Tag Archives: procurement networks

How Your Network Can Turbocharge Procurement

Networks have the power to transform procurement teams and turbocharge the businesses they link together. So how do you get the best value from your network?

Since you’re here reading Procurious, I can already tell you appreciate the value of networks.

And you’ve probably realised that the wider your network of professional connections, the greater its value to you.

This network effect, where the benefit of a product or service increases as more people use it, has fuelled the growth of leading Internet companies for decades.

In procurement as elsewhere, networks enable participants to reach across the world, think big, and magnify their impact.

Meanwhile, as networks embrace cloud-based technologies, they allow buyers and suppliers to think even bigger — and to make an exponentially greater impact on the buyers, sellers, and ultimately customers who rely on them.

As innovations like artificial intelligence, machine learning, the Internet of Things, and blockchain reshape entire industries; networks are becoming not only faster but actually smarter at drawing meaningful insights from sprawling troves of seemingly unrelated data.

Envisioning the world as it could be…

In the process, these advances are helping procurement professionals to envision the world not just as it is, but as it could be — including their own role in it. When cloud-based applications take on many of the function’s day-to-day tactical activities, they free up procurement professionals to focus on strategic priorities such as strengthening supply chain resilience, safeguarding the brand from third-party risk, and cultivating new sources of innovation.

As a result of this digital transformation, procurement is evolving from its traditional role of generating cost-savings to fostering collaboration and, ultimately, driving much of the strategic value that fuels growth.

What does it mean to a business — to all its trading partners and other stakeholders — when, for the first time, cognitive insights allow it to get ahead of problems before they occur?

The implications extend well beyond operational risk. Consider the reputational risk associated with forced labour upstream in one’s supply chain. A network instills confidence across the value chain when it offers visibility not only into inventories, cycle time, and turnover ratios but also into the criteria that gauge whether a trading partner’s brand values align with one’s own.

Does a supplier have, for example, the governance structures in place necessary to root out forced labour, human trafficking, and inhumane working conditions? Customers and investors alike demand transparency into all these factors, and networks provide a comprehensive, real-time glimpse to simplify compliance. The result is peace of mind when advances in machine learning provide buyers and suppliers with options instead of data so that they can create ethical, sustainable supply chains, all while extending their competitive advantage.

At its best, technology enhances our business relationships, our personal ones, and the quality of all our lives. Yet, as anyone who’s ever experienced a hard-drive crash can attest, technology can sometimes serve at cross-purposes to this goal.

The same holds true for the software industry. The world’s most powerful networks can evaluate immense amounts of information, but unless they’re designed with the customer in mind they may as well possess the processing power of an abacus.

Procurement professionals have every right to expect that the network they rely on be intuitive, reliable, and — above all — consistent in delivering on their promises.

Does yours?

Demand it!

SAP Ariba’s James Marland, Vice President, will be speaking at Big Ideas Summit in London later this month. To find out more information and register to attend in person or as a digital delegate visit our dedicated site. 

This article was originally published on LinkedIn. 

Tea Farmers Text Their Way to Supply Chain Collaboration

From tea growing to real-time supply chain transparency, collaboration and online networks are creating tangible value and benefits for organisations.

Martin Chilcott - Supply Chain Collaboration

How do you get 50,000 tea farmers and distributors in regional India working together to build collaboration and supply chain transparency? Through a digital platform, of course. 

Collaboration for the “common good” is reaping real benefits. In some retail and organisational collaboration hubs, there are over 300 companies involved, with estimated operational savings at a combined total of €100 million.

Martin Chilcott, 2degrees CEO and Founder, gets to the point about the type of collaboration needed to cut costs, reduce risks and drive innovation within complex supply chains.

Why is collaboration so important, perhaps even uniquely important to sustainable business?

There are 3 main reasons why collaboration is more important than ever before in helping businesses survive and thrive in what are increasingly chaotic and uncertain times.

1. Firstly most of the environmental and social sustainability challenges businesses face are part of the challenge of the commons. No one company owns the atmosphere, the oceans, the fish stocks, or fresh water reserves. These are resources common to us all. And because of that they can only be managed sustainably through collaboration.

2. Secondly, today most businesses, have subcontracted or out-sourced and off-shored their purchases and operations to such an extent that they have become totally dependent on a geographically dispersed, and increasingly fragile supply-chain. For many companies up to 80 per cent of their risks and impacts lie in this supply-chain. You can’t coerce your suppliers (not for long anyway); and you can’t audit them into submission and compliance. Ultimately you have to work with them.

3. Lastly, brand reputation is no longer something solely in the control of the brand company. It’s one of those risks that lies outside the company in the supply-chain. That makes mitigating brand risk something that can only be done with the co-operation of your suppliers. It becomes a collaborative exercise.

Collaboration is perhaps an over-used word. What do you mean by collaboration and how is it changing?

At 2degrees, we think of collaboration as a strategic function. Traditionally it has been very expensive to do this with more than a few strategic partners because it involved being face to face. But technology is changing that.

Digital technologies and collaboration platforms like ours are enabling companies to work closely with thousands of their suppliers at a depth that was previously impossible. But more remarkably they are allowing those suppliers to work with each other unlocking knowledge and capability that was previously hidden in silos up and down value chains.

Large scale supplier-to-supplier collaboration, with operational managers from different organisations working together to solve problems, share best practice and find solutions, is now possible. To help differentiate it from traditional ways of collaborating and to capture the incredible connectivity and scale it is creating, we call it ‘fully-linked collaboration’.

What kinds of companies and individuals are involved?

The companies that are leading the way are the major FMCG and food companies like Unilever, and retailers like Asda-Walmart and Kingfisher; some banks like RBS; and pharmaceutical giant GSK. Still relatively small numbers right at the vanguard. They are bringing together their enormous supplier webs to work together.

When you get in to the detail, it is individuals that are working together of course. Operational middle management: energy managers, waste managers, factory managers, Health and Safety. All from different companies asking each other for insight and advice on whether to use a particular technology, or how to engage colleagues, or build a business case. It’s the solving of really practical problems together, that makes sustainable business happen.

How do collaboration platforms like 2degrees create value for the companies involved and what are the tangible benefits?

Well if you think about it, if you bring together 1,000 plus engineers and managers involved in say food manufacturing from different companies; that’s an extraordinary amount of experience and know-how. Normally that knowledge remains hidden, but collaboration platforms enable one company/one manager with a problem, to tap into that collective know-how to find someone who has already solved that particular problem.

The vast majority of problems that exist within a supply-base have already been solved by someone somewhere. It’s just a matter of being able to connect up with the right people and persuade them to help you. In some of our programs 100,000s of exchanges of knowledge have taken place, identifying solutions on technical matters like waste water separation or how to build a business case for LED lights, or voltage optimisation.

And these sorts of exchanges have led to investments being made. In one community of 300 companies, for example, we estimate they are generating over €100m of operational savings directly from these exchanges.

Is 2degrees part of a new wave of collaboration platforms in sustainability and if so what other ones are in your opinion worth noting?

Yes 2degrees is one example of how digital technology is supporting a new wave of fully-linked collaboration. But some really interesting others are WeFarm, which uses text message and cell phones to connect up small holder farmers in emerging economies to share know-how.

We partner with them on our Tea 2030 programme, and they claim to be connecting up approximately 50,000 farmers and growing fast.

Another interesting business is EcoChain that uses a technology called Blockchain (the technology behind Bitcoin) to create real-time transparency in supply chains around CO2, water, materials etc. Those are my favourites.

What are the strategic implications of this new wave of collaboration?

I think what is really exciting is that these technologies are enabling really big problems to be solved by co-ordinating thousands of companies and making the most of their hidden capabilities.

For instance, at the COP 21 talks in Paris, over 100 companies, including IKEA, Johnson & Johnson, Mars and Nike, committed to powering their operations with 100 per cent renewable energy by 2020 – supply base collaboration will be a key ingredient needed to makes this commitment a reality.

Helping suppliers face what is now inevitable, transition to becoming low carbon, sustainable businesses, represents a significant opportunity for large companies to cut costs and impacts, reduce risks and drive innovation across their supply-base. It provides an opportunity for Chief Procurement and Chief Supply-Chain Officers to transform their value-chains and generate a sustainable competitive advantage for their businesses.

The implications and possibilities of digitally enabled collaboration are very powerful indeed.

Martin Chilcott will talk about these topics in more detail during one of our panel discussions at the Big Ideas Summit on April 21st.

If you’re interested in finding out more, visit www.bigideassummit.com, join our Procurious group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.