Tag Archives: procurement transformation

It Only Works If You Believe It Works…

As organisations embark on digital transformations, they must also be prepared to trust in ‘new-ness’, adapt to the speed of change and take note of the 3D’s… 

Last week the Procurious team hopped on a plane to Munich to attend Jaggaer’s REVInternational 2018 for two days of inspiring discussion on eProcurement innovations, digitisation, and the future of procurement.

One of the stand out sessions came from futurist Stefan Hyttfors who lectures on how innovation, disruptive technologies and behavioural change affects the worlds of business and social issues.

His mission? To inspire as many people as possible to embrace digital change.

Trust in “new-ness”

“I have a lot of friends working in tech and they often approach me to ask ‘What advice should I give to my peers?’

“And my frequent reply is ‘How come you believe you have any advice to give to your peers?’

“Because if we believe in the concept of disruptive tech then we must also be humble about the fact that experience and knowledge are a problem.”

The reality of the extreme pace of change hit Hyttfors hard last summer when his 20 year old son returned home from university for summer break.

As the family sat down for dinner one evening, Stefan took the opportunity to  interrogate his son about his summer plans; would he be spending the break getting some work experience?

‘No I’m not going to work” he replied.  “I value my time and I don’t want to sell it to anyone”

Instead of work he had conjured a number grand plans including a road trip around Norway and various other escapades.

Stefan’s line of questioning instantly transferred from ‘What are you going to do?’ to ‘How on earth are you going to afford it?!’

His answer, ‘Don’t worry dad, I have some bitcoin’

“This is the millennial perspective today,” Hyttfors asserts. “And money is a particularly interesting discussion, particularly across generations.  Where I was sightly skeptical about how far cryptocurrency should be trusted, my son was offended at the mere suggestion and far more wary of our banking systems.”

“Strange things are happening in the world; things that we don’t understand, thing that we ridicule and laugh at. We are guilty of assuming that our kids need to know what we know”

But in actual fact, it’s a trust in ‘new-ness’ that is going to become one of the most crucial factors for organisations in tomorrow’s world. Money is a great technology and a great innovation; it makes transactions smooth and solves a whole world of problems.

But, as with all technology,  it only works if you believe it works…

Pay attention to the speed of change

Disruptive technology is nothing new but the speed of change is ever-increasing. In the past, organisations had the luxury of time permitting them to be skeptical about and distrusting of new innovations, which took 50 years or more to catch on.

Nowadays we hear a buzzword for the first time and within a matter months it’s everywhere; “a unicorn company appears and usurps all the other companies in that space.”

“We talk about organisations like Kodak and Blockbuster as if they were stupid. But the problem isn’t that they were stupid. They were simply the best at doing something no one needs anymore.

“When you are very good at what you do you will not be the one to disrupt your own industry.”

There are examples of this happening in every industry. And it’s never because the old companies were poor. Someone simply found a new way to solve old problems

“The speed of change puts so much pressure on leaders.  But if you focus on making current processes more efficient you cannnot disrupt at the same time.”

The 3D’s of Digitalisation

As your organisation prepares for, and embarks upon,  digital transformation, take note of Stefan’s predictions for the future of digitalisation. It all comes down to the 3D’s…

  1. Dematerialisation

As technology advances it figures that we will simply need less ‘stuff’.

As Stefan points out, “If you can solve a problem digitally you don’t need material things.

“Don’t tell your kid that an iphone is expensive – think of all the junk you used to have to buy in the past to do the same job [a single iPhone can do].  It solves so many problems. Nowadays everyone in the world can take pictures for free.”

Dematerialisation means that more people can afford to do what used to be expensive and exclusive.

2. Deflation

Deflation, as Stefan sees it, means having “millions of micro transactions rather than thousands of  major transactions.”

Take cars as an example. They are absolutely not efficient; often parked for 23 hours of the day and contributing to congestion and pollution in our cities.

Along came Uber, which offers ‘mobility as a service’ and suddenly transportation is transformed globally.  Selling £50,000 cars is not an ideal model – mobility as a service is the future.

“We are a big world on a small planet and because of this sustainability will be the main leading strategy of the future.

“We need to make much more with much less.”

3. Decentralisation

We all like to believe that we are part of the last uninformed generation; that we have all of the answers and all of the information. But, in Stefan’s opinion, that’s simply not the case.

We will continue to face big problems and these problems can only be solved with global collaboration and global crowd-sourcing.

“We see a big decline in trust because people don’t believe in old institutions anymore” whether it’s governments,  law enforcement systems or our banks.

“Why should my son trust in a banking app when he can trust in a bitcoin app?”

“He believes in decentralisation, a world in which where there is no boss.” Because, at the end of the day,  it’s your boss that makes a system inefficient and corrupt.


Learn more about Jaggaer and  REVInternational 2018 

Strategic Sourcing Tech Investment Is The Key To Transformation

Are you running a little late to the digital transformation party? They do say better late than never!

As we’ve explored previously, digital transformation is changing in the world of supplier sourcing.

According to The Hackett Group’s Sourcing Cycle Time and Cost Measurement study, firms are spending around $275,000 a year on software that streamlines sourcing — from supplier discovery, to e-sourcing, to contract lifecycle management (CLM).

So while it’s a sector still driven largely by traditional methods — with their corresponding disadvantages and inefficiencies — companies are starting to see the benefits of a software-driven approach to sourcing.

A little late to the digital transformation party? Perhaps. But better late than never!

Insights into increased efficiency

Respondents report that using supplier-discovery software they can reduce the time it takes to find and qualify a new supplier by 31%. The average time spent doing this the old-fashioned way is in the region of 40 hours. That’s an entire week’s work — and even then the process isn’t fool proof. Around 14% of projects fail to meet expectations, meaning the bidding has to begin again.

Powered by the right software, many time-consuming processes are eliminated. With access to system-recommended suppliers based on predefined criteria, sourcing staff can instantly improve their productivity and speed supplier discovery. On the e-sourcing front, the right tech can reduce total sourcing time by 30%. While CLM software can improve compliance by increasing the use of standard terms and conditions by 38%.

Adapt to succeed

It’s obvious that businesses are seeing benefits. Although that’s not to say new technology adoption isn’t without its own challenges. Processes need to be assessed and adapted, and staff have to learn new ways of working. Cultural change isn’t easy, but it’s one of the hurdles that all firms must clear in pursuit of digital transformation.

In a highly competitive business landscape, it’s vital that your processes enable you to get results quickly and cost-effectively. And this is the bottom line of why organisations need to revisit their approach to strategic sourcing.

A little adjustment today opens the door to far greater efficiency tomorrow.

To discover how your organisation can embrace digital transformation and reduce strategic sourcing costs and cycle times, read The Hackett Group report now.

IBM Global Procurement’s Radical Transformation

Transformation has become the new norm as organisations respond to an onslaught of shocks. But is there a best-practice way to go about transforming a procurement function? We interviewed Procurious Partner, IBM Global Procurement, to discover why they’ve been recognised on the global stage for their approach to the challenge.

If you were to stop any procurement professional on the street and ask what their function is currently up to, you’re unlikely to hear the reply, “Oh, you know – business as usual”. Instead, you can expect to hear a description of some sort of transformation. Whether it’s enterprise-wide or procurement-led, everybody’s doing it. In fact, you could argue that the process of transformation itself has become business as usual, especially if you’ve ever worked in a company where one transformation follows another, ad nauseum.

Where once your organisation may have needed to reinvent itself every few decades, today, an onslaught of shocks – technological, cultural, economic, and regulatory – is forcing companies to transform every few years. Five to ten years ago, your CEO might have become a business icon through a single transformation. The minimum requirement now is being able to execute multiple transformations, while success today is measured in your ability to foster a culture of continuous reinvention.

Showing how it’s done

IBM Global Procurement recognised the need to transform as market dynamics put increased pressure on its customers, which consist of internal IBM business units and external clients. Graham Wright, Vice President, Global Procurement and IBM Procurement Services, described some of these pressures. “We realised that our internal and external clients needed less complexity, more transparency, consistent processes executed with speed, and new solutions. The challenge was to find new ways to stay relevant and be successful – that’s why we launched a radical transformation not only to address the needs of the business but to keep pace with smaller, more agile competition and remain an industry leader”.

The team went about this by ramping up activity across three key areas:

1.Innovation: Leveraging strategic partnerships and key relationships to drive innovation.

The team unlocked the value of supplier innovation by implementing a state-of-the-art Supplier Enabled Innovation (SEI) program and using new, engaging tools, including cognition. The SEI initiative included 3rd-party ‘Voice of the Supplier’ surveys, supplier incentives including annual awards, and clear performance metrics.

2. Engagement: Delivering simple, engaging user experiences.

After identifying key client pain points around complexity, slow execution and delayed problem resolution, IBM Global Procurement followed a mantra of speed and simplicity to improve visibility, enhance workflows and reduce cycle times. Innovative engagement solutions, such as an “Ask Procurement” chat function for clients, have contributed to an impressive improvement in client satisfaction. The chat application is highly intuitive – it suggests self-service solutions for users, and provides direct access to live agents who can answer questions simply and quickly.

3. Analytics & Cognitive: Capitalising on foundational analytics and cognitive solutions.

No mention of IBM Global Procurement would be complete without a reference to its not-so-secret weapon – the Watson Cognitive Platform. Through catalog data enrichment and cognitive procurement solutions which provide users with refined real-time data for risk mitigation, market and supplier insights, pricing information and recommendations, the team realised significant efficiencies including hand-free POs and greatly improved process compliance.

As an extremely positive side-effect of this transformational effort, Wright reports that the team’s efforts are being recognised within the wider organisation. “The transformation has helped change the perception of procurement evolving from a cost centre to a value centre.”

While internal recognition of the procurement team’s value is gratifying, the Global Procurement Team was even more delighted to see their efforts celebrated at Procurement Leader’s World Procurement Awards, where the team won the award for “Transforming External Partnerships (Pioneering Business Impact)”. The team’s submission went through a rigorous 3-stage judging process including online judging, peer review and a face-to-face regional debate.

And that’s not all – amongst 350 submissions across 15 categories, IBM Procurement was short-listed for each of the 6 entries it entered a submission for, and picked up 2 major awards – the Transformation award, and another for Risk Mitigation.

Procurious is working with our Knowledge Partner, IBM, over the next 12 months to promote cognitive procurement to our global community. To learn more about IBM Global Procurement, click here.

No More Guessing Games! Time To Use Innovative Data Leveraging

There’s no longer a need for guessing games when it comes to  driving value! Innovative data leveraging is possible in any environment and can help to lead organisations towards an analytics enabled procurement.  

 

Join BravoSolution’s webinar, Innovative Data Leveraging for Procurement Analysis, which takes place on 28th March.

Many purchasing executives are looking to drive procurement transformation but this is reliant on three major factors:

  1. Level of stakeholder engagement
  2. Ability to align with the overall business strategy
  3. Use of advanced tools and technologies

My research suggests there exists a noticeable gap between procurement executives’ explicit intentions of driving value for the business, and documented results in these three areas.

These gaps can be attributed to a lack of critical data and analytical insight that can support a truly meaningful conversation with the business about spend, supply base, and supplier performance.

Annual budgeting becomes a guessing game, with little input solicited or provided by procurement. It might be due to a lack of data. Or, it could be procurement’s inability to take the lead in order to anticipate and gather the data required. This disconnect is causing significant challenges for businesses.tech

BravoSolution is running a  webinar on the 28th of March, Innovative Data Leveraging for Procurement Analysis.  I will be  discussing a common process that every executive we met with cited as critical for engaging stakeholders and building analytical insight. We call it “innovative data leveraging” (IDL).

Innovative Data Leveraging (IDL)

Innovative data leveraging is a fact-based, data-driven approach to driving change and influencing stakeholders to create procurement value for the business.

The IDL process was described in different contexts, but the common thread was that cross-functional engagement was powered by stakeholder influence through analysis and presentation of data. Of course, leveraging analytics is difficult without some prior investment in procurement systems such as transactional spend analytics, contract management, and supplier performance measurement. However, our analysis also showed that innovative data leveraging is possible in any procurement environment.

The process starts with procurement executives conducting working sessions with business stakeholders to develop a deep understanding of their business strategy, the challenges they face in executing this strategy, and the role that procurement can play in helping to shape and support this strategy. Successful procurement leaders are the ones who can effectively articulate the questions that need to be answered and pursue the data requirements to provide analysis, insight and advice in order to address stakeholders’ business concerns.

Several additional insights emphasize the importance of innovative data leveraging.

  1. IDL was found to be important during any stage of procurement transformation maturity.
  1. The development of IDL capabilities depends on successful initial business engagements, especially when reliable procurement systems and data are lacking.
  1. Advanced analytics in the form of predictive capability is the most highly evolved form of IDL.

What are the benefits of IDL?

At the earliest stages, preliminary insights on spend may provide opportunities for deeper involvement in functional sourcing initiatives, creating a platform for further engagement and integration. In emerging stages, organisations can drive significant insights into total cost of ownership and working capital improvements that go above and beyond simple price leveraging capabilities. In advanced stages, predictive analytics (using both structured and unstructured data) that produce insights into revenue forecasts, supplier risks, emerging market opportunities, and other value drivers begin to emerge.

The innovative data leveraging approach can help organisations at all maturity levels to build a solid path towards an analytics-enabled procurement, in their pursuit of value and excellence. This does more than bridge the gap between procurement’s goals and the overall business strategy.

When you start by leveraging data analytics, no matter what stage your organisation is in, you can build a foundation for innovative capabilities for procurement excellence, like predictive analytics and cognitive computing.

You’ll  learn more about all of these issues in BravoSolution’s  upcoming webinar!

Sign up to join BravoSolution’s webinar, Innovative Data Leveraging for Procurement Analysis, on 28th March

Procurement Translation? Now You’re Speaking My Language

Sometimes in procurement it feels like you’re speaking a different language to the rest of the business. 

Qvasimodo art/Shutterstock.com

Procurious is at ProcureCon Europe this week. Stay up to date with what’s happening on Procurious, and by following us on Twitter.

If we’re perfectly honest, procurement wasn’t the first thing on everyone’s minds this morning. With both media and social media, dominated by US Election coverage, you might have been forgiven for not having your eye on the procurement ball.

However, if you didn’t, then you were likely to miss some great nuggets of procurement knowledge on Day 2 of ProcureCon Europe.

Do You Speak the Language of the Business?

A prevailing theme at the conference has been communication and collaboration between procurement and the rest of the business.

Kristian Saksida’s gave a Finance to Procurement perspective yesterday in his keynote. Today gave us the Engineering to Procurement perspective from Gordon Tytler, Director of Purchasing at Rolls-Royce.

It’s worth noting that none of these speakers have used this as a criticism of procurement. In Tytler’s case, his Engineering and Supply Chain background gave him a broader perspective both inside and outside the profession.

According to Tytler, Procurement as a role and a function is appreciated but, crucially, not fully understood by the rest of the business. If procurement is too insular, then it can’t be sure it’s delivering what the business actually wants.

However, by communicating well (and speaking the right language), procurement can be sure it’s meeting the strategic needs of internal and external stakeholders.

Fly the Plane While Fixing It

Collaboration was also picked out as a vital part of procurement transformation and procurement excellence.

Thibault Eissautier, CPO at pladis (a newly formed organisation in the FMCG industry), was discussing the factors procurement must consider when choosing its operating model. He highlighted collaboration between functions as the only way to definitely deliver significant value.

Procurement needed to speak the language of the business to make sure that senior managers were on board. From Decentralised, to Centralised, to Centre-led, there was no way that procurement could operate in isolation.

The current POM is often defined by the maturity of the organisation. However, many organisations will be changing their POM, while still trying to deliver for the business. Eissautier likened to “flying the plane while fixing it” – not really an image you want with a flight back to the UK later on!

The Future of Air Travel?

The flight metaphor leads nicely into an afternoon session on the construction of a new airport in the Netherlands. Not your common fare for procurement, but there were some amazing insights into the potential future of low-cost air travel.

The Royal Schiphol Group has been charged with the project to build Lelystad Airport by 2018. Two of the team, Budi Darmadi and Peter Mustert, showcased the very different approach the Group is taking to the project’s procurement strategy.

Competition in the sector is fierce, and Lelystad Airport is aiming for the low-cost market, so needs to price accordingly. Given a $58 million maximum budget to work with, Mustert said that they knew a best-value approach would be needed.

For this, they needed to work with experts, but first they needed to identify them using a 4 step model:

1. Approach the Experts

Using a functional, rather than technical specification, and a maximum budget for a ‘good’ solution.

2. Assessment

Experts are asked to supply a 6 page only bid. This is to focus on proven performance and results.

3. Clarification

Following selection, the two parties discussed unclear items, risks, etc. to form a contract.

4. Execution

Let the supplier do their job, procurement is not to interfere. A weekly risk report helps to ensure that there are no blockers for the supplier in completing the project.

And that was it! There was no question of SRM, or partnerships, or even the endless meetings usually associated with contracts. The process aimed to have all parties working together in an open, functional way.

Whether this proves to be successful, we’ll have to wait until April 2018. But if it is, Lelystad Airport will showcase the future of the form of travel. Fully automated, simple, but highly innovative designs, all aimed at providing customers what they need, and want, from low-cost travel, and nothing more.

And who knows, maybe if this is a success, then best-value, non-interference contracts will become the norm. A great vision of the future (so long as you don’t manage contracts…!).