Tag Archives: procurement transformation

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. 

speaking my language

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…!).