Justin Bieber, Oprah and Grumpy Cat that are using social media. Do you realise who else is out there?

So why aren’t the rest of us “out there”? Putting ourselves in the fray? Why should I, as a procurement professional, be on Social Media?

Your Professional Development

By creating a strong network around yourself, you will be stronger for it.

It’s how you can stay informed and get ahead. Be it via LinkedIn, Procurious, Twitter or even Facebook, access the news as it’s posted, discover the world around you, keep abreast of industry gossip.

You need to have your finger on the pulse of the profession; anticipate things before they’ve happened, know who has changed jobs (and where they’ve gone to), identify issues others are experiencing, hone-in on the issues and questions.

You can also use social media to actively seek out information. Identify experts in your specific category or industry and follow their updates. Reach out directly to your network for answers.

Your Personal Brand

Be noticed for being clever and insightful. Don’t let people forget about you. Maintain a consistent and persistent presence on social media.

Social media gives you a voice. It has the potential to transform you into an authority figure. When you share something on social media (or in real life) and people respond, it demonstrates influence.

I appreciate not everyone wants to post their holiday snaps or selfies online and you don’t have to. Sharing online need not be so different to sharing offline.

If you’re feeling a bit hesitant, I suggest you join forums and websites to discuss the things that interest you.

This shows your professional nous, and keeps you front of mind with our clients and lifts your profile personally. It also demonstrates that you’re plugged into the industry, and will have the required knowledge to talk candidly about breaking issues affecting the profession.

What are the topics that only you can talk about? Every procurement professional has a unique vantage point from which they are gathering really interesting information that is unique to the industry, communities and businesses they work in.

Recognise your unique position and share some of the amazing learning’s and insights that come your way.

Your Daily Habit

The easiest way to get social is to incorporate a little bit of social “exercise” every day. Yes, every day. It shouldn’t be a chore and it doesn’t need to take more than 10 – 15 minutes. To prove that’s no exaggeration, here is what you can do in 15 minutes – I timed it.

1. News Scan

Check the latest news and happenings. We’ve made that easy on Procurious with our news tab which sifts through all the major business and procurement publications, so you don’t have to.

Keep your eyes peeled for “water cooler moments”, mentions of your competitors or suppliers in the headlines and be ready to dazzle colleagues and clients with factoids you’ve found on the commute to work.

2. Share

What did you find that was interesting? An article? A comment? A quote? Well, post it to Procurious – get people talking.

3. Be an expert

Start a discussion topic or contribute to a burning issue. There’s already a bustling discussions area on Procurious to dive into, take the initiative!

4. Grow your network

If we are going to be world’s best, then we need to be the most connected. You can invite people to Procurious via a direct email. You should also scan LinkedIn and review the suggested connections often. It is very exciting to see the wide range of procurement professionals present in these forums.

And once you’re in the swing of that maybe consider some of the real pro-moves, for example:

Register for any events you are thinking of attending. Send the invite around your network as others might want to join in.

When you’re at the event, post your thoughts to your network on Procurious. Keep the conversation going even when the party’s ended! On Twitter? Tweet about it.

Want to write something and see your name in lights? Send our Community & Content Editor Euan Granger an email and propose an interesting topic for our blog. Become a published writer!

Givers Gain

Recognise your unique position and share some of the amazing learnings and insights that come your way.

You are all in very fortunate positions but you’re not sharing these insights, so how will people (outside) know the amazing things we’ve all been doing? Feel free to blow your own trumpet, and together we can all be heard!

You are all ambassadors for the procurement profession; you should be using these new tools to help tell our story. What’s more, use Procurious to stay current and remain connected to your fellow procurement professionals.

No Seat at the Table? Time to Build Your Own Chair

The solution is simple, surely. If procurement can’t get a seat at the table, it’s time to build our own chair.

How many times have you heard your peers or even yourself say the inevitable term, “seat at the table”? I am not sure where this proverbial leadership table came from, but we are constantly trying to get a chair. It’s time to build our own chairs and bring them to the table.

Time to Whittle Some Wood

So, how do we build our own chair? It needs to start with education. You can help. Earlier this year I was at a Supply Chain career fair, recruiting some talent, and had a chance to speak to several students about the lack of educational offerings for our profession. It was remarkable how many of them had a strong interest in procurement.

This University happens to be a leader in Supply Chain education, and one of their courses has a procurement focus.

The interest is there, but outside of this University, dedicated procurement courses are as hard to find as one of Willy Wonka’s golden tickets, or a Snorlax on Pokemon GO. (See what I did there? I’m trying to bridge the generational gap – you either don’t know who Gene Wilder is, or you never downloaded Pokemon GO and have no clue what a Snorlax is! Anyway, focus.)

I don’t believe that every college and university is going to begin adding procurement programs, because honestly I am not sure if just adding the courses would solve the problem.

I am still not convinced you can “teach” procurement, which is another can of worms I am not ready to crack open. However, I do think there is value in introducing procurement to students; educating them, exposing them to the industry and sharing what we do.

I have been speaking to students and sharing my procurement experience since very early in my career. With only a year of experience up my sleeve, I was speaking at my alma mater. I continue to speak to students of all ages, and am often invited to undergraduate and graduate classes to speak.

I’ve even spoken about procurement at an elementary school! At the time I was working for a large beverage and snack company, so I think they only wanted some potato chips and soda without their parents knowing. But regardless, I was there.

Get Up and Get Out There

Stop complaining that you have to always justify your value. You alone are not going to solve the big issues at your company. You can create some great traction and maybe even get that seat at the leadership table, but keep in mind that it only takes one re-structuring to lose that seat once more. The solution? Get out there and educate.

Share. Be vocal. Don’t just attend procurement events – go to other industry events and get the word out on what we do. Attending procurement events is great, but often we are telling each other the same thing we already know.

How about you go to a CIO, CMO, or CFO conference and share how much value you are adding to your organisation? The movement needs to come from all ends!

The CPO is Not Dead

There was an article written earlier this year with the provocative headline, “The CPO is dead.” I really valued it and don’t entirely disagree with its suggestion of a shift from Chief procurement Officer to Chief Value Officer. The role of procurement has transformed – it’s not just tactical, it’s strategic; not just focused on cost saving, but adding value. I encourage you to read it.

I do, however,  disagree with the concept that the CPO is dead, because I think the CPO is just growing up. There is so much more work to do to get this industry further exposed, so that there is no second-thought for a company to focus on procurement top-down.

Pull Up a Chair – Let’s Eat!

So, what are you going do? Read this – great! Share this – great! If you’re reading this and want to make a difference, please connect with me here on Procurious, and let’s figure out how to get more schools involved and how you can drive this movement locally or even nationally.

Utilise your company, and your position, to be an external voice for the profession.

Nicholas Ammaturo is the President and Chair of ISM 7 Counties and a former winner of ISM and ThomasNet’s 30 Under 30 Rising Supply Chain Stars award. Nicholas is Managing Director of Cormac Advisory Services, a retail and wholesale consulting service.