Tag Archives: procurement solutions

Procurement’s Future: Upskilling in Supplier Relationship Management

Why upskilling in Supplier Relationship Management is key to the future success for the Procurement profession.

Supplier Relationship Management

The rapid development of artificial intelligence and cognitive technology is completely redefining the boundaries of what is possible for procurement. To fully take advantage of this new era and remain relevant, CPOs and their organisations will have to react very quickly and re-orientate more than ever their focus towards supplier relationship management.

Why is SRM fundamental to Procurement?

The traditional and archetypal focus of the CPO has been on cost savings, whilst arguably neglecting the supplier relationship. We have reached the point where applying pressure to suppliers to cut costs is unsustainable. It has been proven that working on improving relationships with suppliers is the key to fostering innovation; to go beyond just savings and develop more value adding capabilities.

Secondly, with artificial intelligence and technological advances comes an increasing level of automation, not only of tactical and operational procurement tasks, but also complex sourcing activities, such as RFX creation, analysis, or even scoring. Even market research or negotiation can be improved, to a point where technology will perform these tasks in a better, more efficient and secure manner.

This will allow more time for procurement to focus on supplier activities after contract signature, such as performance management, or supplier collaboration and innovation programs.

In addition, procurement teams will be equipped with the tools to navigate the procurement process more quickly, easily, and in an even more compliant way. It may lead to the point where there is less of a necessity for a full, dedicated team. It is therefore important that the role of supplier management remains within the remit of the Procurement function, to avoid inefficiency and over-complication.

This is especially true for companies where part of this process is handled by different organisation. To improve in this area, there must be one owner who can efficiently coordinate the strategy, the training, and the performance management.

Another benefit of becoming more skilled at Supplier Relationship Management (SRM) is reducing risk. With a strong SRM process, Procurement can not only very quickly identify potential supply chain disruption, but also proactively mitigate any event that may occur, by fostering a collaborative and transparent relationship with suppliers.

Generating Innovation Through SRM

Supplier collaboration has also become an increasing focus for Procurement, especially where cost savings have been stretched to breaking point, and yet there is still requirement to go beyond this.

Suppliers and Procurement organisations have to work hand in hand to be even more cost effective and extract additional value from their relationship, and this on a long term basis. SRM is an invaluable approach to promote and generate innovation.

There is a well-known anecdote regarding a multinational car manufacturer, just one example amongst many others, of the benefits of good supplier relationship management. The company wanted to cut the cost of the window trim on their car, and turned to their suppliers for help. The suppliers created a new resin which would streamline the manufacturing process.

The result was a reduction of 2,700 gallons of diesel fuel and 60,000 pounds of carbon dioxide, by removing 19,200 truck miles transporting the parts between factories. It was a move that was both good for the environment (look at that carbon dioxide reduction), and dramatically cut costs.

Undeniably, in this context, by leveraging partnerships and collaboration, procurement teams become the customer of choice. They can therefore encourage and gain access to new innovations or insights, which could stand to be an important competitive differentiator.

What skills does the future Procurement workforce need to develop?

With this in mind, CPOs need to assess how their staff interact with suppliers, in order to determine whether they have the right skills, and also to understand what is missing, to fully unlock these supplier relationship management capabilities.

On that basis, and with the new direction that Procurement is taking, future procurement professionals should be looking to develop such skills as influencing leadership, change management and creativity. These are, arguably, not amongst primarily targeted skills in a current buyer profile.

With the advent of data insight and technology enhancing Procurement activities, CPOs will also have to upskill their teams to be able to fully maximise the potential of the tools available to them, as there is little doubt of the value available here.

Aside from data and tool utilisation, the human side is equally as important. Acting on insight and fostering the ability to listen, earn trust, and foster a high level emotional intelligence and creativity should also be part of the soft skills of the new buyers.

In an environment where technology will be ever-present, it will be even more important to master these skills, as maintaining customer satisfaction and high value relationships will continue to rely on the human side of the service management.

It becomes urgent not only for CPOs but also for the professionals working in Procurement today, to ask themselves about what should we do if we want to stay relevant to our organisation in 5 years’ time? How will we be able to fully endorse roles such as Supplier Relationship Manager and deliver value? Should we go on new training courses, and re-skill completely? What type of skills should be developed, and where and how can we acquire them?

These questions will need answers, and those who will address them first will obviously be ahead of the crowd in fostering innovation and adapting to the Procurement world of the not-too distant future.

IBM are one of the sponsors of the Big Ideas Summit, being held in London 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.

Showcasing Your Big Ideas – Tackling Maverick Spend

Ahead of the Big Ideas Summit 2016 on April 21st, we’re on the hunt for your Big Ideas. Stuart Brocklehurst discusses how procurement can elevate its role by tackling maverick spend.

At the Big Ideas Summit 2016, which takes place on 21st April,  we will be asking our speakers and attendees to record their ‘Big Ideas’ live on camera for the whole of our Procurious community to see.

But we also believe that every single procurement and supply chain professional has a unique vantage point in the industries, communities and businesses they work in. You have been submitting your Big Ideas to us, and so far, we think they have been great!

Stuart Brocklehurst, Chief Executive at Applegate Marketplace

According to a survey by KPMG, on average 40 per cent of organisational spend happens without any input from procurement. At a time where procurement needs to be delivering value to the business, tackling maverick spend in the organisation is a good place to start.

Stuart’s Big Idea is exactly that. He believes that for procurement to be valued for its strategic role, it needs to demonstrate its impact on the whole organisation.

Stuart goes on to say that this can only happen through giving access to user-friendly solutions, and demonstrate the benefits of doing this across the organisation.

How to Submit Your Big Idea

We don’t mind if you film your submission on your phone, tablet, laptop or PC. However, to help you out we’ve compiled a list of some of our recommended methods for reaching out.

Once you’ve completed your film, you can reach us by email ([email protected]); on Twitter (@procurious_) or via Google Drive or Dropbox (using [email protected]).

You can find all the information you need on recording and submitting your Big Idea here.

Want to know more about Big Ideas 2016? Then 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.

Why Predictive Analytics is Changing Procurement’s Future

The opportunity for predictive analytics and Big Data in procurement goes well beyond spend.

Predictive Analytics in Procurement

Hackett’s 2016 Procurement Key Issues Study shows that increasing agility is a critical development area for organisations. It also shows that predictive analytics and forecasting tools are identified as having the greatest transformational impact on procurement in the future.

A confluence of high volatility, technology-led innovation, and hyper-competitive market conditions, has accelerated the rate of change in business to unprecedented levels. Agility is the key to success in this environment. In a procurement context this has four attributes:

  • Proactive Decision Making: Leveraging information and predictive analytics to improve the quality and timeliness of decision-making.
  • Value Chain: Industry leadership in digitising their value chain, including supply and demand chains, as well as internal operations.
  • Planning: Customer-centric planning processes and day-to-day business decisions.
  • Operational responsiveness: Permitting swift response to changes in the supply chain, customer preferences, the competitive landscape, and business strategy.

Overcoming Obstacles

However, accessing this data, information and market intelligence is a significant obstacle that must be overcome.

Becoming information-driven should be a primary focus area for procurement. The function must develop the tools and skills that will allow staff to apply market data and intelligence to decisions on spending and sourcing strategies. Creating deep, consultative working relationships with business leaders, demands that procurement bring this valuable expertise to the table.

This level of insight requires high-quality, real-time market intelligence. However, over half of the Key Issues Study respondents lack a formal market intelligence program or are in the very earliest stages of adoption. At the same time, establishing data governance and building a continuous improvement culture for data management and quality, are also tactics increasingly adopted by organisations.

Access to market intelligence, and ensuring that sourcing and supplier relationship management teams are using high-quality category and supplier intelligence, are prerequisites for agility.

Transformative Impact of Predictive Analytics

As procurement’s role matures from transactional facilitator to trusted business advisor, proficiency with the next generation of analytics – a.k.a. “big data” – will be a key enabler. Big data has been a game changer when it comes to customer analytics, offering an unprecedented ability to quickly model massive volumes of structured and unstructured data from multiple sources.

Good examples from the digital world include Google’s insight into customer behaviours and preferences, and Amazon’s ability to anticipate orders and ensure on hand stock to meet demand.

Source: The Hackett Group Key Issues Study 2016
Source: The Hackett Group Key Issues Study 2016

Predictive analytics refers to the use of statistical and mathematical techniques to predict the probability of future events occurring.

The predictive analytics and forecasting use case for procurement can be an increased focus on business outcomes, through greatly enhanced forward looking decision support capability; and automated and real-time information and analysis availability. Both of these are underpinned by greatly improved data quality.

Combining predictive analytics with cognitive tools will allow, for example, upgraded end-user buying experiences and automated sourcing actions to anticipate supplier and market events. It will also allow for forecasting of and acting to mitigate the impact of supply chain disruptions, and reduction of the severity of supplier risk events.

How do we respond?

As procurement leaders this situation poses challenging questions:

  1. What are the business outcomes and specific use cases for predictive analytics?
  2. How can we accelerate the organisation towards a single view of data and segmentation?
  3. Do we need to access new sources of meta and domain data?
  4. What is the value from faster, more frequent and higher quality information and insight?

Taking advantage of advanced analytical tools and methods requires appropriate staff with the skills to use them, as well as new technology roles, aligning business agendas, and elevating the overall level of technology knowledge. Future talent management plans should reflect the importance of training and hiring staff to handle the sophisticated analytical tools and methods, to deliver the full potential of Big Data.

Analytical projects are not without challenges. Procurement leaders who have not already started down this path should use the high-stakes competitive environment of 2016 as a burning platform.

About Hackett’s Procurement Key Issues Study

The results of this annual study are gathered from executives from over 180 large and global companies operating in the US, Europe and rest of the world, with annual revenue of $1 billion or greater. Find out more at the Hackett Group website.

Chris Sawchuk will discuss why procurement needs to be more agile during his keynote address 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.