COVID-19 creates new career opportunities for procurement and supply chain professionals, despite recent job losses and pay cuts.
COVID-19 wreaked havoc on the job market. The most recent U.S. analysis reveals that 21.5 million Americans remain unemployed. In the European Union, 397,000 people lost their jobs in April, according to the EU’s June report. Globally, Citi projects that 44 million people around the world, excluding China, could lose their jobs due to the pandemic.
The procurement and supply chain function is not immune. Our research, which was conducted between 4/28 – 5/12, found that 20% of supply chain and procurement departments experienced job cuts due to the crisis. Diving deeper into those numbers:
Nearly half (48%) said the job cuts were limited to about 10% of the team
15% said their teams experienced cuts of 50% or more
Similarly, 23% of respondents said they were forced to take pay cuts. Of these:
38% saw pay cuts of about 15%
32% saw cuts of about 25%
10% saw cuts of about 33%
19% saw cuts of 40% or more
Millennials took the most pay cuts (32%), while Boomers took the least (18%).
While these numbers are alarming on the surface, they may not be as severe as they appear. A recent U.S. survey from the Census Bureau found that 47% of adults said they or a member of their household had lost employment income since mid-March. This may indicate, on a comparative and anecdotal level, that procurement and supply chain practitioners have somewhat been spared.
The harsh reality: Given the magnitude of job loss across the world, it was always a matter of how much, not if, procurement and supply chain functions would get hit. Across many industries, it simply did not matter how talented you are, or the results you produced. Many organizations saw revenues drop by nearly 100%, which naturally (and unfortunately) affects employment.
The good news comes in what’s next. Our research found that the majority of organizations are valuing procurement and supply chain like never before. More than ever, procurement and supply chain leaders play a critical role in organizational resiliency, recovery, cost controls and business continuity.
Go-forward job confidence reflects this thinking. On a scale of 1 – 5, weighted job confidence for the next 12 months is 3.96—meaning procurement and supply chain practitioners are more confident than not. Nearly half (43%) said they were extremely confident they would have a job 12 months from now, compared to only 5% that said they were not confident. We see this confidence mark as an incredibly positive sign considering the employment turmoil around the world.
Could this confidence – along with the newfound appreciation for procurement and supply chain – lead to more promotions? While it’s safe to assume most organizations will take a tepid approach to compensation and spending for the foreseeable future, we believe this crisis will create fresh career and financial opportunities for Generation Next. If anything, this crisis – and the strong performance of teams across the world – crystalizes the importance of investing in people, technology and the overall function, which should open up more (and new) doors.
Building on this dynamic, the majority (73%) of organizations we surveyed are planning seismic shifts in supply chain and procurement strategy post-pandemic, including supply base expansion, inventory management changes, and reductions in supply chain globalization. These changes represent fundamental shifts to traditional approaches, and will require substantial smarts, experience and an immensely committed and results-driven team for success. All of this points to higher demand for great people.
There’s no escaping the chaos caused by COVID-19, especially when it comes to jobs. But for procurement and supply chain leaders, the light at the end of the tunnel is bright.
With only 1 week to go until our Career Bootcamp, we are taking a walk down memory lane and looking at our favourite podcasts from last year.
Can you believe it? In just one week we’ll kick off this year’s most essential Career Bootcamp, covering the one thing we know you need this year more than anything: a resilient mindset.
In case you missed this, this incredible Bootcamp will help you power your mind and supercharge your ability to innovate, play to your strengths and be more resilient.
But before next week, we thought we would take a look back at last year’s Career Bootcamp and all of the inspiring insights to come out of it.
One of our favourites was this podcast. Director at MIT Sustainable Supply Chain, Alexis Bateman, discusses her experiences through the lens of sustainability, where she gets her energy from and, like all truly successful leaders, why it’s just as important (if not more important!) to develop your team as well as yourself…
Not only is this next speaker a World Para-triathlon Champion and won Paralympic Gold in hand-cycling at Rio 2016, but Dr Karen Darke MBE is also an author and broadcaster, with an area of expertise on the subjects of challenge, change, resilience, sustainable wellbeing and maintaining a positive mental state.
Karen Darke is the strongest adventure athlete you’ve never met. This is why…
Have you ever wondered about the concept of biohacking? Do you think that people could unlock even more potential in themselves by using technology, gadgets or implants in their brains?
Well, as far-fetched as it might sound, Neuroscientist and Professor at Kellogg School of Management, Professor Moran Cerf, has devoted his career to this idea.
Responsible for all strategy, execution and transformation of IBM’s global end-to-end supply chain, and delivering to clients across more than 170 countries, Ron Castro, Vice President at IBM Supply Chain, is ideally positioned to share his wealth of experience and give his Bootcamp tips in this podcast…
Finally, to discuss his career journey, what habits he’s developed to differentiate himself, and what he’d advise a younger version of himself about when it comes to accelerating his supply chain career, Stephen Day rounds out our wonderful speaker lineup for 2019.
This year’s Career Bootcamp with IBM Sterling Supply Chain is set to be bigger and better than ever before. Through 6 awe-inspiring podcasts from June 22-26 featuring a stellar line-up of speakers, the Bootcamp will help you to:
Be more creative and innovative as Mok O’Keefe, Founder, Beehive Innovation, takes us all through practical strategies to help you and your team have bigger and better ideas.
Adapt and persevere as clinical psychologist Nicky Abdinor talks about how to thrive in times of uncertainty.
Be more resilient as Roh Singh, Founder of Populis and Excelerate You, enlightens us on how to overcome fear and doubt.
Alex Bailey, CEO and Co-Founder, Bailey and French: Alex will help us all identify our strengths, but more than that, she’ll help us leverage them to boost our careers.
Rob Baker, Author and Founder, Tailored Thinking, will discuss how we can use those strengths to craft a job that we love
And finally, VP and CMO of AI Applications and Blockchain at IBM, Amber Armstrong defines what it means to be an inspiring leader, especially during challenging times.
Don’t be seduced by a sleek user interface or fancy bells and whistles – it’s the solutions ability to address your most critical spend categories, use cases and suppliers that really matter in the long term.
It’s easy to be taken in by the shiny exterior of a product, it’s pretty packaging, isn’t it? As we all know, companies use clever product branding and marketing to draw us in and boost their sales. And the pretty-packaging strategy is no different when it comes to tech solutions.
Think about the last tech solution you or your organisation purchased. More than likely it had an appealing design, intuitive user interface, and web 2.0 look and feel. Or maybe you were drawn in by the way the system looks in mobile or app form? These are all design features intended to lure in a tech buyer.
But is design really what matters most when it comes to making a success of your tech implementation?
Success Requires More Than Just a Pretty Face
Once you’ve decided to purchase a new tech solution, you pull together your shopping list of requirements. Key stakeholders add to your list of requirements and then each requirement is stack ranked based on need. “Must-haves” vs. “nice to haves” are thrown together into an RFP. Tech vendors check all the boxes and impress you with their demos. By the time you see the third or fourth vendor, you start to believe, any one of these vendors can meet our requirements and help us achieve the success we desire.
Then the system demos take place and that pretty packaging comes into play. There’s a risk that all the focus on the shiny new objects distracts from what really matters. So how do you stay focused and stick to your requirements and select a tech solution that’s right for you?
Here are my three tips to keep your mind focused and ensure your head isn’t turned by the razzle-dazzle of a great sales presentation.
1. Keep suppliers top of mind
One of procurement’s key relationships is with the suppliers that we use. Choosing a solution that puts the suppliers’ user experience at the top of your priority list is pivotal to making your tech implementation a success.
Your business case probably includes reducing supplier-related work. As far back as 2015, Hackett Group research estimated that e-invoicing could cut costs by 31 percent and supplier enquiries by 24 percent – big wins for you and the team if you get the implementation right.
But this goes beyond making it easy for suppliers to transact efficiently, it includes making it easy for suppliers to keep their content up to date. Supplier data, certifications, qualifications, financial info, and catalog info are just a few things that suppliers can keep up to date to make it easier on you and your team.
During your selection process, don’t forget that suppliers are no different to any other user of new tech. They expect it to be free and easy to use or they, like your end users, will do all they can to go around the system.
Successful supplier adoption of new tech can be critical to making your implementation work. If buyers ensure that regularly used suppliers are onboarded correctly and ready to go at go live, then adoption will be a whole lot easier for your end users. Why? Because the suppliers they are used to transacting with, will be easily found in your new tech. Resist the pretty packaging and keep your supplier experience top of mind.
2. Ensure your new tech effectively addresses the categories that matter most
Imagine you have just installed your new tech and your end users engage the platform only to find that their spend categories are not enabled. It doesn’t really matter how intuitive the user interface is or how much it looks like Amazon.com. If they can’t engage with their suppliers and buy from the categories they typically buy, they will not adopt your new tech.
Buyers of tech can easily be persuaded to focus on the shiny new object. Don’t be distracted, stay focused on what really matters for your end users. What spend categories must your new tech address to deliver the value your business case promised?
Make sure your new tech supports the categories and departments that are large spend areas, but are not effectively managed today. If your new tech can match the spend coverage you have today, while also positively affecting categories and departments that you have typically struggled to manage, you will see wider spread adoption and a significant increase in spend under management. Your end users will feel as though they have been heard and will appreciate that you are implementing a solution that appears as though it was built for them.
3. ‘Keep the main thing the main thing’
In the razzle-dazzle of the tech demo, it’s easy to lose track of the critical use cases that separate success from failure. Tech companies will want to show off their most fancy stuff, but that is not typically where success is found. In fact, many that focus on the shiny objects don’t focus enough attention on the use cases that matter most.
For example, what’s the real use of an Amazon-like procurement system when a very small percentage of your spend is actually “shopping” for items? It is also a very low bar for any system to shop for a laptop, put it into a shopping cart and route it for approvals. That changes though if your end users are shopping for MRO and/or research items where shopping is the norm.
We are also seeing a trend for organizations moving toward systems that are able to effectively address use cases for both direct and indirect. This is certainly an area that you don’t want to assume your new tech can effectively address. Take the time to engage the right stakeholders and let their voice be heard. Bringing them in after contracts are signed is way too late.
Ask yourself – does the tech solution give me what I need? Are core functions as they should be? Is the user experience for suppliers and end users acceptable for your standards? Does the solution cater to your key categories and departments? You will find there is a big difference between updating your processes to fit best practices to minimize customization and feature requests with your new tech and trying to fit a square peg in a round hole on the other. Make sure you’re clear on what your critical use cases are and the features that you will need to support them. Consider how much you are prepared to change processes to fit within your new tech and document everything so all parties are on the same page on what needs to be done. This will help clarify which tech is a better fit and which solution is better aligned to support your industry and organizational uniqueness.
It’s great to have a tech solution that has a pretty face. But the lure of pretty packaging may lead you down a path that’s just not right for you, your team or your business. Use my 3 tips during your selection process to ensure you get a solution that will deliver the outcomes you are expecting.
Today we released the results of our How Now? The Supply Chain Confidence Index. The research reveals that nearly all (97%) of the 600+ professionals we surveyed experienced a supply chain disruption related to COVID-19. In response, the majority (73%) of organisations are now planning major shifts in supply chain and procurement strategy post-pandemic, including supply base expansion (38%), reductions in supply chain globalisation (34%) and increases to inventory levels (21%).
When asked where COVID-19 had the biggest single impact on their supply chains:
31%: Decreased demand for products and services
26%: Lack of available supply due to production downtime and shutdowns
21%: Logistics and transportation slowdowns and delays
“We expect to see seismic strategy changes in the months ahead that fundamentally alter the makeup of global supply chains,” said Tania Seary, founding chairman and CEO of Procurious. “For decades, low-cost country sourcing and offshoring was the foundation of global supply chains. The pandemic has many executives considering reducing globalisation—and for good reason. But these changes won’t come easy.”
Reflecting on lessons learned, 39% of those surveyed said they were blinded by a lack of supplier and geographic risk and 29% said they didn’t understand the upstream supply chains of their suppliers. Fifty-nine percent of respondents believe the Fortune 500 should reduce globalisation by localising supply chains and bringing manufacturing back home.
Confidence Remains High, Despite Looming Uncertainty
Uncertainty around when the disruption will peak continues to loom. Procurious found that while 34% of business leaders believe the worst has come and gone, nearly half believe the peak impact will occur within the next six months.
“The message from frontline practitioners is that the end to these supply chain disruptions is not near. Most professionals believe the crisis will peak in or after June,” said Seary.
As a result, supply chain and procurement teams will continue to play a key role in recovery and resiliency initiatives. During the crisis, 40% of respondents said their recommendations were solicited more than usual internally, and 22% said they now have a seat at the executive table.
This growing platform has inspired a new generation of professionals to further pursue careers in supply chain and procurement. Procurious found that 62% of all respondents and 71% of millennials said their interest in procurement and supply chain has increased as a result of the pandemic.
“We found that most practitioners stepped up in a big way and responded effectively to a crisis that literally brought the world to a halt,” said Seary. “The spotlight on performance will lead to increases in budgets, tech investments and board-level involvement, and create new opportunities for practitioners to make their mark at the executive level.”
Analyzing employment trends, Procurious found that 20% of supply chain and procurement departments experienced job cuts and 23% of departments were forced to take pay cuts. However, go-forward job confidence remains high. On a scale of 1 – 5, weighted job confidence for the next 12 months is a 3.96—meaning employees are more confident than not.
The full report, which dives deeper into COVID-19’s effect on supplier payments, technology investments, jobs and supply chain and procurement operations, as well as plans and predictions for the future, is now available for download.
As we emerge from lockdown and leave the safety of social isolation, we will need to drain what’s left of our almost empty resilience reserves to return to – or look for – work. Feeling anxious? Well, you are not alone … but the good news is that resilience is a learnable skill and boosting it could help you cope with the current crisis in confidence caused by the coronavirus.
If your resilience reserves are running low, you are not alone.
Mental health issues were already at epidemic levels before the coronavirus pandemic – and Covid-19 has only made them worse.
So, if you are worried about losing your job (or no longer have one), are feeling isolated and unsupported or are fearful about your health or that of a loved one, you will inevitably be feeling stressed – in the UK alone, half the population say their anxiety levels are “high”.
In the USA, 33 million Americans have already lost their jobs as a result of the pandemic, and although 8 in 10 are hopeful they will be re-hired, the coronavirus crisis has left 9 in 10 stressing about finances.
While in Australia, 1 in 4 say they are overwhelmed by loneliness when working from home, -with half of those economically impacted due to reduced hours or loss of job and stressed about job security.
So, this is a global problem – and one that affects professionals across all sectors. Those working in procurement and supply, which have seen dramatic shifts in supply chains as well as working practices, are not immune and are understandably feeling the strain.
Accept that this is the ‘new normal’
Right now, the only thing that is certain is uncertainty. So, it’s important to be kind to yourself and understand that the coronavirus crisis will inevitably take its toll on your mental wellbeing.
This is not a sign of weakness. It’s biology. In response to high levels of stress and anxiety, cortisol and adrenalin will pump through your body and your brain will start to function differently.
Blood flow will be directed to your flight or fight system priming you to run way from danger and, as a result, you will become more reactive and emotional and make decisions that are less rational and logical. No wonder we are all feeling unsettled.
Awareness of your mental state is key
So, the first step is to understand that there are physical – as well as psychological affects – of the coronavirus crisis.
To really understand how this is impacting you, use the heart rate monitor on your fitness tracker (if you use one) to see when your pulse spikes. Is it just before those chaotic conference calls where everyone is clamoring to be heard? Or does it spike when you wake up, check your emails and realize that you face yet another day of uncertainty?
According to Track Record, which uses Olympic training techniques to teach execs about stress, the key is to look at your heart rate variability not just the heart rate itself.
A sleep tracker is another useful tool. Poor sleep is a key indicator of high levels of stress and also shows that your body and mind is not getting a chance to recover from the pressures of the day. Recovery is key to boosting resilience but it is hard to find time to “get away” from the Covid crisis particularly as news of the latest infection rates and deaths is streaming 24/7.
Accept that your mental resilience important
At the same time track your mental state – many of us are hooked on fitness right now logging our times on the running machine etc. So just add this to the list. Note your feelings and what triggers you to feel stressed and anxious.
This will help you to monitor how your resilience is fluctuating. As with any exercise program (mental or physical) it is important to know where you are starting from so that you can track your progress as you build your mental toughness.
That’s why The Road to Resilience: Mental Toughness leadership series for The Faculty Management Consultants starts with self-awareness, to measure your MTQ (using a mental toughness questionnaire).
The Faculty (which works with Australia’s leading procurement teams and – like many of us – has adapted to the “new normal” by running everything online), now has a special focus on emotional resilience, in addition to technical skills, because it’s so important as we navigate this period of uncertainty.
So why does it matter? Well, being aware of where you sit on the resilience scale enables you to not only improve your score, it enables you to be more emotionally intelligent.
“You can become more aware of how tough or sensitive you need to be in any given situation – when to flex the toughness muscle, or give it a rest,” says Sally Lansbury, memberships director at The Faculty. “Remember, there are circumstances where having mental sensitivity is required… particularly right now.”
In addition to being self-aware and adapting your mental toughness to different situations, it is important to be risk-aware – something that the intrepid explorer Charlie Walker talked about in Procurious’s recent Virtual Future Leaders Roundtable in the UK.
Called “Rapid, Risk Aware and Resilient”, Charlie talked to procurement professionals about training to have fast reactions and training to deal with moments of risk. And while procurement professionals are not facing the challenge of a 43,000 mile bicycle ride across 60 countries (just one of Charlie’s many feats of endurance) they can train to boost their 3Rs, including resilience.
…and that you don’t have to struggle
We all know that some people are more resilient than others. However, what you might not realize is that you can change where you stand on the mental toughness scales – that’s because resilience is a plastic personality trait which means it can be developed.
So, in addition to being aware of how mentally tough you are – and how tough or sensitive you need to be at any given time – you should also understand that mental resilience can be learned and that now is the ideal time to start boosting your MT score.
The first step is to understand what it really is:
Mental Toughness describes the quality which determines, in large part, how we respond to stress, pressure and challenge … irrespective of the prevailing circumstances. – Dr Peter Clough.
Much of what we do is habit and that includes our response to stress and pressure. In the definition of MT “how we respond” are the three key words.
As part of your awareness exercise – which will help you to identify when you feel less resilient and when your stress levels spike – also take a note of how you respond to change and challenge.
Do you feel hopeless? Or overwhelmed? Perhaps you are angry or anxious?
Once you are more aware of your default setting in terms of “how you respond”, then you can start to change these automatic behaviours to the ones you want to adopt.
Changing any behaviour pattern takes time, but right now you can start with the first step: awareness.
This year’s Career Bootcamp is designed to ‘Power Your Mind’ and set you up with the skills to innovate, play to your strengths, and be more resilient. Register for your digital ticket here.
Big things, small things – there are probably countless things stopping you doing what you need to in procurement. What blockers are in your path?
We’ve all had that day or that week. You get to the office with a task list in your head or in hand, sure that you are going to make a huge dent in it before you even get to your morning coffee. But then you sit down and within 10 minutes your plan is blown out of the water and you spend the rest of the day playing catch up, with the bottom of your to-do list getting further and further away.
This is the reality for many procurement departments too, just on a larger scale. While an individual’s blocker might be a rogue email or the wrong phone call at the wrong time, a department’s could be any one of a number of things, from lack of resources to questionable IT systems. The thing about the blockers is that most people will already be aware of them, either as conversation around the watercooler, or something that people think is the responsibility of senior management to sort.
However, responsibility doesn’t just rest with an individual or small group, it is on each and every person to recognise these blockers and help to minimise their impact. This list is far from definitive and will change from organisation to organisation, but they are common across the profession as a whole.
1. Being Distracted by the ‘Next Big Thing’
“Procurement deserves a seat at the top table.”
“Procurement needs to be seen as a strategic business partner.”
“The next big thing for procurement is…”
If you attend procurement events or read industry literature, much of the content will concern the ‘next big thing’. Category Management, Supplier Relationship Management, Business Process Re-engineering, Strategic Stakeholder Engagement – all of these things have been touted as procurement’s ‘next big thing’ at some point in the past decade.
But, hand on heart, how many of us could say that they have been fully achieved before the next big thing came along and stole people’s attention?
Too many of these terms have become useful jargon for consultants and advisors to use, rather than the core principles for procurement departments to be working with. The relentless pursuit of the next idea to make procurement a strategic partner has blinded the profession to a major blocker to progression – getting the basics right.
Instead of chasing the metaphorical white rabbit, procurement instead should focus on ensuring that it is delivering on its principal duties – ensuring good relationships with suppliers (and paying them on time!), delivering on time and in full and delivering value, not just savings, to the business.
This can be achieved in a number of ways including cutting down unnecessary tenders, ditching non-strategic strategic activities, creating more open supplier markets and two-way communication in relationships. Whatever the best way to do this, organisations need to find their own path to it which will ultimately allow them to get back to basics.
2. Not Being ‘Besties’ with your Stakeholders
For procurement to realise its goal of a more strategic role in the organisation, it needs to create good relationships with its key stakeholders. We’re not talking about being ‘besties’ with stakeholders, but gaining support and buy-in for ideas and projects.
There is plenty good literature written about stakeholder engagement, and many organisations talk a good game about the importance of procurement and supply chain. However, just as many organisations fail to live up to these words and aims when it comes to having it as part of their key tasks.
Getting stakeholder buy-in is a critical first step in the success of any project or for any part of an organisation. This can range from ensuring that maverick spending practices are limited, or that procurement has the necessary level of support in terms of resources, time and money to build robust and fully risk-managed supply chains.
There is something of a chicken and egg situation with gaining key stakeholder buy-in. Procurement needs to meet internal expectations to prove its value, but may need a level of support to achieve this.
There are good ways to engage internal stakeholders and for procurement to get an organisational BFF! Strong two-way communication, ensuring what is required from stakeholders is clear and developing plans in conjunction with stakeholders are all good things to bear in mind.
3. Being Buried in Paperwork
At the Big Ideas Summit 2020 in London, Justin Sadler-Smith, General Manager at Basware, argued that technology solution providers have failed procurement in not providing good technology solutions. This, combined with a lack of utilisation of existing technology, has led to many procurement processes continuing to be done manually – effectively burying procurement in a deluge of paperwork, wasting valuable time and resources.
This just isn’t an issue for procurement, but across the wider organisation. The lack of technology also has a knock-on impact on the quality of data being used by procurement. Poor data means procurement can’t fully define things like the length of its tail spend, or even understand fully what its annual spend with individual suppliers is.
This can then lead to poor contract management (and over spend) and poor supplier management, including late payments. Late payments lead to delays, which can then lead to organisational issues. Late payments can undermine supplier relationships, put the suppliers themselves at risk and ultimately cost an organisation more than the original payment was worth in the long-run.
It goes against one of the foundations of the profession and means that procurement fails to meet its own basic requirements of operation.
Unblocking the Blockers
Procurement, as the entry point for suppliers and the supply chain into the organisation, will frequently be where the buck stops. However, the blockers for procurement have the potential to derail everything from individual activities to organisational strategy making it a collective responsibility to solve.
For procurement, the blockers ultimately boil down to getting the basics right, meeting the needs of the organisation, putting systems in place for better management and delivering on its core principles. Something as simple as ensuring that appropriate systems are in place to facilitate on-time supplier payment can mitigate a number of risks, many of which can have a domino effect across the organisation.
Could unblocking the blockers be as simple as treating suppliers better? Perhaps not, but it seems like a very good place to start.
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What does best practice supplier relationship management look like? Not like this…
With sales at her company in freefall due to the Covid-19 crisis, the pressure was on for Sally’s* procurement team to reduce costs. In a desperate pitch to do what she could, Sally decided to issue a letter to all suppliers, asking for an overall price reduction of 5%. In exchange, Sally dangled the carrot of ‘to-be-determined’ commitments that the business would fulfill post-Covid. These could include, she thought, accelerated payment terms, additional volumes, or contract extensions.
What could possibly go wrong, she thought, as she hastily finalised the letters and forwarded them on. Even if most say no, some might say yes and procurement will be lauded as heroes.
We’ve all been in Sally’s position – or if we haven’t, we certainly can imagine being put in it. When faced with the pressure that a crisis brings, isn’t it always the best idea to at least try to reduce costs by asking for a discount? On the surface, it seems like a logical approach – all you need is for one supplier to agree and your effort pays off. But is it possible that taking such a black-and-white approach can end up costing you more than it saves you?
Issue 1: Vague notions of success can’t be measured
In Sally’s situation above, you could argue that ‘success’ looked like one supplier agreeing to discount. But what if they agreed to a 1% discount, would that suffice? Or if they agreed to a 5% discount without complaint, would you ask if you had done more?
The problem with a strategy of ‘doing something and hoping for the best’ is that there really is no benchmark for what ‘the best’ is and whether it has been achieved. This leads to issues with measuring success internally, and naturally, the same question is always asked: how has procurement added value here?
Issue 2: No discount is as simple as asking – negotiation will be required
If achieving a 5% discount was as easy as sending a letter, then procurement would likely be out of a job. Herein lies another problem with Sally’s strategy – it’s unlikely that vendors would respond with a simple ‘yes’ or ‘no,’ leaving her to need to negotiate for whatever she could get.
And these negotiations would not be simple. Those suppliers who may be inclined to agree would expect more clarity and certainty on any future commitments from the company, which could turn discussions sour, quickly.
Those on the other end of the spectrum, however, may feel the need to explain why they can’t offer a discount, and may enter the conversation feeling defeated or exposed.
Whichever way these discussions transpired, they would certainly be time-consuming. In an environment where time is money, you have to ask yourself what the small percentage gains you might secure are really worth. .
Issue 3: Your supplier is in a crisis, too
Supplier Management 101 tells us that we should treat our suppliers like we’d like to be treated. But is sending out a generic request the way we’d like to be treated, especially if we’re in crisis too?
The answer is a resounding and obvious no. Any suppliers that Sally is dealing with would also be deep within this crisis, and may in fact be considering a price increase to save themselves. On top of this, a lack of personalised correspondence could be perceived as insulting to the relationship. The request might net a discount, but it would cost far more than that in future relationship capital.
If Sally’s plan wouldn’t work, then what would?
Step 1: Shore up your fundamentals
In times of crisis, and indeed, in ordinary time procurement must have a clear goal and an execution plan for what is needed for the business operations to continue undisrupted (or minimally impacted) and more importantly, for creatively increasing value to the organisation.
These are essentially the fundamentals required to maintain a strong supplier base and elevate procurement. From a pure supplier relationship perspective, engaging strategic suppliers to assess their crisis preparedness and ability to continue to serve the organisation is the first step.
Step 2: Creatively and empathetically engage your suppliers
Once you’ve got your fundamentals organised, you need to engage your suppliers in strategic conversations about how to creatively increase efficiency, optimize processes quickly, reduce waste (of time, resources and costs), and where possible, decrease costs and deliver additional value.
Beyond this, you also need to discuss with them what value is added, how much, for how long, what are the contingencies. This will help you establish a win-win approach with short and long term impact.
The idea is that a continuation of a growing partnership will drive the right behaviours, not just during this crisis but in the future. Supplier-driven innovation should always be a top priority to both procurement and the entire organisation.
After you’ve finished your initial discussions (and note, these type of discussions should always be ongoing) use learnings from them across all other supplier segments. The behavior you want to drive here is ensuring suppliers not only want to continue doing business with you but are eager to strategize with each other during the crisis.
Going back to Sally’s situation, this approach works for a number of reasons. Even if suppliers couldn’t immediately offer reductions they will be clear on expectations and will be committed to perform at a high level and produce ideas for the company, while increasing supplier engagement and value as a byproduct. Suppliers will be willing to explore solutions to avoid disruption, which is exactly what the business needs. In addition to this, the effort expended is targeted so no time will be wasted and in fact, the time spent may even produce market intelligence that can be brought back to the business to refine their own mitigation strategies.
Also, finally and perhaps most importantly, the role of the procurement will be elevated to a truly strategic function (with lasting impact) to the organisation.
Continue supplier relationship best practice?
For procurement professionals that realised early that Sally’s approach wouldn’t work, none of the advice here on how to rectify it should come as surprise: it is, quite simply, supplier relationship best practice to treat your suppliers in this way.
In fact, for organisations that already implement supplier relationship best practice, they may not even need to take these steps – throughout this crisis, their suppliers may already be knocking on their door with creative mitigation strategies. They may even be using this crisis to bring the relationship to the next level.
But for those who are yet to establish supplier management best practice, this example provides the perfect reason why you need to. Supplier relationships are a key enabler to business success, and when they are strong, the risk of business disruption is greatly reduced.
What have you done to strengthen supplier relationships throughout this crisis? Let us know in the comments below.
Innovation and change – we know we need to do it but taking the first step is always hard. However, waiting until change is forced upon us could lead to even more pain.
“Execution is all about timing – people don’t want to do things differently…until they have to”
James Varga, CEO – DirectID
Change. It runs against our very nature to accept and embrace it, even when we know it’s for the best. People will rail against it, undermine it, challenge it or be completely apathetic to it. That is until something forces them to accept it and the need to do something differently.
That’s exactly the issue facing global procurement professionals at this very moment. The COVID-19 pandemic has forced each one of us to reconsider the how our jobs are done and how we help our organisations. Fortunately, we have a group of leaders whose first thoughts on change are how they can make it happen, to rely upon.
Procurious is one of those organisations considering how to provide its service in the current climate. Faced with not being able to have CPO Roundtables in person, we grasped this opportunity to connect our leaders virtually, ensuring that our CPOs still had the chance to gather and share their ideas and experiences. Because at times like these, as Helen Keller once said, “Alone we can do so little, together we can do so much.”
Pragmatism over Pomposity
Although the Roundtable took place against the backdrop of COVID-19, the discussions on the day had a far greater focus on the future than the present. Procurement not only faces the challenges of global supply disruption while ensuring that employees can operate in a safe environment, but also ensuring that the profession is well prepared for what comes next.
Part of this preparation is bringing innovation back into the everyday conversation about how procurement looks, feels and operates. This is not innovation as a management buzzword, but as a practical concept that helps realise real change and sets procurement up to face any and all future challenges. As one of our speakers, Gareth Hughes, Director of Property and Procurement at Whistl noted, “We need pragmatic procurement, not pompous procurement terms”.
Innovation here is about finding the areas where change can make a lasting difference. It’s also about ensuring that, even though the timing may not seem quite right, having the tenacity to make ideas a reality is critical for procurement’s future success.
With that in mind, we’ve picked out our three key messages from the Roundtable for you to take back to your organisation.
1. Supplier Innovation – Fit for the Future
“We need to focus on the positives that have arisen from the COVID-19 experience.”
Ian Thomson – Regional Director UK and Nordics, Ivalua
Innovation is a fleeting concept. A brand new, imaginative and forward-thinking idea one day can quickly become obsolete before we even have a chance to do anything with it. The trick is to keep challenging the idea that things need to be done in a certain way and not to ignore the ‘hard’ challenges for fear of rejection.
This is the mantra of Ian Thomson of Ivalua, who chose to look for the positives for procurement in the challenges posed in the current global climate. What is striking, according to Ian, is how traditionally adversarial relationships – competing organisations; buyers and suppliers – are changing for the better as people pull together.
This not only provides an amazing opportunity to develop long-lasting leadership and trust, but also opens the doors to supplier-led innovation. This can be achieved by having greater pragmatism when it comes to new ideas, as well as increasing our appetite for risk to embed real change.
2. Volatility requires flexibility
“Businesses are operating in massively changed contexts. To use foresight, we need to develop multiple long-term strategies.”
Jessica Prendergast, Freelance Foresight Consultant at Future Insights
An organisation’s appetite for risk is one key to successful innovation. Being too risk averse can stop worthwhile ideas in their tracks but failing to fully plan for future risks can be just as bad. That’s why Jessica Prendergast, a freelance Foresight Consultant, believes that the one-dimensional continuity plans that most businesses have belong in one place – the bin!
According to Jessica, in order to innovate and predict the future, organisations need to develop multiple scenarios to cover all possible eventualities. ‘Foresighting’ is how the thought process for this starts, helps us to understand the role of automation and technology and how we can learn and apply today from these techniques.
Jessica used the example of our changing ways of working recently. At the beginning of the year, widespread Working from Home would have been unthinkable for most organisations. Now it is the ‘new normal’. Good leadership and community spirit have made these changes easier to implement, and has highlighted how organisational planning can be helped by taking a broader view.
3. Timing is everything
“An idea isn’t great until you prove it, an idea can be in the wrong place at the wrong time.”
James Varga, CEO – The ID co.
Planning multiple scenarios, being more accepting of risk and working more closely with suppliers to innovate is only half the battle. Getting people to accept an idea at the best of times will always prove tricky due to people’s natural aversity to change. Even the most innovative idea ever may struggle to gain traction if the timing is wrong.
However, there are ways to tips the scales in your favour. James was able to share his top three with the assembled group:
Be tenacious – make the most of issues facing the organisation to highlight innovation and make change happen;
Don’t assume – not everyone will think your idea is great, you’ll need to test and measure to prove its worth;
Accept a bit more risk – moving smaller suppliers and accept more risk in our new normal, you never know where it will lead.
The underlying key to these three points is removing the blockers to innovation by focusing on adoption of ideas. Then your focus can be coming up with one great idea and making it work, rather than lots of ideas that may ultimately deliver less for your organisation.
Collaboration is King
However, your organisation is approaching the current situation, it is always worth remembering that there will be life (and work) on the other side. Taking time to focus on the future at a point when many of us have the time to do this could make a critical difference to how procurement looks and operates at the forefront of public consciousness.
Not every problem can be solved. Sometimes it’s about mitigating the impact, which can be helped by planning out your multiple scenarios and accepting a bit more risk to be open to new ideas that can have a positive impact.
And, no matter what you do, it’s important to remember that you are not alone – there are thousands of procurement professionals tackling the same issues who are willing to share their thoughts and approaches. As the world changes the way we work, it’s time to collaborate as much as we can and become the leaders who are facing change head on.
If you’re interested in accessing market-leading industry insights and networking, express your interest in joining Procurious’ Roundtable Program here.
The coronavirus pandemic disrupted Procurement in unimaginable ways. Running Procurement from home is possible, but is it sustainable?
The coronavirus pandemic has disrupted the workforce in ways we have never experienced, affecting also Procurement departments and Procurement Outsourcing (PO) providers. Shared service center locations first across Asia and then the rest of the world became hot spots, leading to a rush of company initiatives to enable procurement professionals to productively work from home. IBM was successful in moving 99% of its Procurement Outsourcing teams from 60 centers across 40 countries into a home office environment in only 10 days without service degradation (1), proving that running a Procurement business working from homeis possible and productivity can be maintained when a business can react quickly, but is it sustainable? Have critical activities just been postponed or is this is the new business as usual? Three considerations for sustained resiliency.
#1. Make regularly working from home part of your team’s DNA
While many of us are used to working from home in some capacity, over 80% of our procurement professionals have never done so on a regular basis. And just because our workforce can work from home does not mean they are able and willing to do so long-term.
But returning to the office means finding the balance between safety and productivity for our teams, and deciding whether to aim for a quick return to the office or a more comprehensive re-modeling toward “borderless workplaces” where staff works from a combination of office, client site and/or home. Returning to the office is based on smart, quick and simple fixes: social distancing, mask wearing, and setting up sanitation protocols, such as rethinking where and when we eat and gather, how we open and close doors and use elevators. Re-modeling more fundamentally looks at how we work and defining what the worker’s purpose and intent is inside the office. Buildings become much more purpose-driven; deliberately sought out for team meetings, new employee onboarding, and collaboration sessions, with more hot desks and larger shared spaces, instead of being the default place to go for work.
But no matter in what capacity we return to the office, working from home regularly or even primarily will have to become part of our DNA going forward, as future infection waves are likely to force us out of offices again multiple times over the next few years.
Achieving this will require us to focus more than ever on internal communication. We have already seen a personalization of written communication over the past few months, with people expressing genuine care for each other, but we need to also listen to our employees and keep an eagle-eyed focus on engagement. By taking time for one-on-one discussions, acknowledging everyone’s individual challenges, ramping up appreciation and recognition, and ensuring we create virtual spaces for socializing we can maintain a sense of belonging and feeling of pride. On a collective scale, short pulse surveys can be a simple way to gauge the team about how they feel and adapt measures for greater engagement and productivity.
Ultimately our teams and their willingness to be flexible will be the first line of defense for sustained productivity in the new world.
#2: Bootstrap adjustments in operating models to accelerate your digitalization journey
Just a few months of working from home on a large scale have successfully increased the sense of urgency for digitalization and more intelligent end-to-end workflows. IBM and our clients have already seen an explosion of home-grown dashboards and trackers, aimed at gaining more visibility into procurement operations, allowing for more granular insights and daily views of the business. In the spirit of agility, we should initially allow for the creation of these “quick and dirty” data collection and visualization tools, even if it is manual and there is duplication. As we learn more about what our post-COVID-19 world will look like and the effort required to maintain a plethora of semi-manual tools becomes a burden, we can start distilling down to only a handful of tools and a new operating standard, creating the enablers for a broader roll-out of “no touch” procurement solutions, including traditional tools like catalogs, as well as newer solutions like marketplaces, chatbots, guided buying assistants, robotic process automation, and analytics to accelerate speed to insights and decision making.
Even more delicate and trust-based processes like Category Management and Strategic Sourcing can benefit from digitalization, for example by running “Virtual Sourcing Bootcamps” with business stakeholders using a series of video calls to map out purchasing plans, identify additional addressable spend and define more robust category wave plans for the year.
Additional incentives can be created for those internal clients or BPO customers who are resistant to a more permanent work from home delivery environment by redistributing real estate charges and differentiating expected employee productivity to create a price differential between home- and office-based setups.
#3: Learn to build trust virtually as a buyer and a seller
Until recently, meeting face-to-face was a non-negotiable prerequisite for the signing of large contracts, which we at IBM have experienced both as a supplier of Procurement Outsourcing, but also a buyer agent with our own and our customer’s suppliers. Finding a way to make customers comfortable pulling the trigger on multi-million-dollar contracts with little to no human contact is going to be a key success factor for our new future.
In the outsourcing world, visiting one or more delivery centers is a staple in every sales pursuit, but with increasingly distributed teams and a desire to reduce non-essential business travel, we are now showcasing our teams and their capabilities virtually. Using a mixture of live and pre-recorded videos, online whiteboarding tools and virtual roundtables with practitioners we have been able to create an authentic virtual delivery experience to aid in the sales process.
Experiment with virtual collaboration tools not just internally, but get comfortable using them with clients and suppliers to co-create, or hear from experts and practitioners that wouldn’t otherwise have been flown in. Focus your travel dollars and effort on one key meeting or workshop and augment it with a few virtual “visits” to round out the picture.
Leading a borderless workplace Procurement team is possible and can even deliver superior results if employees are engaged, but ensuring sustainability requires active shaping of your team’s DNA, a more digitalized operating model and the confidence to build trust in a virtual environment. Sometimes creativity requires constraints to really flourish, and let’s use the existing restrictions as an opportunity to emerge from this crisis stronger than when we entered it.
Footnote: (1) IBM Services blog, “Building operational resiliency for anytime, anywhere and any situation”, May 4, 2020, https://www.ibm.com/blogs/services/2020/05/04/building-operational-resiliency-for-anytime-anywhere-and-any-situation/
NOW is the time to start a robust process to select, fund and implement a new technology system.
Your CFO needs some love right now – supply chain isn’t something they’ve had to worry about much before…because you had it all covered!! For the first time in their careers they’ve had to get into the details of how you keep it all going. Your poor pandemic-battle-scarred CFO is now looking for some new ways to mitigate future business continuity risks.
Procurement and supply chain leaders around the world have the answers to future potential business disruption woes – what’s needed is some serious investment in technology!
COVID-19 has placed the risk of future global supply chain disruptions at the top of the C-suite’s agenda. Not wanting to be caught out again, company leaders are desperate for a better, faster way to recover the next time a crisis strikes.
Their eyes are firmly fixed on supply chain.
So, it’s time to wipe the dust of all those technology business cases – and get on Zoom, pucker up to the c-level and ask for the cash.
It’s the right time
The pandemic caught us out. It stripped away the luxury of time, revealing the real supply chain risks that we knew had been lurking just below the water line for years.
The tide went out and our weaknesses were exposed – a lack of visibility into our multi-layered supply chains, an overdependence on single geographies and single supply source and a lack of agility to pivot and close the supply gaps.
As we move forward, supplier risk, supplier collaboration, value analysis, cost reduction, quality, and compliance will be more important than ever.
NOW is the time to start a robust process to select, fund and implement a new technology system.
How to pucker up
But how can you make sure you select the right system and construct a convincing business case, especially when budgets are being slashed across the board?
Here’s your guide to technology selection and adoption, pulled together from years of experience.
Step One – make sure you meet the business needs
It starts with understanding needs. As procurement and supply chain pros, we all know how to run a solid needs analysis….so I don’t need to labour this point.
To decide what works for your company and suppliers, remember the 80/20 rule. For example, if 80% of your spend is on contingent labour, you are better off looking at a system that specialises in that functionality.
What system is best?
Once you know your company needs, it’s time to narrow down the provider playing field.
This can get confusing, because you might pick your top three and accidentally end up comparing apples to oranges. One system could be a full end-to-end suite, and you’re comparing it to a contract management point solution and a sourcing tool!
It’s easy to get overwhelmed; there are literally hundreds of e-procurement technology suppliers in the marketplace right now.
About 10 years ago we saw a big push towards ‘best of breed’ solutions. There were very few fully-integrated suites that were intuitive and easy to use. Plus, a lot of companies had budget limitations, so they looked to point solutions for contracts, P2P, sourcing, supplier management, analytics, etc.
That worked for a while, but then it became a nightmare to maintain all those integrations and the systems lacked true interoperability.
Then came the race for fully integrated suites, which led to the likes of SAP Ariba, Coupa, Ivalua and Jaggaer who emerged to lead the pack today.
Will the strong preference for the fully integrated suites continue? That remains to be seen. One thing is for sure, we will see a thinning out of the market as some of the best of breed start-ups struggle for cash.
But only you will know what’s right for your company.
Finding the love…and the cash
Once you’ve chosen your tech system, it’s time to get senior-level buy-in. How can you make your case convincing?
It comes down to giving a clear, compelling ‘why’. Why now? Why this system? What will it mean for the company?
Some great messaging that would resonate with the c-suite right now would be:
Systems give transparency
Systems give control
Systems give confidence
As well as these overarching messages, you should tailor specific business case messaging and justification for investment in your system for different members of the c-suite. For example:
Chief Executive Officer – mitigate business continuity risk and future profitability
Chief Financial Officer – cost control and visibility
Financial Controller – well, it’s obviously about control!
Another tip for developing your business case messaging is to reach out to your online peer community and look through social media, to find stories that support your reasons for investing in tech.
There’s nothing the c-level likes more than to do better (or avoid the same mistakes) than the competition. Your stories and examples on how peers are handling problems will be a powerful tool for motivating your senior leadership team to invest in your recommended technology.
Keep a c-suite huddle
It’s critical to ensure you have a wide base of support across the senior leadership team so that your project has strong foundations.
Stay close to the c-suite throughout the project. Don’t ever assume the support you secure today will endure. Keep them regularly updated to ensure your technology project stays top of mind (and the corporate strategic priority list!).
Also, beware the trophy-seeking sponsor who could be using your supply chain technology project as a pawn in their political power play. It is always difficult to pick these people, but the wrong choice could threaten your project’s success. You don’t want everything to go down the drain when your board sponsor’s career bets don’t pay off.
Ensure change management isn’t funded out of small change
Business cases for tech have always focussed on headcount reductions (hard numbers based on FTEs taken out of Accounts Payable, administration etc) and efficiencies (more of a soft number) on the value side, and licensing and implementation on the cost side for investment in technology. Don’t forget to also factor in the total cost of ownership. Customisation costs, implementation, and productivity losses and gains are all important financial considerations.
All of these cost and other benefits are important, but you must ensure you include a significant budget for change management, training, user implementation.
As a profession, we have not had enough focus on how to implement technology; that’s our weak point. It’s difficult to ensure the organisation is gaining the full benefit of the system they have invested in – and for the most part, we do a pretty lousy job of it.
That’s because these are change management projects, not technology projects. It’s so little about systems and so much about the people who use them.
Too often, the implementation budget is the first thing to go when CFOs want a quick financial win. Don’t fall prey to their argument that people will work it out, or that it’s all straightforward. That logic is precisely how and why many technology projects fail.
Fiercely guard your change management budget, and make sure you have a dedicated project team to make it a success.
You can do this
This is your chance to step up and lead, showing your potential for a more senior role.
Given the high failure rate of these systems right now, it may be a high-risk strategy to take on the leadership of a procurement or supply chain technology implementation. But with risk comes reward; your successful project will be a great asset to your career progression and increase your visibility.
More importantly, it will prove that you understand the business and know how to solve complex issues.
As we work our way through this latest supply chain disruption, we are (sadly) capturing the real costs of this pandemic and will have much stronger financial proof points for investment in technology.
If this kind of disruption happens again, we know the magnitude of what it is going to cost. So we must put systems in place that will respond much faster to mitigate these potential losses.
Now is the time to step up and put forward your argument for investment. We may never have such a fertile and receptive audience as we do right now.
Act now, while the spotlight is on supply chain. Don’t waste a crisis.