Tag Archives: procurement challenges

I’d Like To Purchase Some Expert Advice

Obtaining access to high quality consultancy services can often be the crucial factor in the success of a project. But buying advice is also one of the most confusing challenges for procurement. How can we overcome this?

Despite some consolidation in the financial consultancy sector, the overall market for consultancy services continues to grow, with the global consulting market valued at $250 billion.

While technology consultancy is leading the continued growth curve, other sectors including HR, operations and strategy are making strong contributions to overall value. For those seeking consultancy services, the market however can be complex. Is there a way to simplify the complexity of procuring consultancy services?

Why are consultancy services so confusing for buyers?

Much has to do with the breadth and depth on offer. Consultancy services are available in just about every industry possible and the sector continues to grow. The broad reach and sheer volume of suppliers can make it difficult to identify the best consultant for your needs. Take ‘Digital Transformation’ consultancy services as an example. It was barely recognised a sector just a few years ago, now it’s worth over $23billion and represented over 15% of the global consultancy market last year.

Consultancy services are provided by organisations large and small,- from multinational organisations and specialist niche providers to freelance independent consultants – often with much crossover in between. Many of the companies started life offering a single specialism but have grown and added additional services to their portfolios as their sector and market experience has developed.

Consultants often use a variety of language and definitions to describe who they are and what they deliver. With no single regulatory body on board to help define the market, its no wonder that buyers can find drawing comparisons a challenge.

As procurement budgets decrease globally, the lack of resourcing and specialisms often means that in-house buyers are generalists not specialists. As a result they may not have the insights into specific markets to be able to evaluate different consultancies meaningfully.

As a professional buying organisation, ESPO’s recent experience in building its largest ever public sector consultancy services framework highlights just how crowded and complex the marketplace is. It received a record number of tenders from suppliers – evaluating over 240 tenders before awarding 135 to the framework. As part of the process ESPO found that the marketplace is so complex that public sector buyers often remain with the same consultancy provider for years to avoid going through the procurement process again, putting budgets at risk.

Top things to consider when buying consultancy services

Utilising a team of 12 procurement experts with cross sector experience drawn from across the organisation and externally, ESPO was able to effectively evaluate the tenders before awarding the successful organisations a place on the framework. Here are its top considerations for buying consultancy services:

  1. Closely define your outcomes or objectives. By identifying the outcomes, procurement teams can work backwards from the end goal to define the exact service required.
  2. Request case studies. This will help you understand the process for delivery and ensure that the consultant has the right experience.
  3. Review technical capabilities. Whether you’re buying financial, waste disposal or even logistical advice, ensure that the consultants are specialists with the technical capabilities needed to deliver. This may mean that you are required to use a different provider for each project.
  4. Consider using a specialist framework for complex service procurement needs. Framework providers operate under strict due diligence rules and processes so you’re assured of the suppliers’ capabilities.   

Sheena Kocherhans is Category Manager for Professional Services at ESPO

Procurement Is Everywhere But It Wears Hundreds Of Disguises

When procurement wears a mask, layers of stage make-up or one of its other many disguises, you might find it tricky to identify. But, as Daniel Ball explains, procurement is everywhere and in all of our organisations- it might just be presenting itself in a different way…

It’s fair to say that, as a concept, procurement tends to be associated with large businesses.

However, any organisation from the smallest to the largest buys things that they need from chosen suppliers. And, however small the organisation, they face much of the same procurement challenges that we all do. So why do we not consider them all to be ‘in procurement’?

The many disguises of procurement

In reality, the entry point starts when a business begins and evolves in sophistication and complexity with their growth. Although we think of procurement in terms of an established function, role or set of rules, much of the practical procurement going on out there is actually in a formative or evolutionary stage, depending on the maturity and needs of the organisation in question.

This is a vital insight for those of us working to support the procurement profession. We have to remember that we’re not dealing with a perfect procurement-badged world, nor one which conforms to all of the industry buzzwords and ‘best practices’.

In most cases, we’re dealing with people in a state of flux, who might well not call themselves procurement professionals; after all, there are hundreds of different guises in which procurement presents itself. This is particularly prevalent in high growth mid-sized businesses who are feeling the pain of change or ‘growing up’ more severely than most.

What challenges do mid-sized companies face?

Wax Digital wanted to find out what kind of challenges mid-sized companies are faced with during expansion.  We asked 200 senior business management and procurement professionals at fast-growth, mid-sized UK businesses about the pain points they have experienced as their organisation has grown.

Without giving too much away, here are 3 of the key highlights our research uncovered; demonstrating the kinds of procurement-related issues hampering their ability to support business growth.

  1. 83 per cent of respondents surveyed said they didn’t challenge their suppliers on cost or performance adequately, whilst 78 per cent struggled to control spend, citing departmental purchasing autonomy as a problem. Three quarters also said that they don’t have sufficient purchasing technology or systems in place to keep up with the pace of growth.
  2. UK mid-sized businesses have a broad range of growth challenges that are all linked back to both upstream and downstream procurement needs. Even though they’re not yet talking procurement these businesses are dealing with procurement’s problems and need a solution.
  3. In fact, mid-sized businesses are perhaps the segment of the UK economy most in need of professional procurement practice. Their reasons for, and rate of, change are so extreme they must get their house in order before it becomes too unwieldy and difficult to control.

The results of the research will be revealed in full next week via Wax Digital’s website.

What are your media consumption habits?

Wax Digital are conducting a quick survey to understand more about how procurement professionals use media for work. If you’ve got a few minutes spare to tell us how you stay on top of latest industry news and trends, we’d love to hear from you!  It’s just a few simple questions on your media consumption habits. And, to say thanks, we’ll put your name into a draw to win a £200 donation to a charity of your choice.  Complete the survey here.

A Whole New World: The Cognitive Computing Era

The age of cognitive tech is coming, whether procurement likes it or not! How can we be ready for the changes coming our way? 

Register your attendance for our free webinar, Man & Machine, which takes place on 8th February 2017. 

A New Era Of Computing

 We’ve entered into a new era of computing: “the cognitive computing era”, which follows the eras of programmable and tabulating systems and represents a massive jump forward that will transform how enterprises operate.

This new era is defined as such because there is a fundamental difference in how these systems are built and how they interact with humans. Traditional programmable systems are fed data, knowledge, and information, and they carry out and return results of processing that is pre-programmed. In this case, humans are doing most of the directing.

Cognitive technology is different; it accelerates, enhances and scales human expertise to solve more complex problems by understanding language and interacting more naturally with humans. It can reason to find patterns and form hypotheses, making considered arguments and scenarios planning. And this is exactly what Watson is about.

Watson is a cognitive technology that can think like a human and is available as SaaS products and a set of open APIs (Applications Programming Interface) such as natural language classifier, speech to text, text to speech, visual recognition, etc.

What Does Watson Mean For Procurement?

This disruptive technology, by creating a new digital ecosystem, is pushing Procurement to create a new business model, moving away from objectives centered on cost take out and taking a new customer centric and revenue growth approach. CPOs must employ the right strategy, structure, skillset and cognitive technology if they want to be in a strong position to demonstrate their relevance and value to the organization.

Procurement organizations and their leaders need to embrace the reality and potential for Artificial Intelligence (AI) and cognitive procurement as readily as they would accept other technologies and developments. AI will bring changes and challenges but it will also bring amazing opportunities for the profession.

As we apply AI to certain procurement tasks and processes, we will begin developing internal capability and expertise.

Applying Cognitive Tech To Procurement

Cognitive technology has already proven to be particularly helpful at helping procurement with a number of specific tasks and programs. These include:

  • Quickly sorting through very large amounts of structured or unstructured data. This is especially useful for benchmarking and supplier analysis
  • Providing very detailed supplier assessments of a single supplier, a group of suppliers or the whole supply base
  • Providing in-depth risk assessments, identify hidden risks, and calculate rate risks
  • Supporting and validating decision-making during supplier selection

More generically, cognitive computing will undeniably be a key ingredient to innovation, helping to find new ways of operating, providing new insights, uncovering new opportunities and last but not least it will elevate procurement professionals to the well-deserved advisor role by extending their capabilities and growing their experience.

How Can Procurement Prepare For The Changes That Are Coming? 

The question that so many procurement organisations are asking is how can they make cognitive tech a reality and where to start?

Adopting and integrating cognitive solutions into an organization is a journey and not a destination.

Firstly, CPOs need to be clear about what matters the most. In order to grow their company’s business and best benefit from the technology, they must set realistic expectations and develop long-term plans with incremental milestones

Secondly, transformation doesn’t happen by itself. It requires the vision and support from the top. As an example, Bob Murphy, IBM’s CPO, is the biggest driver of change in terms of transforming his organization. He saw the potential in cognitive technology and the prospects for Procurement and became an evangelist within the team; encouraging, sponsoring and demanding we embrace this opportunity.

Thirdly, leveraging big data is a key area to take advantage of, especially in data management. This ensures that organisations have the right structure and strategy. At IBM, we have appointed a Procurement Data Officer and also hired data scientists within the procurement team as we understood that procurement needed to take a more active role in extracting and analyzing data to demonstrate its value especially by leveraging the data we are managing and generating. (i.e data in RFP answers, ….)

The Race Is On – Can Procurement Shape Up In Time?

With cognitive technology, procurement teams will be equipped with the tools to navigate the procurement process quickly, easily and more compliantly. This will allow more time for procurement teams to focus on strategic supplier activities after contract signature, such as performance management or supplier collaboration and innovation programs. But is the function ready for this shift?

Embedding such advanced technology requires some serious changes in skills and competencies within our teams. Procurement leaders will have to search for procurement professionals not only focusing on their core competencies, such as category expertise, negotiation skills or market knowledge, but it will be more and more important to hire people with the “right” soft skills. The function must onboard and retain people with excellent relationship management and analytical skills and with a high aptitude to work with advanced technology and financial acumen.

The procurement landscape will have to reshape to a more business leading capability that has to operate in a much more virtual and networked environment where emerging roles of data scientists, business relationship managers and innovation scouts, to mention a few, will be increasingly required.

In short, beyond just being capable of creating visible savings, the role of the procurement organisation will have to shift its focus beyond cost reduction efforts, and move towards a trusted advisor role; accurate, fast and efficient.

There’s no doubt about it, late adopters of the digital transformation or organisations failing to take into consideration the growing exigencies such as speed, value for money, collaboration will be soon perceived as road blockers rather than enablers.

Join Procurious’ free webinar, hosted by Tania Seary with Manoj Saxena, Pascal d’Arc and Nathalie Fekete to make sure you’re ahead of the cognitive technology game. 

 

 

Be Brave or Be Dead – A Futurist View of Supply Chains

There are two types of company left – brave or dead. Considering what’s coming in the next 15 years, now is definitely the time to be brave.

Increasingly, there are only two kinds of companies: brave and dead.

When world renowned speaker and author, Seth Godin, talks about the future of businesses, people listen. And when Godin warns of extinction if companies aren’t brave, then you certainly want to be in the first category.

Change is coming. Not only for procurement and supply chains, but for businesses as a whole. And businesses that choose to bury their heads in the sand on key issues aren’t going to survive long. But what are the key issues they need to be focusing on?

Respected futurist, entrepreneur, and author of global best-seller, ‘An Optimist’s Tour of the Future‘, 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.

A Futurist’s Perspective

We’re well aware of the technological changes coming our way in the next 10-15 years. Automation, AI, and 3D printing, amongst others, have all made headlines already given their impact on manufacturing, supply chains and business models.

Industry 4.0 has presented organisations with an immense opportunity to change the way they work. However, there are still too many companies with their heads in the sand, being left behind.

According to Stevenson, there are several technology waves coming in the next decade. With each one, industries will be disrupted, but new models and strategies will arise. Companies need to account for three key components – geo-politics; geo-economics; and geo-technology.

This isn’t an either/or situation – all three are crucial. But the companies that can take advantage of these waves will not only attract the best staff, they will seriously outperform all their rivals.

The Energy Race

One of the first waves will be in renewable energy, and a final step away from fossil fuels. Even oil-rich nations like Saudi Arabia are planning for this future, advising they will be ‘getting out of oil’ in the next 20 years. Even now, organisations are generating their own energy, or are buying energy through co-operatives. The traditionally big players in the industry will increasingly be bypassed, as energy gets cheaper and more locally generated, something that can only be a benefit for individuals and organisations.

Financial Services Disruption

What will happen to the Financial Services industry? Can it survive this disruption? Yes, but it will need to evolve to survive. Stevenson uses the example of the blockchain as a key disruptor. He is on the board of a new bank which embraces blockchain and has about 50 staff.

This is a far cry from the enormous, staff heavy traditional models, who have thousands of staff praying that blockchain is just a bad dream, hampering their ability to innovate. As the novelist Upton Sinclair noted “It’s difficult to get a man to understand something when his salary depends on him not understanding it”.

Manufacturing Revolution

An area where supply chains are already seeing major disruption is in manufacturing. Of this revolution, Stevenson highlights the potential for 3D Printing.

Organisations can bring much manufacturing in house. Designs can be downloaded and printed on site, at a fraction of the cost in some cases. One industry looking at this is pharmaceuticals – the first 3D printed drug is already FDA approved.

Unlocking the Genome

 Genetics and Bio-Technology represent a technological wave that many have yet to consider. Advancements in human longevity change the game for the medical industry, but leave organisations with decisions to make on staff. What do retirement, long-term strategy, even relationships look like if we might live healthily past 100? And, to loop back to the energy race, bio-technology is one disciipline that is already being leveraged to pull CO2 from the skyu and turn it into liquid fuel. Why shouldn’t procurement be at the heart of this revolution too?

Time to Be Brave

 Ultimately, Stevenson’s message boils down to one thing – if you don’t understand the questions technology is asking you, then you’re lost. It might seem brutal, but it’s the truth, and trying to ignore it, or pleading ignorance will mean your company may soon be obsolete.

However, the message here is not intended to be doom and gloom. Stevenson reminds us that one option is a future that we can make better for all. He’s keen to engage people on an emotional level, and get them thinking about their careers, and their children’s futures.

It’s time for leaders to engage their hearts, not just their minds. It’s time for us all to get our heads out of the sand and look up. And if we all listen carefully at the Big Ideas Summit 2017, we’ll certainly learn a great deal about our role in making the future sustainable, human, compassionate and just.

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

Samsung Eats Horsemeat on the Titanic with Captain Kirk

Highlighting potential procurement lessons from the latest supply chain crisis for Samsung – the Galaxy Note 7.

samsung galaxy

This article was written by Daniel Ball, Director at Wax Digital.

The Samsung Galaxy Note 7 spent just two and a half months on the market before it was recalled amidst a crisis badly affecting its share price, not to mention its brand image.

The device was quickly taken off the market after some models of the phone exploded and went on fire. It was found that overheating lithium ion batteries were to blame.

Some analysts have been quick to consider how a respectable brand like Samsung, which surely has a sound manufacturing process and supply chain, has come to retailing a product that turns out to be dangerous.

Many have put the blip down to Samsung’s competition with rival Apple. The battery of the Galaxy Note 7 is bigger and has a higher energy density than Apple’s iPhone 7 Plus. This suggests that Samsung has tightly crammed in more components.

Has Samsung’s desire to trump Apple seen it rush a product to the market without properly addressing the true capability of its battery technology?

It’s also been argued that the mobile sector’s demands are pushing battery technology to and in some cases beyond, its limits. It’s not the first time this technology has literally flared up (remember the hoverboards last Christmas?).

Race to Beat the Competition

The situation raises a key question that applies to any competitive marketplace.

At what point does the race to release new products and beat the competition, or simply deliver a competitively priced product to tight margins, become more important than ensuring your supply chain is not taking risks? Where is the line drawn in adding components into the product that could ultimately harm the very people you are trying to win over (your customers)?

It’s what I call ‘the Titanic effect’. In a bid to make the infamous boat lighter and faster in the race to cross the Atlantic, all sorts of risks were taken. And it was the customer who paid the ultimate price.

While not all risks involved are supply chain related you have to ask the question “what was procurement’s role in all of this?”

Are customer and business demands properly mapped onto supply chain capabilities? Are supplier checks rigorous enough to ensure they can do the job we need them to do safely and securely?

Or is procurement like poor Mr Scott in Star Trek, constantly at the mercy of his boss, Captain Kirk, wanting him to flog the warp engines again even though he keeps telling him “they cannae take much more”. 

At the bottom line, visibility of who is in your supply chain and how they are operating has reared its head once again. It raises the point that procurement needs to play an increased role in the decisions of the business to ensure the rules of demand and supply are effectively balanced.

6 Ways to Attract and Retain Procurement Talent

Procurement job openings are on the rise and, as organisations squabble over the best talent, it’s important to make sure you’re doing the right things to attract the crowd you want!

how to attract top talents

Recent studies reveal that the number of advertised procurement and supply chain roles increase by 22 per cent each year, demonstrating a huge demand for talent in the industry.

As more people consider making the move into a procurement role, it’s important for organisations to find ways to attract the best possible employees.

I’ve come up with six innovative methods that will help you to attract, and then retain, the top talent out there.

1) Emphasise Your Standing Within the Industry

The position your company holds within the industry plays an important role in a potential candidate’s decision to apply or not.

Demonstrating extensive experience and knowledge of your industry will show candidates that you are a firm to be taken seriously. It’s crucial that you explain the influence your company has within your sector by highlighting the key successes you have enjoyed.

2) Offer an Attractive Salary

If you want to recruit the best talent, you need to offer a competitive wage. It’s important that you look at what similar businesses are offering, and how you’re able to match it.

If an employee is deciding whether to go with you or another employer with a better wage, chances are they will pick the higher salaried position. If you can’t quite match the salary your competitors are offering, investigate how to make your position seem more attractive by offering employee benefits and rewards.

3) Provide the Training and Support Needed to Succeed

Showing that you value your staff and take their development seriously is a great way to attract talented professionals to your available roles – think what training or support you can offer that will encourage professional growth.

Those who are serious about their career will actively seek out any opportunities to advance their skills and knowledge. Employers who can’t offer a competitive wage may find that by showcasing the importance of training and support within their company, they can still attract a high calibre of talent.

By providing the training and skills needed to succeed, you’ll show a determination and passion to help your employees climb the career ladder.

4) Stay On Top of Industry Trends

Is your company making any broad moves to digitise how its employees work? The procurement and supply chain industry is continuously facing rapid technology change. With new software and developments changing the way the industry works, you need to stay on top of these changes in order to attract the best staff.

The latest E-procurement software allows businesses to smoothen out operational processes. By having up-to-date tools, you will demonstrate to both current staff and potential candidates that you are keen to stay ahead in the technology game.

5) Clearly Articulate the Skills Required

When advertising your job offerings, it’s pivotal that you understand the role fully.

Fully articulate the skills and abilities you’re looking for and you will attract the relevant procurement staff. Being thorough and clearly describing the role will show talented individuals that you know your industry.

6) Forging Strong Relationships with Other Departments

Procurement seeks out new ways for organisations to work, throughout every department in the company. It is essential that your procurement department have strong relationships with other members of the organisation in order to work effectively.

When advertising new positions, demonstrate how well departments work together and how the role of procurement comes into play within your company. This will help to show potential candidates just how seriously you take procurement.

Attracting the Right Candidates to Succeed – In Summary

To appear attractive to potential candidates, it’s important that you speak their language.

Using the correct business jargon, thoroughly explaining the role and outlining how your organisation is beneficial to their career success will help you draw in the right people for your procurement roles. Knowing the industry will also help to retain your best talent.

With the procurement sector receiving a huge demand for roles, it’s vital you find how to reach the right people who will not only work for you but stay with you too.

Adam Maidment is a content writer for Portfolio Procurement, a procurement recruitment specialist which focuses on managerial roles through to executive appointments in procurement, category management and leadership.

Is Indirect Procurement Really So Complex?

You could be forgiven for thinking the management of indirect procurement is akin to rocket science. Is it really so complex?

Indirect Procurement Rocket Science

Sourcing and contracting indirect goods and services in categories like I.T., consulting, HR and travel is important to keep the business running.

You could be forgiven for thinking that the procurement of such services is akin to rocket science, especially if you listen to those many external “solution providers” whose income stream may depend on you.

It may be tempting to consider outsourcing some or all of the management of your indirect spend. In many organisations it is often poorly recorded, loosely managed, widely dispersed, and, generally, messy or neglected. But first let’s consider the issues, and how this indirect spend could be managed internally.

Direct and Indirect Procurement 

Direct (or core) procurement traditionally focuses mainly on the sourcing of goods, and some allied services, that are used in the manufacturing or production of goods for sale. These items are usually clearly specified, often with a pre-defined supplier base.

Indirect procurement is different. It is essentially the sourcing of services (and maybe some goods) to support day-to-day operations.

The indirect spend may make up around 30 per cent of all third-party spend, but there are significantly more suppliers and the buying community is more decentralised. Add to that, a higher potential for maverick spend and sensitive stakeholders, and there is the added complexity.

What is happening now is that the percentage of indirect spend-under-management is growing in many companies. Difficult areas such as advertising, insurance and consulting fees are slowly being brought into the category structure.

It is often said that indirect procurement is not strategic. However, some high spend categories, such as sponsorship and employee benefits, could definitely qualify.

Key issues in Indirect Procurement
  • Buying decisions are often dispersed throughout an organisation into diverse and competing business units or locations.
  • Stakeholders can, and will, resist any changes on which they have not been consulted.
  • Managing an indirect category such as marketing services or consulting requires assembling the historical data and providing reliable spend information. Often transactions are miscoded – sometimes on purpose – which creates the wrong picture.
  • Suppliers can only be a resource for continuous improvement if the communication channels are open in both directions.
Strategies for Indirect Procurement  

The first step in a category strategy should be to aggregate the spend and understand it and its sub-categories. Next, present this information, in a digestible form, to stakeholders to elicit their input.

It is never too early to talk to stakeholders about the data or the proposed Scope of Work. After the Request for Proposal has been issued, it is too late.

Two of the success criteria in indirect procurement are a robust Scope of Work and a detailed Service Level Agreement with workable measurements.  Without these, any contract can fail.    

Indirect Procurement as a Career Choice

The requisite technical skills for individual success in procurement have been well-documented. One of the key skills of the future is to be numerate and have analytical ability, but not necessarily be a mathematician.

Managing indirect categories requires a different skill set from that which is needed for working in direct procurement. Behavioural skills, which can also be acquired, come into the spotlight here.

Particularly important is the need to collaborate with stakeholders. An aspiring category manager needs Influencing and listening skills, empathy, and the ability to take the initiative as well as being decisive when the need arises.

Indirect categories (when the tail-end spend is excluded) do not easily lend themselves to automation or the use of the e-procurement tools, such as e-catalogues or vendor management systems.

This creates a dilemma for external service providers who have these tools, but readily admit that there are nuances and emotions at play that may be beyond their control.

The organisational culture and landscape on the indirect side has many nuances that do not exist on the direct side. Procurement executives will therefore need to traverse the waters of indirect spend with unique strategies to ensure success.

Indirect procurement is all about building trust with stakeholders and suppliers to ensure continuity of supply and smooth operations.

Just try to procure the same make and model of smartphone for everyone, or change the catering company without considering end-users.

British Businesses Need to Respond to Brexit Now

British businesses can’t afford to wait before they take action and respond to the post-Brexit situation in the UK.

British Businesses Brexit

With uncertainty still abounding, and business implications not yet fully understood, two separate reports have confirmed that British businesses need to be taking action to prepare themselves for the Brexit.

Slowing UK Economy

The Markit/CIPS Purchasing Managers’ Indexes for both construction (weakest performance in seven years), and services (lowest growth in just over 3 years) showed that the UK economy was already slowing down before the Referendum took place.

The economic uncertainty following the June 23rd vote is likely to lead to further falls for July. Experts have advised that businesses need to take immediate action to mitigate these falls, particularly in the service sector.

And despite a fall in purchasing associated with these industries, companies also reported on-going supply chain pressures, including lengthening lead times linked to transportation delays, and lower supplier stocks.

Challenges for British Businesses

At the end of last week, the Institute of Directors (IoD) launched a paper outlining a wide-ranging assessment of what the Brexit means for British businesses.

While the IoD suggested that the UK will most likely retain access to the single market for goods, albeit with some concessions, the real concerns raised were also for the service industry.

The report highlighted that 83 per cent of IoD members had a link with Europe, whether via export, import, supply chain, staff or otherwise, and that these businesses needed to begin conversations with EU clients and supply chain to clarify what these changes will mean.

However, the IoD paper also offered the following thoughts:

  • The UK is unlikely to be able to deal with new trade partners whilst re-negotiating with the European Union and amending existing third-party arrangements.
  • Passporting for financial services will be difficult to negotiation, as remaining EU members will see this as an opportunity to shift business to European cities.
  • The IoD expects EU nationals living here to be able to stay once the UK has left the EU, but called on politicians to clarify this status as soon as possible.

In the immediate aftermath of the referendum vote, IoD members considered the key priorities for the Government to be:

  • Take steps to stabilise the economy in the face of any negative reaction in financial markets.
  • Securing a new trade agreement with the European Union.
  • Prioritise new UK trade agreements with high growth markets and ensure preferential market access to third countries (via existing EU trade deals) is maintained
  • Clarifying the status of EU citizens in the UK, and UK citizens elsewhere in the EU.
Coherent Response

Simon Walker, Director General at the Institute of Directors, stated: “In the wake of the EU referendum vote, we now need politicians to respond coherently to provide stability as we work out our future path. We must not lose faith in the ability of British businesses to overcome these challenges. 

“The IoD is resolutely positive about the opportunities that globalisation brings. We were promised an open and outward looking country after Brexit. Whoever ends up in charge must deliver on that pledge – a Britain that continues to play an outsized, global role in a world that is coming together, not moving apart.”

Allie Renison, Head of Europe and Trade Policy at the Institute of Directors and author of the report, added, “In the wake of the referendum, the most pressing concerns for businesses are responding to the short-term consequences stemming from disruption to financial markets, and preparing for longer-term ramifications, and maximising any opportunities that a post-Brexit landscape stands to offer.

 “With such a high degree of integration into EU markets, British businesses need to consider the possible outcomes of negotiations and whether we have access to the single market. There are a number of areas outlined in this report where we can forecast a range of potential changes to policy that firms should take into account when making any adjustment plans in the wake of Brexit, with both short and longer-term perspectives in mind.”

Throwback Thursday – 4 Challenges Procurement Faces & How to Overcome Them

Ask the question, “What are the challenges procurement faces?” and you’ll get the same responses time and again. So how do we overcome the key challenges and move on?

4 challenges procurement faces

We’re looking back at some of Procurious’ most popular content from the past 12 months. First up, we revisit an article on the 4 challenges procurement faces, and how to overcome them.

Why? Well, the nature of these challenges never seems to change, so by shining a spotlight on them again, we aim to start a conversation on how to finally put these challenges to rest!

Challenges Procurement Faces

Results from a newly published study shine a light on an assortment of internal challenges facing the procurement function, as well as its changing role as we enter an uncertain future.

Xchanging has issued the first results from its 2015 Global Procurement Study of more than 800 procurement decision makers. 

These first set of results look at internal challenges and the new role of procurement, covering misaligned KPIs, lack of internal engagement, capacity issues and skills gaps.

Challenge #1: Misaligned KPIs

Despite the now wide ranging responsibilities of procurement decision makers, 47 per cent name ‘cost savings realised’ as their number one KPI. The top four KPIs listed are all cost related. CSR/Sustainability impact, by comparison, is ranked as the least important at just 1 per cent.

Chirag Shah, Executive Director, Xchanging Procurement comments: “These results strongly indicate that there is a problem with the current KPI structure. Procurement teams are responsible for many business critical functions. From risk management to sustainability impact, procurement is engaged in activities that far surpass its cost-cutter legacy.

“The metrics against which organisations track procurement’s performance do not line up with what procurement actually delivers.”

Challenge #2: Lack of Internal Engagement

63 per cent of procurement decision makers globally identify ‘internal stakeholder engagement’ as a challenge, with 14 per cent claiming it is as an extreme challenge.

Shah explains: “Procurement’s strategic capability isn’t being understood and because of that, it isn’t appropriately valued. Not only is this causing problems for procurement performance, it is also restricting business success. By not engaging with the procurement team and fully understanding what it can deliver as a strategic partner, companies are limiting their potential for growth.”

CPOs clearly feel more internally valued than procurement middle management. 60 per cent of CPOs feel that procurement is a C-level priority in their organisations, compared to 37 per cent of procurement middle managers.

Shah makes a number of recommendations based on the findings: “To improve internal engagement, and properly communicate the value of procurement, procurement departments need to consider tactics such as introducing governance boards, using score cards to track deliverables, leveraging analytics and reporting tools to demonstrate results and even re-labelling team members with non-cost centric job titles that relate to their roles, for example ‘Risk Manager’ or ‘International Consultant’”. 

Challenge #3: Capacity Issues

According to Xchanging’s numbers, 80 per cent of procurement decision makers identify ‘procurement team time pressures’ as a challenge, and 20 per cent as a major challenge. This implies that the majority of procurement departments are facing major capacity issues.

Surprisingly, in comparison, ‘talent shortage’ is considered an operational challenge by far fewer respondents, with 59 per cent citing it as a challenge, and only 12 per cent as a major challenge.

The number citing talent shortage as a concern drops to less than half (40 per cent) when asked if it’s a problem for the industry as a whole.

xchanging

Challenge #4: Skills Gap

The skills considered most important for procurement professionals are ‘relationship management’ (88 per cent consider important, 59 per cent very important) and ‘negotiation skills’ (88 per cent and 58 per cent).

Significantly, these are also the areas where procurement decision makers identify the greatest gaps in skill set provision; around a quarter cite ‘relationship management’ (26 per cent) and ‘negotiation skills’ (23 per cent) as areas with the greatest gap in skill set provision. 23 per cent also name ‘project management’.

Want to read more about the challenges procurement faces? You can download the full report here.

Brexit: Reflections of a Procurement Professional

In the cold light of day, and after a weekend’s reflection, a procurement professional reflects on the implications of the Brexit.

Procurement & Brexit

Following my pre-referendum thoughts on supply chain trade and the EU, I was looking forward to the event itself.

A severe weather occurrence, disrupted travel during a six hour journey from Guildford to Norwich, and with the Mission Impossible theme tune on repeat in my head – this was my voting experience on the 23rd June.  I made it to Norwich to vote #Remain just in time before the polling station closed.

Storm on the Horizon

The real storm was not the weather. it was the result to come in the dawn with the UK #Brexit result.

My initial, personal, reactions on June 24th were of shock, anger and fear.  The value of the £ tumbled and the FTSE100 index crashed.  The ‘Leave’ campaign ideas, clearly taken by some as Brexit ‘pledges’, are already confirmed as “mistakes” or not “realistic”.

But time, even a few short hours, is a great healer. The £ and the FTSE both recovered a little on the 24th after their initial crashes.  My optimism and positivity is also slowly returning. The UK now has a fantastic opportunity.

Staying United

The first opportunity is to stay united. “IndyRef2” is already on the table, and the Northern Irish might follow suit. I doubt if many voting to leave the EU anticipated the potential break-up of the UK. Is this really an ‘unthinkable’ now?

The focus is now on what happens next. If there’s one thing I’ve heard through all of the interviews and opinions in the past few days, is that no one really knows what the future looks like now.

No state has left the EU before. The process is set out, yet it’s not tried or tested.  We have to find a new Prime Minister, and possibly face a General Election, to appoint the team to lead the UK through this.

Procurement & Strategic Relationships

There are uncharted and uncertain waters ahead. Procurement and Procurement Professionals can shine through and add the value we’ve all talked about for years and now have the opportunity to deliver.

Keeping in close contact with strategic suppliers and working together to build certainty in existing trading relationships might be a crucial first step to steady the ship.

Businesses need to keep focus on their mission, vision and values, and make sure they are still relevant in a post EU, UK. Most will need to adapt, and Procurement needs to ideally provide, or at least proactively source, the help and guidance to do that.

Procurement must not sit back and wait any longer for the invite to the table it has been waiting decades for. At the Big Ideas Summit in April, we heard lots about Procurement being the source of talent within organisations – it’s time to step up.

I expect we’ll all be revisiting our segmentation matrices and risk maps this week for starters! We should rapidly review processes and procedures ready to make ourselves, our teams and our businesses as agile as we can, ready to adapt to the changes as they unfold.

A wiser man than me said “agility is core”.  Let’s make this work team UK.