Tag Archives: supplier collaboration

Suppliers: Partners not Punching Bags

If suppliers are treated as part of the team, rather than punching bags, it can actually help to accelerate procurement’s ability to add value.

Photo by i yunmai on Unsplash

When you are hiring employees, do you focus just on the salary negotiations?  With the only goal being to get the lowest cost talent?  No, because we know the value we are going to receive from that individual is through many years of ideas, quality work and the leadership they provide to others.   

The price negotiation is a point in time, while the relationship is the multiplier.   

The same holds true with suppliers.   

As you look across our supply base, procurement has a range of suppliers from “high potential” to “needs improvement”.  As we do with top performing teams, procurement has the opportunity to cultivate high potential suppliers through exposure, stretch assignments, and trust. 

There is also an opportunity to manage up or out the “needs improvement” suppliers by developing their capabilities and giving them the opportunity to improve.  Through this approach, procurement now has the ability to discuss with their new-found talent how to creatively reduce total cost of ownership, to solve problems, and to provide innovative solutions.  

When trusted are offered development opportunities, suppliers will go above and beyond for the customer.  They assign their best people on the account.  They look for ways to improve the relationship, reduce costs, and proactively call out risks.  And, in times of short supply, will serve their preferred customer of choice first.   

Through one change in perspective, one change in a relationship, procurement achieves lower TCO, lower risk, more innovation, and a reliable supply chain – this is the key to delivering value.   

The Next Big Idea in Procurement  

Procurement is on the brink of significant change, as are many more areas of our lives.  There will be many big ideas that brilliant procurement professionals implement into their organisations to support the advancements in technology, the new expectations of talent, and techniques to add value well beyond cost.  These are exciting times to lead, inspire, and create within procurement.   

Each year a small group of influential procurement thought leaders gather in Chicago for the Procurious Big Ideas Summit.  Participants are inspired and take back many big ideas for their personal growth as well for their organisations.    

While technology advancements often receive a lot of focus, perhaps the biggest shift within procurement is the expectation to move beyond cost to becoming value providers.  Procurement is being challenged to find new ways to reduce risk, increase sustainability, to help solve complex business problems, to increase revenue, to generate new innovations, to become an internal consultant to their stakeholders to obtain the best out of every investment. 

This expectation is becoming more pronounced and will allow procurement to analyse how they measure success, the skills their talent need, and even what technology they might need to deploy.   

Those organisations who make this change exceptionally well will also realise that their suppliers offer a limitless capability to accelerate procurements’ ability to add value.  When suppliers are treated as an extension of the supply chain, as part of the team, the relationship with suppliers also moves beyond cost.  In fact, one could argue that becoming a customer of choice to suppliers is the key to unleashing value, reducing risk, increasing innovation, and achieving agility within the supply chain.    

Leading the Supply Base 

An idea is just an idea until it is implemented, so how do procurement organisations get started with this change?  Below are some low investment ways to start this journey. 

  • Toss out outdated segmentations – Start looking at the supply base like one would talent.  Understand high potential suppliers, remain in role, and need improvement suppliers.  This does not need to be complicated nor does this need to be scientific.  Without putting much effort into this, the top performers and the lowest performers could be listed.  Start there.   
  • Offer development programmes – As one would with their internal talent, offer programmes that will help suppliers operate with excellence.  These programmes can even be supplier funded, but it shows suppliers that procurement cares about their success.  It develops a relationship where it is understood that procurement is only as good as their suppliers.  When suppliers perform at their best, procurement, suppliers, and the communities around them all benefit. 
  • Think differently about procurement’s role – When procurement starts thinking about their role as a hiring manager to suppliers, it creates a change within every interaction.  Set the expectation that a procurement manager’s role is to lead their team of suppliers to success.  This will have downstream impacts around measurements and skills needed but starting here will start the cultural change needed for success.   

Procurement is on the move.  These are indeed exciting times to renew the spirit of what procurement is all about.  Let’s not be overwhelmed and paralysed by the amount of opportunity.  The best thing to do now is to start.  Start taking the small steps that will create big change and the next big ideas.   

As the Big Ideas Summit Chicago facilitator, Amanda Prochaska will be harnessing the biggest and brightest ideas presented. You don’t need to be “in the room where it happens” – you can register as a digital delegate and get up-skilled and uplifted from the comfort of your own desk.  Register now by clicking here.

New Goals for Procurement – Driving Revenue Growth Through Supplier Collaboration

Procurement professionals need to think in more innovative ways about how we can drive competitive advantage and shareholder value for our organisations.

By Greg Epperson / Shutterstock

In my recent article, I talked about “the Art of Procurement”, and suggested that the time is right for procurement to move beyond our traditional focus on transactional improvement and basic cost reduction. Whilst remembering those are still important aspects of the role, we need to think in more innovative ways about how we can drive competitive advantage and shareholder value for our organisations.

Revenue growth is one key factor that determines shareholder value and organisational health generally. While profit is of course important, and the procurement goal of cost reduction plays a key role here, “you cannot cut your way to growth” (or ultimate success), as the saying goes. Growth is vital, and stock markets arguably value growth more than absolute profit levels or even margins.

So, firms can grow revenue through a variety of activities, for instance;

  • Finding new customers for existing products
  • Improving existing products (so the firm sells more)
  • Introducing new products – either totally “new”, or line / range extensions and additions
  • Improving the efficiency and effectiveness of sales and marketing activity

In every case here, it’s clear that procurement has a potential role to play. Even in terms of the “improved sales / marketing” route, there are possibilities – maybe procurement can work with the marketing team to find innovative suppliers in areas such as digital marketing? 

For one European bank, the capability of their internal procurement team has become a customer benefit that is winning new revenue.  Potential business customers – particularly small and medium sized firms who may not have much internal capability – are offered access to a set of procurement tools, templates and good practice guidance developed by the bank’s procurement team, who are also available for telephone consultation if the clients want that too. In a market where the core banking service on offer from every competitor is very similar, this has proved to be a differentiator that has won new business for the firm.

When it comes to improving existing products (or services), suppliers are often better placed than the business itself to identify opportunities. Procurement can really come into its own by supporting that supplier-driven innovation and improvement. But in many cases, it is not simply about identifying the innovation or improvement – it may well be that the firm gains revenue and advantage through the speed to market compared to the competition.  

That was highlighted in a recent webinar I enjoyed, which featured my old friend and ex-colleague Jason Busch of Spend Matters as well as KPMG and Ivalua. But the highlight was hearing from Mark Gursky, Director of the Procurement Center of Excellence at Meritor (a $4 billion global manufacturer of automotive components). He explained how procurement in that business was contributing towards ambitious targets for growth via new product launches.

The key was (and is) enabling more effective working between Meritor and key suppliers, who are supporting the drive for growth. That change in the whole working relationship between buyer and suppliers, needed to support Meritor’s goals, has itself been supported by technology (that’s where procurement technology firm Ivalua comes into the picture).

It struck me that the technology achieves two goals. First of all, to really make the most of what your suppliers can offer, you need to manage the basics of supplier management well. That means supplier master data management; spend and contract analytics; risk management and so on. Putting it simply, if you don’t have a grip on who your suppliers are, what they’re doing with you, where in your organisation they are already working, and how they are performing, then impressive sounding “supplier innovation programmes” will be built on sand.

Then, having got the foundations in place, technology can support the actual collaborative development work. Gursky talked about using the Ivalua platform to manage all the work between the firm and key suppliers. Information is captured in one place rather than emails flying around between lots of different people. Complex requirements can be quickly translated into bills of material, then suppliers can respond rapidly to requests and questions. Projects can be tracked, data and information exchanged securely between the parties, and outputs tracked and monitored via the platform. Information is easily shared, but proper controls are managed too, important when we’re talking about potentially innovative new products.

You can still access the webinar here to find out more about the Meritor story; it’s a great example of procurement looking beyond the norm, and really contributing to those wider goals such as revenue growth.  And at the Ivalua Now “Art of Procurement” conference next month, I’m expecting to hear more examples like that of procurement moving beyond our traditional heartland of cost control and transactional management.

You can book for that here, and join the firm, key clients such as Total, Suez and Deutsche Telekom (and me) in Paris for what should be a stimulating couple of days – maybe see you there!   

Ivalua are sponsoring today’s Big Ideas Summit in London. Sign up now as a digital delegate to follow all the action wherever you are in the world.  

Big Ideas in Procurement Technology

Procurement technology – you can’t get away from it! But what Big Ideas can we expect from this area in the coming years?

Ahead of the Big Ideas Summit 2016 on April 21st, we are taking a look at the key issues facing procurement in the coming years. We have asked experts and influencers in our community to share their Big Ideas on the themes we will be discussing on the day.

Here, our experts and influencers share their thoughts on the Big Ideas impacting organisations and industries in the field of procurement technology.

Meghan Huynh, Content & Marketing Associate, Winddle

Meghan HuynhWhen we discuss the importance of collaboration, interdepartmentally and with external partners, it is a case for visibility and how it is key to better procurement process.

Not all processes are broken, but most are inefficient. This is where technology comes in – to connect contributors in a project and make sure that their status of the entire operation is updated in real time.

The bottom line here is let’s get everyone on the same page so that we can all perform to the best of our abilities. Procurement technology needs to give the opportunity to identify and eliminate inefficiencies through connectivity. When people are better connected, relationships can effortlessly develop which is known to increase productivity and accuracy.

The main idea to remember is that this can only be executed to it’s intention if end users and upper management truly believe in the possibilities that collaborative technology can bring, and are committed to improving the procurement process.

Anya McKenna, Marketing Manager, Market Dojo

Anya McKennaMarket Dojo‘s Big Idea for the Procurious Big Ideas Summit 2016 is that there will be an increased focus on the information companies hold on suppliers.

The Modern Slavery Act 2015 consolidates previous legislation and introduces new measures to combat slavery and human trafficking.

We’ve already seen companies take extra measures by adopting supplier on-boarding solutions. We predict this will become the focus of many more organisations.

Oliver Oram, Founder, Chainvine

Oliver OramPhysical flows captured and identified by digital finger prints through one shared ledge, would help achieve greater visibility of all corporate assets. One could imagine a scenario of fish being traced from tackle to table, via Blockchain technology. This near real-time tracking of elements in the supply chain have been, until today, too costly and difficult to audit.

Blockchain as a shared ledger among supply chain connections could today be identified as one of the best means of applying such a management interface. What is needed is that companies identify the most optimal meta-data structure to enable effective and simple ways of search and retrieval of such data.

The best way to implement such a change would be in picking small non critical business areas in which to apply this technology first, but ones that can show a real tangible value in using such a technology. Chainvine is now involved in more projects where we have begun to merge both digital and physical aspects of the supply chain and are exploring both transparency and efficiencies.

Simona Pop, Head of Sales & Marketing, InstaSupply

Simona PopIncorporating an online network aspect to the procurement process is a key move in simplifying buyer-supplier relationships. We are so accustomed to the efficiency of ‘one-click’ interactions in our personal lives, that not extending this technology into our business practices is nonsensical. 

Working smarter, not harder, and making use of clever online tools will be the main procurement trends going forward. Eliminating paper, a real time view on all spend, and cloud based location purchasing management will be the staples of successful, efficient procurement. 

Kate Lee, Senior Director of Research & Strategy, Fronetics

Kate LeeThe B2B buying process is not what it used to be. Unfortunately, many companies have not adapted their sales and marketing strategies accordingly and are, therefore, missing out on attracting, engaging, and acquiring customers.

Today, B2B buyers are spending more time researching and evaluating products than ever before. Key places where they turn to conduct research are social media and vendor-focused content (e.g. case studies, white papers, product data sheets). Given this, the average buyer now progresses nearly 60 per cent of the way through the purchase decision-making process before engaging with a sales rep. 

Given this new reality, it is important for companies to recognise that content marketing should be a part of their strategy. Content marketing gives companies a way to meet buyers where they are (online) and provide buyers with the information for which they are looking (knowledge). 

Do you work with, or have a passion for, procurement technology? Tell us your Big Idea in this critical field and we could be discussing them on April 21st.

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.

4 Ways Procurement Should Be Using Big Data

While it might be a difficult term to define, there are a number of practical applications for using Big Data.

In our previous article, we looked at defining (or rather, not defining) the term ‘Big Data’. Now we are going to explore the potential big data analytics and computing may hold for the procurement function.

There are a number of high-profile ways in which organisations are using Big Data. For example, hospitals and public health organisations are using Google’s search trends and history to predict future outbreaks of the flu and colds. You can read the details here and see the counter argument here.

The application of Big Data in the procurement space is a little less apparent, or at least, less well publicised. With that in mind, we’ve put together four ways that procurement could be using Big Data to its advantage.

1. Understanding supplier risk

By leveraging the vast amounts of unstructured data now available to organisations, procurement teams can get a far better understanding of their key suppliers.

Previously supplier information could be found through the media, suppliers’ websites and personal relationships with the people being bought from. Data mining allows procurement to go much deeper than this and provides an unbiased, opinionated view of their suppliers’ standings.

2. Uncovering new savings

In the same way that harnessing data allows us to understand more about our current suppliers, correctly utilised, it can also help procurement understand more about its supply markets and where it sits within them.

By understanding the global supply market at a more granular level, a whole new set of opportunities to uncover savings is opened up. These savings can come about either through direct pricing improvements or through new innovative solutions.

3. Predicting negative external factors

In the past, Big Data has been used to predict unforeseen weather events with varying degrees of success. However, many organisations and governments are investing heavily in this technology.

These insights and predictions would, understandably, garner strong commercial interest, particularly from procurement teams looking to understand just how exposed their supply chains are to both natural, and man-made, disasters.

4. Opening up collaborative supplier projects

Understanding and using Big Data means understanding a category more clearly. Organisations that are able to get this level of understanding are in a position to open up conversations around innovative solutions.

The critical part of this is that transparent relationships with suppliers must exist first. The companies can then work together to solve problems and benefit from opportunities, even if some of these opportunities are not even visible yet.

In our next article, we’ll be be looking for some real life procurement examples where Big Data has been leveraged successfully. If you know of any great examples, please get in touch.

Big Data will be one of the themes discussed at the Big Ideas Summit on April 21 in London. Tell us your Big Data story and pose questions for our experts on this subject by registering today.